S. Padmanabhan, J.
1. In these writ appeals the validity of Rule 6(i) of the Rules framed by the Government of Tamil Nadu under Section 7 of the Cotton Transport Act (Central Act III of 1923) is being questioned. These writ appeals have been filed against the dismissal of a batch of writ petitions by a learned single Judge of this Court. The main judgment is found in Writ Petition No. 1683 of 1976.
2. The facts of the case are briefly as follows : The appellants carry on business in the manufacture and sale of cotton yarn in their various factories in Kerala State. They procure the necessary cotton for the manufacture of yarn from different places in India as well as from out of India. The major portion of the cotton is obtained form dealers in cotton in the States of Gujarat, Maharashtra, Punjab, etc. The cotton is supplied in the form of lint and is pressed and packed in hessian cloth over which iron hoops are tied for secure and convenient transportation. Each such packet is known as one bale and weighs between 160 and 180 kilograms. The bales are serially numbered and each bale bears the name of the press in which the cotton is ginned and packed as a bale.
3. These bales are transported from the various States to the appellants' factories in Kerala by rail or in lorries by road. The railway receipts are taken in the name of the appellants and sent to them through barks. The consignees viz., the appellants take delivery of the railway receipts from the bark on payment of cash and clear the goods in Kerala. In the course of such transport by road the lorry has to travel through different States including Tamil Nadu apart from Andhra Pradesh and Karnataka.
4. While so, the District Agricultural, Officer (Certification and Enforcement) Tirappur sent a communication to the appellants to the effect that inasmuch as Tamil Nadu is a prohibited area for the import of cotton as per the Cotton Transport Act (Central Act III of 1923) (hereinafter referred to as 'the Act') the appellant should take licences as required by Rule 6(i) of the Rules made by the Tamil Nadu Government. The ground on the basis of which the communication was sent is that the cotton sent from the various States to Kerala pass through Tamil Nadu which is a protected area. The officer concerned enclosed a draft of the application form to be used for that purpose and indicated the fee prescribed for the issue of a licence.
5. Mr. V.K.T. Ghari, learned Counsel for the appellants submits that, the Act provides for the issue of licences only for the import of cotton in the protected area and not 'for the passing of cotton through the protected area'. Even Section 7(1) of the Act which permits a State Government to make rules permits the making of Rules only for the prevention of imports into the protected area and not for the case of transit through the protected area. In these circumstances, the learned Counsel submits, that Rule 6(i), in so far as it provides for taking out a licence in respect of cotton passing through the protected area to any unprotected area, goes beyond the rule-making power. In the submission of the learned Counsel the words 'imported into' contemplate the import of any article into an area to be used or to be delivered inside the particular area for-consumption in that area and do not include the mere passage of the goods through the protected area especially having regard to the object and intent of the Act as set out in the preamble and also the destination and delivery point as contemplated and understood under Sections 4 and 5 of the Act. In this view, the contention of the learned Counsel is that the State of Tamil Nadu cannot compel the appellants to take out a licence when there is no import of the bales of cotton into the State of Tamil Nadu. The cotton bales are only carried by rail or lorries through the State of Tamil Nadu to their destinations in Kerala.
6. The learned Advocate-General, on the other hand, contends that the underlying idea in the Act is to prevent malpractices in mixing up variety of cottons and only with that intention the Act has been introduced for the perpose of regulating the movement of cotton to maintain the good quality and reputation of cotton. The word 'import' in the Act should not be given a narrow interpretation and that Rule 6(i) must therefore be held to the intra vires of the rule-making powers under the Act as a regulatory measure.
7. The learned single Judge accepted the contention of the learned Advocate-General that the word 'import' should not be given a narrow interpretation but should be interpreted liberally and be given a wide meaning. Further, after referring to certain decisions the learned Judge held that the measure of requirement of licence contemplated under Rule 6(i) of the Act is only regulatory and it only facilitates the maintenance of the good quality and reputation of cotton rather than impede with the trade, within the meaning of Article 301 of the Constitution and he further held, having regard to the possibility of the abuse of the inferior quality of cotton being mixed up with superior cotton, this measure of insistence on licence should be upheld on the theory of 'felt necessities of time' enunciated by Holmes, J.
8. We feel that for the disposal of these appeals it is unnecessary to go into the question how far the provisions of Rule 6(i) contravene Article 301 of the Constitution of India. The answer to the poser raised by the appellants lies in the meaning to be attached to the word 'import' contained in the provisions of the Act interpreted in the light of the decisions of the Supreme Court hereinafter referred to. The Act was passed by the Indian Legislature for the purpose of providing restriction and control of the transport by rail and import of cotton into certain areas, for the purpose of maintaining the quality and reputation of cotton grown in those areas.
