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PETITIONER: THE LORD KRISHNA SUGAR MILLS LTD.,AND ANOTHER

       Vs.

RESPONDENT: THE UNION OF INDIA AND ANOTHER(and connected petition)

DATE OF JUDGMENT: 06/05/1959

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. SUBBARAO, K. SINHA, BHUVNESHWAR P. IMAM, SYED JAFFER KAPUR, J.L. SARKAR, A.K.

CITATION:  1959 AIR 1124            1960 SCR  (1) 226  CITATOR INFO :  R          1965 SC1503  (7)  F          1978 SC 771  (15)  E&D        1985 SC1737  (16)

ACT: Constitution-Fundamental   Rights-Restrictions    on-Reason- ableness,  relevant  considerations  for   judging-Enactment obliging  sugar manufacturers to supply sugar for export  at loss-Notification  under another enactment increasing  price of sugar for internal sale for recouping loss-Whether can be taken   into   consideration--Discrimination-Sugar    Export Promotion  Act,  1958 (30 of 1958), ss. 5, 6, 7, 8,  and  9- Constitution of India, Arts. 14 and 19 Essential Commodities Act,  1955 (10 of 1955), s. 3--Sugar (Control) Order,  1955, cl. 5.

HEADNOTE: The  petitioners  challenged the  constitutionality  of  the Sugar  Export Promotion Act, 958, which was enacted for  the purpose  of exporting sugar with a view to  earning  foreign exchange.    The   impugned  Act   imposed   the   following restrictions on the owners of 40 factories producing sugar by the vacuum pan process: (i)  it obliged  them to deliver to the export agency  specified  by the Central Government the quota of sugar allocated to them; (ii)  it made them suffer a loss on this delivery of  sugar; and (iii) it exposed them to a penalty in case the  delivery was short of the quota.  By a notification issued under  the Sugar  (Control)  Order,  1955, which  was  made  under  the Essential  Commodities  Act, 1955,  the  Central  Government increased  the price of sugar for internal sales by  50  nP. per  maund to enable the owners to recoup the loss  suffered by  them  by  the delivery of the  sugar  for  export.   The petitioners  contended that it was not permissible  to  take the   notification   issued  under  another   statute   into consideration  and that the impugned Act offended  Arts.  14 and 19(1)(f) and (g) of the Constitution.

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Held,  per Sinha, Imam, Kapur, Subba Rao  and  Hidayatullah, jj., Sarkar, J. dissenting) that the impugned Act was constitutionally valid. Per   Sinha,   Imam,  Kapur  and  Hidayatullah,   jj.    The restrictions  placed by the Act upon the fundamental  rights of  the  petitioners under Arts. 19(1)(f) and (g)  were  not unreasonable  as  arrangements were made to save  them  from loss  by increasing the price of sugar for  internal  sales, thus  passing  on the loss to the consumers in  India.   The reasonableness of the restriction and not of the law was  to be determined, and if the restriction was under one law  but countervailing advantages were created by another law passed as  part of the same legislative plan, the Court  must  take that  other  law into account.  The  reasonableness  of  the restriction  was to be judged at the time it was  challenged and in the context Of the circumstances then existing.   The notification of the Central Government increasing the  price of sugar to enable the recoupment of the loss occasioned  by the export could be taken into consideration in judging  the reasonableness of the restrictions. State of Madras v. V. G. Row [1952] S.C.R. 597; Virendra  v. The  State of Punjab, [1958] S.C.R. 308 ; Arunachalam  Nadar v.  State of Madras, 1959 S.C.J. 297 ; Attorney-General  for Alberta  v. Attorney-General for Canada, (1939) A. C. 117  ; Ladore v. Bennet, (1939) A.C. 468 and Pillai v.  Mudanayake, (1953) A. C. 514, relied on. The   foreign  export  served  the  national   interest   by stabilising the sugar market and stabilised national economy by  earning foreign exchange.  The loss, if any, was  spread over many factories and was so small as not to amount to  an unreasonable restriction. The  Act  did  not offend Art. 14  Of  the  Constitution  in selecting  sugar  produced  by the vacuum  pan  process  for export  and in leaving out sugar produced by  other  methods and  other  commodities from the mischief of the  Act.   The Government  was the best judge as to which commodities  were most likely to earn 41 foreign exchange and the selection made was justifiable as a reasonable classification which was related to the object of the Act of earning foreign exchanger Per  Subba  Rao,  J. In testing the  reasonableness  of  the restrictions  imposed  by  the  impugned  Act  it  was   not permissible  to  take into  consideration  the  notification under the Sugar (Control) Order, 1955, increasing the  price of  Sugar for internal sales by 50 nP. per maund.  The  test of  reasonableness of one Act could be made to  depend  upon the  impact of another Act on it only when the  earlier  Act was  made part of later Act or when both Acts were parts  of the  same  legislative scheme or plan.  To  go  beyond  this would  be  to destroy the stability of  legislation  and  to introduce an uncertain element.  To go further and to depend upon  a notification of a transitory nature issued under  an unconnected  Act  would be to place the statute in  a  fluid state.   The impugned Act and the Essential Commodities  Act were enacted for different purposes. State  of Madras v. V. G. Row [1952] S.C.R.  597;  Attorney- Geneyal for Alberta v. Attorney-Geneyal for Canada (1939) A. C.  117  ; Ladore v. Bennet (1939) A. C. 468 and  Pillai  v. Mudanayake, (1953) A. C. 514, distinguished. The  restrictions  imposed  by the  impugned  Act  were  not unreasonable  as  the Act served the  national  interest  by earning  foreign  exchange  for the State  and  building  up foreign  markets  for  the future prosperity  of  the  sugar industry.

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Per  Sarkar, J. The impugned Act which made the  petitioners suffer a loss on the sale of a part of their produce imposed unreasonable  restrictions  on their  fundamental  right  to carry on their business and was invalid.  Though in deciding the  reasonableness  of  the  restrictions  imposed  by  the impugned Act all the prevailing conditions and circumstances had  to be considered, the notification increasing the  home price  of sugar could not be taken into consideration.   The impugned  Act neither made it obligatory on,  nor  empowered the  Government to take any steps to recoup the loss  caused to  the  petitioners.  The increase in  the  price  depended solely on the arbitrary discretion or generosity or sense of fair play of the Government.  It would be intolerable in any legal  system  that  a  statute should  be  legal  when  the Government chose to do a thing and illegal when it undid  it and so on from time to time at the choice of the Government. Besides, there was nothing in the Essential Commodities  Act or the Sugar (Control) Order which authorised the Government to  increase  the  price for the sake of  recouping  to  the manufacturers  the loss caused to them by the impugned  Act, and  the  validity of the notification increasing  the  home price of sugar was doubtful. State   of  Madras  v.  V.  G.  Row  [1952]  S.C.  R.   597, distinguished. The  impugned Act caused loss to the petitioners  which  was not negligible and thus imposed unreasonable restrictions on 6 42 their  right to carry on their business.   The  restrictions could  not be justified on the ground that they resulted  in stablising  the  sugar  industry as the  industry  (lid  not require  any stabilisation.  The export was not to be   made out  of the excess of production over  internal  consumption and  in fact production in India had always been  less  than internal consumption.

JUDGMENT: ORIGINAl, JUTRISDICTION : Petitions Nos. 9 and 14,of 1959. Petitions under Article 32 of the Constitution of India  for the enforcement of Fundamental Rights. A.V.  Viswanatha  Sastri,  and  G.  C.  Mathur,  for  the petitioners in Petition No. 9 of 1959. M.  C. Setalvad, Attorney-General of India, B. Sen and R. H. Dhebar, for respondent No. 1 in both the petitions. M.C.  Setalvad, Attorney-General of India, B. Sen and  B. P.  Maheshwari,  for respondent No. 2 in Petition No.  9  of 1959. N.C.  Chatterjee and G. C. Mathur for the petitioners  in Petition No. 14 of 1959. B.Sen  and  B.  P. Maheshwari, for respondent  No.  2  in Petition No. 14 of 1959. 1959.  May 6. The judgment of B. P. Sinha, Jafar Imam, T. L. Kapur  and  M.  Hidayatullah,  JJ.,  was  delivered  by   M. Hidayatullah,  J.  A. K. Sarkar, J., and K. Subba  Rao,  J., delivered separate judgments. HIDAYATULLAH  J.-Writ Petition No. 9 of 1959 has been  filed by  the Lord Krishna Sugar Mills, Ltd., Saharanpur and  Shri Sushil  Kumar, a Director of the said Mills.  It  was  heard along  with  Writ Petition No. 14 of 1959,  which  has  been filed  by  Shiva  Prasad  Banarsidas  Sugar  Mills,  Bijnor, through  Seth  Munnalal  and also by him in  his  own  name. These  Mills  are hereinafter referred to as the  L.  K.  S. Mills and S. P. B. Mills, respectively.  The petitions raise

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the  same contentions, but in Writ Petition No. 14 of  1959, there  is  one more circumstance, which  will  be  mentioned later.   The  petitions are directed against  the  Union  of India and the Indian Sugar Mills Association (Export  Agency Division) Calcutta.  The petitioners challenge inter alia 43 the  constitutionality  of the Sugar Export  Promotion  Act, 1958  (30 of 1958), which shall hereafter be referred to  as the Act.  They question also the legality of certain  orders passed  by the second respondent purporting to be under  the Act. Before describing how this matter came before the Court,  it is  convenient to give the scheme of the Act and to set  out some  of  its provisions.  On June 27, 1958,  the  President promulgated  the  Sugar Export  Promotion  Ordinance,  1958, which was repealed by and reenacted as the Act on  September 16,  1958. The Ordinance was in the same terms as  the  Act, and   it  is  not  necessary  to  refer  to  the   Ordinance separately.  more  so  because by s. 14  of  the  Act  which repealed  the Ordinance, anything done or any  action  taken under  the  Ordinance is deemed to have been done  or  taken under  the  Act,  and  the Act  itself  is  deemed  to  have commenced on the 27th (lay of June, 1958. Both  the Ordinance and the Act were passed to  provide  for the export of sugar in the public interest and for the  levy and  collection  in certain circumstances of  an  additional duty of excise on sugar produced in India.  To achieve  this objective, the Act authorises the Central Government (as did the  Ordinance  previously) to specify an export  agency  to ’perform the functions mentioned in the Act, and the Central Government by a notification issued the same day,  specified the Indian Sugar Mills Association (Export Agency  Division) Calcutta, as the export agency. The  Act  next provides that the Central Government  may  by notification  in the Official Gazette, fix the  quantity  of sugar   to  be  exported  during  any  period  taking   into consideration : (a)  the quantity of sugar available in the country; (b)  the  quantity of sugar required for consumption in  the country; and (c)the necessity of exporting sugar with a view to earningforeign exchange in the public interest, but, so as not to exceed 20 per cent. of the quantity to  be produced  in  India in the season ending with the  month  of October falling within that year.  The Central 44 Government fixed 50,000 tons as the quantity to be  exported up  to  ]December 31, 1958, later extended  to  January  31, 1959.  This notification was also issued on June 27, 1958. Section  5  of  the Act enables the  Central  Government  to apportion, by order in writing, the quantity to be  exported among  " owners " of factories, the word " factory  "  being confined to a factory where sugar is produced by the  vacuum pan  process.   The  term " owner " is  defined  to  include transferees,  and  agents  and  managers  under   Industries (Development  and Regulation) Act, 1951.  The  apportionment of  the  quantity  of  sugar to be  exported  is  to  be  in proportion to the quantity of sugar produced or likely to be produced  by  the  owners  during  the  season  referred  to earlier.  On the communication of the order to an owner, the quantity so apportioned is deemed to be the export quota for the factory of that owner. Section 6 then provides that on demand by the export agency, every  owner  shall deliver to it from time to  time,  sugar produced in his factory in such quantities (not exceeding in

