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Judgment Summary — M.C. Jain, J.

Factual and Procedural Background

The petitioners are wholesale dealers in wheat who challenged a State Government notification (Ex. 1) dated 23 May 1981 issued under sub-clause (ii) of Clause 18 of the Rajasthan Trade Articles (Licensing & Control) Order, 1980 ("the 1980 Order"). The notification fixed a maximum limit of 200 quintals of wheat that a dealer may possess at any one time and came into force on 27 May 1981.

The petitioners contended that the time provided by the notification to reduce existing stocks to the prescribed limit (effectively three days from publication to the effective date) was unjust, unreasonable and insufficient. They asserted that despite their best efforts they could not dispose of stocks within the time allowed. Specific factual assertions included:

  • Some petitioners (e.g., Messrs. Pokarchand Jeevraj, SB Civil Misc. Writ Petition No. 892/81) alleged they first learned of the notification upon publication in the Rajasthan Patrika on 25 May 1981.
  • Several petitioners averred that the market was closed on 24 May 1981 (a Sunday) and that railway loading for transport was closed during relevant days.
  • One petitioner (Messrs. Pokarchand Jeevraj) stated it maintained daily stocks of 5,000–7,000 quintals and had a daily average sale of 300–400 quintals.
  • Some petitioners provided opening and closing stock figures and averred they could not reduce stocks to the prescribed limit despite all possible efforts.

The petitioners sought quashing of the notification as violative of their right to trade and constitutionally infirm.

Respondents filed returns stating the notification had been published in the Gazette and broadcast by radio on the evening of 23 May 1981 and thus was publicly known. The respondents denied the petitioners' factual claims, contending that the petitioners had not demonstrated what efforts were made to dispose of stocks and had not provided intake and out-delivery figures for the relevant period. The respondents asserted the time given was sufficient and the notification valid.

The matter proceeded as a set of writ petitions heard by M.C. Jain, J., who delivered the judgment reproduced in the provided opinion.

Legal Issues Presented

  1. Whether the time period provided in the impugned notification (published 23.5.1981 and coming into force 27.5.1981) for dealers to reduce their wheat stocks to the maximum limit of 200 quintals was reasonable.
  2. Whether the impugned notification imposed an unreasonable restriction on the petitioners' right to trade, such as to render the notification unconstitutional and liable to be quashed.

Arguments of the Parties

Petitioners' Arguments

  • The three-day period prescribed by the notification for reducing stocks was highly unjust, unreasonable and insufficient to permit dealers to bring their stocks within 200 quintals despite best efforts.
  • Some petitioners only became aware of the notification upon its newspaper publication on 25 May 1981; market and transport closures (24 May being a Sunday and railway loading closed) further impeded disposal.
  • The restriction, in light of the short time allowed, effectively placed an unjustifiable and confiscatory restriction on their right to trade and was therefore unconstitutional.
  • Reference was made to Clause 12 of the 1980 Order, which provides 15 days for disposal of stocks when a licence is cancelled or suspended; petitioners argued that if 15 days is provided in that situation, the three-day period in the notification is manifestly insufficient.
  • Reliance was placed on this Court's decision in Gordhan Lal Ramgopal v. State and on the Supreme Court decision in Oudh Sugar Mills Ltd. v. Union of India to support the contention that inadequate time for disposal can render a regulatory measure unconstitutional.

Respondents' Arguments

  • The notification was properly and publicly communicated by Gazette publication and radio broadcast on 23 May 1981; the effective date (27 May 1981) was indicated.
  • The time given to dealers was sufficient and the impugned notification was valid and reasonable.
  • The petitioners failed to demonstrate what specific steps they took to dispose of stocks or to provide necessary intake and out-delivery figures for the intervening period (the returns assert absence of such data).
  • The precedents relied on by petitioners were distinguishable on their facts: in Gordhan Lal Ramgopal no time was given; in Oudh Sugar Mills the Supreme Court found 26 days unreasonable on the specific facts (including inability to procure railway wagons despite every effort by producers).
  • Clause 12 of the 1980 Order relates to cancellation or suspension of licence and is not directly comparable to the present situation of running business; dealers could continue business subject to the maximum limit.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Gordhan Lal Ramgopal v. State Applied for the proposition that imposing a restriction without giving time to reduce existing stocks (i.e., immediate enforcement) was held to be violative of Article 301 where Article 19 was suspended in that case. The Court noted this case was distinguishable on facts (there no time was given), but held that the principles underlying it support the conclusion that inadequate time can render an order unreasonable. The Court applied those principles to find the three-day period unreasonable.
Oudh Sugar Mills Ltd. v. Union of India (Supreme Court) Considered the reasonableness of a 26-day period; held 26 days to be unreasonable in that case because producers had taken every possible step to dispose of sugar but were impeded (e.g., by non-availability of railway wagons), hence not at fault. The Court observed that the Supreme Court's finding of unreasonableness turned on the specific factual circumstances (producers proved they had taken all steps). The present Court found that while the Oudh Sugar Mills facts differed, the legal principle (that time must be reasonable in the circumstances) supported striking down the impugned notification.

