1. In this Batch of writ petitions, this Court is called upon to decide:
(1) Whether the Tobacco Board (hereinafter referred as 'the Board') is having the authority to declare crop holiday for the FCV Virginia tobacco that is being grown in the State of Andhra Pradesh for the year 2000-2001.
(2) If the answer is 'yes', whether it can be said that it is a 'reasonable restriction' on the tobacco trade as contemplated under Section 19(g) of the Constitution.
2. Having heard the arguments for four days, having perused the provisions of the Act and having entertained a doubt that the decision taken by the Board is too harsh affecting the agriculturists and agricultural labour, as the same being nominated body, but not a democratically elected one, and also in the light of the allegations and counter allegations that are being made in the Court by the persons supporting crop holiday and against crop holiday, with a view to find out whether any workable formula can be arrived at, I passed an interim order on 28-9-2000 with the following directions:
(a) The Board shall invite applications from the intending growers of Tobacco nursery growers and curers (barren owners) seeking registration, on or before 8-10-2000;
(b) The intending growers have to submit their applications on or before 8-10-2000;
(c) The Board shall furnish information to this Court with regard to the number of applications received, the extent of land in which tobacco is sought to be grown, and the expected yield of tobacco;
(d)The Board shall screen the applications and identify the eligible growers for registration;
(e) The Board shall reconsider its decision by inviting the views of the growers on each of the grades of tobacco that is being grown in the State and also of the representatives of the trade before-10-10-2000 and take appropriate action thereon;
(f) The growers' Committee attached to each auction-platform shall immediately convene a meeting of all registered growers and take a decision before making representation to the Board in one way or the other;
(g) If there is no growers' Committee to any auction platform, the auction Superintendent is directed to convene a meeting of the growers and send a detailed report with regard to the total number of members, the number of persons that attended the meeting and how many of them are supporting and how many of them are opposing the crop holiday;
(h) The traders shall give their firm commitment for the year 2000 and also file an undertaking to that effect that in the event of their failure to purchase the tobacco, for which a commitment was given, the Board is at liberty to recover the cost of the tobacco that was not purchased at the higher prices that fetched on the auction-platform during that year in the event of lifting of the crop holiday;
(i) They shall also express their willingness to give bank guarantee for one half of the value of the tobacco as per their commitment;
(j)They shall also indicate the Minimum Guarantee Price, whichthey arc going to offer, in the event of the growers being allowed to grow tobacco;
(k) They shall communicate their view to the Board by 10-10-2000.
(3) The Board shall meet after 10-10-2000 and take a decision in the light of the information received by the growers and, traders; and that decision shall be communicated to the Court before 15-10-2000.
(4) Till a decision is taken by the Board or till the Court delivers the judgment, no grower shall grow either nurseries or tobacco crop.
(a) The Board shall also keep in mindthe suggestions made by Dr. Yelamanchili Sivaji, in his representation dated 1-4-2000;
(b) The Board shall publish the entire programme given in the order in the vernacular papers and also send circulars to the Superintendents of each auction-platforms with the above information and with necessary instructions to convene the meetings of the growers attached to the platforms and submit their reports as directed in this order and also receive applications from the intending growers.
3. Pursuant to the above directions, the Board issued a notification published in 'Enadu' Telugu daily newspaper, Vijayawada edition on 1-10-2000 and in 'Andhra Jyothi' Telugu daily newspaper, Vijayawada edition on 2-10-2000. The Board, in its 104th (special) meeting held on 12-10-2000, having reconsidered the issue in the light of the suggestions made by this Court, reiterated its decision to continue the crop holiday in the State ofAndhra Pradesh by giving the following reasons:
(1) Only very small percentage i.e., 7.54% of growers (3,368 growers out of 44,629) have applied for crop. Majority of the farmers are forcontinuing crop holiday.
(2) Majority of the tobacco growers have already grown alternative crops such as maize, groundnut, black gram, red gram, castor, coriander, cotton sugar cane, dry paddy etc., in an area of 92,964 hectares against 1,27,284 hectares planted under tobacco last year.
(3) The expert advice of the scientists of CTRI is that no nurseries shall be sown after 30th August for upper NLS and 15th September for all other regions and no plantation shall take place after 15th October in NLS and 15th November in all other regions, as there will be loss in productivity as well as quality of tobacco.
(4) There are enough carried over stocks available for export use and domestic consumption for the next year.
(5) The traders have declined to give willingness to submit bank guarantee and have not submitted undertakings permitting the Board to recover the cost of tobacco required by them in case of their failure to purchase tobacco committed by them.
(6) The MGP indicated by the trade is not remunerative and conditional.
(7) A section of trade i.e., small dealers who purchases around 25% to 30% of total crop, are also for continuing crop holiday.
'As mentioned a majority of the members of the Board are in favour of not alteringthe decision of the Board taken in its 100th and 101st meetings, the Board resolved that no crop is authorised for the 3368 applicants for cultivation for FCV tobacco and 19 applicants for growing commercial nurseries of FCV tobacco and the decision on Crop Holiday for the year 2000-2001 in respect of A.P. and Maharashtra will continue and the decision be communicated to the Hon'ble High Court of A.P.'
4. From this, the efforts made by this Court to find out an amicable solution to this issue went in vain. Arguments were addressed on merits of the case and in fact, it is a marathon session spreading over more than 15 working days in support of and against, the crop holiday declared by the Board.
5. Virginia Tobacco Growers Association and three others, Sri Nunna Venkala Chiranjeevi Rao and four others and Sri Ravoori Subba Rao and 7 others filed Writ Petition No.12728 of-2000, Writ Petition No.16463 of 2000 and Writ Petition No.I6465 of 2000 respectively, questioning the crop holiday declared by the Board. Sri M. Rangaiah and 10 others, filed WPMP (SR) No.103447 of 2000 in WP No.12728 of 2000, seeking permission of the Court to come on record as interveners, in opposing the claim of the petitioners in the above writ petition. The Tobacco Growers Welfare Association, filed WPMP No.21139 of 2000, seeking permission of the Court to implead themselves as respondents in opposing the claim of the petitioners in the above writ petition. The Indian Tobacco Association, representing growers, manufactures and exporters of tobacco, filed Writ Petition No.16651 of 2000, questioning the decision of the Board in declaring the crop holiday. One Dr. Yelamanchili Sivaji, President of Tobacco Growers Association, filed WPMP No.25I37 of 2000 to get himself impleaded, in opposing the relief sought for by the saidAssociation. He argued the matter as party-in-person. The Indian Tobacco Dealers Association, the members of which seem to be small dealers, filed WPMP No.2347l of 2000 to get themselves impleaded, in support of the decision of the Board. One Chundurl Ranga Rao, a member of the Board, filed WPMP No.22344 of 2000, to get himself impleaded as party respondent for opposing the relief sought for by the Association. One Painidi Veera Raghava Rao and another, filed writ petition No.17138 of 2000 for enforcement of the crop holiday in the State of Andhra Pradesh, as per the decision of the Board. Also one Vijendra Rama Rao and 82 others and also one Bheemavarapu Venkateswara Rao and 3 others filed WPMP No.25144 of 2000 and 25685 of 2000 respectively, opposing the relief sought for in this writ petition. One Sri Geddam Kolaiahof Karumanchi village of Tanguture Mandal, representing the agricultural labourers filed Writ Petition No.19787 of 2000, opposing the crop holiday as the same was detrimental to the interests of the agricultural labourers. Another one, by name, Prakasa Rao and 2 others, tobacco growers of NLS region, filed writ petition No.17407 of 2000, seeking a similar relief of enforcement of crop holiday.
6. In all these writ petitions, I have heard not only the Counsel appearing for the parties but also the President of A.P. Tobacco Growers Association, who strongly advocated the crop holiday, and some growers of NLS region who opposed declaration of crop holiday.
7. Before considering the legality of the .resolutions adopted by the Board certain facts have to be kept in mind. Tobacco is also a commercial crop like any other commercial crop that is being raised by the agriculturists in areas where regular irrigated water supply is not available and is subjected to vagaries of the nature. The tobacco grown in the State of AndhraPradesh accounts for 80% of the tobacco grown in the country. But, because of its global market and the revenues received by the State by way of Foreign Exchange and Excise Duty and perhaps because of the agitation of the growers for remunerative prices, the Parliament had chosen to enact 'The Tobacco Board Act, 1975', (for short 'the Act') to take over the control of the industry relating to FCV Virginia tobacco, in the public interest.
8. Under Section 4 of the Act, the Board is constituted as a body corporate having perpetual succession and common seal so on and so forth. Hence, the controversy in this batch is limited to the growth of FCV Virginia Tobacco only, but not to the other varieties of tobacco grown in the State of Andhra Pradesh. Under Section 4(4) of the Act, the composition of the Board is given. It is rather surprising to see that the Board constituted under Act is more a nominated Board without the elected members of the growers, traders, manufacturers, exporters 'etc., that are involved in the trade. Under Section 8 of the Act, the functions of the Board are enumerated. Under Section 8(1) of the Act, the Board has to promote the development of the Tobacco industry under the control of the Central Government. Under Section 8(2) of the Act, the Board is empowered to take measures referred to in that sub-section. As the entire controversy revolves round the functioning of the Board in discharge of its duties under this section, Section of the Act is extracted hereunder for better appreciation of the case of hand.
