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PETITIONER: VIKLAD COAL MERCHANT, PATIALA, ETC. ETC.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT28/10/1983

BENCH: DESAI, D.A. BENCH: DESAI, D.A. REDDY, O. CHINNAPPA (J)

CITATION:  1984 AIR   95            1984 SCR  (1) 657  1984 SCC  (1) 619        1983 SCALE  (2)619  CITATOR INFO :  D          1986 SC 452  (2,5,9,11,17,18)  D          1986 SC1527  (24)  RF         1986 SC1541  (9)

ACT:      Constitution of  India Art.  19(1) (g)-Freedom to carry on trade  or business-To examine whether restriction imposed reasonable-Court to find out trade affected and keep in view direct impact  of restriction  on trade and not ancillary or indirect effect.      Indian Railways  Act, 1890-Sec.  27A-Interpretation of- Whether  violative   of  Art.   19(1)(g)   of   Constitution Preferential Traffic  Schedule laying  down  priorities  for movement of  different  goods  issued  by  the  Ministry  of Railways under sec. 27A-Validity of-Whether ultra vires sec. 27A-Whether ultra  vires Arts.  14  and  19(1)  (g)  of  the Constitution.      Indian Railways  Act, 1890,  section  28-Interpretation of-Ministry of  Railways order  dated April  1, 1972-Whether violative of sec. 28 and Art. 19(1) (g) of the Constitution.

HEADNOTE:      Section 27 of the Indian Railways Act, 1890 cast a duty on the  railway administration  to arrange for receiving and forwarding traffic  without unreasonable  delay and  without partiality. Section 28 prohibited the railway administration from giving undue or unreasonable preference or advantage to any particular  person  or  railway  administration  or  any particular description  of traffic. Section 27A was inserted in  the  Act  after  1950  to  give  power  to  the  Central Government to issue directions for giving special facilities or preherential  treatment in transport of goods or class of goods consigned  to the Central Government or the Government of any State or of such other goods or class of goods as may be specified in the order.      The Government of India, Ministry of Railways issued an order dated  April 1, 1972 containing its decision to add an abbreviation ’GX’  below the abbreviation ’G’ in the list of abbreviations  at   page  14,   Chapter  VI   of  the   IRCA Alphabetical list  of Railway  Stations in  India and asking the railway administration to decide and notify the names of stations to  which this  new provisions would apply. Putting

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abbreviation ’GX’  against a  station meant that the station was not open for outward booking of coal, coal shale etc. in wagon loads.  Pursuant to  this order, the abbreviation ’GX’ was appended  to all  way-side stations  in  the  coal-belt. Thereafter Government  of India, Ministry of Railways by its order dated  April 27,  1972 revised  rules 1  and 2  of the Eastern Railway  Coal Traffic  Part  1.  The  revised  rules provided inter alia that all traffic in coal 658 etc. in  wagon loads  will  be  loaded  only  from  colliery sidings, coke  oven  plant  and  washeries  on  the  Eastern Railway, but  coal in  wagons will  not be  permitted at the stations  serving   these  colliery   washeries.  A  further restriction followed  with effect from December 4, 1979 when the  Divisional   Operating  Superintendent,   Bilaspur  for apparent reasons stopped booking of coal in smalls including clubbing at  all  stations  of  North  Eastern  Railway.  On February 11,  1980, a  telegraphic communication  was issued explaining that  coal in  wagon-loads  can  be  booked  from colliery sidings  by the  collieries concerned.  Booking  of slack coal  was wholly  stopped as  per a  phone call  dated April 9,  1981. In  exercise of  the power conferred by sec. 27A of  the Act,  Union of  India, the  Ministry of Railways issued   Preferential   Traffic   Schedule.   The   schedule prescribed  five   priorities  ’A’  to  ’E’  with  inter  se priorities amongst ’A’ to ’E’ to be accorded by the railways for transport  of certain  goods or class of goods specified under each  category. Different  kinds of  coal falls  under priority ’C’  (iii) which provides for movement of coal from collieries  in  accordance  with  programmes  and  movements sponsored or  recommended by  the Coal Controller and/or any Committee appointed  by  him  and/or  the  State  Government and/or other  recommending authorities  and accepted  by the Railway   Administrations    and/or    Director.    Movement (Railways), Calcutta,  and  in  accordance  with  the  Zonal Scheme applicable  to  each  field  and  the  principles  of transport  rationalisation  in  force  from  time  to  time. Priority ’E’,  a residuary  clause again  involves coal from collieries.      The petitioners  who were  coal merchants, alleged that sum total  of various restrictions including one dated April 1, 1972  introducing abbreviation  ’GX’ and the Preferential Traffic Schedule specifying priorities under sec. 27A (1) of the Act  in their  cumulative effect  imposed a total ban on transport of  coal by  the Railways,  at their  instance and this action  was violative  of Art.  14 and 19(1) (g) of the Constitution.  The   petitioners  contended;  (1)  that  the Railway Administration’s  action of  giving priority to some transporters of coal denying use of its transport facilities to  the   petitioners  who   were  similarly   situated  was discriminatory in  character and  hence violative of Art. 14 of the  Constitution; (2)  the orders  dated  April  1,1972, December 31,  1980 and  April 11,  1981 imposed unreasonable restrictions on  the the freedom of the petitioners to carry on their  trade guaranteed  by Art. 19(1) (g); (3) that sec. 27A is  violative of  Art. 19(1)  (g);(4) that para (iii) of priority ’C’  of the Preferential Traffic Schedule in so far as it  permits special facility or preference to individuals or groups of persons selected by the sponsoring authority or recommending body  for transport of coal is ultrn virea sec. 27A of  the Act;  (5) order dated April 1,1972 was violative of sec.  28 of  the Act and was also violative of Art. 19(1) (g) of the Constitution.      Dismissing the writ petitions, ^

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    HELD: Railway  is a  monopolistic  undertaking  in  the matter of  transport of  coal by railways. Barring some tiny dots which  may become  visible only  by a magnifying glass, the entire  railway net work is nationalised and the railway is a  department of  the Union  of India.  It is  therefore, indisputably a State monopoly. A monopoly unless kept within bounds may prove to be a menace, 659 Therefore, regulatory  measures are necessary to prevent the abuse of  monopolistic power.  But there is a constitutional check on  the State  monopoly, namely, it being State within the meaning  of Art. 12 of the Constitution, all its actions will have  to conform  to the  fundamental rights  enshrined Part III  in of  the Constitution.  Sec. 28  of  the  Indian Railways Act  seeks to  achieve the same result which on the advent of  the Constitution, Art. 14 would achieve. But sec. 28 is  subject to  sec. 27A.  If while  giving effect to the orders of  the Central  Government issued  under  sec.  27A, priority is  accorded in  the matter  of transport  of goods consigned to  Central or  State Government or class of goods specified in  the general  or special  order issued  in this behalf,  the   action  of   the  railway  administration  in complying with  such special  or general  order could not be said  as  tentamounting  to  giving  undue  or  unreasonable preference or  advantage to  in  favour  of  any  particular person or  railway administration and therefore violative of sec. 28.  What sec.  28 forbids  is  discrimination  in  the matter of  transport of  goods against  a class  but this is subject to  the permissible  classification  that  would  be introduced by  a special  or general  order  issued  by  the Central Government  in exercise  of the  power conferred  by sec. 27A.  It may  be recalled that the Preferential Traffic Schedule according  Priority ’C’  to transport  of  coal  by those mentioned  therein has  been issued in exercise of the power conferred  by sec. 27A. Therefore, the submission that petitioners in the matter of transport of coal are similarly situated  with   the  Central   or   State   Government   or transporters given  priority by  general  or  special  order issued under sec. 27A cannot be entertained. This is all the more so  because the petitioners are coal merchants who want to transport  their coal by railway for carrying on business in coal  and  they  may  sell  the  coal  to  any  intending purchaser while  those accorded preferential treatment under Priority  ’C’  of  the  Preferential  Traffic  Schedule  are transporters of  coal who  have been  recognised one year in advance under Zonal Distribution Scheme as persons who would be transporting  the  coal  to  satisfy  fixed  goals  which subserve needs  of the  public at  large. Classification  of those covered by Priority ’C’ and the present petitioners is founded  on  intelligible  differentia  which  distinguishes persons or things that are grouped together from others left out of the group and the differentia has a rational relation to the  object sought to be achieved by the impugned orders. Those falling  within Priority  ’C’ (iii) would from a class by themselves  and the  petitioners clearly stand out of the group. [679 A-H; 680 A-E]      Nav Rattanmal  and Ors.  v.  The  State  of  Rajasthan, [1962] 2 S.C.R. 324 referred to.      Art.  19(1)   (g)  guarantees   to  the   citizen   the fundamental freedom  to carry  on any  occupation, trade  or business. This  fundamental freedom is subject to reasonable restrictions that  can be  imposed by  law relating  to  the carrying on  by the  State, or  by a  corporation  owned  or controlled by the State, of any trade, business, industry or service, whether  to the  exclusion complete  or partial, of

