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Ramrichpal Agarwalla and ors. Vs. the State of West Bengal - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtKolkata High Court
Decided On
Case NumberMatter Nos. 154 to 162 of 1957
Judge
Reported inAIR1958Cal257,62CWN561
ActsEssential Commodities Act, 1955 - Section 3, 3(2) and 3(3A); ;Constitution of India - Articles 19(1), 19(5), 19(6), 31(2A) and 226
AppellantRamrichpal Agarwalla and ors.
RespondentThe State of West Bengal
Appellant AdvocateKar, Adv.
Respondent AdvocateAdv. General
Cases Referred and State of Rajasthan v. Nathmal.
Excerpt:
- .....x x' 5. under section 5 of the act, the central government may delegate its powers inter alia to a state government.6. by s. r. o. 1925 dated 7-6-1957, published in the gazette of india, the central government has delegated its powers conferred by section 3(2)(f), inter alia to the government of west bengal. both the orders, exhibits 'a' to the petition are orders passed by the government of west bengal, pursuant to delegated power. there is an order, s. r. o. 1917 dated 6-6-1957, by which the central government, in exercise of the powers conferred by sub-section (3a) of section 3 of the act, has directed that in the state of west bengal (amongst other places) the price at which rice and paddy shall be sold in compliance with an order made with reference to section 3(2)(f), shall be.....
Judgment:
ORDER

Sinha, J.

1. The same point or law is involved in this Matter (No. 154 of 1957), and Matters Nos. 2 to 9, being the next eight cases in the list. There has been only one set of arguments and all the Matters will abide by the result of this judgment.

2. The petitioner carries on business as manufacturer of, and dealer in, rice and paddy. The petitioner has a rice mill at Basantlal Saha Road, in Tollygunj, a suburb of Calcutta. On or about 28-8-1957, the petitioner received two orders, signed by the respondent No. 2, copies whereof are annexed to the petition and marked as Exhibit 'A'. We are concerned in this application with Exhibit A at page 11 the relevant part whereof is as follows:

'In exercise of the powers conferred on the Government of West Bengal under Clause (f) of Sub-section (2) of Section 3 of the Essential Commodities Act. 1955 (X of 1955), read with Clause (b) of Section 5 of the said Act and Order No. SRO 1925 of the Government of India dated 7-6-1957, the Governor is pleased to make this order requiring you .................... to sell and deliver immediately to the Director of Food or Sri Arunodaya Chowdhury C. I., authorised in this behalf the entire stocks of rice .............. held by you this day the 28-8-1957, as it is necessary to maintain supplies of rice to modified Rationing Shops in Calcutta for distribution to the public at fair prices, and the Governor is pleased further to direct that the price of the stock of rice so sold and delivered by you will be paid to you in due course in accordance with the provisions of Sub-section (3A) of Section 3 of the aforesaid Act.'

3. Thereafter on 30-8-1957, the petitioner received a letter from respondent No. 3, the Director of Food, intimating to the petitioner that the stock of rice 'which has been purchased by the State of West Bengal', would be lifted from 31-8-1957, till completion of delivery. This rule was obtained by the petitioner on 2-9-1957, directing the respondents to show cause why a writ in the nature of Mandamus should not issue directing them to forbear from giving effect to the said order, and for other reliefs. All parties were restrained by an interim injunction from removing any goods from the Mill premises.

4. The Essential Commodities Act 1955 (Act X of 1955) is a Central Act, which came into operation On 1-4-1955. Trade and Commerce within the State is a State subject (List II, item 26 of the 7th Schedule) but it must be read with the provisions of item 33 of the Concurrent List, which includes 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, as also food stuffs. This Act is a successor to the Essential Supplies Act, and the contents are very much the same. The preamble states that it is '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.' In order to appreciate the argument made in this case, it will be necessary to consider several provisions of the Essential Commodities Act (hereinafter referred to as the 'Act'), which are set out hero under:

'3. 'powers to control production, supply distribution, etc., of essential commodities'-- (1) If the Central Government is of the opinion that it is necessary or expedient so to do 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.

(2) Without prejudice to the generality of the powers conferred by Sub-section (1), an order made thereunder may provide-

xxxxxxxxx (f) 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;

xxxxxxxxx (3) Where any person sells any essential commodity in compliance with an order made with reference to Clause (f) Sub-section (2) there shall be paid to him the price therefor as hereinafter provided-

(a) where the price can, consistently with the controlled price, if any, fixed under this section, be agreed upon, the agreed price;

(b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;

(c) where neither Clause (a) nor Clause (b) applies, the price calculated at the market rate, prevailing in the locality at the date of sale.