Court's Reasoning and Analysis

The Court identified the principal legal question as whether the time provided in the notification was reasonable for dealers to reduce their stocks to the prescribed maximum. The analysis proceeded through the following steps, relying on the materials and averments in the writ petitions and the returns:

  1. The Court recognized that sufficiency or insufficiency of time must be evaluated in relation to factual factors including existing stock levels, a dealer's average daily sales, and any acquisition of fresh stock during the intervening period. These factors are factual but relevant to the legal question of reasonableness.
  2. The Court examined the petitioners' averments. Several petitioners provided opening and closing stock figures for 26.5.1981 and averred that despite all possible efforts they could not reduce stock to the maximum limit. The Court found these statements, in the circumstances, not to be untrue.
  3. Specific facts were noted that affected the ability to dispose of stock: some petitioners only learned of the notification on 25.5.1981 (publication in a newspaper), the market was closed on 24.5.1981 (Sunday), and railway loading was closed, impeding transport in some cases. The Court treated these facts as relevant to the question of whether the time allowed was reasonable.
  4. The Court considered the precedents cited by petitioners. While treating Gordhan Lal Ramgopal and Oudh Sugar Mills as distinguishable on their facts (one involved immediate enforcement, the other 26 days and special impediments like wagon non-availability), the Court concluded that the legal principles from both cases—namely that time to comply must be reasonable in the factual context—applied to the present case as well.
  5. The Court also examined Clause 12 of the 1980 Order (which allows 15 days for disposal of stocks upon cancellation or suspension of a licence). Although Clause 12 technically applies to a different situation (suspension/cancellation), the Court considered it informative regarding what a reasonable period might be for disposal of stock.
  6. The Court distinguished between "sufficiency of time" and "reasonableness of time," noting that the two concepts may differ. After assessing the petitioners' factual averments and contextual impediments, the Court concluded that three days was not a reasonable period to require wholesale dealers to reduce their stocks to 200 quintals.

On that basis the Court found the impugned notification to have placed an unreasonable restriction on the petitioners' right to trade and therefore to be liable to be struck down.

Holding and Implications

HOLDING: The writ petitions were allowed and the impugned notification of the State Government dated 23.5.1981 was QUASHED.

Implications:

  • The direct effect is that the specific notification fixing a maximum limit of 200 quintals to be possessed by a dealer at any one time, as issued on 23.5.1981 and effective 27.5.1981, was quashed in these proceedings; the necessary consequences flowing from that quashing were to follow.
  • The Court ordered that the parties shall bear their own costs.
  • The opinion does not purport to announce a broader new precedent beyond the application of existing principles regarding the reasonableness of time allowed for compliance; it resolves the present petitions on the ground that the three-day period was unreasonable in the factual circumstances before the Court.

This summary is limited to the information appearing in the provided opinion and does not add facts or inferences beyond the text of that opinion.

    Messrs. Pokar Chand v. The State Of Rajasthan

    The Judgment of the Court was delivered by

    M.C Jain, J.:— The petitioners in these wirit petitions are wholesale dealers in wheat. The State Government, with the prior concurrence of the Central Government, issued Notification Ex. 1 dated 23.5.1981 in exercise of the powers conferred by sub clause (ii) of Clause 18 of the Rajasthan Trade Articles Licensing and Control) Order, 1980 (hereinafter referred to as “the 1980 Order”) fixing the Maximum limit of 200 quinials of wheat to be possessed by a dealer at any one time. The notification came into force with effect from 27th May, 1981. The petitioners have challenged the validity of the aforesaid notification of the State Government inter alia on the ground that the time given for reducing the stock of wheat upto 200 quintals by 26th of May, 1981, was highly unjust, unreasonable and insufficient. The petitioners' case is that inspite of best of efforts on their parts, it was not possible for them to dispess of their existing stooke with in the time gives to the petitioners under the said notification. According to Messrs. Pokarchand Jeevraj (SB Civil Misc. Writ Petition No. 892/81) the petitioner came to know of the aforesaid notification when it was published in the Rajasthan Patrika on 25.5.1981 and some of the other petitioners in their respective writ petitions, have likewise everred. In Writ Petitions No. 968/81 to 976/81 and No. 984/81 the petitioners have also averred that the market was closed on 24.5.1981 as it was Sunday and they have further averred that during these days, the Railway loading was closed. These petitioners are from Ganganagar District, which is essentially a wheat producing area. The petitioner Messrs. Pokarchand Jeevraj in its writ petition averred that for the last 2-3 months it was having a daily stock of 5,000. to 7,000 quintals of wheat. In these months his daily average sele was 300 to 400 quintals wheat It used to send wheat for sale outside Jodhpur and used to sell wheat to dealers locally. Thus the case of all the petitioners is that inspite, of all possible efforts it was not possible for the petitioners to bring down their stocks to the maximum limit fixed by the aforesaid notification. The petitioners have alleged that having regard to the time given under the notification, the notification the placed unreasonable and unjust restriction on the petitioner's right to trade and the notification is essentially confiscatory in the nature, if viewed in the light of the time provided to the dealers. The petitioners have prayed that the notification being violative of the petitioners' right to trade, may be struck down being unconstitutional.

