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  • Secs. 3 and 5 of the Essential Commodities Act and the provisions of the Gram (Rajasthan) Price Control
  • ESSENTIAL COMMODITIES ACT
  • Sec. 3 of the Essential Commodities Act, 1955.
  • Inland Waterways) Act (Assam Act XIII of 1954)
  • Sec. 7 of the Essential Commodities Act, 1955
  • Sec. 3 of the Essential Commodities Act
  • Act, i.e the Essential Commodities Act.
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
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Acts
  • Secs. 3 and 5 of the Essential Commodities Act and the provisions of the Gram (Rajasthan) Price Control
  • ESSENTIAL COMMODITIES ACT
  • Sec. 3 of the Essential Commodities Act, 1955.
  • Inland Waterways) Act (Assam Act XIII of 1954)
  • Sec. 7 of the Essential Commodities Act, 1955
  • Sec. 3 of the Essential Commodities Act
  • Act, i.e the Essential Commodities Act.
Smart Summary

Factual and Procedural Background

The petitioners were convicted by a Magistrate under Section 7 of the Essential Commodities Act, 1955 for contravening Rule 3 of the U.P. Paddy (Restriction on Movement) Order, 1958. They appealed to the Sessions Judge, Varanasi, but their appeal was dismissed on 14 April 1961 by Sri P.S. Varma, II Temporary Civil and Sessions Judge, Varanasi. A revision application under Section 439 of the Criminal Procedure Code was thereafter filed in the High Court. The matter was initially considered by Broome, J., who observed that the question might require further consideration and directed that the record be placed before the Chief Justice for possible listing before a larger Bench. The present opinion follows that direction.

The factual circumstances disclosed in the opinion include that about 31 maunds of paddy were involved. The petitioners were sentenced to rigorous imprisonment for one year each and to pay a fine of Rs. 100 each (in default, rigorous imprisonment for two months). They had served eight days of imprisonment at the time of this ruling. An order of forfeiture of the paddy had also been made earlier; the High Court considered whether maintaining that forfeiture was necessary.

Legal Issues Presented

  1. Whether Clause 3 of the U.P. Paddy (Restriction on Movement) Order, 1958 is ultra vires the Constitution in view of Articles 301 to 304.
  2. Whether the Essential Commodities Act, 1955 and orders made under Section 3 of that Act are protected by Parliament's power under Article 302, thereby making Clause 3 intra vires.
  3. Note: A ground invoking Article 14 had earlier been taken in the revision but was expressly withdrawn and is therefore not pressed before the Court.

Arguments of the Parties

Petitioners' Arguments (as presented)

  • Counsel for the petitioners, Mr. C.S. Saran, confined his submissions to the vires of Clause 3 of the Order and contended that the clause is hit by Articles 301 to 304 of the Constitution (i.e., that it impermissibly restricts freedom of trade, commerce and intercourse).
  • One of the grounds earlier pleaded — that Clause 3 offended Article 14 — was withdrawn and no argument was advanced on that basis.

State's / Respondent's Position (as presented)