'Section 8(1) It shall be the duty of the Board to promote, by such measures as it thinks fit, the development under the control of the Central Government of the tobacco industry.
(2) Without prejudice to the generalityof the provisions of the sub-section (1),the measures referred to there-in may provide for-
(a) regulating the production and curing of Virginia tobacco having regard to the following factors namely:
(1) the demand for Virginia tobacco in India and abroad;
(ii) the suitability of land for growing Virginia tobacco;
(iii) the difference in soil characteristics and agro climatic factors in different regions of the country where Virginia tobacco is grown and the effect thereof on the quality and quantity of Virginia tobacco produced in those regions;
(iv) the marketability of different types of Virginia tobacco;
(v) the need for rotation of crops; and
(vi) the nature of the holdings of the growers of Virginia tobacco whether owned or leased,
(b) keeping .a constant watch on the Virginia tobacco market, both in India and abroad, and ensuring that the growers get a fair and remunerative price for the same and that there are no wide fluctuations in the prices of the commodity;
(c) maintenance and improvement of existing markets, and development of new markets outside India for Indian Virginia tobacco and its products and devising of marketing strategy in consonance with demand for the commodily out side India, including group marketing under limited branch names;
(cc)e stabli shine nt by the Board of auction platform with the previous approval of the Central Governmentfor the sale of Virginia tobacco by registered grower or curers and functioning of the Board as an auctioneer at auction platform established by or registered with it subject to such conditions as may be specified by the Central Government;
(d) recommending to Central Governmentthe minimum prices which may be fixed for purposes of export of Virginia tobacco with a view to avoiding unhealthy competition amongst the exporters;
(e) regulating in other respects Virginia tobacco marketing in India and export of Virginia tobacco having due regard to the interests of growers, manufacturers and dealers and the nation;
(f) propagating information useful to the growers, dealers and exporters (including packer) of Virginia tobacco and manufacturers of Virginia tobacco products and others concerned with the Virginia tobacco and products thereof;
(g) purchasing Virginia tobacco from growers when the same is considered necessary or expedient for protecting the interests of the growers and disposal of the same in India or abroad as and when considered appropriate;
(h) promoting the grading of tobacco at the level of growers;
(i) sponsoring, assisting, co-ordinating or encouraging scientific, technological and economic research for the promotion of tobacco industry;
(j) such other matter as may be prescribed.
(3) Without prejudice to the generality of the provisions of sub-section (1) andsubject to priority being given to matters specified in sub-section (2) the measures referred to in sub-section (1) may also provide in relation to tobacco other than Virginia tobacco for all or any other matters specified in clauses (c) to (g) of sub-section (2) and for this purpose any reference in those clauses to Virginia tobacco shall be construed as including a reference to tobacco other than Virginia tobacco.
(4) The Board shall perform its functions under this section in accordance with and subject to such rules as may be made by the Central Government and such rules may in particular make provisions for ensuring that the Board functions in close liaison with Union agencies institutions and authorities concerned with the tobacco industry (including growing of tobacco) and avoids duplication of effect.
9. From the above section, it is seen that various measures to be taken by the Board to promote and develop the tobacco industry under the control of the Central Government by regulating the production and curing of the Virginia tobacco are enumerated in this section. In nutshell, the Board has to take the following measures to regulate the production and curing of tobacco;
(a) The demand for Virginia tobacco in the country and abroad;
(b) The suitability of climatic factors with regard to soil characteristics and agro-climatic factors and their effect on the quality and quantity of the tobacco produced in these regions;
(c) Marketability of various types of tobacco;
(d) The need for rotation of crops;
(e) To ensure fair and remunerativeprocess without wide fluctuations forthe tobacco grown by the growers keeping to constant watch on the internal and international market;
(f) Maintenance, improvement of markets and development of new markets outside India for the Tobacco and its products;
(g) Establishment of auction platforms for sale of Tobacco and to ftmction as an auctioneer at these platforms;
(h) To recommend minimum price for export of Tobacco;
(i) Regulating the Tobacco marketing in India and outside having due regard to the interests of the growers, manufacturers, dealers and the nation at large;
(j) To make the useful information available to the growers as well as traders, collected from time to time for the development ,of the industry;
(k) To purchase Tobacco from the growers as and when found necessary or expedient to protect the interests of the growers and to dispose of the same in India or in abroad;
(1) Promoting grading of the Tobacco at the level of the grower; and
(m)Encourage scientific, technological and economic research for promotion of Tobacco industry.
Under sub-section (3), the measures contemplated under sub-section (2) can be extended to other varieties of Tobacco, if the Board finds it expedient to protect the growers of other varieties of Tobacco also. Under sub-section (4), the Board has to ftmction in close liaison with the union agencies, institutions and authorities concerned with the Tobacco industry as per the rules made by the Central Government.In one word, this section is the heart and soul of this Act.
10. During the course of arguments, it came to light that the Board failed to perform any of the functions envisaged under the Act taking the plea that the Board is not empowered to take any plenary action against the erring growers, manufacturers and exporters, without prior sanction of the Central Government. It is also its case that in none of the cases recommended for prosecution by the Board, the Central Government did not give any sanction till this date after the Act came into force in the year 1975. Had the Central Government and the Board acted with the required foresightedness to actheve the objectives underlying the enactment, the Tobacco industry in this country would not have been placed in such a chaotic situation in which it is placed today. How the Central Government acted callously all these years and thwarted the objective of the Act will be dealt with at the appropriate place. For the present, I would like to refer to other provisions of the Act and the. Rules made thereunder for having a grip over the factual background in considering the issue before this Court.
11. Under Section 10 of the Act, no person is allowed to grow Tobacco without obtaining a registration certificate from the Board in accordance with the Rules made under the Act. Under Seclion 10(aXl) of the Act, inserted in the year 1985, by a way of an amendment, which came into force on 6-9-1985, no person shall grow seedbeds for commercial .purposes without registering his name as a nursery grower with the Board. Under sub-section (2), the registered nursery grower has to sell the Tobacco seedlings only to the registered grower. Under Section 11 of the Act, even the curer has to register his name with the Board. Under Section 11A, again introduced by an amendment, which cameinto force on 6-9-1985, even the processor or manufacturer of tobacco has to register himself with the Board. Under Section 11B of the Act, even construction and operation of barons for taking up grading work by individuals are also prohibited unless they obtain a licence to that effect from the Board. Under Section 12 of the Act, export of Tobacco and its products by a packer, auctioneer or dealer is prohibited without oblaining a registration to that effect from the Board. Under Section 13 of the Act, the registered growers or curers have to sell the Tobacco grown or cured only on auction platforms eslablished by the Board. Section 14 of the Act deals with the procedure contemplated for registration, cancellation and other related matters. Under Section 14(a) of the Act, which came into force by another amendment, dated 22-8-1984, the Board is authorised to collect service charges at a rate of 2% for the sales that have taken place on the auction-platforms established by it. Under Section 15 of the Act, the Board and the officers working under it are authorised to inspect any land or premises to see whether the particulars furnished in the application are true or not. Chapter V of the Act deals with the powers of the Central Government to regulate the tobacco industry. Under Section 20 of the Act, the Central Government is authorised to prohibit, restrict or otherwise control the import and export of Tobacco and Tobacco products either generally or in a specified classes of cases by an order to be published in the official gazette. Under Section 20A of the Act, which was introduced by way of an amendment and which came into force on 6-9-1985, if the Central Government is satisfied that is necessary and expedient so to do, may be order in writing and subject to such conditions and limitations specified in the order, authorise anybody or other agency to purchase Virginia Tobacco from the growers and dispose of the same in India or abroad. Under Section 21 of theAct, the Board is expccled to carry out the directions given by the Central Government from time to time. Of course, the word used is for efficient administration of the Act, which was never there from the date the Legislation, came into force. Chapter VI of the Act deals with the miscellaneous provisions. Section 23 of the Act empowers the Board to levy penalty for failure to furnish any return containing any false information. Under Section 24 of the Act, penalties are provided if any of the officers of the Board are obstructed from carrying out their functions as contemplated under Section 15 of the Act. Under Section 25 of the Act penalties are provided for violation of any of the provisions of the Act by all the concerned in the Tobacco trade. Under Section 26 of the Act, the persons incharge of the companies commit any offence-attracting punishment, are liable to be prosecuted and punished accordingly. Under Section 27 of the Act, the Board has to file its complaint either before a Metropolitan Magistrate or before a Judicial First Class Magistrate against any person who violated the provisions of the Act and the same is punishable under the Act. Under Section 28 of the Act, prior sanction of the Central Government is required for launching prosecution for the offences punishable under the Act. Under Section 32 of the Act, the Central Government is empowered to make rules for carrying out the purposes of the Act by way of a notification to be published in the official Gazette. Under Section 33, the Board is empowered to make regulations not inconsistent with the Act and the Rules made thereunder, with reference to the matters mentioned in subsection (2), but they shall not come into force until they have been approved by the Government and published in the official Gazette.