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the  aggregate  his export quota fixed for  the  factory  or group  of factories, as the case may be), of such grade,  in such manner,’ within such time and at such place, as may  be specified by the export agency in this behalf.  If the sugar is  delivered by an owner in accordance with the  provisions of  this section, he retains no rights in such sugar  except his  rights  to receive payment therefor under s. 9  of  the Act. Section  7  provides for levy of additional excise  duty  on sugar dispatched from the factory for consumption in  India, if the owner of a factory does not fulfil the demands  under s. 6. It provides: " (1) Where sugar delivered by any owner falls short of  the export  quota  fixed  for it by  any  quantity  (hereinafter referred to as the said quantity), there shall be levied and collected  on  so  much of the  sugar  dispatched  from  the factory  for  consumption in India as is equal to  the  said quantity,  a duty of excise at the rate of seventeen  rupees per maund. 45 (2)The duty of excise referred to in sub-section (1) shall be  in  addition to the duty of excise chargeable  on  sugar under  any other law for the time being in force, and  shall be  paid by the owner to such authority as may be  specified in the notice demanding the payment of duty and within  such period not exceeding ninety days as may be specified in such notice. (3)If any such owner does not pay the whole or any part of the  duty  payable by him within the period referred  to  in sub-section  (2),  he shall be liable to pay in  respect  of every period of thirty days or part thereof during which the default  continues  a penalty which may extend  to  ten  per cent. of the duty outstanding from time to time, the penalty being adjudged in the same manner as the penalty to which  a person  is  liable under the rules made  under  the  Central Excises and Salt Act, 1944 (1 of 1944), is adjudged." By sub-s. (4) of this section, the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder are made  applicable as far as may be, including those  relating to refunds and exemptions from duty in relation to the  duty mentioned in this section or any other sum due as a penalty. Section 8 then deals with the export by the export agency of sugar delivered to it.  The section also authorises the sale of such sugar within India under certain circumstances.  The section  may be reproduced in full here, as its  terms  will form the subject of consideration in the sequel. 8(1)  " The export agency shall take all practical  measures to export sugar delivered to it under this Act: Provided  that,  if  the export agency is  of  opinion  that having regard to the quality of the sugar delivered to it by any  owner, or to the expenses involved in transporting  the sugar  from one place to another, or to the delay likely  to be involved in exporting it, or to the conditions prevailing in the markets for sugar, whether in or out of India, or  to any  other relevant circumstance, it is expedient so to  do, the  export  agency may sell the whole or any  part  of  the sugar in India 46 and  may, if it thinks fit, purchase such quantity of  sugar as  it may consider necessary for export at the  appropriate time. (2)For the purposes of sub-section (1), the export  agency may itself sell sugar or permit the owner to sell the  whole or  any part of the export quota in his custody at  a  price approved  by  it  on condition that  the  sale-proceeds  are

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payable to it." Section  9 deals with payments to owners who have  delivered sugar for export.  It provides as follows: (1),The  export  agency shall, at such time as  it  thinks fit, make to the owners who have delivered sugar to it under this  Act,  payments  determined  in  accordance  with   the provisions hereinafter in this section contained. (2)From the total sale-proceeds in respect of the quantity fixed  for export under section 4 for any year, there  shall be  deducted  the total expenditure incurred by  the  export agency   in  respect  of  the  sugar,  whether  by  way   of administrative expenses or otherwise, and the balance  shall be  apportioned  among  the  owners  in  proportion  to  the quantity  of  sugar delivered by them  respectively  (hiring that year. (3)In  making  any distribution under  this  section,  the export  agency  shall  make  such  adjustments  as  may   be necessary  having regard to the grade of sugar delivered  by any owner, the adjustments being made on the basis of  sugar of   ISS-E-29  grade  and  with  reference  to   the   price differential  schedule for different grades of  sugar  which the Central Government may, by notification in the  Official Gazette, publish in this behalf. (4)Notwithstanding anything contained in this section  and subject  to the rules which may be made in this behalf,  the export agency may make on account payments to owners against documents  of delivery of sugar furnished by them, and  such payments shall be adjusted at the time of final payment." In  the  remaining  five  sections,  the  Act  provides  for ancillary matters, the last (s. 14) incorporating the repeal of the Ordinance and savings.  Section 10 47 reserves  to  the  Central  Government  the  power  to  give directions  to  the  export agency, and  s.  11  allows  the Central  Government  to delegate, subject to  conditions  if any, its functions under the Act to an officer or  authority specified  by notification.  It may be pointed out that  the Chief Director, Directorate of Sugar and Vanaspati, Ministry of  Food  and  Agriculture,  was  specified  as  such  in  a notification  issued on June 27, 1958.  Section 12  provides for  protection  of authorities, and s. 13  confers  on  the Central  Government the power to, make rules and includes  a power  to  make a breach of any rule an  offence  punishable with fine extending to five thousand rupees.  All such rules must  be  laid  before Parliament, and may  be  modified  by Parliament.  No rules, however, have been made. We  next  proceed to the facts of these two  cases.   By  an order  No.  6(53)/58-SC,  dated June  27,  1958,  the  Chief Director,  Directorate of Sugar and Vanaspati, fixed  461-05 and  412-04 tons of sugar as the quantities  apportioned  to the L. K. S. Mills and the S. P. B. Mills respectively.   On July  17,  1958 the export agency wrote to  the  two  owners informing them of the quotas and their equivalents in  bags, intimating  also that the supply would be required in  Grade C-29, and/or Grade D-29 and/or Grade E-29.  Inquiry was made as to the grades and quantities in stock with them.  It  was also  stated in these letters that a  further  communication would  be  sent  in due  course  giving  detailed  despatch/ delivery/disposal  instructions for the export quota.   They were  also informed that the’ Central Board of  Revenue  had issued  detailed instructions to the Collectors  of  Central Excise,  and that it had been agreed that the order  of  the Chief Director (Sugar) served on the owners with copy to the Central  Excise Officer of the factory concerned would  also be the release order from the Sugar Directorate.

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Different replies were sent by the two petitioners.  The  L. K. S. Mills replied that they had only sugar of D-28  grade, while  the  S. P. B. Mills replied that they had  E-29.   On August  24, 1958, the export agency wrote to them  that  the export quota was diverted for internal sale.  They were told that they were permitted to 48 sell  the  " quota sugar " for internal consumption  at  the price  of  Rs. 36, per maund for Grade D-29,  fixed  by  the Government.  The export agency asked the two Mills to let it know  by  telegram the grade in which the export  quota  was available, so that documents could be sent to enable them to deliver sugar to their respective buyers.  The export agency described the documents as follows: "(1) A delivery order authorising the Central Excise Officer of your factory to deliver the quantity sold. (2)This  delivery  order will be sent through  the  Punjab National Bank Ltd., attached to a demand draft drawn on  you for  the amount of the sale proceeds payable to us.   Please pay this on presentation. (3)The  sale proceeds payable to us will be calculated  as in the following examples:-                                                     Rs. Sale price at Rs. 36 per maund D-29                                               ... Less Excise Duty to be paid by you                 ...                                                  ------- Less ’ on account’ payment of Rs. 10 per maund    ..... Amount for which draft will be drawn on you        ... After  receiving the delivery order you will pay the  Excise duty and deliver the sugar to the buyer. " Grade differentials will be allowed as per the  Government Notification GSR. 661 d/30th July fixing ex-factory prices. The  sale transaction will be as between you and your  buyer and the Export Agency cannot take any responsibility. We  now  await  to hear by  telegram  the  grade  available. Please  also  say in your telegram to which  branch  of  the Punjab National Bank we should send the documents."                              49 The  facts  from here progress differently  with  these  two petitioners,  and  they are stated separately.   The  L.K.S. Mills  informed  the export agency their inability  to  sell sugar at the controlled rate fixed by the Government by  its notification of July 30, 1958, as the market was very  weak, and there were no purchasers of sugar at the controlled rate even  out  of the releases made by the Government  for  free sales.  The export agency reminded the L.K.S. Mills that the industry had agreed to finance the Export Agency Division by letting  it  have the sale-proceeds of  sugar  diverted  for internal  sale  less Rs. 10 per maund as an " on  account  " payment.  The export agency offered to show a concession  to the   L.K.S.  Mills,  and  asked  them  to  sell  sugar   in instalments  of  1,500, 1,500 and 1,565 bags with  a  week’s interval  between  each.  It asked the L.K.S. Mills  to  co- operate  and let the export agency send documents for  1,500 bags at Rs. 35-69 nP. per maund ex-factory.  It appears that a  mistake  was  made in putting down 1,000  bags,  but  the meaning  was  perfectly plain.  The L.K.S.  Mills,  however, insisted  that  they  were  unable  to  sell  sugar  at  the controlled  rate,  and  that  as  they  were  in   financial difficulties, it was not possible to honour the documents as suggested by the export agency. The L. K. S. Mills proving obdurate, the export agency wrote on November 5, 1958, that it proposed to send documents  for the  full quota of 4,565 bags at Rs. 35-69 per  maund.   The

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L.K.S.   Mills  were  requested  to  retire  the   documents immediately,  as funds were needed urgently for purchase  of additional  quantities  for  export  to  replace  the  quota diverted  for  internal sale.  It enquired the name  of  the bankers  to whom the documents might be sent by the  agency. The  L.K.S. Mills, it appears, did not agree to any  of  the courses  suggested, and the export agency wrote on  November 27,1958, that the L.K.S. Mills were requested to remit a sum of  Rs. 1,88,216-63 nP. being the amount calculated  at  the rate  of  Rs. 35-69 nP. per maund in respect  of  the  total sugar quota, less excise duty to be paid by the L.K.S. Mills and  less  "on  account"  payment of Rs.  10  per  maund  as indicated in the earlier letters, 50 It  also stated that unless the remittance was  received  by December 5, 1958, the permission to sell the quota sugar for internal consumption would be Withdrawn.  Subsequent to this too,  the export agency wrote to the L. K. S.  Mills  saying that a demand draft for Rs. 61,845-57 nP. was being sent, to which  was  attached  the delivery order  addressed  to  the Central  Excise  Officer of the factory  for  releasing  the first  installment  of 1,500 bags.  The  L.K.S.  Mills  were asked to pay the excise duty and to clear the bags from bond and  to  intimate  to  the agency that  they  had  done  so. Similar  documents were prepared for the  other  instalments and forwarded through the Bank.  The L.K.S. Mills,  however, did  not agree to this, and the export agency thereafter  on December  18, 1958, sent a telegram that unless  the  drafts were  retired  immediately, the quota sugar should  be  kept ready  for dispatch so that delivery might be taken  by  the export  agency.  The export agency also informed the  L.K.S. Mills  that  otherwise  the  name  of  the  Mills  would  be communicated  to the Chief Director, Sugar, as a  defaulter. The  export  agency also sent an order for delivery  of  the quota sugar, and required the L.K.S. Mills to despatch it by goods train, freight to pay, consigned to the export agency. It  also intimated that the Mills should draw on the  export agency for the amount of excise duty paid by the Mills  plus "on account" payment at Rs. 10 per maund.  Much was made  of the error in describing the quota as of D-29, but in view of what  had  already been understood, it cannot  be  suggested that the L.K.S. Mills were in any way misled. The L.K.S. Mills informed the export agency that their  bank position  did  not  allow them to  honour  the  drafts,  nor despatch  the  desired  quantity  of  sugar  at  the   rates mentioned  by the agency.  They also stated that  they  were not able to despatch more than 500 bags, as wagons over  the Eastern  Railway were limited.  The export agency,  however, did   not  agree.   Finally,  the  export  agency   demanded remittance  of  the sum of Rs. 1,88,216-63 nP. by  the  25th January,  and gave the alternative to the L. K. S. Mills  to despatch the sugar by that date according to the 51 despatch  instructions  communicated  earlier.   The  L.K.S. Mills  wired saying that the Banks were  demanding  interest and  that  the agency should instruct the  Banks  to  forego interest.   The export agency on January 29, 1959, wired  as follows: "Your  tel.  twentyninth  without  prejudice  and  to  avoid serious  complications we instructing bank  waive  interest. Regarding  interest Committee will consider  whose  decision will be communicated in due course." The petition (No. 9  of 1959)  was, however, filed on January 27, 1959, that  is  to say, two days earlier. The facts relating to the S.P.B. Mills are as follows: After

