Skip to content


District Collector, Hyderabad Vs. Ibrahim and - Court Judgment

LegalCrystal Citation
SubjectCommercial;Constitution
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal Nos. 34 to 58 of 1965
Judge
Reported inAIR1966AP310
ActsSugar Control Order, 1963; Essential Commodities Act, 1965; Essential Commodities Act, 1955 - Sections 3; Constitution of India - Articles 19(1) and 358; ;Andhra Pradesh Sugar Dealers Licencing Order, 1963; Defence of India Act; Defence of India Rules
AppellantDistrict Collector, Hyderabad
Respondentibrahim and ;company and ors.
Appellant AdvocateAdv. General
Respondent AdvocateP.A. Choudary, Adv.
DispositionAppeal dismissed
Excerpt:
constitution - validity of government order - andhra pradesh sugar dealers licencing order, 1963 and sugar control order,1963 - respondents-petitioners were dealers in sugar since long time - government order (go) under clause 4 of sugar control order passed - allotment of sugar stopped to petitioners and wholesale trade in sugar exclusively handed over to appellant - whether go was valid - go created monopoly for appellant - held, go inconsistent with both sugar control order and andhra pradesh sugar dealers licencing order. - - 2976, dated 30-12-1964 us bad in law and issued a writ of mandamus in favour of all the writ petitioners directing the respondents, i. the petitioners, in so far as they were licensed under the state licensing order, were well within this definition. dated.....1. these appeals arise out of a common order passed by our learned brother gopalakrishna nair, j. whereby he struck down on certiorari g. o. no. 2976, dated 30-12-1964 us bad in law and issued a writ of mandamus in favour of all the writ petitioners directing the respondents, i.e., the district collector, hyderabad, the state of andhra pradesh and the commissioner of civil supplies to forbear from acting under the authority or in pursuance of the said g. o. and refrain from interfering with the carrying on of the wholesale business insugar by the petitioners' firm under their licences.2. the facts leading to these proceedings may be shortly stated. the petitioners who are 25 in number have been dealing from a long time in sugar along with other articles in the twin cities of hyderabad and.....
Judgment:

1. These appeals arise out of a common order passed by our learned brother Gopalakrishna Nair, J. whereby he struck down on certiorari G. O. No. 2976, dated 30-12-1964 us bad in law and issued a writ of Mandamus in favour of all the Writ Petitioners directing the respondents, i.e., The District Collector, Hyderabad, the State of Andhra Pradesh and the Commissioner of Civil Supplies to forbear from acting under the authority or in pursuance of the said G. O. and refrain from interfering with the carrying on of the wholesale business insugar by the petitioners' firm under their licences.

2. The facts leading to these proceedings may be shortly stated. The petitioners who are 25 in number have been dealing from a long time in sugar along with other articles in the twin cities of Hyderabad and Secunderabad. In or about the year 1963 conditions of scarcity of the commodity in the markets all over made themselves felt. The Government of India, apprehending some serious situation wherein the purchasers and traders may try to push up the prices of sugar thought it expedient to advise the State Governments for taking measures to checkmate the probable activities of wholesale dealers in sugar by issuing Sugar Dealers' Licencing Order on the lines adopted during the period 1959-61. The Government of Andhra Pradesh accepting the proposal promulgated with the prior concurrence of the Central Government the Andhra Pradesh Sugar Licencing Order, 1963, in exercise of its powers conferred by Section 3 of the Essential Commodities Act, 1955 (Central Act X of 1955). By virtue of this Order no person could carry on business as a dealer except under and in accordance with the terms and conditions of a licence issued by the licensing authority, the licensing authority being the District Collector having jurisdiction over the place of business or storage. Procedure in detail was laid down therein for the grant and renewal of the licence. Applications therefor had to be made to the licensing authority in the prescribed form and the licence thereupon had to be issued or renewed also on the prescribed form at the discretion of the licensing authority, which discretion should not be exercised arbitrarily. The licence issued immediately after the advent of the Order was to be valid till the 31st of March, 1963, whereafter it had to be renewed for a period of