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M/S. Naurang Rai Chirangi Lal v. The State Of Bihar And Another Opposite Party.

Patna High Court
Feb 19, 1959
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Structured Summary of the Opinion

Factual and Procedural Background

The primary question in this matter was the constitutional validity of two executive orders: (1) the Bihar Milled Rice Procurement (Levy) Order, 1958, promulgated by the Government of Bihar; and (2) the Milled Rice (Bihar) Price Control Order, 1958, issued by the Central Government under Section 3(2) of the Essential Commodities Act, 1955.

By a Central notification under Section 5 of the Essential Commodities Act, powers in relation to food-stuffs were delegated to the State Government. Exercising delegated power, Bihar issued the Bihar Milled Rice Procurement (Levy) Order, 1958, which required millers and licensed dealers to sell specified percentages (50% of stock at commencement and 50% of production or acquisition) of milled rice to the State at a "controlled price." Separately, on 22-12-1958 the Central Government fixed a maximum wholesale price of milled rice at Rs. 16 per maund for Bihar by the Milled Rice (Bihar) Price Control Order, 1958.

Acting under the Bihar Order, enforcement officers seized quantities of milled rice from the petitioner (1075 maunds on 1-1-1959 and 187.5 maunds on 11-1-1959). The petitioner asserted that he had purchased the seized rice at prices ranging from Rs. 17-12 to Rs. 28 per maund (plus transport) and filed a writ petition under Article 226 of the Constitution challenging the constitutional validity of both the Bihar and Central Orders on the ground that they violated his fundamental rights under Articles 19(1)(g) (freedom to carry on business) and 19(1)(f) (right to acquire, hold and dispose of property).

Notice was given and the Advocate General appeared for the respondents. The respondents filed a counter-affidavit explaining the objective of the Bihar Order and defending the measures taken.

Legal Issues Presented

  1. Whether the Bihar Milled Rice Procurement (Levy) Order, 1958 is constitutionally valid.
  2. Whether the Milled Rice (Bihar) Price Control Order, 1958 (fixing the maximum wholesale price at Rs. 16 per maund) is constitutionally valid.
  3. Whether the Bihar Order and the Central Order infringe the petitioner's fundamental rights under Article 19(1)(g) (to carry on trade or business) and Article 19(1)(f) (to acquire, hold and dispose of property).
  4. Whether Section 3(2)(f) of the Essential Commodities Act (as amended) authorized the State Government to require sale of essential commodities to the State Government or its officers (i.e., whether the Bihar Order exceeded the delegated authority).
  5. Whether the petitioner was entitled to a writ under Article 226 preventing enforcement of the levy and price-control measures.

Arguments of the Parties

Petitioner's Arguments

  • Section 3(2)(f) of the Essential Commodities Act did not empower the Bihar Government to require the petitioner to sell stock to the State Government; the phrase "such person" in S.3(2)(f) cannot be read to include the State Government, so the Bihar Order exceeded statutory authority.
  • The Bihar Order and the Central Price Control Order imposed unreasonable restrictions on the petitioner's right to carry on trade or business under Article 19(1)(g) because they compelled sale at a fixed price.
  • The Central Order's fixation of Rs. 16 per maund would force the petitioner to sell at a loss (he had bought the rice at higher prices), effectively causing a total stoppage of his commercial business; this constitutes an unreasonable restriction.
  • Both orders infringed the petitioner's Article 19(1)(f) right to acquire, hold and dispose of property because the measures compelled disposal at an uneconomic or confiscatory price.

