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Ramappa Bhimappa Kulgod and ors. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberWrit Petn. Nos. 1102 and 1115 of 1972 and 4653 and 5606 of 1974
Judge
Reported inAIR1975Kant215; ILR1976KAR80; 1975(2)KarLJ359
ActsEssential Commodities Act, 1955 - Sections 3 and 3(1); Constitution of India - Articles 14, 19(1), 19(6), 226 and 369; Cotton Textiles (Control) Order, 1948; Essential Supplies (Temporary Powers) Act, 1946 - Sections 2 and 3
AppellantRamappa Bhimappa Kulgod and ors.
RespondentUnion of India and ors.
Appellant AdvocateB.V. Deshpande and ;C.N. Kamath, Advs.
Respondent AdvocateU.L. Narayana Rao, Sr. Central Govt. Standing Counsel and ;M. Ramakrishna, H.C.G.P.
Excerpt:
.....time when it made the report it was necessary in order to maintain supplies that the production of coloured sarees should be exclusively entrusted to the handloom sector, a perusal of the report of the committee clearly establishes that there was a case for the imposition of the prohibition in the larger interests of the indian economy. --(1) the prohibition imposed by the notification instead of advancing the object of the essential commodities act, defeated it; it is well settled that a court while considering the validity of a classification of objects or things for special treatment should bear in mind two factors--(i) whether there is an intelligible differentia between persons and things which are included in a class and persons and things which are excluded from the class; the..........on november 9, 1966, which had the effect of prohibiting the petitioners from manufacturing coloured sarees, the petitioners have filed these petitions for the issue of a writ quashing the said notification to the extent it prohibited them from manufacturing coloured sarees and directing the respondents not to enforce the said notification as against them.2. before the commencement of the constitution, there was a law in force in british india dealing with the production and distribution of essential commodities by the name the essential supplies (temporary powers) act, 1946. cotton and woollen textiles were listed as one of the essential commodities under section 2(a)(i) of the said act. section 3 of the said act provided that the central government so far as it appeared to be.....
Judgment:
ORDER

1. The petitioners in these four writ petitions are manufacturers of cloth on power-looms belonging to them. The number of power-looms owned by each of the petitioners is less than five. Aggrieved by the notification issued by the Textile Commissioner on November 9, 1966, which had the effect of prohibiting the petitioners from manufacturing coloured sarees, the petitioners have filed these petitions for the issue of a writ quashing the said notification to the extent it prohibited them from manufacturing coloured sarees and directing the respondents not to enforce the said notification as against them.

2. Before the commencement of the Constitution, there was a law in force in British India dealing with the production and distribution of essential commodities by the name the Essential Supplies (Temporary Powers) Act, 1946. Cotton and Woollen textiles were listed as one of the essential commodities under Section 2(a)(i) of the said Act. Section 3 of the said Act provided that the Central Government so far as it appeared to be necessary for maintaining or increasing the supply of any essential commodity or for securing its equitable distribution and availability at fair price might by a notified order provide for regulating or prohibiting its production, supply and distribution and trade and commerce therein. In exercise of the power conferred on it by Section 3 referred to above, the Central Government promulgated the Cotton Textiles (Control) Order, 1948 (hereinafter referred to as the Order), providing for the regulation of production and distribution of cotton textiles in British India. Clause 20 of the order authorised the Textile Commissioner to issue directions in writing to any manufacturer or class of manufacturers or the manufacturers generallly regarding the production of cloth. It reads as follows :--

'20. (1) The Textile Commissioner may from time to time issue directions in writing to any manufacturer or class of manufacturers or the manufacturers generally, regarding the classes or specifications of cloth or yarn, an the maximum or the minimum quantities thereof, which they shall or shall not produce during such periods as may be specified in the directions, and they shall comply with such directions.

(2) In the exercise of the powers conferred upon him by Sub-clause (1) the Textile Commissioner shall have regard to the capacity of the producer to produce cloth and yarn of different descriptions or specifications and to the needs of the general public.'

By virtue of Article 369 of the Constitution, the Essential Supplies (Temporary Powers) Act, 1946, continued to be in force even after the commencement of the Constitution. Article 369 further provided that notwithstanding the fact that the topics referred to in Clause (a) thereof were in List II of the Seventh Schedule to the Constitution, it was open to the Parliament to make any law in respect of those topics during the period of five years from the commencement of the Constitution as if the said topics were within the concurrent list. Production, supply and distribution of cotton and woollen textiles was one of the topics referred to in Article 369(a). In exercise of the power conferred by Article 369, an ordinance, the Essential Commodities Ordinance, was issued by the President of India on January 26, 1955, providing for the effective control of the production and distribution of the essential commodities dealt with by the said Ordinance. The Ordinance was replaced by the Essential Commodities Act, 1955. The Order which had been issued under the Essential Supplies (Temporary Powers) Act, 1946, however continued to be in operation even after it ceased to be in operation.

