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Prabhudayal Agarwalla and ors. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberCivil Rule Nos. 6678(W), 6719-23(W) and 6729-31(W) of 1974
Judge
Reported inAIR1975Cal235,(1975)1CompLJ122(Cal)
ActsRice Milling Industry (Regulation) (West Bengal Second Amendment) Act, 1974; ;Rice Milling Industry (Regulation) (Amendment) Act, 1958 - Sections 5, 6, 6A, 7 and 12
AppellantPrabhudayal Agarwalla and ors.
RespondentUnion of India (Uoi) and ors.
Appellant AdvocateDebi Pal, ;Amar Nath Dhole and ;Sobhendu Sekhar Roy, Advs. in C.R. 6678 (W) of 1974, ;N.C. Chakraborty, ;Jamini Banerji, ;Tapas Kr. Mukherjee, ;Samir Mukherjee and ;Nirmal Manna, Advs. in C.R. 6719-23
Respondent AdvocateGouri Nath Mitter, Adv. General, ;G.N. Roy, ;S.S. Pal, ;Paritosh Mookherji and ;Dilip Kr. Bose, Advs.
DispositionPetition allowed
Cases ReferredR. M. D. C. v. Union of India
Excerpt:
- .....paddy at different places in west bengal. all of them are holders of licence granted under the rice-milling industry (regulation) act, 1958, and which is valid upto march 31, 1975. on 31st october, 1974, the government of west bengal in exercise of powers conferred by clause (1) of article 213 of the constitution, promulgated an ordinance viz. the rice milling industry (regulation) (west bengal second amendment) ordinance, 1974, whereby the rice milling industry (regulation) act, 1958, in its application to west bengal has been amended. by section 3 of the ordinance a new section 6-a has been inserted in the rice milling industry (regulation) act, 1958. the said ordinance was published in the calcutta gazette extraordinary issue dated 31st october, 1974. the new section 6-a (3) (a).....
Judgment:
ORDER

Amiya Kumar Mookherji, J.

1. Petitioners are owners of Husking Machines fixed with different types of hullers and run their business of husking paddy at different places in West Bengal. All of them are holders of licence granted under the Rice-Milling Industry (Regulation) Act, 1958, and which is valid upto March 31, 1975. On 31st October, 1974, the Government of West Bengal in exercise of powers conferred by Clause (1) of Article 213 of the Constitution, promulgated an Ordinance viz. The Rice Milling Industry (Regulation) (West Bengal Second Amendment) Ordinance, 1974, whereby the Rice Milling Industry (Regulation) Act, 1958, in its application to West Bengal has been amended. By Section 3 of the Ordinance a new Section 6-A has been inserted in the Rice Milling Industry (Regulation) Act, 1958. The said Ordinance was published in the Calcutta Gazette extraordinary issue dated 31st October, 1974. The new Section 6-A (3) (a) provides that the licencee shall recover from every customer not less than 60% of the charges for milling rice in kind, i.e. in rice and Section 6-A(3)(b) provides that the licencee shall deliver to the State Government 5 tonnes of rice of fair average quality within the 30th day of April every year at such price as may be fixed by the State Government under any law for the time being in force. The District Controller of Food and Supplies Malda, issued on 18-11-1974 a general cyclostyle order whereby he directed the owner of the existing husking mill whether he holds a licence under the Rice Milling Industry (Regulation) Act, 1958 or not shall make an application in the prescribed pro forma (Form A) to the Licensing Officer by 29-11-1974 for the grant of a fresh licence for carrying on rice milling operation failing which current licence granted to the owners of husking mills under the principal Act shall lapse. It is stated by the petitioners that the Act 21 of 1958 was enacted to regulate the rice milling Industry in the interest of the general public and it was declared under Section 2 of the said Act that it was expedient in the public interest that the Union should take under its control the Rice Milling Industry. The said declaration having been made by the Union, Parliament has the exclusive power to make laws in respect of rice milling under entry No. 52 of Schedule VII, List No. 1 to the Constitution and the State Legislature under entry No. 24 of Schedule VII, List No. II does not retain the competence and power to legislate upon the rice milling Industry so long as the said declaration is effective and is in force. In any event, the power of the State Legislature to legislate upon the rice milling industry under entry No. 24 of List 2 of Schedule VII is subject to entry No. 52 of List 1 of Schedule VII to the Constitution. The licence granted to the petitioners under Section 6 of the Central Act cannot be declared to have lapsed and to be invalid unless an application is made for a fresh licence within the time specified under Sub-section (1) of Section 6-A of the said Act as introduced by Section 3 of the said Ordinance. The licence granted to the petitioners under Section 6 of the said Act would be revoked or suspended or amended only in accordance with the provision of Section 7 of the said Act and by the appropriate authority specified under the said Act. The petitioners challenge the said ordinance on the ground that it is beyond the legislative competence of the State Legislature to enact such a legislation and is, therefore, illegal, invalid, inoperative and ultra vires the Constitution in India. The petitioners being aggrieved by the impugned ordinance moved this Court under Article 226 of the Constitution and obtained these Rules.

