M/S. Chhotabhai Jethabhai Patel And Co. And Another v. State Of Madhya Pradesh, Bhopal And Others

1. This application under Articles 226 and 227 of the Constitution is by M/s. Chhotabhai Jetbabhai Patel & Co., Sagar, a firm encased in the business of manufacture and sale of Bidis and one of its partners Jhaverbhai for the issue of a writ of certiorari for quashing an order of the respondents Nos. 2 and 3 passed on 16th August 1965 seizing 9007 bags of tendu leaves weighing 2341.25 quintals imported by the petitioners by rail from Garwah Road (Bihar) to Sagar and 256 bags of tendu leaves weighing 130.56 quintals imported from Bindoumganj railway-station, Eastern Railway (Bihar), to Sagar. A complaint has also been filed against the petitioners in the Court of the Magistrate. First Class, Sagar, for find-Ing them guilty for importing the aforesaid tendu leaves contrary to the provisions of Section 5 of the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 (hereinafter referred to as the Act) The petitioners pray that the proceedings initiated on this complaint be also quashed by issue of a writ of rertiorari

2. Before stating the material facts and dealing with the contentions advanced on behalf of the parties it is necessary to refer to the relevant provisions of the Act. The Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964, is a legislation enacted "for regulating in the public interest the trade of Tendu leaves by creation of State monopoly in such trade". Section 1(3) of the Act lays down that it shall come into force in such area or areas and on such date or dates as the State Government may, by notification, specify. The Act came into force in the whole of Madhya Pradesh with effect from 28th November 1964. Section 2(d) defines "grower of tendu leaves" "Specified area" has been defined by Section 2(h) as meaning "the area specified in notification under Sub-section (3) of Section 1". Section 3 enables the State Government to divide the area in which the Act has been brought into force into such number of units as it may deem fit. The next section, namely Section 4, inter alia lays down that the State Government may, for the purpose of purchase ot, and trade in, tendu leaves on its behalf, appoint agents in respect of different units. Section 5, which is very material here runs as follows:

"5. Restriction on purchase or transport of tendu-leaves -- (1) on the issue of a notification under Sub-section (3) of Section 1 in any area no person other than,--

(a) the State Government;

(b) an officer of State Government authorised in writing in that behalf; or

(c) an agent in respect of the unit in which the leaves have grown; shall purchase or transport tendu leaves.

Explanation I--Purchase of tendu leaves from the State Government or the aforesaid Government Officer or agent shall not be deemed to be a purchase in contravention of the provisions of this Act.

Explanation II--A person having no interest in the holding who has acquired the right to collect tendu leaves grown on such holding shall be deemed to have purchased such leaves in contravention of the provisions of this Act.

(2) Notwithstanding anything contained in Sub-section (1)--

(a) a grower of tendu leaves may transport his leaves from any place within the unit wherein such leaves have grown to any other place in that unit; and

(b) tendu leaves purchased from the State Government or any officer or agent specified in the said sub-section by any person for manufacture of bidis within the State or by any person for sale outside the State may be transported by such person outside the unit in accordance with the terms and conditions of a permit to be issued in that behalf by such authority and in such manner as may be prescribed.

(3) Any person desiring to sell tendu leaves may sell them to the aforesaid Government officer or agent at any depot situated within the said unit."

Under sections 6, 7 and 9 tendu leaves are purchased from growers by the State Government or its authorized officers or agents at a price fixed by it in consultation with an Advisory Committee constituted under Section 6. The State Government, its authorized officers and agents have also been given power by Section 9 to refuse to purchase any leaves which in their opinion are not fit for the purpose of manufacture of Bidis. If any person is aggrieved by the rejection of his tendu leaves, he can make a complaint to the Divisional Forest Officer concerned. On receipt of such a complaint and on holding an enquiry if the Divisional Forest Officer finds that the leaves were wrongly rejected, he may, if he considers the leaves in question still suitable for the manufacture of Bidis, purchase them and pay the price and compensation according to section 9(3)(a) or if he considers that the leaves in question are unsuitable for manufacture of Bidis, direct the payment to the person aggrieved, of the amount mentioned in Clause (b) of Section 9(3). Under Sub-section (4) of Section 9 the State Government can appropriate the leaves if there is reason to believe that the leaves appertain to forests or lands belonging to the State Government. Section 10 is concerned with the registration of growers of tendu leaves. Section 11 deals with registration of manufacturer of Bidis and exporters of tendu leaves. Section 12 prescribes that tendu leaves purchased by the State Government or be its officers or agents shall be sold or otherwise disposed of in such manner as the State Government may direct. Section 19 empowers the State Government to make rules to carry out all or anv of the provisions of the Act. By Sub-section (2) of Section 19 it is provided that the rules may provide for all or any of the matters enumerated in that sub-section. The other provisions of the Act are not relevant here

