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PETITIONER: VISHNU DAYAL   MAHENDRA PAL AND OTHERS

       Vs.

RESPONDENT: STATE OF UTTAR PRADESH AND ANOTHER

DATE OF JUDGMENT01/05/1974

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. MATHEW, KUTTYIL KURIEN ALAGIRISWAMI, A. SARKARIA, RANJIT SINGH

CITATION:  1974 AIR 1489            1975 SCR  (1) 376  1974 SCC  (2) 306

ACT: Uttar  Pradesh  Krishi Utpadhan Mandi  Adhiniyam,  1964  and Rules made thereunder-If violative of Arts. 14 and  19(1)(g) of the Constitutional.

HEADNOTE: The  Uttar Pradesh Krishi Utpadhan Mandi Adhiniyam, 1964  as amended by U.P. Acts 25 of 1964 and 10 of 1970. was  enacted to  provide for the regulation of the sale and  purchase  of agricultural   produce,  to  protect  the   producers   from exploitation and for the establishment, superintendence  and control of markets in U.P. Under s. 5, the State  Government is empowered to declare a particular area as market area and under  s. 7. the principal market yard and sub-market  yards are declared.  Section 7(2) provides that no person shall in a principal market yard or sub-market yard carry on business as  a trader, broker, commission agent etc., in respect   of specified agricultural produce except in accordance with the conditions  of a licence obtained from he  concerned  market committee.   Sec.  13 provides for the constitution  of  the market  committee  and for representation on  the  committee from  different  sources.  Under s. 17.  the  committee  has power to issue, renew, suspend or cancellicences. Section  25  provides  for appeals  against  orders  of  the committeeto  the  Director  of Agriculture and  s.  32  for revision by the State Government Under s. 16(2)(vii), the committee has to provide accommodation for storage.  Sec. 40 enables   the-’   State  Government  to  make   rules   Rule 70(4)(1)provides  that the Committee may issue a licence  to an  applicant if it is satisfied. (a) that the applicant  is solvent  and (b) that the applicant is a desirable   person. Rule  76(1)  provides that every  consignment  of  specified agricultural produce brought for sale into the principal  or sub-market yard shall be sold by open auction. The  petitioners  who  were traders  or  commission  agents, dealing in agricultural produce, challenged the validity  of the  Act,  and the rules made thereunder on  the  ground  of violation of Arts. 14 and19(1)(g). They contended that : (1) that constitution of the committee is  prejudicial  to their interests since. it  will  have  a

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perpetual  majority  of producers, (2)  the  entrustment  of licensing to such a committee is an unreasonable restriction on  their  right to trade, (3) there is no guidance  in  the matter  of grant of licences, the criteria mentioned  in  r. 70(4)  being vague, (4) the requirement to  provide  storage space   for   the  producers  by  the  petitioners   is   an unreasonable restriction, and (5) r. 76(1) is ultra vires s. 40  and  also  places an  unreasonable  restriction  on  the petitioners. Dismissing the petitions, HELD  :-(1) Under s. 13, the Committee is to consist  of  23 members  and  out of, them only 10 are from  the  producers. Therefore the submission is factually inaccurate as there is no question of a perpetual majority of producers. [381G-H] (2)  There  are  no unreasonable features in the  scheme  of representation in the    committee.    Under   8.   13,    8 producers are elected who may represent the 8 categories  of agricultural  produce  mentioned  in the  schedule  and  two producers  are  nominated from the schedule  castes  by  the Government, because, they may not get due representation  in the  election.  The performance of the duty of licensing  by such a committee cannot prejudice the petitioners.  In fact, none of the petitioners has been refused a licence.   Though usually some governments] authority is charged with the duty of granting licences under various Acts, that does not prove that  the duty cannot be property and impartially  exercised by a Committee representing various interests which are                             377 vitally  interested in the trade. of  agricultural  produce. If in a particular case. the action of the Committee is mala fide’  or  otherwise  objectionable such  grievance  can  be properly dealt with. [381H-382E] (3)  It  is not correct to say that there is no guidance  in the  Act in the matter of grant of license and that the  two criteria provided by rule 70(4)(1) are vague. [382E-F] (a)  The  Committee  which  is entrusted with  the  duty  of granting licences consists of people from different  sources vitally interested in the marketing of agricultural produce, as  well as Government officials.  It is a  well-represented Committee  which is expected to know the object and  purpose of the Act of’ which it is a creature.  There is  sufficient guidance  from the preamble and other provisions of the  Act with  which the members of the Committee would  be  familiar and-conversant,  for  example,  s. 16 of  the  Act  and  the particulars  in Forms XI and XIII. for the application of  a licence  and  Conditions  of a licence.  With  the  help  of Government officials in the committee there is no reason  to think  that the Committee will not function smoothly  or  to apprehend that licence would be refused arbitrarily.   There is  also a limitation on the power of the Committee in  that the Act insists that the Committee should record its reasons while  refusing a licence.  Further, there is  provision  of appeal  against the decision of the Committee and a  further revision to the State Government. [382F-383D] (b)  One  of the two criteria mentioned in r.  70(4)(i).  is solvency  and the criterion on the score or  ’bankruptcy  is well-known and cannot be said to be vague or indefinite.  As regards  the  second criterion, namely, that  the  applicant should  be  a  desirable  person  the  Act  itself  provides sufficient  guidance  to  the Committee  in  the  matter  of deciding  whether  a  particular applicant is or  is  not  a proper person to hold the licence. [383F-H] (4)  The  requirement to provide a storage space is only  an interim  measure pending arrangements by the  Committee  for proper storage as required by S. 16. Under r. 52(4)  storing