  • The State relied upon the earlier decision State of U.P. v. Ram Charran (1962 A.L.J. 13) in which a Division Bench of the Court held provisions of the U.P. Wheat (Restriction on Movement) Order, 1949 to be intra vires; the State relied on that authority to support the validity of the impugned Order.
  • Implicit in the State's position (and in the Court's consideration) was that the impugned Order was framed under Section 3 of the Essential Commodities Act, 1955 — a central enactment passed by Parliament which is within Parliament's competence under Article 302.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
State of U.P. v. Ram Charran, 1962 A.L.J. 13 Held provisions of the U.P. Wheat (Restriction on Movement) Order, 1949 to be intra vires. The State relied on this decision; Broome, J. suggested the matter required further consideration and the present Court considered the instant case to be distinguishable to some extent from that decision.
Thangmal Kunju Musaliar v. Venkatachalam, A.I.R. 1956 S.C. 246 Preamble is a key to interpretation of an Act and may be used to understand legislative aims and objects. The Court invoked the principle that the Preamble can be used to determine the scope and object of the Essential Commodities Act.
Asawami Kumar v. Arbinda Bose, A.I.R. 1952 S.C. 369 Use of the Preamble by the Supreme Court to decide scope, aim and object of legislation. Supported the Court's use of the Essential Commodities Act's Preamble to determine the Act's purpose in controlling supplies and distribution.
D.S and G. Mills v. Union of India, A.I.R. 1959 S.C. 626 Explains that the Preamble shows the Act was passed in public interest to control production, supply and distribution; Sec. 3 empowers the Central Government to pass orders to maintain/increase supplies or secure equitable distribution and fair prices. Used to show the Essential Commodities Act falls within Article 302 and that orders under Section 3 are intended to carry out the Act's purposes.
Attiabari Tea Co. Ltd. v. State of Assam, A.I.R. 1962 S.C. 232 Addresses limits of freedom of trade (Article 301) and competence of State legislation; majority and minority judgments emphasize that freedom is not absolute. The Court examined both judgments and concluded that nothing in them supported declaring Clause 3 ultra vires; quoted the observation that Article 301's freedom is not absolute.
Khetsidas Girdhari Lal v. Pratapmull Rameshwar, A.I.R. 1946 Cal. 197 Principle that rules/regulations framed under a statute may be treated as part of the statute. Supported the Court's view that Orders under Section 3 are akin to delegated legislation and form part of the Act for purpose of constitutional protection.
Saligram Singh v. Emp., A.I.R. 1945 Patna 69 Similar principle regarding delegated legislation being part of the statutory scheme. Relied on to reinforce that the impugned Order is not independent legislation but part of the statutory framework.
Naurang Rai Chirangi Lal v. State of Bihar, A.I.R. 1959 Pat. 268 Validated the Bihar Milled Rice Procurement (Levy) Order, 1958 against challenge under Article 19(1)(f). Noted as an example where a similar order under the Essential Commodities Act was held intra vires by a High Court.
Thanmal Surana v. Union of India, A.I.R. 1959 Rajas. 206 Upheld Sections 3 and 5 of the Essential Commodities Act and provisions of the Gram (Rajasthan) Price Control Order, 1958 against challenges including on grounds of delegation. Referred as an instance where challenges to orders under the Act failed; no attack founded on Articles 301–304 was pressed in that case.
Harishanker Bagla v. M.P. State, A.I.R. 195 S.C. 465 Challenge to validity of a movement-control order (Cotton Textile (Control of Movement) Order, 1948), where attack was confined to alleged infringement of Article 19(1). Noted to show that prior attacks on movement-control orders under the Act have generally not been pursued on Articles 301–304 grounds; supports view that the present attack is misconceived.

Court's Reasoning and Analysis

The Court framed the legal issue as whether Clause 3 of the U.P. Paddy (Restriction on Movement) Order, 1958 is ultra vires in the light of Articles 301–304 of the Constitution. The Court proceeded by textual and structural analysis of the Constitution and the statute:

  1. Interpretation of Articles: The Court noted that Article 301 guarantees that "subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." It emphasized that this freedom is expressly made subject to other Articles in Part XIII (including Article 302).
  2. Parliamentary power under Article 302: Article 302 empowers Parliament to "by law impose such restrictions on the freedom of trade, commerce or intercourse ... as may be required in the public interest." The Court held that restrictions lawfully enacted by Parliament under Article 302 can limit the freedom guaranteed by Article 301.
  3. Nature and purpose of the Essential Commodities Act, 1955: The Court examined the Preamble of the Essential Commodities Act and relied on authority (D.S and G. Mills) to conclude that the Act was enacted in the public interest to control production, supply and distribution of certain commodities, and that Section 3 empowers the Central Government to make orders to maintain or increase supplies or secure equitable distribution and fair prices.
  4. Character of Orders under Section 3: The Court treated the impugned Order as delegated legislation made under a valid Parliamentary Act. It held that orders made under Section 3 are in substance part of the statutory scheme (analogous to rules or regulations under a statute) and therefore enjoy the protection afforded to the Act itself.
  5. Application of precedents: The Court examined Attiabari Tea Co. Ltd. v. State of Assam and found that the Supreme Court's observations support the proposition that trade freedom is not absolute. The Court stated that there was nothing in Attiabari or other cited authorities that would permit declaring Clause 3 ultra vires.
  6. On Articles 303 and 304: The Court observed that Article 304 applies to State legislation and is not applicable to central legislation; counsel for the petitioners ultimately conceded its non-applicability. Article 303's Clause (2) — which permits preference/discrimination when Parliament so declares necessary to deal with scarcity — would, in the Court's view, protect Clause 3 even if Article 303 were argued to apply, because the Essential Commodities Act and the impugned Order address scarcity and equitable distribution.
  7. Conclusion of vires question: For these reasons — the Act being a valid exercise of Parliament's power under Article 302, the orders under Section 3 being part of the statutory scheme, and the absence of authority compelling a contrary result — the Court concluded that Clause 3 of the impugned Order is not hit by Articles 301–304 and is not ultra vires.
  8. Sentencing and relief: Although the conviction was affirmed, the Court exercised its discretionary powers in relation to sentence and ancillary orders. Considering that only about 31 maunds of paddy were involved and that the petitioners had already served eight days of imprisonment, the Court remitted the fine and the remaining period of imprisonment, let the petitioners off on the sentence already undergone, and held that it was not necessary to maintain the order of forfeiture of paddy.