12. The Central Government, inexercise of its- rule-making power under Section 32 of the Act, made rules in theyear 1976 and they are known as 'The Tobacco Board Rules. 1976' (for short 'the Rules'). Rule 14 of the Rules deals with the quorum of the Board; and atleast 8 members of the Board should be present for taking any policy decision. Under Rule 25 of the Rules, the Board is competent to borrow monies on the securities of the tobacco fund or any of its estates for meeting the expenses or for carrying out the measures referred to under Section 8 of the Act, of course, subject to previous sanction of the Central Government,. It is the case of the Board that though it approached the Central Government for approval to raise loans from the Nationalised Banks, the Central Government seems to have thrown the requests of the Board into the dust bin and kept quite.
13. Chapter VI of the Act deals with fixation of minimum price for purchase, sale and export of Tobacco. Under Rule 31 of the Rules, though the Board is expected to recommend minimum export prices to be fixed for the coming year for export of Virginia as well as other varieties of Tobacco, which are having export prospects for consideration of the Central Government, from the version of the Board, the Central Government has given up the practice of fixing the minimum export prices, without deleting the said Rule from the Statute book. Under Rule 32 of the Rules, with the permission of the Central Government, the Board can itself purchase the Tobacco from the growers if the Central Government is satisfied that such a step is necessary and sufficient to safeguard the interests of the growers and the Tobacco so produced shall be disposed of by it in India or Abroad at an appropriate time and in an appropriate manner as the Board may think or as may be directed by the Central Government. Rule 32(3) of the Rules, the Board has to utilise the agency of State Trading Corporation of India Limited in exporting the Virginia Tobacco purchased by it tothe maximum possible extent. Under sub-rule (4) the Board has to keep the Central Government informed of the operations undertaken by it and shall also comply with the instructions and guidelines or restrictions imposed by the Government from time to time in giving effect to Rule 32 of the Rules. Under sub-rule (5), the Board is given the power to fix the price for purchase of Tobacco subject to the guidelines, if any given by the Central Government in that regard.
14. Chapter VII of the Act deals with registrations of growers, curers, exporters, packers, auctioneers and dealers in Tobacco. Under Rule 33(1) of the Rules, the growers are expected to register their names with the Board atleast 5 months before commencement of the operations for growing Virginia Tobacco in any State in an year and the last date for obtaining registrations in each of the State were also specified. As far as Andhra pradesh is concerned, under sub-rule (3), the growers of tobacco are expected to obtain registrations before 31st May for growing Virginia tobacco. Under sub-rule (2), the Board is given the power to extend the last date for receiving the applications for certificate of registration or for renewal of certificates of registration. Sub-rule (3) prescribes the form in which the grower has to file an application. Sub-rule (4) deals with the fees to be paid as per the hectorage in which he intends to grow tobacco along with the application. Under sub-rule (5), the certificate of registration, if granted, shall be in from No.2 and the said certificate of registration is valid for one year from the date of issuance thereof. Under sub-rule (6), the renewal of certificate of registration shall be for a period of one year, at a time and to be endorsed on such certificate. Under sub-rule (7), the certificate of registration or renewal shall be valid for the year for which it was granted. Rule 33-A of the Rules deals with the procedure and principles governing thegrant of registration or renewals of the registration to growers of Tobacco. Under sub-rule (1), every year, in advance the Board shall lay down the policy regulating the production and curing of the Tobacco, having regard to the factors specified in Section 8(2)(a) of the Act and the same is to be published in the form of book or pamphlet or notification in widely circulated newspapers. Sub-rule (2) says that the Board has to constitute a Committee consisting of 5 members of the Board to lay down the criteria for registration, or renewal for registration as grower having regard to the aspects enumerated in sub-rule (3). Under sub-rule (4), as per the criteria laid down by the Registration Committee, the Secretary or any other officer who was authorised to scrutinise the applications and grant registrations or renewal of registration, if he is satisfied that the application satisfied the criteria laid down the Registration Committee after making such enquiry as he deems fit, has to grant registration of renewal. Under sub-rule (8),, if the registration or renewal is refused, the Board has to communicate the decision to the applicant within 15 days and a right or appeal is provided to the applicant by way of making a representation to the Board under sub-rule (9) seeking revision of the decision of the Committee within 30 days from the date of communication. Rule 33(b) of the Rules deals with the procedure and the principles for cancellation of the certificate of registration on any of the grounds mentioned there under. Under Rule 33(c) of the Rules, every nursery grower has to make an application within three months to the Board before the commencement of the operation; and the last dates for receipt of the applications State-wise were also specified in the Rules. As far as Andhra pradesh is concerned, the nursery growers have to file their applications on or before 31 st December of every year. The procedure indicated in Rule 33(a)(b) of the Rules for registration of the grower is made applicablemutatis mutandis for the nursery growers also. Rule 33-E of the Rules says that every nursery grower shall maintain registers in Form Nos.5 and 6 and also submit returns in Form Nos. 7 and 8 at the times specified therein by the Secretary of the Board. Section 34 of the Act deals with registration or curers of Virginia tobacco and they have to file applications three months before the commencement of the curing operations. Rules 34-A, B and C of the Rules deal with the procedure for grant of registration, cancellation, appeal as in the case of growers. Under Rule 34-D of the Rules, the processors or manufacturers have to submit their applications for their registrations on or before 1st November of the year preceding the calendar year for which registration is applied by paying the requisite fee shown in the table under sub-rule (4), Rules 34-E, F and G of the Rules deal with the procedure and principles for grant of registration, maintenance or returns to be submitted by them and the procedure and principles for cancellation of registrations in case of violation of any of the provisions. Rules 34-Ii, I, J, and K of the Rules deal with the licensing of the commercial grades, procedure for grant of licences, registers to be maintained and the procedure for cancellation of licences as commercial growers in case of violation of any of the provisions. Rules 34-L, M, N, O, P, and Q of the Rules deal with licences for construction of barrens for flue curing of the Tobacco, the procedure for grant of licences for construction and operation, the procedure for grant of licences for operation, registers to be maintained and returns to be submitted by the licensees for operation of barren and the procedure and principles for cancellation or renewal of licences for operation of barren.
15. From this it is seen that the personsintending to construct barrens have to apply for licences and after completion of the construction he has to again make anapplication for putting the barren into operation.
16. Rule 35 of the Rules deals with registration of exporters, packers, auctioneers or dealers in Tobacco. Everyone of them has to file application before the Board on or before 1 st November of the year preceding the calendar year for which registration is applied along with the fee prescribed in sub-rule (4). 30th November was prescribed as the last date for application seeking renewal of registrations. Rule 36 of the Rules deals with the procedure for grant of registration. Rule 37 of the Rules deals with relurns to be submitted and registers to be maintained and submitted by these persons. Under Rule 37(2) of the Rules, all these persons have to submit to the Secretary, monthly returns in Form No.31 on or before 15th day of the succeeding month furnishing the information with regard to the quantity purchased till the end of the previous month, progressive total quantity, quantity issued for growing, grades and bye-products, quantity of grades and bye-produces that have realised during the grading process. Form No.32 deals with carried stocks grade-wise and year-wise purchases from exporters, dealers/sale of Tobacco to the other dealers, exporters and manufacturers, balance at the end of the calendar month. Form No.34, deals with giving information with regard to the exports against contract/ firm order during the month. Rule 38 of the Rules deals with the procedure for cancellation of registration or renewal.
17. Chapter VIII of the Act deals with inspection of lands and premises. The officers of the Board are expected to give reasonable notice of not less than 24 hours before any land or premises is inspected as required under Section 15 of the Act. Chapter IX of the Act deals with the fees leviable on sales, the mode of recovery of fees, the fees leviable by purchaser and the mode of recovery of fees from purchaser.