Respondents' Arguments

  • The respondents' counter-affidavit stated that the purpose of the Bihar Order was to prevent hoarding and undue profiteering by traders, to prevent unhealthy competition that could raise prices, and to ensure a ready stock of rice for sale to needy consumers at reasonable prices through fair-price shops.
  • The Central Government's price fixation was justified by Section 3(1) of the Essential Commodities Act, the object of which is to maintain supplies of essential commodities at a fair price to the general public; price fixation and uniform controlled rates are inherent in the power to control sale and distribution.
  • Practical loss to an individual trader does not render a measure constitutionally invalid if the restriction is reasonable and enacted in the interest of the general public.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bijay Cotton Mills Ltd. v. State of Ajmer, 1955 SCJ 51; AIR 1955 SC 33 The Supreme Court held that legislation (Minimum Wages Act) that may operate harshly on a particular class of employers is not thereby rendered unreasonable if it is in the interest of the general public; hardship to individual employers for economic reasons does not invalidate the law under Article 19(6). The court relied on this authority to reject the petitioner's argument that price fixation and procurement were invalid merely because they might cause loss to this petitioner. The precedent supported the view that measures enacted for public welfare may impose burdens on particular individuals without being unconstitutional.

Court's Reasoning and Analysis

The court's analysis proceeded in several discrete steps, each grounded in the statutory text and the facts declared in the record:

  1. Authority under Section 3(2)(f): The court examined the petitioner's contention that Section 3(2)(f) did not authorize the State Government to require sale to the State. The court observed that Section 3(2)(f) had been amended by Central Act No. 28 of 1957 (effective 17-9-1957) to substitute a clause expressly permitting orders to require sale to the Central Government or a State Government or to an officer or agent of such government. In view of this amendment, the court rejected the argument that the Bihar Order exceeded the statutory authority.
  2. Reasonableness of the Bihar Order: Turning to the Bihar Milled Rice Procurement (Levy) Order, the court considered its scope and mechanics: it applies only to milled rice (not paddy or hand-pounded rice) and requires sale to the State of only 50% of stock at commencement and 50% of daily production/acquisition thereafter, not the entirety of a trader's holdings. The court noted the governmental objective stated in the Government Press Note and in the respondents' counter-affidavit — preventing unhealthy price rises, hoarding and undue profiteering, and ensuring stocks for needy consumers through fair-price distribution. Considering these objectives and the limited nature of the requisition, the court concluded the restrictions are reasonable within the meaning of Articles 19(5) and 19(6).
  3. Reasonableness of the Central Price Control Order: As to the Central Order fixing Rs. 16 per maund, the court observed that the petitioner produced no material to demonstrate that the fixed price was arbitrary. The court referred to the object of Section 3(1) of the Essential Commodities Act — maintaining supplies of essential commodities at a fair price to the general public — and noted that uniform controlled pricing is inherent in the power to control sale and distribution. The mere fact that a particular trader may suffer loss because he previously purchased at higher prices does not render the price-control order unconstitutional.
  4. Balancing individual rights and public welfare: The court reiterated the established principle that rights under Articles 19(1)(f) and 19(1)(g) are not absolute. Determination of reasonableness requires balancing the nature and extent of the restriction, the manner of imposition, the purpose served, and the urgency or extent of the evil sought to be remedied. Applying these considerations, and guided by the Bijay Cotton Mills precedent, the court found the Bihar and Central Orders to be reasonable restrictions enacted in the public interest.

Holding and Implications

Holding: The petition for writ relief under Article 226 was dismissed. The court held that (a) Section 3(2)(f) (as amended) authorized the State Government action; (b) the Bihar Milled Rice Procurement (Levy) Order, 1958 imposed reasonable restrictions and did not violate Articles 19(1)(f) or 19(1)(g); and (c) the Milled Rice (Bihar) Price Control Order, 1958 was not shown to be arbitrary and likewise imposed a reasonable restriction in the public interest.

Direct consequences and implications:

  • The State of Bihar and its officers were entitled to enforce the Bihar Order and the Central Price Control Order against the petitioner; the seizure and procurement measures complained of were not declared unconstitutional.
  • The petition was dismissed with costs; the hearing fee of Rs. 200 was ordered.
  • The opinion applies established principles on the reasonableness of restrictions under Article 19 and relies on prior Supreme Court authority; the decision rejects the petitioner's challenge but does not purport to establish a novel constitutional principle beyond applying settled tests of reasonableness and public interest balancing.

