(1) On 16-9-1963 the petitioner had made an application in accordance with Clause 5 of the Motor Cars (Distribution and Sale) Control order, 1959 (hereinafter referred to as the Cars Control Order), for purchase of a Fiat Car. As required by Cl.5 (2) of that Order, he had furnished a Bank guarantee for Rs. 2000/- to Respondent No. 2, who is the authorised dealer of Fiat Cars. Consequent upon the amendment of the Cars Control Order, by the notification dated 29-6-1965, the petitioner was asked to make a cash deposit of Rupees 2000/- in a Post Office and to pledge the Post Office Savings Bank Pass Book with Respondent No. 2 in lieu of the Bank guarantee furnished earlier.
(2) Feeling aggrieved by this requirement to deposit cash, the petitioner has filed this petition under art. 226 of the Constitution challenging the validity of amended Sub-clause (2) of Clause 5 of the Cars Control Order.
(3) The Cars Control Order was made by the Central Government on 1-5-1959 in exercise of the powers conferred by S. 18G of the Industries (Development and Regulation) Act, 1951 (Central Act 65 of 1951) (hereinafter referred to as the Regulation Act), Clause 5 of that Order, as it stood originally reads:--
'5. Application for purchase of motor cars:--
(1) Every person desirous of purchasing a motor car shall apply to a dealer in the form set out in Schedule II.
(2) Every such applicant shall also furnish along with the application a written guarantee from a Bank undertaking to pay to the dealer at the time when the motor car is ready for delivery to the applicant a sum of rupees two thousand:
Provided that, in the case of a person whose name appears in the books of the dealer as an applicant for the purchase of a motor car at the commencement of this order, the guarantee may be furnished within thirty days of such commencement.
Provided further that, where the bank guarantee furnished by a person expires before the delivery of the car, the guarantee may be renewed by that person within thirty days of the date of such expiry'.
For sub-clause (2) of clause 5, the following sub-clauses were substituted by the Motor Cars (Distribution and Sale) Control (Second Amendment) order, 1965: made by the Central Government on 29-6-1965:
'(2) Subject to the provisions of sub-clause (2B), very applicant shall also furnish along with the application a post Office Saving Bank Pass Book from a Post Office evidencing the fact that he has opened a Security Deposit Account in the post office for a sum not less than Rs. 2,000/- and pledged to the dealer.
(2A) When the Motor Car is ready for delivery, the dealer shall send intimation of that fact in writing to the pledge applicant along with the Post office Savings Bank Pass Book and an authority authorising the pledge applicant to withdraw the money from the post office.
(2B) Where, at the commencement of the Motor Cars (Distribution and Sale) Control (Second Amendment) Order, 1965, the name of any person appears in the books of the dealer as an applicant for the purchase of a Motor Car, such person appears in the books of the dealer as an applicant for the purchase of a Motor Car, such person shall, within sixty days of such commencement, furnished such Post Office Saving Bank Pass Book as is referred to in sub-clause (2) in lieu of the bank guarantee already furnished to the dealer, and thereupon the dealer shall release the guarantee forthwith;
Provided that the Controller may, having regard to the circumstances of any case and the purposes to be served by this order, extend, by order in writing, the said period of sixty days to such further period as he deems fit.'
(4) While according to sub-clause (2), as it stood originally, it was sufficient for an applicant to furnish along with his application a Bank guarantee for Rs. 2000/- under amended sub-clause (2) he has to make a cash deposit of Rs. 2000/- in a Post Office and pledge and Savings Banks Pass Book with the dealer.
(5) The petitioner has not challenged the validity of original sub-clause (2), but he has challenged that only amended sub clause (2) of clause 5. The petitioner who is an Advocate argued his case himself. The grounds on which he has assailed amended sub-clause (2) of clause 5 are these:
(i) Amended sub-clause (2) is not authorised by Section 18G of the Regulation Act.