one year at a time. The terms and conditions of licence could not be contravened except on pain of suspension or cancellation of the licence, besides other action that could be taken under the Act. The grant of licence and renewal thereof could be refused only on grounds reduced to writing after giving opportunity to the party to state his case. The aggrieved party had a right of appeal. Thus, the issue or renewal of the licence was a quasi-judicial Act. The petitioners were granted licence for the year 1963-64. Hardly a few months passed by when the Central Government in exercise of its powers under Sub-rule (2) of Rule 125 of the Defence of India Rules, 1962 promulgated an Order called the Sugar Control Order of 1963 under a notification dated 17-4-1963. This order defined a recognised dealer as a person carrying on the business of purchasing, selling or distributing sugar and licensed under the Order relating to the licensing of sugar dealers for the time being in force in a State or Union territory. The petitioners, in so far as they were licensed under the State Licensing Order, were well within this definition. They were the 'recognised dealers'. This Order provides further measures: (1) placing restriction on sale, or agreement to sell or deliver by the producers; (2) for controlling the production, sale, grading, packing, marking, delivery, distribution etc. of sugar bythe producers or recognised dealers; (8) for regulating the movement of sugar, (4) for fixation of its prices, (5) for allotment of quotas, (6) for delivery of such quotas and (7) for various other things. The Central Government or the Chief Director was the competent authority to issue directions or make orders in this behalf. It is they who by order would allot quotas of sugar to the specified States or areas. The State Government used to sub-allocate the total quota thus allotted to different areas or districts in their States and nominate licenced sugar dealers to take delivery of the allocated quantity from the concerned factories. The nominees of State Government who lift stocks direct from the factories would then distribute sugar to retailers at the prices to be fixed by the State Governments. In this way the quotas used to be allotted to the petitioners from time to time in varying measures upto Januaiy, 1965, they being fixed on the basis of the turnover of each dealer and the quantity of sugar available. The petitioners used to lift the allotted sugar at their cost from the factories concerned, and carry on trade or commerce in accordance with the licence and the provisions of law. While so, the State Government passed the impugned G. O. dated 30-12-1964 under which the entire quota of sugar allotted to the twin cities of Hyderabad and Secunderabad was directed to be handed over for wholesale trade, exclusively to the 4th appellant, the Co-operative Society, which was a recognised dealer just like the petitioners. It was mentioned in the G. O. that the Government had also decided that the Cooperative as wholesale dealers in the district should be given the monopoly distribution. The direct consequence of this G. O. is that the allotment of sugar to the petitioners was, stopped and the 4th appellant became the only recognised dealer entitled to lift the entire quota for purposes of distribution and sale in the twin cities. Thus the stocks which were necessary for carrying on trade as recognised dealers were no longer available to the petitioners, with the result that their trade in this commodity abruptly came to an end. The petitioners, through separate petitions, moved ' this court seeking a Writ of Mandamus against the respondents directing them to forbear from acting under the authority of or in pursuance of the said G. O. and to refrain from interfering with the carrying on wholesale sugar business by the petitioners. Firms under their licence.

3. These petitions were opposed by the 4th respondent and also the Government on the basis that the impugned G. O. was good and valid and was in conformity with the provisions of the Sugar Control Order, and that it was issued in pursuance of the policy laid down by the Central Government to entrust the work or distribution of sugar entirely to the Co-operative society and thereby eliminate in the public interest the unnecessary agency of the petitioners in lifting and distributing the sugar. It was also urged that the petitioners are not entitled to seek any relief complaining infraction of their right under Articles 14 and 19 of the Constitution of India. It was further urgedthat there was no contravention at all of Article 14 of the Constitution of India.