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citizens or  otherwise. Whenever the Court is called upon to examine the  complaint  that  restrictions  imposed  on  the freedom to  carry on trade are unreasonable, it is necessary to  find   out  what   is  the  trade  or  business  of  the complainant-petitioner and  to what  extent the restriction, if any,  is imposed  upon the  freedom to  carry on trade or business and  then to  determine whether  the restriction is reasonable or otherwise. It is the direct impact of the 660 restriction on  the freedom to carry on trade that has to be kept in  view and  not the ancillary or incidental effect of the governmental  action on  the freedom  to carry on trade. [682 C-D; F-H]      In the  instant case,  if the  law of demand and supply and non-availability  of facility for loading coal in smalls at wayside stations result in not making available wagons to the petitioners  because of  pre-planning  and  priority  it cannot be  said that  there has  been a  total  ban  on  the transport of  coal offered  by the  petitioners by railways, which would  violate the  fundamental freedom  to  carry  on their trade  guaranteed to  the petitioners under Art. 19(1) (g). If  the impugned orders constitute a restriction on the freedom of carrying on trade, though it is not considered to be so,  the same  is reasonable and imposed in larger public interest. Prima  facie  it  appears  that  the  petitioners’ business or  trade as  coal merchants  is no  way interfered with by  the railways by not being able to provide transport facility. Let  it not  be forgotten  that the railway is not the only  means of  transport.  There  are  other  means  of transport by  which the  coal  can  be  transported  by  the petitioners to  their respective  place where  they carry on their business as the coal merchants. Even assuming that the direct impact  of  the  policy  laid  down  by  the  railway administration  pursuant   to  the  orders  of  the  central Government under  sec. 27A results in denial of allotment of wagon to the petitioners, the restriction will none-the-less be reasonable  because petitioners are not wholly denied the allotment of wagons. [681 H; 682 A-B; 683 A-C]      A developing  country with  mixed economy  and economic planning have  certain targets to achieve. These targets are planned in  advance and  the economic  activity is geared to the achievement  of these targets. If the required resources necessary for  achieving targets  were readily available, no difficulty would  arise. But  a developing country has to so distribute its  scarce resources  to achieve  and accomplish desired targets.  This situation  is bound  to lead to a gap between  the   demand  and  supply  of  various  facilities. Transport is  one such.  Once there  is a  gap  between  the demand for  transport service offered by the railway and the supply of the service, the resources being not sufficient to meet with  all existing  demands, the  scarce resources will have to be equitably distributed keeping in view the planned target.  This   equitable  distribution   would  necessitate imposing  of   reasonable  restrictions   and  according  of priorities. [683 D-F]      In the  instant case,  coal falls in Priority ’C’ (iii) in the  Preferential  Traffic  Schedule  being  the  Primary source of energy. Planned regulated movement of coal to meet priority needs  if it  results in denial of that facility to non-priority sector  could not  be rejected  as  placing  an unreasonable restriction on the fundamental freedom to carry on trade or business. And that is the object underlying sec. 27A. It is therefore, idle to contend that the section being violative of Art. 19(1) (g) is unconstitutional. [684 A-B]      Annexure ’B’  to Preferential Traffic Schedule sets out

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the list  of sponsoring authorities. The list shows that the Central and  State Governments  as  well  as  highly  placed Central and State Government Officers have been appointed as sponsoring  authority   in  respect   of  coal  required  by different area and industries. 661 Again in  various States various sponsoring authorities have been set up by State Government. Power is conferred on these sponsoring authorities  to  sponsor  persons  who  would  be accorded priority  in transport  of coal.  These responsible persons and  bodies set  up  in  each  State  as  sponsoring authority are  expected  to  act  in  a  responsible  manner keeping in  view the  demands of  the area and the industry, for coal  in each  State. It  is, therefore, idle to contend that setting  up of  sponsoring or recommending authority in Priority ’C’  (iii) of  the Preferential Traffic Schedule is ultra vires sec, 27A of the Act. [684 C-F]      The transport of coal is according to a plan drawn up a year in  advance.  Further  this  plan  is  subject  to  the decision of the Standing Linkage Committee. Every meticulous detail is  worked out in advance. A daily loading of maximum number of  wagons is pre-planned. Loading of the wagons with coal at a targeted number daily requires rotational movement also according  to plan.  A wagon once loaded with coal when it moves out to the destination has a certain average return time stipulated  and worked out in advance. In order to give effect to this planned movement abbreviation ’GX’ is devised and appended  to all  the  railway  stations  informing  the transporters that  the station  is not open for transport of coal in  wagon loads.  Coal in  smalls can  be  offered  for transport that  is what  the petitioners  do not desire. All the regulatory  measure clearly  indicate that  transport of coal is  scientifically planned  and devised in advance. All the impugned orders are made for effective implementation of the planned  movement  of  coal.  If  consistent  with  this planning, the railways have stopped booking of coal in wagon load from  wayside station,  it cannot  be  said  that  this regulatory arrangement  violates sec. 28 of the Act and also that  this   action  has   imposed  such   an   unreasonable restriction on the fundamental freedom of the petitioners to carry on  their trade  as to  be  violative  of  Art.  19(1) (g).[685 A-B; F-H]

JUDGMENT:      ORIGINAL JURISDICTION  : W.P.Nos.  6822,7350,7351,7457- 58,  7461,7609-18,7625,7637,7638,  7945,  7966-68,  8003-04, 8007-08,       8068,8078,8088,8196-8220,8358-60,       8361- 63,8378,8505, 8832-33,  8912, 8917,  8918-19,9083,9110,9135- 36/81,13, 36,  112, 159,  969, 2163, 2641, 7089, 7685, 8004, 8119,   8187-88,    9186   &   9187/82,   7462   63/82,7765- 67/81,160,180,1503/82,1919/81,1/82,868,1270,1358,2256, 2272,4051-4052,5123-26,7147/82.       (Under article 32 of the Constitution of India) Advocates for the Appearing Parties:      S.S. Ray,  N.R. Choudhary, K.K. Mohan, S.K. Sinha, R.C. Kohli, R.S. Sharma, S. Mitter, N.S. Das Bahl, E.C. Agarwala, A.K. Mitra,  H.K. Puri & K. Chatterjee, B. Datta, Rishi Kesh & M.  Chopra., S.C.  Gupta &  M. N.  Shroff, S.K.  Ghosh, D. Goburdhan, P.  Mohanty, Abdul  Khader, C.  V.  Subba  Rao  & Dalveer Bhandari. 662      The Judgment of the Court was delivered by      DESAI, J.  When the  hearing in this group of petitions

