Baijnath Prasad Gupta v. State Of Madhya Pradesh .

1. The petitioner in this case questions the legalitv of Clause 4 of the Madhya Pradesh Paddy Procurement (Levy) Order, 1965 (hereinafter referred to at the Order) and prays that the said provision be declared to be invalid and a direction be issued to the opponent-State restraining it from enforcing the provision.

2. According to the applicant, he holds a licence under the Foodgrains Dealers Licensing Order, 1965, which entitles him to deal in foodgrairis and that until the promulgation of the Order he and other licence holders like him used to purchase paddy, get it milled in the shelter type rice mills and used to sell the rice thus produced to the Government at prices fixed by the Government. The Madhya Pradesh Paddy Procurement (Levy) Order, 1965, was promulgated by the Government on 9th December 1965 in the exercise of its powers under Section 3 of the Essential Commodities Act, 1955 Clause 2 (b) of the Order defines "dealer" thus--

'Dealer' means a person engaged in the business of purchase, sale or storage for sale in any quantity of paddy, whether on one's own account or in partnership or in associa tion with any other person or as a Commission agent or kacha arhtiya or pacca arhtiya and whether or not in conjunction with any other business but does not include an owner of a shelter type rice mill."

Clause 4 of the Order runs as follows:

"4 Purchase by State -- (1) No agriculturist shall sell paddy to any person except to a consumer in rural areas for bona fide consumption up to 20 Kilograms at a time and to the Director of Food Supplies or the Collector or p. person or persons as may be authorised by the Director of Food Supplies or the Collector, in this behalf.

(2) No dealer except the owner of a shelter type rice mill shall purchase or possess paddy for business purposes and stocks held by him on the date of application of this Order shall be sold at the rate specified in sub-clause (1) of clause 3 of this order, to the Director of Food Supplies or the Collector or any other person authorised by the Director of Food Supplies or the Collector in this behalf"

3. The petitioner's contention is that Clause 4 of the Order is in excess of the authority conferred on the Government under Section 3 of the Essential Commodities Act, 1955. and that it imposes unreasonable restrictions on the petitioner's right to trade in paddy and is also violative of Article 14 of the Constitution

4. Having heard Shri Adhikari, learned counsel for the petitioner, we have reached the conclusion that this application must be dismissed Taking first the question of the authority of the Government to make the provision contained in Clause 4 of the Order, it is clear from Clause (f) of Section 3(2) of the Act of 1955 that by that clause the Government has been expressly given the power to make an order providing for requiring any person holding in stock any essential commodity to sell the whole or a specified part of the slock to the Government or to an officer or agent of such Government or to such other person Or class of persons and in such circumstances as may be specified is the order. Clause (g) of Section 3(2) of the Essential Commodities Act, 1955, also gives to the Government the power to make a provision for regulating or prohibiting any class of commercial or financial transactions relating to foodstuffs which, in the opinion of the authority making the order, are, or, if unregulated, are likely to be detrimental to the public interest.

Now, the first sub-clause of Clause 4 of the Order prohibits an agriculturist from selling paddy to any person except to a consumer in rural area for bona fide consumption up to the limit of 20 Kilograms at a time and to the Director of Food Supplies or the Collector or a person or persons authorised by them. The second sub-clause restrains every dealer from purchasing or possessing paddy for business purposes and requires him to sell the stocks of paddy held by him on the datt of the coming into force of order to the Director of Food Supplies or the Collector or a person or persons authorised by them at specified prices. The matters covered by Clause 4 of the Order thus fully fall under Clauses (f) and (g) of Section 3(2) of the Essential Commodities Act. 1955 It cannot, therefore, be contended with any degree of force that Clause 4 of the Order is a provision made by the Government in excess of its authority.

5. Assuming that the right to carry on a trade is itself property. there can be no doubt that Clause 4 is directly hit by Article 19(1)(f) as well as by Article 19(1)(g) of the Constitution But the provision would be valid if it is saved by Clauses (5) and (6) of Article 19 which enable the State to impose reasonable restrictions in the interests of the general public on the exercise of rights to acquire or hold any property or to praclist any profession or to carry on any trade or business. The principles underlying Clauses (5) and (6) of Article 19 are now well settled and have been enunciated and explained in a number of decisions of the Supreme Court. It is unnecessary to refer to those principlesi in detail. In the case of State Of Madras v. V.G Row., AIR 1952 SC 1% : 1952 SCR 597 it has been observed that:

". .. the test of reasonableness, wherever prescribed should be applied to each individual statute impugned. and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extenl and urgency of the evil sought to be remedied thereby the disproportion of the imposition, the prevailing conditions at the time should all enter into the judicial verdict."

The Supreme Court said in the case of Collector of Customs v. Sampathu Chetty AIR 1962 SC 316 that the above observations are in line with the principle underlying the structure of rights guaranteed by Article 19 namely,

"a balancing of the need for individual liberty in the matter inter alia of the right to hold property or of the right to trade, with the need for social control in order that the freedoms guaranteed to the individual subserve the larger needs -- moral, social economic and political -- of the community and thus ensure orderly progress towards the goal indicated by the preamble."

