Sarjoo Prosad, C.J.
1. These petitions for writs have been presented by certain commission agents and grain merchants of Ganganagar District. The common question raised in these applications is the constitutional validity of Sections 3 and 5 of the Essential Commodities Act, 1955 -(Act X of 1955 hereinafter called the Act) and certain orders and notifications issued thereunder.
2. The relevant facts are brief. On 12-6-1958, the Central Government issued order No. 201 (25)/ 58-PY. 11 in exercise of the power conferred by Clause (c) of Sub-section (2) of Section 3 of the Act. The order is called the Gram (Rajasthan) Price Control Order, 1958. It extends to the whole of the district of Shri Ganganagar in the State of Rajasthan. By the order in question, the maximum price at which gram could be sold in wholesale quantity in the district was fixed at Rs. 10.50 per maund. This was exclusive of the cost of gunny bags. The Order also laid down specifications as to the average quality of the gram for which the maximum price had been determined.
A day earlier, the Central Government had issued on 11-6-1958 a notification under Section 5 of the Act delegating powers under Section 3 of the Act to the respondent Gurbaksh Singh, Deputy Director (Food), Government of India. In pursuance of this authority, the said Deputy Director called upon the petitioners to declare all the stocks of gram held by them whether in their possession or in possession of their agents or pledged with any other person or any bank and also the place or places where such stocks were located.
The petitioners submitted the declarations required. Then followed certain orders directing the petitioners to sell out of the stock of' gram held by them large quantities to Government agents and in some of the cases even to other authorised persons. The Legislative authority for these orders as also the orders themselves have been accordingly challenged by the petitioners on various grounds as being void and without jurisdiction. It is contended that the Essential Commodities Act under Sections 3 and 5 gives unfettered and uncanalised power to the Central Government for making any order that it thinks fit and even for delegating that power without laying down any principle or criteria for the exercise of such power.
It is, therefore, urged that it amounts to an unreasonable restraint on the fundamental right of the petitioners to carry on trade and occupation or to hold and dispose of property and it is hit by Article 19(1)(f) and (g) of the Constitution and is not saved by any of the clauses mentioned therein. It is contended that under Section 5 of the Act, the Central Government is given the right to delegate its power to make orders under Section 8 to any officer or authority subordinate to the Central Government or such State Government or such officer or authority subordinate to a State Government, as may be specified in that direction; there is thus no restraint upon the power of delegation and sub-delegation either.
It is further contended that in substance, the notification directing the petitioners to sell to Government agents or to other specified individuals amounts to confiscation of property without laying down any principle for payment of compensation and that the price fixed by virtue of the order issued by the Central Government is wholly arbitrary and has been fixed without any reference to any known data. It is submitted that the petitioners themselves purchased their stocks of gram for higher prices and are now being compelled to part with them at a much lower price to their detriment. It is also urged that the Central Government had no reason to discriminate in respect of the Ganganagar District and the petitioners who carry on trade in that locality and that any such discrimination was violative of the provisions of Article 14 of the Constitution.
3. For a correct appraisal of the arguments advanced on behalf of the petitioners, it is necessary to examine the provisions of the Essential Commodities Act which is the parent legislation and the main source of authority for the subsequent orders. It should be remembered that even after the termination of the War, it was considered necessary in public interest that the Centre should continue to have the same legislative powers as it had earlier to control the maintenance and supply of essential commodities.
The Constitution (Third Amendment) Act had not become law when the Essential Supplies (Temporary Powers) Act, 1946 expired and, therefore an Ordinance was promulgated to take effect on 26-1-1955, which provided for the regulation of trade and commerce in and the production, supply and distribution of essential commodities.
The present Act, the Essential Commodities Act (No. 10 of 1955) replaced the Central Ordinance and at the same time included within the definition of 'essential commodities' those commodities which had been left out earlier in the Ordinance by reason of lack of legislative power. The present Act follows in a large measure the pattern of the earlier legislation of 1946. The Act itself underwent two amendments. By Amendment Act (No. 13 of 1957), in Section 3 of the Act, after Sub-section (3), Sub-section (3A) was inserted. By another amendment, which came into effect on 17-9-1957 (Act No. 28 of 1957) Clause (f) was added to Sub-section (2) of Section 3 of the Act.
The preamble to the Act shows that it was an Act to provide in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce in, certain commodities. The crucial section in the Essential Commodities Act is Section 3 and Sub-section (1) of that section furnishes the key-note to the purpose and object of the legislation and its underlying policy. It provides that if the Central Government is of opinion that it is necessary or expedient for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, it may, by order, provide for regulating or prohibiting the production supply and distribution thereof and trade and commerce therein.