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the  letter of August 24, 1958 was sent, nothing appears  to have been heard by the export agency.  On November 27, 1958, the export agency asked the S. P. B. Mills to remit to it by December  15,  1959, Rs. 1,69,524. 77 nP. being  the  amount calculated  in  the same way as for the  L.K.S.  Mills.   On December 14, 1958, in continuation of this letter a despatch order for the entire quota was sent in the same terms as  in the other case.  In reply, the S.P.B. Mills pointed out that they  were working the Mills as short-term  lessees,  having obtained  the  lease  from the High Court  of  Allahabad  on payment  of Rs. 6,10,000 as lease money and Rs. 1,00,000  as security on August 6, 1956.  They also pointed out that they were required to purchase additional machinery, stores etc., for a sum of Rs. 5 lakhs, and that a sum of Rs. 3,43,500 was spent  in  connection with the repairs to  the  factory  and wages  for  the  period during which  the  factory  was  re- started.  They further pointed out that they had suffered  a loss of Rs. 2,40,000 in the last season and another loss  of Rs.  50,000  on  account of the strike  of  cane-growers  in March, 1958; that all their sugar stock was pledged with the Punjab  National Bank, Bijnor, against an advance of 75  per cent.  of  the price; and that there were  arrears  of  cess amounting  to  about Rs. 5,50,000 and that the  lease  money amounting to Rs. 6,10,000 for the next season was also  due. They  therefore,  ’expressed  their inability  to  send  any sugar.   They also stated that if they redeemed the  pledged sugar  even  after paying the " on account "  money  to  the Bank, 52 the  Bank would be receiving Rs. 15-2-0 per maund less  than the controlled price of sugar.  They further stated that  it was  not possible for them to sell sugar at  the  controlled price fixed by the Directorate and ended by saying that they were  not in a position to ,despatch sugar, pointing out  at the  same  time that the Act was  unconstitutional  and  not binding on them. The export agency, however, was not agreeable, and it  asked the  S.P.B. Mills either to deliver the export quota or  pay the  net sale-proceeds for the same, pointing out  that  the Mills  ran the risk of liability for the  additional  excise duty of Rs. 17 per maund. While matters stood at this stage and the S. P. B. Mills had neither paid the amount demanded nor agreed to despatch  the sugar,  a petition was filed in this Court and  a  temporary stay was obtained. The  questions that have been raised in these petitions  are many,  but  they can be grouped under two heads,  viz.,  the vires  of  the legislation and the propriety of  the  action taken under it.  The argument about the vires challenges the Act as a whole and also clause by clause.  In regard to  the vires  of  the Act, the petitioners draw  attention  to  the statement of objects and reasons, incorporated in one of the affidavits  in  the case.  According to them,  the  declared object of the Act is to earn foreign exchange.  They contend that if foreign exchange is so urgently needed, there should have   been  uniform  legislation  compelling  other   sugar manufacturers,  who  do not manufacture by  the  vacuum  pan process,  also to export sugar.  This argument is  based  on alleged  discrimination and on Art. 14 of the  Constitution. The  petitioners  further  contend  that  manufacturers   of commodities other than sugar are not compelled to export  in a like manner, and thus there is further discrimination. In  our  opinion, this argument is without  substance.   The power  of  Parliament to make laws in  relation  to  foreign exchange  is  manifest.   Entry No. 36  of  the  Union  List

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specifically confers jurisdiction on Parliament to legislate in relation to foreign exchange.  That Entry, if interpreted widely, would embrace within 53 itself  not  only laws relating to the  control  of  foreign exchange but also to its acquisition to better the  economic stability of the country.  The need for foreign exchange  to finance  the various development schemes was very  properly, not  disputed.  It is thus plain that the object of the  Act is  in  the  public  interest., If we  are  to  exist  as  a progressive nation, it is very necessary that we carve out a place  for  ourselves  in  the  International  market.   The beginning has to be made, and many a time, it is at a  great loss.   That the, Central Government has selected the  sugar industry  for  an  export programme does not  mean  that  it cannot make a classification of the commodities, bearing  in mind which commodity will have an easy market abroad for the purpose  of  earning  foreign  exchange.   During  the  Suez crisis,  sugar  was exported in large quantities  from  this country, and earned 12-4 chores as foreign exchange.   There is  nothing  on  the record to show  that  export  of  other commodities  was not also undertaken, though it was  pointed out  in arguments that manganese ore was also exported in  a similar  manner  to  earn foreign  exchange.   It  is  quite obvious that the Central Government cannot order the  export of all and sundry manufactured commodities from the country, without  being  assured of a market  in  foreign  countries. Necessarily, the Government can only embark upon. an  export policy in relation to these products, for which there is  an easy  and readily available market abroad.  For this  reason also, sugar produced by the vacuum pan process may have been selected, because such sugar is perhaps in demand abroad and not  sugar  produced  by  any other  process.   It  must  be realised  that  goods manufactured in our  country  have  to stand heavy competition from goods produced abroad, and even this export can only be made at great sacrifice, and is made only  to earn foreign exchange, which would not,  otherwise, be available. In this view of the matter, it cannot be said that there  is discrimination  in  so  far as sugar  manufacturers  by  the vacuum  pan process are concerned.  Government is  the  best judge as to which commodities are 54 most likely to earn foreign exchange, and the selection thus made is justifiable as a reasonable classification which  is related  to  the object of the Act, namely, the  earning  of foreign exchange. The  next  contention is under Arts. 19(1) (f) and  (g)  and also  31 of the Constitution.  The petitioners contend  that the whole export programme in respect of sugar amounts to an infringement  of their fundamental Fights under Arts.  19(1) (f) and (g), and amounts also to a compulsory acquisition of their  property without payment of compensation.  The  peti- tioners  analyse  the scheme of the Act, and state  that  it amounts to taking sugar from owners for sale abroad at  such price as it may fetch, the owners being paid when such money is  received,  after deducting the expenses  of  the  export agency  and the cost of export.  They state that the  owners stand  to  lose, because, admittedly, sugar is going  to  be exported at a loss, and the loss is to fall on the owners of factories.   They  further state that if the  necessity  for foreign exchange was felt, the’ loss entailed in the earning of  foreign  exchange should be borne by  Government  or  be distributed among all industries, or at least among all  the sugar producers in the country.  It is urged that the Act is

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an  unreasonable restriction upon the fundamental rights  to hold,  acquire,  and  dispose of property and  to  carry  on occupation, trade or business. In  reply,  the learned Attorney-General on  behalf  of  the Union  as  well as the Directorate of Sugar  refers  to  the negotiations which took place between the Government and the sugar industry and the arrangements which were made to  save owners  of factories from the loss which is inevitable as  a result of this export programme.  We were taken through  the various Control Orders which were passed by Government under the  Essential Commodities Act about this time,  fixing  the price  of  sugar for internal consumption.   In  particular, reference  is  made  to the  Sugar  (Control)  Order,  1955, Notification  No. G. S. R. 661/ ESS.  Com/Sugar  dated  July 30,  1958.  It is pointed out that by that Notification  the price  of  sugar was increased by 50 nP. per  maund  on  all internal sales                          55 to enable the factories giving their export quota to  recoup themselves  for  the loss, which might be entailed.  It  was anticipated that the loss would be recouped if there was  an increase  of  50  nP. per maund in the price  of  sugar  for internal consumption and the export quota was fixed at 2-1/2 per cent. of the total production of a factory for  1957-58. The loss, it was expected, would be more than set off by the excess  price which the producers would be able to  get  for every  20 maunds sold for internal consumption.  It is  also pointed  out  that Government at that time did not  wish  to take over the work of export on itself and specified as  the export  agency, the Indian Sugar Mills Association,  a  body composed of 95 per cent. of the sugar mills in the  country. The learned Attorney General also points out that more  than 95  per cent. of the mills have stood by  this  arrangement, and did either supply their quota of sugar or sold it in the internal market and made available the money for purchase of sugar  for export. only a few mills in the country  resorted to  these  devices to get out of the  commitment  which  the industry as a whole had entered into.  The learned Attorney- General  also  contends that the  petitioners  had  obtained favourable prices for sale of sugar in the country but  were not  willing to honour their other commitments which,  after the agreement of the sugar industry, were given  legislative form. Learned counsel for the petitioners contends that the  vires of  the Act should be considered without reference to  other circumstances such as the agreements, price adjustments  and price   control,   as  they  have  no   bearing   upon   the resonableness of the legislation.  In State of Madras v.  V. G.  Row  (1),  this  Court laid down  that  in  judging  the resonableness of a restriction upon fundamental rights,  the surrounding  circumstances  can be looked  into.   Patanjali Sastri, C.J., observed as follows: "  It is important in this context to bear in mind that  the test,  of  reasonableness, wherever  prescribed,  should  be applied to each individual statute impugned, (1)[1952] S.C.R. 597, 607. 56 and  no  abstract standard, or general  pattern  of  reason- ableness  can be laid down as applicable to all cases.   The nature  of  the right alleged to have  been  infringed,  the underlying  purpose of the restrictions imposed, the  extent and  urgency of the evil sought to be remedied thereby;  the disproportion  of the imposition, the prevailing  conditions at the time, should all enter into the judicial verdict.  In evaluating  such  elusive  factors  and  forming  their  own

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conception  of what is reasonable, in all the  circumstances of a given case, it is inevitable that the social philosophy and  the scale of values of the judges participating in  the decision  should  play an important part, and the  limit  to their  interference with legislative judgment in such  cases can  only be dictated by their sense of  responsibility  and self-restraint   and  the  sobering  reflection   that   the Constitution  is meant not only for people of their  way  of thinking  but for all, and that the majority of the  elected representatives  of  ’the people have,  in  authorising  the imposition  of  the  restrictions,  considered  them  to  be reasonable." In  Virendra  v. The State of Punjab (1), S. R.  Das,  C.J., again  reaffirmed this approach.  See also Arunachala  Nadar v. State of Madras (2). It  is, however, contended that though one can look  at  the surrounding  circumstances, it is not open to the  Court  to examine  other  laws on the subject, unless  those  laws  be incorporated  by  reference.   In our  opinion,  this  is  a fallacious    argument.    The   Court   in   judging    the reasonableness of a law, will necessarily see, not only  the surrounding    circumstances   but    all    contemporaneous legislation  passed  as  part  of  a  single  scheme.    The reasonableness of the restriction and not of the law has  to be  found  out,  and if restriction is  under  one  law  but countervailing advantages are created by another law  passed as  part of the same legislative plan, the Court should  not refuse to take that other law into account. The  existence  of  such  other  law  is  not  difficult  to establish.   The Courts can take judicial notice of it.   As was laid down by the Privy Council in Attorney-General (1) [1958] S.C.R. 308, 318. (2) 1959 S.C.J. 297, 299-301. 57 for Alberta v. Attorney-General for Canada(1), the Courts in determining the effect of legislation, do take into account, it  any  public general knowledge of which the  Court  would take judicial notice, and may in a proper case require to be informed   by  evidence  as  to  what  the  effect  of   the legislation  will  be.   Clearly, the  Acts  passed  by  the Provincial  Legislature may be considered, for it  is  often impossible  to  determine  the  effect  of  the  Act   under examination  without  taking  into  account  any  other  Act operating, or intended to operate, or recently operating  in the Province." No doubt, this was laid down in a case falling within ss. 91 and  92  of the British North America Act, but  the  general proposition  is equally applicable where the effect  of  the legislation on those governed by it has to be measured.   In the  same  connection,  their  Lordships  looked  into   the historical  background  of  legislation  to  find  out   the materials  which were considered before the legislation  was promoted  in  the legislature.  See also Ladore  v.  Bennett (2).   This  Court  also in Arunachala  Nadar  v.  State  of Madras(3),   examined  the  ’  historical  background’   and discovered  the object of the Act, " from the  circumstances under which it was passed." That  other contemporaneous legislation passed as part of  a legislative  plan can be examined was clearly laid  down  by the  Privy  Council in Pillai v. Mudanayake  (4).   In  that case,  the question was whether the Ceylon  Citizenship  Act (18  of  1948)  and  the  Ceylon  (Parliamentary  Elections) Amendment  Act (48 of 1949) were valid, or were ultra  vires the  Ceylon  Parliament, being void under s.  29(2)  of  the Ceylon  (Constitution  and Independence) Order  in  Council,

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1946  (as  amended).  Under the first two Acts,  the  Indian Tamils  were denied as a community, the right  of  franchise unless  they came within the terms of the first  Act.   They were  thus subjected to disabilities and restrictions  which were prohibited by (1)  (1939) A.C. 117, 130. (2)  (1939) A.C. 468, 477. 8 (3)  1950 S.C.J. 297. 299-301- (4)  (1953) A.C. 514. 58 s.   29(2)  of the Order-in-Council.  During the  course  of arguments,  their Lordships’ attention was drawn to a  later Act,   intituled   the  Indian   and   Pakistani   Residents (Citizenship) Act (3 of 1949), under which the Indian Tamils and others were entitled to get themselves registered as the citizens  of Ceylon on proof of sufficient  connection  with Ceylon.  It was argued by Mr. Pritt, Q.C., before the  Privy Council that the later Act could not be read to justify  the earlier  Act, because if the impugned Citizenship  Act  were bad  when  it was passed, it could not be  brought  back  to light’  by  the  enactment of  the  subsequent  Act.   Their Lordships  did not accept this argument and read  the  later Act with the previous.  They observed: "It was argued that sections 4 and 5 of the Citizenship  Act made it impossible that the descendants, however remote,  of a person who was unable to attain citizenship himself  could ever  be able to attain citizenship in Ceylon no matter  how long they resided there, but their Lordships’ attention  was subsequently  drawn  to the Indian and  Pakistani  Residents (Citizenship)  Act, No. 3 of 1949, by which an Indian  Tamil could  by an application obtain citizenship by  registration and thus protect his descendants, provided he had a  certain residental qualification.  It was suggested on behalf of the appellant  that  this  Act might itself be  ultra  vires  as conferring a privilege upon Indian Tamils within s. 29(2)(c) of the Constitution Order-in Council, and that therefore  it was inadmissible to rebut the inference that the legislature had intended by, the Citizenship and Franchise Acts to  make Indian  Tamils liable to disabilities within the meaning  of s.   29(2)(b),  but  their  Lordships  cannot  accept   this argument.  If there was a legislative plan the plan must  be looked  at as a whole, and when so looked at it is  evident, in  their Lordships’ opinion, that the legislature  did  not intend  to prevent Indian Tamils from attaining  citizenship provided  that  they were sufficiently  connected  with  the island.  " It  is not necessary to speculate as to the remedies of  the sugar   dealers   if  the  Sugar  Control  Order,   or   the notification were varied or abrogated in future.  The 59 reasonableness of the restriction is to be judged today  and in the context of the circumstances now existing. It cannot but be accepted that the Government made  adequate arrangements to recoup the sugar industry for the loss which it  might  suffer  in giving, the export  quota.   For  that purpose,  though  the export quota was fixed  at  2-1/2  per cent. of the total quantity produced by a factory, the  loss which  was expected to be Rs. 10 per maund was  spread  over the  remaining  sugar  to be sold in  the  country  and  was recouped  at 50 nP. per maund.  We are unable to accept  the plea that the petitioners were not able to sell sugar at the controlled  price,  because the price -Was fixed  too  high. Learned counsel for the petitioners contend that by fixing a ceiling  there  is no guarantee that the commodity  will  be