(3A) (i) If the Central Government is of opinion that it is necessary so to do for controlling the rise in prices, or preventing the hoarding, of any foodstuff in any locality, it may, by notification in the official Gazette direct that notwithstanding anything contained in Sub-section (3) the price at which foodstuff shall be sold in the locality in compliance with an order made with reference to Clause (f) of Sub-section (2) shall be regulated in accordance with the provisions of this sub-section.

(ii) Any notification issued under this subsection shall remain in force for such period not exceeding three months as may be specified in the notification.

(iii) Where, after the issue of a notification under this sub-section, any person sells foodstuffs of the kind specified therein and in the locality so specified, in compliance with an order made with reference to Clause (f) of Sub-section (2) there shall be paid to the seller as the price therefor-

(a) where the price can, consistently with the controlled price of the foodstuff, if any, fixed under this section, be agreed upon, the agreed price;

(b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;

(c) where neither Clause (a) nor Clause (b) applies, the price calculated with reference to the average market rate prevailing in the locality during the period of three months immediately preceding the date of the notification.

(iv) xx x x'

5. Under Section 5 of the Act, the Central Government may delegate its powers inter alia to a State Government.

6. By S. R. O. 1925 dated 7-6-1957, published in the Gazette of India, the Central Government has delegated its powers conferred by Section 3(2)(f), inter alia to the Government of West Bengal. Both the orders, Exhibits 'A' to the petition are orders passed by the Government of West Bengal, pursuant to delegated power. There is an order, S. R. O. 1917 dated 6-6-1957, by which the Central Government, in exercise of the powers conferred by Sub-section (3A) of Section 3 of the Act, has directed that in the State of West Bengal (amongst other places) the price at which rice and paddy shall be sold in compliance with an order made with reference to Section 3(2)(f), shall be regulated in accordance with the provision of the said Sub-section (3A). While this application was pending, this order was due to expire and a fresh notification was issued on 6-9-1957, extending it for another three months.

7. Mr. Kar appearing on behalf of the petitioner, first of all attacked the Act, and then alternatively the order made under the Act (Exhibit 'A' to the petition page 11). In the petition, the Act and S. R. O. 1925 dated 7-6-1957 are challenged as ultra vires the Constitution of India, but no particulars have been given. In fact, the real attack has been upon the order dated 28-8-1957. As will appear from the copy of the order, set out above, the petitioner has been directed to sell and deliver his stock of rice to the 'Director of Food or Arunodaya Choudhury C. I., authorised on this behalf.' It is nobody's case that either the Director of Food or the C. I. are the real purchasers. In fact, by his letter dated 30-8-1957, the Director of Food has plainly indicated that the purchaser is the State of West Bengal. Under Section 3(2)(f) of the Act, the Central Government (or its delegate) may require a person engaged in the production etc., of any essential commodity to sell his stock 'to such person or class of persons' as is specified in the order. Now that it appears that the State is the purchaser, the Question is whether it is a 'person or class of persons' to which a compulsory sale can be directed. A 'person' has been defined by Section 3(42) of the General Clauses Act to include any company or association or body of individuals whether incorporated or not, but this definition is not very helpful. In Motilal v. Uttar Pradesh Government, : AIR1951All257 , the word 'person' in Article 14 of the Constitution was held not to include the State when carrying on its ordinary governmental functions. The same view was taken by a divisional bench judgment of the Punjab High Court: The Kapur Textile Finishing Mills v. Province of East Punjab, , where the word 'Person' in Section 43 of the East Punjab Public Safety Act was held not to include the 'Crown' or the 'State'. The point came for determination in a recent divisional bench judgment of the Punjab High Court: Shiv parshad v. Punjab State, (C).

'The natural and obvious meaning of the expression 'Person' is a living human being, a man, woman or child, an individual of the human race. As used in law the word includes natural persons and artificial persons like Corporations and Joint Stock Companies, but it does not include a State or Government, for although a State is in the language of Vattel 'a moral person having an understanding and a will, capable of possessing and acquiring rights and of directing and fulfilling obligations', the State in its political organisation is entirely different and distinct from the inhabitants who may happen to reside there.