Holding and Implications

Holding:

The Court held that Clause 3 of the U.P. Paddy (Restriction on Movement) Order, 1958 is not ultra vires Articles 301–304 of the Constitution. The petition in revision was partly allowed: the conviction of the petitioners was affirmed, but they were let off on the sentence already undergone; the fine and remaining imprisonment were remitted; bail bonds were cancelled; refunded fines (if paid) and auction proceeds (if paddy had been sold) were ordered to be returned to the petitioners.

Implications:

  • Direct effect on the parties: The petitioners' convictions remain, but they will not suffer the remainder of the imposed penal consequences — they are released having already undergone eight days of imprisonment; fines and any sale proceeds are to be refunded as directed.
  • On broader legal consequences: The Court's reasoning emphasizes that orders made under Section 3 of the Essential Commodities Act are to be treated as part of the statutory scheme enacted by Parliament and, when the Act itself is within Article 302, such orders are constitutionally protected against challenges under Articles 301–304. The opinion does not announce that it is laying down a novel constitutional principle beyond applying established authorities; no wider binding precedent beyond the application in this case is expressly claimed by the Court.
  • Forfeiture: The Court concluded that maintaining the forfeiture of the paddy was not necessary in the circumstances, and therefore the earlier order of forfeiture need not be enforced.
Partly allowed.

    Shobha v. State

    Jagdish Sahai, J.:— On being convicted under Sec. 7 of the Essential Commodities Act, 1955 for contravening R. 3 of the U.P Paddy (Restriction on Movement) Order, 1958 (hereinafter referred to as the Order) by a Magistrate, the petitioners appealed before the learned Sessions Judge, Varanasi but their appeal was dismissed on 14th of April, 1961 by Sri P.S Varma, II Temporary Civil and Sessions Judge, Varanasi. Thereafter the present revision application was filed in this Court under Sec. 439, Cr. P.C The matter came up before our brother Broome. The submission that was made before him on behalf of the petitioners was that the provision of the Order and specially those of Cl. 3 are ultra vires. On behalf of the State reliance was placed upon State of U.P v. Ram Charran 1962 A.L.J 13. where a Division Bench of this Court had held the provisions of the U.P Wheat (Restriction on Movement) Order, 1949 to be intra vires. Broome, J. was of the opinion that there was a suggestion in the State Of U.P… v. Ram Charan…. that the matter requires further consideration. He also considered the instant case to be, to some extent, distinguishable, from the State Of U.P… v. Ram Charan….. He, therefore, directed the record of this case to be placed before the Hon'ble the Chief Justice so that there may be directions for the listing of the case before a larger Bench. This is how the case has come up before us.

    2. Mr. C.S Saran, who has appeared for the petitioners, has not made any submissions on the merits of the case but has confined his arguments only to the question regarding the vires of Cl. 3 of the Order. He has contended that the provisions of that clause are hit fey Art. 301 to 304 of the Constitution of India (hereinafter referred to as the Constitution). One of the grounds taken in the revision application was that the provisions of Cl. 3 of the Order are hit by Art. 14 of the Constitution but that ground has now been withdrawn and no submission has been made in respect of it.

    3. The only question that has, therefore, to engage our attention is whether in view of the provisions of Arts. 301 to 304 of the Constitution, the provisions of Cl. 3 of the Order are ultra vires. This Order was framed by the Central Government purporting to exercise powers Conferred by Sec. 3 of the Essential Commodities Act, 1955 and was published in the U.P Gazette Extraordinary, Part II, dated the 24th of December, 1958. Cl. 3 of the Order reads as follows:—

    “No person shall move or attempt to move or abet the movement of paddy from any place in any of the districts specified in the Schedule to this Order to any place outside the said districts, except under and in accordance with a permit issued by the State Government or any officer authorised by the State Government in this behalf:

    Provided that nothing contained herein shall apply to the movement of paddy,—

    (i) not exceeding five seers in weight by a bonafide traveller as part of his luggage; or

    (ii) on Government account; or

    (iii) under and in accordance with Military Credit Notes.”

