1. This is an appeal tiled by me State Government of Madhya Pradesh against the judgment of the Sessions Judge, Jabalpur, in Criminal Appeal No. 262 of 1951, acquitting the respondent Amritlal who was prosecuted and convicted under Section 7 of the Essential Supplies (Temporary Powers) Act for contravening Clause 27 of the Central Provinces and Berar Cotton Cloth Trade Regulation Order, 1948 (hereinafter referred to as the Order).
2. The respondent Amritlal is a dealer in cloth. He has been given a B class licence for doing the cloth business. On 17.2.1951, Phoolsingh (P. W. 1) was sent as a test purchaser with a marked ten rupee note to purchase a 'dhoti' from the shop of the respondent. The control price of a 'dhoti' was Rs. 6-3-0.
3. The prosecution case was that when Phoolsingh (P. W. 1) purchased the 'dhoti' he was charged by the respondent Rs, 7-6-0 which was in excess of the control price. It was also alleged that the respondent did not issue cash memo to the purchaser nor did he prominently display the licence at the place of his business.
4. The only charge framed against the respondent was that he failed to display prominently in the shop his cloth licence as required by Clause 27 of the Order.
5. The respondent had pleaded guilty admitting that the licence was not exhibited prominently in his shop. There was also convincing evidence on record to show that the licence was kept by him inside a box in his shop and was produced by him at the time-of the search made by the Police. The breach of the rule contained in Clause 27 of the Order was conclusively proved. He was accordingly-convicted by the trial Magistrate under Section 7 of the Essential Supplies (Temporary Powers Act for contravening Clause 27 of the Order, and sentenced to pay a fine of Rs. 200'/-. His conviction was set aside by the Sessions Judge, Jabalpur, under Section 95, Penal Code, who was of the opinion that the breach was so trivial that no notice should have been taken of it.
6. The learned Sessions Judge was clearly in error in setting aside the conviction under Section 95, Penal Code. This section has no application unless the act in question amounts to an offence under the Indian Penal Code.
7. The learned Counsel for the respondent contends that Clauses 3, 5, 10, 24, 25 and 27 of the-Order do not impose reasonable restrictions on the exercise of the fundamental rights in the interest of the general public mentioned in Article 19(1)(g) of the Constitution, and as such, they are 'ultra vires'; and unless and until the Court upholds the constitutionality of the Order, the conviction of the respondent for contravening Clause 27 is bad. It was contended that Clause 3 was not in the interest or the general public as it prohibited the cloth business without reasonable restrictions while Clause 5 controlled volume and scope of the-business by the licensing authority. Clause-10, according to the Learned counsel, gave arbitrary powers to the Provincial Government, and as Clauses 24 and 25 are interwoven with the above clauses, the entire Order was 'ultra vires'. A large number of cases was cited by the learned Counsel for the respondent which we will consider presently.
8. The Central Provinces and Berar Cotton Cloth Trade Regulation Order was passed on 13.9.1948. Clauses 3, 5, 10, 24, 25 and 27 are in these terms:
Clause 3 : Save as hereinafter provided no person shall sell or store for sale cloth except under and in accordance with the conditions of a licence granted by the licensing authority.
Clause 5 (a): For the purposes of this Order there shall be four classes of dealers, namely: (i) 'A class dealer' meaning a dealer who buys cloth from a manufacturer in mill-packed bales or cases or from a person in respect of whom a direction is issued by the Provincial Textile and Yarn Commissioner, Central Provinces and Berar, or the Textile Commissioner, Bombay, in this behalf, and sells it or authorises, in pursuance of an order served upon him by the Textile Commissioner under any provision of the Cotton Textiles (Control) Order, 1948, a manufacturer to sell it direct to a dealer on his behalf or stores it for sale in such bales or cases; he shall obtain a licence in Form II.
(ii) 'B class dealer' means a dealer who does retail business and sells or stores mill-made cloth for sale to persons other than licensees; he shall obtain a licence in Form III.