18. From the above provisions of the Act and the Rules, it is seen that the Parliament had taken care to regulate the production and sale of tobacco within and outside the country, from the time of raising seed beds till the tobacco grown is mopped up every year. But, unfortunately most of the provisions of the Act and the Rules remain on the statute book without their implementation due to continued indifferent attitude exhibited by the officials of the Central Government in not giving the required powers to the Board to implement the Act and the Rules having not only brought into existence a Legislation with a laudable objective of development of the tobacco industry duly protecting the interests of the growers, the traders, the exporters and dealers but also intended to cam foreign exchange and revenue to the State by way of Central Excise. In fact, time and again, the Board was after the Central Government to make amendments to the statute and strengthen the hands of the Board for carrying out the purposes of the Act from time to time. The chairman of the Board, in his letter Ref.No.10(3)/91/PC, dated 10-5-1999, brought to the notice of the Director, Ministry of Commerce, Government of India, New Delhi, the fate of the amendments proposed by the Board from time to time duly enclosing a draft copy of the Act to be brought into force after effecting the amendments. From this letter, it is seen that various amendments proposed to the Act and the Rules are pending with the Government since 1991. The Government neither rejected the proposal nor accepted those amendments so far. With the result, the growers have been growing tobacco more than the area authorized for raising the crop continuously and without rotating the crops to be raised in the lands as contemplated under the Act, and the traders were neither paying the remunerative prices to the growers on the ground of excess production nor furnishing the information about mopping up of tobaccothat was purchased form the platforms as required under the Act. Ultimately, the Board is not able to control the illegal production of tobacco and its sale from time to time. While this sorry state of affairs were continuing for over a period, the traders approached the Board for higher crop during 1991-92 on the basis of some letters received from London Chamber of Commerce and some other importing countries. On the basis of these letters, the Board permitted construction of about 1000 new barrens. But, due to disintegration of Russia, which is the major consumer of Indian tobacco, there was a steep fait in the exports. Though in the subsequent years, the Board was trying to reduce the crop size, the tobacco growers particularly the growers in NLS region whose tobacco is fetching higher rate in the market, started growing excess tobacco than the authorised crop size in that area. Apart from that, it seems that the growers constructed barrens unauthorisedly also. When the Board was not permitting the excess tobacco grown by the growers, the growers were approaching this Court and this Court for some time was giving orders liberally direction the Board to allow the growers to sell the excess tobacco grown in these areas on the auction platforms established by the Board. This practice was put to an end by Parvaiha Rao, J., as he then was. Thereafter, the Central Government stepped into the picture directing the Board to purchase the excess tobacco grown in these areas without realising the ill-effects of their orders and also without realising, how the traders were exploiting the situation due to piling up of the excess stocks on the auction platforms. During this year, when purchasers did not come forward to purchase the tobacco by stating that more than 50 million kgs. of unsold stocks of the previous year were piled up and they were not able to get the market, the growers were forced to agitate for crop holiday. While the registered growers were pleading forintervention of the Central Government for the purchase of their stocks through STC without considering their request the Central Government issued notification on 18-8-2000 to permit the sale of unauthorised tobacco grown during the year 1999-2000 on the auction platforms of the Board. The Board and the Central Government having failed to come to the rescue of the law-abiding citizens who have grown the tobacco as per the registration given to them, the Central Government came to the immediate rescue of the violators of the law and allowed them to sell the unauthorized tobacco grown by them. The standing Counsel for the Central Government is unable to give any satisfactory explanation for issuance of the orders by the Central Government and the arbitrariness exhibited by the officers of the Central Government is writ at large. This is how the Executive is discharging their duties without reference to the aims and objects of the Legislation brought into existence mainly intended to get remunerative prices to the fanners.
19. From the information furnished by the Board, it is seen that NLS tobacco fetched Rs.72-98 ps. per kg. in 1999 auctions and its rate fell down to Rs.47-31 ps., during the current season, it has further fallen down to Rs.42-93 ps. The rate fetched by the tobacco in terms of the value of the dollar in the year 1997 is 1.15 dollars and it has come down to 0.72 cents during the current season.
20. Coming to the present season, the auction platforms are opened in the State of Andhra Pradesh in the last week of February, 2000. For a considerable period, the purchasers had not come to the auction platforms to purchase the tobacco. On the other hand, the Indian Tobacco Association which consists of 3 manufacturers and 19 exporters who monopolized tobacco trade, threw its first salvo by writing a letter to the Board on.1-3-2000 by stating:
(1) that tobacco leaf industry isexperiencing a phase of uncertainty and passing through difficult times;
(2) that there has been a general declining trend in demand for FCV tobacco; and
(3) that in the last season, had the International manufacturers, exporters, STC and the AP Tobacco Growers Union not intervened, the growers would not have disposed of their huge surplus stocks;
(4) While the authorized crop for 2000-2001 by the Board is around 95.63 million kgs., actual output from the current growth is expected around 150 million kgs. i.e., 50 per cent over and above the authorised crop and the trade is already having an estimated 40 million kgs. of packed tobacco of the previous year and another 10 million kgs. is expected to be added to this. The market for tobacco is presently at a low pace. According to them, the total tobacco that is to be marked during the year 2000-2001 will be around 200 million kgs. against the estimated demand for 100 kgs., and hence they were not able to participate in the auctions. In this letter, they requested the Government to take some redressal steps by directing the intervention of the STC in a substantial way for price stabilisation, infuse confidence in the minds of tobacco growers and prevail on the banks to increase the credit limits upto 365 days instead of the present 180 days. This position was reiterated by staling that, during the last year the STC was authorised to buy tobacco up to Rs.50,00,00,000/-but the STC bought the tobacco only up to Rs.18,00,00,000/- and the balance amount can be utilised by the .STC to purchase the surplus byentering into the market. As the purchasers were not turning up to the auction platforms, the growers started knocking the doors of every one within their reach including the Hon'ble Union Minister for Commerce seeking a direction to the STC to enter the market and purchase the piled up stocks and declare a crop holiday prohibiting the cultivation of tobacco in the States of Andhra Pradcsh and Kamataka during the year 2000-2001. When there was no response from the Hon'ble Union Minister for Commerce, they approached the Hon'ble Cthef Minister of Andhra Pradesh who in turn addressed a letter to the Hon'ble Union Minister for Commerce bringing to the notice of the former the precarious situation in which the tobacco growers in the State of Andhra Pradesh were placed, and requested the Union Minister for Commerce to consider the important suggestions made by the representatives of the farmers like;
(1) declaration of crop holiday all over the country for the next season i.e., 2000-2001;
(2) liquidating the surplus tobacco to the extent of 103 million kgs. indented by the traders, exporters and manufacturers;
(3) purchase of the remaining excesstobacco by STC; and
(4) exploring the possibilities for exporting Indian tobacco to other countries like Russia.
21. The Chef Minister also requested to take several other long-term measures like;
(a) creation of Price Stabilisation Agency in the Board itself;
(b) creation of the revolving fund by collecting one percent cess on the sate of cigarettes and using the same funds for stabilising the market;
(c) allow Foreign Direct Investment in cigarette industry;
(d) allowing foreign buyers to participate in the tobacco auctions directly;
(e) power of fixing minimum support price may be given to the Board;
(f) number of fanners' representatives need to be increased in the Board;
(g) promoting cultivation of alternate crops in the tobacco growing areas by offering certain concessions and incentives to growers and;
(h) introducing deterrent punishment against the unauthorised growers and to give adequate powers to the Board for enforcing the crop regulations.
22. Dr. Y, Sivaji, former Rajya Sabha Member and the Honorary President of the Tobacco Growers Association and Sri Venkaiah Naidu, Member of Parliament, as he then was, and the General Secretary of the BJP, addressed letters to the Prime Minister seeking immediate intervention of the Government to save the farmers from frustration by implementing the short term as well as long term measures as suggested by them in their letters. But there was no response from the Central Government. In the mean-time, the Board, at its 100th meeting held on 27-3-2000, having taken into consideration the excess stock of tobacco lying with the traders and the estimated quantity of 150 million kgs. of tobacco growing during the season of 1999-2000 which works out to 200 million kgs. against the indicative requirement of 100 million kgs. given by the trade on the basis of their estimated domestic requirements and export orders, felt that, after meeting therequirements of the trade, another 100 million kgs. would be left with the traders to meet the requirements of 2000-2001 and that, if further crop was allowed to be grown and marketed, there would be a further slump in the prices which might ultimately throw the grower into frustration, and took a decision that the only remedy to solve the crisis in the tobacco industry would be imposition of crop hoi iday for the year 2000-2001. Though the decision was taken on 27-3-2000, it was made known to the growers only on 6-6-2000. The growers and traders, even after coming to know of the said decision, observed silence for a long time. It was only in the latter part of August and September, 2000 that the growers in NLS region and the Indian Tobacco Association filed writ petitions questioning the wisdom of the decisions taken by the Board on various grounds. As stated supra, all reasonable efforts made.by the Cowl to find out an amicable solution throughout the marathon hearing spreading over a period of 15 days, did not yield fruitful results because of the non-co-operative attitude exhibited by the trade. That apart, when the opinion of the farmers was sought to be elicited by this Court, out of 45,000 growers in the State ofAndhra Pradesh, only 3000 of them mostly hailing from NLS region, who are responsible for the present melody In raising excess tobacco crops than the authorized crop sought for lifting up of the crop holiday while majority of the growers in other regions opted for crop holiday. There were allegations and counter allegations on the opinion of the poll conducted by the Auction Superintendents who are no other than the officials of the Board. It is the case of the growers against the crop holiday that the leaders of the growers, who are in support of the crop holiday, did not allow them to participate in the opinion poll and hence no credence can be given to the opinion poll. Assuming for the sake of argument that the leaders of the growers, in support of the crop holiday, arein minority as contended by the growers opposing the crop holiday, they would not have kept quite in exercising their option. Be that as it may, I cannot adjudicate on these controversies sitting in the jurisdiction under Article 226 of the Constitution. With the. result, the judgment is pronounced on the merits of the case.
23. The Counsel appearing for the growers opposing crop holiday strenuously contended and in fact, the bone of contention of theirs is that, under Section 8 of the Act, the Board is empowered to regulate the production and sate of Virginia tobacco including curing and processing, in the interest of all the concerned in the trade and the question of declaring crop holiday is alien to the aims and objects to be actheved under the provisions of the Act. The word 'regulation' occurring in Section 8(2a) of the Act cannot be interpreted to mean total prohibition of the growth of tobacco in the State, as that was not the intention of the Act. The Parliament did not choose to empower the Board to take such a drastic decision like prohibiting production of tobacco itself. The issue is no more res iniegra. In State of TN v. M/s. Hindu Stone, : 2SCR742 , the Supreme Court, while upholding a similar provision, Rule 8-C of the TN Minor Mineral Concession Rules (1959), having made a reference to the decision in the State of Uttar Pradesh v. Hindustan Aluminium Corporation Ltd., : 3SCR709 and also to the decision of the Privy Council in Common Wealth of Australia v. Bank of New South Wales, 1950 AC 235, wherein it was pointed out that the problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved, not so much legal as political, social or economic consideration and that it could not be laid down that in no circumstances could the exclusion of competition so as to create a monopoly,either in a State or Common-wealth agency, be justified, observed:
'We do not think that 'Regulation' has that rigidity of meaning as never to take in 'Prohibition'. Much depends on the context in which the expression is used in the Statute and the object sought to be actheved by the contemplated regulation.'
Their Lordships of the Supreme Court further observed:
'The statute with which we are concerned, the Mines and Minerals (Development and Regulation) Act, is aimed, as we have already said more than once, at the conservation and the prudent and discriminating exploitation of minerals. Surely, in the case of a scarce mineral, to permit exploitation by the State or its agency and to prohibit exploitation by private agencies is the most effective method of conservation and prudent exploitation. If you want to conserve for the future, you must prohibit in the present. We have no doubt that the prohibiting of leases in certain cases is part of the regulation contemplated by Section 15 of the Act.'
24. I am in respectful agreement with the observations made by the Supreme Court. In the present case, the State has allowed the situation to drift away from stage to stage and ultimately a stage has reached that if further production of tobacco is allowed, the trade is going to certainly exploit the situation and the agriculturists will not be in a position to receive remunerative prices. In fact, the case of the trade is that the tobacco fetched average price of Rs.30/- per kg. during the last year as well as this year and the same is above the minimum support price fixed and cannot be said that the tobacco is not fetching reasonable price. Such a submission was made by them without reference to the fallin the value of the rupee in the International market steadily. If the Slate or the Board failed to intervene even at this belated stage, nothing remains to the farmers except resorting to commit suicide. On the other hand, if one crop is prohibited for one year, the erring growers as well as the unscrupulous traders, who want to thrive on the miseries of the growers, receive proper signals and conduct themselves properly in fnlure. The same is the effect of the decisions in K. Ramanathan v. State of Tamil Nadu, : 2SCR1028 and King Pal Singh v. State of UP, : AIR1997SC1758 . On the other hand, the learned Counsel appearing for the persons, who are opposing crop holiday, could not cite a decision where a contrary view was taken either by the apex Court or this Court. Hence I have no option except to reject the first contention of the growers opposing the crop holiday that, under the guise of exercising the power of regulating the production and sale of tobacco, the Board is not competent to impose a crop holiday. In other words, the Board is competent to declare, a crop holiday taking the totality of the circumstances to prevent further depletion in the prices of tobacco grown in this country.
25. The next question that falls for consideration would be whether imposition of crop holiday in the State of Andhra Pradesh can be termed as a 'reasonable restriction' on the exercise of the right to practice or carry on any occupation or business as conferred under Article 19(1)(g) of the Constitution and whether such a restriction is in public interest?
26. Before dealing with the facts of the case, it is useful to refer to some of the decision of the Supreme Court as. to what constitutes 'reasonable restriction.' A Seven Judge Bench of the Supreme Court in Pathumma v. State ofKerala, : 2SCR537 , while considering the constitutionality of Section 20 of the Kerala AgriculturistsDebt Relief Act (2 of 1970) under which the traders are entitled to recover the properties sold to the purchasers in execution of the decree passed in liquidating the debt owed by the agriculturists, having declared that the above section is valid, proceeded further to see whether the object sought to be actheved by the said provision can be considered as 'reasonable restriction' on the right of the citizen guaranteed under Article 19(1)(g) of the Constitution and deduced the following seven guidelines to judge the reasonableness of the restrictions imposed by the State:
(1) In judging the reasonableness of the restrictions imposed by clause (5) of Article 19, the Court has to bear in mind the Directive Principles of State;
(2) Restrictions must not be arbitrary or of an excessive nature so as to go beyond 'the requirement of the interest of the general public;
(3) In order to judge the quality of the reasonableness no abstract or general pattern or a fixed principle can be laid down so as to be of universal application and the same will vary from case to case;
(4) A just balance has to be struck between the restriction imposed and the social control envisaged by clause (6) of Article 19;
(5) There must be a direct and proximate nexus or a reasonable connection between the restriction imposed and the object, which is sought to be actheved. In other words, the Court lias to see whether by virtue of the restriction imposed on the right of the citizen the object of the statute is really fulfilled or frustrated;
(6) The Court must see the prevailingsocial values whose needs are satisfiedby restrictions meant to protect social welfare and
(7) So far as the nature of reasonableness is concerned it has to be viewed not only from the point of view of the citizen but the problem before Legislature and the object which is sought to be actheved by the statute. In other words, the Courts must see whether the social control envisaged in clause (6) of Article 19 is being effectuated by the restrictions imposed on the fundamental right.
Their Lordships observed in para 24 of the decision thus:
'Another important test which has been enunciated by this Court is that so far as the nature of reasonableness is concerned it has to be viewed not only from the point of view of the citizen but the problem before the Legislature and the object which is sought to be actheved by the statute. In other words, the Courts must see whether the social control envisaged in clause (6) of Article 19 is being effectuated by the restrictions imposed on the fundamental right. It is obvious that if the Courts look at the restriction only from the point of view of the citizen who is affected it will not be a correct or safe approach inasmuch as the restrictions is bound to be irksome and painful to the citizen even-though it may be for the public good Therefore, a just balance must be struck in relation to the restriction and the public good that is done to the people at large. It is obvious that, however, important the right of a citizen or an individual may be, it has to yield to the larger interests of the country or the community.'
27. From the above, it is seen that the Courts while judging the reasonableness of the restrictions should keep in mind not only the interest of the citizens but alsothe problem faced by the community at large and a balance has to be struck between the individual interest and the community interest. Viewed form that angle, the right of a citizen or an individual has to yield to the large interest of the community.
28. In M/s. Laxmi Khandasari v. State of UP, : 3SCR92 , Their Lordships white considering the reasonableness of the notification, dated 9-10-1980, issued by the Cane Commissioner, Government of Uttar Pradesh prohibiting the owners of power crusher or a Khadasari Unit or any agent of such owner in any reserved area of any Sugar Mill from working the Power Crusher, or the Khandasari Unit prior to December 1, 1980, during the year 1980-81, having referred to the decision in The State of Madras v. V.G. Row, : 1952CriLJ966 , held:
'In such cases a doctrinaire approach should not be made but care should be taken to see that the real purpose which is sought to be actheved by restricting the rights of the citizens is sub served. This can be done only by examining the nature of the social control, the interest of the general public which is sub served by the restrictions, the existing circumstances which necessitated the imposition of the restrictions the degree and urgency of the evil sought to be mitigated by the restrictions and the period during which the restrictions are to remain in force. At the same time the possibility of an alternative scheme which might have been but has not been enforced would not expose the restrictions to challenge on the ground that they are not reasonable.'
29. Keeping the above principles, I would like to examine whether the decision of the Board can be termed as an unreasonable restriction on the right ofthe citizen to carry on any profession or business or trade.
30. While referring to the factualbackground, I have clearly mentioned that though the Act is a self-contained Code from the time of registration of nursery growers and the growers of tobacco till the consumption of the tobacco produced, either in the country or abroad, the Board was not able to implement any of the provisions made in the Act or the Rules for the simple reason that the Board on its own under any of the provisions of the Act and the Rules, cannot initiate criminal prosecution against any of the persons involved in the trade of tobacco if they violate any of the provisions of the Act without prior permission of the Central Government which is not at all forthcoming all these years. I have also clearly demonstrated that, due to incapacity of the Board in implementing the provisions of the Act, the growers were never bothered to follow the regulations in raising the crop and they went on growing more and more tobacco without reference to the area for which registration was granted by the Board. As more and more tobacco than the indicated authorised crop was corning to the market, the prices of the Indian tobacco, during the current year, in terms of the dollar, fell down to 0.72 cents from 1.15 cents during 1998. It is also seen that Indian Tobacco Association, in its letter, dated 1-3-2000, followed by another letter, dated 3-5-2000, completely depicted a gloomy picture prevailing in the international market for Indian tobacco and expressed their inability in participating in the auctions that were commenced in the last week of February, 2000. In their letter dated 3-5-2000, they have also stated that the trade is already holding an estimated 40 to 45 millions kgs. of unsold stocks of the previous years. That apart about 12 millions kgs. of excess crop from Karnataka and another 50 millions kgs. ofexcess crop from Andhra Pradesh over and above the authorized crop of 25 million kgs. and 101.6 million kgs. of tobacco from the States of Karnataka and Andhra Pradesh for the year 2000-2001, in all more than 100 million kgs. of excess stock of tobacco over and above the indented 100 million kgs. of tobacco by the trade, will be coming to the market, which will result in steep fall in the sale price of the tobacco on the platforms. Further the Board, in exercise of the power under Section 8(2Xa) of the Act, determines the quantity of tobacco to be grown every year on the basis of the information gathered by the Board from the international markets and other sources apart from indents that are to be given by the manufacturers and exporters well in advance and thereafter starts issuing the registration certificates to the nursery growers, tobacco growers, curers and other processors every year. It is also see that, in Andhra Pradesh, the season for sowing nurseries commences around 15th July for NLS and other areas around 15th August for a period of one month and the plantation season starts for NLS region from 15th October, every year. Tobacco grown will be ready for plucking in an estimated time of 60 days. In this case, as the Board is expected to determine the crop to be grown for 2000-2001, latest by 1st of July as the nursery beds have to be sown around 15th July. But the manufacturers as well as exporters did not place their indents leave apart their commitment with regard to the purchase of tobacco during the current year. On the other hand, as stated supra, they have given an impression that the excess tobacco stocks available with them from the previous years coupled with the excess stocks that are likely to come to market this year, would meet their requirements in the current year. In fact, during the course of the arguments, it has been brought to the notice of this Court that the traders having found global demand for burley tobacco and natutobacco on the increase which are not covered by the provisions of the Act, made efforts to grow these varieties of tobacco in agency tracts of Rampachodavaram and Kumool under a contract system entered into with the local tribals and other weaker sections of the society for the last several years. But for the last two years, the traders stopped growing these two varieties of tobacco. This is also yet another indicative factor that the traders are holding buffer stocks of tobacco to meet their requirements.