It is obvious, therefore, that Section 3 does not give an unchartered and unlimited liberty of action to the Central Government; but in the very first subsection postulates the conditions under which the Central Government is empowered to act and not otherwise. Sub-section (2) enumerates the nature of the orders which the Central Government is empowered to pass without prejudice to the generality of the powers conferred by Sub-section (1).
For instance, the order may provide, amongst others, for regulating by licences, permits or otherwise the production or manufacture of any essential commodity; it may provide for cultivation of any waste or arable land, and for otherwise maintaining or increasing the cultivation of food crops; for controlling the price at which any essential commodity may be bought or sold; for regulating the storage, transport, distribution, disposal, acquisition, use or consumption of, any essential commodity; for requiring any person holding in stock any essential commodity to sell the whole or a specified part of the stock to such person or class of persons and in such circumstances as may be specified in the order.
Clauses (c) and (f) of Sub-section (2) are particularly relevant for purposes of these applications, because, it is to be noticed, that acting under the provisions of Clause (f), the petitioners were called upon to declare their stock and directed to sell the gram held by them to Government agency or such other persons specified in the order, while under Clause (c) the Government controlled and fixed the price at which gram was to be sold.
Sub-section (3) of this section lays down that if any persons sells any essential commodity in compliance with an order made under Clause (f) of Sub-section (2), there shall be paid to him the price therefor as thereinafter provided; and in the various clauses of that sub-section, the principles according to which the prices have to be paid are enumerated. The clauses provide that where the price is agreed upon, the agreed price is payable, of course, consistently with the controlled price, if any, fixed under the section. Where there is no such agreement, the price calculated with reference to the controlled price; and where there is neither an agreed price, nor a controlled price, the price calculated at the market rate prevailing in the locality at the date of sale.
4. The main attack of the learned counsel for the petitioners is directed against Sub-section (2) (e) and (f) and also against Sub-section (3) of Section 3 of the Act. It is contended that it was necessary for the Act to lay down certain principles under which the prices could be fixed, where there was no agreed price, and at any rate, the price fixed should have been calculated according to the average prices prevailing during certain periods in the locality.
In our opinion, there is no merit in these contentions. We have already indicated that the underlying policy of the legislation within which the Central Government is authorised to act has been laid down in Sub-section (1) of Section 3. The authority has been conferred in public interest with the object of maintaining supplies of essential commodities and regulating their distribution at fair prices. As local conditions differ, the power of delegation to act under given circumstances was also necessary and no legitimate objection could be taken to the provisions of Section 5.
As to the payment of price for the sale of commodities directed to be sold under Clause (f) of Sub-section (2) of Section 3, the broad principles have been embodied in Sub-section (3). No hard and fast rule could be laid down by the legislature as to the fixation of prices in any locality and some amount of discretion had to be vested in the Central Government or the State Government and its subordinate authorities in making the fixation of prices according to local conditions. In fixing fair prices, many factors had to be taken into account and the market trends had to be watched of which the local authorities were better cognisant.
It would have been both unwise and impractical for the legislature to anticipate all such details and thereby fetter the discretion of the local authorities, who were more competent to fix fair prices. The assertion that average prices prevailing in the locality during a specified period should have been laid down as the criterion, may not have met the requirements of a particular situation. The section, therefore, cannot be held to offend against Article 19(1)(f) and (g) of the Constitution and is definitely saved under Clauses (5) and (6) of that Article.
All that the law contemplates is that the restriction imposed should be reasonable and that it should not be indiscriminate and reckless. The restrictions on the fundamental rights enumerated in Article 19(1) Clauses (f) and (g) of the Constitution have to be imposed, if at all, with care and deliberation and in the interest of the public. The test of reasonableness is that there is no lack of due care and attention and that it strikes a balance between the fundamental right of the individual and the control necessitated by the demand of the community.
A statute under the guise of protecting public interest cannot arbitrarily interfere with private business and impose harsh and restrictive regulations upon lawful use of property or freedom of trade and commerce and there should be a reasonable nexus or co-relation between the purpose which the Act has in view and the restriction which is sought to be imposed. As pointed out by the Supreme Court in Chintamanrao v. The State of Madhya Pradesh AIR 1951 SC 118.
'The phrase 'reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word 'reasonable' implies intelligent care and deliberation, that is the choice of a course which reason 'dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by Clause (6) of Article 19, it must be held to be wanting in that quality.'