3. After the Order was promulgated by the Government of India, the Textile Commissioner in exercise of the power conferred on him by Clause 20 thereof issued a notification on 15-4-1950 whereby he prohibited owners of power-looms from manufacturing coloured sarees. The said notification, however, excluded from the operation of the above restriction owners of power-looms who owned less than five power-looms. The effect of the said notification was that coloured sarees could be manufactured after the issue of the said notification by weavers in the hand-loom sector and power-loom owners owning less than five power-looms.

4. In order to review the condition prevailing in the power-loom industry, the Government of India appointed on January 8. 1963, a committee presided over by Sri Ashok Mehta (hereinafter referred to as the Committee) to enquire into the problems of the power-loam industry. One of the terms of reference was that the Committee should consider and report on the relative role to be played by the power-loom industry vis-a-vis that of the handloom and mill industry and to recommend the targets of production. In the month of May 1964 the Committee submitted its conclusions and recommendations to the Government of India. One of the recommendations made by the Committee was that the production of coloured sarees should be reserved exclusively for handlooms. The relevant part of the recommendation reads as follows :--

'We also recommend that the production of coloured sarees should be reserved exclusively for hand-looms. Small powerloom establishments with four looms and below at present are free to manufacture these sarees. It will be necessary to take positive measures for increasing the protection offered to those who would still continue to ply the handlooms by preventing the production of coloured sarees by the small powerlooms also whether they are in the co-operative fold or outside. We recommend that Government may lake all the steps necessary to ensure that adequate facilities to obtain sized beams are provided within a period of three years for the weavers in Burhanpur, Malegaon and Jabalpur so that the powerlooms in these centres, whether in the co-operative sector or outside, simultaneously could change over to the weaving of fabrics other than coloured sarees.' After taking into consideration the recommendations made by the Committee, the Government of India passed a resolution on the above question on June 2, 1966. The relevant part of the resolution reads :

'31. With a view to afford protection to the handloom industry, the Committee has recommended that :

(a) production of dhoties and sarees by by textile mills should be pegged at the 1963 level; and

(b) that the production of coloured sarees should be reserved exclusively for hand-loom and that even small powerlooms establishment with four looms and below should not be allowed to produce coloured sarees. In certain centres where there is large scale production of coloured sarees by powerlooms at present the restriction on production of coloured sarees and change over to other varieties should be brought about gradually within a period of three years and the existing units should be assisted in obtaining the requirements of sized beams.

Government accept these recommendations.'

After the above resolution was passed, the Additional Textile Commissioner issued a notification under Clause 20 of the Order on November 9, 1966, modifying the notification issued on 15-4-1950. By this notification he took away the exemption which had been extended to the powerloom establishments having less than five powerlooms by the notification dated April 15, 1950. The result was that the petitioners who were owners of establishments in which there were less than five powerlooms could not manufacture coloured sarees. Aggrieved by the notification dated November 9, 1966, the petitioners have filed these writ petitions.

5. Three principal contentions were urged by Sriyuths B. V. Deshpande and C. N. Kamath, learned counsel for the petitioners, in support of these writ petitions : (i) that the prohibition imposed on the petitioners by the impugned order was outside the scope of Section 3 of the Act, and, therefore, was ultra vires of the statute under which it was issued; (ii) that the notification was violative of Article 14 of the Constitution is it brought about a hostile discrimination between the owners of power-looms on the one hand and persons functioning in the handloom sector; and (iii) that the impugned notification was violative of Article 19(1)(g) of the Constitution.

6. Section 3(1) of the Essential Commodities Act, 1955 which is in pari materia with Section 3(1) of the Essential Supplies (Temporary Powers) Act, 1946, reads as follows:--

'If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.'

7. It was argued by the learned counsel for the petitioners that the imposition of the prohibition on the petitioners, namely, that they should not manufacture coloured sarees did not advance the object of Section 3(1) of the Act. It was contended that such prohibition would not assist either in maintaining or increasing the supplies of the cotton textiles. On the other hand, according to the petitioners it would only check the pace of production of cotton textiles in India. In the counter-affidavit filed on behalf of respondents 1 and 2 which is sworn to by an officer working in the Office of the Textile Commissioner, it is stated as follows :--