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of  the specified agricultural produce shall be  subject  to the payment of such storage fee and other conditions as  may be:  specified  in the bye-laws.  Since the storage  by  the traders  in the market yards will always be paid  for  under the  rule there is no substance in the contention  that  the requirement is unreasonable. [384A-B] (5)(a Rule 76(1) is not ultra vires s. 40 Section  9(2) restricts the right to carry on  trade  except under and in accordance with the licence_ and s. 17 provides for   issuing  or  renewal  of  licences  subject   to   the restrictions  under  the rules, and these sections  are  not challenged.   Section  40 empowers the State  Government  to make  rules  for carrying out the purposes of the  Act,  and under  s.  40(2)  (xxvii), r.  76(1)  only  prescribes  open auction as the mode of sale. [384B-D] (b)  The rule does not violate the fundamental right of  the petitioners under Art. 19(1)(g). [384G] The definitions of sale and purchase in the.  Act do not run counter  to the provisions relating to auction  sale  under, the  rule and, it Could not be field to be  an  unreasonable mode  considered in the entire scheme of the Act.  in  order that  the  producers  may obtain the best  price  for  their commodity, sale by open auction is prescribed under the rule to  fulfil  one of the important purposes of the  Act.   The legislature is intervening to see that the producers get the maximum pecuniary return possible in the transaction and as a          necessary         concomitant          eliminated the made of private sale by individual negotiation resulting in  malpractices.  Besides, by the Proviso to the  rule  the restriction is not allowed to operate in the case of  retail sales. [384D-G] Lala  Hari Chand Sarda v. Mizo District Council  and  all)-. [1967]  1 S.C.R. 479 and Harakchand Ratanchand  Banthia  and ors.  etc. v. Union of India and ors. [1970] 1  S.C.R.  479, distinguished. 378

JUDGMENT: ORIGINAL  JURISDICTION: Writ Petitions Nos. 1524,  1537-1580 of  1973 and 74, 75, 254, 510-512 of 19702’ 21 of  1971  and 1525 & 1581-1606 of 1973. Petitions under Art. 32 of the Constitution of India. A.   K. Sen, Yogeshwar Prasad, S. K. Bagga and S. Bagga, for the petitioners (in W.Ps. Nos. 1524 and 1537-1580/73). A.   K. Sea, (in W.P. No. 74/70), Hardyal Hardy (in W.P. No. 75/70), Yogeshwar Prasad, S. K. Bagga and S. Bagga, for  the petitioners  in (W.P. Nos 74, 75, 254 and 510-512/70,  21/71 and 1525, 1581-1606/1973). L.   N.  Sinha,  Solicitor  General  and  O.  P.  Rana,  for respondents (in W.Ps.    Nos. 1524, 1537-1580173). O.   P.  Rana,  for respondents (in W.Ps. Nos.  74,  254/70, 21171, 1525, 1581-1606/73 and respondents nos. 1 & 3 in W.P. 75 and 510-512/70). V.   M.  Tarkunde and E. C. Agarwala, for respondent  No.  2 (in  W.-P.  No. 75/70 and applicant/intervener in  W.P.  No. 75/70. The Judgment of the Court was delivered by- Goswami, J.-By the above writ applications under Article  32 of the Constitution the validity of the Uttar Pradesh Krishi Utpadhan Mandi Adhiniyam, 1964 (U.P. Act No. XXV of 1964  as amended by U.P. Act No. 10 of 1970) (briefly called the Act) and  the rules made thereunder are challenged on the  ground of  violation  of Article 14 and Article  19(1)(g)  of  the,