Similarly a Government cannot fall within the ambit of the expression 'person' for although in common parlance 'Government' is synonymous with 'State' in actual fact the State is a country or assemblage of people while the Government is the political agency through which it acts. It is true that the State is capable of suing or being sued but that is so not because the State is a person, but because Article 300 of the Constitution has made an express provision in that behalf.'

8. The learned Advocate General argued that the impugned order literally complies with the provisions of law. According to him, the persons named in the order are undoubtedly 'Persons' as understood in law, and the Court cannot go behind the order. I am unable to agree. The Government is the donee of a power under the Act which constituted a serious inroad into the fundamental rights guaranteed to a citizen, under Article 19(1)(f) and (g), of the Constitution. It must, therefore, be continuously prepared to show that it is acting within the four corners of the law. It could not have acquired any right by taking recourse to a subterfuge. The learned Advocate General does not deny that the State is the purchaser, but he says that by naming its agent in the order, the Statute is satisfied, and the seller is not prejudiced, because, under Section 226 of the Contract Act, the State will be compelled to pay the price of goods taken delivery of by its agents.' This argument is of no substance. If the Director of Food or the C.I. is considered as the real purchaser then of course the Statute is satisfied. But we cannot have a purchaser which is either unreal or fictitious or who merely stays behind the scene. A citizen cannot be compelled to sell his goods to any such purchaser. There must be a real purchaser, who must be mentioned in the order and must be a 'Person or class of persons' as understood in law.

9. My attention has been drawn to the fact that pending the completion of the arguments in this case, a Bill has been introduced in the Lok Sabha and has been passed. By this amendment the Act is being amended to this extent that Government has been given the power to order a sale to persons or classes of persons including Government itself, or any of its officers. Such an order for sale would then be a valid compliance with the provisions of Section 3(2)(f) of the Act. I am further informed that this provision is intended to be made retrospective. Unfortunately however, upto the time of delivering Judgment, the news has not arrived that this amendment has passed through the Rajya Sabha or that it has obtained the assent of the President. The result is that the learned Advocate General is not in a position to state that the amendment has yet become law. I am, therefore, compelled to decide these cases upon the law as it stands at the present moment. As I have already stated above, in my view, the impugned order is not in accordance with the law as it stands at present, because the Government has no power under the law as it now stands, to order a stockholder under Section 3(2)(f) of the Act, to sell to Government, or its officers acting as agents of the Government.

10. In this connection, Mr. Kar has taken two other points. He says that in any event the 'Director of Food' is not a person but an office. An office, according to him is an intangible thing and cannot be called a 'Person' to whom a sale is possible. I am unable to accept this argument. When a direction is made to sell to the 'Director of Food,' undoubtedly what is meant is that the sale should be made to the person holding the office for the time being. The next point is that the order directs a sale to be made to two persons in the alternative. Mr. Kar argues that an order could be made under Section 3(2)(f) to sell to a 'person' and not to two persons in the alternative. Supposing they both appear and ask for delivery then to whom will delivery be given? I think this Is taking too narrow a view of the matter. The goods or commodities which are the subject-matter of the order can be sold and delivered only once, and therefore if the seller delivers it to anyone of the two persons named, he has carried out the order. Since they are both officers of Government, it is extremely unlikely that such a struggle should take place between the persons designated in the order. In fact, no such difficulty has in fact arisen.

11. Mr. Kar next attacks the orders in the following manner. He says that the order dated 28-8-1957 (Ext. A page 11) purports to be an order, by the Governor under Section 3(2) as well as Section 3(3A), but there has been no delegation to the State of West Bengal of powers under Section 3(3A). In this respect the order is somewhat misleading. Although it states that 'the Governor is pleased further to direct that the price of the stock of rice so sold ............... will be paid to you ................. in accordance with the provisions of Sub-section (3A) of Section 3 ...........' it is not that the Governor is acting as a delegate, but it is a pure statement of fact that is to say an information conveyed to the seller, and a direction to his own agents to make payment in a particular manner. Section 3(3A) comes into operation by virtue of S. R. O. 1917 dated 6-6-1957, as subsequently extended, and not by the order of the Governor of West Bengal.