(ii) Amended sub-clause (2) constitutes an unreasonable restriction on the fundamental right of a citizen to acquire property and hence is violative of Art. 19(1)(f) of the Constitution.
and (iii) the Central Government was not competent to make a retrospective amendment of the Cars Control Order so as to require applicant who had applied before the amendment, to make a cash deposit of Rs. 2000/-.
(6) We shall now examine these contentions. The relevant parts of Section 18G of the Regular Act read:
'18G Power to control, supply, distribution price, etc., of certain articles.
(1) The Central Government, so far as it appears to it to be necessary or expedient for securing the equitable distribution and availability at fair prices of any Article or class of Articles relatable to any scheduled industry, may, notwithstanding anything contained in any other provision of this Act, by notified order, provide for regulating the supply and distribution thereof and trade and commerce therein.
(2) Without prejudice to the generality of the powers conferred by sub-section (1), notified order made thereunder may provide....
(a) * * * * * * * * * * * * (b) for regulating by licences, permits or otherwise the distribution, transport, disposal acquisition, possession, use or consumption of any such article or class thereof; (c)* * * * * * * *
(7) Motor Cars and other automobiles come under sub-heading (5) of heading 7 of the First Schedule to the Regulation Act.
(8) It is seen that Clause (b) of S. 18-G(2) provides, inter alia, for regulation of distribution and acquisition of any article coming under the First Schedule. The petitioner contended that Clause (b) of Section 18G(2) would only enable the Government to impose restrictions or conditions on a manufacturer or a dealer and not on a consumer of any scheduled article. But we see no force in this contention. The concept of distribution or acquisition involves two parties-the distributor or supplier or vendor on one hand and the purchaser or acquirer on the other. The regulation of distribution or acquisition may be effected not only by regulating the activities of the distributor, supplier or vendor, but also by regulating the activities of the distributor, supplier or vendor, but also by regulating the activities of the purchaser or acquirer. Thus restrictions and conditions can be imposed not only on the distributor or supplier or vendor but also on the purchaser or acquirer of scheduled articles. We think the impugned sub-clause of the Cars Control Order comes within the ambit of clause (b) of Section 18G(2) of the Regulation Act.
(9) Art. 19(1)(f) of the Constitution provides that all citizens shall have the right to acquire, hold and dispose of property. But as provided in clause (5) of that Article, that right is subject to reasonable restrictions made under any law in the interest of the general public. Hence, the real question is whether the requirement of amended sub-clause (2) that an applicant for a car should deposit Rs. 2000 in a Post Office and pledge the Savings Bank pass Book with the dealer, is a reasonable restriction in the interest of the general public.
(10) As stated by the Supreme Court in Narendra Kumar v. Union of India, : 2SCR375 , in applying the test of reasonableness, the Court has to consider the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy to the beneficial effect reasonably expected to result to the general public; and it will also be necessary to consider in that connection whether the restraint caused by the law is more than was necessary in the interests of the general public.
(11) The petitioner urged that it is for the State who establish that any restriction imposed by the State on a fundamental right of a citizen under Art. 19 of the Constitution, is reasonable and in the interest of the general public. Reliance was placed on the decision of the Supreme Court in Khyerbari Tea Co. Ltd. v. State of Assam, : 5SCR975 . There Gajendragadkar J. (as he then was) who spoke for the majority, said that once the invasion of the fundamental right of a citizen is provided under Art. 19(1)(g), the State must justify its case under Clause (6) which is in the nature of an exception to the main provision contained in Art. 19(1). However, His Lordship added that in most cases the question of onus of proof would be merely of academic importance, because when one considers the reasonableness of a given restriction, one inevitably enquires also whether the said restriction is not reasonable.