The reasonableness of the restraint has to be judged by the magnitude of the evil which it is the purpose of the restraint to curb or eliminate and, as pointed by the Supreme Court in M. H. Quareshi v. State of Bihar AIR 1958 SC 731 the reasonableness of a restriction has to be determined from the standpoint of the interests of the general public and not from the point of view of the persons upon whom the restriction has been imposed.

6. Applying these principles, it is plain that the restrictions imposed by Clause 4 of the Order are clearly reasonable restrictions in the interests of the general public. The object of the clause is to secure the maximum supply of rice--an essential commodity --and to arrange for its equitable distribution and availability at a fair price. When rice, undoubtedly an essential commodity, is in short supply, it is clearly in the interests of the general public that adequate supply of rice should be procured and its stocks should be regulated and the price of paddy should be kept down by eliminating the middleman. Though the result may be to prevent a middleman like the petitioner from carrying on the trade of purchasing paddy, milling it at the rice mills and then selling the rice to the Government, that would still be a reasonable restriction on his right to trade. The interest of any particular dealer may suffer under Clause 4. But judging from the point of view of the interests of the general public, the restriction must be held to be reasonable and Clause 4 cannot be struck down as unconstitutional when it has been made in the interests of the general public.

7. Learned counsel referred us to the decision of the Supreme Court in Dwarka Prasad v. State of U. P. AIR 1954 SC 224 to support his contention that Clause 4 of the Order is repugnant to Article 19(1) (f) and (g) of the Constitution. In our opinion, that decision is not in point. In the case of M/s Dwarka Prasad AIR 1954 SC 224 (supra). Clause 4 (3) of the U. P Coal Control Order, 1953, was held to be void as imposing an unreasonable restriction upon the freedom of trade and business guaranteed by Article 19(1)(g) of the Constitution and not falling within the purview of the protection afforded by Clause (6) of Article 19. This was on the ground that Clause 4 (3) conferred on the licensing authority unrestricted power without framing any rules or issuing any directions to regulate or guide the authority's discretion. Clause 3 of the U. P. Order was also held to be imposing unreasonable restrictions and invalid inasmuch as it gave to the State Con-troller unrestricted power to make exemptions These questions clearly do not arise in connection with Clause 4 of the Order before us.

8. The argument that Clause 4 (2) of the Order offends against Article 14 of the Constitution is ill-founded. That sub-clause does not make any distinction between one dealer and other dealer. It prohibits all dealers from purchasing or possessing paddy for business purposes and enjoins all of them to sell at specified prices to the Government stocks held by them on the date of the coming into force of the Order. That clause no doubt permits all owners of sheller type rice mills to purchase or possess paddy for business purposes. By permitting only the owners of sheller type rice mills to purchase or possess paddy for business purposes, the clause only canalises in the interests of the general public the supply and distribution of rice and thus only serves the object of the Order, namely, to secure large quantity of rice and to make it available to the consumers at a fair price.

The provision about the canalisation of purchase or possession of paddy for business purposes through the agency of the owners of sheller type rice mills is per se a reasonable restriction on the right to trade and has a reasonable relation to the object of the Order. The petitioner himself has stated in his petition that it is at the sheller type rice mills that the maximum quantity of paddy is husked and he himself used to get the paddy purchased by him husked at these mills before selling the rice which is husked paddy to the Government; and that the entire stock produced by the mills is taken over by the Government at fixed prices. It cannot, therefore, be urged that the canalisation of the business of production of rice through the agency of the owners of sheller type rice mills is arbitrary.

9. It was also said that Clause 4 of the Order offended against Article 301 of the Constitution. The short answer to this contention is that the restrictions imposed by Clause 4 are reasonable restrictions in the public Interest within the meaning of Article 304(b) of the Constitution.

10. Learned counsel also pointed out that an owner of a sheller type rice mill was not a "dealer" according to the definition of that term contained in Clause 2(b) of the Order, yet by Sub-clause (2) of Clause 4 it has been provided that "no dealer except the owner of a sheller type rice mill shall purchase or possess.....", thus suggesting that the owner of a sheller type rice mill is a dealer. The suggestion was that the expression "no dealer except the owner of a sheller type rice mill" with which Sub-clause (2) of Clause 4 begins is inconsistent with the definition of the term "dealer" given in Clause 2 (b) The definition of the term "dealer" given by Clause 2(b) undoubtedly cannot be fitted in Clause 4 (2). After having excluded the owner of a sheller type rice mill from the term "dealer" it is no doubt absurd to say that 'no dealer except the owner of a sheller type rice mill .. .. .."

But this anomaly arising on account of the definition of the term "dealer" and the language of Clause 4(2) does not in any way assist the petitioner. In the context of Clause 1(2) the word "dealer" has to be understood in its ordinary and general connotation and not in the sense given by the definition contained in Clause 2(b). Taking the ordinary meaning of the word "dealer", it is clear that what Clause 4 (2) does is to prohibit every person engaged in the business of purchase or sale of paddy except the owner of a shel-ler type rice mill from purchasing or possessing paddy for business purposes,

11. For the foregoing reasons, our con clusion is that Clause 4 of the Madhya Pra-

desh Paddy Procurement (Levy) Order, 1966, is valid. This petition is, therefore, dismissed with costs Counel's fee is fixed at Rs. 150/-.

The outstanding amount of the security de posit after deduction of costs shall be refund ed to the petitioner.