This summary has been prepared strictly from the content of the provided opinion. No facts, arguments, or holdings beyond those present in the opinion have been inferred or added.

Show all summary ...

V. Ramaswami, C.J:— The question involved in this case relates to the constitutional validity of the Bihar Milled Rice Procurement (Levy) Order, 1958, promulgated by the Government of Bihar, and of the order of the Central Government called the Milled Rice (Bihar) Price Control Order 1958, fixing the maximum wholesale price of milled rice under the provisions of Section 3(2) of the Essential Commodities Act, 1955 (Act 10 of 1955).

2. In pursuance of Section 5 of the Essential Commodities Act (Act 10 of 1955), the Central Government issued a notification No. G.S.R 1088, dated 15-11-1958, providing that the powers conferred on the Central Government by S. 3(1) to make orders with regard to matters specified in S. 3(2) cls. (a) to (j) shall in relation to food-stuff be also cxercisable by the State Government. In exercise of the delegated powers given by this notification the Government of Bihar promulgated on 29-12-1953 the Bihar Milled Rice Procurement (Levy) Order, 1958, which provided for a comoulsory levy on milled rice produced or kept in stock with the owner of a rice mill or a licenced dealer as defined in the order. Sections 1, 2 and 3 of the Order are reproduced below:

“1. Short title, extent and commencement.—

(1) This Order may be called the Bihar Milled Rice Procurement (Levy) Order, 1958.

(2) It extends to the whole of the State of Bihar.

(3) It shall come into force at once.

2. Definitions.— In this Order unless the context otherwise requires,—

(a) ‘controlled price’ means the maximum price ??? in the Milled Rice (Bihar) Price Control Order, 1958;

(b) enforcement officer means an officer appointed by the State Government to enforce the provisions of this Order and includes any Police Officer not below the rank of Assistant Sub-Inspector, the District Magistrate and Sub-Divisional Magistrate within their respective jurisdictions;

(c) licensed dealer means a person holding a valid licence under the Bihar Food grains Dealers' Licensing Order, 1958;

(d) ‘miller’ means the owner or any other person in charge of a rice mill worked by power;

(e) ‘milled rice’ means rice recovered from paddy in rice mill with the aid of power;

(f) ‘rice mill’ means the plant and machinery with which and the premises including the precincts thereof in which or in any part of which, rice milling operation is carried on;

(g) ‘State Government’ means the Government of the State of Bihar.

3. Levy on rice produced or in stock, (1) Every miller shall sell to the State Govemment at the controlled price—

(a) 50 per cent, of the quantity of milled rice held in stock by him at the commencement of this Order, and

(b) 50 per cent of the total quantity of rice produced or manufactured by him in his rice mill, every day beginning with the date of the commencement of this Order until such time as the State Govemment otherwise directs.

(2) Every licensed dealer shall sell to the State Government at the controlled price—

(a) 50 per cent of the quantity of milled rice held in stock by him at the commencement of this Order, and

(b) 50 per cent of the total quantity of milled rice acquired by him every day for sale or storage for sale beginning with the date of the commencement of this Order until such time as the State Government otherwise directs.

(3) The milled rice required to be sold to the State Government under sub-cls. (1) and (2) shall be delivered by the miller or the licensed dealer to such officer as may be authorised by the State Government to take delivery on its behalf.

(4) The State Government may, by general orders notified in the Official Gazette, vary the percentage of milled rice required to be sold to the State Government under this Order.”

3. On 22-12-1958, the Central Government made an order in exercise of its powers under Section 3(2)(c) of the Essential Commodities Act, J955, fixing the maximum price of milled rice sold ex-mill or in wholesale quantities at Rs. 16/- per maund in any area within the State of Bihar. The order of the Central Government is in the following terms:

“1. Short title, extent and commencement.—

(1) This Order may be called the Milled Rice (Bihar) Price Control Order, 1958.