(12) In the counter-affidavit filed on behalf of the Union of India, the background of facts and circumstances under which the Cars Control Order was made, has been explained. It is stated that this Order was passed with a view to secure equitable distribution of motor cars and their availability to the members of the public at fair prices and that the Order was also designed to regulate the sale of the motor cars in an orderly manner on the basis of 'first come first served' principle so that no room could be left for any manipulation by the dealers either for showing favour to any person or for deriving any undue advantage to themselves. The rationale of amended sub-clause (2) of Clause 5 has been explained thus.
'Thus said amendment was necessitated by the fact that the original bank guarantee system which was in vogue was being widely abused. A large number of persons were taking undue advantage of the Bank guarantee system and were procuring registration of several vehicles in their names at nominal expenses by simply paying the bank commission, etc and obtaining a bank guarantee without actually depositing the amount as required by the Motor Cats (Distribution and Sale) Control Order, 1959. there was thus a serious impediment in the equitable distribution of the motor cars and their availability at reasonable price for the genuine and bona fide purchasers. The amendment was, therefore, introduced by the Central Government to effectively prevent such spurious bookings and to save the genuine purchasers having bona fide need of a vehicle from being deprived of their chance due to such bookings. The amendment was necessary to ensure supply of motor cars to the genuine and needy according to their turn. The amendment Order, I submit, is designed to improve the procedure for the benefit of the general public. It is wrong to say that the amendment order seeks to curtail the right of a citizen to purchase a motor car. The petitioner can still acquire a motor car if he complies with the statutory provisions of the Motor cars (Distribution and Sale) Control Order, 1959, as amended. The amendment order, far from being a curtailment of the right of a citizen to purchase a motor car on payment of the price, in fact, helps a citizen to procure and get the same in his turn.'
Thus it is clear that the Cars Control Order in general, and amended sub-clause (2) in particular, are intended in the interest of the general public.
(13) However, the petitioner contended that the requirements under amended sub-clause (2) that an applicant should deposit Rs. 2000 in a Post Office and pledge the Savings Bank Pass Book with the dealer, were in no way improvement over the system of Bank guarantee and did not in any way promote fair distribution of cars among genuine purchasers by eliminating spurious purchasers who have no real intention of owning cars. The petitioner also contended that the connection between the requirement of deposit of Rs. 2000 in cash and fair and equitable distribution of cars, is so remote and indirect that this restriction cannot be said to be in the interest of general public. He placed strong reliance on the following observations of Gajendragadkar J. (as he then was) in O. K. Ghosh v. E. Ex. Joseph, : (1962)IILLJ615SC :
'When Cl.(4) refers to the restriction imposed in the interests of public order, it is necessary to enquire as to what is the effect of the words 'in the interest of'. This clause again cannot be interpreted to mean that even if the connection between the restriction and the public order is remote and indirect, the restriction can be said to be in the interests of public order. A restriction can be said to be in the interests of public order only if the connection between the restriction and the public order is proximate and direct. Indirect or far-fetched or unreal connection between the restriction and public order would not fall within the purview of the expression 'in the interests of public order'. This interpretation is strengthened by the other requirements of Clause (4) that, by itself, the restriction ought to be reasonable it would be difficult to hold that a restriction which does not directly relate to public order can be said to be reasonable on the ground that its connection with public order is far-fetched.''
(14) There can be no doubt that the above statement of law by the Supreme Court in regard to clause (4) of Article 19, is equally applicable to clause (5) of that Article. But a connection between a restriction and the interest of the general public, cannot be said to be remote or indirect or far-fetched merely because the effect of that restriction on public good is not felt immediately but after some time.
(15) The ease with which a Bank guarantee for Rs. 2000 could be obtained has been explained in the counter affidavit. Many persons who had no means to own cars and who had no real desire to keep them could obtain Bank guarantee by paying small commission to Banks and would get themselves registered in the books of dealers for purchase of cars with a view to purchase and re-sell them at a profit. It is common ground that there will be interval of a few years between making an application for a car and obtaining delivery of it. The requirement that the intending purchaser should keep a sum of Rs. 2000 in deposit during such long interval of time, will itself act as a deterrent to a considerable number of persons who have no means to own cars but intend to purchase them with a view to resell them at a profit. To the extent to which such non-genuine purchasers are eliminated, the prospect of securing cars for genuine purchases will be improved and they can secure cars earlier. Thus the requirement under sub-clause (2) can reasonably be expected to yield beneficial effect on bona fide purchasers of cars and the connection between the requirement of deposit and the advantage to genuine purchasers, is proximate and direct.