4. Our learned brother repelled all these contentions and accepted the claim of the petitioners that the impugned G. O. could not fee supported by the provisions of either the Sugar Control Order or the Andhra Pradesh Sugar Dealers Licencing Order, 1963, that it was not an order issued under any of the provisions of the said laws; that it embodies mere executive instructions which directly affect valuable, legal and constitutional rights of the petitioners and grant to a registered society monopoly to trade in a commodity like sugar, which is so essential to the life of the community. The learned judge observed that this is an exceptional step for the Government to take, and is not permissible in law as what could be accomplished only by a statutory measure cannot be lawfully achieved by executive instructions of the kind. He further held that as a result of the impugned G. O. the licences given to the petitioners automatically stand cancelled even though that effect could be brought about only by following the procedure laid down in Clause 7 of the Andhra Pradesh Sugar Dealers Licensing Order. Valid provisions of law cannot thus be circumvented by sheer executive instructions. Indeed such instructions are too inadequate to neutralise the provisions of law. It was further observed that the executive instructions interfering with the exercise of discretion of competent authority cannot be validly given. On question of Article 14, the learned judge was of opinion that by singling out the 4th appellant for the conferment of monopoly in utter disregard of valid subsisting rights of 25 persons the Government have subjected themselves to a charge of invidious discrimination in the administration of the Sugar Control Order which cannot he permitted under the Constitution. As to the plea under Article 358 or 359 of the Constitution, he held that it is not a case where the State Government has taken the impugned action under the Defence of India Rules, or under any Control Order made under those Rules, so that the inapplicability of Articles 14 and 19 may successfully he pleaded. As a result, the learned judge directed the issue of writ as prayed for. Aggrieved by this order, all the four respondents have preferred appeals, 25 in number.

5. The first point that arises for consideration in all these appeals is whether the impugned G. O. can be supported by the provisions of any valid law, The G. O. on the face of it does not refer to any express provisions of law under which it is made. The avowed object of the G. O. being grant of monopoly forthwith to the Greater Hyderabad Central Consumers Stores, Hyderabad in the twin cities and of gradual grant of monopoly to the co-operative as wholesale dealers in the districts, that order to have legal force and effect must be justified by any of the two statutes viz., the Essential Commodities Act and the Defence of India Act or the two Orders promulgated thereunder. It is so because it is not the case of the Government that the order was made in exercise of any inherent powers vested in them. Indeed there is no statute which has conferred on them suchunlimited liberty of action through executive directions. Such action for its justification and validity must needs be referable to some legal sanction or authority. The G. O., therefore may be justified if it could be validly made under any of the said two Orders, namely, the Licensing Order or the Sugar Control Order, for both of them have got force and sanction of the statute. While the former derives its legal sanctity from the Essential Commodities Act, the latter has been promulgated under the Defence of India Rules. That being the case, we have to notice the relevant provisions of the Acts and the orders made thereunder while considering the point at issue.

6. The Essential Commodities Act (Act X of 1955) was enacted by Parliament in exercise of the legislative powers conferred upon it by Entry 33 of list 3 which was an exercise of concurrent jurisdiction. The dominant object and intendment of the Act is to secure in the interests of the general public, equitable distribution of essential commodities like sugar etc. and availability at fair prices. Section 3 of the said Act says that 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 equi-able 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. The Central Government has thus powers to take action under this Act if the conditions postulated by Sub-section (1) exist. The action should be in the public interests and must be necessitated or deemed expedient for maintaining or increasing supplies of essential commodities and regulating their equitable distribution etc. as set out in the section. The measures to be taken to achieve the object of the Act are of necessity varied and manifold. Sub-clause (2) of Section 3 provides that the order may be made inter alia for purpose of production, controlling the price, regulating the storage, transport, distribution, disposal etc. of any essential commodity by means of licences and prohibiting or withholding from sale of such essential commodity ordinarily kept for sale, for requiring any person holding in stock any essential commodity to sell the whole or a specified part of the stock to the Central Government or State Government or to an officer or agent of such Government or to such other person or class of persons and in such circumstances as may be specified in the order and for other causes specified in sub-clauses of Section 3(2), Section 4 refers to the powers that may he conferred and duties imposed by the order under Section 3 of the Central Government or the State Government or officers and authorities of the Central Government or State Government. Section 5 deals with the delegation of powers by means of notified order to the State Government or the officers or authorities subordinate to the Central or the State Government, Section 6 says that any Order made under Section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act. Section 7 provides penalties for contraventionof the order under Section 3. It is manifest from the above provisions that making orders under Section 3 is the exclusive privilege of the Central Government. The State Government can have no such power or privilege unless they are delegated therewith by the Central Government. The delegation contemplated by Section 5 can be effected only by notified orders specifying the matters in relation to which and conditions subject to which the power is exercisable. The delegated powers, therefore, need not cover the whole field of operation of Section 3, of course, apart from such delegation, certain powers may he conferred on the State Government under the Order itself. Orders passed under Section 3, whether under delegated authority or otherwise, shall indeed prevail over the other enactments. This in short is the scheme of the Act.