3. Rule 9 of the Rules framed under the Act and intituled 'the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Niyamavali, 1965' prescribes the procedure for issue of transport permits. It reads as under:

"9. Procedure for issue of transport permit.--

(1) Application for issue of transport permit under Clause (b) of Sub-section (2) of Section 5 shall be in Form 'M' and shall be submitted to the Divisional Forest Officer or any other officer authorised by him in writing, who shall be competent to grant the permit:

Provided that the said Officer, if he has reason to believe that the leaves in respect of which the application has been made have not been purchased from Government or their Officer or Agent, may, after giving the applicant such opportunity of being heard as he may in the circumstances deem fit, reject such application by an order in writing, recording the reasons for such rejection.

(2) Transport permit shall be in Form 'N' and shall be subject to the following conditions:

(a) The leaves shall be transported only by the route specified in the permit and shall be produced for checking at such place or places as may be specified therein.

(b) Except with the permission in writing of the Divisional Forest Officer or of an officer authorised by him in this behalf, the leaves shall not be transported outside the Unit at any time after sunset and before sunrise

(c) The permit shall be valid for such period as may be specified therein."

The prescribed form 'M' in which an application for a transport permit has to be made is as follows:

FORM 'M' [See Rule 9(1)] "Form of application for grant of Transport Permit

(a) Name of the Applicant.

(b) Quantity (in bags) of tendu leaves purchased--

(i) Actual bags......

(ii) Standard bags.....

(c) Unit in which purchased.

(d) Place or places where the Tendu leaves are stored. If at more than one place, specify the quantity at each place.

(e) Destination to which the leaves are to be transported.

(f) Mode of transport.

4. The petitioner-firm M/s. Chhotabhai Jethabhai Patel & Co. got itself registered under Section 11 of the Act as a "Bidi manufacturer''. The case of the petitioner-firm is that in 1965 it submitted tenders to the State of Madhya Pradesh for purchase of Tendu leaves of different forest units in the State; but all the tenders submitted by it were not accepted and even where the tenders were accepted the Tendu leaves were not sold to it to the extent of the quantity tendered and that, therefore, there was heavy shortage of Tendu leaves and the quantity of Tendu leaves in possession of the firm was not sufficient foi meeting the requirement of the petitioner's factory at Sagar for the whole year. In order to meet this shortage and avoid a reduction in production, the firm decided to import Tendu leaves from outside the State of Madhva Pradesh and for that purpose took leases for the collection of Tendu leaves in the various forest ranges in Bihar and Maharashtra States. The applicants have averred that on 18/19th July 1965 they wrote to the Divisional Forest Officer, Sagar Division, intimating him that the petitioner firm had imported Tendu leaves from Bihar giving a schedule showing the particulars of the railwav receipts, the number of bags and the date of despatch. The petitioners informed the Divisional Forest Officer that the Tendu leaves imported from Bihar would be transported to their factories at Sagar, Damoh. Jabalpur and Sehora Road and sought permission for transport of the leaves and prayed that they be permitted to utilize and consume the imported Bidi leaves for the manufacture of Bidis. In reply to this letter of the petitioners the Divisional Forest Officer wrote back on 27th July 1965 asking the petitioner to furnish some particulars of the imported Tendu leaves and informed them that--

".....the imported leaves must not be moved for bidi manufacture until permission is accorded for so doing on receipt of Government orders. If any cases of breach of this inhibition are noticed, I shall be compelled to cancel the authorisation made by me in favour of your agents to issue transport permits for movement of tendu leaves from your branch offices to the sattedars."

According to the petitioners, this letter of the Divisional Forest Officer clearly authorized them to store the imported leaves in their godown. They complain that notwithstanding the grant of the permission communicated by the letter dated 27th July 1965 and even though the petitioners had not moved the imported leaves from their godown. the Sub-Divisional Officer (Forests), Sagar, seized from their godown at Sagar 9007 bags of Tendu leaves weighing 2341.25 quintals imported from Garwah Road (Bihar) as also 256 bags of Tendu leaves weighing 130.56 quintals imported from Bindoumgani railway station (Bihar), and that thereafter the respondent No. 2, Divisional Forest Officer, Sagar filed a complaint alleging contravention of Section 5 of the Act by the petitioner-firm in the Court of the Magistrate. First Class, Sagar, praying that cognizance of the complaint be taken as provided in Section 17 of the Act and that a penalty be imposed on the petitioner-firm under Section 15 of the Act.