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sold at the ceiling price and not at a lower rate.  It is  a well-known proposition that when commodities are  controlled by  fixation  of  price, the commodities sell  only  at  the controlled  price and not less.  Economists have  complained that the worst fault of price control is that the price does not fall below the controlled rate.  There is nothing in the record  of the case to show that the Mills were not able  to sell their sugar at the controlled price. We  are  satisfied  that  the object of  the  Act  does  not infringe  the  fundamental rights of  the  petitioners.   To prevent   any  loss  to  the   petitioners,   countervailing additional  prices  were  allowed  on  sales  of  sugar  for internal consumption.  The petitioners did not stand to lose ultimately. The quota was fixed at 2-1/2 per cent. of  their total  production,  and it is inconceivable  that  they  are unable  to  sell  sugar  in  the  open  home  market.   This suggestion  of the petitioners that they are unable to  sell sugar at the controlled price has not been substantiated  by the  production of a single document to show what they  held in stock and what they had sold.  The balance sheet produced by the S. P. B. Mills shows that they were able to sell more than a lakh of bags in eight months, as against the quantity of 4,079 bags for export. It  is  obvious that the plea that the Mills are  unable  to sell sugar at the controlled price is a mere sham. 60 Indeed,  an examination of the correspondence in  the  first case  clearly demonstrates that the Mills were devising  one excuse or another to avoid the liability to supply the quota of  sugar.  First, they raised the contention that they  did not  have  the  requisite  grade.   Then  they  raised   the contention that they could not sell sugar.  Thereafter  they asked for supply in installments, and when instalments  were fixed,  they put forth the excuse of there being  no  wagons available.   They  next  urged that the  Bank  was  charging interest,  and  that interest should be  waived  before  the documents would be retired.  When interest was waived,  they filed  the petition in this Court.  In these  circumstances, in  our  opinion, there can be no ground  for  holding  that there has been an infringement of the fundamental rights  of the  petitioners.   The restriction  was  not  unreasonable, because  arrangement  was  made to save the  owners  of  the factories from loss, and the loss entailed by the export  of sugar  was to be borne by the consumers in India and not  by the producers. There is one more circumstance which may be considered.  The foreign  export served the national interest by  stabilising the sugar market so that the production of sugarcane may  be maintained  at  a  reasonable  level.   It  also  stabilised national economy by earning foreign exchange.  The loss,  if any,  was  comparatively  small and  was  spread  over  many factories.   Apart  from the very real  possibility  of  its being recouped by sales in the country, the loss itself  was so small as not to amount to an unreasonable restriction. The petitioners next challenge the Act in its parts to  show that there is infringement of fundamental rights or, in  the alternative,   compulsory  acquisition  of  their   property without  compensation.  In this connection, ss. 5 to  9  are challenged.   Section 5 only permits the Central  Government to fix the quota leviable from different factories.  If  the object  and purpose of the Act is valid and also is  in  the public  interest, there being no disadvantage to the  owners ultimately, s. 5 which fixes the quota for export from sugar produced by a factory cannot be challenged separately. 61

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Section  6  Makes it incumbent on the owner to  supply  that sugar on demand and further provides that after delivery  of sugar, the owner retains no right except to receive  payment therefor  under  s.  9. This section is  criticised  on  the ground  that  delivery  of goods and payment  of  the  price should  be concurrent conditions,’ that is to say, that  the buyer  should  be  ready and willing to  pay  the  price  in exchange for possession of the goods.  If the Government was buying sugar, the provisions of s. 32 of the Indian Sale  of Goods Act, which is apparently relied upon here, might  have been  invoked.   The  object and purpose of the  Act  is  to export sugar and to divide the receipts less expenses, among the  owners  who  supply sugar  for  export.   The  argument overlooks the scheme that export is made by a Central Agency for the industry as a whole, and the prices obtained  abroad are payable, and they are less than those at which sugar  of various  grades sells within the country.  The section  does not suffer from any infirmity, if the object and purpose  of the   Act   is,  as  has  been  found   above,   valid   and constitutional.   It must not be forgotten  that  during-the time payment was due, the owners were getting an  additional 50 nP. on every maund sold by them in the country.  Deferred payment is not deprivation of property, nor an  encroachment upon  fundamental  rights.   The affidavits  show  that  the entire  quota of 50,000 tons has been exported, that it  has earned  Rs.  2-4 crores in foreign exchange,  and  that  the exporters have been paid except for a small balance. Section  7 is the penalty section.  We  heard  considerable argument  as  to whether the section would apply to  a  case where no delivery was at all made, in view of the words: "   where  sugar delivered by any owner falls short  of  the export  quota." No  action  has yet been taken against the Mills  under  the section;  nor has -any penalty been imposed.   The  question whether the section is ultra vires the legislature need  not be considered here. Section  8  deals with export of sugar or its  sale  by  the owner or the export agency.  It is stated that the 62 section deals with sugar delivered to the export agency, and here  there  was no sugar delivered.  The  first  subsection deals  with  export, and the export agency can  only  export sugar delivered to it.  The second subsection authorises the export  agency  to sell the sugar for reasons given  in  the first sub-section.  It also authorises the export agency  to permit  the  owner  to sell sugar in his  custody.   In  the present cases, there was a demand for delivery of the  sugar of  the  quota,  and that has not  been  met.   Whether  the petitioners have exposed themselves to any penalty can  only be considered when penalty is actually imposed on them. The  condition  that the sale-proceeds are  payable  to  the export  agency is perfectly valid, regard being had  to  the scheme of the export and the advantage allowed on all  sales in India.  The owners having obtained that advantage  cannot claim  to  keep  the proceeds of such sales,  by  which  the export  policy is to be run.  Out of the 50,000 tons,  about half  was  sold in India, and with the  sale-proceeds  other sugar  was  bought  and  exported, and  this  would  not  be possible  if the export agency were required to make a  spot cash payment. Section  9 provides how payments to owners are to  be  made. Since the export was by a non-profit-making agency  composed of the sugar industry, it is obvious that the payments could not  be  made forthwith.  As explained already,  the  owners received  payment after the sale prices were  received  from

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abroad.   Necessary deductions of expenses have to be  made, and  the  proceeds  are then distributed.   No  doubt,  such payment is likely to be somewhat delayed but looking to  the small  quantity  involved (i.e. not more than 20  per  cent. under the Act and in actuality, only 2-1/2 per cent.) it was not likely to make it very hard for the owners, who were  in the  meantime breaking this loss at the rate of 50  nP.  for every maund of sugar sold in India.  In our opinion, none of the  sections  considered here, even viewed  separately,  is ultra vires. The  petitioners did not challenge the action taken  by  the export  agency as being contrary to the Act.   No  ,argument can  be  considered in view of the want of a  plea  to  this effect in the two petitions.  In the petition 63 by  the  S. P. B. Mills, the petitioner did not  invite  any decision on the correctness of the demand for the additional excise  duty,  because  no  such duty  has,  in  fact,  been demanded.   The  main contention of the Mills was  that  all sugar was pledged with banks.  The pleadings on this part of the  case  are  far  from clear  or  sufficient.   The  only reference  is to a letter, which is insufficient.   However, in view of the fact that learned counsel reserved this point to be raised for exemption from payment of additional  duty, we say nothing about it. The  result  is  that  both  the  petitions  fail,  and  are dismissed with costs. SARKAR  J.-I  think these two applications  should  succeed. They  raise the question whether the Sugar Export  Promotion Act, 1958 is invalid as imposing an unreasonable restriction on the petitioners’ right to carry on their trade. Some   of   the   petitioners  are   owners   of   factories manufacturing  sugar  by  a process called  the  vacuum  pan process  and they carry on business as manufacturers of  and dealers  in sugar.  For the purposes of this judgment  these persons  may be taken to be the petitioners.  The  principal respondent in these applications is the Government of India. The other respondent is the Indian Sugar Mills  Association, an  association of manufacturers of sugar by the vacuum  pan process. On  June  27,  1958,  the  Government  had  promulgated   an Ordinance.   The  impugned Act was passed on  September  16, 1958  repealing the Ordinance and reenacting its  provisions and  also providing that anything done under  the  Ordinance would be deemed to have been done under the Act as if it had come into force when the Ordinance had been promulgated. As  appears  from  its preamble, the  Act  was  intended  to provide  for the export of sugar in public interest  and  it set up a machinery for that purpose.  I will summarise  here the  main  provisions of the Act.  Section  3  empowers  the Central  Government  to  specify a  company  or  other  body corporate  as the export agency to perform the functions  of that agency under the Act. 64 The respondent Indian Sugar Mills Association wag  specified as  the  export  agency  under  this  section.   Section   4 authorises  the  Central Government to fix the  quantity  of sugar  that  may  be exported, during any  period,  but  the quantity  so  fixed for a year is not to exceed  twenty  per cent.  of the quantity of sugar produced in India  upto  the month of October in that year.  Section 4 also provides that " in fixing such quantity the Central Government shall  have regard to -(a) the quantity of sugar available in India, (b) the  quantity  of  sugar which, in  its  opinion,  would  be reasonably  required  for  consumption  in  India,  (c)  the

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necessity for exporting sugar with a view to earning foreign exchange  in  the public interest." Section 5  requires  the Central Government to apportion the quantity fixed under  s. 4  among  the  owners of factories producing  sugar  by  the vacuum pan process in proportion to the quantity produced or likely  to  be  produced by them  respectively,  during  the season.   The  quantity so apportioned to  each  factory  is called  its  export quota.  Section 6  provides  that  every owner  of  a factory shall, on demand by the  export  agency deliver to it sugar upto its export quota and on delivery  " the  owner shall retain no rights in respect of  such  sugar except  his right to receive payment therefor under  section 9." Section 7 makes provision for an additional excise  duty being  levied  in certain circumstances on the  quantity  of sugar by which the sugar delivered by the owner of a factory falls short of its export quota.  Section 8 states that  the export  agency  shall  export the  sugar  delivered  to  it, provided that in certain circumstances specified, the export agency may sell that sugar in India and may if it thinks fit purchase other sugar for export and for this purpose  permit the owner to sell the whole or part of its export quota at a price approved, on condition that the sale proceeds are paid to it.  The provisions of s. 9 are important and will be set out  later.   It  is not necessary to  refer  to  the  other provisions of the Act. Soon after the Ordinance had been promulgated the Government started  taking  action under it.  By a  notification  dated June 27, 1958, 50,000 tons of sugar 65 was  fixed under s. 4 as the total quantity for  export  for the period ending October 31, 1958.  Export quotas were duly fixed for all factories including those of the  petitioners. The  petitioners were thereafter asked by the export  agency to sell the sugar and pay the saleproceeds to it.  This they failed  to  do.   It is said by  the  respondents  that  the petitioners  were also asked to deliver the sugar  and  this also  they  failed to do.  The petitioners  set  up  various reasons  justifying  their failure to sell  or  deliver  the requisite  quantities of sugar.  It is unnecessary to  refer to  these  reasons  for  if  the  Act  is  invalid,  as  the petitioners  contend  the orders could not be  made  and  no question would arise as to whether the petitioners had valid reasons  for  not carrying them out.  It  appears  that  the export  agency felt that the petitioners were neither  going to  sell the sugar and pay the sale proceeds nor to  deliver the  sugar and it thereupon pointed out to  the  petitioners that  they were by their conduct exposing themselves to  the risk of having to pay the additional excise duty under s. 7. It  was then that the present applications  for  appropriate writs  restraining the respondents from taking  steps  under the Act were launched by the petitioners on the ground inter alia that the Act was invalid as it unreasonably  restricted the  petitioners’  right  to carry on their  trade.   I  now proceed to examine the validity of this contention. From the provisions of the Act earlier set out, it is  quite clear that it requires the owner of a sugar factory to  part with a portion of the produce of his factory in exchange for an amount to be fixed under the provisions of s. 9. The  Act therefore restricts his freedom of trade; it takes away  his right  to  trade with the whole of his  merchandise  in  any manner  he  likes.   The question is,  is  such  restriction reasonable ? It is necessary now to set out the terms of s. 9 of the  Act which  fixes  the amount which a manufacturer  of  sugar  in entitled  to  receive in respect of the sugar  delivered  by