(iii) 'C class dealer' means a hawker; he shall obtain a licence in Form IV. (iv) 'D class dealer' meaning one who carries on business in mill-made cloth as an agent; he shall obtain a licence in Form.V.
(b) A dealer may at one and the same time belong to one or more of the above four classes if the licensing authority so permits:
Provided that hawker's licence shall not be granted to a holder of a licence in Form II, III or V.
Clause 10 : Notwithstanding anything contained in this Order, the Provincial Government may, without assigning any reason, direct that any application for a licence be refused.
Clause 24 : Notwithstanding anything contained in this Order, the Provincial Government may, without previous notice or assignment of any reason, cancel or suspend any licence or class of licences and such cancellation or suspension shall not entitle the licensee to any compensation or the refund of any fees paid in respect of any such licence.
Clause 25: The licensing authority may, in its discretion, cancel a licence under which no business is carried on for more than three months.
Clause 27 : Every hawker shall carry with him his licence when hawking and produce it for inspection on demand by the licensing authority or an officer authorised by it in this behalf; and every other licensee shall display his licence prominently at his place of business.
9. Article 19(1)(g) of the Constitution runs as follows:
All citizens shall have the right to practice any profession, or to carry on any occupation, trade or business.
The Article guarantees freedom of trade. The freedom guaranteed by the said Article is subject to the limitations imposed by Clause 6 of Article 19 which is in these terms:
Nothing in Sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it prescribes or empowers any authority to prescribe, or prevent the State from making any law prescribing or empowering any authority to prescribe, the professional or technical qualifications necessary for practicing any profession or carrying on any occupation, trade or business.
10. The question for consideration is whether the Central Provinces and Berar Cotton Cloth Trade Regulation Order, 1948, comes within the ambit of this saving clause or is In excess of its provision.
11. The learned Counsel for the respondent in support of his contentions cited - Chintaman Rao v. The State of Madhya Pradesh : 1SCR759 ; - Yick Wo v. Hopkins 118 U.S. 356 (B) which was followed in - Balakrishnan v. State of Madras : AIR1952Mad565 ; - 'Mohammad Yasin v. Town Area Committee Jalalabad : 1SCR572 and - Anumathi Sadhukhan v. A.K. Chatter jee : AIR1951Cal90 .
12. In - Yick Wo v. Hopkins (B) (cit. sup.) the law laid down was as follows:
Though a law be fair on its face and impartial in appearance, yet, if it is administered by public authority with an evil eye and. an unequal hand, so as practically to make illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the Constitution.
The case arose out of a breach committed by one Yick Wo of Ordinance passed by 'the people of the City and County of San Francisco'.
13. In San Francisco there were about 320 laundries managed by the Chinese. Of them, only about 10 were in brick buildings. The remainder were in wooden buildings, with the result that so far as the majority of the Chinese laundries were concerned, it depended entirely on the pleasure of the Board of Supervisors whether any of them would or would not be permitted to engage in the business in the wooden buildings. Actually it was found that the white launderers who were carrying on. business in wooden buildings were given permission the Chinese were refused permission. The validity of the Ordinance was challenged on the ground that it was capable of being and was so operated and enforced as to discriminate against the Chinese laundries and therefore offended Section 1 of the Fourteenth Amendment of the Constitution. The Supreme Court held that the Ordinance was invalid because:
It confers a naked arbitrary power upon the Board to give or withhold consent and makes all engaged in the business, the tenants at will as to their means of living under the Board of Supervisors.