(2) It extends to the whole of the State of Bihar.

(3) It shall come into force at once.

2. Maximum prices at which milled-rice may be sold. (1) The maximum price at which milled-rice may be sold ex-mill or in wholesale quantities, in any area within the State of Bihar shall be Rs. 16.00/- (Rupees sixteen) per maund.

(2) For the purposes of sub-clause (1),—

(a) the price specified shall be exclusive of cost of gunny bags and shall be for delivery ex-mill or as the case may be ex-seller's godown;

(b) a ‘maund’ is equivalent in weight to 82.2/7

(c) ‘sale in wholesale quantities’ means in quantities exceeding ten maunds in any one transaction;

(d) ‘milled-rice’ means rice recovered from paddy in a rice mill with the aid of power;

(e) ‘rice mill’ means the plant and machinery with which, and the premises, including the precincts thereof, in which or any part of which, rice milling operation is carried on;

(f) the price specified is for fair average quality rice; for rice below the fair average quality, the maximum price shall be determined by reducing the specified price by the amounts of cuts indicated in the Schedule hereto applicable to the variety of rice;

(g) ‘fair average quality rice’ means rice of that quality in which the admixtures or impurities, if any, do not exceed the tolerance limits specified in the table annexed to the schedule hereto applicable to Arwa (raw) or Usna (par-boiled) variety, as the case may be x x x”

4. Acting in pursuance of the Bihar Order, respondent No. 2, the Enforcement Officer, Samastipur, seized 1075 maunds of milled rice from the total stock of the petitioner on 1-1-1959, and another quantity of 1871/2 maunds of milled rice on the 11th January, 1959. The case of the petitioner is that he had purchased the seized stock of rice from Maheshwari Rice Mills, Ghoghardiha, in the district of Muzaffarpur, at varying rates between Rs. 17/12/- per maund and Rs. 28/- per maund, besides the cost of transport etc. at the rate of Re. -/10/- annas per maund.

5. If was submitted on behalf of the petitioner that the provisions of the Bihar Milled Rice Procurement (Levy) Order, 1958, hereinaiter referred to as the Bihar Order, as also the provisions of the Order of the Central Government, dated 22-12-1958, called the Milled Rice (Bihar) Price Control Order, 1958, are unconstitutional and void as there is violation of the guarantee of the fundamental right to carry on trade or business under Article 19(g) of the Constitution.

6. It was also alleged on behalf of the petitioner that both the Bihur Order and the Central Order infringe the fundamental right of the petitioner under Article 19(f) of the Constitution to acquire, hold and dispose of property. The petitioner, therefore, prayed for grant of a writ under Article 266 of the Constitution prohibiting the State of Bihar and its officers from enforcing the provisions of the Bihar Order or from taking any steps to enforce the levy of milled rice held in stock by the petitioner or produced or manufactured by him in his rice-mill.

7. Cause has been shown in this case by the Advocate General on behalf of the respondents to whom notice of the rule was ordered to be given.

8. On behalf of the petitioner Mr. P.R Das submitted in the first place that Section 3(2)(f) of the Essential Commodities Act, 1955 (Act 10 of 1955) did not confer any authority upon the Bihar Government to require the petitioner to sell the essential commodity to the State Government or its officers. In support of this argument learned Counsel referred to the language of S. 3(2)(f) which states as follows:

“3. Powers to control production, supply, distribution, etc. of essential commodities.—

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

(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 he may be specified in the order;

9. The submission of Mr. P.R Das was that the expression “such person” or class of persons S. 3(2)(f) cannot mean the State Govermneut ani so the provisions of the Bihar Order exceed the authority conferred by Section 3(2)(f) of the Essential Commodities Act. There is no merit in the argument of learned Counsel for the petitioner, because Section 3(2)(f) of the Essential Commodities Act had been amended by the Central Act No. 28 of 1957 which came into force on 17-9-1957. Section 2 the Amending Act states:

“2. Amendment of Section 3.— In sub-section (2.) of Section 3 of the Essential Commodities Act, 1955 (10, 1955), for cl. (f), the following clause shall be substituted and shall be deemed always to have beer substituted, namely:—

(f) for requiring any person holding in stock any essential commodity to sell the whole or specified part of the stock to the Central Government or a State Government or to an officer of agent of such Government or to such order person or class of persons and in such circumstance: as may be specified in the order;”

10. In view of the amendment of S. 3(2)(f) made by the Amending Act, I reject the argument of learned Counsel for the petitioner on this point.

11. It was then submitted on behalf of the petitioner that the Bihar Order is tantamount to an unreasonable restriction on the petitioner's right to carry on trade or business and so there an infringement of the guarantee under Article 19(1)(f), and Article 19(1)(g) of the Constitution. It was pointed out by learned Counsel for the petitioner that the milled rice was actually purchased at prices varying from Rs. 17/12/- to Rs. 28/- per maund and it was unreasonable that the petitioner should be compelled to sell the rice to the State Government at the rate of Rs. 16/- per maund as fixed in the Central Order dated 22-12-1958.

12. It was contended that any order compelling the petitioner to sell at a particular price was a restriction on the right of freedom of trade of business, and an order compelling the petitioner to sell at a loss, namely, at Rs. 16/- per maund, was an unreasonable restriction. It was submitted that the enforcement of the Bihar Order will cause a total stoppage of the petitioner's business in commercial sense and so the provisions of the Bihai Order must be held to be an unreasonable restriction.

13. It was also argued that the restrictions imposed by the Bihar and Central Orders constituted violation of the right of the petitioner under Article 19(1)(f) to acquire, hold and dispose of property I do not agree with the argument of learned Counsel for the petitioner that either the Bihar Order or the Central Order infringes the guarantee of freedom of property or freedom of trade of business under Article 19(1)(f) and Article 19(1)(g) of the Constitution. Taking the Bihar Order first, consider that the restrictions imposed are reason able restrictions in the interest of general public within the meaning of Articles 19(5) and 19(6) of the Constitution.

14. It would be noticed in the first place that the Bihar Order applies solely to the procurement to milled rice and that it does not apply to paddy or hand-pounded rice. It should also be notice that the miller or licensed dealer is required to sell to the State Government at the controlled price only 50 per cent of the stock and not the whole of the stock. It appears from the Government Press Note annexure B. that the object to the procurement is to prevent rise in prices be unhealthy competition among traders and to have some ready stock of rice for sale to needy consumers at a reasonable price later on in the year.

15. In the counter-affidavit filed by the respondents it is further stated that the object of the Bihar Order was to prevent hoarding and undue profiteering by the traders in the rice market, and the purpose of the procurement was to make rice available to the general public for consumption at a controlled rate through fairprice shops: Taking all these matters into consideration I am of opinion that the provisions of the Bihar Order do not violate the guarantee under Article 19(1)(f) of the Constitution and the restrictions imposed by the Bihar Order are reasonable restrictions.

16. With regard to the Central Order of the 22nd December, 1958, fixing the maximum wholesale price of milled rice at Rs. 16/- a maund, the argument on behalf of the petitioner is that he would suffer loss if he is forced to sell the milled rice at the controlled rate, because he has already purchased it at prices varying from 17/12/- per maund to Rs. 28/- per maund. It was contended, therefore, that the provisions of the Central Order imposed unreasonable restrictions upon the right of the petitioner to carry on business and so violated the guarantee under Articles 19(1)(f) and 19(1)(g) of the Constitution.

17. I do not accept this argument as correct. No material has been furnished by the petitioner to show that the maximum price of Rs. 16/- per maund fixed by the Central Government for the sale of rice within Bihar is arbitrary. The object of price fixation as mentioned in Section 3(1) of the Essential Commodities Act (Act 10 of 1955) is to maintain the supplies of essential commodities at a fair price to the general public.