7. The Andhra Pradesh Sugar Dealers Licencing Order, 1963 purports to he made by the State Government under Section 3 in exercise of their delegated powers. The avowed object of the order seems to be mainly licencing the dealers and prohibiting sale of sugar without a licence. By its provisions it prohibits all persons from carrying on business us a dealer except under and in accordance with the terms and conditions of a licence issued in this behalf by the licencing authority. Of course, the sale or purchase of sugar on Government account and the sale by banks 'of stocks of sugar hypothecated to them as provided in Sub-clause (4) of Clause 3 of the Order are exempt from the operation of this order. The order makes detailed provisions for issue of or refusal to grant or renew the licence and also the remedy open to the aggrieved party and the consequences of the cancellation of the licence etc. The delegated powers of the State Government in making this Order under Section 3, is confined mainly to regulating by licence the sale, distribution etc., of sugar. Hence the impugned G. O. cannot derive any legal sanction from the limited scope of this Licencing Order. Strictly speaking it is not an order containing instructions for implementation of the provisions of the Licensing Order. Indeed it runs riot with it. It is difficult nay impossible to hold, consistent with the provisions of the Licencing Order which are express, explicit and full and provide quasi-judicial machinery and give a right of appeal to the aggrieved party on refusal of grant or renwal of licence, that the grant of monopoly of trade is the end and aim or one of the objects of that Order, which indeed is the avowed object of the impugned G. O. Nor can the G. O. be deemed to De substantive Statutory Order by itself made under Section 3 of Act 10 of 1955 in exercise of any delegated power, for, delegated authority could be vested only by a notified order in a particular manner with specification of the covered field and conditions attached thereto. The G. O. was thus beyond the competence of the State Government in the light of the provisions of Act X of 1955.

8. Then we turn to the Sugar Control Order to find out whether the impugned order can be justified by the provisions of mat order, The sugar control order was made in exercise ofpowers under Sub-rule (2) of Rule 125 of the Defence of India Rules by the Central Government. Rule 125(2) says that if the Central Government or the State Government is of opinion that it is necessary or expedient so to do inter alia for securing the equitable distribution and availability of any article or thing at fair prices, it may, by order, provide for regulating or prohibiting the production, manufacture, supply and distribution, use and consumption of such articles or things and trade and commerce therein. The rule thus gives power not only to the Central Govt. but also to the State Government to Act thereunder, in case they are of opinion that it is necessary or expedient to do so. The Andhra Pradesh State Government has not made any Order in exercise of its powers under this rule. The Order with which we are now concerned is the Central Government's Order, viz., the Sugar Control Order of 1963. It may be at once stated that the provisions made in this Order are not inconsistent with (he State Licencing Order of 1963. A licenced dealer tinder the State licencing order is in fact a recognised dealer within the meaning of Sugar Control Order, entitled to deal in sugar, subject to the restrictions imposed. this Order makes various provisions for equitable distribution or sale of sugar at fair prices. Rule 3 imposes restrictions on the producer by prohibiting sale or delivery of removal of sugar from his bonded godowns of the factory in which it is produced, except under and in accordance with the direction issued in writing by the Central Government or the Chief Director. Rule 4 says that the Central Government or the Chief Director may, from time to time, by general or special order, issue to any producer or recognised dealer, or any class of producers or recognised dealers, such directions regarding the production, maintenance of stocks, storage, sale, grading, packing, marking, weighment, disposal, delivery and distribution of sugar as it or he may deem fit. Rule 5 confers power on the Central Government or Chief Director to regulate the movement of sugar and Rule R to fix the sugar prices. Rule 7 says that the Central Government or the Chief Director may, from time to time, by order, allot quotas of sugar to any specified State or area. Rule 8 provides that the Central Government or the Chief Director may, by order, issue directions to any producer or recognised dealer to supply sugar of such type or grade, in such quantities and to such areas or markets or to such persons or organisations as may be specified in the Order and at a price not exceeding the price or maximum price fixed under Clause 6. Rule 9 provides for collection of information etc. and Rule 10 for compliance with the directions issued under the older. Thus, it would appear from the above provisions that the sugar produced in the fae-tories is virtually