    4. The argument addressed on behalf of the petitioners is that Art. 301 of the Constitution guarantees free trade throughout the territory of India subject only to the other provisions in Part XIII. That Article reads as follows:—

    “Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.”

    5. Art. 303 of the Constitution prescribes the restrictions on the legislative powers of the Union and the States with regard to trade and commerce and Art. 304 prescribes restrictions on trade, commerce and intercourse amongst the various States in India. Art. 302, however, confers on Parliament the power to impose restrictions on trade, commerce and intercourse and reads as follows:—

    “Parliament by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.”

    6. A study of the provisions mentioned above clearly reveals that the freedom of trade, commerce and intercourse guaranteed under Art. 301 of the Constitution is subject to any law framed by the Parliament under Art. 302. The impugned order has been framed under Sec. 3 of the Essential Commodities Act, 1955. That Act was passed by Parliament. The Preamble of that Act runs as follows:—

    “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.”

    7. It is well settled that a Preamble is a key to the interpretation of an Act and can be used to know the aims and the objects of the legislation. See Thangmal Kunju Musaliar v. Venkatachalam A.I.R 1956 S.C 246.. The Supreme Court of India has on occasions more than one used the Preamble in order to decide the scope, the aim and the object of the legislation. See Asawami Kumar v. Arbinda Bose A.I.R 1952 S.C 369.. In D.S and G. Mills v. Union of India A.I.R 1959 S.C 626. the Supreme Court held as follows with regard to the Essential Commodities Act:—

    “The Preamble shows that it has been passed in the interest of the general public for the control of the production, supply and distribution of, and trade and commerce in, certain commodities, Sec. 3 of the Act gives power to the Central Government to pass orders under the Act if 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.”

    8. Other provisions in that Act also reveal the same thing. Consequently, the Essential Commodities Act is a piece of legislation contemplated by Art. 302 of the Constitution and fully protected by it.

    9. Mr. Saran has placed reliance upon Attiabari Tea Co. Ltd. v. State of Assam A.I.R 1962 S.C 232.. In that case the constitutionality of the Assam Taxation (on Goods carried by Roads or Inland Waterways) Act (Assam Act XIII of 1954) was challenged by means of a writ petition filed in the Assam High Court. That High Court dismissed the petition and upheld the validity of the Act (Assam Act XIII of 1954). The Supreme Court reversed the Assam High Court's judgment, granted the reliefs made in the writ petition under Art. 226 and also allowed similar petitions made before it under Art. 32 of the Constitution. The facts of the case before the Supreme Court were very different from those before us and what was contended before the Supreme Court was that the impugned statute did not fall within item 62 of the State List and was thus beyond the legislative competence of the Assam Legislature and was also hit by Art. 301 of the Constitution. There what the Assam Legislature had done was that it had provided for the levy of tax on certain goods carried by road or inland waterways in the State of Assam. We have carefully examined the majority judgment delivered by Gajendragadkar, J. as also the minority judgment delivered by Sinha, C.J and in our opinion there is nothing in those judgments on the basis of which the provisions of the impugned Order or Cl. 3 of if can be declared to be ultra vires. In fact Gajendragadkar, J. has clearly observed as follows:—

    “It is obvious that whatever may be the content of the said freedom, it is not intended to be an, absolute freedom; absolute freedom in matters of trade, commerce and intercourse would lead to economic contusion, if not chaos and anarchy and so the freedom guaranteed by Art. 301 is made subject to the exceptions provided by the other Articles in Part XIII.”