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concluded we pronounced the following order:           "All the  Writ Petitions  are  dismissed  and  any      interim order  in each matter is hereby vacated. In the      matters which are listed as ready, the petitioner shall      pay cost to the respondents in one set in each petition      and there  will be  no order  to costs  in the  matters      which are shown as unready.      Reasons will follow." Here are the reasons.      The petitioners, in this group of petitions, under Art. 32 of the Constitution are coal-merchants, who, according to them, have been denied the use of the railways for transport of coal  from various  coalfields and  way-side stations  to their  destinations  by  the  illegal  and  unconstitutional action  of   the  railway   administration.   Constitutional conundrum invoked  by them  is the alleged violation of Art. 14 in  that while  certain transporters  of coal  have  been accorded priority in the matter of transport of coal such as the Central  and the State Governments and the sponsored and recommended  transporters,  the  petitioners  who  are  coal merchants were  denied equality of opportunity in the matter of transport  of coal by railway. Their further grievance is that total  prohibition of  booking and transport of coal as requested by  petitioners, by the railway administration, an instrumentality of the State envisaged by Art. 12 imposes an unreasonable restriction  on their  fundamental  freedom  to carry  on   trade  guaranteed  by  Art.  19(1)  (g)  of  the Constitution and hence impugned orders are invalid.      There are  different petitioners  from different  areas voicing their  grievance against  action of  different zonal railway  administrations  but  the  running  thread  in  the catalogue of  grievances is  the same  and therefore  a  few representative facts to appreciate the contention as set out in Civil  Writ Petition  No. 8003-04  by M/s  Raniganj  Coal Corporation &  Ors. may be briefly enumerated. This petition is adopted  as representative for the additional reason that a very  comprehensive counter affidavit has been filed in it on behalf of the respondents. 663      Petitioners  aver   that  they  are  coal  traders  and undertake supply  of coal  and coke  throughout India but in particular in  the States  of Punjab,  Haryana and the Union Territory of Delhi. They carry on the additional business of supplying  slack  coal  purchased  from  private  collieries situated in  the State  of Meghalaya.  In order to move coal from  the  collieries  to  consumers,  petitioners  have  to transport coal from various stations served by North-Eastern Frontier Railways  (Meter gauge)  New Gauhati  and  Badarpur Ghat  in   Silchar  District  in  the  State  of  Assam  and Meghalaya. For the purpose of transporting coal they have to indent wagons  as they want to transport coal in wagon-loads as the  expression is  understood in  contra-distinction  to smalls and clubbing. They submit indent for wagons according to  the   procedure  prescribed   in  the   relevant  rules. Petitioners aver  that prior  to April 1, 1972, there was no restriction on  booking of coal in wagon-loads. The Govt. of India, Ministry  of Railways  issued an  order  dated  April 1,1972 which reads as under:      "Government of India (Bharat Sarkar)      Ministry of Railways (Rail Mantralaya)           Railway Board No. TCR/1510/71           New Delhi dated 1st April 1972                                12th Chaitra, 1894      The General Manager      11, India Railways

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         The Railways  Board have  decided that in the list      of abbreviations  at page-14  Chapter VI  of  the  IRCA      Alphabetical  list   of  Railway   Stations  in   India      (corrected upto  31.3.79) an additional entry below the      abbreviations ’G’ should be incorporated as under:                GX-Open   for    goods,   traffic   of   coal           descriptions  excluding  livestock,  horse,  large           animals such  as camels,  elephants etc. carriages           on their  wheels and  motor cars  but not open for           outward booking  of  coal,  coal  shale,  lignite,           patent fuel,  shoft coke  and hard  coke in  wagon           loads.’ 664           The Railway Administrations are hereby directed to      decide and  notify the  names of stations to which this      new provisions  would  apply  and  advise  the  General      Secretary, I.R.C.A. accordingly.           The General  Secretary I.R.C.A.  On receipt of the      advice from  the Railway Administrations should arrange      to issue the necessary corrections, to the alphabetical      list of Railway Stations.                                       Sd/- P.N Kalra,                                Dy. Director, Traffic (Rates)                                Rly. Board, New Delhi, dated                                Ist April 72/12 Chaitra 64"      This is  one of the impugned orders in these petitions. The abbreviation  IRCA used  in  the  impugned  order  means Indian Railway Conference Association (’IRCA’ of short). The IRCA has compiled and issued an alphabetic list of All India Railway Stations  and by  a suitable  abbreviation as  shown against the name of each railway station indication is given about the  facilities for  traffic both  goods and passenger available at  different stations.  As per the impugned order when abbreviation ’GX’ is appended to any railway station it would inter-alia  mean that  the station  is  not  open  for outward booking  of coal, coal-shale etc. in wagon-loads. It appears that  the abbreviation ’GX’ has been appended to all way-side stations  in the coal-belt, consequently no railway station in the coal-belt would be in a position to book coal in wagon-loads  from each  such station. Consequent upon the issuance of  the impugned  notification, the  Govt. of India revised Rule 302(i) of the Goods Tariff No. 33 Part I issued by  IRCA.  Further,  the  Chief  Commercial  Superintendent, Eastern Railway  by a circular dated April 15, 1972 informed the station  superintendents and  station-masters of all the stations served  by the  Eastern Railway that the entry ’GX’ should  be   appended  to   all  the   stations  within  its jurisdiction.  Thereafter   Govt.  of   India,  ministry  of Railways by  its order  dated April 27, 1972 issued an order revising Rule  1 and  2 of  the Eastern Railway Coal Traffic Part I as under:           "All Traffic  in coal, coal-shale, lignite, patent      fuel, soft  coke and  hard coke  in wagon loads will be      loaded only from Colliery sidings, coke oven plants and      washe- 665      ries on  the Eastern  Railways. Though  invoices may be      issued as  from the  stations  serving  these  colliery      washeries and  coke oven  plants, loading  of  coal  in      wagons will not be permitted at those stations. Loading      and booking  of coal  is also  not permitted  from  any      other station on the Eastern Railway. This traffic will      be booked under the following forms of invoices:-      a)   "Weight only" invoices showing the weight and rate           but not the calculated freight.

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    b)   "Paid" invoices.      c)   "To pay" invoices.      2.    Coal will be booked under "Paid" invoices only on           the written  request of the sender despatching the           coal and  provided the  freight is tendered at the           time of despatch.           Wagons will  be allotted  only an availability and      will be  subject to observe of priority and other Rules      that are in force."      A further  restriction  followed  when  the  Divisional operating  Superintendent,  Bilaspur  for  apparent  reasons stopped booking  of coal in smalls including clubbing at all stations of  North-Eastern Railway.  This  restriction  came into force  on December  4, 1979.  On February  11,  1980  a telegraphic communication was issued explaining that coal in wagon-loads can  be booked  from  colliery  sidings  by  the coalieries concerned. In other words, the coalieries booking the wagon  must specify  its name  in the  indent Booking of slack coal  was wholly  stopped as  per a  phone call  dated April 9,  1981. Petitioners  further contend  that Union  of India, Ministry  of Railways has issued Preferential Traffic Schedule in  exercise of  power conferred by sec. 27A of the Indian  Railways   Act,  1890   (’Act’  for   short).   This Preferential  Traffic  Schedule  provides  for  preferential treatment in  transport of  goods from  various stations. It provides five inter se priorities A to E. Different kinds of coal falls under priority ’C’ (III) which reads as under:      (iii) Coal from collieries in accordance with commodity           quotas laid  down from  time to  time  for/certain           types 666           of coal  and/or in  accordance with programmes and           movements sponsored  or recommended  by  the  Coal           Controller and/or  any Committee  appointed by him           and/or  the   State   Governments   and/or   other           recommending   authorities    and   accepted    by           the/Railway   Administrations   and/or   Director,           Movement (Railways),  Calcutta, and  in accordance           with the Zonal Scheme applicable to each field and           the principles  of  transport  rationalisation  in           force from  time to  time. A  list  of  sponsoring           authorities authorised  to sponsor  coal movements           in this item is given in Annexure ’B’. Note-(a)   Coal in  the above  item C(iii)  means  "Coal  as           defined in Colliery Control Order."      (b)   Besides the  sponsoring authorities  mentioned in           Annexure ’B’  movement of Coal may be sponsored by           "any other  authority who  may be appointed by the           Government from time to time."      (c)   Recommendation  for  allotment  of  wagons  by  a           sponsoring    authority     or    acceptance    of           recommendations  or   issue  of  sanction  by  the           Railway     Administration/Director,      Movement           (Railways) does  not guarantee allotment/supply of           wagons.  Allotment/supply   of  wagons   would  be           regulated  according   to  the   availability   of           Coal/transport  and   according   to   operational           exigencies from  time to  time. Allotment/supplies           of wagons may be cancelled or reduced by Director,           Movement (Railways).      (d)  The period of validity of programmes/sanctions for           rakes/piece-meal movement  may be  laid down  from           time to  time by  Railway Administration/Director,           Movement (Railways).  The validity  of  programme/           sanction does  not guarantee  allotment/supply  of