placed under the control of the Central Government or the Chief Director, who, by their order, allot quotas of sugar to specified States and areas and direct supply thereof. The quantities of supply delivered to such persons or organisation as may be specified in the order are sold, distributed or disposed of by the recognised dealers as per the directions of the said authorities contained in a general orspecial order at prices fixed by them. That is the general scheme of the order. In order to carry out the purpose of the various rules referred toabove, directions have been issued under notified Orders from time to time. Now the quotas allotted to specified States or areas should be supplied by the producer or recognised dealer, and taken delivery of by the consignee or his nominee has been clarified by an order issued under Rule 8 containing directions as to the quality and quantity of sugar to be supplied its price, the period of its delivery, and the per-son or organisation to whom it would be delivered. It is stated therein that the consignee, who would take delivery would be the Government or their nominee or where such nominee is an officer of the Government any person or organisation duly authorised by such officer. Clause (3) of the Order makes It clear chat the transaction would be strictly on a commercial basis between the producer and the consignee and any claim or dispute arising out of the transaction shall be the responsibility of the producer and the consignee and no claim shall be made in this behalf against the Central Government by reason of the issue of the direction. This is just to remove all doubts and impress upon the privies to the contract that the role of the Central Government in this transaction is purely that of a statutory authority and not of a contracting party, and that mutual rights and obligations arising from the transaction are to be adjusted between themselves in accordance with the law, of course regard being had to the directionsgiven by the Central Government or the Chief Director under the provisions of the Sugar Control Order. The purpose if issuing directions under Rule 8 manifestly is one to advance the purpose of Rule 7. When once the quotas are allotted, they should be made available (o the

State Governments concerned, so that the distribution and sale may be effected by the recognised dealers subject to the directions of fhe Central Government in pursuance of Rule 4. Rules 4 and 5 have thus their distinct appointed provinces. It would appear from the contentions of the parties that the Collector of the District concerned was the appointed nominee of the Government to receive the quotas to be supplied by the producers and the nominee being an officer of the Government he used to nominate persons or organisations to lift the quotas. These persons or organisations invariably were the recognised dealers and were nominated because of allotment of particular quantity of sugar for purpose of their trade or commerce by the Civil Supplies. Commissioner or other competent authority, so that they may after lifting the quota trade with it, subject, of course to the directions of the Government issued under Rule (4). This was the procedure followed upto the time of implementation of the impugned G. O. We have already noticed that Rule 8 is concerned only with me manner in which the quotas will be supplied. It does not deal also with directions for its sale etc., as the matter in that behalf is covered by Rule 4. One would do well to bear in mind that the lifting of quotas allotted under Rule 7 and supplied under Rule 8, whether it be by the nominee of the Government or thenominee or nominees of fts nominated officers, is an act on behalf of the State and unless the nominees are further directed to use them for tReir purpose, they do not become entitled to sell even though they might have paid for them. The recent order under Rule 8 notified on 29th March, 1965 also makes that abundantly clear. It shows that where any direction is issued to any producer or recognised dealer under Sub-clause (1) for the supply of sugar to any State Government, that State Government may either arrange to take delivery of the sugar by itself or nominate any person, organisation or authority to take delivery of the same. It follows that the person taking delivery of the sugar supplied under Rule 8 takes it only on behalf of the State. No doubt he has to pay the purchase money at the time of delivery. On account it does not necessarily follow that he automatically became entitled to sell the goods on his own account. The fact that he happens to be a recognised dealer does not ipso facto entitle him In sell the stock thus obtained or arrange for its distribution by himself. Further the orders under Rule A containing the directions relating to sale, distribution etc, having also to be taken into account and complied with. Only two orders containing directions of the Central Government have been brought to our notice. One is the notification dated 17-4-1963. That was made by the Central Government in exercise of the powers conferred under clauses 3, 4 and 6 of the Sugar Control Order. That is not of much assistance in