31. Next, under Rule 31, the Board is expected to recommend the minimum export price for the tobacco grown for the next year for consideration of the Central Government. While recommending the price, the Board has to take into consideration various aspects mentioned in Sub-Rule 2 of Rule 31 of the Rules. Now, the Counsel for the Board submits that the Central Government stopped the practice of fixing the minimum export price for the last 2 years. If no minimum price for export of tobacco is fixed, there is every possibility of the purchasers forming into a cartel more so in this trade, which is now mainly controlled by handful of persons even as per the list of the manufacturers and exporters furnished by ITA and offering low prices to the growers and they may even create a situation where the grower is forced to sell tobacco at rock-bottom prices. In fact, what these people have done after sate of tobacco on platforms commenced which resulted in an agitation by the growers. Further, from the information furnished by the Board, while the tobacco is grown in a 4 months, the growers have to go round the auction platforms for more men 6 months to find purchasers to sell the tobacco grown by them. This factclinchingly proves that the trade is dictating the terms to the growers as they are holding stocks more than the required tobacco.
32. Sri Sridhar, learned Counsel appearing for the Trade, strenuously contends that the Trade lias always been offering higher prices than the minimum support price fixed by the Commissioner for agricultural caution prices and it cannot be said that the tobacco is being purchased at a low price. It is true that the trade is paying a little higher price than the minimum support price fixed by the Commissioner. But it should be kept in mind that the prices fixed are only for distress sale but it cannot be termed as reasonable and remunerative prices in normal market conditions. In fact, the Board constituted 11 member committee consisting of the Executive Director, Vice-Chairman, the Director (Auctions) and the members of the Board, one K.C. Biddppa, of ITA representing the Trade apart from the other officials i.e., Senior Scientist, CTRL, Rajahmundry, the Directorate of Tobacco Development, Madras and other officials of the Board, to work out remunerative price to be paid for the tobacco grown in the country as contemplated under Section 8(2)(e) of the Act. This committee went into the question of fixing minimum guaranteed price and made the following recommendations:
(1) The soil region-wise data on cost of production should be collected every year immediately after conclusion of auctions i.e., for A.P. by June and for Karnataka by January, to arrive at the cost of production per kg. of FCV tobacco in the revised format.
(2) After arriving at soil region wise cost of production per kg. of FCV tobacco, the inflation rate should also be added and thereafter 10 percent of the sum should be added as profit to fix MGP for the next year crop soil region-wise.
These recommendations were accepted by the Board, at its 93rd meeting, held at Gimtur on 8-1-1998, stating that the Boardapproved the recommendations of the Committee and suggested to lake follow up action thereon. Though the resolution was passed about 2 year back, till now the Board failed to fix the minimum guaranteed price payable to the tobacco grown in the country, more so, when the formula was worked out in the presence of the representatives of the trade. The reason is obvious. The trade did not want the Board to fix minimum guaranteed price and make them purchase the tobacco at a reasonable price and went on to swim in the troubled walers as unauthorised crop to an extent of 50% of the authorised crop is coming to the platforms due to indiscipline among the average tobacco growers.
33. Having prima facie opined that the declaration of crop holiday is too harsh a decision, by interim orders dated 28-9-2000 I gave the following direction to the representatives of the trade :
'The trade representatives shall give their firm commitment for the year 2000-2001 and shall also file an undertaking to the effect that in the event of their failure to purchase the tobacco, for which a commitment was given, the Tobacco Board will be at liberty to recover the cost of the tobacco that was purchased at higher prices that fetched on the auction platform during that year in the event of lifting of the Crop Holiday. They shall also express their willingness to give bank guarantee for half of the value of the tobacco as per their commitment. They shall also indicate the minimum guarantee price at which they are going to offer in the event the growers are allowed to grow tobacco, apart from giving an undertaking that they will not purchase Tobacco from the growers directly without the intervention of the Board.'
To the surprise of this Court, the Association, in its representation, dated 10-10-2000, while indicating that it may require about 70 million kgs. Crop, refused to give any bank guarantee by contending that the trade cannot ask for a counter bank guarantee from the growers or the Board giving their commitment to make available the tobacco indented by them. I need not refer minor aspects of their representations, as they are not germane to the issue in question. Having fully known that the Court was constrained to give such a direction to ease out the situation and dispel the apprehension of the growers that the possibility of selling the tobacco grown for the year 2000-2001 is remote and also to ensure that the members of the trade may not go back on their commitment after the crop is brought to auction platform for sale, they sent such a vague reply. Further except stating that they require 70 million kgs. for the coming year, they did not file any supporting evidence like submitting copies of the orders received by them from other countries. They further stated that the information available in March does not reflect the correct position, as the entire stocks have been already purchased by the trade in the light of the import orders received by them from other countries. At the same time, they have neither filed the copies of the orders nor gave any information as required under Form Nos.31, 32 and 34 as to the basis on which stocks were purchased by them and how they are going to mop up the piled up stocks of the yester years and the tobacco that is being purchased by them inspite of the directions of this Court. Likewise I directed traders to give an undertaking that they would not purchase tobacco from the growers directly without the intervention of the Board. For that, they simply stated that the members would submit individual letters to the Board that they would not purchase tobacco directly from the growers outside the jurisdiction of the auction platforms. But to my surprise, theITC which purchases 50 per cent of the tobacco grown in this country for domestic consumption, did not choose to give any undertaking as directed by their association. It is also brought to my notice that 177 registered exporters and 985 dealers obtained registration certifications as buyers on the platforms from the Board. But, though such a large number of persons registered their names as dealers with the Board, from the information furnished by the trade, it is seen that the entire trade is monopolised by three mainifacturers and about 5 to 6 exporters. Be that as it may, out of these persons only 44 people have chosen to file undertaking stating that they would not purchase tobacco from the growers directly. Nextly, from the press reports published in a Telugu daily newspaper 'Enadu', dated 31-10-2000, it is seen that the Excise officers of the Karnataka Stale having received information that under the guise of tobacco bales, opium is being transported to Karnataka, raided some villages in Miduthura Mandal in Kurnool District and found tobacco purchased unauthorisedly by one person, stored in the godown of one Pillata Monaf of Miduthuru Mandal. From this i( is seen that some of the traders are indulging in the purchase of tobacco unauthorisedly from the growers without the knowledge of the Tobacco Board.
34. Coming to the fixation of MGP it is seen from the letter, dated 10-10-2000, addressed by the Indian Tobacco Association, to the Chairman, Tobacco Board, Guntur, having quoted the price for various types of tobacco shown in the note appended to that letter, they stated that are prepared to purchase the crop as per the quality and grade of the tobacco that will be brought to auction platform and the MGP mentioned is only an indicative but not a firm commitment. In fact, I directed them to quote the minimum guaranteed price under which they can purchase the tobacco withoutreference to the grade in the event crop holiday is lifted as the season for growing tobacco was already over and if the Court permits the growth of the tobacco at this stage, there is every likelihood of loss of quality of the leaf that is grown as per the opinion of the Director of the Central Tobacco Research Institute in his letter, dated 10-10-2000, in DO No.F 195 of 2000-01/T, wherein the information with regard to loss of qualify in the leaf produced is mentioned in the following terms:
'The cured leaf of late planted tobacco is of subnormal nature in leaf size, texture with minimum accumulation of gums resulting in dry, woody and K-style leaf. In NLS, late planted tobacco with more number of irrigations lead to more chloride accumulation in leaf which in turn impedes the quality.'