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         wagons.      (e)  Inter se seniority of the class of consumers would           be  laid   down  from  time  to  time  by  Railway           Administration/Director, Movement  (Railways)  and           may be 667           altered/modified from  time to  time.  Within  the           same class  or category of consumers seniority may           be fixed  from time  to time  depending  upon  the           operational  and   other  considerations.  Railway           Administration/Director,  Movement  (Railway)  may           permit distress  allotments/supply of  wagons when           considered necessary.  Nothing  laid  down  herein           shall be  considered as  contrary to  notes (a) to           (b) appearing under Priority ’E’."      Priority ’E’  also includes  coal  from  collieries  in accordance with targets laid down from time to time from the different fields  and in  accordance with  the zonal  scheme applicable to  each field  and the  principle  of  transport rationalisation already  in force.  Petitioners contend that sum total  of various restrictions including one dated April 1, 1972  introducing abbreviation  ’GX’ and the Preferential Traffic Schedule  specifying priorities under section 27A of the Act  in their  cumulative effect  impose a  total ban on transport of  coal by  the Railways,  at their  instance and this action  is violative  of Art.  14 and/19(1)  (g) of the Constitution.      A very  detailed affidavit  has been filed on behalf of the respondents. Some of its highlights may be noticed.      Indian Railway  net-work serve  7000 railway  stations, scores of  divisions and  9 zones. In such an extensive net- work, all kinds of facilities by their very nature cannot be provided at  all stations,  nor can  all kinds of traffic be lifted and  moved from  all  stations.  The  Railways,  have therefore  to  plan  and  rationalise  movement  of  various commodities  from   various  loading   points   to   various destinations and in various directions. It is said that till recently coal  was the primary source of energy. It being an important commodity it has to be accorded such high priority being the  primary source  of energy,  that a senior officer called  Director,   Movement  (Railways)   is  posted   with headquarters at  Calcutta and  he controls  and co-ordinates all movements of coal by rail. As far back as 1945, the Govt of India  by its  resolution No. Coal 119 (1) dated December 4, 1945  appointed a  Committee called the Indian Coalfields Committee  which  submitted  its  report  in  1946.  Amongst various other  recommendations, the Committee suggested that in view  of the shortage of transport, it is imperative that increased attention be given to zonal 668 distribution of  coal.  If  further  notices  that  coal  is invariably transported  in full  wagon-loads  and  at  times despatched from  depot stations  in  full  train  loads  and therefore if  any general  revision of freight is undertaken in  consequence  of  increased  cost  of  operation  of  the railways, the  preferential treatment  now accorded  to coal should be  maintained. Statistical  data relied  upon in the report was  annexed to  the counter-affidavit. It is averred that railway  has to  rationalise movement  of coal  because daily on  an average 10,000 wagons are required for movement and transport  of coal  all over  the country.  In order  to explain why  booking  of  coal  from  way-side  stations  is prohibited,  it  is  averred  that  the  Director,  Movement (Railways) assesses  the likely  availability of wagons in a coming year for the movement of coal. After ascertaining the

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available capacity  he advises  Central  Govt.  and  various State Govts.  with a  request to sponsor coal traffic as per the  requirement   and  policies.  The  whole  programme  of transport of  coal from coalfields and coalieries to various points in India is worked out in advance keeping in view the daily despatch  of loaded  wagons and return of empty wagons so as to be available for daily requirement of empty wagons. A chart  is annexed  to this  counter-affidavit in which the average loading  of coal  in wagons per day is set out. In a letter dated  December 21,1981  by  the  Director,  Movement (Railways) to  Chairman of  the Railway  Board, it is stated that coal  loading the  month is  10,478 per day compared to 10,121 wagons  per day  during October,  1981. A comparative breakage of  loading during  some months  has been  set  out showing the  number of wagons indented, the number of wagons allotted and  the number of wagons loaded and the percentage of loading  against offer. It is also stated in the counter- affidavit that  the Department  of Coal,  in the Ministry of Energy  has  set  up  a  standing  linkage  committee  whose functions to  assess and link the requirements to particular sources of  coal  so  as  to  provide  this  primary  energy material to  establishments like the Railways, Thermal Power Stations, Fertiliser  Plants, Cement  Plants, Steel  Plants, Textile  factories,   Chemical  Industries   and  like.  The Committee assesses  the requirements  of various  industrial units, consumers  establishments and other consumers located in different parts of the country and thereafter taking into account the  production programme  of various collieries, it links  the   requirements  of  various  consuming  units  to different  individual   coal-fields,  and  this  linkage  is reviewed from time to time as the situation may necessitate. The availability  of wagons  is an  integral  part  of  this linkage programme.  After  specifying  these  facts,  it  is averred that this annual allotment drawn in advance 669 cannot be  disturbed by casual indent for transporting coal. It is  further averred  that the  railway is a carrier which has to  chop its own priority programmes keeping in view the public interest  of rushing various commodities to different parts of the country. If in the process some individuals may not get  a change to transport their commodities, the action of the  railway administration  is neither violative of Art. 14 or 19 (1) (g) of the Constitution.      There  are  some  averments  in  the  counter-affidavit casting some  doubt  about  the  trade  carried  on  by  the petitioners but  we consider  the same  irrelevant  for  the purpose of disposing of these petitions.      A number  of learned  counsel addressed  the  Court  on different facets  of almost  the same identical contentions. We would,  however, only  deal with  the  basic  contentions raised in these petitions.      At the  outset,  a  brief  reference  to  some  of  the provisions of  the Act  would facilitate  the examination of the contentions  canvassed before  us. Sec.  27 of  the  Act casts a  duty on  the railway  administration to arrange for receiving and  forwarding traffic without unreasonable delay and with  out partiality.  Sub-sec. 1  of sec.  27 reads  as under:      "27). Duty  of railway  administrations to  arrange for           receiving   and    forwarding   traffic    without           unreasonable delay and without partiality:-      (1)   Every railway  administration shall, according to           its powers,  afford all  reasonable facilities for           the  receiving,   forwarding  and   delivering  of           traffic  upon   and  from   the  several  railways

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         belonging to or worked by it and for the return of           rolling-stock." Sec. 27-A which was introduced by the Amending Act No. 11 of 1950 confers  power on  the Central Govt. to give directions in regard  to transport  of goods by railway administration. It reads as under:      "27   A. Power of Central Government to give directions           in  regard   to  transport  of  goods  by  railway           administration-(1) The  Central Government may, if           in its  opinion it  is  necessary  in  the  public           interest so  to do,  by general  or special order,           direct any railway administration- 670      (a)   to give special facilities for, or preference to,           the transport  of any such goods or class of goods           consigned to  the Central  Government  or  to  the           Government of  any State or of such other goods or           class of goods, as may be specified in the order;      (b)  to carry any goods or class of goods by such route           or routes and at such rates as may be specified in           the order.      (2)   Any order  made under sub-section (1) shall cease           to have effect after the expiry of six months from           the date  thereof, but it may be renewed from time           to time.      (3)   Notwithstanding anything  contained in  this Act,           every railway  administration shall  be  bound  to           comply with  any direction given under sub-section           (1). any  action taken by a railway administration           in pursuance  of any  such direction  shall not be           deemed to be a contravention of Section 28." Section 28  prohibits giving  undue  preference  by  railway administration. It reads as under:      "28.  Prohibition   of  undue   preference:-A   railway           administration shall not make or give any undue or           unreasonable preference  or advantage  to,  or  in           favour  of,   any  particular  person  or  railway           administration, or  any particular description, of           traffic, in any respect whatsoever, or subject any           particular person or railway administration or any           particular description  of traffic to any undue or           unreasonable  prejudice  or  disadvantage  in  any           respect whatsoever."      In exercise  of the power conferred by Sec. 27A Central Govt. issued  Preferential Traffic  Schedule directing  that all railway  administrations shall  give special  facilities for or  preference to  the transport  of goods  or class  of goods specified  in  the  Schedule  to  the  order.  Amongst Priority ’A’  to ’E’  there is  inter se  priority and  when under one  Priority various  goods or  class  of  goods  are clubbed  together   they  have  inter  se  priority  amongst themselves. Coal falls under 671 Priority ’C’.  Coal has  to  be  moved  from  collieries  in accordance with commodity quotas laid down from time to time for  certain   types  of  coal  and/or  in  accordance  with programmes and  movements sponsored  or recommended  by  the Coal Controller and/or any Committee appointed by him and/or the State  Governments and/or other recommending authorities and accepted by the Railway administrations and/or Director, Movement (Railways),  Calcutta and  in accordance  with  the Zonal Scheme  applicable to  each coal-field  from  time  to time. A list of sponsoring authorities authorised to sponsor coal movements  under priority C(iii) is set out in Annexure ’B’ to  the Schedule.  The expression  ’coal’ has  the  same