    2. Returns to the writ petitions have been filed by the respondents, in which it was averred that by publishing the notification in the Gazette as well as by radio broadcasting on 23.5.1981 in the evening, it was made publicly known. The respondents refuted the grounds on which challenge to the validity of the notification has been made by the petitioners and it was averred that the petitioners have not shown as to what efforts were made by them to dispose of their stocks and further the petitioners have not shown as to what has been their in-take and out-delivery of wheat between the period from 23.5.1981 to 26.3.1981

    3. Accordidg to the respondents, time given to the dealers, was suffici-cient and the notification is perfectly valid and reasonable.

    4. I have heard Shri H.M Parekh, Shri M.L Garg, and Shri L.M Lodha, learned counsel for the petitioners, and Shri D.S Sbishodia, Government Advocate, for the respondents.

    5. The principal challenge to the notification on behalf of the petitioners is that the time given in the notification is most insufficient and unreasonable, in which it was not possible for the dealers to reduce their stocks to the maximum limit despite best efforts on their part, so on this ground the notification is violative of the petitioner's right to trade. The learned counsel for the petitioners supported their contention by placing reliance on a decision of this Court in Gordhan Lal Ramgopal v. State (1) in which reference has been made to a decision of the Supreme Court in Oudh Sugar Mills Ltd. v. Union of India (2). The learned counsel for the petitioners also referred to Clause 12 of the 1980 Order, which provides that when a licence under this Order is cancelled or suspended, the stocks of trade articles available with the dealer at the time of such cancellation or suspension, shall be disposed of by him within 15 days from the date of receipt of the order of cancellation or suspension. The learned counsel for the petitioners submitted that under Clause 12 when the licence is suspended or cancelled, the dealer is given 15 days time to dispose of his available stocks. If the notification is viewed even in the light of Clause 12, the time allowed to the dealers under the impugned notification, clearly appears to be insufficient and unreasonable.

    6. Mr. D.S Sbishodia, learned Government Advocate, submitted that the two cases relied upon by the learned counsel for the petitioners, are the cases, which are clearly distinguishable. He submitted that in Gordhan Lal Ramgopal's case supra an amendment order was enforced immediately and no time was given. In that case by Clause 4A Para 3 of the Rajasthan Foodgrains (Prevention of Hoardings) Amendment Order, 1973 (hereinafter referred to as “the Amendment Order, 1973”) it was provided that no person shall have in his possession at any one time, all foodgrains taken together in quantity exceeding 150 quintals. As no time was given to bring down the existing stocks, it was hold that the Amendment Order was violative of Art. 301, as Art. 19 was suspended at that time.

    7. As regards the other decision, referred to above, Shri Sbishodia submitted that their Lordships of the Supreme Court considered the time of 26 days as unreasonable in the light of the facts as appeared in that case. He submitted that, that was a case where restriction was placed on the producers for bringing down their stocks. Shishodia mentioned the facts appeared in that case that the producers after the premutation of the order entered into contracts with the dealers for the sale of sugar. They also applied for railway wagons for transport of sugar to the States outside their own. Most of the sugar released for open sale was removed from their godowns within the time prescribed, but each of the appellants was not able to put into open market a fraction of the sugar released for sale in the open market as the railway wagons were not made available to them in time. Thus, it was satisfectorily proved that the producers have taken every possibie step to dispose of the sugar. If they were not able to dispose of some portion of the sugar released, it was not due to any fault of theirs. It is these circumstances that the time given was held to be unreasonable. Shri Shishodia pointed out that such a case is not made out by the petitioners in these writ petitions and so it may not be found that the time given in the notification is unreasonable. He vehemently urged that the petitioners have also not given figures of their in-take and out-delvery, so as to know as to whether the petitioners during the intervening time purchased fresh stocks in such a quantity, so that it may have become impossible for the petitioners to reduce their stocks to the prescribed limit. Thus, in the absence of necessary data, according to Shri Shishodia, the finding may not be reached that the time given under the notification is unreasonable.