We are unable to hold in the circumstances of the present legislation that the restrictions envisaged by the statute are unreasonable and not justified by the purpose which the legislation is intended to serve.
5. The cognate provisions of the Essential Supplies (Temporary Powers) Act, 1946 (herein-after called the Act of 1946 came in for consideration by the Supreme Court in Harishankar Bagla v. The State of Madhya Pradesh, AIR 1954 S.C. 465: 1955 SCR 380. It has been already noticed that the Act impugned in these cases adopts largely the pattern of the 1946 legislation aforesaid. There the provisions of Sections 3 and 4 of the Act of 1946 directly came in for scrutiny as also the provisions of the Cotton Cloth Control Order issued on the authority of those provisions. Sections 3 and 4 of the Act of 1946 provided as follows:--
'3. (1) The Central Government, so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein .....
(2) Without prejudice to the generality of the powers conferred by Sub-section (1), an order made thereunder may provide--
(a) for regulating by licences, permits or otherwise the production or manufacture of any essential commodity; .....
(d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity.....
4. The Central Government may by notified order direct that the power to make orders under Section 3 shall, in relation to 'such matters' and subject to 'such conditions', if any, as may be specified in the direction, be exercisable also by--
(a) such officer or authority subordinate to the Central Government, or
(b) such State Government, or such officer or authority subordinate to a State Government as may be specified in the direction.'
6. Under powers conferred by Section 3, the Central Government promulgated the Cotton Textiles (Control of Movement) Order, 1948 which provided that no person should transport or cause to be transported by rail, road, air, sea or inland navigation any cloth, yarn or apparel, except under and in accordance with a general permit notified in the Gazette of India by the Textile Commissioner, or a special transport permit issued by that officer. Section 7 of the Act of 1946 provided that any violation of the order issued thereunder was punishable.
The petitioner in the case was punished under that section and he therefore impugned the Act and the Control Order both as unconstitutional and in infringement of Sub-clauses (f) and (g) of Article 19(1) of the Constitution. It was held that if the transport of essential commodities were left uncontrolled, it might seriously hamper the supply of those commodities to the public. The Act was intended to provide for the control of trade and commerce in certain essential commodities and such a legislation could not be held to be unreasonable. All that was required is that the Legislature must declare the policy of the law and the legal principles which are to control any given case and must provide a standard to guide the officials or the body in power to execute the law.
The essential legislative function consisted in the determination or choice of the legislative policy and of formally enacting that policy into a binding rule of conduct. In the legislation in question, the legislature laid down such a principle and that principle was the maintenance or increase in supply of essential commodities and of securing equitable distribution and availability at fair prices. As their Lordships observed:
''The principle is clear and offers sufficient guidance to the Central Government in exercising its powers under Section 3. Delegation of the kind mentioned in Section 3 was upheld before the Constitution in a number of decisions of their Lordships of the Privy Council, vide --Russell v. Reg, (1872) 7 AC 829; -- 'Hodge v. Reg', (1884) 9 AC 117 and -- 'Shannon v. Lower Mainland Dairy Products Board', 1938 AC 708 and since the coming into force of the Constitution, delegation of this character has been upheld in a number of decisions of this Court on principles enunciated by the majority in In re Article 143, Constitution of India and Delhi Laws Act (1912) etc. AIR 1951 SC 332. As already pointed out, the preamble and the body of the sections sufficiently formulate the legislative policy and the ambit and character of the Act is such that the details of that policy can only be worked out by delegating them to a subordinate authority within the framework of that policy.'
7. Section 4 of the Act of 1946, which was in the same terms as section 5 of the present Act, empowered the Central Government to delegate its powers to make orders under Section 3 to any officer or authority subordinate to it or the Provincial Government or to any officer or authority subordinate to the Provincial Government as specified and subject to the conditions mentioned in the direction given by the Central Government.
The validity of this section was also attacked on the ground that it was void for excessive delegation of powers and that it was necessary for the legislature itself to specify the particular officers or authorities who could exercise power under Section 3 and not to leave the matter to the discretion of the Central Government. In support of the above argument, the learned counsel relied upon certain American cases, but the Supreme Court repelled those contentions and held in approval of the decision of the Privy Council in Shannon's case, 1938 AC 708, that Section 4 was valid and that there was no legislative incompetency in delegating such a power.