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meaning as defined in the Colliery Control order. There is a further  provision   under  Item   (iii)  that  besides  the sponsoring authority  mentioned in  Annexure B,  movement of coal may  be sponsored  by ’any  other authority  who may be appointed by the Govt. from time to time."      Sec. 27  provides for smooth flow of traffic throughout the length  and  breadth  of  the  country.  The  expression ’traffic’ is  defined to  include  rolling  stock  of  every description as well as passengers, animals and goods. A duty is cast on every railway administration to afford reasonable facilities  for  receiving,  forwarding  and  delivering  of traffic upon  and from  several  railways  belonging  to  or worked by  it and  for the  return of rolling stock. This is necessary because  the railway  net  work  is  divided  into various railway  such as  Western Railway, Central Railways, meaning  zonal   railway   administration   and   prior   to nationalisation of the railways different companies operated different railways.  Sec. 27  was enacted in the last decade of 19th  Century when  different companies  had set  up  the railway net work in different parts of the country. In order to provide  for smooth flow of traffic thwarting the railway administrations creating  their own  preferences, throughout the length and breadth of the country it was made obligatory by Sec.  27 that  every railway railway administration shall afford reasonable  facilities for  receiving, forwarding and delivering traffic and for return of the rolling stock. Sec. 27-A was  introduced in 1950 with a view to conferring power on the  Central  Govt.  to  give  directions  in  regard  to transport  of  goods  by  railway  administration.  In  1950 railways were  the primary  carriers of passengers and goods throughout the  length and  breadth  of  the  country.  Road transport was  then in  its infancy and river navigation was practically unknown.  On the  advent of the independence and as a  result of  planned  economy,  there  was  a  spurt  in industrial activity  with the  result that  demand from  the railways for 672 rolling stock  escalated. Various projects were being set up in  different   parts  of  the  country  which  necessitated uninterrupted flow  of goods  for speedy  completion of  the projects. By  1950, Constitution  became operative.  Art. 14 loomed larged  so that unless a specific power was taken for serving   larger   public   interest,   the   railways,   an instrumentality of  the State  would be  guilty of violating Article 14  if it  did not  afford  the  same  facility  for transport  of   goods  by   individuals  against  the  state requirements as  also priority requirements. In order to arm the  Central   Govt.  with  power  to  give  directions  for according special  facilities, or  preferential treatment in transport of  goods or  class  of  goods  consigned  to  the Central Govt.  or the  Govt. of  any State  or of such other goods or  class of  goods as  may be specified in the order, Sec. 27A  was introduced in the Act. It also conferred power on the Central Govt. to give directions for the same purpose of carrying  goods or class of goods by such route or routes and at such rates as may be specified in the order. The life of an order giving such facilities or preferential treatment was to  be initially  for a period of 6 months but it can be renewed from  time to  time. Sec.  28 prohibited  giving  of undue or unreasonable advantage or preference by the railway administration in the matter of transport of goods in favour of  any  particular  person  or  railway  administration  or particular description  of traffic.  The scheme that emerges from the  combined reading  of Secs. 27, 27-A and 28 is that the railway  administration on  their own  shall not  impede

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free flow  of traffic and return of rolling stock. Power was conferred  on   the  Central  Govt.  for  according  special facilities  or  preferential  treatment  in  the  matter  of transport of  goods both in respect of consignees as well as class of  goods, if  in its  opinion, it is necessary in the public interest to do so. However, Sec. 28 in the absence of general or  special order  in this  behalf  by  the  Central Government  under   Sec.   27A   denied   to   the   railway administration power  to accord  any undue  or  unreasonable preference or  advantage in  favour of any particular person or any  other body. The preferential treatment in the matter of transport  of goods  can be  accorded not  by the railway administration on  its own which it is prohibited from doing by Sec.  28 but  it is  under an  obligation to do so if the Central Govt.  gives a direction by general or special order in public  interest. In  short, undue  preference by railway administration is  statutorily prohibited  but  preferential treatment in  respect of  goods or  class of  goods  can  be accorded if  the Central  Government by a special or general order in public interest so directs. 673      Armed with  the power conferred by Sec. 27A the Central Government has  issued what  is called  Preferential Traffic Schedule. It  prescribed five  priorities ’A’  to  ’E’  with inter se priorities amongst ’A’ to ’E’ to be accorded by the railways for  transport of  certain goods  or class of goods specified under  each category. A brief reference to various Priorities ’A’  to ’E’  would  at  a  glance  show  how  the priorities have  been  determined  in  public  and  national interest. The  General Order No. 68 directs that in exercise of the  powers conferred by Sec. 27A of the Act, the Central Government directs  that all  Railway Administrations  shall give special  facilities for  or preference to the transport of goods  class of  goods specified  in the schedule to this order. Goods  included in  Priority ’A’  cover all  moves of immediate and  operational nature  ordered  by  the  Quarter Master General’s  Branch  through  Milrail,  which  will  be marked ’Immediate’  in respect  of Personnel,  Vehicles  and Stores, Military  Special trains  and immediate  operational demands. Demands  of the  Military have  been  accorded  the highest priority  for the  security of  the nation. Priority ’B’ includes foodgrains, fertilisers, edible groundnut cake, Iron and  Steel etc.  Next to  national security  hunger has been given  priority. Priority  ’C’ includes inter alia coal from collieries.  Coal has  till recently  been the  primary source of  energy and  yet it receives its place in Priority ’C’. Energy  thus gets  Priority ’C’.  Priority ’D’ includes raw materials  and finished  product  from  Asbestos  Cement Industry, Cotton  seed, foodstuffs such/pulses, fresh dates, perishable commodities  subject to quota etc. Priorities ’E’ is practically  a residuary clause which again involves coal from collieries  is accordance  with the  targets laid  down from  time   to  time  from  the  different  fields  and  in accordance with  the zonal  scheme applicable  to each field and the  principle of  transport rationalisation  already in force but not falling within Priority ’C’ (iii).      In the backdrop of this legal position, we may now turn to the contentions raised on behalf of the petitioners.      1.    Railway  being a common carrier and by Sec. 28 of           the Act  being statutorily  prohibited from giving           undue  preference   by  arbitrarily   picking  and           choosing some  out of  those seeking  to  use  its           services  and  facilities  its  action  of  giving           priority to  some transporters of coal denying use           of its transport facilities to the petitioners who

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         are  similarly   situated  is   discriminatory  in           character and hence violative of Art. 14. 674      2.    Impugned  orders such as one dated April 1, 1972,           December 31,  1980 and  April 11,  1981  in  their           cumulative effect  have imposed a total ban on the           transport of  coal offered  by the  petitioners by           the  Railway   and  thereby  imposed  unreasonable           restrictions on  the fundamental  freedom  of  the           petitioners to  carry on their trade guaranteed by           Art. 19(1)(g) and hence they are unconstitutional.      3.    If  upon its  true construction, Sec. 27A enables           the Central  Government to  impose a  total ban on           transport of  coal offered  by the petitioners who           are traders in coal, it (Sec. 27A) is violative of           Art. 19(1)(g) and hence unconstitutional.      4.    In any view of the matter, Para (iii) of Priority           ’C’ of the Preferential Traffic Schedule issued by           the Government  of India  in exercise of the power           conferred by  Sec. 27A  in so  far as  it  permits           special facility  or preference  to individuals or           groups  of  persons  selected  by  the  Sponsoring           Authority or  recommending body  for transport  of           coal is ultra vires Sec. 27A of the Act.      5.    Order  No. TO(g)  1510/71  dated  April  1,  1972           introducing abbreviation ’GX’ and appending to all           railway stations  denoting that  each such station           is not  open for  outward booking  of  coal,  coal           shale, lignite,  patent fuel  soft coke  and  hard           coke in  wagon loads  is violative Sec. 28 because           thereby the  railway administration  has subjected           the petitioners  as well  as the  coal offered for           transport to  an undue  and unreasonable prejudice           or disadvantage in the matter of coal transport.      6.    At  any rate,  total stoppage  of booking of coal           from wayside  stations and colliery sidings unless           the collieries  in their  own name book the wagons           imposes a  total ban  on transport of coal offered           by the  petitioners and therefore, the order dated           April 1,  1972 introducing  ’GX’ abbreviation  and           appending it  to all railway stations is violative           of  Art.   19(1)(g).  We  shall  deal  with  these           contentions seriatim. 675 Re Ground  1: Railway  is a  common carrier  and being State owned it  is subject  not only  to the provisions of the Act but also  the fundamental  rights guaranteed  by Part III of the Constitution.  However much  before the  advent  of  the Constitution  when   different  Railways   were   owned   by incorporated companies,  Sec. 28  of the  Act precluded  the different  railway   administrations  from   granting  undue preference  to  any  particular  person  or  any  particular traffic or  to any  particular  railway  administration,  or subject anyone  to any  undue or  unreasonable prejudice  or disadvantage  in   the  matter  of  transport  of  goods  or passengers. Railway being a Stale monopoly, to checkmate its monopolistic power  in the  larger public interest it has to be  subjected  to  regulatory  measures.  Simultaneously  it became necessary  to arm  Central Government  with power  to direct railway  administrative to  give  preference  in  the matter of  transport of the goods of the Government, Central or State  or specified  goods to meet the demands of various regions as  well as  needs of  Government. Intention  was to classify government  in a class by itself for the purpose of Art. 14.  To meet  the challenge  of Art.  19  (1)  (g)  the