5. The contention of the petitioners is that the Act does not prohibit the import of Tendu leaves from any place outside the State: nor does it place any restriction on a manufacturer importing such Tendu leaves for the purpose of being consumed in his own factories for the manufacture of Bidis; and that the Act or the Rules made thereunder also do not in anv way regulate the transport of imported Tendu leaves. Learned counsel for the petitioners argued that Section 5 of the Act and Rule 9 of the Rules put a restriction on the transport of Tendu leaves grown in the State of Madhya Pradesh only and that there was no other provision in the Act or the Rules controlling the import or transport of Tendu leaves brought from outside the State. It was also submitted that if the Act or anv of its provisions were to be construed as prohibiting the import of Tendu leaves into the State and the transportation within the State of imported leaves and their consumption for manufacture of Bidis, then the Act would offend articles 301 and 304 of the Constitution

6. The stand of the respondents is that except to the extent provided by section 5(2) transport of Tendu leaves, whether grown in the State of Madhya Pradesh or outside that State, by any person other than the State Government, its officers or agents, is completely prohibited. It is said that

"the application and the scope of the Act is not restricted to Tendu leaves grown in Madhya Pradesh alone. It appplies to all leaves found within the territory of Madhya Pradesh whether grown in Madhya Pradesh or brought from outside;"

that regulation and control of Tendu leaves imported from outside the State is necessary for the successful working of the State monopoly in the trade of Tendu leaves: that the Act does not prohibit the import of Tendu leaves and cannot, therefore be said to be violative of articles 301 and 304 of the Constitution; and that the control of movement of Tendu leaves after they are imported is in no way repugnant to Articles 301 and 304.

7. In our judgment, this application must be granted The Act has no doubt been described as one "for regulating in the public interest the trade of Tendu leaves by creation of State monopoly" But an examination of the various provisions of the Act shows that it only regulates the trade of Tendu leaves grown in the State of Madhya Pradesh and creates State monopoly in the trade of leaves grown in the State of Madhya Pradesh. The Act has clearly no extra terriotorial application. It is operative only in the State of Madhya Pradesh. The units which have been constituted under Section 3 are all units located in the State of Madhya Pradesh. It is for these units in the State that agents have been appointed under Section 4. Now, Section 5(1) no doubt says that on the issue of a notification under Section 1(3) in any area, no person other than the State Government or an officer of the State Government or an agent in respect of the unit in which the leaves have grown shall purchase or transport Tendu leaves. The purchase or transport of Tendu leaves spoken of in Sub-section (1) of Section 5 is the purchase or transport of Tendu leaves grown in the State. This is clear from the fact that if an agent in respect of a unit in which the leaves have grown, and which unit is in the State, is permitted to purchase or transport Tendu leaves, then the purchase or transport can have reference only to Tendu leaves grown in the State. That the purchase of Tendu leaves referred to in Section 5(1) is of the Tendu leaves grown in the State is made further clear by the two Explanations to Section 5(1) The first Explanation says.

"Purchase of tendu leaves from the State Government or the Government Officer or agent shall not be deemed to be a purchase in contravention of the provisions of the Act"

It is easy to see that the question of purchase of Tendu leaves from the State Government or its officer or agent can arise only if the Tendu leaves are those grown in the State. The reference in the second Explanation to "holding" which has been defined in Section 2(e) also shows that the second Explanation deals with collection of Tendu leaves grown in the State. The two Explanations only explain what has been said in the substantive provision contained in Section 5(1) and if that provision is understood in the light of the two Explanations, as it must be according to the well-settled rules of interpretation of statutes, then it is plain that Section 5(1) is concerned only with the purchase or transport of Tendu leaves grown in the State

8. This conclusion is further reinforced by the second sub-section of section 5 which only relaxes in certain respects the ban on transport imposed by the first sub-section. clause (a) of section 5(2) deals with transport of Tendu leaves by a grower of Tendu leaves within the unit wherein the leaves have grown to any other place in that unit. The expressions "grower of tendu leaves" and "unit" occurring in Clause (a) indicate that the Tendu leaves dealt with by that clause are the Tendu leaves grown in the State Clause (b) of Section 5(2), as pointed out by this Court in Vrajlal Manilal & Co v. State of M. P. 1966 MPLJ 806= (AIR 1966 Madh Pra 301) lays down that a permit is necessary for transport of Tendu leaves by a purchaser not only when he desires to take the leaves from within the limits of the unit of purchase to a place outside it, but also when he wants to transport the leaves from one place to another outside the unit, Here, again, the reference to "unit" shows that this clause also deals with transport of Tendu leaves grown in the State. It is thus clear that Section 5 in no ways controls the purchase or transport of Tendu leaves grown outside the State of Madhya Pradesh

9. The Rules framed under the Act nowhere provide for transport of Tendu leaves imported in the State of Madhya Pradesh from other States. Rule 9 deals only with the issue of transport permits under Section 5(2)(b). In fact, in the Rules a "transport permit" has been defined as meaning "a permit issued under Section 5 (2)(b) for transport of tendu leaves outside the unit " It is noteworthy that in the prescribed form 'M' for an application for a permit under Rule 9, the applicant has to state the unit in which the Tendu leaves have been purchased. Thus, there can be no room for doubt that the transport of imported Tendu leaves is in no wav regulated by the Rules.