this case. There is another order dated 20-4-1963 which contains directions exclusively under Clause 4 of the Sugar Control Order. It provides that no recognised dealer shall sell sugar in excess of the quantity he is permitted to sell at any one time under such general or special order as the State Government or any officer authorised by it in this behalf may issue from time to time. That should indicate that a ceiling is fixed in relation to sale at one time by individual recognised dealer. This rules nut the possibility of any concept of grant of monopoly lurking in the provisions of the Sugar Control Order. The further limitations contained in the Order of July, 1963 are that one recognised dealer cannot sell to any other recognised dealer except in accordance with the directions issued to him. He can sell to the retail dealers and bulk consumers but he is duly bound to maintain a register of retail dealers in sugar and bulk consumers of sugar with whom he has business and who were nominated by the State Government or any officer authorised by it in this behalf to purchase sugar from him. These directions do not suggest anything that may be consistent with the theory that the directions of sale or distribution given from time to time by the Central Government by a notified order under Rule 4 do contemplate grant of monopoly to a particular recognised dealer. In the absence of any clear context in favour of monopoly in the statutory orders duly passed by the Central Government, the State Government could not grant such monopoly by issuing the impugned G. 0. The impugned G. 0. besides, is not an order purporting to have been made by the State Government in exercise of its power underRule 125(2) of the Defence Rules of India. aS. already discussed, it cannot derive any sanction from either the State Licensing Order, 1963 or the Sugar Control Order 1963. In fact it is inconsistent with both the Orders, which do not contemplate monopoly of trade. The very purpose of the 1st mentioned order is to licence the dealers in sugar and not to refuse licence to any unless it is expedient to do so consistent with the object of Act X of 1955. Sugar Control Order also recognises the system of licenced dealers and does not contain any provisions or clear context of monopoly in sale or distribution of sugar. If the impugned G. O. is to be treated as an administrative instruction, it cannot be permitted to interfere with or prevail over the statutory provisions. Indeed it interferes with the working of the two Statutory Orders in diverse ways. Once a dealer is licenced and becomes a recognised dealer, he can lawfully sell or deal in sugar, subject, of course, to the rules and directions in that behalf given under the said Orders. In order to exercise this right he must be put in possession of stock of sugar which is a commodity produced in the factories. The Central Government has taken the entire produce of sugar under its control, imposing a ban on the producers against sale, delivery, or disposal of stocks of sugar except under and in accordance with the directions given by them. The dominant idea guiding this action is to ensure fair and equitable distribution of sugar at reasonable prices through recognised dealers. The stocks are allotted to various States or areas so that they may be made available to the dealers who have got licence, for purposes of trade and commerce, because the persons duly licensed have a right to sell in accordance with, the directions of Centra! Government, so long as they continue to be recognised dealers. That is a right conferred on them by reason of licence issued in their favour. This licence has been granted by the State Licensing Authority itself in due accordance with law. While granting the licence it has taken into consideration all the factors which have nexus with the objects and purposes sought to be advanced by the Order. It is not open to the Government, therefore, to debar the licensees during the operation of their licences from exercising their right by refusing to sub-allocate quota, of any extent to them, with the help of which alone they can engage in trade or commerce in relation to the said commodity, especially when there is no scarcity or total lack of commodity in the country. In this way the impugned G. 0. interferes with the aims and objects of the two orders, viz., the Sugar Control Order and the Andhra Pradesh Sugar Dealers Licensing Order, 1963, there is one other aspect of the matter on which our learned brother has laid emphasis. It is this. The State Government by refusing to issue quotas to recognised dealers, has virtually suspended or cancelled the licences of the recognised dealers even though under the provision's of the State Sugar Licensing Order that could be done only in case the licencees have contravened any of the terms or conditions of the licence. Further, under the Sugar Licensing Order where the grant or renewal of licence is refused, it Is open to theaggrieved party to carry the matter in appeal and get relief in accordance with law. The implementation of the impugned G. O. has resulted in the infraction of this right as well. The provisions having statutory force have been thus completely neutralised by reason of the administrative instructions in the impugned G. O, which actively interferes with the proper functioning of the two statutory Orders. It is indisputable that the valid provisions in law cannot thus be circumvented or overridden by sheer executive instructions contained in the G. O., which, as already noticed, it is not based on any statutory provision. What law and provisions of law must legitimately do the same cannot be done by executive or administrative instructions. The following observations of their Lordships of the Supreme Court in Mannalal Jain v. State of Assam, : [1962]3SCR936 may be aptly quoted at this juncture:

'Before we part with this case we must express our deep concern over the manner in which the State Government or its officers have issued instructions in the matter of granting of licences, instructions which clearly enough are not in consonance with the provisions of law governing the grant of such licenses. We doubt the wisdom of issuing executive instructions in matters which are governed by provisions of law; even if it be considered necessary to issue instructions in such a matter, the instructions cannot be so framed or utilised as to override the provisions of law. Such a method will destroy the very basis of the rule of law and strike at the very root of orderly administration of law.'

9. It is contended on behalf of the respondents that the Government had a right under the Sugar Control Order to lift the stock themselves or to nominate a person for such purpose. Further, where the nominee is an officer of the Government, such officer can as well nominate any person or organisation to lift the quotas allotted for the States or the areas. So, then, if the 4th appellant has been nominated to lift the quota, the petitioners can make no grievance of the same. There has been thus no contravention of any provision of law at all. It is difficult to countenance this argument. The contention raised fails to take into account that the avowed object of the G. 0. is not limited to lifting the quota but goes much further, in that thereunder, the 4th appellant alone has to be allotted that quota for me purposes of his wholesale business. In other words, the entire quota that is allotted for twin cities of Hyderabad and Secunderabad is allotted exclusively to him for trade and commerce in total negation of the rights of the other recognised dealers who, under the licence granted to them, have a right to deal in the commodity and get certain quota for that purpose from the Government. It is in fact a grant of monopoly in favour of the 4th appellant. While it is permissible to grant different quotas for different dealers having regard to their particular circumstances, certainly it was not competent to the Government to create a monopoly in favour of one person ororganisation. Such a grant of monopoly is against the intendment of the provisions of both the Orders, namely, the Sugar Control Order and the State Licensing Order. Grants of monopolies are as a rule bad at common law except in cases of statute monopolies (i.e.,) the monopolies regulated by any statute. In a democratic set up of a social welfare State the grant of monopoly in relation to commodities essential to life, unless that be made in case of emergency & in the interests of the general public must be highly deprecated. The Constitution of India does not, as a rule, favour monopoly in trade and commerce. Of course, it has provided some exceptions. While acknowledging in Article 301 the principle of freedom of trade and commerce throughout the territory of India and in Article 19 freedom of the citizen to follow trade, it has, however, permitted monopoly in cases where trade, business, industry or service is carried by the State or by a corporation owned 'and controlled by the State. That is what is expressly provided in Article 19(6)(ii). It has also permitted restrictions on freedom of trade and commerce in tiroes of need; but they could be imposed only by act of Parliament, if that is deemed necessary in the interests of the general public. The trade in question is not carried on by the State, nor by the State owned and controlled corporation. Further it is not a monopoly in favour of the State or the corporation of the kind. It is a monopoly in favour of an individual or an organisation. The impugned G. 0. could not have validly created such monopoly. The G. 0. is not a statutory order either. It is not made under the Defence of India Rules as pre-essential requisites of exercising jurisdiction thereunder are conspicuous by their absence and it does not conform to the required formalities either, (or, such power is exercisable only under a statutory notified Order. The impugned G. (). embodies an executive instruction which is not backed up by any provision of law and hence too inadequate to defeat the rights of the recognised dealers or hold these rights in abeyance by refusing stocks of sugar to them. It is indisputable now that all the petitioners are licence holders. Their licences have been renewed even after the said G. O. and the writ proceedings in this court have started. Some of them