The contention that the Textile Control Order issued under the authority of that Act which required the taking of a permit for transport of certain textile goods was ultra vires, was also rejected by the Supreme Court, as any such restriction was within the permissible bounds of the Constitution and sanctioned ,by the provisions of the Act on the authority of which the order had been issued.
8. Another decision of the Supreme Court which is relevant on the subject is Madhya Bharat Cotton Association Ltd. v. Union of India , AIR 1954 S.C. 634. In that case the petitioner was prevented by certain notifications from carrying on the business of 'Hedge Contracts'. The action complained of was taken under the Cotton Control Order (1950) and Clause 4 of this Order banned all cotton contracts and options in cotton except those permitted by the Textile Commissioner by a general order under Clause 6.
The Textile Commissioner was also authorised to place such restrictions and conditions as he thought fit on the contracts and options which he permitted. Cotton was listed as an 'essential commodity' under Section 2 (a) of the Act of 1946 and the State, under the provisions of that Act, enjoyed the right to control and even to prohibit, transactions in the essential commodities. 'Hedging' was considered to be of vital importance in cotton trade, because it not only acted as an insurance and protected cotton growers, manufacturers and merchants, but also acted as a check on reckless speculation and gambling if properly controlled.
It was, therefore, considered necessary to have this type of dealing under proper supervision and control, otherwise, innocent persons were likely to suffer on account of the speculation of a handful of persons seeking to get rich quickly. It was also considered necessary that trading in cotton, which was an essential commodity to the life of the community should be reasonably controlled and in certain circumstances, even totally prohibited. It was, therefore, held that Clause 4 of the Cotton Control Order of 1950 which derived its authority from the provisions of the Act of 1946 did not offend against Article 19(1)(g) of the Constitution and was saved under Clause (5) thereof.
An argument was also advanced on the basis of Article 14 of the Constitution that, although the East India Cotton Association of Bombay had been allowed to carry on trade, there was undesirable discrimination against the petitioners in that case so as to give almost a virtual monopoly to the Association aforesaid. It was held that it was within the discretion of the Textile Commissioner to consider whether the petitioner in that case, the Madhya Bharat Cotton Association Limited, could be entrusted with the responsibility of carrying on business in cotton textiles until it had acquired better experience and was more strongly established as compared to the East India Cotton Association of Bombay, in whose favour the Commissioner had passed orders.
The decision may not be a direct authority on the point of the constitutional validity of the provisions of the present Act which are challenged in these petitions. Nevertheless, it is obvious that similar provisions of the earlier statute which armed the Textile Commissioner with large discretion in the matter of controlling an essential commodity were not challenged before the Supreme Court; and, in any case, the Court found that the power which had been vested in the Textile Commissioner under the authority of that law to impose restrictions was valid and did not amount to any unreasonable interference with the individual rights guaranteed under Article 19(1) of the Constitution.
9. Shri Laxmimal, who represents many of these petitioners and has advanced the leading argument has endeavoured his best to distinguish the decision of the Supreme Court in Harishankar Bagla's case AIR 1954 SC 465: 1955 SCR 380. He submits that the Act of 1946 was a temporary measure and the exigencies which it sought to meet might well have justified the validity of the measure and the orders passed thereunder. This distinction, in our opinion, is unsound. The crux of the decision does-not lie in the fact that the Act was a Temporary Powers Act, but in the fact that the preamble and the body of the sections in the Act in question sufficiently formulated the legislative policy; and the character of the Act was such that the details of the policy could only be worked out by delegating that power to subordinate authority within the framework of that policy and that there was no delegation of essential legislative powers.
He has also argued that the said decision is no authority for the contention that under Sub-section (3) Clause (c) of Section 3 of the Act no principle for fixation of prices has been indicated and the matter is left entirely to the discretion of the executive authorities. We have already held that Sub-section (3) does lay down the principles for payment of price to persons concerned and it was not possible for the legislature to anticipate all the details of the conditions under which fair prices could be fixed by local authorities. The above decision, therefore, is clearly relevant on the points which are at present canvassed before us.
10. We may also refer in this context to a Full Bench decision of the Madhya Pradesh High Court in State v. Haidarali, (S) AIR 1957 Madh Pra 170. In this case reference was necessitated to the Full Bench because of a decision by Kapur J. (as he then was) in Criminal Writ Case No. 36-D of 1954, dated 14-3-1965 (Punjab) on which the petitioners here have also relied in these petitions. Hidayatullah C. J. who delivered the judgment of the Full Bench, after a very elaborate review of Indian and foreign decisions on the point held in favour of the constitutional validity of the provisions of the Act of 1946 and the orders issued thereunder except in one case where the Central Government had provided no check or conditions for the exercise of discretion by the Controller to whom power to fix maximum prices had been delegated in that regard.