(16) The petitioner contended that the Government has not furnished any statistical data as to what were the number of applicants registered before the amendment of sub-clause (2), what was the number of applications registered after the amendment and whether the amendment had eliminated the spurious applications to any considerable extent. According to the petitioner, in the absence of such statistical data, the mere statement made by respondent 1 in its counter affidavit that the amendment was made with a view to eliminate spurious purchasers, cannot be believed and that respondent 1 cannot be said to have discharged the onus of proving reasonableness of the restrictions imposed by sub-clause (2).
(17) Mr. M. Sunderraj, learned counsel for respondent 2, has filed a Memo setting out certain particulars. It is stated therein that the number of applications for Fiat Cars registered with respondent 2 upto the date of the impugned amendment of Cars Control order was 2,968, that the serial number of the petitioner's application was 1896, that among the applicants prior tot he petitioner, 177 had not chosen to deposit cash of Rs.2,000 in lieu of Bank guarantee and that the registration of their applications had been canceled.
(18) These figures demonstrate that the impugned amendment has been effective in eliminating, to a considerable extent, non genuine purchasers and thereby accelerating delivery of cars to genuine purchasers.
(19) Quite apart from the figures furnished by Mr. Sunderraj, it appears to us that it is naive to think that in human affairs every problem is capable of being expressed in terms of statistics. Nor is it reasonable to think that until statistical data about a problem or a social evil is available, the State cannot take cognizance of that problem or evil and should not try to remedy it by appropriate regulatory measure.
(20) The mere absence of statistical data is not sufficient to reject what has been stated in the counter-affidavit on behalf of the Central Government as to the abuse of the system of Bank guarantee and the rationale of the system of cash deposit. The deponent of the counter-affidavit is Deputy Secretary to the Government of India in the Department of Industries. The petitioner has not shown why the factual statements by a responsible officer in the counter-affidavit, should be disbelieved
(21) The petitioner next contended that the burden placed by amended sub-clause (2) on intending purchasers of cars, was arbitrary, excessive and out of all proportion to the evil sought to be remedied. In his additional affidavit the petitioner has alluded to the statement of the Minister of State for Industrial Development in the Council of State to the effect that for Ambassador cars the maximum period of waiting was 6 years and the minimum period 2 years; for Fiat Cars, the maximum period 6 years; and for Standard cars the maximum period was 8 years and the minimum period one year. The petitioner argued that an applicant for a car had to keep in deposit a substantial sum of Rs. 2000 and would be deprived of its use for several years. This according to the petitioner, would cause great hardship to an applicant.
(22) It is not disputed that even at the time the petitioner was required to make a cash deposit, the value of the Fiat Car was not less than Rs. 12,000. The amount which he was required to deposit formed less than one sixth of the value of the car. Having regard to the acute scarcity of cars and large demand for them, the requirement that a person who intends to purchase and own a car should keep in deposit less than 1/6th of its value until he obtains it, cannot be said to be a very onerous condition even though there might be an interval of a few years between making his application and obtaining the car. The deposit made by an applicant in the Post Office will also earn him interest just as in the case of any other deposit in Post Office.
(23) It was also argued by the petitioner that even if there was need to provide for a deposit of cash of Rs.2000, there is no reason why the applicant for a car should be required to deposit the amount only in a Post Office and not in any scheduled Bank. The petitioner argued that a deposit in a schedule Bank would fetch a higher rate of interest than that allowed by the Post Office. This contention was not specifically raised in his affidavit in support of his petition and respondent 1 had no opportunity of meeting that contention.