have been renewed when the appeals were pending. They were issued by competent authority. The holders thereunder have a subsisting right to trade in sugar. It is impossible to conclude that they have obtained licences in vain after incurring delay and expense. It is equally difficult to assume, that the licencing authority did not grant the licence having regard to the objects of the Act and needs of the time. When they have licences, the recognised dealers are entitled to get stocks requisite for their trade according to the quotas Fixed in exercise of sound discretion by the competent authority. The impugned G. O. ought not to stand in their way and defeat their statutory and constitutional rights. It is, however, urged that Articles 14 and 19 have become effete by reason of proclamation dated 3-11-1962 and also notification dated 11-11-1962 under Article 359 of the Constitution and the petitioners cannot now complain of infraction offundamental rights and that the Government on account of emergency can grant monopoly to the 4th appellant in exercise of its inherent right. Whatever be the extraordinary powers of the Government in times of emergency, certainly when the Defence of India Act and the Rules thereunder or the Essential Commodities Act provide that a particular power should be exercised in a particular manner by a particular Government on existence of particular set of fads any substantial departure therefrom can-not give validity to the acts done. Under the Defence of India Rules when public Interest so demand, in view of the fact that the provisions of Article 19 have become effcte by reason of operation of Article 358, the. trade may as well he placed under the control or in the hands of only a particular person or persons. But such an inevitable situation must be made out and the Government, whether Central or State, must to in that opinion and exercise powers as a result having regard to and only in furtherance of the purposes of the said statute. That is not the case here. It is also argued in this case that the impugned G. O. is made iu implementation of the policy laid down by the Central Government to encourage the co-operative societies. But we think that the G. O, does not acquire legal validity only on the basis that it is made in furtherance of Central Government's policy which is calculated to promote the interests of certain types of organisation. What the statutes as discussed above say is that the order must be motivated by the interests of the general public and not the interests of a particular group or groups-It is significant that even the instructions of the Central Government issued on 17-4-1963 are to the effect that the quota for the period allocated should be sub allocated in such a manner that minimum dislocation of distribution takes place and there are no complaints of unemployment and favouritism and that in nominating the dealers there should be as wide a dispersal as possible. It is no doubt true that at later stages the Central Government stressed upon the need of fostering co-operative movement and encouragement of such societies. But that is not to say that while implementing the provisions of law or orders having the force of statute, considerations which have no nexus with the object of that law, should prevail or any such orders may be made as would interfere with the working of the said provisions or completely neutralise them. Preference, if any, to be given should firstly be warranted or contemplated by the provisions of law and not by the administrative instructions which run riot with them. Further preferential treatment even if it is permitted or contemplated in certain circumstances, it need not and ought not take the form of monopoly which is an extreme step and save in exceptional cases cannot be tolerated in a democratic set up of a social welfare State. We therefore, fell, in the absence of any formal order having statutory force, the administrative instructions of the Central Government and executive directions of the State Government based thereon cannot be permitted to prevail over or interfere with the just working of the provisions of the statutory orders.

10. The result of the above discussion is that the impugned G. O. is not a delegated piece of legislation. It does not purport to be made under the Defence of India Rules or under any valid statute or order having statutory force. It is a mere executive instruction. It interferes with the proper working of the Andhra Pradesh Sugar Dealers Licensing Order of 1963 and Sugar Control Order (Central of 1963). It tends to hold in abeyance, defeat or destroy the rights of the petitioners, which are expressly or by necessary implications recognised by the said Orders. It is prone even to set at naught the fundamental rights of the petitioners vouchsafed by the Constitution of India. The said G. O. cannot be permitted to stand in the way of carrying out the urpose and object of the two statutory orders,our learned brother, was, therefore, right inissuing Writ of Mandamus as prayed for. We,therefore, dismiss all the appeals with costs.Advocate's Fee Rs. 50 in each.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //