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The Special Officer for Coir, Kerala (Licensing Officer), Trivandrum Vs. P.V. Mohamed Yusuf and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtKerala High Court
Decided On
Case NumberW.A. No. 55 of 1972
Judge
Reported inAIR1977Ker88
ActsConstitution of India - Article 246; Essential Commodities Act, 1955 - Sections 2; Coir Retting (Licensing) Order, 1968; Coir Industry Act, 1953
AppellantThe Special Officer for Coir, Kerala (Licensing Officer), Trivandrum
RespondentP.V. Mohamed Yusuf and ors.
Appellant AdvocateGovt. Pleader
Respondent Advocate S. Narayanan Poti, Adv.
Cases ReferredSupreme Court Harakchand Ratanchand v. Union of India
Excerpt:
.....33 of list of schedule 7 to constitution of india, section 2 of essential commodities act, 1955, coir industry act, 1953 and coir retting (licensing) order, 1968 - provisions of sections 3 (c), 4 (3) (b), 10 (b), 10 (h) and 10 (i) support view that production of husks is part of integrated activities of coir industry - legislative competence under entry 33 to legislate with respect to production of husks both raw and retted - notification declaring coconut husks as essential commodity and order of 1968 issued with proper authority and jurisdiction. - - union of india, air 1970 sc 1453: but we are satisfied in the present case that the manufacture of gold ornaments by goldsmiths in india is a process of systematicproduction for trade or manufacture and so falls within the..........parliament by law to be expedient in the public interest.' the union parliament declared that the coir industry was an industry, the control of which by the union was expedient in the public interest, and the coir industry act of 1953 was passed. in this act, under section 3(c), 'coir' or 'coir fibre' means the fibre extracted from the husk of the coconut; under clause (d) of the section. 'coir products' means mats and mattings, rugs and carpets, ropes and other articles manufactured wholly or partly from coir or coir yarn; under clause (e), 'coir yarn' means yarn obtained by the spinning of coir, and under clause (b), 'husks' means coconut husks, both raw and retted.5. the argument of the government pleader is that coconut husk, raw and retted, will come within the ambit of the.....
Judgment:

Raghavan, C.J.

1. I have read the judgment prepared by my learned brother Gopalan Nambiyar, J. and I regret I am not able to agree with his reasoning on the main question in the case.

2. The Central Government has, by notification under Section 2(a)(xi) of the Essential Commodities Act of 1955, declaredcoconut husk, raw and retted, as an essential commodity. The said notification was declared to be beyond the powers of the Central Government by a Single Judge, and the correctness of that decision is the question to be decided in the appeal.

3. The Essential Commodities Act was passed under Entry 33 of List in of Schedule VII to the Constitution, which reads:

'33. Trade and commerce in, and the production, supply and distribution of,--

(a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products:

(b) foodstuffs, including edible oil-seeds and oils;

(c) cattle fodder, including oil cakes add other concentrates;

(d) raw cotton, whether ginned or un-ginned and cotton seed; and

(e) raw jute.'

And Section 2(a)(xi) of the Essential Commodities Act says that 'any other class of commodity which the Central Government may, by notified order, declare to be an essential commodity for the purposes of this Act being a commodity with respect to which Parliament has power to make laws by virtue of Entry 33 in List III in the Seventh Schedule to the Constitution' is an essential commodity. The short point for consideration is whether coconut husk, raw and retted, is a commodity with respect to which Parliament has power to make laws by virtue of Entry 33 of List III of the Seventh Schedule; in other words, does coconut husk fall within the legislative competence of Parliament under Entry 33 of List HI.

4. Under Entry 52 of List I of the Seventh Schedule, the Union Parliament has power to legislate on 'Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.' The Union Parliament declared that the coir industry was an industry, the control of which by the Union was expedient in the public interest, and the Coir Industry Act of 1953 was passed. In this Act, under Section 3(c), 'coir' or 'coir fibre' means the fibre extracted from the husk of the coconut; under Clause (d) of the section. 'Coir products' means mats and mattings, rugs and carpets, ropes and other articles manufactured wholly or partly from coir or coir yarn; under Clause (e), 'coir yarn' means yarn obtained by the spinning of coir, and under Clause (b), 'husks' means coconut husks, both raw and retted.

5. The argument of the Government Pleader is that coconut husk, raw and retted, will come within the ambit of the legislation contained in the Coir Industry Act and the commodity (husk) should consequently fall within the ambit of legislation under Entry 33 in List III in the Seventh Schedule to the Constitution and also under Section 2(a)(xi) of the Essential Commodities Act. In the ultimate analysis, the question will boil down to whether coconut husk, raw and retted, is a product of the coir industry,

6. Now I shall explain the position. Under Entry 52 of List I, the legislative competence of the Union Parliament is in respect of industries, the control of which is declared by Parliament to be expedient in the public interest. But, when we come to Entry 33 of List III, the legislative competence is confined to trade and commerce in the products of any industry and the production, supply and distribution of the products of any industry. The stress is evidently on the 'products of any industry.' In the case before us, there is no question of trade and commerce in a product of the coir industry: there is also no question of supply and distribution of any product of the coir industry. The only contention is that the Essential Commodities Act covers 'the production of the products of any industry', viz., the production of the products of the coir industry. That is why I have said already that the question will boil down to whether coconut husk, raw and retted, is a product of the coir industry. If it is, a legislation regarding the production of the product of the industry, viz., coconut husk, raw and retted, will be within Entry 33 of List III of the Seventh Schedule. And if it thus comes within this Entry, naturally, it will come within Section 2(a)(xi) of the Essential Commodities Act too.

7. There cannot be any doubt that the term 'industry has a wide connotation. The Supreme Court has said in Ch. Tika Ramji v. State of Uttar Pradesh, AIR 1956 SC 676.

'Industry in the wide sense of the term would be capable of comprising three different aspects (1) raw materials which are an integral part of the industrial process, (2) the process of manufacture or production, and (3) the distribution of the products of the industry.'

Vide also the observation of the Supreme Court Harakchand Ratanchand v. Union of India, AIR 1970 SC 1453:

'But we are satisfied in the present case that the manufacture of gold ornaments by goldsmiths in India is a process of systematicproduction for trade or manufacture and so falls within the connotation of the word 'industry' in the appropriate legislative entries.'

Thus, raw material, namely, coconut husk, raw and retted, may also come within the term 'industry' and may fall within the Coir Industry Act too. But, does it mean that coconut husk, not only retted but raw also, will be a product of the coir industry? I asked the Government Pleader whether the contention he was urging, if accepted, would not lead to the position that even raw husk would be a product of the coir industry. This question I put, assuming, for the sake of argument, that the process of retting was an industrial process, and retted husk might, again for the sake of argument, be a product of the coir industry. And the Government Pleader candidly stated before us that, if his contention was accepted, the result would be that even raw husk would be a product of the coir industry. This I find extremely difficult to accept. And in this connection, I may once again refer to the decision of the Supreme Court in Tika Ramji's case AIR 1956 SC 676, where the Supreme Court held that sugar-cane was not a product of the sugar industry but was only a raw material for the industry.

8. In my opinion, there is sufficient warrant to support the conclusion I am taking even in Entry 33 of List III of the Seventh Schedule and in Section 2(a) of the Essential Commodities Act. Entry 33 of List III contains raw cotton, whether ginned or unginned, as a separate item (vide clause (d). This appears in Section 2(a)(xi) of the Essential Commodities Act too. In the Essential Commodities Act, Section 2(a)(iv) is cotton and woollen textiles. Suppose the textile industry is declared by the Central Government as a controlled industry under Entry 52 of List 1, then, according to the argument of the Government Pleader, raw cotton should also fall within the ambit of Entry 33 of List III. If this argument is correct there is no need for mentioning raw cotton, whether ginned or unginned, as a separate item, viz., clause (d) in Entry 33. The same reasoning applies to clauses (iv) and (xi) of Section 2(a) of the Essential Commodities Act too. Again, though the expression 'product of the coir industry' is not defined in the Coir Industry Act, the expression 'coir-products' is defined to mean mats and mattings, rugs and carpets, ropes and other articles manufactured wholly or partly from coir or coir yarn. This also,in my opinion, indicates that coconut husks, raw and retted, from which coconut fibre isextracted, cannot be a product of the coir industry.

9. For the above reasons, my conclusion is that coconut husk, raw and retted, is not a commodity which can be declared by notification by the Central Government as an essential commodity under Section 2(a)(xi) of the Essential Commodities Act, since it is not a product of the coir industry and the legislative competency of the Parliament under Entry 33 of List III is confined to the production of the product of the coir industry. In this view, I agree with the conclusion of the single Judge and dismiss the appeal. How ever, I pass no order regarding costs.

10. In the view I have taken, the other question, viz., whether the levy can be justified as a fee, does not arise; however, if I have to express any opinion on this question I would agree with the reasoning and conclusion of Gopalan Nambiyar, J.

Gopalan Nambiyar, J.

11. A learned Judge of this Court by his judgment in Order P. No. 336 of 1970 and other connected writ petitions heard along with it, held that the Notification Section Order 2615, dated 22nd July, 1968 issued by the Central Government in purported exercise of the powers under Section 2(a)(xi) of the Essential Commodities Act, 1955, declaring coconut husk as an essential commodity, and the Coir Retting (Licensing) Order 1968, and all notifications issued thereunder and other proceedings taken pursuant thereto, are without jurisdiction and illegal. This appeal has been preferred by the State of Kerala against the decision in Order P. No. 336 of 1970.

12. The Essential Commodities Act, 1955 (referred to as the 1955 Act) has been passed by Parliament under Entry 33 of List III of the Seventh Schedule of the Constitution of India. It is entitled; 'An Act to provide in the interest of the general public for the control of the production, supply and distribution of, and trade and commerce in, certain commodities' faithfully echoing the words of Entry 33. Section 2(a)(xi) of the 1955 Act reads :

'2. In this Act, unless the context otherwise requires-

(a) 'essential commodity' means any of the following:

* * * * * (xi) 'any other class of commoditywhich the Central Government may, by notified order, declare to be an essential commodity for the purpose of this Act, being acommodity with respect to which Parliamenthas power to make laws by virtue of Entry 33 in List III in the Seventh Schedule to the Constitution.'

The Central Government's power of declaring a commodity as an essential commodity under the above Clause, is co-equal with the legislative competence with respect to it, under Entry 33 in List III of the Seventh Schedule of the Constitution. The said entry reads:

'Trade and commerce in, and the production, supply and distribution of:--

(a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products.

(b) foodstuffs, including edible, oil-seeds and oils;

(c) cattle fodder including oil cakes and other concentrates;

(d) raw cotton, whether ginned or un-ginned, and cotton seed; and

(e) raw jute.'

Entry 52 of List I of the Seventh Schedule reads:

'Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.'

In pursuance of the above power conferred by Entry 52 of List I Parliament has passed the Coir Industry Act, 1953 (Act 45 of 1953) (referred to as the Act) declaring that it is expedient in the public interest that the Union should take under its control the coir industry Section 3(c) of the Act defines 'coir' or 'coir fibre' as the fibre extracted from the husk of the cocount. Section 3(d) defined 'coir products', as mats and mattings, rugs and carpets, ropes and other articles manufactured wholly or partly from coir or coir yarn. Section 3(h) defines 'husks' as coconut husks, both raw and retted. Section 4 provides for the establishment and constitution of the Coir Board. The members of the Board arc to be drawn inter alia from the growers of coconut and producers of husks and coir yarn and persons engaged in the production of husks and coir yarn. Section 10 defines the functions of the Board. They include; (1) under Clause (2) (b) of the section to regulate under the supervision of the Central Government the production of husks, coir yarn and coir products; (2) under Sub-clause (h) to ensure remunerative return to producers of husks, coir fibre and coir yarn; and (3) undet Clause (1) to license, retting places and warehouses and otherwise regulate the stocking and sale of coir fibre, coir yarn and coir products.

13. By a Notification Section Order 2615 dated 2nd July, 1968 the Central Government declared coconut husk (raw or retted) an essential commodity under Section 2(a)(xi) of the 1955 Act. The Coir Retting Licensing Order, 1968 (referred to as the 1968 Order) was passed in exercise of the powers under Section 3 of the 1955 Act. It defines 'husk' as coconut husk, raw or retted, and 'retting' as the process of immersing husks in pond, lake or pit containing water as a preliminary step to extraction of fibre. By Section 3(1), the Licensing Officer is to determine a locality where retting shall not be undertaken, except in places licensed for the purpose. By Section 3(2), no person shall undertake any retting operation in the locality so determined, except in accordance with the terms and conditions of a licence issued for the purpose; Sub-clause (4) provides that an application for a licence is to be accompanied by a fee of fifty paise per square metre when the location of retting is in backwaters, and a fee of twenty paise per square metre in other localities. (We were informed that as a result of reduction of rates brought about by a recent notification, the rate applicable in the present case was twenty paise per square metre).

Section 4 of the Order requires a person to declare his stock of retted husks before the 10th day of every month; and Section 5 enacts that no one shall sell or offer to sell, the retted husks except in accordance with the terms and conditions of the permission issued by the Licensing Officer. Sub-clause (2) of Section 5 lists the considerations which the Licensing Officer shall have regard to, in granting the permission; Sub-clause (3) provides that the application shall be in Form II. By Sub-clause (4) or receipt of the application the Licensing Officer, after making such enquiries as he considers necessary, may either grant or reject the permission. By Section 6 of the Order the Licensing Officer has to fix with the previous approval of the Central Government, ex-retting price of any retted husks, either by publishing the price in a leading newspaper or by communicating it to the persons in possession of the retted husks or otherwise. It is unnecessary to notice the other provisions of the order.

14. The learned Single Judge was of the view that coconut husks cannot, in any sense of the term be regarded as a product of coir industry. The learned Judge felt that the Coir Industry Act gives a definition of coir product and it was obvious that husks would not fall within the definition. Being so the learned Judge was of the view that coconut husks would not fall within Clause (a)of Entry 33 of List III, which, admittedly, is the only Clause applicable.

15. It is well settled that entries in the legislative lists in the Seventh Schedule of the Constitution must be understood as broadly and liberally as possible. A further amplification of legislative power is contained in the use of the words 'with respect to' used in Article 246 in relation to legislation under these entries. Reading Entry 33, (omitting the unnecessary words) along with Article 246, legislative power is conferred on Parliament and on the State with respect to the production of any product of the coir industry. The point then for consideration is whether coconut husks can be said to be a product of the coir industry, and legislation in regard to husk can be said to be one with respect to the production of the product of the coir industry. Only then could the Central Government make a declaration with respect to husk under Section 2(a)(xi) of the 1955 Act.

It was argued, and it has been found by the learned Judge, that coconut husks are not the products of the coir industry, but are merely the raw material for the said industry and the legislation in respect of the raw material is not covered by Entry 33. Giving the matter my careful attention, I am afraid I cannot accept this proposition. A legislation 'with respect to' the production of the products of coir industry seems to me to be wide enough to cover legislation with respect to coconut husks. I do not think it can bo said dogmatically that husks are not the products of the coir industry. Nor am I prepared to hold that the production or extraction of husks and the retting of husks cannot be regarded as an industry or as part of the coir industry. The former can well form a cottage industry; and the recent decision of the Supreme Court in Harakchand Ratan-chand v. Union of India, AIR 1970 SC 1453 Para (7) is sufficient authority for the proposition that an industry need not necessarily involve any mechanised process of the employment of machines and automations.

The sections of the Coir Industries Act, which I have noticed earlier, contain sufficient indication that a process is involved, certainly in the retting of coconut husks which is regulated by the Act. Husks are soaked in ponds, or pits or other suitable places, and left over for a certain period before being retted. From this concept of retting, not less than from the provision of the 1953 Act, I am of the view that retting husks is certainly an industry and retted husks can certainly be regarded as products of the coir industry, within the meaning of Entry 33 of List III. It is in this sense that the Board is asked by Section 10 (2) (b) of the 1953 Act to regulate, inter alia the production of husks. I am also of the opinion that even raw husks may well be regarded as products of the coir industry, in large and liberal sense, and that a legislation 'with respect to' the production even of raw husks, may well relate to the products of the Coir Industry and therefore fall within Entry 33 of List III.

The provisions of Section 3(c), Section 4(3)(b), Section 10 (b), (h) and (i) of the 1953 Act, seem to further support the view that production of husks, and certainly, of retted husks, is part of the integrated activities of the Coir Industry. Therefore there is legislative competence under Entry 33 of List III to legislate with respect to the production of husks, raw and retted. That is sufficient to sustain the declaration made by Section Order 2615 dated 2nd July, 1968 under Section 2(a)(xi) of the 1955 Act, declaring husks an essential commodity.