The learned Judges held that it was open to the Indian Legislature both at the Centre and in the States to delegate to an outside instrumentality the carrying into operation of the purpose of an enactment. The only condition which had to be observed in this respect was that in making such delegation, the Legislature must define the policy and the purpose of the enactment, so as not to abdicate its legislative power or efface itself.
They also pointed out, relying upon the decision of the Supreme Court in Harishankar Bagla's case, AIR 1954 SC 465: 1955 SCR 380 that on the question of delegation of power by the Legislature the Supreme Court in India had not accepted the doctrine of separation of powers as applied in the American & the Australian Constitutions. What the Court, therefore, had to examine was whether the parent Act under which the Control Order was issued had laid down clearly and adequately the policy and the purpose for which the law was enacted and whether in conferring the power upon the delegate or sub-delegate there had been at any stage conferment of naked and arbitrary power, uncontrolled by any set standards.
The power which was conceded to the Central Government under the Act in question to make an order for controlling prices at which any essential commodity might be bought or sold was qualified by making it depend upon the will of the Central Government as to how far the control or its operation was necessary and the words 'so far as it appears to it to be necessary or expedient' in Section 3(1) show that the Central Government had to apply its mind in determining how much control was needed for effectuating the policy of equal distribution and availability at fair prices of essential commodities and also for maintaining or increasing supplies thereof. Here the opening words of Sub-section (1) of Section 3 of the Act impugned before us: 'If the Central Government is of opinion that it is necessary or expedient so to do' are substantially identical.
11. In view of the above decisions which furnish an appropriate guide to the determination of the questions raised before us, we consider that it would serve no useful purpose to discuss the various American cases on which Mr. Laxmimal has taken pains to rely. The learned counsel for the petitioners, however, contend that the above Full Bench decision fortifies their submission that where unfettered and arbitrary discretion is vested in the fixation of prices by the executive authorities, the order which purports to delegate such authority must be held to be void on account of excessive and unauthorised delegation.
It appears that in the case in question, the Central Government had issued two successive Orders delegating powers to the Controller on the authority of Section 4 of the Act of 1946. The first was the Iron and Steel (Control of Production and Distribution) Order of 1941 and the second was the Iron and Steel (Scrap Control) Order, 1943. For the sake of brevity we will refer to them as 1941 and 1943 Orders respectively. Clause 11B of the 1941 Order empowered the Controller from time to time by Gazette notification to fix the maximum prices at which any iron or steel might be sold by a producer or stock-holder or any other person, making provision for certain allowances in each case.
Clause 8 of the 1943 Order was in analogous terms, except for the difference, which naturally weighed with the learned Judges as 'notable' in deciding the case, that the Controller in fixing the prices had to obtain the approval of the Central Government. The other clauses of the two Orders were identical and most of them were ipsissima verba. With reference to Clause 11B of the 1941 Order the learned Judges observed that
'under the scheme of the Act of 1946, the Central Government had to give relevant instructions to the Controller while empowering him to fix the maximum prices. The clause impugned no doubt contained directions, but it did not enact the manner in which the ultimate fixation of maximum prices is to be made. It does not refer to any basic period or any basic price. Similarly, the rest of the clause, namely, that such prices may differ for iron and steel obtainable from different sources merely empowers the Controller to make changes in regard to the commodities obtained from different sources; but it does not tell the Controller how he has to fix the prices in any particular area or in relation to any supplies from any particular source. The only direction that one finds is about the allowance for contribution to and payment from any equalisation fund and also that the Controller may provide for any other disadvantages.'
It was therefore held that the Central Government had given unlimited power to the Controller to fix maximum prices as he liked and was thus an unconstitutional exercise of power imposing an unreasonable restraint upon fundamental rights of individuals. The learned counsel for the petitioners have laid special stress upon the above observations which they seek to press in aid in attacking the fixation of price under the Gram Price Control Order, 1958 in these cases.
It must be however remembered that the Gram Control Order is an order made by the Central Government itself in exercise of the powers conferred by Clause (c) of Sub-section (2) of Section 3 of the Act, The wholesale price in these cases has been fixed by the Central Government itself acting within the frame-work of the legislative policy and not by any delegate of the Central Government authorised to act under Section 5 of the Act. We will presently show that nothing has been brought out in these petitions to indicate that the Central Government has acted arbitrarily or mala fide in exercise of that power or that under cover of that authority it has purported to do something which was beyond the powers conferred.