9. Section 3 of the Act runs as follows:
3. (1) The State Government may, for the purpose of maintaining the quality or reputation of the cotton grown in any area in the State, by1 notification in the. Official Gazette, prohibit the import of cotton or of any specified kind of cotton into that area by rail, road, river and sea or by one or more of such routes, save under and in accordance with the conditions of a licence:
Provided that no such notification shall be deemed to prohibit the import into any protected area of packages containing any kind of cotton and not exceeding ten pounds avoirdupois weight.
(2) Any such notification may prohibit the delivery to and the taking delivery by any person, at any specified railway station situated in the protected area, of any cotton, the import of which by rail into that area is prohibited when such cotton has been consigned from a railway station not situated in that area, unless such person holds a licence for the import by rail of the cotton into that area.
Protected area has been defined thus under Section 2(g) of the Act : 'Protected area' means an area into which the import of cotton or of any kind of cotton has been prohibited wholly or partly by a notification under Section 3.
10. Under Section 4(1) booking of goods and parcels by rail is not permitted from one railway station to a notified station unless both the railway stations are in the same protected area or unless the consignor produces a certified copy of a licence for the import of cotton by rail into the protected area, in which such notified station is situated. Under Section 5, delivery of cotton at the notified station is prohibited unless the booking station also is in the same protected area or the necessary licence for import is produced. Section 7(1) which contains the rule-making power provides that the State Government, may by notification in the Official Gazette, make rules to provide for any of the following matters, namely:
(a)Prevention of the import into a protected area by road, river or sea, save under and in accordance with the conditions of a licence, cotton the import of which into that area has been prohibited wholly or partly by a notification under Section 3.
(b) terms and conditions to be contained in licences, the authorities by which they may be granted and the fees which may be levied in respect thereof; and
(c) the manner in which licences and the certified copies thereof shall be dealt with on or after the delivery of the cotton to which they relate.
11. The original notification issued under Section 3 of the Cotton Transport Act, 1923 as amended by the Cotton Transport (Amendment) Act, 1925 which is relevant for our purpose is as follows:
Whereas, it is necessary for the purpose of maintaining the quality and reputation of the cotton grown in the areas in the Madras Presidency mentioned in Schedule I hereto appended:
Now therefore, in exercise of the powers conferred by Sub-section (1) of Section 3 of the Cotton Transport Act, 1923 as amended by the Cotton Transport (Amendment) Act, 1925 and in supersession of the notification No. 344, dated 18'b November, 1925 at page 2244, Part I of the Fort St. George Gazette, dated 24tb November, 1925, the Governor acting with his Ministers is hereby pleased to prohibit the import of cotton (kapas, ginned cotton or cotton waste) into the area specified in schedule I and the import of cotton seeds into the Tirunelveli area as defined in that schedule by rail, road, river and sea save under and in accordance with the conditions of a licence prescribed in this behalf.
Schedule 1 to the said notification includes the State of Tamil Nadu.
Rule 6(i) as amended is as follows:
A single licence to cover only one consignment may be granted to such persons as can satisfy the licensing authority that it is necessary to import cotton of a specified quantity and kind by road and river into the protected area or 'passing through the protected area' to any unprotected area (vide G.O.Ms. No. 1740, Food and Agriculture, dated 25th May, 1963). Such licence shall be in Form G and GG hereto annexed and shall be subject to conditions stated therein.
It is as per this Rule 6(i) that the District Agricultural Officer (Certification and Enforcement) sent a, communication to various appellants calling upon them to take out a licence to cover one consignment in so far as the cotton 'passes' through the State of Tamil Nadu which is a protected area to the State of Kerala which is an unprotected area.