16. But it was said that the decision in Tika Ramji's case AIR 1956 SC 676 militates against this conclusion. That case was concerned with the question as to whether the U. P. Sugarcane (Regulation of Supply and Purchase) Act of 1953 passed by the State Legislature had invaded the field of the Central Legislation, namely Entry 52 of List I. One of the further questions was, whether the State Act, if validly passed, was repugnant to the provisions of the Central Legislation and the Control Orders, viz., the Essential Commodities Act IV of 1955, and the Industries Development and Regulation Act 65 of 1951, and the Sugar Control Order and Sugar-cane Control Order, both of 1955.

In discussing the questions, the Supreme Court referred to Entry 52 of List I, Entries 24 and 27 of List II, and Entry 33 of List in and observed that all the Acts and Notifications issued thereunder by the Centre, were enacted in exercise of the concurrent jurisdiction under Entry 33 of List I, under which the State also acted (see para 24). There was therefore no question of want of legislative competence, or invasion ol legislative powers, but only a question of repugnance, which was also found against. It is true that the Supreme Court generally discussed the scope of the entries, but there was no occasion to consider the precise scope and ambit of Entry 33 of List III of the Seventh Schedule. Counsel on both sides relied on different passages from the decision, for supporting their rival contentions, but I do not,with respect, think that the decision deals with the precise aspect which arises for consideration here.

17. I would accordingly hold, differing from the learned Single Judge, that the Notification Section Order 2615, dated 2nd July, 1968 declaring husks an essential commodity under Section 2(a)(xi) of the 1955 Act, the Coir Retting Licensing Order, 1968 and the Notifications and Proceedings issued thereunder which are challenged in this writ petition, cannot be said to be without jurisdiction. As the learned Judge has not proceeded to consider the contentions, raised in the writ petition on the merits, I shall proceed to deal with them.

18. By Ext. P-l notification dated 6th October, 1969 issued in exercise of the powers under Clause 3 (1) of the 1968 Order, a licence fee of fifty paise per square metre in localities where retting of husks was done in backwaters, and twenty paise per square metre in other localities, was fixed. We have been informed that this was further reduced by a notification filed as Ext. R-I in Order P. No. 4235 of 1970 heard along with this writ petition. Counsel for the writ petitioner (respondent id this appeal) contended that this licence fee is not supported by any quid pro quo, nor any special benefit conferred on the payer of the licence fee, as explained by the decision of the Supreme Court in the Liberty Cinema's case AIR 1965 SC 1107 and in the numerous other Full Bench decisions of this Court. It has not been shown that the levy of the licence fee is supported by any quid pro quo or special benefit or services. In the circumstances, I hold that the levy of the licence fee is illegal.

19. Fixation of the price for selling retted husks effected by Ext. P-2 notification under Clause (3) (1) of the 1968 Order, has been attacked on the ground that the same is arbitrary and illegal. The Government Pleader who appeared for the appellant in this appeal, assured us that the Government would review the price fixed under Ext. P-2 and refix the same in accordance with law, and till the same is done, no steps will be taken to enforce the terms in Ext. P-2. I record the submission made by the Government Pleader, and in view of the same, I think it unnecessary to consider the legality of the price fixation in Ext. P-2.

20. In the result, while differing from the learned Judge and holding that the notification dated 2nd July 1968 declaring coconut husks an essential commodity, and the Coir (Retting and Licensing) Order, 1968 and the notifications challenged herein, have all beenissued with proper authority and jurisdiction, I would hold that the levy of licence fee for retting husks is unjustified and illegal, and would further record the submission made on behalf of the Government Pleader that the price fixation under Ext. P-2 would be reviewed and the price would be refixed in accordance with law, and that tin then the price fixation in Ext. P-2 will not be implemented.

21. I would allow Order P. No. 336 of 1970 to the limited extent indicated above and direct that there will be no order as to costs throughout. The order of the learned judge will stand modified as above, and this appeal Will stand allowed to that extent.

Viswanathaiyer, J.

I agree.

BY THE COURT

22. In accordance with the majority decision, it is declared that the Notification dated 2nd July 1968 declaring coconut husks an Essential Commodity and the Coir (Retting and Licensing) Order, 1968 and the notifications challenged here, have all been issued with proper authority and jurisdiction. It is further declared that the levy of licence fee for retting husks is unjustified and illegal. Regarding the price fixation under Ext. P-2, the submission made on behalf of the Government Pleader that the same would be reviewed and the price would be re-fixed in accordance with law, and that till then the price fixation in Ext. P-2 will not be implemented, is recorded.


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