14. In : AIR1952Mad565 , the provisions, of Clause 12(4) of the Cotton Textiles (Control) Order, 1948, read with Clause 33 of the said Order, in the absence of rules for guiding and controlling the exercise of discretion by the Textile Commissioner, were held to be arbitrary and unreasonable. The petitioner in the above case had applied to the Textile Commissioner, Bombay, in July 1949 for permission to acquire and install 36 more power looms as such permission was necessary under the provisions of the Cotton Textile Control Order, 1948. He was informed by the Secretary to Government Development Department that in view of the difficult conditions of the yarn supply, his request for permission to instal 36 additional looms would not be considered for the present. Meanwhile the petitioner had purchased the preparatory machinery at a cost of about a lakh of rupees. This was a case where the refusal by the Textile Commissioner was found to be arbitrary and unreasonable as it amounted to such a total prohibition which would not be valid having regard to the fundamental right conferred on the citizens by Article 19(1)(f) and (g) of the Constitution.
15. In : 1SCR759 , the validity of the Central Provinces and Berar Regulation of Manufacture of Bides (Agricultural Purposes) Act (64 of 1948) was considered. By this Act, power was given to the Deputy Commissioner to issue an order fixing a period to be an agricultural' season in respect of any of the villages mentioned in the Act prohibiting the manufacture of bides during the agricultural season. The Act provided further that
no person residing in a village specified in such order shall during the agricultural season engage himself in the manufacture of bides, and no manufacturer shall during the said season employ any person for the manufacture of bides.
The Deputy Commissioner under the provisions of the Act issued an order forbidding all persons residing in certain villages from engaging in the manufacture of bidis during a particular season. One of the manufacturers of bidis and an employee in a bidi factory residing in one of the [ said villages applied under Article 32 of the Constitution for a writ of mandamus on the ground that the Act prohibited them from, exorcising their fundamental right to carry on their trade or business which was guaranteed by Clause (1)(g) of Article 19 of the Constitution.
16. The object of the Act was to provide measures for the supply of adequate labour for agricultural purposes in bidi manufacturing areas of the Province, but it was observed that the object could well have been achieved by - legislation restraining the employment of agricultural labour in the manufacture of bidis during the agricultural season without prohibiting altogether the manufacture of bidis. It was therefore held that as the provisions of the Act had no reasonable relation to the object in view, the Act was not a law imposing 'reasonable restrictions' within the meaning of Clause (6) of Article 19 and was therefore void.
17. It was thus clear that the order issued by the Deputy Commissioner under the Central Provinces and Berar Regulation of Manufacture of Bidis (Agricultural Purposes) Act (64 of 1948) prohibited the bidi manufacturers from exercising their fundamental right to carry on their trade. Before us, the case of the respondent is quite different. He already holds a licence for doing cloth business and he cannot complain that he was prevented from exercising his fundamental right to carry on his business with a reasonable restriction imposed by the Order.
18. In : AIR1951Cal90 , the 'vires' of Clauses 9 and 13 of the West Bengal Rice Mills Control Order (1949) was considered. A petition under Article 226 of the Constitution was filed by a licence-holder of three husking mills for revoking the order dated 7.12.1950 issued by the A.R.C.P. Alipore. The order which was sought to be revoked was as follows:
It is notified for general information that the husking mill owners are authorized to husk half of their previous permitted quantities up to 14.12.1950. No husking Mill should be run after that date (without obtaining further orders).
The sole business of the petitioner was to husk boiled paddy brought by the customers. It was pointed out that as a result of this order and the closing down of the husking mills, the price of the rice shot up in the locality to a certain extent. It was stated that the restriction imposed regarding the amount of paddy to be husked was an unreasonable restriction, and it was pointed out that the quantity allowed to be husked in the neighbouring districts in the same Sub-Division was a minimum of about '800 maunds. It was held-
An order which arbitrarily or excessively invades the right of an individual cannot be said to contain the quality of reasonableness. Clauses 9 and 13 of the Rice Mills Control Order which empower cancellation or refusal of a licence already issued and refusal to issue a new licence without assigning any reasons, overstep the limits of reasonableness and must be held to be invalid in the face of the written Constitution....