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him.   Only sub-ss. (1) and (2) of this section need be  set out and they are as follows: Section  9.-(1) The export agency shall, at such time as  it thinks fit, make to the owners who have 9 66 delivered sugar to it under this Act, payments determined in accordance  with the provisions hereinafter in this  section contained. (2)From the total sale-proceeds in respect of the quantity fixed for export under section 4 for any year,  there  shall be  deducted  the total expenditure incurred by  the  export agency   in  respect  of  the  sugar  whether  by   way   of administrative expenses or otherwise, and the balance  shall be  apportioned  among  the  owners  in  proportion  to  the quantity of sugar delivered by then respectively during that year. The substance of the matter then is that an owner of a sugar factory  gets  in exchange for the sugar  delivered  by  him under  the Act, a proportionate share of  the  sale-proceeds less the expenses.  He has no hand in deciding at what price the  goods would be sold by the export agency.  If they  are sold  for  a very low price, he has no  right  to  complain. Neither  has  he  any power to control  the  expenses.   The exchange value that a sugar manufacturer is entitled to  get under the Act for sugar delivered by him, therefore, depends entirely on the export agency.  Again, under subsec. (1)  of s.  9, the export agency need pay the manufacturer  only  at such  times  as it thinks fit.  It may be difficult  to  say that all these terms are reasonable. However that may be, there is another aspect of the question which  in  my view decides it.  It is quite  plain  that  as things  are, sugar can be sold abroad only at a loss.   That clearly appears from the materials on the record and is  not indeed disputed.  I think it enough to refer to the  Objects and  Reasons of the Act and to a statement in the  affidavit of  Shri K. P. Jain, Chief Director, Directorate  of  Sugar, affirmed  on  February 13, 1959 and filed on behalf  of  the Government,  to  show  that the Act  contemplated  that  the export  of sugar made under it would result in a  loss.   In the Objects & Reasons of the Act it is stated, "With a view to earning foreign exchange it is necessary  to promote  export  of  sugar.  The export  of  sugar  however, involves  a  loss,  even if excise duty and  cane  cess  are remitted." 67 In paragraph 22 of Shri Jain’s said affidavit it is stated, "I  further say that ... the entire scheme envisaged in  the Act  depends on the pooling of the losses on export  by  all sugar  factories  in India, in proportion  to  their  export quota." We  then get to this that on the respondents’ own  case  the exports  under  the  Act can be made only at  a  loss.   The result therefore is that the Act compels the petitioners  to part with a portion of their merchandise at a loss.  Can the restrictions  so  put on the petitioners’ trade by  the  Act then be said to be reasonable?  I conceive it is  impossible to do so.  It is said that the Act was passed with a view to earn  foreign  exchange by export of sugar.   Indeed  so  it appears  from the Objects & Reasons of the Act  earlier  set out and the provisions of s. 4 earlier quoted.  I will agree that  earning  of  foreign exchange  is  essential  for  the country.  But I do not see that justifies the enactment of a legislation  which imposes a loss on a  sugar  manufacturer. It is not as if foreign exchange could not be earned without

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inflicting loss on the manufacturers of sugar.  That  indeed is  not  the respondents’ case.  The loss  might  have  been avoided  if for example, the exports were made by the  grant of a subsidy, a course in fact adopted by the Government  in the  year 1951-52.  It has not been said that there was  any difficulty in granting the subsidy for the exports under the Act.  A reasonable restriction on a citizen’s right to carry on  his trade which alone is permitted by Art. 19(6) of  the Constitution, must be, as Mahajan, J., said in Chintaman Rao v.  The  State of Madhya Pradesh(1),  a  restriction  "which reason dictates", which " unless it strikes a proper balance between the freedom guaranteed in article 19(1) (g) and  the social  control permitted by clause (6) of article 19,  must be  held to be wanting in that quality." Here I do not  find the  balance struck nor the infliction of the loss a  course which  reason  dictates.  The loss  which  the  restrictions imposed by the Act on the petitioners’ trade caused to them, was  by  no means such as could only have  been  avoided  by incurring a greater loss. (1)[1950] S.C. R. 759, 763. 68 I  also  think  it clear that an  object  however  laudable, cannot by itself and without more, make a restriction put on a  citizen’s  right to carry on a trade for  attaining  that object,  reasonable.  A restriction on a person’s  right  to carry  on  his  trade does  not  become  reasonable,  simply because  it had been imposed on him to achieve an object  of great necessity and undoubted merit.  The reasonableness has to  be judged in all the circumstances of the case  and  the object  to  be attained is only one of  such  circumstances. This, in my view, is too clear to require elaboration. It is not necessary for me to pursue the matter further  for it is not the respondents’ contention that the  restrictions are reasonable notwithstanding that they cause loss.  On the other hand, the contention of the respondents is for reasons to  be presently stated that the Act really caused  no  loss and  that being so the restrictions imposed by it cannot  be said  to  be unreasonable.  I proceed now  to  consider  the respondents’ reason for saying that the Act imposes no  loss on the sugar manufacturers including the petitioners. It  is first said that though the exports result in  a  loss now,  it  may  in future bring in  profits.   That  hope  is clearly  only a pious hope.  And what is more, it is  not  a hope  which has even been expressed in the affidavits  filed on  behalf  of  the respondents.   On  the  contrary,  these affidavits  make it perfectly plain that in the  foreseeable future  there is no hope of export of sugar being made at  a profit.   Indeed,  it is said in these affidavits  that  the scheme  of  the Act is based on the pooling  of  the  losses caused by the exports made under it.  It is hardly necessary to  point  out  that if the exports  could  be  expected  to produce a profit in the near future, the coercive  machinery of  the  Act for making the exports  would  be  unnecessary. There is no basis whatever for saying that in some years the export  may result in a profit.  Indeed on  the  respondents own affidavits it is not open to them to say that they  hope that it may be possible in future to make a profit on export of sugar. Then it -is said that the export quota fixed for 1957-58  is only 2-1/2 per cent. of the production of each                              69 factory.   The point sought to be made is  that,  therefore, the  amount of the loss would be very small.  Now 2-1/2  per cent. of the production of the factory of the petitioners in Writ Petition No. 9 of 1959 is 12,533 maunds.  It is  stated

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by  the respondents in the supplementary affidavit  of  Shri Jain  affirmed  on March II,’ 1959, that on the  export  the loss  will  be in the region of Rs. 10 per maund.   On  this basis the loss to the petitioners in that petition would  be Rs. 1,25,530.  The loss to the petitioners in Writ  Petition No.  14 of 1959 would be slightly less.  I for myself  would hesitate to say that losses in such amounts are  negligible. The  export quota for 1958-59 has been fixed at 5 per  cent. of  the  production.   Naturally, the  loss  would  be  much larger.   The  Government have the right under  the  Act  to increase the quota upto 20 per cent.  The loss if the  quota is  increased  to the utmost would be  formidable.   In  the cases  of factories with larger production the losses  would be much larger than the petitioners’ losses.  And of, course the  reasonableness of the restrictions imposed by  the  Act has  to  be tested generally and without  reference  to  any particular sugar manufacturer.  I am also unable to agree to the  proposition  that the reasonableness of  a  restriction depends  on  the quantum of the loss it  produces.   Even  a small  loss may conceivably make a restriction  causing  it, unreasonable.   The  quantum of the loss  cannot  by  itself decide  the reasonableness of the restriction.  Does  reason dictate that a small loss shall be inflicted ?  Nothing that has been said in this case leads me to hold that. It is then said that the loss caused by the Act was recouped by an order made by the Government increasing the home price of  the  sugar  and  therefore  in  fact  the  manufacturers suffered no loss.  The process of recoupment was thus stated in paragraph 14 of the said main affidavit of Shri Jain: "  The incidence of loss on the first quota of  50,000  tons fixed  by the Government was assessed and when  the  Central Government fixed the price of sugar for internal consumption under  the provisions of the Essential Commodities  Act  and the Sugar (Control) 70 Order,    1955,  they gave adjustment in price by adding  50 nP.  per  maund  in  the  ex-factory  prices  of  sugar  for internal sales." It  is said that the increase so made in the home  price  of sugar  would  completely wipe out the loss incurred  on  the export under the Act of 2-1/2 per cent. of the produce of  a factory.  I will accept this as a correct estimate.  I  will also  ignore the petitioners’ contention that they  had  not been  able  to  sell the sugar in the  home  market  at  the increased price. The argument then is that though the impugned Act produces a loss,  that loss can be ignored because the  Government  has taken  steps  under  another  Act  to  recoup  the  loss  so occasioned.   It  is  said that in  the  circumstances  that prevail,  namely,  the  increase  in  the  home  price,  the restrictions  imposed by the impugned Act cannot be said  to be  unreasonable,  for on the whole they occasion  no  loss. This  is indeed the principal contention of the  respondents to establish that the restrictions are not unreasonable. Now a reference to the Essential Commodities Act under which the home price was increased has to be made.  It was  passed in  the  year  1955.  It was not intended  to  earn  foreign exchange; indeed it had nothing to do with foreign  exchange or  with helping the sugar industry.  Section 3 of this  Act provides:  "Section  3.  (1) If the Central Government is  of  opinion that  it is necessary or expedient so to do for  maintaining or  increasing  supplies of any essential commodity  or  for securing  their equitable distribution and  availability  at fair  prices,  it may, by order, provide for  regulating  or

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prohibiting the production, supply and distribution  thereof and trade and commerce therein. (2)Without  prejudice  to  the generality  of  the  powers conferred  by sub-section (1), an order made thereunder  may provide (c)  for  controlling  the  price  at  which  any  essential commodity may be bought or sold." Sugar  is an essential commodity-within the meaning of  that term in the Act.  Under the powers conferred 71 by  the  section  quoted  above, on  August  27,  1955,  the Government passed an order called the Sugar (Control) Order, 1955.  Clause 5 of that order provides that, (1)The  Central  Government  may from  time  to  time,  by notification  in the Official Gazette, fix the price or  the maximum    price    at    which    any    sugar    may    be sold...’              .....   Such price  or  maximum  price shall  be fixed ... with due regard to the price or  minimum price  fixed  for  sugar cane,  manufacturing  cost,  taxes, reasonable  margin of profit for producer and/or trade,  and any incidental charges. (2)Where the price or the maximum price has been so  fixed no person shall sell or purchase............ any sugar at  a price in excess of that fixed under subclause (1)." It  was  under  this  Order that  the  Government  issued  a Notification  on July 30, 1958, enhancing the home price  of sugar  by  50 nP. per maund which it is said wipes  out  the loss caused by the impugned Act. I will assume that the Notification increasing the price was issued  with the object of recouping the loss caused by  the impugned Act as stated in the affidavit of Shri Jain, though the Notification itself does not say so.  The question  then is,  is the increase in the home price of sugar made by  the Government  by a Notification issued under the powers  given to it by another Act which has the effect of wiping out  the loss  inflicted  by the impugned Act, a  circumstance  which makes the restrictions imposed by the latter Act  reasonable ? It  is  said that this is so ; that in judging  the  reason- ableness  of  the  restriction imposed by  one  Act,  it  is permissible  to  consider  an order made  by  the  executive Government  under  another  Act.  We were  referred  to  the observations of Patanjali Sastri, C. J., in State of  Madras v. V. G. Rao (1).  The learned Chief Justice there stated at p. 607: "The nature of the right alleged to have been infringed, the underlying  purpose of the restrictions imposed, the  extent and  urgency of the evil sought to be remedied thereby,  the disproportion of the (1)[1952] S.C.R. 597. 72 imposition,  the prevailing conditions at the  time,  should all enter into the judicial verdict." I respectfully agree with all that the learned Chief Justice said, but I am unable to see that this advances the  present contention  of the respondents.  What is really relied  upon is  that portion of the learned Chief Justice’s  observation where  he  said that the prevailing conditions at  the  time should  be  taken in into account.  Support is  sought  also from another observation of the learned Chief Justice at the same  page  which  I have not quoted,  to  the  effect  that reasonableness has to be decided in all the circumstances of a  given, case.  It is said that the  prevailing  conditions and  the circumstances of the case would include  the  order increasing the home price of sugar made under the  Essential