    10. Ours is not a case of an independent legislation. It is a case where an Order has been framed under an existing Act, i.e the Essential Commodities Act. The Order merely carries out the purposes of that Act. See D.S and G. Mills v. Union of India. In other words, it is in the nature of delegated legislation. There was no argument before us and indeed none was possible that there has been a delegation of legislative functions in the instant case. The position of all the Orders framed under Sec. 3 of the Essential Commodities Act is to make those Orders a part of the Act itself. It would be a complete misconception to treat the impugned Order as independent of the Essential Commodities Act. Inasmuch as the Essential Commodities Act has been passed under Art. 302 of the Constitution and fulfils all the requirements of that provision, it was not necessary that the Parliament should have passed another Act in order to give protection to the impugned Order. The position of the impugned Order and such other Orders is analogous to that of the rules or regulations framed under the statute which are treated to be a part of the statute itself. See Khetsidas Girdhari Lal v. Pratapmull Rameshwar A.I.R 1946 Cal. 197. and Saligram Singh v. Emp. A.I.R 1945 Patna 69.. It is trite that if and when the Essential Commodities Act is repealed, the impugned Order would also disappear and cannot be continued unless there is another Act passed making its continuance possible. Under these circumstances, we have no hesitation in rejecting the submission made by Mr. Saran that the Parliament has not passed any law under Art. 302 of the Constitution which could give protection to Cl. 3 of the Order. Many Orders similar to the impugned Order were framed under Sec. 3 of the Essential Commodities Act and so far it has not been held by any Court that they or any one of them is invalid because of the provisions of Arts. 301, 303 and 304 of the Constitution. In Naurang Rai Chirangi Lal v. State of Bihar A.I.R 1959 Pat. 268. the validity of the Bihar Milled Rice Procurement (Levy) Order, 1958 had been challenged on the ground of Art. 19(1)(f) of the Constitution. The Patna High Court, however, held the Act to be intra vires. In Thanmal Surana v. Union of India A.I.R 1959 Rajas. 206. the validity of Secs. 3 and 5 of the Essential Commodities Act and the provisions of the Gram (Rajasthan) Price Control Order, 1958 was challenged on the ground of Art. 19(1)(f) and (g) of the Constitution as also on the ground of delegation of essential legislative functions but without success. It was not considered worthwhile to raise any question regarding the invalidity of the impugned provisions on the ground of Arts. 301 to 304 of the Constitution and even though a large number of similar Orders have been passed under Sec. 3 of the Essential Commodities Act, we are not aware of a single case where an attack was launched on its validity on the basis of Arts. 301 to 304 of the Constitution. Even in the case of Harishanker Bagla v. M.P State A.I.R 195 S.C 465. where the validity of the Cotton Textile (Control of Movement) Order, 1948 was challenged, the attack was confined to the alleged infringement of Art. 19(1) of the Constitution. We have no hesitation in saying that the Order having been framed under Sec. 3 of the Essential Commodities Act, any argument regarding the non-existence of restriction imposed under Art. 302 of the Constitution is mis-conceived. It is difficult to understand how the provisions of Art. 304 of the Constitution can be attracted to this case. That provision applies to State and not to Central legislation which is the case before us. Besides, it is not an exception to Art. 302 of the Constitution, Mr. Saran had in the end to concede that provision has no applicability to the facts before us. We have already said above that Mr. Saran withdrew the argument With regard to discrimination between one State and another either on the ground of Art. 14 or Art. 303 of the Constitution. We may also add that Cl. 3 of the impugned Order regulates the movement of paddy within the State of U.P and on facts also we do not see that there is any discrimination between one State and another. It is true that the first part of Art. 303 is in terms an exception or a proviso to Art. 302 as is indicated by the non-obstantate Cl. (1). Cl. (2) of Art. 303 is, however, an exception to Cl. (1) and empowers the Parliament to make a law giving or authorising to give any preference, or making any discrimination subject to the condition that it is declared by law made by a Parliament that is necessary so to do for the purpose of dealing with a situation arising from the scarcity of the goods in any part of the territory of India. Therefore, even if Art. 303 applied to the facts of the present case, Cl. 3 of the impugned Order would be protected by Cl. (2) of Art. 303 inasmuch as the impugned Order has been framed under Sec. 3 of the Essential Commodities Act. That Act was passed because the Parliament was dealing with the situation arising from scarcity of goods in some parts of this country and was thus meeting an emergency created by the scarcity of goods. For these reasons, in our judgment, Cl. 3 of the impugned Order is not hit by Art. 303 of the Constitution also.

    11. No other point was urged before us.

    12. We are, therefore, of the opinion that there is no substance in the submission of the learned counsel for the petitioner.

    13. The petitioners have been sentenced to undergo rigorous imprisonment for a period of one year each and to pay a fine of Rs. 100 each, in default to undergo rigorous imprisonment for two months each. They have served the sentence of imprisonment for eight days. It was only about 31 maunds of paddy that was sought to be transported. We, therefore, are of the opinion that the petitioners can reasonably be let off on the sentence already undergone. We remit the sentence of fine passed against them as also the remaining period of imprisonment. We are also satisfied that in this case it is not necessary to maintain the order of forfeiture of the paddy for the reasons already given above.

    14. The result is that the application in revision is allowed in part. The petitioner's conviction is affirmed but they are let off under the sentence already undergone. They need not surrender to their bail; Their bail bonds are cancelled. The fine, if paid, shall he refunded. In case the confiscated paddy has been sold, the auction sale price thereof shall be paid to the petitioners.

    Partly allowed.

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    Comments

    Shobha v. State
    (May 2, 1962)