Clauses 9 and 13 of the West Bengal Rice Mills Control Order (1949) are similar to the provisions of Clauses 10, 23 & 24 of the Central Provinces & Berar Cotton Cloth Trade Regulation Order 1948. It is not the case of the respondent here that his application for a licence was refused under Clause 10 or that his licence which is in form B was cancelled under Clauses 23 and 24.
19. In : 1SCR572 the validity of the bye-laws 1 and 4(b) framed by the Town Area Committee, Jalalabad, was considered. The Committee framed the bye-laws under which all right and power to levy or collect commission on sale or purchase of vegetables and fruits within the limits of the town vested in it or in any other agency appointed by the Committee, and no one except the Committee was authorized to deal in wholesale vegetables and fruits and collect the commission thereof in any place and in any event. The respondent committee by auction gave the contract for sale of vegetables and fruits and for collecting the commission to a person who had never dealt in vegetables and fruits. It was found that although, in terms, there was no absolute prohibition against carrying on business as wholesale dealer in vegetables and fruits, the result of the byelaws requiring the wholesale dealers to pay the prescribed fee of one anna in the rupee to the contractor who holds the monopoly is, in effect, to bring about a total prohibition of the business of the wholesale dealers in vegetables and fruits. It was held that bye-laws 1 and 4 went much beyond the powers conferred on the Committee by Sections 293(1) and 298(2)(j) and (d) of the U.P. Municipalities Act, and were therefore invalid, and further that the bye-laws could not be said to constitute a valid law which alone may under Article 19(6) of the Constitution impose a restriction on the right conferred by Article 19(1)(g). This was a case where the enforcement of the impugned bye-laws resulted in a total stoppage of the wholesale dealers' business in a commercial sense, and hence they were declared invalid. The decision in this case is not applicable here.
20. The Central Provinces and Berar Cotton Cloth Trade Regulation Order was passed in 1948. It complied with the provisions of Section 3 of the Essential Supplies (Temporary Powers) Act. As to the phrase 'reasonable restriction' appearing in Clause (6) of Article 19 of the Constitution, their Lordships in - Cbintaman Rao v. State of Madhya Pradesh (A) (cit. sup.) observed as follows:
The phrase 'reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interest of the public. The word 'reasonable' implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by Clause (6) of Article 19, it must be held to be wanting in that quality.
It may be noted that the system of issuing licence has the object of controlling the carrying on of the cloth trade, and the system seeks to prevent unfair competition and any wrongful practice such black marketing or other similar practices. Clause 3 of the Order does not impose total prohibition against any party as such for doing the cloth business. In our opinion, the restrictions imposed by the Government under Clause 3 of the Order in respect of the cloth trade is reasonable. It is for the benefit of the general public. Clause 3 of the Order is within the ambit of the saving Clause (6) of Article 19 of the Constitution
21. The respondent having seured a licence under from B has to sell the cloth in accordance with the conditions of the lince. He is not concerned with the provisions of Clause 9, 10, 24 or 25 of the Order. Clause 27 lays down that every licensee except the hawker shall display his lince prominently at the leaned Counsel for the respondent have no application here as we are not considering the case of a trader who has been refused a licence.
22. It was also urged on behalf of the respondent that in the absence of 'mens rea' he could not be convicted for breach of Clause 27 of the Order. Reliance was placed on - Hatimali v. Emperor AIR 1950 Nag 38 (F); - Mahadeo v. Emperor and - Srinivas Mall v. Emperor AIR 1947 PC 135. These are cases relating to vicarious liability and have no application here. The respondent can give no lawful excuse for not displaying his licence as required by Clause 27 of the Order. Besides he admitted in his statement that he had not kept the licence hung at the shop and pleaded guilty.
23. The acquittal of the respondent is therefore, set aside. We convict him under Section 7 of the Essential Supplies (Temporary Powers) Act for contravening Clause 27 of the Order. We sentence him to imprisonment till the rising of the Court and a fine of Rs. 50. in default rigorous imprisonment for one month.
24. The appeal filed by the Seate Government is allowed.