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Central Government  was armed  with power to accord priority in transport  of goods in larger public interest. Soon after the  advent   of  the  Constitutions,  to  arm  the  Central Government  with  requisite  power  to  direct  the  railway administration to  give special facilities for or preference to the  transport of  any  such  goods  or  class  of  goods consigned to  the Central Government or to the Government of any State  or such  other goods  or class of goods as may be specified in  the order,  Sec. 27A was introduced in the Act which enabled it by a general or special order to direct the railway administration  to grant  special facilities  for or preference to  the transport  of goods.  Such a  general  or special order  can be issued by the Central Government if in its opinion it is necessary in the public interest to do so. Now  indisputably   the  goods   consigned  to  the  Central Government or to Government of any State must obviously have a priority  over what  we may  loosely describe  as  private transporters, because it is well-settled that the Central or the State  Government is  in a class by itself. This view is founded on  the assumption  that all activities of the State are in  public interest  in the  sense that  they are either undertaken on  behalf of the public or that the loss or gain arising form  them falls  upon the public (See Nav Rattanmal and  Others  v.  The  State  of  Rajasthan.(1)    The  goods consigned to the Central or the State Government are, unless shown to the contrary necessarily to be 676 used to  carry on  governmental activity  undertaken for the benefit of  public or  to sub serve some public interest and which may  as well  include the  efficient administration of the governmental  agencies. Sec.  27A also  confers power to direct any railway administration to give special facilities for or  preference to  the transport  of goods or a class of goods as may be specified in a general or special order that may be  issued in  this behalf.  The Central  Government  is better equipped  to know what class of goods are required to be sent  to any  particular area  expeditiously to meet some shortage, or  for national security or to meet and emergency or any  natural or  man-made catastrophy  so  as  to  accord special treatment in the matter of transport. See. 28 can be said to  some extent  to be  a corollary  to Sec. 27 A in as much as  the railway administration on its own is prohibited from giving  undue or  unreasonable preference  or advantage to, or  in favour  of,  any  particular  person  or  railway administration, or any particular description of traffic, in any respect  whatsoever, or subject any particular person or railway administration  or  any  particular  description  of traffic  to   any  undue   or  unreasonable   prejudice   or disadvantage in  any respect  whatsoever. To  repeat railway being a State monopoly undertaking, it had to be statutorily controlled  from   abusing  its  monopolistic  character  by prohibiting  it   from  giving  any  undue  or  unreasonable preference or  advantage or acting in any manner which would evidence undue  or unreasonable prejudice or disadvantage in any respect  whatsoever. Equality  guaranteed be  Art. 14 is translated into  statutory provision  in Sec.  28.  A  State monopoly like  the railway  administration cannot be trusted to act  fairly and that is the object underlying Sec. 28. If everyone was  to get  equal facility  for transport  of  his goods by  railway without anyone claiming priority or anyone having power  to grant preference or special facility, in an emergency this  equal  opportunity  would  create  a  havoc. Therefore on  the other hand, the Central Government to meet the needs of the country arising in any eventuality can give directions for  giving special  facilities for or preference

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to the  transport of  goods or  any class  of goods.  In the absence of  power such  as conferred  by Sec.  27A,  floods, draughts,  national   security  requirements,   unscrupulous hoarders,  artificial   shortages  materials   for  national projects in  a country  of the dimensions of India cannot be effectively and  adequately tackled.  This is the genesis of the power conferred by Sec. 27A.      Armed with  the power conferred by Sec. 27A the Central Government  has   issued  Preferential   Traffic   Schedule. Priorities ’A’ 677 to ’E’  therein set  out in the matter of transport of goods by railway  clearly manifests  a  public  policy  framed  to subserve public  interest. Coal the primary source of energy has been  relegated below the military requirement (Priority ’A’) and foodgrains and fertilisers, Iron and Steel material for wagon building, seeds etc. (Priority ’B’) and then comes the primary source of energy in Priority ’C’ Coal. Does this priority manifest  undue preference prohibited by Sec. 28 or a general  order issued  by the Central Government in public interest ?      Let one  confusion be cleared at the outset. Submission that there  is virtually a total embargo on the transport of coal by  railway at  the instance of the present petitioners or others  similarly situated  is  substantially  incorrect. Throughout the  hearing of  these petitions, it was pepeated ad nauseum  that cumulative  effect of all orders, including the impugned order dated April 1, 1972, is to impose a total ban on  the transport of coal offered by the petitioners. As will be  presently pointed  out, this statement is unfounded in facts  and presents  a distorted picture in the matter of transport of coal by railways.      Priority ’C’  (iii) which  deals with coal provides for transport of coal from collieries to various parts in India. It was  subjected to  varying  constructions.  It  has  been extracted earlier.  In order  to be  eligible for  obtaining allotment of  wagon under  Priority ’C’, it is necessary for the person  indenting  the  wagon  to  satisfy  the  various conditions specified therein. They are: (i) that the coal is to be  loaded from  the collieries; (ii) that the coal to be loaded is  in conformity with the commodity quotas laid down from time  to time  for certain  types  of  coal  and/or  in accordance with  the programmes  and movements  sponsored or recommended by  the Coal  Controller  and/or  any  Committee appointed by him; (iii) or it is sponsored or recommended by the State  Government and/or  other recommending authorities and accepted  by the  Railway Administrations; (iv) or it is sponsored or  recommended by  Director, Movement (Railways), Calcutta: (v)  and it  must be  in accordance with the Zonal Scheme applicable  to  each  field  and  the  principles  of transport rationalisation  in force  from time  to time.  In order to comply with the preconditions for eligibility under Priority ’C’,  a list  of sponsoring authority authorised to sponsor coal  movements is  drawn  up  and  is  set  out  in Annexure ’B’  to the  Preferential Traffic  Schedule.  These general conditions  are further subject to Notes A to E. Why such 678 an  exhaustive   and  detailed  provision  is  made  is  not difficult to  answer? Coal  forms 32% of the total transport of goods  handled by  the Railways. On an average, more than 10,000 wagons  will have  to be allotted daily for transport of coal  Coal being a primary source of energy used by heavy industries, electricity  generating plants,  steel plants as also cooking fuel used in the remotest parts of the country,

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it is  necessary to  handle its  transport  with  scientific precision. Therefore, there is a prior planning about a year in advance  drawn up  by the  Director, Movement  (Railways) setting out  Zonal Scheme of distribution applicable to each coal-field and  the principles  of transport rationalisation in force  from time  to time. The purpose underlying setting up  of   sponsoring  and   recommending  authorities  is  to ascertain the needs of various regions of the country who in their respective  regions would  be in  close  and  intimate contact with  the consumers  of  coal  both  industrial  and individual. Even  though power has been conferred on them to sponsor or  recommend  indenting  of  wagons  of  coal  from collieries  this  network  of  sponsoring  and  recommending authorities are  subject to  the Zonal  Scheme applicable to each  coal   field   and   the   principles   of   transport rationalisation in force from time to time. The nerve centre is the  Director, Movement  (Railways) of all the activities connected with  transport of  coal. In  addition to this the Government has  set up  a Standing  Linkage Committee in the Department of coal in the Ministry of Energy. This Committee assesses the  link and  requirement of  particular source of coal. The  Committee keeps  in view the requirements of such major industries  and establishments  using  coal  like  the Railways, thermal  power stations, fertiliser plants, cement plants steal  plants, textile factories, chemical industries and the  like. This  very narration would show that if there is disturbance  in regular  supply of  coal to this priority sector resulting  in their  closure, there would be a ripple effecting various  ancillary  industries  creating  a  major dislocation  in  in  the  national  economy  and  escalating haunted spectre  of layoff  and unemployment.  That  is  why planning is undertaken every year in advance and but for any emergency  it  is  considered  inadvisable  to  disturb  the advance Planning  because any  such disturbance  results  in serious dislocation  of this  primary source of energy being distributed all  over the  country keeping  in view national priorities.      With this background, it is not difficult to appreciate the various  orders issued by the Railway Administration and the Central Government regulating the movement of coal. 679      Railway is  a monopolistic undertaking in the matter of transport of  coal by Railways. Barring some tiny dots which may become  visible only  by a  magnifying glass, the entire railway  network  is  nationalised  and  the  railway  is  a department  of   the  Union   of  India.  It  is  therefore, indisputably a State monopoly. A monopoly unless kept within bounds may  prove to  be  a  menace.  Therefore,  regulatory measures are  necessary to prevent the abuse of monopolistic power. The  reasons  which  led  to  the  enactment  of  the Monopolies and  Restrictive Trade  Practices Act may have to be kept  in  view  even  while  keeping  a  watch  over  the activities  of   a  State   monopoly.   But   there   is   a constitutional check on the State monopoly, namely, it being State within the meaning of Art. 12 of the Constitution, all its actions  will have  to conform to the fundamental rights enshrined in Part III of the Constitution. Part III provides a positive  and healthy check on the railway administration. Sec, 28 of the Act seeks to achieve the same result which on the advent  of the Constitution, Art. 14 would achieve. Sec. 28 undoubtedly  prohibits railway administration from giving any undue  preference by  arbitrarily picking  and  choosing some  out   of  those   seeking  to  use  its  services  and facilities. But  Sec. 28  is subject  to Sec.  27A.  If  the railway administration  accords  priority  in  transport  of