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Constitution. The  petitioners  in  all the above  cases  are  traders  or commission agents dealing in agricultural produce. The  following  submissions  are  made  on  behalf  of   the petitioners               (1)   The constitution of the Market Committee               under   section  13  of  the  Act  is   highly               prejudicial  to  their interests  and  of  the               traders  in  general  since, it  will  have  a               perpetual majority of producers.               (2)   To  entrustment of licensing to  such  a               Market  Committee instead of to any  impartial               authority  is  unfair and an  un-.  reasonable               restriction on the right to trade.               (3)   The  Act  in  the  matter  of  grant  of               licences  gives  no guidance at all  and  even               under rule 70(4) two vague criteria have  been               laid  down in the matter of issue of  licences               under the Act.               (4)   The petitioners are required to  provide               a  storage  space to the producers  for  their               agricultural  produce going to the market  and               this  obligation is also an unreasonable  res-               triction  on  the  fundamental  right  of  the               petitioners.               379               (5)   Rule  76 (1) is invalid and ultra  vires               section  40  of the Act and  has  also  placed               unreasonable  restrictions  on  the  right  to               carry on trade or business. Before  we  deal  with these submissions, we  may  turn  out attention to the Act.  As the preamble shows the Act has  to provide   for  the  regulation  of  sale  and  purchase   of agricultural    produce   and   fox    the    establishment, superintendence,  and control of markets therefore in  Uttar Pradesh.  The statement of object and reasons gives a  clear picture  of  the  evils  sought  to  be,  remedied  by  this legislation  and a portion therefrom may be extracted  below :-               "The  present  chaotic state  of  affairs  as,               obtaining  in agricultural produce markets  is               an acknowledged fact.  There  are.,innumerable               charges,,  levies.  and  exactions  which  the               agricultural  producer  is  required  to   pay               without   having   any  say  in   the   proper               utilisation of the amount so paid by him.   In               matters of dispute, between the seller and the               buyer,  the  former  is  generally  put  at  a               disadvantage; by being given arbitrary awards.                             The producer is also denied a large pa rt of his               produce  by manipulation and defective use  of               weights   and  scales  in  the  market.    The               Government of India and the various committees               and   commissions  appointed  to   study   the               condition  of  agricultural  markets  in   the               country have also been inviting the  attention               of  the  State Government from  time  to  time               towards  improving  the  conditions  of  these               markets .... The Planning Commission  stressed               long  ago  that  legislation  in  respect   of               regulation  of markets should be, enacted  and               enforced by 1955-56".               56". It is also mentioned that legislation in the State was first