12. Next Mr. Kar attacks the Act itself. He argues that the provisions of Section 3(1) of the Act shows that the pre-conditions for the exercise of power under it are: 'for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices'. Since Sub-clause (f) of Sub-section (2) of Section 3, is no more than an illustration of the general powers conferred by Sub-section (1), the pre-conditions are the same. He points out however that when we come to Section 3(3A) which also relates to Section 3(2)(f), the pre-conditions are 'for controlling the rise in prices, or preventing the boarding of any foodstuffs in any locality'. He argues that these pre-conditions are radically different to the pre-conditions laid down in Section 3(1) of the Act and being contradictory to it, makes the whole Section 3(3A) void.

13. I can well understand the anxiety of Mr. Kar to get rid of Section 3(3A). because under that provision his client will be paid at the average of the last three months market price, whereas under Section 3(3) his client would have received the market price at the date of the sale, which I am informed is immensely higher. I regret however that I find no substance in the argument. The pre-conditions in Section 3(3A) are not different from the pre-conditions in Section 3(1). Undue rise in prices and hoarding, both affect the maintenance and supply of essential commodities and call for action to ensure their increase in supply, their equitable distribution and availability at fair prices. In other words, they are closely related and not divorced from one another.

14. The next point made by Mr. Kar is one which has not been easy to follow. He argues that if the order for sale is to a third person, then it is neither a compulsory acquisition, nor a requisition of property. He draws my attention to Article 31(2A) which lays down that where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a Corporation owned by the State or to a Corporation controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisition of property, notwithstanding that it deprives any person of his property. Now, if the sale is to an individual and not to the State, what Mr. Kar argues is perfectly correct. In that case, Article 31 does not apply at all, and the question would be whether it can be said to be a reasonable restriction under Article 19(5) or (6). In such a case, the question of compensation would be justiciable and Section 3(3A) would not be the last word. In this case however, we know now that the purchaser is not an individual but the State, and the sale is certainly in the nature of acquisition or requisition of property. Since the law provides for sale, It implies delivery of possession. The provisions of Article 31(2A) are accordingly satisfied.

15. Lastly Mr. Kar has argued that the Act is bad because Government can acquire the commodities at a price calculated according to the provisions of Section 3(3A) and sell through the fair price shops at a price the ceiling price of which has not been fixed, thereby making a profit. He cites the Supreme Court decisions Charanjit Lal Chowdhury v. Union of India, : [1950]1SCR869 and State of Rajasthan v. Nathmal. : [1954]1SCR982 . In the latter case. Government was empowered to order sale at a price arbitrarily fixed. Thus, while the stockholder could only sell or purchase in the market at the controlled price he would be compelled to sell under the order at an arbitrarily fixed price which might be much less. In the present case however the price to be paid is connected with the market price and is not a price arbitrarily fixed.

16. The result is that so far as the Act is concerned, it has not been successfully challenged. But so far as the impugned order dated 28-8-1957 is concerned, for reasons stated above, I am of the opinion that the order is not in compliance with the existing law and, therefore, the petitioner cannot be compelled to carry out the directions contained therein. Had the amendment come into operation the result would have been otherwise, but, as Mr. Kar has strenuously contended and I think correctly that I cannot, at the moment take any judical notice of it because it has not vet become the law of the land. The result is that this rule must be made absolute in part that is to say there will be a writ in the nature of mandamus directing the respondents to forbear from giving any further effect to the impugned order which is dated 28-8-1957, Ext. A. p. 11, whereby the petitioner has been directed to sell and deliver his existing stock of rice to the Director of Food or Sri Arunodava Chowdhury C. I. This will however not prevent the respondents in future from acting in accordance with the law. In this matter I had made a certain interim order. That will continue for the space of three weeks from date, in order to enable the respondents to appeal from this decision. Any further stay must be obtained from the Court of Appeal. There will be no order as to costs.

17. With regard to the applications Nos. 2 to 9, the facts and the law in these cases are the some as in Matter No. 154/57, save and except that the persons to whom the stock of rice has been directed to be delivered are various -- In some cases it is the Director of Food, and in other cases it is the Chief Sampler etc. They will all be governed by the decision in the Matter No 154/57 in accordance with the judgment delivered to day, similar writ in the nature of mandamus will be issued therein, including the continuance of the interim order. Nothing herein will however prevent the respondents from taking any steps in accordance with law.

18. Let such of the rules as have not yet been drawn up be drawn up immediately.

19. Let this order be drawn up expeditiously.


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