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goods by  giving special facilities for or preference to the transport of  goods,  in  compliance  with  any  general  or special order  made by  the Central Government in the public interest in  this behalf,  compliance with  such special  or general order  could never be attacked as being violative of Sec. 28.  Sec. 28  forbids discrimination by giving undue or unreasonable preference  or  advantage  in  respect  of  any particular traffic  to any  particular person  or any  other railway administration  but this general prohibition against discrimination is  subject to the overriding power conferred on Central Government under Sec. 27A. If while giving effect to the  orders of  the Central  Government issued under Sec. 27A, priority  is accorded  in the  matter of  transport  of goods consigned  to Central  or State government or class of goods specified  in the  general or  special order issued in this behalf,  the action  of the  railway administration  in complying with  such special  or general  order could not be said  as  tentamounting  to  giving  undue  or  unreasonable preference or  advantage to  or in  favour of any particular person or  railway administration.  What Sec.  28 forbids is discrimination in the matter of transport of goods against a class but this is subject to 680 the permissible classification that would be introduced by a special or general order issued by the Central Government in exercise of  the power  conferred by  Sec. 27A.  It  may  be recalled that  the Preferential  Traffic Schedule  according Priority ’C’ to transport of coal by those mentioned therein has been  issued in  exercise of the power conferred by Sec. 27A. Therefore,  the  submission  that  petitioners  in  the matter of  transport of coal are similarly situated with the Central or  State Government  or transporters given priority by general  or special order issued under Sec. 27A cannot be entertained. This is all the more so because the petitioners are coal  merchants who  ’want to  transport their  coal  by railway for  carrying on  business in coal and they may sell the coal  to any  intending purchaser  while those  accorded preferential   treatment   under   Priority   ’C’   of   the Preferential Traffic  Schedule are  transporters of coal who have  been  recognised  one  year  in  advance  under  Zonal Distribution Scheme  as person who would by transporting the coal to  satisfy fixed  goals which  subserve needs  of  the public at  large. For  this additional reason the contention of the  petitioners that  they are  similarly situated  with those set  out in  Priority ’C’ (iii) cannot be entertained. Classification of  those covered  by Priority  ’C’  and  the present petitioners  is founded  on intelligible differentia which distinguishes  persons  or  things  that  are  grouped together  from   others  left  out  of  the  group  and  the differentia has  a rational relation to the object sought to be achieved  by the  impugned orders.  Those falling  within Priority ’C’  (iii) would form a class by themselves and the petitioners clearly  stand out  of the group and for reasons herein stated  petitioners could not be said to be similarly situated with those grouped together in Priority ’C’ (iii). Re Gr.  2: It  was next  contended that  the impugned orders dated April 1, 1972, December 31, 1980 and April 11, 1981 in their cumulative  effect have  imposed a  total ban  on  the transport of coal offered by the petitioners by the Railways and thereby  imposed an  unreasonable restriction  on  their fundamental freedom  to carry  on their  trade guaranteed by Art. 19(1)(g) of the Constitution. It is factually incorrect to say  that the  impugned orders  have in  their cumulative effect imposed  a total ban on the transport of coal offered by the  petitioners by Railway. Priority ’E’ in Preferential

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Traffic  Schedule   provides  for  transport  of  coal  from collieries in  accordance with  the targets  laid down  from time to  time from  the different  fields and  in accordance with the  Zonal Scheme  applicable to  each  field  and  the principle of  transport rationalisation  already  in  force. Priority ’C’ 681 (iii) caters  to transport  of  certain  types  of  coal  as recommended and  sponsored by  recommending  and  sponsoring authorities. Priority  ’E’ (ii)  caters to a situation where coal is  required  to  be  transported  from  collieries  in accordance with the targets laid down in advance. Therefore, if the  petitioners are  unable to obtain any sponsorship or recommendation for transport of coal by Railway, they may as well come under Priority ’E’ (ii). Assuming they even do not come within  the sweep  of Priority  ’E’ (ii), it is crystal clear that  any available  wagon after  all  priorities  are satisfied can  be made available to the petitioners. If even then wagons  are  not  allotted  to  petitioners,  they  can complain of  violation of Sec. 28. But it was urged that the Priority ’A’  to ’E’ have been so exhaustively drawn up that conceivably not  a single wagon would be available after all the priorities  are met  with. That  may be  so but  that is unavoidable when  the law  of demand  and  supply  operates. There is  always an  yawing gap  between the  demand for the wagon and  the available  supply of the same. That situation itself would justify making of orders under Sec. 27A. If the railways were in a position to meet with every demand of the wagon for  transport of goods, it was absolutely unnecessary to provide  for priority.  The very  fact that  there  is  a discernible gap  between the  demand for  the wagons and the supply of  the same that led to the necessity of introducing Sec. 27A  and making a general order drawing up Preferential Traffic Schedule  in exercise of the power conferred by Sec. 27A. Further  it was  said that  coal can  be transported in smalls from  certain  wayside  stations  not  suffixed  with abbreviation ’GX’.  But the  petitioners want  to  transport their coal  in wagon  loads. The Railways may not be able to provide wagon  from the  wayside stations because each empty wagon at  wayside station  is accounted  for  in  the  daily supply of  wagons approximately 10,000 for transport of coal from colliery siding to various destinations in the country. It may be as the petitioners contend that a loaded wagon may reach a  wayside station  and is  unloaded but  the counter- affidavit shows that each such empty wagon is accounted for, a year  in advance towards supply of more than 10,000 wagons daily to  the colliery  sidings for  transport of  coal. And this pre-planning  cannot be  disturbed  by  excluding  such wagons from the calculations about available wagons and hand it over to the petitioners. There is a further difficulty in making available  wagons to  the  petitioners.  Every  small wayside station is not equipped with necessary equipment for loading of coal. Therefore, if the law of demand and supply, and non-availability  of facility  for loading coal in small at wayside stations result in not making available wagons to the petitioners 682 because of  pre-planning and priority it cannot be said that there has  been a total ban on the transport of coal offered by the  petitioners by the railways, which would violate the fundamental freedom  to carry  on their  trade guaranteed to the petitioners  under Art. 19(1)(g). If the impugned orders constitute a  restriction on  the  freedom  of  carrying  on trade, though  we do  not consider  it to be so, the same is reasonable  and  imposed  in  larger  public  interest.  The