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proposed  in 1938 but lapsed.  It also appears that most  of the  other  states have already passed legislation  in  this respect.  It is, therefore, clear that the principal  object of  this  Act  is to come in aid of the  producers  who  are generally  ill-organised  and  are  by  far  and  large  the exploited party in the bargain between unequals. Section  2  contains  the definitions.  By  section  2(a)  " ’agricultural  produce’  means  such  items  of  produce  of agriculture,    horticulture,    viticulture,    apiculture, sericulture, pisciculture, animal husbandry or forest as are specified  in the schedule, and includes admixture of  2  or more  of  such  items, and also includes any  such  item  in processed  form,  and further includes  gur,  rab,  shakkar, khandsari and jaggery".  By section 2 (f) "’Committee’ means a Committee constituted under this Act".  By section 2(k)  " ’Market Area’ means an area notified as such under section 6 or  as  modified  under  section  8".   By  section  2(p)  " ’producer’ means a person who, whether by himself or through hired  labour, produces, rears or catches, any  agricultural produce,  not being a producer who also works as  a  trader, broker  or  Dalal, commission agent or Arhatiya  or  who  is otherwise ordinarily engaged in the business, of storage  of agricultural  produce".  We are not concerned with the  pro- viso  attached thereto.  By section 2(y) " ’trader’ means  a person who in the ordinary course of business is engaged  in buying or selling agricultural produce as a principal or  as a duly authorised agent of one or more 380 principals  and includes a person, engaged in processing  of agricultural  produce".   After notification  by  the  State Government of its intention to declare a particular area  as a Market Area under section 5 and after inviting  objections and  consideration of the same, the State  Government  under section 6 declares the whole or any specified portion of the area mentioned in the notification to be the Market Area  in respect  of such agricultural produce as may  be  specified. Similarly  under  section 7, the Principal Market  Yard  and Sub-Market  Yards  are  declared.   Section  9(2)  which  is material for our purpose, may be quoted:-               "No  person shall, in a Principal Market  Yard               or  any Sub-Market Yard, carry on business  or               work  as a trader,  broker,  commission-agent,               warehouse  man, weighman, palledar or in  such               other capacity as may be prescribed in respect               of  any specified agricultural produce  except               under  and- in accordance with the  conditions               of  a  licence  obtained  therefore  from  the               Committee concerned". The  petitioners  make a great grievance of  this  licensing provision by the Market Committee called the Mandi Samiti of the  Market Area.  Section 13 provides for  constitution  of the  Market Committee and provides for  representation  from different sources as detailed in (i) to (xi) thereunder. The  learned counsel draws our attention to  clauses,  (vii) and (vii-a) of section 13(1) whereby ten representatives  of the producers are included in the Committee.  It is  pointed out by the learned Solicitor General and not contradicted by Mr. Sen that ’ the Committee under section 13 consists of 23 members out of which ten are from the producers.  Section 16 provides  for  functions and duties of  the  Committee  and, inter  alia, under section 2(i) thereof "a  Committee  shall ensure  fair  dealings  between the  producers  and  persons engaged  in the sale or purchase of  specified  agricultural produce."  Under  section 17, "A Committee  shall,  for  the purposes of this Act, have the powers to-

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             (i)   issue  or renew licences under this  Act               on  such terms and conditions and  subject  to               such  restrictions as may be  prescribed,  or,               after  recording reasons therefore, refuse  to               issue or renew any such licence;               (ii)  suspend  or  cancel licences  issued  or               renewed under this Act". Section  25 provides for appeals against the, orders of  the Committee  to the Director of Agriculture who is  to  decide the same in accordance with the rules.  Under  section   32, the State Government also has powers of revision  and    may call for the records of the proceedings of the Committee and pass  orders  modifying, annulling or  reversing  the  same. Section  40 enables the State Government to make  rules  for carrying out the purposes of this Act. The  rules, inter alia, provide for matters relating to  the functions,  powers  and duties of the  Committee,  licensing fee,  or market fee which may be levied and realised by  the Committee  and  their  mode of recovery and  the  terms  and conditions for assessment and renewal of licences under this Act [section 40 (2) ]. There is a schedule to the Act                             381 which  contains the description of the agricultural  produce Under  eight  different heads.  Chapter VIII  of  the  rules deals with transaction  of business in Market Yards and  the opening  rule  70  provides  for  licensing  by  the  Market Committees.   By  sub-rule(3) "any person desiring  to  hold licence  under  sub-rule (1) shall make, in Form No.  XI  or Form No. XII, as the case may be, a written application  for a licence to the Market Committee and shall pay the  licence fees  prescribed under rule 67".  Rule 70(4) (i) may now  be quoted:               "On receipt of such application together  with               the  amount of fee prescribed under  rule  67,               the Market Committee may issue him the licence               applied for,, if-               (a)   it  is satisfied that the  applicant  is               solvent;               (b)   it is satisfied that the applicant is  a               desirable  person  to whom a  licence  may  be               granted;               provided that the provisions of sub-clause (a)               shall   not  apply  to  weighmen,   measurers,               palledars, truck plyers and Thela plyers". This rule will have to be read with section 17 quoted above. By rule 73, the order of refusal, cancellation or suspension of a licence by, the Committee shall be communicated to  the person concerned in the specified manner indicated  therein. Rule 76(1) which is impugned may be quoted :               "Every  consignment of specified  agricultural               produce  brought for sale into  the  Principal               Market  Yard or any sub-Market Yard  shall  be               sold by open auction:               Provided  that nothing in this sub-rule  shall               apply to a retail sale as may be specified  in               the bye-laws of the Committee". Some  provisions  of similar Acts of the States  of  Madras, Bombay   and  Gujarat  had  earlier  been  the  targets   of unsuccessful   attack   in   this  Court   and   hence   the constitutional challenge in the present applications against the  U.P. Act is necessarily on different ground,,. [See  M. C.  V  ’ S. Arunchala Nadar etc. v. The State  of  Madras  & others;(1)  Mohammad Hussain Gulam Mohammad and  Another  v. The  State of Bombay and another;(2) and Jan  Mohammed  Noor Mohammed Begban v. State of Gujarat and Another(3)].