2. In affidavit-in-opposition filed on behalf of the State and affirmed by Kashinath Mukhopadhyay, the District Controller of Food and Supplies, Malda, it is stated that the major impediment to the State Government's rice procurement programme in the recent years has been the operation of a large number of hullers (Paddy Husking Mills) both licensed and unlicensed. The owners of these hullers are reported to be clandestinely carrying on in the name of customers milling, a regular rice trade and helping the producers to dispose of the stock in the form of rice. Large quantities of paddy and rice, which would otherwise become available to the State Government procurement agents are thus sold in the open market at high rates. It has, therefore, become urgently necessary that the hullers are brought under the discipline of levy. Theoretically the owner of a husking mill mills paddy on customer's account only and has no right to part with any portion of the stock he mills. Therefore, a levy is imposed on him, he has to be enabled to acquire some stock. This can be done by providing for his milling charges to be realised in kind i.e. in rice. In view of serious practical difficulties in regular collecton, in small lots of rice realised by the husking mills from the customers as milling charges, it was considered expedient and desirable to impose levy at a flat rate per unit per annum to be delivered within a specified date every year. After considering all aspects of the matter, the State Govt. decided immedia-rely to enforce the aforesaid scheme of imposition of levy on the husking mills and the Rice Milling Industry (Regulation) Act, 1958, was amended for its application to the State of West Bengal by promulgation of an Ordinance on 31st August, 1974, being the Rice Milling Inustries (Regulation) (West Bengal Second Amendment) Ordinance 1974.

3. After the promulgation of the Rice Milling Industry (Regulation) (West Bengal Second Amendment) Ordinance, 1974, the legislature of the Stare of West Bengal bas passed a Bin modifying some of the provi-sions of the Ordinance and the said Bill is now awaiting assent of the President of India.

4. During the course of the hearing of these Rules, Mr Roy, Junior Government Advocate appearing on behalf of the State informed the Court that the Rice Milling Industry (Regulation) (West Bengal Second Amendment) Act, 1974 (West Bengal Act LIII of 1974) which was previously parsed by the West Bengal Legislature, has obtained the assent of the President on the 12th Decem-ber, 1974. Thereafter, the petitioners filed supplementary affidavits praying for amendment of the petitions by substituting the Rice Milling Industry (Regulation) (West Bengal Second Amendment) Act, 1974 in place of the impugned Ordinance By consent of the parties the amendment was allowed.

5. It is contended by the learned Counsel for the petitioners that the State of West Bengal has got no legislative competence for insertion of new Section 6-A in the Act 21 of 1958 as the said Act was passed by Parliament under Entry No. 52 in List I of Sch. VII. The said Act was enacted to regulate the Rice Milling Industry in the interests of the general public and it was declared under Section (sic) of the said Act that it was expedient in the public interest that the Union should take under its control the Rice Milling Industry. The said declaration hav-ing been made by the Union. Parliament has the exclusive powers to make laws in respect of the Rice Milling Industry under Entry No. 52 in List 1 and the State Legislature under Entry No. 24 in list 2 does not retain the competence and the power to legislate upon the Rice Milling Industry so long as the said declaration made by Parliament is effective and in force. In any event the power of the State Legislature to legislate upon the Rice Milling Industry under Entry No. 24 13 List I is subject to Entry No. 52 in List 1. It is further contended that as the impugned Act has encroached upon the subject-matter relating to Entry No. 52 in Sch. 1, it is ultra vires the State Legislature.