'I say that both under the Essential Supplies (Temporary Powers) Act 1946 and the Essential Commodities Act, 1955, the Central Government were, and are, empowered to make orders to provide for prohibiting or regulating the production, supply and distribution of any essential commodity which in the present case is cotton textiles and trade and commerce therein so far as it appears to the Central Government to be necessary or expedient for maintaining or increasing the supplies of such commodity or for securing their equitable distribution and availability at fair prices. I say that the textiles produced by, handlooms and textiles produced by factories using power are both essential commodities, the production and supply of which are to be maintained and increased. With a view to maintain the supplies of cotton textiles produced by organised sector, namely, mills and powerloom factories and decentralised sector, namely; handlooms, targets of production of cotton textiles by the different sectors have been fixed from time to time. I say that if the mills and powerlooms factories arc not generally to produce coloured sarees or to dye sarees, the result will be that the handlooms could produce them. I say that in such a case the mills and powerlooms factories can produce grey cloth and any other varieties of cloth. I say that the handloom sector would continue to play a prominent role in the field of production of cloth for some decades. An unrestricted growth or encouragement of powerlooms would make a si/eable number of handlooms go out of production which will have adverse effect on the total supply position of cotton textiles fabrics. The impugned order has, therefore, been necessitated to maintain the supplies of handloom cloth.'

8. It is very well known that the production of cotton textiles is concentrated in three main sectors in India, namely, (i) textiles mills; (ii) powerlooms; and (iii) hand-looms. For the first time in 1950 by the notification dated April 15, 1950, reservation in certain field of production i.e. production of coloured sarees by handlooms as a measure of helping that industry which was in need of such help, was made. At the same time establishments having less than five power-looms were allowed to manufacture coloured sarees. Subsequent to the issue of that notification, there was an abnormal growth in the number of powerlooms that were installled in different parts of India. It was noticed that many of them had been installed even without the necessary permits or licenses.

On account of the prevalence of certain unhealthy practices such as establishing power-looms benefit in the names of persons who did not in fact own them, and partition of existing powerloom establishments amongst the members of a family even though in fact there was no such partition, come into vogue in order to defeat either the excise law or the rules and notifications issued by the competent authorities for the purpose of regulating and controlling the establishment of powerlooms. The consequence was that the handloom sector which was considered to be the main sector in which coloured sarees had to be manufactured suffered considerably on account of the competition of powerloom manufacturers. It was at that stage the Government of India appointed the Committee. In the course of its report the committee observed as follows : 'Even with the phased programmes of introduction of powerlooms in the handloom sector, the handloom sector would continue to play a prominent role for some decades. It will be necessary therefore to ensure that this sector is given assistance by a further reservation of field of production. It has been explained to us that the total production of dhoties by the textile mill industry has been going down. Against 682 million metres of dhoties produced in the year 1952, the present production is of the order of about 330 million metres only. A similar reduction in the manufacture of sarees also has taken place. The total production has declined from 536 million metres in 1952 to about 317 million metres currently. The fall in production of dhoties by the textile mill sector would seem to have been filled mainly by powerlooms. We recommend that the production of dhoties and sarees by the textile mills may be pegged at the 1963 level. We also recommend that the production of coloured sarees should be reserved exclusively for the handlooms. Textile mills and large power-loom establishments are already prohibited from producing these types of sarees as a measure of protection to the handloom industry. However, small powerloom units with four looms and below are free to manufacture these sarees. In view of our recommendation to install powerlooms in the hand-loom sector in a big way, it will be necessary to take positive measures of increasing the protection offered to those who would still continue to ply the handlooms by preventing production of coloured sarees by the small powerlooms also whether they are in the co-operative fold or outside.' It is seen from the report of the Committee extracted above that on account of increased production of dhoties in the powerloom sector it was not necessary to continue to exempt small powerloom establishments from the operation of the prohibition contained in the notification of April 15, 1950. It was also felt by the Committee that having regard to the conditions prevailing at the time when it made the report it was necessary in order to maintain supplies that the production of coloured sarees should be exclusively entrusted to the handloom sector, A perusal of the report of the Committee clearly establishes that there was a case for the imposition of the prohibition in the larger interests of the Indian economy.

9. The question which however arises for consideration in these cases is whether it was open to the Textile Commissioner exercising his powers under Clause 20 of the Order and the provisions of the Act to issue the notification dated November 9, 1966. It was contended on behalf of the petitioners that the notification was defective for the following reasons:--

(1) the prohibition imposed by the notification instead of advancing the object of the Essential Commodities Act, defeated it;

(2) the classification of sarees into coloured sarees and non-colored sarees was not warranted by the provisions of Clause 20 of the Order; and

(3) that the omission to specify the period during which the notification would be in force was fatal.