It is significant that when dealing with the Order of 1943 the learned Judges held that Clause 8 of that Order was valid because there the Central Government reserved to itself the final power and enjoined upon the Controller to obtain its approval before fixing the maximum prices. The learned Judges held that this was a salutary check because the Central Government was likely to review the methods adopted by the Controller in reaching a particular result. Here the Central Government itself has fixed 'the wholesale price on the authority of the law and no further direction or principle was necessary.
12. The learned counsel for the petitioners have also relied upon the decision of the Supreme Court in Dwarka Prasad Laxmi Narain v. State of Uttar Pradesh, AIR 1954 S.C. 224: 1954 SCR 803. The case dealt with Uttar Pradesh Coal Control Order, 1953, issued on the authority of Section 3 of the Act of 1946. The challenge to the order was only against Sub-clause 3 of Clause (4) and though the matter concerned only licensing, their Lordships dealt with the general power of the legislature conferring authority upon a subordinate agency and also went into the question of fixation of fair prices.
They found that there was in the Order no higher authority prescribed which could examine the propriety of the reasons recorded by the Controller and revise or review its decision and as the direction given to the licensing and controlling authority was unlimited, the delegation must be held to be bad. They accordingly declared! the licensing restriction to be bad, but it is noteworthy that they did not hold that the price fixation was defective. It is interesting to consider what the Supreme Court itself had to say about the case in its later decision in Harishankar Bagla's case AIR 1954 S.C. 465: 1955 SCR 380. The Court observed:
'It may also be pointed out that reference to the decision of this Court in 'Dwarka Prasad's case AIR 1954 S.C. 224: 1954 SCR 803, is not very apposite and has no bearing on the present case. Section 4(3) of the U. P. Coal Control Order was declared void on the ground that it committed to the unrestrained will of a single individual to grant, withhold or cancel licences in any way he chose and there was nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same. Section 4 (3) of the U. P. Coal Control Order was in these terms: 'The Licensing Authority may grant, refuse to grant, renew or refuse to renew a licence and may suspend, cancel, revoke, or modify any licence or any terms thereof granted by him under the Order for reasons to be recorded. Provided that every power which is under this Order exercisable by the Licensing Authority shall also be exercisable by the State Coal Controller, or any person authorised by him in this behalf.'
In the present Control Order there is no such provision as existed in the U. P. Coal Control Order. Provisions of that Control Order bear no analogy to the provisions of the present Control Order. The policy underlying the Order is to regulate the transport of cotton textile in a manner that will ensure an even distribution of the commodity in the country and make it available at a fair price to all. The grant or refusal of a permit is thus to be governed by this policy and the discretion given to the Textile Commissioner is to be exercised in such a way as to effectuate this policy. The conferment of such a discretion cannot be called invalid and if there is an abuse of the power there is ample power in the Courts to undo the mischief. Presumably, as appears from the different forms published in the Manual, there are directions and rules laid down by the Central Government for the grant or refusal of permits.'
We are similarly of opinion that the U. P. Coal Control Order which was under consideration in that case bears no analogy to the order of the Central Government which is challenged in these cases fixing the wholesale price of gram. Here it is an order made by the Central Government itself in exercise of its powers under the Act and in pursuance of its legislative purpose.
13. The other decision of the Supreme Court in State of Rajasthan v. Nathmal, AIR 1954 S.C. 307 is equally distinguishable. The question involved in that appeal related to the constitutional validity of Clause 25 of the Rajasthan Foodgrains Control Order, 1949. By virtue of the said Order the Controller was authorised to freeze the stocks existing with any trader and also to compel him to sell compulsorily to Government his stocks at prices to be fixed.
The first part of the Control Order was held to be valid because it related to the availability at fair prices of essential commodities and their equitable distribution. The second part of the law was declared ultra vires because it was found that there was no limitation upon the action of the agent in fixing the price of the frozen stocks. The opening portion of Clause 25 of the Order which was held to he void, both under Article 19(1)(g) and Article 31(2) of the Constitution ran as follows:
'Such stocks shall also be liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for purposes of Government procurement.'