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contention must accordingly be rejected. Re Gr.  3: It  was next  contended that  if  upon  its  true construction Sec.  27A enables  the  Central  Government  to impose a  total ban  on transport  of coal  offered  by  the petitioners who  are traders  in coal,  Sec.  27A  would  be violative  of   Art.  19(1)(g)   and  should   be   declared unconstitutional. Art.  19(1)(g) guarantees  to the  citizen the fundamental freedom to carry on any occupation, trade or business. This  fundamental freedom is subject to reasonable restrictions that  can be  imposed by  law relating  to  the carrying on  by the  State, or  by a  corporation  owned  or controlled by the State, of any trade, business, industry or service; whether  to the  exclusion complete  or partial, of citizens or otherwise.      The first  question that  may be  posed in this context is: what  is the  trade being carried on by the petitioners? Are they  coal transporters ? Is the transport of coal their business ?  Or are  they coal  merchants who  are dealers in coal and  for the  purpose of  carrying on  of business at a certain place  they are  required to transport coal from the colliery sidings  to their  place of  business  ?  Obviously their business is not transport of coal. Transport is merely incidental  to   their  business,  namely,  trade  in  coal. Assuming that  the Railways  have wholly banned transport of coal offered  by the  petitioners by wagons could it be said that the  action of the Railways would violate Art. 19(1)(g) in relation  to them.  Whenever the  Court is called upon to examine the  complaint  that  restrictions  imposed  on  the freedom to  carry on trade are unreasonable, it is necessary to  find   out  what   is  the  trade  or  business  of  the complainant-petitioner and  to what  extent the restriction, if any,  is imposed  upon the  freedom to  carry on trade or business and  then to  determine whether  the restriction is reasonable or  otherwise. It  is the  direct impact  of  the restriction on  the freedom to carry on trade that has to be kept in  view and  not the ancillary or incidental effect of the governmental  action on  the freedom  to carry on trade. The petitioners  are not transporters of coal. They are coal merchants scattered over various parts in 683 India  and  now  they  complain  that  they  are  unable  to transport coal  because the  Railways have  so arranged  its priorities in  the matter  of transport  of  coal  that  the petitioners would never be able to obtain a single wagon for transport of  their coal.  Prima facie  it appears  that the petitioners’ business or trade as coal merchant is in no way interfered with by the railways by not being able to provide transport facility. Let it not be forgotten that the railway is not the only means of transport. There are other means of transport by  which the  coal  can  be  transported  by  the petitioners to  their respective  place where  they carry on their business as the coal merchants. Even assuming that the direct impact  of  the  policy  laid  down  by  the  railway administration  pursuant   to  the  orders  of  the  Central Government under  Sec. 27A results in denial of allotment of wagon to the petitioners, the restriction will none-the-less be reasonable  because petitioners are not wholly denied the allotment of wagons.      A developing  country with  mixed economy  and economic planning have  certain targets to achieve. These targets are planned in  advance and  the economic  activity is geared to the achievement  of these targets, If the required resources necessary for  achieving targets  were readily available, no difficulty would  arise. But  a developing country has to so distribute its  scarce resources  to achieve  and accomplish

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desired targets.  This situation  is bound  to lead to a gap between  the   demand  and  supply  of  various  facilities. Transport is  one such.  Once there  is a  gap  between  the demand for  transport service offered by the Railway and the supply of the service, the resources being not sufficient to meet with  all existing  demands, the  scarce resources will have to be equitably distributed keeping in view the planned targets.      This equitable  distribution would necessitate imposing of reasonable  restriction and according of priorities. Coal as pointed  out earlier  being the primary source of energy, the demand  for it  to keep  wheels of  industry rotating is very high  and it  has to be accorded a fairly high priority and that  is done by the Preferential Traffic Schedule. Only two other  items have  a priority  over coal and they are in respect of  Personnel, Vehicles and Stores, Military Special trains and  immediate Operational  demands that  is national security. This  does not  require  any  explanation  because national security  has  the  highest  priority,  and  it  is accorded Priority ’A’. Priority ’B’ provides for foodgrains, edible  oils,   goods  in   connection   with   relief   and rehabilitation of  displaced persons,  seeds etc. Hunger has been 684 accorded Priority  ’B’. And coal falls in Priority ’C’ being the primary  source of energy, Planned regulated movement of coal to  meet priority needs if it results in denial of that facility to  non-priority sector  could not  be rejected  as placing  an  unreasonable  restriction  on  the  fundamental freedom to  carry on  trade or  business. And  that  is  the object underlying Sec. 27A. It is therefore, idle to contend that  the  section  being  violative  of  Art.  19(1)(g)  is unconstitutional.      Re Gr.  4: It  was next  contended that  in so  far  as Priority C(iii)  in the  matter of  transport of  coal  from colliery sidings  permits special  facility or preference to individuals or  groups of  persons  selected  by  sponsoring authority or  recommending body for transport of coal, it is ultra vires  Sec. 27A  of the Act. One has merely to look at the list  of sponsoring and recommending authority to reject this  submission.   Annexure  ’B’  to  Preferential  Traffic Schedule sets  out the list of sponsoring authorities. It is a long  list but  a bare perusal of it is sufficient to show at a  glance that  Central and  State Governments as well as highly placed  Central and  State Government  Officers  have been appointed  as sponsoring  authority in  respect of coal required by  different area and industries. Again in various States various  sponsoring authorities  have been  set up by State Government.  Power is  conferred on  these  sponsoring authorities  to   sponsor  persons  who  would  be  accorded priority in transport of coal. These responsible persons and bodies set  up in  each State  as sponsoring  authority  are expected to  act in a responsible manner keeping in view the demands of  the area  and the  industry, for  coal  in  each State. It  is therefore  idle to  contend that setting up of sponsoring or  recommending authority  in Priority C(iii) of the Preferential Traffic Schedule is ultra vires Sec. 27A of the Act.      Re Gr.  5: It  was next contended that the Order No. To (g) 1510/71  dated April  1,1972 introducing of abbreviation ’GX’ and  appending it  to all railway stations has resulted in every  such station being not open for outward booking of coal, coal  shale, lignite etc. in wagon loads and therefore it violates  Sec. 28  of the Act because thereby petitioners are  wholly  prohibited  from  transporting  their  coal  by

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railway and  making every  empty wagon  available  to  those covered by Priority C(iii). It was said that the order dated April 1,1972  has the  pernicious tendency  of giving  undue preference to  Priority ’C’(iii)  transporters and  subjects petitioners  to   undue   or   unreasonable   prejudice   or disadvantage, both  situations being  prohibited by Sec. 28. As pointed out earlier, transport of coal is 685 according to a plan drawn up a year in advance. Further this plan is  subject to  the decision  of the  Standing  Linkage Committee. Every meticulous detail is worked out in advance. A daily  loading of maximum number of wagons is pre-planned. Loading of  the wagons  with coal at a targeted number daily requires rotational movement also according to plan. A wagon once loaded  with coal it moves out to its destination has a certain average  return time  stipulated and  worked out  in advance. There  may be  dislocations. In  order to meet this eventuality in  the counter-affidavit  it is  stated that no wagon load  of coal  can be booked from wayside stations. It can only  be booked  from colliery sidings and that ought to be so.  To achive this desired end, an abbreviation ’GX’ was devised and appended to all stations. Where a station has an abbreviation ‘GX’  appended to  it, it  would mean  that the station is not open for outward booking of coal, coal shale, lignite, patent  fuel, soft  coke and  hard  coke  in  wagon loads. We  fall  to  see  how  this  regulatory  arrangement violates Sec. 28. In fact, this incidental arrangement helps in smoothly  working the  Zonal Distribution  Scheme and the planned movement  of coal.  And it  is not disputed that the coal in smalls, if offered and if the space is available can be moved  from wayside stations. Therefore, we find no merit in the submission.      Re  Gr.  6;  It  was  lastly  urged  that  by  affixing abbreviation ’GX’  to all  waysides stations, a total ban is imposed on  the transport of coal offered by the petitioners and therefore,  the order dated April 1,1972 is violative of Art.  19(1)   (g).  It   is  the  same  submission  slightly differently clothed.  As stated  earlier movement of coal is planned and  regulated  and  no  tinkering  is  permissible. Petitioners  are   equally  Subject  to  this  planning  and regulated movement.  It cannot  be tinkered  with.  To  give effect to this planned movement abbreviation ’GX’ is devised and appended  to all  the  railway  stations  informing  the transporters that  the station  is not open for transport of coal in  wagon loads.  Coal in  smalls can  be  offered  for transport that  is what  the petitioners  do not desire. All regulatory measures discussed in detail hereinbefore clearly indicate that  transport of  coal is  scientifically planned and devised  in advance. All the impugned orders are made or effective implementation of the planned movement of coal. If consistent with  this planning,  the railways  have  stopped booking of  coal in  wagon load  from  wayside  station,  it cannot  be  said  that  this  action  has  imposed  such  an unreasonable restriction  on the  fundamental freedom of the petitioners to  carry on  their trade  as to be violative of Art. 19(1) (g). 686      We cannot part with this judgment without recording our uninhibited appreciation  of thorough  study of  the  knotty issues, research  and analysis of historical background, and scientific and  painstaking presentation  of the  facts  and issues of  law involved  in these  petitions by  Shri  Gupta learned  counsel,  who  appeared  for  the  various  railway administrations.  The  intense  labour  put  in  by  him  in collecting the most useful material and elucidating the same

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before  the   Court  in   a  very   able  manner  helped  us considerably in disposing of these petitions.      These are  the reasons  which persuaded  us to make the order set out at the commencement of the judgment. H.S.K.                                  Petitions dismissed. 687