10. It was argued that the prohibition of production of coloured sarees by the power-loom sector would only result in the reduction of supply of such sarees, and, therefore, would not be in the public interest. As a simple problem of arithmetic, probably what Is argued on behalf of the petitioners would be true. We are not here dealing with a mathematical problem. We are concerned with the economic life of the community which is very complex. The handloom sector has been in existence from ages. It cannot be denied that it has an essential role to play in the economy of the country. The Committee was rightly of the opinion that if the powerloom sector which had the benefit of improved technology was allowed to manufacture coloured sarees, the magnitude of the competition would be such as to totally destroy the handloom industry. Looked from that angle, I do not think that the reservation of the production of coloured sarees to the hand-loom sector can be considered to be improper,

The very provisions of the Act on which reliance is placed show that it is necessary in certain cases to prohibit the production of certain essential commodity in order to maintain or increase the supplies of essential commodities. In order to explain the above proposition the following illustration may be given : Let us assume that the production of paddy is the country is not sufficient to meet the requirements of the country and that bulk of the wet lands in the country is diverted by the farmers for growing sugarcane. In order to maximise the production of paddy in the country, it is necessary for the Government to impose a ban on the cultivation of sugarcane. Similarly to see that a sector in an industry does not languish and ultimately go out of existence it may be necessary, as in this case, to prevent competition from other sectors to enable it to maintain optimum production level. This may have to be done to maintain supplies from that sector. It is not for the court in cases of this type to examine the question whether there was or whether there was not the need for prohibiting the manufacture of coloured sarees by the powerlooms. A decision on that question has to be taken by the Central Government or any other authority to whom the power has been delegated. When the Central Government or the authority empowered comes to the conclusion that there is a need to impose a prohibition on the production of certain commodity by a certain sector, there is hardly any ground for interference by the court in the exercise of its powers under Article 226 of the Constitution in the absence of any other material.

It is significant to note that powerloom establishments having five or more powerlooms are prohibited from 1950 from manufacturing coloured sarces. The report of the Committee shows that the imposition of such prohibition has not in any way interfered with the growth of powerloom industry in India. There is no reason to reject the report and any action taken on its basis cannot be treated as one taken on irrelevant or improper considerations. It is difficult to accept the argument urged on behalf of the petitioners that the imposition of the ban by the notification on small powerloom establishments would take the notification out of the purview ot the provisions of the Essential Commodities Act and the Order.

11. Clause 20 of the Order authorises the Textile Commissioner to issue direction in writing to any manufacturer or class of manufacturers or the manufacturers generally regarding the classes or specification of cloth or yarn which they shall or shall not produce. It was argued that whereas saree can be considered as a specification of the cloth, coloured sarees would not come within the scope of the specification of cloth. The expression 'specification' means description or detail. It is clear from the report of the Committee that coloured sarees have a definite market in India and they belong to a specified classification. Hence, I do not find any substance in the contention that by reserving the production of coloured sarees for the hand-loom sector the Textile Commissioner had violated Clause 20 of the Order.

12. It was next urged that the non-specification of time during which the notification would be in force was fatal. Clause 20 (1) of the Order does not say that the period during which the notification issued thereunder would be in force should always be specified in it. It only authorises the Textile Commissioner, if he wishes to do so, to mention the period during which the notification would be in force. If no such period is mentioned, the notification would be in force till it is rescinded or until it is superseded by any means known to law. The non-specification of the time during which the notification would be in force, does not, therefore, affect the validity of the impugned notification.

13. I shall now advert to the argument based on Article 14 of the Constitution. It is well settled that a court while considering the validity of a classification of objects or things for special treatment should bear in mind two factors--

(i) whether there is an intelligible differentia between persons and things which are included in a class and persons and things which are excluded from the class; and

(ii) whether there is a reasonable nexus between the object to be achieved by the classification and the classification itself.

That the powerloom sector and the handloom sector belong to two definite classes in textile industry cannot he denied. The first test is therefore satisfied. As already mentioned the object of the issue of the notification was to maximise the production of textiles by reserving certain categories of cloth to be manufactured by one or the other of the sectors and in order to subserve the above purpose the notification has been issued reserving manufacture of coloured sarees to the hand-loom sector. I do not think that the classification is in any way opposed to Article 14 of the Constitution.

14. There is no substance in the last contention urged by the petitioners that the notification is violative of Article 19(1)(g) of the Constitution. The validity of the Essential Commodities Act is not in issue. Similarly, the validity of Clause 20 of the Order is not questioned in these proceedings by the petitioners. The history of textile industry in India can be gathered from the report of the Committee. The particular types of ad-vantages which the different sectors in the industry are enjoying, the marketability of the goods, manufactured by them and the technological advancement made by each of the sectors, would show that the prohibition imposed by the notification is in the public interest. The notification, is therefore, protected by Clause (6) of Article 19 of the Constitution. Hence the above contention also fails.

15. No other contention is urged.

16. In the result, these petitions failand they arc dismissed.

17. No costs.

18. Petition dismissed.


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