(24) Moreover, as the Post Office is an establishment of the State, there is complete security for the amount deposited in any Post office. The period during which the amount will be in deposit, cannot be known at the time of making the deposit as it cannot be foreseen when the turn of an applicant for getting a car comes.
(25) It was next contended by the petitioner that the amendment made by the Order dated 29-6-1965 was retrospective in its operation, that it was not competent for a subordinate legislative authority like the Government to make any rule order, or notification so as to have retrospective effect and that it is only the legislature which can make retrospective law.
(26) In support of this contention, the petitioner strongly relied on the decision of this court in India Sugars & Refineries Ltd., Hospet v. State of Mysore, 1960-30 Mys LJ 635=(AIR 1960 Mys326). There, the Government had issued Notifications under Section 14 of the Madras Sugar Factories Control Act 1949 (as amended in Mysore) purporting to levy cess on sugarcane brought into, and crushed by, a Sugar Factory for the crushing seasons in the years 1955-56, 1956-57, and 1957-58. By the time these notifications were issued, the crushing season in the respective year had commenced and these notifications purported to levy cess on sugarcane brought into the factory from the commencement of the crushing season. It was contended or the Sugar Factory that the impugned notifications could not retrospectively impose any cess for any period prior to the dates of these notifications. This court upheld that contention and Das Gupta, C.J. who spoke for the Bench, observed thus:
'I am unable to hold that a power conferred by the Legislature on a subsidiary body e. g., Government, to issue notifications, if couched in general language, can be exercised retrospectively. On the other hand, I am of opinion that such power, unless it is expressly stated that the same can be exercised retrospectively, can only be exercised prospectively...... In my opinion, unless the power to legislate, conferred on the executive body by the Legislature, expressly mentions that such power can be exercised retrospectively, it can only be exercised prospectively.'
(27) There does not appear to be any pronouncement of the Supreme Court on this point. The question whether in exercise of the power conferred by the proviso to Article 309 of the Constitution the Governor is competent to make retrospective rules, came up before the Supreme Court in B. N. Nagaraj v. State of Mysore, : (1967)ILLJ698SC . But the Supreme Court left that question open.
(28) As there is no express provision in the Regulation Act empowering the Government to issue an Order or Notification retrospectively, it is clear from the aforesaid decision of this Court that it is not competent for the Government to provide hat sub-clause (2) shall have retrospective effect.
(29) The learned Central Government Pleader contended that there is no retrospectively in amended sub-clause (2), that even the requirement that persons who had made applications giving Bank guarantee, should substitute such Bank guarantee by a cash deposit in Post Office, cannot be said to operate retrospectively but that sub-clause (2) operates only prospectively by requiring such substitution to be made hereafter and not in respect of purchase of cars already made.
(30) To decide which of the rival contentions is correct, it is necessary to understand what is meant by retrospective legislation and when a law can be said to operate retrospectively.
(31) In Crawford's Construction of Statutes, prospective and retrospective statutes are explained thus in para 77:
'A statute which operates upon acts and transactions which have not occurred when the statute takes effect, that is, which regulates the future, is a prospective statute. On the other hand a retrospective or retroactive law is one which takes away or impairs vested rights acquired under existing laws, or creates new obligations and imposes new duties, or attaches new disabilities in respect of transactions already past.'
In Craies' Statute Law (1963 Edn.) the meaning of the term 'retrospective' has been explained thus at page 366;
'A statute is deemed to be retrospective which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty or attaches a new disability in respect of transaction or considerations already past. But a statute is not properly called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing.'
(32) In Bashiruddin v. B. S. S. Majlis; Awaqut, : 2SCR205 the Supreme Court observed at page 1209;
'A statute is not necessarily used retrospectively when the power conferred by it based on conduct anterior to its enactment, f it is clearly intended that the said power must reach back to that conduct. It would be another matter if there was a vested right which was taken away......'
