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PETITIONER: THE STATE OF RAJASTHAN

       Vs.

RESPONDENT: NATH MAL AND MITHA MAL.

DATE OF JUDGMENT: 12/03/1954

BENCH: HASAN, GHULAM BENCH: HASAN, GHULAM MAHAJAN, MEHAR CHAND (CJ) MUKHERJEA, B.K. DAS, SUDHI RANJAN BOSE, VIVIAN

CITATION:  1954 AIR  307            1954 SCR  982  CITATOR INFO :  E&D        1960 SC 475  (9,12)  R          1967 SC 829  (6)  R          1974 SC 366  (58)  RF         1981 SC 873  (18,27)  R          1987 SC1802  (9)

ACT:  Constitution  of India, arts. 19(1)(f) and 31(2)  -Rajasthan  Foodgrains  Control Order, 1949, cl. 25-Whether ultra  vires  the constitution.

HEADNOTE: Held,  that  the first portion of cl. 25  of  the  Rajasthan Foodgrains Control Order, 1949, relating to the freezing  of stocks of foodgrains is not void under art. 19(1)(f) of  the Constitution  because such freezing of stocks of  foodgrains is reasonably related 983 to the object which the Act was intended to achieve,  namely to  secure  the equitable distribution and  availability  at fair   prices  and  to  regulate  transport,   distribution, disposal  and acquisition of an essential commodity such  as foodgrains. Hold,  that the last portion of cl. 25 to the effect that  " such  stocks  shall also be liable to  be  requisitioned  or disposed  of under orders of the said authority at the  rate fixed for purposes of Government procurement ", is void both under art. 19(1)(f) and art. 31(2) of the Constitution:- (i)because  the  clause places an  unreasonable  restriction upon  the  carrying on of trade or business and is  thus  an infringement  of the respondents’ right under art.  19(1)(f) of the Constitution; (ii)because the clause by vesting the power in the authority to  acquire the stocks at any price fails to fix the  amount of compensation or specify the principles on which it is  to be  determined and leaves it entirely to the  discretion  of the executive authority to fix any compensation it likes and is thus hit by art. 31(2) of the Constitution.

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JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 136 of 1952. Appeal   under   articles  132(1)  and  133(1)(c)   of   the Constitution of India from the Judgment and Order dated  the 19th  October,  1951, of the High Court  of  Judicature  for Rajasthan  at Jodhpur in D. B. Miscellaneous  Writ  Petition No. 3/1951. K.   S.  Hajela,  Advocate-General  of  Rajasthan,  for  the appellant. K.   N. Aggarwal and P. C. Agarwal for the respondents. M.   C. Setalvad, Attorney-General for India (Porus A. Mehta, with him) for the intervener (the Union of India). 1954.  March 12.  The Judgment of the Court was delivered by GHULAM HASAN J.-The question involved in this appeal relates to the constitutional validity of clause 25 of the Rajasthan Foodgrains  Control  Order,  1949,  hereinafter  called  the Control Order, and arises in the following circumstances :- The  respondents,  who are grain merchants  at  Raniwara  in Jodhpur Division, Rajasthan State, held 984 licences for dealing in foodgrains.  They held  considerable stocks  of bajra in the ordinary course of business  but  on October  7,  1950, their stocks were frozen  by  the  Deputy Commissioner,  Civil  Supplies, Jodhpur,  through  the  Sub- Divisional  Officer.   It is not disputed  that  the  market price  then  prevailing  was about Rs. 18  per  maund.   The State,  however, requisitioned the stocks  at the  rate.  of Rs. 9 per maund and sold them at Rs. 13-5-4 per maund.   The respondents claimed that they had purchased the bajra at the prevailing market rate of Rs. 17 to Rs. 18 per maund.   They filed  a  petition on January 23, 1951, for the issue  of  a writ  under article 226 of the Constitution before the  High Court of Rajasthan, contending that clause 25 of the Control Order  was void under articles 14, 19 (1) (g) and 31 (2)  of the  Constitution.  The High Court held that clause  25  was void  inasmuch as it is a restriction upon  the  fundamental right of the respondents to carry on business under  article 19  (1)(g) of the Constitution, that the restriction is  not reasonable  and  is not saved by clause (6) of  article  19. The  High Court further held that clause 25 was also hit  by article  31 (2) as fair compensation had not been  fixed  by the  law  for  the acquisition of the  foodgrains.   As  the grains  had already been disposed of by the Government,  the High Court holding that Rs. 17 a maund was fair compensation directed that the State of Rajasthan shall pay  compensation at that rate.  The State has preferred.the present appeal on a certificate granted by the High Court. The impugned clause 25 is as follows:- " 25.  Notwithstanding anything contained in this Order, the Commissioner,  the  Director, the Deputy  Commissioner,  the Nazim,   the  Assistant  Commissioner,  the   Sub-Divisional Officer, the Senior Officer of a jurisdictional Thikana, the enforcement  officer  ’or  such  other  officer  as  may  be authorized  by the Commissioner in this behalf,  may  freeze any stocks of foodgrains held by any person, whether in  his own behalf or not, and such person shall not dispose of  any foodgrains  out  of  the stock so freezed  except  with  the permission of the said authority.  Such stocks shall 985 also  be  liable to be requisitioned or  disposed  of  under orders of the said authority at the rate fixed for  purposes of Government procurement.  " It  is  not disputed that bajra is  an  essential  commodity