6. The Rice Milling Industry (Regulation) Act, 1958 (Act 21 of 1958) was passed to regulate the rice milling industry in the interest of the general public, and came into operation from April 22, 1959. Under Sec-tion 2 of the said Act there is a statutory declaration that it was expedient in ihe public interest that the Union should take under its control the rice milling industry. The said Act prohibits establishment of a new rice mill and carrying on rice milling operation without a licence or permit. Section 5 deals with grant of permits for establishment of a new rice mill and defunct rice mills: provisions for granting licence are provided in Section 6. Section 7 lays down procedure for revocation, suspension and amendment of licences. Any person aggrieved by a decision of the Licensing Officer under Section 6 or 7, may within 30 days prefer an appeal tinder Section 12. Section 19 deals with the delegation of powers; powers to make rules are provided in Section 22 and in exercise of such powers the Rice Milling Industry (Regulation) Licensing Rules, 1959, have been framed. It is not disputed that the jurisdic-tion of the State Legislature under Entry 24 in list 2 viz. 'Industries' is subject to the provisions of Entry No, 52 of list 1. When Parliament declared that it was expedient in the public interest that the Union should take under its control the rice milling industry and if the said declaration covered the field occupied by the impugned Act, then it would be ultra vires because the State Legislature has no legislative competence to pass the law. The limitation imposed by latter part of Entry 24 is a limitation of legislative competence of the State Legislature (vide Hinger Rampur Coal Co. v. State of Orissa, : [1961]2SCR537 ).

7. Learned Advocate General appear-ing on behalf of the State contends that the impugned Act is intra vires the State Legislature as its subject-matter is related to Entry 33 in list 3 and its validity is not impaired or affected by Entry 52 in List 1. He summarised his arguments as follows:--

8. The field covered by the declaration made under Section 2 of the Central Act viz. Act 21 of 1958, is not the same as covered by the impugned Act. The pith and substance of the Act is in respect of Trade and Commerce in food stuffs, relating to production and distribution of the same which falls in Entry No. 33 in List 3, the concurrent list. Conversion of paddy into rice through husking mill is the production or manufacture of rice. The Act intends to control and regulate the production of rice for the purpose of making it available to the people at a fair price. The impugned Act intends to impose levy of 7 and 5 tonnes of rice being the produce of the controlled industry from the licencees out of 60 per cent. of then remuneration in kind of rice. The Central Act deals with the establishment of the rice mill and provisions have been made therein for granting permits and licence. But under the impugned Act fresh licence is granted only for the purpose of imposing levy of certain quantity of rice by the 30th April, every year from the licences. In deciding the pith and substance of a legislation, the true test is not to find out whether the Act has encroached upon or invaded any forbidden Geld, but it is the true intent of the Act which would determine its validity. If the State has legislative competence to legislate on Entry 33 in list 3, this power cannot be denied on the ground that it has some effect on an industry controlled under Entry 52 in list 1, inasmuch as effect is not the same thing as subject-matter.

9. Item 33 in list 3 of Sch. VII reads as follows:--

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) food stuffs, including edible oilseeds and oils; (c) cattle fodder including oilcakes and other concentrates; (d) raw cotton, whether ginned or unginned and cotton seed; (e) raw jute.

10. In the preamble of the amended Act it is stated 'whereas it is expedient to amend the Rice Milling Industry (Regula-tion) Act, 1958, in its application to West Bengal, for the purpose and in the manner hereinafter appearing.'

11. After Section 6 of the principal Act, a new Section 6-A has been inserted. Section 6-A (1) provides that notwithstanding anything to the contrary contained elsewhere in this Act, every owner of a husking mill, whether he holds a licence under this Act or not, shall within thirty days from the date of coming into force of the Rice Milling Industry (Regulation) (West Bengal Second Amendment) Ordinance, 1974, or in the case of an owner of a new husking mill, before he starts actual milling operation, make an application to the Licensing Officer for the grant of a fresh licence for carrying on rice milling operation in that husking mill.

12. Section 6-A (1) requires that every owner of a husking mill even if he holds a valid licence granted to him under Section 6 of the Principal Act or in the case of a new husking mill owner before it starts actual milling operation requires to apply for a licence to the Licensing Officer for the grant of a fresh licence for carrying out rice milling operation in that husking mill.

13. Section 5 (1) of the Central Act reads as follows:--

Any person or authority may make an application to the Central Government for the grant of a permit for the establishment of a new rice milt; and any owner of a defunct rice mill may make a like application for the grant of a permit for re-commencing rice milling operation in such mill.

14. Section 6 (1) reads:--Any owner of an existing rice mill or of a rice mill in respect of which a permit granted under Section 5 is effective, may make an application to the licensing officer for the grant of a licence for carrying on rice milling operation in that rice mill.

15. Sub-section (5) of Section 6-A of the impugned Act provides that licence granted to an owner of a husking mill before coming into force of the Rice Milting Industry (Re-gulation) (West Bengal Second Amendment) Ordinance, 1974, shall lapse--

(i) if the owner does not apply for a fresh licence within the time specified under Sub-section (1).