35. From the above conduct of the Trade, it is evident that even at this belated stage also the trade is playing hide and seek game and refused to purchase the tobacco without reference to the grade of the tobacco. From the rates offered by the trade, it is difficult to hold that the prices offered by them are in any way higher than the prices fetched during year 1999-2000. As there is every likelihood of fall in value of the rupee due to increase in the inflation, it cannot be said that the rates offered by the trade are reasonable rates.
36. Nextly, it is seen that they were able to succeed in pursuing the Central Government in not increasing the excise duty during the financial year 2000-2001, by parading the Hon'ble Cthef Minister of the State of Andhra pradesh and several MPs., before the Finance Minister on 23-2-2000 as seen from the report published in Telugu daily newspaper 'Andhra Jyothi', dated 25-2-2000, and succeeded in not increasing the Excise Duty on cigarettesduring the financial year 2000-2001. But, at the same time, they arc not willing to offer reasonable price to the grower.
37. It is also seen from the material papers filed before this Court that, for over a considerable period, the growers are making representations to create a revolving funds by levying 1% cess on the sale of cigarettes for stabilisation of prices of the tobacco grown. Besides the representations that were made by the elected representatives and the growers, in the year 1993 the Parliamentary Advisory Committee attached to the Ministry of Commerce headed by Sri Inder Kumar Gitzral, who subsequently became the Prime Minister apart from Sri Deva Gowda, Sri Unnikrishncm, Sri Anthtday and Sri Chaturauan Mishra, who occupied the Ministerial positions from time to time along with several other Members of the Parliament, went into the question of creating cess on the sale of cigarettes to be utilised for the market stabilisation fund. Under items 57-1, the Committee categorically recommended to the Minister in favour of the proposal in its meeting held on 29-4-1993. But, even this recommendation made by the High Power Committee consisting of Members of Parliament of both the Houses, did not receive the attention of the Government even though some of them became Prime Ministers and Ministers in the Central Cabinet. This sort of sorry state of affairs are prevailing in this Country.
38. The Central Tobacco Research Institute, in its booklet, published for the information of the tobacco growers, emphasised the need of raising alternative crops in the tobacco grown areas for strengthening the soil, at least once in two or three years in order to maintain the quality of the leaf (tobacco) and the level of nicotine in it. Keeping in tune with the recommendations of the Research Institute, under Section 8(2)(a)(V) of the Act,the Board is under an obligation to consider the need for rotation of crops. But, neither the Board enforced -this regulatory measure nor the growers ever stopped raising tobacco for over a number of years, which undermined the growth of quality tobacco in the region, due to infertility of the soil. By giving effect to this decision of the Board, the growers will not be allowed to grow tobacco at least for one year. Further, as the season to grow tobacco in the State of Andhra Pradesh is already over, and growing quality tobacco at this belated stage is a remote possibility.
39. Nextly, during the course of hearing as well as in the representation dated 10-10-2000, before the Board, the Tobacco Association Strenuously contended that the situation prevailing in the beginning of March, has underwent a sea change and the entire tobacco including the unauthorised crop was purchased by the Trade and as such there is no need for imposition of crop holiday. It is true that the tobacco that was brought to auction platforms was purchased by the manufacturers, exporters, dealers etc., and the sales went on almost till the end of October, 2000. But, it is only after their efforts with the Central Government for lifting the crop holiday failed, they purchased the tobacco. I have no manner of doubt that the traders purchased the tobacco grown anthoriscdly and unauthorisedly during the current year even without mopping up the piled up stocks with them, only to convince the Court that there is no need to continue crop holiday. Hence, I am of the opinion that mere purchase of tobacco from the auction platforms by the traders without indicating how they are going to liquidate the stocks cannot be presumed that the purchases were affected on the basis of the purchase orders or commitments from others to purchase the tobacco and it is nothing but a trade trick that was pressed into service to mislead the Court, if possible.
40. Nextly, it has to be seen that no other regulatory measure contemplated under the Act is likely to give the desired result as the Board is not in a position to enforce any of the regulatory measures as it is not having the plenary powers to get the offenders punished without the prior permission of the Central Government, which was not forthcoming all these years. With the result, the very purpose of the object for which that Act is brought into existence remained on the Statute Book without implementation. Hence, the only -way through which the Board can bring discipline on all, who are involved in the tobacco trade is to declare crop holiday and refuse to issue certificates of registration to the growers, manufacturers, dealers, curers, etc. This being only a temporary measure, intended to liquidate the surplus stocks of tobacco lying with the traders as well as growers and though it is having some adverse affect initially, I have no manner of doubt that the growers who are likely to suffer financial loss this year, will definitely receive higher income for the tobacco that is going to be grown next year as the entire surplus tobacco lying with the traders will be mopped up and the trade will be forced to purchase the tobacco at higher prices next year to meet their requirements.
Further, this Court has not only adjudicated the lis but also giving a comprehensive directions both to the Central Government as well as the Board and failure to comply with them is likely to result in evil consequences. Taking the totality of the circumstances into consideration, I hold that the decision of the Board to impose crop holiday is a reasonable one in the given circumstances and does not call for interference of this Court.
41. This leaves me with some minor contentions to be adverted to.
42. It is contended that while enforcing Crop Holiday in the State of Andhra Pradesh,the Board allowed the crop to be grown in other States.
43. From the information available it is clear that while the State of Andhra Pradesh accounts for about 100 mkgs. of authorised crop followed by State of Karnataka with an authorised crop of 25 mkgs, other States like Maharashtra and Orissa contribute less than 0.5 mkgs. per year and as far as State of Gujarat is concerned the production is nil. It also came to light that the growers of the State of Orissa grew excess tobacco than the authorised crop last year and they lost their eligibility to get their names registered with the Board. With the result, there was no crop for this calendar year. Likewise, the growers of State of Maharashtra, did not register their names with the Board for raising tobacco. There remains the two States, viz., State of Andhra Pradesh and Karnataka. As far as Karnataka is concerned the process of registration of tobacco growers and nursery growers commenced on 31st January, 2000 and the crop will be ready for harvesting by July, 2000. In other words, while the crop year for the State of Andhra Pradesh is for 2000-2001, the crop of State of Kaniataka is for the year 2000 and by the time the Board took decision at its 101st meeting held on 3-4-2000, much water has flown and it almost reached the stage of plantation. That apart most of the growers have already approached the banks and availed term loan facility. Nextly, the crop grown in the State of Andhra pradesh is four times higher than the crop grown in the State of Karnataka. Further, while the representatives hailing from the State of Andhra Pradesh in the Board in one voice pleaded for Crop Holiday responding to the growers agitation, the representatives of the State of Kaniataka pleaded for restricted crop as their growers are in the advanced stage of raising tobacco plantations; and any decision prohibiting the production of tobacco in the State of Karnataka willsubject the growers to irresparable financial loss. Hence, I do not find any hostile discrimination against the growers of the State of Andhra Pradesh and the State of Karnataka. Moreover, in the light of the response from the growers of State of Andhra Pradesh to the interim directions granted by this Court, i.e., out of 45,000 growers only 3,000 growers are against to the declaration of the Crop Holiday stating that it is illegal. From this it can be safely presumed that a large number of growers are in favour of Crop Holiday. .Hence, the Board is justified in treating the State of Andhra Pradesh as a different and distinct area for declaration of Crop Holiday. Accordingly, the above contention is also rejected.
44. Sri Bojja Taharakam, Counsel appearing for the agricultural labourers, strenuously contended that by imposing Crop Holiday, thousands of agricultural labourers involved in the tobacco industry will be left with no work and it will result in grave injustice to them.
45. It is true to some extent that the labourers involved in the Tobacco industry are likely to be affected adversely, but at the same time as the tobacco growers, in an extent of 92,000 hectors from out of 1,20,000 hectors have already opted for alternative crops, it cannot be said that they are completely left without work though they may not be getting higher wages. It is also brought to my notice that some of the manufacturers have already established thrashing plants for processing tobacco resulting in unemployment of thousand of agricultural labourers. The present day Government's policy is to go in for more and more mechanisation dispensing with the manual labour, which is also resulting in unemployment. Here at least in this case, it cannot be said that the agricultural labourers are left with no work as the agriculturists have already resorted to alternative crops.The Supreme Court in Pathumma's case (supra), made the position crystal clear that the Court while striking a balance between the larger interests of the community involved and the right of a citizen or an individual, priority should be given to the larger interest of the community. I am in respectful agreement with the dicta laid down by the Supreme Court. Hence, I am of the view that though some inconvenience is caused to the agricultural labour, they have to give way in the larger interest of the tobacco trade. Accordingly, this contention is rejected.
46. Nextly, it is contended that the Board gravely erred in treating the entire State as one unit without reference to the varieties of tobacco grown by them and their marketability, both domestic and outside.
47. Though a semblance of justification is there in this argument, the Court cannot forget the fact that most of the growers opposing the Crop Holiday are from NLS area, who have contributed their share in throwing the industry into shackles by producing tobacco both with left and right hands, without reference to the authorised area as they are getting higher prices than the growers in other regions. As these petitioners are responsible for marketing unauthorised crop, I cannot permit them to violate the law further and make the lives of thousand of tobacco growers more miserable. Hence, I cannot give any credence to this argument.