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within the meaning of the Essential Supplies Act (No.   XXIV of 1946).  The question that arises for consideration is how far and in what respects clause 25 can be said to be void as violating   Part  III  of  the  Constitution.   The   clause authorises  the Commissioner and various  other  authorities mentioned  therein  and  such  other  officers  as  may   be authorised  by  the  Commissioner to  freeze  any  stock  of foodgrains held by a person.  It is true that the  authority of  the  Commissioner to delegate his powers  to  any  other officer  at  his discretion is expressed  in  somewhat  wide terms but we need not decide that per se would be sufficient to  invalidate the clause.  Admittedly that :power  has  not been  exercised in the. present case.  Nor do we think  that the power to freeze the stocks of foodgrains is arbitrary or based  on no reasonable basis.  It is not disputed that  the clause does not state in express terms the circumstances  in or  the  grounds on which the stocks may be freezed  but  it should  be  read  along  with section  3  of  the  Essential Supplies Act which lays down the policy for controlling  the production,,   supply   and   distribution   of    essential commodities.  Section 3 in so far as it is material says:- "  The Central Government, so far as it appears to it to  be necessary   or  expedient  for  maintaining  or   increasing supplies  of any essential commodity, or for securing  their equitable distribution and availability at fair prices,  may by   order  provide  for  regulating  or   prohibiting   the production, supply and distribution thereof Sub-section (2) lays down:- "  Without  prejudice  to  the  generality  of  the   powers conferred  by sub-section (1) an order made  thereunder  may provide................... (a)....................... (b)....................... (c)....................... 986 (d)  for  regulating by licences, permits or  otherwise  the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity; (e)  for  prohibiting  the  withholding  from  sale  of  any essential commodity ordinarily kept for sale; We  are  clear, therefore, that the freezing  of  stocks  of foodgrains is reasonably related to the object which the Act was  intended  to achieve, namely, to secure  the  equitable distribution and availability at fair prices and to regulate transport,  distribution,  disposal and  acquisition  of  an essential  commodity  such as foodgrains.  We do  not  agree with  the High Court that the first portion of clause 25  is void under article 19 (1) (g). The last portion of clause 25 to the effect that such stocks shall  also  be liable to be requisitioned  or  disposed  of under  orders  of the said authority at the rate  fixed  for purposes  of Government procurement ", however stands  on  a different  footing.  The clause, as it is worded, leaves  it entirely to the Government to requisition the stocks at  any rate  fixed by it and to dispose of such stocks at any  rate in  its  discretion.  This obviously vests  an  unrestrained authority  to  requisition the stocks of  foodgrains  at  an arbitrary  price.   In contrast with this provision  we  may refer  to clauses 23 and 24 of the Control Order.  They  are as follows:- "  23.   The Commissioner or the Director,  and  the  Deputy Commissioner  or  the  Senior Officer  of  a  jurisdictional Thikana  with  the  approval of the Director,  may  fix  the

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ceiling prices at which foodgrains in any area to which this order applies shall be sold, and may from time to time  vary such prices." "24.    The   Commissioner,   the   Director,   the   Deputy Commissioner,  the  Nazim, the Assistant  Commissioner,  the Sub-Divisional  Officer,  or  the  Senior  Officer  of   the jurisdictional  Thikana as the case may be, may  direct  any person  or persons in possession, whether on his own  behalf or  not  of any foodgrains to sell such foodgrains  or  part thereof to any person or persons at any 987 specified  place  and at such price as may  be  fixed  under clause 23." It appears from these clauses that while the authorities may fix the ceiling price at which foodgrains should be sold  in the  market  by  the dealers and may direct  any  person  in possession of foodgrains to sell them to any other person at the price fixed under clause 23, there is no such limitation upon the power of the Government to acquire the stocks.   In other  words, it will be open to the Government to  requisi- tion the stocks at a price lower than the ceiling price thus causing  loss to the persons whose stocks are freezed  while at  the  same time the Government is free to sell  the  same stocks  at a higher price and make a profit.  It is  obvious that the dealer whose stocks are thus freezed will stand  to lose  considerably and will be unable to carry on his  trade or business at the prevailing market price.  No dealer  will be  prepared to buy foodgrains at the market price  when  he knows  that  he is exposed to the risk of his  stocks  being freezed  any moment and the same being requisitioned at  the procurement  rate.   The  present is a  typical  case  which illustrates  how  the  business of a  grain  dealer  can  be paralyzed,  for  it is admitted that  while  the  Government procurement rate was Rs. 9 a maund, the market rate was  Rs. 17  or  Rs.  18 per maund, with the result  that  the  stock holder  suffered  nearly  cent. per cent.  lose,  while  the Government made a profit of Rs. 4-5-4 per maund on the stock requisitioned.  We hold, therefore, that the last portion of clause  25  places  an  unreasonable  restriction  upon  the carrying on of trade or business and is thus an infringement of  the  respondent’s right under article  19(1)(g)  of  the Constitution  and is, therefore, to that extent  void.   The same  result follows if the impugned clause is  examined  in the light of article 31(2).  The clause by vesting the power in the authority to acquire the stocks at any price fails to fix   the  amount  of  the  compensation  or  ,specify   the principles  on which the compensation is to  be  determined. The  clause  leaves  it entirely to the  discretion  of  the executive  authority to fix any compensation it likes.   The High Court 988 rightly held that the clause offended against article 31(2). For  the foregoing reasons we hold that the last portion  of clause 25 is void and dismiss the appeal with costs.                      Appeal dismissed. Agent for the appellant and for the intervener: R.     H. Dhebar.