12. The question is what is the meaning to be attached to the word 'import' occurring in the Act. In Empress Mills v. Municipal Committee, Wardha : 1SCR1102 the interpretation of the word 'import' arose for consideration in the following circumstances. The appellant therein, Empress Mills, had its spinning and weaving mills at Yeotmal. They were transporting bales of cotton from Yeotmal to Nagpur by road and vehicles and during such transport the goods passed through the limits of Wardha Municipality. The goods were neither unloaded nor reloaded at Wardha but were merely carried across through the municipal area, during transit to Nagpur. Section 66(1)(o) of the C.P. and Berar Municipalities Act, 1922 provided a terminal tax on goods imported by rail or road at a certain rate and also a terminal tax on goods exported by rail or road at certain rates. The Municipal Committee purporting to act under Section 66(1)(o) of the Act and Rule 1 of the Rules made thereunder collected Rs. 240 as terminal tax on these goods on the ground that they were exported by the appellant from the limits of the Municipality of Wardha. The Mills claimed a refund of the same on the ground that a mere passage of the goods through the municipal limits of Wardha did not constitute in law 'import' or 'export' within the meaning of the C.P. and Berar Municipalities Act, 1922. In dealing with this contention J.L. Kapur, J., speaking for the Court stated as follows:
'Import' is derived from the Latin word importare which means 'to bring in' and and 'export' from the Latin word exportare which means to carry out but these words are not to be interpreted only according to their literal derivations. Lexicologically they do not have any reference to goods in 'transit' a word derived from transire bearing a meaning similar to transport i.e., to go across. The dictionary meaning of the words, 'import' and 'export' is not restricted to their derivative meaning but bear other connotations also. According to Webster's International Dictionary the word 'import' means to bring in from a foreign or external source; to introduce from without; especially to bring (wares or merchandise) into a place or country from a foreign country in the transactions of commerce; opposed to export.
Similarly 'export' according to Webster's International Dictionary means 'to carry away; to remove; to carry or send abroad especially to foreign countries as merchandise or commodities in the way of commerce; the opposite of import'. The Oxford Dictionary gives a similar meaning to both these words.
The word 'transit' in the Oxford Dictionary means the action or fact of passing across or through; passage or journey from one place or point to another; the passage or carriage of persons or goods from one place to another; it also means to pass across or through (something) to traverse, to cross. Even according to the ordinary meaning of the words which is relied upon by the respondent, goods which are in transit or are being transported can hardly be called goods 'imported into or exported from' because they are neither being exported nor imported but are merely goods carried across a particular stretch of territory or across a particular area with the object of being transported to their ultimate destination which in the instant case was Nagpur.
The learned Judge proceeded to state further as follows:
By giving to the words 'imported into or exported from' their derivative meaning without any reference to the ordinary connotation of these words as used in the commercial sense, the decided cases in India have ascribed too general a meaning to these words which it appears from the setting, context and history of the clause was not intended. The effect of the construction of 'import' or 'export' in the manner insisted upon by the respondent would make railborne goods passing through a railway station within the limits of a municipality liable to the imposition of tax on their arrival at the railway station or departure therefrom or both which would not only lead to inconvenience but confusion, and would also result in inordinate delays and unbearable burden on trade both inter. State and intra-State. It is hardly likely that that was the intention of the Legislature. Such an interpretation would lead to absurdity which has, according to the rules of interpretation, to be avoided....
Similarly the word 'export' has reference to taking out of goods which had become part and parcel of the mass of the property of the local area and will not apply to goods in transit i.e., brought into the area for the purpose of being transported out of it. If the intention was to tax such goods then the word used should have been 're-exported' which means to export (imported goods) again; re-exportation means the exportation of imported goods.
In the result, the Supreme Court held that the terminal tax under Section 66(1)(o) of the C.P. and Berar Municipalities Act, 1922 is not leviable on goods which are in transit and are only carried across the limits of the Municipality.
13. The identical question again came up for consideration before the Supreme Court in Town Municipal Council v. Urmilla Kothari : 2SCR660 . There iron ore extracted from its mine heads in Hospet Taluka was brought over and stocked in Hubli Railyard by the Mysore Minerals Limited. M/s. Urmila Kothari the respondent before the Supreme Court used to lift the iron ore in trucks from Hubli Railyard and carry to Karwar and Belekeri harbours. The trucks carrying the iron ore have to pass in the course of transit the municipal town of Kalghatagi in the State of Karnataka. Under Section 124 of the Karnataka Municipalities Act, 1964 any article or animal brought into the municipal limits for the purpose of immediate exportation may at the option of the importer not be subjected to levy of octroi if such article or animal be conveyed direct from the place of import to the place of export by such routes, within such time, and under such supervision as the municipal council may by resolution determine. Rule 26 made under the Act provides that in case the person bringing the goods wishes to transport the goods at once beyond the limits of the municipality he shall do so only after obtaining a transport permit in Form IV, on payment of a fee of rupees two for each lorry and rupee one in other cases in the case of a city municipal council and rupee one for each lorry and fifty paise in other cases in the case of a town municipal council. Acting on these provisions the Kalghatgi Municipal Council on the basis of the resolution passed by it and approved by the State Government levied a fee of Re. 1 per truck of M/s. Urmilla Kothari under Section 124 of the Act read with Rule 26 of the rules. As already stated, the trucks were being used to carry iron ore from Hubli Railyard to Karwar and Belekeri harbours. It is in this context the learned Judges of the Supreme Court happened to consider the implication of the words 'import into and export from' the municipal limits of any article or animal. Jaswant Singh, J., enunciated the law thus:
The opening words of Section 124 of the Act viz., 'and article or animal brought into the municipal limits for the purpose of immediate exportation on the construction of which the upshot of the case depends are very important. They imply processes of 'importing into' and 'exporting from' the municipal limits of goods or animals and are indicative of an element of repose and rest of the goods within the municipal limits. As rightly held by the Division Bench of the High Court, the expression 'brought into' and 'immediate exportation' do not comprehend within their sweep the continuous process of transit of goods, by vehicles which merely use the State highways passing through the areas which lie within the municipal limits. In the instant case, the iron ore is carried in the trucks of the respondent which merely pass through the areas which lie within the municipal limits and is not unloaded and reloaded at any place within the municipal limit. As such, the important element of repose and rest which the words 'brought into the municipal limits for the purpose of immediate exportation' imply is absent in the instant case,
After referring to Empress Mills v. Municipal Committee, Wardha : 1SCR1102 the learned Judge observed:
The enunciation of law in the above case fully covers the present case. In the present case also, the iron ore which is in transit from Railyard at Hubli to Karwar and Belekeri harbours can hardly be characterised as goods brought into or exported from the municipal limits of Kalghatgi because they are neither imported into nor exported from any point within the municipal limits but are merely carried across a particular stretch of territory or across a particular area with the object of being transported to its ultimate destination.
14. The learned Judge finally observed that the continuity or continuous process of the carriage of iron ore is not in any way in fact broken within the municipal limits of Kalghatgi and that the respondent Urmilla Kothari could not be said either to bring in or export the iron ore as contemplated by Section 124 of the Act read with Rule 26 of the Rules and as such was not liable to pay the octroi or what was styled as 'supervision fee'. The learned Judge added that a contrary interpretation would make rail borne goods passing through the railway stations within the limits of the municipality liable to the imposition of the fee on their arrival at the railway stations and departure therefrom which would not be the intention of the Legislature.
15. The above decisions are clearly applicable to the facts of the case in the appeals before us. The learned Advocate-General submits that the two Supreme Court decisions above referred to are distinguishable in the sense that they deal with taxing statutes which called for a stricter interpretation of the words 'import into and export from', while the Act with which we are concerned is a regulatory one which by virtue of the objects set out in the preamble calls for a broader interpretation of these words. We are unable to agree. The very purpose of the Act as is evident from Section 3 is to maintain the reputation of cotton grown in any area by prohibiting the import of cotton or of any specified kind of cotton into the area by rail, road, river or sea. Thus, a restriction is sought to be imposed on the import of cotton into the prohibited area. We are therefore of the opinion that the meaning given to the word 'import' by the Supreme Court in the decisions referred to above applies to the present case. In the circumstances we agree with the learned Counsel for the appellants and hold that the appellants cannot be said to import the cotton bales into the protected area as difined in the Act when they are only in the course of transit from the place of manufacture outside Tamil Nadu into the various factories in Kerala. In this view, we hold that the appellants are not bound to take out licences in the Form 'GG' as required by the District Agricultural Officer (Certification and Enforcement), Tiruppur. The amended Rule 6(1) in so far as it states that a licence should be obtained in respect of cotton 'passing through the protected area to unprotected area' is beyond the powers conferred on the rule making authorities under Section 7(1) of the Act in so far as it compels a person to take out a licence in respect of cotton 'passing through the protected' area 'to any unprotected area.' The appellants are not bound to take out a licence so long as the cotton bales are only in the course of transit from outside the State of Tamil Nadu through the protected area in Tamil Nadu to their respective destinations in Kerala State. We however make it clear that it is necessary for the appellant to inform the respondents in writing before the transport of the cotton bales through the protected area in Tamil Nadu that the bales are not intended for import into any of the protected area within the State of Tamil Nadu, but are only meant to pass through the protected area in the course of transit from the place of consignment outside Tamil Nadu to their respective destinations in the State of Kerala, We accordingly set aside the orders of the learned single Judge and allow the appeals. In the result, we direct that the respondents be restrained from insisting on the appellants to take out licences in respect of cotton bales which pass through the protected area in the State of Tamil Nadu in the course of their transit from outside the State to their respective destinations in the State of Kerala. There will be no order as to costs.