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Commodities Act.  I am entirely unable to agree that such  a thing was in the contemplation of the learned Chief Justice. The  case before him was completely different.  He  was  not considering the reasonableness of one Act by reference to an order  made  by the Government under another.   The  learned Chief  Justice  was considering whether a  certain  Act  had placed unreasonable restrictions on the fundamental right to form  associations.   The Act had given the  Government  the right  to declare an association an unlawful association  on certain  specified  grounds.  In  holding  the  restrictions imposed  by the Act unreasonable, the learned Chief  Justice observed at p. 608, " The formula of subjective satisfaction of the Government or of its officers, with an Advisory Board thrown  in to review the materials on which  the  Government seeks to override a basic freedom guaranteed to the citizen, may be viewed as reasonable only in very exceptional circum- stances  and within the narrowest limits and cannot  receive judicial  approval  as  a  general  pattern  of   reasonable restrictions  on  fundamental rights." I do not at  all  see that  the  respondents  can derive  any  support  for  their present  contention  from anything  that  Patanjali  Sastri, C.J., said. I entirely agree that in deciding the reasonableness of  the restrictions  imposed  by  a  statute,  all  the  prevailing conditions and all the circumstances of the case                              73 have  to be considered.  But I am wholly unable to see  that the  conditions or circumstances, which seem to me  to  mean the same thing, can include that which depends solely on the arbitrary discretion or generosity or the sense of fair play of another.  That, in my view, is not permissible.  That  is not a reasonable test.  It is not reasonable to say that the validity  of a statute would depend on something  which  the executive  Government  may  do or undo  at  any  time.   The statute  imposing the restrictions does not give  any  right that   the  Government  would  do  something  to  make   the restrictions  reasonable.   How can such  a  restriction  be reasonable   ?  How  can  an  Act  which  is   prima   facie unreasonable-and  it  is  on that  basis  that  the  present argument   arises-be  held  to  be  reasonable  because   of something  to which it gives no right and the  existence  of which  depends  entirely  on the  choice  of  the  executive Government ? Is it to be said that the restrictions  imposed by a statute are reasonable because the Government has, when the  question  cropped up, done something  which  makes  the restrictions  reasonable though it was not bound to do  that and  though it is free to undo that which it has, done ?  To say  that would be to say that the Act is valid because  the Government  has  for the time being chosen to  make  it  so. This seems to me to be against all known principles of law. Furthermore,  if  the  respondents contention  was  right  a statute  would then be legal when the Government chooses  to do a thing and illegal when it undoes it and so on from time to  time  at the choice of the Government.   That  would  be intolerable  in any legal system.  It was said that this  is unavoidable  and  may happen in many cases.   The  following illustration  was  given.  Suppose in  famine  conditions  a statute  was  passed  controlling free  sale  of  foodstuff. Assume that the prevailing conditions made the  restrictions put  on  free  sale reasonable.   Later,  normal  conditions returned  which  made  the control  of  sales  of  foodstuff unnecessary  and  therefore  unreasonable.   The  Act  would thereupon  become invalid.  But further suppose  that  after sometime the famine conditions returned.  The 10

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74 validity  of the Act would then be restored.  Hence,  it  is said  that there would be nothing unusual in the  Act  being valid  and  invalid from time to time.  But it seems  to  me that this is no analogy.  The famine conditions imagined  do not  depend on the choice of the Government.   So,  assuming that  the appearance and disappearance of famine  conditions from time to time made the Act once valid and again invalid- as  to which I do not feel called upon to say  anything  now that  does  not justify the adoption of a rule  which  would make  the  validity of an Act depend on the  choice  of  the Government.   If fluctuating validity is the result  in  one case,  it  does not follow that the same  consequence  would occur in’ another and a totally different case. Again  the validity of the Notification enhancing  the  home price  seems to me to admit of grave doubt.  I find  nothing in the Essential Commodities Act nor naturally in the  Sugar (Control) Order, 1955, which would authorise the  Government to  increase the price simply for the sake of  recouping  to the  manufacturers the loss caused to them by  the  impugned Act.  I have earlier set out the relevant provisions of  the Essential  Commodities Act.  The power to fix the  price  of sugar  given thereby can be exercised, " for maintaining  or increasing  the supplies of any essential commodity  or  for securing  their equitable distribution and  availability  at fair prices".  That power cannot therefore be exercised  for recouping loss caused to a manufacturer by another Act,  the object of which is to earn foreign exchange.  If it is  said that the Notification was issued for the purposes  mentioned in  the  Essential  Commodities  Act,  it  becomes  at  once apparent,  that the price fixed under it has no relation  to the impugned Act and may have to be altered irrespective  of the  latter  Act.   I  find it  impossible  to  say  that  a Notification  fixing the price of sugar on different  condi- tions   can   be  taken  into  account   in   deciding   the reasonableness  of  the  impugned  Act  which  is   entirely unconnected with these considerations. For  all  these  reasons  I am  unable  to  agree  that  the Notification increasing the home price can be taken 75 into  consideration  in deciding the reasonableness  of  the restrictions  imposed by the impugned Act.  It follows  that these restrictions do cause loss to the sugar  manufacturers and there is nothing to show that the restrictions are  even so reasonable. Then  it is said that the Indian Sugar Mills Association  of which  the petitioners are said to be members,  wanted  that arrangements  for export of sugar abroad be made and it  was for  that reason that the impugned Act was passed.   It  was suggested  that  the  Association agreed to  the  Act  being passed.   It  is therefore contended that  the  restrictions imposed by the Act must be presumed to be reasonable and the petitioners  cannot be heard to say that they are not.   Now the  request  by or the agreement of the Association  is  of course   not  the  request  by  or  the  agreement  of   the petitioners.   The Association has no authority to bind  the petitioners by any request or agreement.  The fact that  the petitioners were members of the Association if that were so, does  not give the Association the authority.  There  is  no evidence   that   the  petitioners  had  assented   to   the Association  making the request or the agreement.   For  all that  is  known the petitioners may have  been  against  the Association  making  any request to the Government  to  take steps  for  export or agreeing to the passing  of  the  Act. Therefore,  it seems to me that the petitioners’ rights  are

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not  affected by anything which the Association  might  have done. I  think it right also to say that there is no  material  on the  record  whatever  to lead to the  conclusion  that  the Association  had agreed to the Act being passed in the  form in  which it stands.  And of course it is only the Act  with which we are concerned.  It is true that the Association had suggested  that the Government should take steps for  export of  sugar.   That would appear from the minutes  of  various meetings  annexed  to the affidavits used on behalf  of  the Government.   But  there  is nothing in  these  minutes  nor anywhere  else in the records which would indicate that  the Association wanted that sugar should be exported though that might put the manufacturers to a loss.  The position appears to have been this.  In the year 1951-52 the 76 sugar  manufacturers  were placed in  a  difficult  position because of competition from khandsari and gur manufacturers, who  could  buy sugar cane for their manufactures at  a  low price  in  the open market, while, the  sugar  manufacturers were compelled to buy cane at prices fixed by the Government which were high.  So some of them, as appears from  Annexure "A"  to  Shri  Jain’s said  affidavit,  made  the  following suggestions  to  the Government in March 1952 to  give  them relief : " (a) The price of cane be reduced to Re. 1 per maund. (b)The  sugar manufactured from the lower priced  cane  be ’frozen’  and kept as a national Reserve for Export  or  for such   other  purposes  as  the  Government   may   consider desirable. (c)To  reduce the accumulation of stocks in the  factories and  to make room for further storage, and to liquidate  the stocks  into  cash,  serious efforts  be  made  either  from Government to Government or through trade channels to export out  at  least  2  lakh  tons.   Alternatively,  the   State Governments be asked to take deliveryof  the   quantities from the factories and store them in    their own godowns. (d)  If  there  is  any  ’Profit’  in  the  export  of  such quantities  the  same may be utilised either  for  giving  a ’bonus’  to  the cane growers or in lowering  the  price  of sugar for home consumption." It   is  clear  from  the  suggestions  thus  made  by   the manufacturers  that  they wanted the burden on  them  to  be relieved and export at Government’s cost.  In that year  the Government  in fact permitted an export of 10,000  tons  and gave  a subsidy of Rs. 2 per maund to cover the loss on  the export.   Later in the same year the Government reduced  the price  at which the sugar manufacturers could  purchase  the cane. In  the  years  1952-53  to  1955-56  India  imported  large quantities of sugar and did not export sugar at all. it also appears that during these years the consumption of sugar  in India  was much more than the production.  Hence,  obviously the  need  for the import.  So clearly in  these  years  the sugar manufacturers did not need to                            77 export their sugar.  The respondents do not say that  during these   years   the  sugar  manufacturers  had   asked   for arrangements for export being made. 1956-57 was the year  of the  Suez crisis.  In this year a substantial  quantity  was exported  and large profits could be made because  price  of sugar  in some of the markets abroad had gone up due to  the crisis  caused by the Suez situation.  The proposition  then is  that between 1952-53 and 1956-57 the industry was  doing very   well  and  had  no  need  to  ask  for   Government’s

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intercession to enable it to export. There  is  no evidence that in 1957-58 there was  any  over- production.    The  figures  for  this  year  in  tons   are production-19,75,000,   consumption-20,14,000  and   export- 50,000,  the  figure for export being that fixed  under  the Act.  It appears however that various representatives of the Government and the sugar manufacturers met and decided  upon the idea of exporting sugar for earning foreign exchange  in Government’s  interest and getting a foothold in  the  world market  in  the  interests of  the  manufacturers.   It  was realised  that  the export would result in a  loss  but  the manufacturers agreed to export provided they were allowed to make up the loss from the internal market.  For this purpose the  suggestion  made as appears from annexure  "D"  to  the affidavit of Shri Jain, was as follows: "  The  internal  market will be left free  as  at  present. However  to  provide an element of stability to  the  market releases for internal sale shall be regulated by  Government of India in active consultation with the industry." So  what  the  trade had agreed to was that  they  would  be prepared  to  export sugar provided they were left  free  to recoup  from  the  internal sales the  loss  caused  by  the export.   This  is very different from agreeing to  the  Act which  made  no provision for recouping the  loss  from  the internal sales.  The sugar manufacturers did not approve  of the Act, being con. tent to depend on the Government’s sense of fair play to relieve the hardship caused by it. 78 There remains one other contention to deal with.  It is said that  the restrictions are reasonable since they  result  in stabilising the sugar industry.  Apart from saying that  the Act would stabilise the sugar industry,  the affidavits used on  behalf of the respondents do not show how that would  be done  or that there was any need for it.  From what  I  have earlier  stated it does not appear to me that  the  industry needed  any stabilisation.  The figures given  earlier  show that   production  has  always  been  less   than   internal consumption, excepting for the year 1951-52.  But it appears from one of the annexures to the affidavit of Shri Jain that even  then the difficulty was only temporary.  It  is  there stated :  "  Again  in 1952-53 it was decided to export upto  2  lakh tons.   But only about 10,000 tons could be exported  as  in the  meantime  there was an appreciable rise  in  the  sugar prices  and  the  surplus stock was  consumed  in  the  home market." The estimated figures for the year 1958-59 in tons appear to be as follows: production-- 19,00,000 consumption-21,00,000, export-1,00,000.   It  would  thus  appear  that  the  sugar industry in India has always been stable and did not require any export to make it stable. What I think however puts the matter beyond doubt is s. 4 of the  Act.  Under that section, in fixing the total  quantity of  sugar to be exported in any season regard is to  be  had only  to  the  quantity available  in  India,  the  quantity required  for  consumption  in India and  the  necessity  of earning foreign exchange.  So in deciding the quantity to be exported  no question of stabilising the industry or  prices arises.   Again,  it  is  not  out  of  the  excess  of  the production  over  the internal consumption  alone  that  the exports are to be made.  In fact there has never really been any  excess  of production  over  consumption  requirements. Indeed  it  is plain that if sufficient sugar were  left  to meet  the home consumption, then the increased  price  would not help the industry to recoup the loss.  If supplies  were