18. The fixation of one uniform controlled rate is inherent in the power to control the sale and distribution of an essential commodity, and the mere fact that in consequence of fixation of price some loss may fall upon an individual trader cannot lead to the implication that the provisions of the Central Order are constitutionally invalid. The interest of the petitioner may suffer to some extent, but the provisions of the Central Order fixing the price are enacted in the interests of the general public and those provisions cannot be struck down as unconstitutional merely because the petitioner may suffer in this particular case owing to his having purchased a quantity of rice at a higher rate.

19. In a somewhat similar case, Bijay Cotton Mills Ltd. v. State Of Ajmer, 1955 SCJ 51 : AIR 1955 SC 33), it was argued before the Supreme Court that the provisions of the Minimum Wages Act (Act XI of 1948) are bound to affect harshly and even oppressively a particular class of employers who for purely economic reasons are unable to pay the minimum wages fixed by the authorities but have absolutely no dishonest intention of exploiting their labourers. The argument was rejected by the Supreme Court and it was held that the restrictions imposed by the Minimum Wages Act were reasonable, and being imposed in the interest of the general public were protected by cl. (6) of Article 19 of the constitution. At p. 53 of the report (SCJ): (at p. 35 of AIR) Mukherjea, states as follows:

“We could not really appreciate the argument of Mr. Seervai that the provisions of the Act are bound to affect harshly and even oppressively a particular class of employers who for purely economic reasons are unable to pay the minimum wages fived by the authorities but have absolutely no dishonest intention of exploiting their labourers. If it is in the interest of the general public that the labourers should be secured adequate living wages, the intentions of the employers whether good or are really irrelevant. Individual employers might find it difficult to carry on the business on the basis of the minimum wages fixed under the Act but this must be due entirely to the economic conditions of these particular employers. That cannot be a reason for striking, down the law itself as unreasonable.”

20. In my opinion, the restriction imposed by the Central Order in the present case is a reasonable restriction and the argument of learned Counsel for the petitioner on this point must be rejected.

21. The question of reasonableness of the law in any particular case is a matter to be determined by the Court, having regard to various considerations in that case. The Court must look at the nature and extent of the restrictions, the manner in which the restrictions are imposed, the underlying purpose of the restrictions and also the ex tent and urgency of the evil sought to be remedied by the law. Having regard to all these factors I am of the opinion that the provisions of the Bihar and Central Orders which are challenged in this case impose reasonable restrictions on the right of the petitioner under Articles 19(1)(f) and 19(1)(g) of the Constitution and there is no violation of the guarantee of fundamental right of the petitioner.

22. The question of reasonableness is really one of balancing conflicting interests, of reconciling individual right and social welfare in a particular case. The right of property under Article 19(1)(f), or the right of carrying on trade or business under Article 19(1)(g), which the Constitution guarantees, are not absolute rights. The Constitution does not secure to anyone the liberty to conduct his business or dispose of his property in such a fashion as to inflict injury upon the public at large.

23. It is manifest that the rights guaranteed under Articles 19(1)(f) and 19(1)(g) are rights to be enjoyed in the context and setting of a social organization which requires the protection of law against evils which me face the heal he safety and welfare of our people. In my opinion, the restrictions imposed by the Bihar Milled Rice Procurement (Levy) Order, 1958, and by the Milled Rice (Bihar) Price Control Order, 1958, are reasonable restrictions in the interest of the general public, and the constitutional objection raised on behalf of the petitioner must be rejected.)

24. For these reasons I hold that there is no ground made out on behalf of the petitioner for grant of a writ under Article 226 of the Constitution against the respondents. In my opinion, this application fails and must be dismissed with costs. Hearing fee Rs. 200/-.

25. R.K Choudhary, J.:— I agree.

V.R.B

26. Application dismissed.