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We  may  now turn to the Submissions.  With regard  to  the first  submission,  as earlier noted, the grievance  is  not factually  accurate.   Out of 23 members of.  the  Committee only  10  are from the producers.  Therefore,  there  is  no question  of  a perpetual majority of the producers  in  the Committee.   Besides under section 13(1)(vii),  8  producers are elected.  It may be even a legitimate expectation of the legislature  that  there may be reasonable  likelihood  that Producers  of  eight  categories  of  agricultural   produce mentioned in the schedule, (1) [1959] (Supp) (1) S.C.R. 92. (2) [1962] (2) S.C.R. 659. (3) [1966] (1) S.C.R. 505. 382 may  be represented.  Under section 13(1)(vii-a), which  was introduced by an amendment in 1970, two producers  belonging to  the  scheduled castes are to be nominated by  the  State Government  This  provision is made in the interest  of  the People belonging to the scheduled castes who may not be able to. get due representation in the elections.  We do not find any unreasonable features in the scheme of representation in the  Committee  under section 13.  This will be  clear  even from  section 14 whereby the first Committee appoints  suit- able  members "to represent different interests referred  to in sub-section (1) of section 13".  The first submission  of the petitioners is, therefore, of no avail. We may now take up consideration of the second and the third submissions  which  may  be  dealt  with  together.   It  is submitted  that the licensing of the traders should  not  be left  in  the  hands of the Market Committee.   We  find  it difficult to appreciate how the performance of this duty  by the Committee will at all prejudice the traders.  To say the least  it is a hypothetical objection in this case,  as,  we understand,  none  of the petitioners have  been  refused  a licence..   It  is  true  that  usually  some   governmental authority  is charged with the duty of granting of  licences under  various  local Acts.  That, however, does  not  prove that  the duly cannot be properly and impartially  exercised by  the Committee representing various interests  which  are vitally  interested  in the trade of  agricultural  produce. Whether in a particular case the action of the Committee  is mala-fide  or otherwise, objectionable, may be  a  different matter  and  such a grievance can be  properly  dealt  with. That  would, however, not make, the, provision  invalid  nor can  it be said to place an unreasonable restriction on  the right of the petitioners to trade. It is further submitted that there is no guidance in the Act in  the  matter of grant of licence and  the  relevant  rule 70(4)(1)  prescribes only two vague criteria in the  matter. This  submission  fails to take note of the  fact  that  the Committee  which  is  entrusted with the  duty  of  granting licences  consists of people from different sources  vitally interested  in the marketing of agricultural  produce.   The Committee  consists  also  of  representatives  from   local bodies, cooperative marketing societies  Central Warehousing Corporation, State Warehousing Corporation,  representatives of  traders and commission agents, Government  officials  of whom  one  shall  be a  representative  of  the  Agriculture Department  and the other of Food and  Supplies  Department, and  so forth.  It is, therefore, a fairly  well-represented Committee  which is expected to know the object and  purpose of the Act of which it is a creature.  One may  legitimately expect  that the members are well aware of the  difficulties of   the  producers,  interests  of  the  traders  and   the intricacies of the trade.  There is sufficient guidance from the preamble and other provisions of the Act with which  the