    8. Shri Shishodia also submitted that Clause 12 of the 1980 Order is not relevant as that Clause deals with a situation when the licence is suspended or cancelled and it does not deal with running business. The dealers can continue to run their business within the maximum limit of stocks and time given is to be judged in this light.

    9. For appreciation of the controversy, it would be proper to read the impugned Notification, which is as under:—

    “GOVERNMENT OF RAJASTHAN

    (FOOD & CIVIL SUPPLIES DEPARTMENT)

    NOTIFICATION

    Jaipur, dated 23.5.1981

    SO. In exercise of the powers conferred by sub-clause (ii) of clause 18 of the Rajasthan Trade Articles (Licensing & Control) Order, 1980. the State Government with prior concurrence of the Central Government hereby fix the maximum limit of 200 quintals of wheat to be possessed by a dealer at any one time.

    It shall come into force with effect from 27th May, 81.

    No. 17 (iii) F/S/Legal/80

    By Order of the Governor

    (R.P Nag)

    Dy. Secretary to the Govt.”

    10. The main question, which emerges for consideration, in these writ peti tions, is as to whether the time provided in the notification is reasonable for the dealers to bring their stocks to the maximum limit provided under the notifica tion. Sufficiiency or insufficiency of time, no doubt, has retation with the existing stocks and further it has relation with the average daily sale of each dealer and this factor too is relevant as to whether in the intervening time, there has been any acquisition of stocks to such an extent, which might have rendered reduction to the maximum limit impossible. All these factors are, no doubt, relevant and they have factual aspacts, but still the matter can be viewed in the light of the three days time given to the dealers under the notification. Had the time been stretched to a larger period, perhaps all these above mentioned factors would have been more relevant. In the case of the petitioners in writ petitions No. 968/81 to 976/81 and 984/81, the petitioners have averred that on 24.5.1981 the market was closed, as 24.5.81 was Sunday and they have further averred that transport through rail way, was not possible, as the railway loading was closed. In the case of the petitioner Messrs. Pokerchand Jeevraj some reasons have already been stated, above. This petitioner has given its average stocks and as well as average daily sale and considering the stock and the daily sale, it was not possible for the petitioner to dispose of its stock to bring it to the maximum-limit. Most of the petitioners have also given their opening stocks as well as the closing stocks on 26.5.1981 and all the petitioners have averred that despite all possible efforts, they could not dispose of the stocks to reduce it to the maximum limit. This statement made by the petitioners, in the circumstances, does not appear to be untrue and on that basis it can legitimately be found that the time given in the notification for bringing the stock to the maximum limit was unreasonable. It is true that the two cases cited by the learned counsel for the petitioners are distinguishable on facts. In the Rajasthan case no time was given and in the Supreme Court case 26 days time given to the producers was held to be unreasonable in the light of the facts and circumstances that appeared in that case, but if the facts and circumstances, of the present cases are considered, this can be the only just and reasonable conclusion that the time given in the notification too, is unreasonable, so the principles of both these cases apply to the present case, as Well. Further Clause 12 of the 1980 Order, in my opinion, ‘does throw some light on the question of reasonable time to be allowed to the dealers to bring down their stocks It is true that Clause 12 deals with the situation when licence is cancelled or suspended and the dealer, has to completely stop the business, but in that case 15 days, time has been allowed. Even when the business is allowed to run, within a certain stock limit, still the time to be given to, the dealers to bring down their stooks, should be a reasonable time and three days time cannot be considered to be reasonable. Sufficiency of time and reasonableness of time appear to be two different matters The time given may be reasonable, but may be insuffic entthen on that basis, the notification is not liable to be struck down But it is not so in the present case. In this view of the matter, the impugned notification deserve to be struck down as having placed unreasonable restriction on the petitioners' right to trade.

    11. In view of the fact that the writ petitions succeed on the above ground alone, it is not necessary to go into the other grounds.

    12. In the result, the writ petitions are allowed and the impugned notification of the State Government dated 23.5.1981, is quashed. The necessary consequences thereof shall follow. However, in the circumstances of the case, the parties shall bear their own costs.

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    Messrs. Pokar Chand v. The State Of Rajasthan
    (Sep 4, 1981)