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,adequate to meet the demand -the price cannot be forced up. 80 price  fixed  for  sugar-cane,  manufacturing  cost,  taxes, reasonable  margin of profit for producer and/or trade,  and any incidental charges.  In exercise of powers conferred  on the Central Government under s. 3 of the said Act and el.  5 of   the  said  order,  the  Central  Government  issued   a notification  dated  July 30, 1958,  fixing  the  ex-factory price  for  Indian sugar Standard (ISS) D-29 grade.   A  few days  before  the said order was issued i.e.,  on  June  27, 1958, the Central Government promulgated an Ordinance called the   Sugar   Export  Promotion  Ordinance,   and   it   was subsequently  converted  into  an Act (30  of  1958),  which received the assent of the President on September 16,  1958. It  is said that the Central Government in fixing the  price for sugar produced during the season 1957-58, in vacuum  pan sugar factories situate in the areas specified in the  order had taken into account the possible loss the exporters might incur by reason of the application of the provisions of  the impugned  Act.   Shri  K. P. Jain,  Chief  Director  in  the Directorate  of  Sugar  & Vanaspati, Ministry  of  Food  and Agriculture (Department of Food), in his affidavit says that the  ex-factory  ice of sugar per maund fixed  by  the  said order was prie made up of the following items: Average cost of production including margin of profit.             Rs. 22-91 Excise duty.                            Rs. 10-70 Cane cess.                              Rs.1-89 Loss on exports.                   Rs.  0-50                                        ------------           Total                         Rs.36-00                                        ------------- It  is explained therein that the factories are expected  to realise actually on their internal. sales Rs. 22-91 as their cost  of production including margin of profit and Rs.  0-50 to  cover losses of export which work out  to  approximately Rs. 10, per maund of sugar exported.  For every one maund of sugar exported, the factories have for sale in the  internal market  20 maunds of sugar, and on this, on account  of  the price fixed, they would realise 0-50 nP. per maund i.e.,  on 20 maunds Rs. 10, which covers the export loss.  The  effect of the                              79 I therefore come to the conclusion that the Act which  makes the petitioners suffer a loss on the sale of a part of their produce  imposes  a restriction on their right to  carry  on their  business  which cannot in the circumstances  of  this case be said to be reasonable and is therefore invalid. I  may  also  mention  that  the  learned  coursel  for  the petitioners  had  taken  certain  other  objections  to  the validity  of  the Act but in the view that  I  have  earlier indicated  I  do not consider it necessary  to  discuss  the other objections. I would allow the petitions with costs. SUBBARAO  J.  -  I have had the advantage  of  perusing  the judgment prepared by my learned brother, Hidayatullah, J.  I agree  with his conclusion but would prefer to give  my  own reasons.  The only justification for me to write a  separate judgment  is my inability to persuade myself to  agree  with one  of  the  reasons given by  Hidayatullah,  J.,  for  his conclusion.   That  reason  involves  a  principle  of  far- reaching  importance, namely, whether, in  ascertaining  the reasonableness  of  restrictions imposed by a statute  on  a fundamental  right,  it  is  permissible  to  rely  upon   a

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notification  issued  by  Government in  exercise  of  power conferred on it by another Act unconnected with the impugned one. Before  I  embark upon the merits of the case  it  would  be convenient  at the outset to clear the ground by  expressing my  view on the said question.  The facts of the  case  have been fully stated by my learned brother in his judgment, and I need not restate them except to notice a few relevant  and material facts.  The Essential Commodities Act, 1955 (Act 10 of  1955),  was  enacted for the purpose  mentioned  in  the preamble  to that Act.  In exercise of the powers  conferred by  s. 3 of the said Act, the Central Government  issued  an order  dated  August 27, 1955, called  the  Sugar  (Control) Order,  1955.   Under r. 5 of the said  order,  the  Central Government is empowered, inter alia, to fix the price or the maximum  price at which any sugar may be sold or  delivered, having regard to the price or minimum 81 said order is that the possible loss to the sugar  exporters is  off-set by the fact that they can recoup their  loss  in their internal trade. The   learned   Attorney-General  sought  to   justify   the restrictions  imposed  by the impugned Act  on  the  ground, among others, that the Court should rely upon the said order in  determining  whether  the restrictions  imposed  by  the impugned Act are reasonable within the meaning of Art. 19 of the  Constitution. in support of this contention, he  relied upon the decision of this Court in State of Madras v. V.  G. Row  (1).   That decision was concerned  with  the  question whether  s.  15(2)(b) of the Indian Criminal  Law  Amendment Act,  1908 (14 of 1908), as amended by the  Indian  Criminal Law  Amendment (Madras) Act, 1950, was unconstitutional  and void.  It was contended in that case that the said provision fell  within  the  limits  of  constitutionally  permissible legislative  abridgement of the fundamental right  conferred on  the  citizens under Art. 19(1)(c) of  the  Constitution. The  said  limits are defined in cl. 4 of the  said  article whereunder: "Nothing  in sub-clause (c) of the said clause shall  affect the  operation of any existing law in so far as it  imposes, or  prevent the States from making any law imposing,.in  the interests   of   public  order   or   morality,   reasonable restrictions  on the exercise of the right conferred by  the said sub-clause." In  discussing  the said question, Patanjali  Sastri,  C.J., observed at p. 607: "  It is important in this context to bear in mind that  the test  of  reasonableness,  wherever  prescribed,  should  be applied to each individual statute impugned, and no abstract standard,  or general pattern of reasonableness can be  laid down  as applicable to all cases.  The nature of  the  right alleged  to have been infringed, the underlying  purpose  of the restrictions imposed, the extent and urgency of the evil sought  to  be remedied thereby, the  disproportion  of  the imposition,  the prevailing conditions at the  time,  should all  enter  into the judicial verdict.  In  evaluating  such elusive factors (1)  [1952]S.C.R. 597. and  forming their own conception of what is reasonable,  in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the  judges participating in the decision should play an important part, and  the  limit  to  their  interference  with   legislative judgment  in such cases can only be dictated by their  sense of  responsibility  and  self-restraint  and  the   sobering

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reflection  that  the  Constitution is meant  not  only  for people  of their way of thinking but for all, and  that  the majority of the elected representatives of the people  have, in   authorising   the  imposition  of   the   restrictions, considered them to be reasonable." If  I may say so with respect, this passage  summarizes  the law on the subject fully and precisely.  What is  reasonable in a particular set-up may be unreasonable in a society with a  different background.  The learned Counsel  relying  upon the  words "prevailing conditions" and the subsequent  words "in all the circumstances of a given case" contained in  the above observation of Patanjali Sastri, C. J., contended that the  said  words  were  comprehensive  enough  to  take   in notifications issued by the Government, and, therefore,  the said  order of the Central Government fixing the rate  would be  one  of the elements to be taken into  consideration  in testing  the reasonableness of the impugned Act.  I find  it difficult  to accept this argument.  The  learned  Attorney- General  has not been able to place before us  any  decision which went to the length of holding that such  notifications could  enter  the  judicial verdict.  It is  true  that  the prevailing  conditions at the. time the Act was made  should be  taken  into consideration, for the  effectiveness  of  a restriction  imposed for a particular purpose  depends  upon the  said conditions.  In a society addicted to  opium,  the legislature  has to make a law imposing severe  restrictions on  the  right to consume the same.  In a  society  where  a particular  vice  is  rampant, any  restriction  imposed  to eradicate that vice has to be moulded in accordance with the needs of the time.  During times of stress and strain,  such as war or pestilence, greater restrictions may be imposed on a fundamental right to do business in 83 public   interest.    But  the  same  restriction   may   be unreasonable  in  normal times.  Even in normal  times,  the urgency of a social or economic reform, having regard to the sub-normal  standards  of human existence, may  demand  more stringent  restrictions  on fundamental rights  than  during times of prosperity.  The learned Chief Justice,  therefore, in his graphic description of the test of reasonableness, in my  view, was not stating any thing more than  the  obvious, for   the   standard  of  reasonableness   is   inextricably conditioned  by  the state of society and  the  urgency  for eradicating the evil sought to be remedied.  But I am  clear in my mind that the validity of an Act shall not be made  to depend upon another Act unconnected with the impugned Act or power   conferred  thereunder,  which  might,  if   properly exercised,  off-set  the evil tendency or the  vice  of  the impugned  Act.  If the validity of an Act is made to  depend upon  such  a foundation, a super-structure will  have  been built  on  shifting  sands.  To do that is  to  destroy  the stability  of  legislation  and to  introduce  an  uncertain element therein.  If two or more Acts were parts of the same scheme  or plan, to implement the same or common  objective, or  if  the  impugned  Act, though  it  was  not  originally conceived at the time when the, earlier Act was passed,  was only  an  extension  or a further step  by  legislature  for implementing  the  object  of  the earlier  Act  or  if  the legislature   by  express  reference  incorporated  in   the impugned Act the provisions of the earlier Act, it would  be permissible to rely upon the said provisions of the  earlier Act,  not  because  they  formed  part  of  the   prevailing conditions but because either the earlier Act formed part of the impugned Act by reference or both of them formed part of the  same  legislative  plan.   The  illustrations  are  not

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exhaustive,  but  they all fall under one or  other  of  the following  two categories : (i) an earlier Act is made  part of a new Act; and (ii) both Acts are parts of a  legislative scheme  or  plan where both of them were  conceived  at  the inception  but passed in stages, or conceived  at  different times  on  the  basis of experience  gained  but  passed  in furtherance of the same scheme.  In such cases, the test of 84 reasonableness  in regard to one Act may be made  to  depend upon  the impact of the other on it.  But to go beyond  this is to destroy the stability of legislation and to  introduce an  uncertain element.  To go further and to depend  upon  a notification   of  a  transitory  nature  issued  under   an unconnected  Act is to place the statute in a  fluid  state. In  such  a  situation  its validity  would  depend  upon  a statutory  order  of  temporary duration;  it  would  change colour with the changing attitudes of an authority empowered to  issue the order.  It would also mean that a  Court  will have  to  embark  upon  a roving  search  of  all  Acts  and notifications which may, by design or accident, alleviate or mollify  the evil consequences of an impugned Act.   Such  a result cannot be contemplated.  The learned Attorney-General has  not  placed before us any decision in  support  of  his broad proposition; but I find in the judgment of my  learned brother,  Hidayatullah,  J., a few decisions  which,  it  is said,  go to the full length of supporting the  argument  of the learned Attorney-General.  I have carefully perused  the said  decisions and I do not find anything said  or  implied therein  to  support the said contention.  The  decision  in Attorney-General for Alberta v. Attorney General for  Canada (1) was concerned with a conflict between the  jurisdictions of the Dominion and Provincial Legislatures under ss. 91 and 92  of the British North America Act, 1867, The  Legislative Assembly of the Province of Alberta passed an Act respecting the  taxation  of  banks and  imposed  thereunder  on  every corporation  or joint stock company other than the  Bank  of Canada,  incorporated  for the purpose of doing  banking  or savings  bank  business in the Province, an annual  tax,  in addition to any tax payable under any other Act.  Defaulters of payment of tax were to be visited with penalties, and the payment  of  either  tax or penalty  could  be  enforced  by distress  and sale of goods and chattels, or by  action  for civil debt.  It was contended before the Privy Council  that the proposed taxation was not in its true sense taxation  in order to the raising (1)  (1939) A.C. 117.                            85 of a revenue for Provincial purposes so as to be within  the exclusive   legislative   competence   of   the   Provincial Legislature,  but was merely part of a legislative  plan  to prevent  the operation within the Province of those  banking institutions which had been called into existence and  given the necessary powers there to conduct their business by  the only proper authority, the Parliament of the Dominion, under s.  91  of the British North America Act, and the  Bill  was therefore.  ultra  vires the  Provincial  Legislature.   The Privy  Council accepted the contention.  For the purpose  of ascertaining the true plan underlying the bill, the Judicial committee  compared  the relative  legislative  lists,  took judicial notice of other Acts and the object and purpose  of the   Act   in  question.   Having  regard   to   the   said consideration,  it  came  to the conclusion that  it  was  a colorable  legislation  aimed at to  prevent  the  operation within  the province of the aforesaid banking  institutions. When  a  statute  is attacked on the ground  that  it  is  a