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members of the Committee owe their duty to be conversant For example  under section 16 the Committee is charged with  the duty  of enforcing the provisions of the Act, the rules  and the bye-laws.  It has to exercise its powers and perform its duties  and discharge its functions in accordance  with  the provisions of the Act and the rules. 38 3 Under  sub-section  (2) of section 16, the  Committee  shall ensure  fair dealings between the producers and the  traders besides performing other functions.  Form No. XI in which  a trader  has  to submit his application for a  licence.  also gives various particulars from which the Committee would  be able to consider his claim for a licence.  It will be’  seen that  in this form the, applicant has to undertake to  abide by  the conditions of the licence and the provisions of  the Act  and the rules.  The condition of the licence which  are noted in Form No. XIII would also give an indication of  the obligations  of the licensee.  All these would be  known  to the Committee. At  any rate, with the help of the Government  officials  in the  Committee there is no reason to think that the work  of the Committee will not function smoothly and that there will be  any reason to apprehend that licences would  be  refused arbitrarily.   Even  the scope for such an  apprehension  is sought  to  be  done  away with  by  providing  a  provision Provision  of appeal against the decision of  the  Committee and  also a further revision to the State Government.  There is  a  further limitation on the power of the  Committee  by insisting  upon  recording  of  reasons  while  refusing   a licence.  It is, therefore, clear that a speaking order  has to  be. passed when refusing a licence and it will  have  to justify  that  the  licence  is  refused  only  on  relevant considerations with regard to solvency and fitness in  terms of the provisions. of the Act. It  is submitted that the choice of the two  criteria  under rule  70(4)  (i) is bad and there is no proper  guidance  in these   criteria   which  are  not  capable   of   objective determination.  The two criteria laid down are solvency  and desirability.   The applicant has to satisfy  the  Committee that he is solvent as opposed to insolvent that is bankrupt. We are informed that the original Hindi version of the  rule which  is translated into English gives the  equivalents  as follows :-               "It  is satisfied that the applicant is not  a               bankrupt (rindiwali) ".               "It  is  satisfied  that the  applicant  is  a               proper (upoyukta) person to whom a licence may               be granted". Mr.  Sen candidly admits that the criterion on the score  of "bankruptcy" is well known and cannot be said to be vague or indefinite.  Hi, however, submits that the second  criterion is not at all precise and definite. Although perhaps a more expressive guidance could have  been given, we have already observed that the Act itself provides sufficient  guidance  to  the Committee  in  the  matter  of deciding  whether  a  particular applicant is or  is  not  a proper person to hold a licence and we cannot accede to  the submission  that  the  two criteria  taken  with  the  other guidelines  from  the provisions of the Act  and  the  rules offer  no proper guidance to the Committee in tic matter  of grant  of licence.  The second and the third submissions  of the petitioners are, therefore, devoid of substance. With  regard to the fourth submission, it is  sufficient  to point out that under section 16(2)(vii) the Committee has to provide, inter