10. The provisions contained in the Act with regard to fixation of price of Tendu leaves, opening of depots for sale of Tendu leaves, purchase of Tendu leaves by the State Government or their authorised officer or agent and the disposal of Tendu leaves after their purchase by the State Government or their authorized officer or agent all point to the conclusion that the Act in no way touches Tendu leaves grown outside the State of Madhya Pradesh and imported therein.

11. In our view, the Act and the Rules do not restrict or prohibit the import of Tendu leaves by a manufacturer from a State outside the State of Madhya Pradesh; nor do they prohibit the consumption of Tendu leaves imported by a manufacturer for purposes of manufacturing Bidis in his own factory Neither the Act nor the Rules impose on any importer any obligation to sell the imported Tendu leaves to the State Government or to any of its officers or agents. The imporl is in no way controlled or regulated by any provision, express or implied, in the Act or the Rules. The prohibition against transport in Section 5(1) of the Act is directed against transport of Tendu leaves grown in the State. The argument that even if there is no express or implied provision in the Act or the Rules banning the import or transport of Tendu leaves grown outside the State, such a prohibition is implicit in Section 5(1) as it is necessary for the successful working of the State monopoly in the trade of Tendu leaves grown in the State of Madhya Pradesh, cannot be accepted. The prohibition against the import of Tendu leaves in the State and against their transport within the State cannot be said to be basically and essentially necessary for creating State monopoly in the trade of Tendu leaves grown in the State Such a prohibition may be helpful in the monopolistic trade in Tendu leaves grown in the State by promoting the sales of Tendu leaves grown in the State; but that does not mean that unless and until a ban is imposed on the import and transport of Tendu leaves grown outside the State, the monopoly created by the Act in the trade of Tendu leaver grown in the State cannot work

12. If Section 5 of the Act or any of its provisions were to be construed as prohibiting the import of Tendu leaves into the State or as restricting the transportation within the State of imported leaves, then the provision would clearlv be invalid as violative of articles 301 and 304 of the Constitution. The M. P. Tendu Patta (Vyapar Viniyaman) Adhinivam, 1964 is not an Act passed after satisfying the requirements of the proviso to Clause (b) of Article 304 Realizing this, learned Advocate-General was constrained to argue that the Act did not in any way prohibit the import of Tendu leaves in the State: but that after the leaves were imported in the State, the transport within the State of imported Tendu leaves was prohibited under Section 5(1). The argument is altogether untenable and cannot be accepted. To stall the Tendu leaves grown outside the State as soon as they cross the border of the State of Madhya Pradesh is nothing but to prohibit the import of those Tendu leaves. If the imported Tendu leaves cannot be transported anvwhere within the State and if they can be seized by the State, as has been done in the present case, then it cannot be argued with any degree of force that no prohibition has been imposed on the import of Tendu leaves. To ban the transport of imported Tendu leaves within the State is to do indirectly what is prohibited under Articles 301 and 304(b) of the Constitution and what can be done only by a legislation enacted after complying with the requirements of the proviso to Article 304(b).

13. In our judgment, the action of the respondents in seizing the Tendu leaves imported by the petitioners was altogether unjustified, illegal and invalid. The respondents have no authority whatsoever under the Act or the Rules to prohibit in any way the transport or consumption by the petitioners of the imported Tendu leaves.

14. For the foregoing reasons, this petition is allowed. The orders passed by the respondents Nos. 2 and 3 with regard to the seizure on 16th August 1965 of 9007 bags of Tendu leaves weighing 2341.25 quintals imported from Garwah Road (Bihar) and of 236 bags of Tendu leaves weighing 130.56 quintals imported from Bindoumganj Rail way Station (Bihar) are quashed. As the seized Tendu leaves have already been re leased and handed over to the petitioners under an order made by the Supreme Court in Writ Petition No. 102 of 1966 of 12th January 1967 (SC) on the petitioners' furnishing a bank guarantee, the question of issuing a direction for the return of the Tendu leaves does not arise. The proceedings initiated on the complaint filed by the respondent No. 2, Divisional Forest Officer, Sagar, in the Court of the Magistrate, First Class Sagar, for imposition of penalty under Section 15 of the Act on the petitioners are quashed. The petitioners shall have costs of this application.

Counsel's fee is fixed at Rs. 250. The out standing amount of the security deposit shall be refunded to the petitioners.