Commenting on the clause the Court observed:
'It appears from these clauses that while the authorities may fix the ceiling price at which food-grains should be sold in the market by the dealers and may direct any person in possession of food-grains to sell them to any other person at the price fixed under Clause 23, mere is no such limitation upon the power of the Government to acquire the stocks. In other words it will be open to the Government to requisition the stocks at a price lower than the ceiling price thus causing loss to the persons whose stocks are freezed while at the same time the Government is free to sell the same stocks at a higher price and make a profit. It is obvious that the dealer whose stocks are thus freezed will stand to lose considerably and will be unable to carry on his trade or business at the prevailing market price. No dealer will be prepared to buy foodgrains at the market price when he knows that he is exposed to the risk of his stocks being freezed any moment and the same being requisitioned at the procurement rate'.
These considerations do not govern the instant cases where the ceiling price of gram for sale in wholesale quantities has been fixed for all purposes, whether to Government agencies or to other authorised persons.
14. At this stage it would be convenient to dispose of the contention of Mr. Chandmal Lodha, who appears for one set of petitioners in these cases. He contends that the order in substance amounts to acquisition or requisition of the property of the petitioners and should, therefore, be struck down under Article 31(2) of the Constitution. We are unable to accede to this contention. Even if these cases fell under Article 31(2) of the Constitution, we do not think that the Act or the order is viola live of any of its provisions.
The public purpose for which the ceiling wholesale price has been fixed is in accordance with the legislative purpose of the Act, namely the maintenance, supply and distribution of essential commodity like gram. Nor can it be argued that the law does not fix the amount of compensation or specify the principles and the manner in which the compensation is to be determined and given. We have already noticed that Sub-section (3) of Section 3 Jays down the principles for payment of not merely compensation but the price of the essential commodity sold. We will consider later whether the other question, which is raised in the cases represented by Mr. Chandmal Lodha about the direction to sell the gram to certain specified persons and not to Government agencies, is violative of any of the provisions of the Constitution. It is enough to say at this stage that in our opinion, these cases do not strictly fall under Article 31(2) of the Constitution, but the orders affecting the petitioners are only in the nature of restrictions on the right to hold and dispose of property and to carry on trade or business, and these restrictions have, therefore, to be considered in the context of Clauses (f) and (g) of Article 19(1) of the Constitution. If, therefore, it is held that the restrictions imposed are reasonable restrictions in public interest, the legislation and the orders would be saved by virtue of the operation of Clauses 5 and 6 of this Article.
15. We may now turn to the argument put forward by the petitioners that the act of the Central Government in fixing the price was itself arbitrary and in excess of the powers conferred by the Act. In the course of arguments, there was even a suggestion that the act of the Central Government was mala fide; but it should be observed at the outset that there is no such suggestion in the petitions themselves and there is no foundation laid at all in the facts disposed in the petitions for any such assumption.
(His Lordship referred to the petition and the facts set out in the affidavits and counter affidavits of the parties and proceeded:)
16.-17. The charge, therefore, that the fixation of price was arbitrary or beyond the powers conferred, appears to have no foundation on the facts disclosed in these petitions. It is to be noticed that the fixation of price in these cases has been done not only by the Central Government under the authority conferred upon it by the Act and subject to its underlying policy, but there is also a further safeguard provided in Sub-section (6) of Section 3, which provides that every order made under this section by the Central Government or by any officer or authority of the Central Government shall be laid before both Houses of Parliament, as soon as may be, after it is made.
This, in our opinion, is an additional check upon any executive vagaries that might be anticipated. It is true that the order under the section takes effect nevertheless, but the Legislature has not completely lost control over it, because when the order is laid before the Houses of Parliament, any member of the Legislature would be entitled to raise a discussion over it and in case of any illegal exercise of authority under the section, the Legislature might make the provisions more restrictive.
According to May's Parliamentary Practice, the first step in parliamentary control is the requirement that the document he laid before Parliament. The advantage of such a procedure is that members of both Houses have, of course, such chances as Parliamentary arrangements afford of pressing for the repeal of an enactment under which obnoxious rules and orders are made, or of revoking those rules and orders by statute. The Order, therefore, cannot be challenged on the ground of being arbitrary and as a result of illegal and excessive delegation of legislative authority.
18. Another contention of the learned counsel for the petitioners is based upon the language of Sub-section (3A) of Section 3 of the Act introduced by an amendment under Act No. 13 of 1957. It is contended that if -the Government thought it necessary to control rising prices or prevent the hoarding of any food-stuff in any locality, it could have properly taken action under this sub-section and fixed price as contemplated by Clause (iv) of that sub-section. This not having been done, it is submitted that the action taken in fixing the price of gram is ultra vires and without any jurisdiction.