(33) Sub-clause (2) can be said to be retrospective only if it takes away or impairs any vested right that existed in any applicant immediately before the sub-clause came into force or creates any new obligation or liability or duty in respect of a transaction that had been completed before that sub-clause came into force. Can it be said that a person who had made an application for a car after furnishing Bank guarantee had acquired a vested right even before he purchased the car? Or, can it be said that making an application after making deposit is by itself a completed transaction?
(34) The petitioner argued that when he made an application in accordance with the requirements of the Cars Control Order as it stood at that time, he acquired a right to get a car in accordance with his relative position in the list of such applicants and that amended sub-clause (2) impaired such right or imposed a new obligation by providing that his application which was made in compliance with the unamended Control Order would not be treated as a valid application unless he deposited cash in lieu of the Bank guarantee. According to the petitioner any new obligation or liability or duty imposed by a new provision in respect of an application already made before that provision came into force, would amount to retrospective operation of that provision and that provision can be said to operate prospectively, if such new obligation, liability or duty is imposed only on application made or to be subsequent to that provision coming into force.
(35) In Salmond's Jurisprudence (Twelfth Ed.) at pages 262 and 263, vested and contingent ownership have been explained thus:
'It (ownership) is either vested or contingent. It is vested when the owner's title is already perfect; it is contingent when his title is as yet imperfect, but is capable of becoming perfect on the fulfilment of some condition. In the former case the ownership is absolute; in the latter it is merely conditional. In the former case the invective fact from which he derives the right s complete in all its parts; in the latter it is incomplete, by reason of the absence of some necessary element, which is nevertheless capable of being supplied in the future. In the meantime, therefore, his ownership is contingent, and it will not become vested until the necessary condition is fulfilled.......'
(36) At best, the right which the applicant for a car has after making a valid application according tot he Cars Control Order, can only be an inchoate or a contingent right and not a vested right. On happening of certain events and fulfilling certain conditions he may get a right to a car. He has no vested right in a car, Until he gets the car, there can be no taking away or impairing his vested right. Hence the imposition of a new condition or a new obligation on an applicant for a car before he acquires it cannot be said to take away or impair any vested right.
(37) Until an applicant purchases a car there is no completed transaction. mere making of an application for purchasing a car is only preparatory step for a transaction and not a completed transaction in itself. prescribing a new condition on an application already made, cannot be regarded as imposing a new obligation or attaching a new disability in respect of a past transaction.
(38) Hence amended sub-clause (2) cannot be regarded as operating retrospectively.
(39) The view we have taken receives support from the unreported decision of a Bench of the Punjab High Court in Kishan Chand v. Union of India, Civil Writ No. 420-D of 1965 (Punj) in which the similar amendment made on 29-6-1965 to the Commercial Vehicles (Distribution and Sale) Control Order, was challenged. (A stenciled copy of the order in that case was made available to us by the learned Central Government Pleader). Dealing with the contention of retrospective operation, this is what Dulat J., who spoke for the Bench, said:
'....... It is difficult to see how the order made on the 29th June 1965 can be called retrospective in its effect. All that it does and purports to do is to regulate the distribution and sale of commercial vehicles in a particular manner and this it does with effect from the date if is made, namely, the 29th June 1965. The Order does not touch any sale or distribution already made. It is true and Mr. Safer emphasises this that the present petitioners had complied with the requirement of the previous Control Order and but for the new Order they would not have been required to do anything more. The new Control order requires them to make a cash deposit in place of the previously furnished bank guarantee, but it does not require them to do so retrospectively but only after the 29th June 1965. 'No vested interest appears to have been affected or even touched by the New Control order and I do not think there is, really speaking, anything retrospective in its effect'......'
(underling (here in ' ' is ours)
(40) All the contentions of the petitioner fail and we dismiss the petition.
(41) But in the circumstances, we make no order as to costs.
(42) Petition dismissed.