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colourable  legislation, i.e., it assumed a form  apparently falling within the legislative competence of the legislature but  in effect and substance intended to reach  institutions beyond  its legislative competence, it is obvious  that  all the   surrounding   circumstances,  including   other   acts operating in the Province, have to be scrutinized to unravel the  fraud on power.  This decision, in my view,  cannot  be invoked to serve the present purpose.  Nor does the decision of the Judicial Committee in Ladore v. Bennett (1) carry the matter  further.  The question in that case was whether  the Provincial legislation in question did not encroach upon the exclusive  legislative power of the Dominion  Parliament  in relation  to bankruptcy and insolvency, interest or  private rights outside the Province.  For ascertaining the pith  and substance  of the impugned statutes, the Judicial  Committee relied upon the report of the Royal Commission appointed  to enquire  into  municipal  and  other  affairs  of  the  four municipalities in question.  At p. 477, it is observed: " Their Lordships do not cite this report as evidence of the facts there found, but as indicating the (1)  (1939) A.C. 468. 86 materials  which the Government of the Province  had  before them  before  promoting in the Legislature the  statute  now impugned." This case does not, in my view, throw any light on  question raised  in  the  present case.  The decision  of  the  Privy Council  in  Pillai  v. Mudanayake(1) is also  not  of  much relevance to the present case.  The constitutional  validity of  the citizenship Act, 1948, of Ceylon, was questioned  in that case.  It was contended therein that the main object of that  Act  was to prevent the Indian Tamils  from  obtaining citizenship  of Ceylon and that the Act,"-as part of a  plan to effect indirectly something which the legislature had  no power  to achieve directly.  The Judicial Committee  pointed out, at p. 528 : " It must be shown affirmatively by the party challenging  a statute  which  is  upon its face intra vires  that  it  was enacted as part of plan to effect indirectly something which the legislature had no power to achieve directly." The Judicial Committee relied upon the Indian and  Pakistani Residents  (Citizenship)  Act, No. 3 of 1949,  by  which  an Indian  Tamil would by an application obtain citizenship  by registration  and thus protect his descendants, provided  he had a certain residential qualification.  When objection was taken  against  the Court relying upon the said  Act,  their Lordships  disallowed  the  objection  with  the   following remarks, at p. 529: " If there was a legislative plan the plan must be looked at as  a whole, and when so looked at it is evident,  in  their Lordships,  opinion, that the legislature did not intend  to prevent  Indian Tamils from attaining  citizenship  provided that they were sufficiently connected with the island." In this case also the reliance on a subsequent Act was  only to unravel the plan attributed to the Legislature of  Ceylon to  deprive the Indian Tamils of citizenship by passing  the impugned Act.  The said three decisions, therefore, are not, and   cannot  be,  authorities  for  the   proposition   now contended.  To unravel a plan (1)  (1953) A.C. 514. 87 of fraud on powers, it would be necessary to scrutinize  all the documents, whether legislative or otherwise, which  help to  ascertain the truth.  It may also be necessary  to  look into  another Act to ascertain the pith and substance of  an

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impugned Act.  But the same principle cannot  be invoked for ascertaining the reasonableness of legislative  restrictions on fundamental rights. Now  coming  to  the facts of the present case,  it  is  not suggested that the, Essential Commodities Act, 1955, and the impugned Act form part of one scheme of legislation.  Indeed the Essential Commodities Act was enacted to provide in  the interest  of the general. public for control of  production, supply  and  distribution  of, and trade  and  commerce  in, certain  commodities.   The provisions of the  Act  disclose that  the object of the Act was to maintain or  to  increase supplies  of  essential  commodities  and  to  secure  their equitable distribution and availability at fair prices.   It was not one of its objects to stimulate foreign trade or  to earn  foreign  exchange.  It is said that  the  notification issued by the Central Government under s. 3 of that Act  and r.  5 of the Order made thereunder was to off-set  the  loss expected to be incurred under the Ordinance, and  therefore, the  Act which supplanted the Ordinance, must be  deemed  to have been passed on the basis of that notification.  To  put it  in other words, though the impugned Act does not  confer any power or impose a duty on the Government to off-set  the loss  by  fixing the rates of sugar, having  regard  to  the expected  loss,  the mere fact that it could fix  the  rates under  some  other  Act  would  make  the  Act  good  though otherwise  bad.   If this argument be accepted  as  correct, even  if the notification was not issued, the  existence  of such  a  power  under  some other Act  would  be  enough  to validate the impugned Act, for, though the notification  was not  issued,  it  may  be issued at  a  later  stage.   This argument, if accepted, would leave the impugned statute in a fluid  state, its validity or otherwise depending  upon  the changing  attitude  of the authority concerned.   I  cannot, therefore, accept this contention. 88 Let  me now consider the reasonableness of the  restrictions imposed by the Act, excluding the notification issued by the Government.   It  is enacted to provide for  the  export  of sugar  in public interest, and for the levy and  collection, in certain circumstances, of an additional duty of excise on sugar  produced  in India.  Section 4  enables  the  Central Government,  by notification in the Official Gazette to  fix from  time  to  time  the quantity of  sugar  which  may  be exported  during any period, and, in fixing  such  quantity, the Central Government should have regard to the quantity of sugar  available in India, the quantity of sugar  which,  in its opinion, would be reasonably required for consumption in India, and the necessity for exporting sugar with a view  to earning foreign exchange in the public interest, In exercise of  that  power, the Central Government should not  fix  the quantity of sugar for export as to exceed in any year in the aggregate twenty per cent. of the quantity of sugar produced in  India  in the season ending with the  month  of  October falling   within  that  year.   Under  s.  5,  the   Central Government  is empowered to apportion the quantity of  sugar fixed  from time to time for purposes of export under  s.  4 among  the  owners in proportion to the  quantity  of  sugar produced,  or  likely to be produced, by  them  respectively during  the season referred to above.  Section 6 enjoins  on the  owners  of  sugar factories to deliver  to  the  export agency, appointed under the Act, the sugar produced in their factories in such quantities, of such grade, in such manner, within  such time and at such place, as may be specified  by the  export  agency in that behalf.  When such  delivery  is made, the owner ceases to have any more right over the sugar

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except to receive payment therefor.  Section 8 empowers  the export agency, after taking delivery, to export the sugar or permit the owner to sell the whole or any part of the export quota in his custody at a price approved by it, on condition that the sale-proceeds are payable to it.’ Section 9 directs the  export agency to make payments to the owners,  who  had delivered  sugar  to  it, in the manner  prescribed  by  the section.  Out of the total 89 sale-proceeds, the total expenditure incurred by the  export agency  in respect of the sugar exported should be  deducted and  the balance should be apportioned among the  owners  in proportion  to the quantity of sugar delivered by  them  for export  during the year.  It also enables the export  agency to  make payments to owners on account against documents  of delivery  of  sugar furnished by them, and  to  adjust  such payments  at the time of final payment.  Section 10  confers power  on the Central Government to give directions  to  the export  agency in discharge of its functions under the  Act. Section  7  deals  with a situation when the  sugar  is  not delivered, and it reads: " S. 7(1): Where sugar delivered by any owner falls short of the  export quota fixed for it by any quantity  (hereinafter referred to as the said quantity), there shall be levied and collected  on  so  much of the  sugar  despatched  from  the factory  for  consumption in India as is equal to  the  said quantity,  a duty of excise at the rate of seventeen  rupees per maund." Sub-s  2,3  and 4 provide for a machinery for  imposing  the penal  duty  and  collecting the same  from  the  defaulting owners  of  sugar.  The scheme of the Act, therefore,  is  a self-contained one.  The object is to provide for the export of sugar in the interest of public and that object is sought to  be achieved by fixing the quota of sugar for export  and distributing the same among the owners of factories, subject to the condition that in no case it should exceed twenty per cent.  of  the  quantity of sugar produced  in  India  in  a particular  season.   The  quantity is  also  fixed  without detriment to the requirements for internal consumption.  The apportionment  of the quota among the various  factories  is objectively  and impartially made.  The quota delivered,  or in case the owner is allowed to sell the sugar himself,  the sugar purchased from the sale-proceeds, is exported, and the nett  sale-proceeds  are  distributed among  the  owners  in proportion  to the quantity of sugar delivered by them.  for export.  The Act enables the Government to make payments  on account.  The Government also retains an over-all 90 control  presumably to see that no injustice is done to  the parties  concerned.  The short question is whether the  said restrictions  on the freedom of the petitioners to  acquire, hold  and  dispose  of  property,  and  carry  on  trade  or business,  are reasonable within the meaning of clauses  (5) and  (6) of Art. 19 of the Constitution.   The  restrictions must  have  a reasonable relation to the  object  which  the legislature  seeks to achieve and must not go in  excess  of that  object.  What is the object of the legislature  ?  The object  of the legislature is to provide for the  export  of sugar  in public interest.  It cannot be, and indeed  it  is not, denied that at the time the Act was passed there was  a sincere  and  serious national effort to  industrialize  our country  with  the  avowed object of  raising  the  economic standards of our people. One of the necessary conditions for industrializing  our country is to start  heavy  industries, and  that  cannot be done unless the country  earns  foreign

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exchange  to  enable it to import plants  for  starting  the same.   It  is  also self-evident that it would  be  in  the interests of sugar industry to build up a foreign market for that  commodity.   The  object of the  Act  was,  therefore, demonstrably  to serve the national interest and the  scheme evolved  certainly had relation to the object sought  to  be achieved,  for all the provisions of the Act were  conceived in  a genuine attempt to induce foreign export in  sugar  by co-operative  effort.   If  so, the only  objection  to  the restrictions  imposed can be on the basis that  the  freedom was  abridged or curtailed unduly or arbitrarily.   But  for the Act, the petitioners could have sold their sugar in  the open  market  without exceeding the rates  fixed  under  the Essential  Commodities Act, 1955.  The correspondence  filed in  the  ease,  marked  as annexures A,  B  and  C,  clearly demonstrates  that  both the industry as well as  the  State were equally interested to stimulate foreign trade and build up a foreign market.  Under the scheme embodied in the  Act, three  restrictions are imposed on the owners of  factories: (i)  They  must  contribute to the  stock  for  export,  not exceeding twenty per cent. of the quantity produced in their -factories; (ii) they are paid only their proportionate 91 share  of  the nett sale-proceeds realised  in  the  foreign market; and (iii) a penal cess is imposed on those who  make default  in supplying the goods.  When once it  is  conceded that  the  Act serves the national interest, I find  it  not possible  to hold that the restrictions are unreasonable  or excessive.   The three restrictions are really the props  of the  scheme.   If there was no statutory compulsion  on  the owners  of factories to supply a reasonable fraction of  the sugar  produced in their factories, the export agency  would not  get  the requisite quantity of sugar  for  export.   If there was no provision imposing a penal cess on  defaulters, there  would be no sanction to compel them to deliver  their quota of sugar.  Though the final payment was deferred  till the nett sale-proceeds were realised, they would be paid the price  for the sugar supplied, at the rates fetched  in  the foreign  market.   It  is common case that  at  present  the export  trade  in  sugar  ends in loss;  but  it  cannot  be predicated that it will be a chronic feature and there  will not  come  a time when the export trade in sugar  will  earn profits.   It  may be that a better scheme might  have  been evolved  by the legislature or it might be  more  beneficial from  the  standpoint of owners of factories  if  the  State purchased  the  exportable  quantity  for  ready  cash   and exported  the  same on its own account.  But it is  not  for this  Court to evaluate the comparative merits of  different schemes  so  long it is satisfied that the  scheme  actually evolved stands the test of reasonabless.  The correspondence between  the State and the industry shows that the  industry as  a  whole  co-operated with the State.  in  evolving  the scheme,  which  culminated in the passing of the  Act.   The State  as  well as the industry are  equally  interested  to stimulate  foreign trade and build tip foreign  market.   To capture  foreign  market  or to  have  a  substantive  share therein  is  not  an  easy task, as  it  depends  upon  many imponderables,  namely,  the  availability  of  sugar,   its demand,  its comparative merits with the sugar  produced  in other   markets,  transport  facilities,  mutual   agreement requirements, international affiliations etc.  Initial  loss must have to be borne to get a foothold and the clear 92 objective  will  have to be pursued purposefully  and  tena- ciously.  To achieve the said objective, with the consent of

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the  industry and on the basis of past experience,  the  Act was  passed  by  the  Parliament.   The  beneficial  results flowing  from  the  Act are significant.   The  State  earns foreign exchange, and a foreign market is gradually built up for the future prosperity of the sugar industry. In  the  affidavit  filed on behalf of  the  respondents  an attempt  was made to support the Act on the ground  that  it was  intended  to  serve a dual purpose  of  stablising  the internal -market and earn foreign. exchange for the country. An attempt was also made to link the one with the other, but the learned Attorney-General did not pursue that line in his argument,  and  I have, therefore, considered  the  question only from the standpoint of the compelling need of the State to  earn  foreign exchange, and the long range  aim  of  the industry  to build up a foreign market.  I  therefore,  hold that  the  restrictions  imposed  by  the  statute  on   the fundamental rights of the petitioners are not arbitrary, and are  reasonable  within  the  meaning  of  Art.  19  of  the Constitution. I  agree with my learned brother, Hidayatullah, J.,  on  the other  questions  raised in this case.  In the  result,  the petitions are dismissed with costs.                            ORDER. In  view of the opinion of the majority these petitions  are dismissed with costs. 93