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384 alia, accommodation for storage and such other facilities as may  be  prescribed.   Under  rule  52(4)  storing  of   the specified  agricultural  produce  shall be  subject  to  the payment of such storage fee and such other conditions as may be specified in the by-laws.  That being the position,  this may  be even an interim measure pending arrangements  by.the Committee,  for proper storage.  Even otherwise the  storage by  the traders in the Market-Yards will be always paid  for under rule 52(4).  There is, therefore, no substance in  the fourth submission of the petitioner. With  regard to the last submission regarding invalidity  of rule  76(1),  we are not satisfied that the  same  is  ultra vires section 40 of the Act.  Section 40 empowers the  State Government  to make rules for carrying out the  purposes  of the Act.  Rule 76(1) is well within the rule making power of the  State Government under section 40(2),  clause  (xxvii). Section  9(2) restricts the right to carry on  trade  except under and in accordance with a licence.  Section 17 provides for   issuing  or  renewal  of  licences  subject   to   the restrictions  under the rules.  Section 9(2) and section  17 are  not  challenged before us.  Rule 76(1)  prescribes  the mode  of sale that is to say by open auction under the  rule making power under section 40 read with clause (xxvii).  The rule  is not ultra vires section 40 of the Act.  It is  said that prohibiting private sales by confining only to sale  by open  auction puts an unreasonable restriction on the  right to trade of the petitioners.  If section 9(2) and section 17 are not challenged as invalid, it is not understood how rule 76(1)  which is within the rule making power can be said  to be  unreasonable.   In order that the producers  obtain  the best  price  for their commodity, sale by  open  auction  is prescribed  under rule 76(1) lo fulfil one of the  important purposes  of the Act.  Sale by auction is a well known  mode of sale by which the producers, for whose interest this  Act has  been  made,  can  obtain  the  best  price  for   their commodities.   The definition of sale and purchase to  which our  attention has been drawn by the petitioners do not  run counter  to the provisions for auction-sale under  rule  76. It  cannot  by any stretch of imagination be held to  be  an unreasonable  mode  in the entire scheme of  the  Act.   The legislature is intervening to see that the producers get the maximum pecuniary return possible in their transactions and, as  a necessary concomitant, eliminated the mode of  private sale  by individual negotiations resulting in  malpractices. Besides by the proviso to rule 76(1) this restriction is not allowed  to operate in the case of retail sales.  There  is, therefore,  no substance in the submission that  rule  76(1) violates  the  fundamental right of  the  petitioners  under Article 19 (1) (g) of the Constitution. Mr. Sen particularly drew our attention to two decisions  of this Court.  The first is given in Lala Hari Chand Sarda  v. Mizo District Council and Anr. (1) That was a case where the Executive Committee of the Mizo District Council refused  to renew the temporary licence issued to the appellant  therein who  was a non-tribal trader under section 3 of  the  Lushai Hills  District (Trading by non-Tribals)  Regulation,  1953. This Court by majority struck down section 3 as (1)  1967 (1) S.C.R. 1012. 385 violative  of Article 19(1) (g) of the  Constitution.   This decision  is clearly distinguishable from the present  case. In  that case there was no right of appeal to  any  superior authority against a refusal to grant or renew a ]licence and the non-tribal trader had no remedy whatsoever against  such

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an  order.   This Court also observed in that case  that  "a perusal of the Regulation shows that it nowhere provides any principle  or standard on which the Executive Committee  has to  act  in  granting  or refusing  to  grant  the  licence" (emphasis added). The second decision, is in Harakchand Ratanchana Benthia and Ors.  etc.  v. Union of India and Ors.(1) This  was  a  case under the Gold (Control) Act and Mr. Sen drew our  attention to the expression ’suitability of the applicant" in  section 27(6)(e) of the Gold (Control) Act which was held to provide no  objective  standard or norm and as such was held  to  be constitutionally invalid.  This Court while dealing with the objection  to  section 27 of the Gold  (Control)  Act  which relates to licensing of dealers held as follows :---               "Section 27(6)(a) states that in the matter of               issue or renewal of licences the Administrator               shall  have  regard to the number  of  dealers               existing in the region in which the  applicant               intends to carry on business as a dealer,  But               the  word  ’region is nowhere defined  in  the               Act.   Similarly  s.  27(6)(b)  requires   the               Administrator  to  have  due  regard  to   the               anticipated  demand, as estimated by  him  for               ornaments  in that region, but the  expression               anticipated demand’ is vague and incapable  of               objective assessment and is bound to lead to a               great  deal of uncertainty.  In the  same  way               ’the expression ’Suitability of the  applicant               in  S. 27(6 ) (e) and ’public interest" in  s.               27  (6)  (g)  do  not  provide  any  objective               standard or norm.  Further, the requirement in               the  section imposing the same conditions  for               the renewal of the licence as for the  initial               grant  is  unreasonable,  as  it  renders  the               entire  future of the business of  the  dealer               uncertain  and  subject  to  the  caprice  and               arbitrary  will of the administrative  ’autho-               rities.  Therefore, clauses (a), (b), (e)  and               (g) of s. 27(6) are constitutionally invalid". In  the  instant  case  we have  already  examined  the  two criteria  laid down under rule 70(4) (i) and have held  that they do not place any unreasonable restriction on the  right of the applicants to obtain a licence.  By rule, 70(4)(i)(b) the  Committee has to be satisfied that the applicant  is  a fit  and proper person (upoyukta) to whom a licence  may  be granted.   This  is not the same thing  as  the  suitability simpliciter  which this Court had to deal with in  the  Gold (Control)  Act  case.  The decision is,  therefore,  clearly distinguishable. In  the result all the applications fail and are  dismissed. The parties will pay and bear their own costs. V.P.S. Petitions dismissed. (1) [1970] (1) S.C.R.479. 386