(ii) on the issue of a fresh licence by the licensing Officer under Sub-section (3), or

(iii) if a fresh licence under the provisions of this section is not granted.

16. Therefore, it follows that all licences granted under Act 21 of 1958 shall lapse, (1) if there is no application for a fresh licence, (2) when a fresh licence is issued and (3) when a fresh licence under the amend-ed Act is not granted.

17. This comparison goes to show that the impugned Act confines itself with the controlling and licensing of the Rice Milling In-dutry similar to that of the Central Act. It does not concern with the production or manufacture of rice or with the trade and commerce in, and the production, supply and distribution of food stuff.

18. In Tika Ramp v. State of U. P., : [1956]1SCR393 the Supreme Conn observed, '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 The raw materials would be goods which would be comprised in Entry 27 of List 2. The process of manufacture or production would be comprised in Entry 24, List 2 except where the industry was a controlled industry when it would fall within Entry 2, List 1 and products of the industry would also be comprised in Entry 27 of List 2 except where they were the products of the Controlled industry when they would fall within Entry 33 of List 3.

19. In A. S. Krishna v. State of Madras, : 1957CriLJ409 . The Supreme Court observed:--

'When a law is impugned on the ground that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the Legislation. To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions. If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must he held to be valid in its entirety, even though it might incidentally trench on matters which are beyond its competence. It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that process determine what portions thereof are intra vires and what are not.'

20. On application of the above prin-ciples to the instant case, it is abundantly clear that the impugned Act intends to re-gulate the rice milling operation of the Rice Milling Industry and has abrogated the pro-visions of Sections 5, 6, 7 and 12 of the Central Act. Thus it has encroached upon the same field covered by Entry 52 in list 1 -

21. 1 asked the learned Advocate General to point out which of the provisions of the impugned Act related either to the products of the controlled industry or trade and commerce in, and the production, supply and distribution of food stuffs. He candidly confessed that it was a difficult task.

22. In Sub-section (3) (a) of Section 6-A pro-visions have been made that the licencee shall recover from every customer not less than 60 per cent of the charges for milling rice, in kind i.e. in rice. It may be said that those provisions intend to impose levy on the products of the controlled industry and as such it is within the legislative competence as enumerated in Item 33 in List 3.

23. In determining whether valid parts of a statute are separable from the invalid parts thereof, if it is the intention of the legislature that is the determining factor.

24. The doctrine of severability as laid down by the Supreme Court in R. M. D. C. v. Union of India, : [1957]1SCR930 is as follows:--

(a) The test to be applied is whether the legislature would have enacted the valid part if it had known that the rest of the statute was invalid.

(b) If the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another, then the invalidity of a portion must result in the invalidity of the Act in its entirety.

(c) On the other hand, if they are so distinct and separate that after striking out what is invalid, what remains is in itself a complete code independent of the rest, then it will be upheld notwithstanding that the rest has become unenforceable.

25. Now, in the instant case the provisions of Section 6-A (3) (a) and (b) are the conditions of a licence granted under Section 6-A (1) of the impugned Act. If the said section viz. 6-A (1) falls through on account of lack of legislative competence, subsections (3) (a) and (b) of Section 6-A have got no independent existence because they all form part of a single scheme which is intended to be operated as a whole. In that case the invalidity of a part would result in the failure of the whole. Therefore, those provisions also must be held to be invalid.

26. The Rice Milling Industry is a controlled industry as declared by Parliament. The legislature of the State of West Bengal is not competent to legislate in the same field covered in Entry 52 in List 1. The true character and object of the impugned Act is not related to any of the matters enuma-rated in Entry 33 in List 3. Accordingly, I hold the Rice Milling Industry (Regulation) (West Bengal Second Amendment) Act, 1974, is ultra vires as the Legislature of the State of West Bengal has got no legislative competence to pass the said Act.

27. It is not necessary for me to deal with the other points raised by the petitioners when I have found that the impugned Act is invalid due to lack of legislative competence of the State Legislature.

28. In the result, these Rules are made absolute. Let a writ in the nature of Mandamus do issue directing the respondents to cancel the impugned Act and not to give any effect to the same. There will be no order for costs.

29. Let the operation of the order be stayed for 8 weeks as prayed for.

30. This judgment shall govern the other Rules viz. C. R. Nos. 6719-23(W)/74 and C. R. 6729-31(W)/74.

31. The interim order as modified on 3-12-1974 in C. R. No. 6678(W)/74 shall also be effective in respect of the other two Rules, C. R. 6719-23(W)/74 and C. R. 6729-31(W) of 1974.


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