48. Lastly, the conduct of the parties has also to be taken into consideration. Admittedly, the decision taken by the Board was made known to the growers in the 1st week of June, 2000 and inspite of the decision of the Board 'not to allow any tobacco crop this year', they merrily raised the seedbeds and filed the first writ petition in the month of August, 2000. Mr. Seshagiri,who happened to be the former President of the growers Association attached to Devarapalli auction platform, while making submissions in person categorically admitted that they raised seedbeds with a fond hope that the Court will come to their rescue and allow them to grow the crop. Likewise, the traders who are expected to file their indents at the beginning of the crop season i.e., around January or February, failed to indicate the quantity of tobacco required for the current year. For the first time, in their fetter dated 10-10-2000, under the interim orders of this Court, requirement would be 70 million kgs. and they want to reserve their right to purchase the same in terms of quality and grade, more so, without giving any firm commitment on the price at which they intend to purchase, having given a gloomy picture on the trade in March, 2000. The expert opinion on the quality of the late planted tobacco was already extracted by me and at this belated stage, if the tobacco is allowed to be raised by the growers, I will be not only subjecting them to the vagaries of nature, but also to the dictates of the trade. This is evident from the fact that the trade has to come forward to file an affidavit in the Court that they are prepared to purchase the tobacco grown without reference to the quality and grade at the rate of Rs.50/-per kg.
49. As the growers of neither NLS region nor the ITA representing the trading community, have come to the Court with clean hands, I am not inclined to exercise the discretionary powers vested in this Court under Article 226 of the Constitution of India, and give seal of approval for the illegalities committed by the growers as well as the trade. On the other hand, by dismissing this batch of writ petitions, it will be made known to all that the law is not their mistress, but it is a dynamic weapon used not only to enforce the law but also to curtail, lawlessness in thesociety, in showing proper place to the law breakers and if it is not properly used it will cut their throat. Further, it is a universal truth a democracy without discipline is like a jungle. Hence, a time has come to enforce discipline among the violators of law.
50. For all the above reasons, I am not inclined to exercise the decretory powers vested in me under Article 226 of the Constitution of India.
51. All the WPMPs., filed by the parties, both in favour and against the crop holiday to get themselves impleaded as party respondents in the respective writ petition are allowed.
52. In the result, Writ Petition No. 12728 of 2000 and Writ Petition No.16651 of 2000 questioning the legality of the decision of the Tobacco Board in declaring crop holiday for growth of tobacco in the State of Andhra Pradesh are dismissed. Writ Petition No.17138 of 2000, Writ Petition No. 19787 of 2000 and Writ Petition No.17405 of 2000, filed seeking enforcement of crop holiday for growing tobacco in the State of Andhra Pradesh as per the decision of the Tobacco Board are allowed. Consequently, while growers are restrained from growing tobacco in the State of Andhra Pradesh, the traders including manufacturers, exporters, dealers, etc., are prohibited from purchasing tobacco grown unauthorisedly and outside the caution platforms. Any violation of the orders of this Court will result in initiation of Contempt Proceedings. A writ of mandamus shall issue accordingly. But in the circumstances there will be no order as to costs.
53. Before parting with the caseI would like to place on record that this Court has taken the trouble of hearing the agony of the growers both supporting and opposing the Crop Holiday as the decision is very harsh, affecting the very livelihoodof the people involved in the industry and delivered the judgment having failed in all the efforts made by the Court to find out an amicable solution. Had the Executive responded to the proposals submitted by the Board in time, such an ugly situation would not have arisen; and the lives of not only the growers of tobacco but millions of people depending on the trade would have been saved. In this case the press reports make it clear that the fanners are subjected not only to the vagaries of the nature but also to the fluctuations in the trade as the Government is not coming to their rescue in getting remunerative prices for their produce.
54. If an analysis is made, it will be clearly known that neither producer is gelling the fruits of their labour in terms of remunerative prices nor the consumer is getting the commodities at reasonable prices, but it is the middle men who is getting enriched by themselves by adopting known and unknown methods to the deprivation of the producer as well as the consumer.
55. As the Crop Holiday cannot be repeated every year, resulting in loss of livelihood to the growers, agricultural labourers involved and the people working under the traders apart from loss of revenues to the State in the form of Foreign Exchange and Central Excise, the Government is expected to implement the provisions of the Tobacco Act in its true spirit and the Board is to be given the required powers to launch criminal persecution against the erring agencies involved in the tobacco industry, before the next crop season commences. This is not a pious hope, but mandate of the Court to the Government and if it does not comply with the mandate, perhaps the law will take its own course.
56. The president of the Tobacco Growers Association, the Chief Minister ofAndhra Pradesh Sri Venkaiah Naidu, the present Minister for Rural Development, made several suggestions both temporary and long-term measures and I feet that every one of these measures deserve utmost consideration.
57. It is brought to my notice that while all other bi-products of tobacco like snuff, cigars, beedies, zarda, etc., are finding global market, the cigarettes manufactured in the country are not being exported; and the Government is not at all evincing any interest to find out international market for the tobacco grown and the cigarettes manufactured in India, if not in the interest of the grower but atleast in the interest of the State revenues.
58. Apart from the suggestions of these personalities, the Parliamentary Committee attached to the Minister of Commerce, way back in the year 1993, recommended for levy of 1% cess on the sale of cigarettes for providing market stabilisation Fund, so that the grower shall not be left to the mercy of the trader if any unfavourable market conditions come to the force in future and the Government is directed to make known its decision on this within eight weeks from the date of receipt of this order.
59. It is also brought to my notice that the foreign traders are not allowed to purchase tobacco on the auction platforms. It is not known why they are not being allowed when the present day Government are very much interested in the policy of liberalisation, privatisation and globalisation and inviting multi-national companies in all walks of life. As seen from the facts of the case, the entire tobacco trade in India is controlled by only handful of persons whether they are manufacturers or traders, whose number did not exceed double figures. If the foreign buyers are allowed to buy tobacco at our auction-platform, there willbe healthy competition; and our growers will get not only remunerative prices but also fairly high prices in view of [he global demand for the cigarettes and other allied products of tobacco.
60. The Government should also suitably amend' the Act to empower the Board to fix the MGP for each season again without the intervention or approval of the Central Government.
61. It is needless to observe that the Board constituted under the Act is more a nominated Board and it does not reflect the wishes and aspirations of the tobacco growers in this Country. Hence, the Government shall think of amending the Act suitably giving more representation to the actual growers through an election process but not though nominated members along with the representatives of the trade and with few experts on the subject.
62. During the course of arguments it came to light that apart from the Board several other agencies are also dealing with the industry. Previously the saying is that what the right hand is doing the left hand will not be knowing. Now we are in the days where each hand does not know what itself is doing every minute. To avoid conflicting decisions or opinions, the Government should think of constituting a single agency by giving due representation to various wings than entrusting the work to several agencies, which is likely to take divergent opinions without any purpose.
63. Likewise, the action of the Government in giving orders to the Board from time to time to purchase the unauthorised crop grown by the growers amounts to encouragement of lawlessness in the country and the law breakers are not only escaping the clutches of the law, but also enjoying the fruits of their unauthorisedactivity. Hence, the Central Government shall not mis-use the power vested in it under Section 20-A of the Act as such an action runs counter to the aims and objectives, for which the Act is brought into existence.
64. As far as Board is concerned, though it is collecting 1% cess on the sale of tobacco and also by way of levying penalties on the sale of unauthorised crop and earning substantial revenues, was doing little bit of service or practically no service is being done to the growers. It is not in dispute that the tobacco, if it is not sold, it can be preserved by processing the same for considerable time. It is not known why the Board has not established thrashing units of its own to enable the growers who can afford to hold the tobacco till appropriate prices are fetched, by collecting reasonable amounts for the service rendered to them. Likewise, the Board is fully authorised to purchase the tobacco grown by the growers. I am really astonished why it is not entering the market with the surplus funds at its disposal and also approaching the nationalised banks for loans if need arises. From the information I gathered, I feel that practically with the monies available with the Board no financial assistance is required from out side agencies and the monies at their disposal are sufficient for establishment of thrashing plants and also to purchase tobacco by working out MGP. The Board is bound to implement the provisions of the Act and purchase tobacco when need arises to save the grower from starvation deaths. Likewise, it cannot allow any crop to be grown unauthorisedly or allow its sale on their auction platforms.
65. Inspite of the orders of this Court, if any tobacco is grown in any of the areas of the State of Andhra Pradesh, they will be doing so at the risk of facing contempt proceedings for violation of the orders of this Court.
66. The Board shall ensure that the growers shall go for alternative crops every year, as required under Section 8 of the Act. In other words out of the total area owned by the grower, the Board has to register half of the area for one year and the rest for the next year and rotate the same, so that the growers will be growing tobacco in an area for one year and go for alternative crop in the second year in the same land and vice-versa. The Board shall not allow excess tobacco grown in the Karnataka region over and above the authorised crop and shall not allow the same to be sold on the auction-platforms.
67. The Court places on record the assistance rendered by the Counsel on both the sides and also Dr. Yelamanchili Sivaji, who has taken part in the proceedings almost from the commencement of the arguments and in furnishing so much useful information to the Court to arrive at a just decision in the opinion of the Court.