It is urged that no action under Sub-section (2) of Section 3 could be taken by the Government in respect of any particular locality and the only provision under which the Government could act was Sub-section (3A) of the Act. We are unable to accept this interpretation of the relevant sub-clauses of Section 3. Sub-section (2) of Section 3 authorises the Central Government to regulate and fix prices where conditions mentioned in Sub-section (1) of that section are generally found to exist
In other words, where it considers essential, as the Government has considered essential in these cases to supply gram to deficit areas after purchasing the same from surplus areas, Ganganagar being one such area, the Government would be entitled to take action under Sub-section (2) of that section. In other words, it could control price at which essential commodity was to be bought or sold and prohibit or withhold from sale of any essential commodity ordinarily kept for sale.
Sub-section (3A) would apply where in addition to the circumstances mentioned in Sub-section (1) the Central Government is faced with the specific situation of rising prices or hoarding in any of the food-stuffs in any locality which has tended to create some kind of an artificial scarcity in that locality, thereby depriving the residents of the advantage of a free supply of the commodities for prices at reasonable market rates.
Instances are not uncommon where such artificial scarcities are created at times in a locality, due to the unsocial conduct of producers or dealers in monopolising and hoarding and trying to sell food-grains in a situation of acute scarcity at exhorbitant prices. It is only to meet such situations that Sub-section (3A) has been introduced in particular. This subsection, therefore, does not prevent the Government from taking action under Sub-section (2) of that section, provided the circumstances mentioned under Sub-section (1) exist.
It was, therefore, not necessary that Government should have justified the fixation of price under Clause (iv) of Sub-section (3A). There is nothing to show in these cases that in fixing the price, the Government did not allow a fair margin of profit to the producers or dealers on the overhead charges. The contention based upon Sub-section (3A) of the Act, therefore, appears to be somewhat misconceived.
19. The only point which remains to be disposed of is one which affects some of the cases in which Mr. Chandmal appears for the petitioners. In those cases the direction given by the Collector was that the gram should be sold to the District Agricultural Officer. The Collector appears to have been authorised under Section 5 of the Act to take steps under Section 3(2)(f). The direction given by the Collector could not, therefore, be challenged on the ground of any lack of authority. Nothing has been shown to inadequate that the direction to sell gram to the District Agricultural Officer was arbitrary or unreasonable, specially when the gram was to be sold at the wholesale rate already fixed by the Government.
A more serious question which arises in some of the cases relates to Civil Writ No. 301 of 1958, Civil Writ No. 307/1958 and Nos. 322 to 332 of 1958. In all these cases, the direction originally was given by the Collector to sell the gram to the District Agricultural Officer. If the direction had stood, there could not be any question; but it is conceded in the counter-affidavit filed by the Government in these cases that the above direction was not adhered to and that the Tehsildar issued fresh directions for sale of the gram in question to private parties or to himself.
It is also conceded that the Tehsildar had no power delegated to him to take action under Sub-section (2)(f) of the Act; though the rejoinders to the petitions filed on behalf of the Government state that the Tehsildar took such steps under the direction of the Collector to meet the deteriorating food situation in Jaipur and with a view to hasten despatches, Government seeks to justify the Tehsildar's orders on this basis. The petitioners controvert these allegations.
They allege that originally the direction to sell to the Agricultural Officer was for seed purposes but when the sowing season was over, the Tehsildar hastened to substitute his own orders for sale to private parties or to himself. The fact, however, remains that the Tehsildar had no jurisdiction to maker any orders under Sub-section (2)(f) of Section 3 of the Act, No such power having ever been delegated to him, the direction issued by this individual was wholly without jurisdiction. There are no orders on the record to show that the Collector who had certainly authority to act under the relevant section had issued any such order of sale to private individuals or for any justifiable reason.
That being the position, in the ultimate analysis it is to be found that in these cases the orders directing sale of the gram passed by the Tehsildar were wholly without authority and have to be quashed. These orders could not be obeyed. The applications enumerated above, therefore, have to succeed on this simple ground. In so far as the other applications are concerned, there appears to be no merit in them and, therefore, the applications are dismissed with costs, which we assess at Rs. 50/- in each case. In the petitions which have been allowed, we do not see any good reason to award costs to the petitioners as their other contentions have substantially failed.
20. Civil Writs 301/1958, 307/1958 and 322 to 332/1958 are accordingly allowed and directions be issued quashing the orders of sale passed by theTehsildar. The other applications fail and arerejected with costs.