- Firms under their licence.
3. These petitions were opposed by the 4th respondent and also the Government on the basis that the impugned G. O. was good and valid and was in conformity with the provisions of the Sugar Control Order, and that it was issued in pursuance of the policy laid down by the Central Government to entrust the work of distribution of sugar entirely to the Co-operative society and thereby eliminate in the public interest the unnecessary agency of the petitioners in lifting and distributing the sugar. It was also urged that the petitioners are not entitled to seek any relief complaining infraction of their right under Articles 14 and 19 of the Constitution of India. It was further urged that there was no contravention at all of Art. 14 of the Constitution of India.
4. Our learned brother repelled all these contentions and accepted the claim of the petitioners that the impugned G. O. could not be supported by the provisions of either the Sugar Control Order or the Andhra Pradesh Sugar Dealers Licencing Order, 1963, that it was not an order issued under any of the provisions of the said laws; that it embodies mere executive instructions which directly affect valuable, legal and constitutional rights of the petitioners and grant to a registered society monopoly to trade in a commodity like sugar, which is so essential to the life of the community. The learned judge observed that this is an exceptional step for the Government to take, and is not permissible in law as what could be accomplished only by a statutory measure cannot be lawfully achieved by executive instructions of the kind. He further held that as a result of the impugned G. O. the licences given to the petitioners automatically stand cancelled even though that effect could be brought about only by following the procedure laid down in Clause 7 of the Andhra Pradesh Sugar Dealers Licensing Order. Valid provisions of law cannot thus be circumvented by sheer executive instructions. Indeed such instructions are too inadequate to neutralise the provisions of law. It was further observed that the executive instructions interfering with the exercise of discretion of competent authority cannot be validly given. On question of Article 14, the learned judge was of opinion that by singling out the 4th appellant for the conferment of monopoly in utter disregard of valid subsisting rights of 25 persons the Government have subjected themselves to a charge of invidious discrimination in the administration of the Sugar Control Order which cannot be permitted under the Constitution. As to the plea under Art. 358 or. 359 of the Constitution, he held that it is not a case where the State Government has taken the impugned action under the defence of india rules, or under any Control Order made under those Rules, so that the inapplicability of Arts. 14 and 19 may successfully be pleaded. As a result, the learned judge directed the issue of writ as prayed for. Aggrieved by this order, all the four respondents have preferred appeals. 25 in number.
5. The first point that arises for consideration in all these appeals is whether the impugned G. O. can be supported by the provisions of any valid law. The G. O. on the face of it does not refer to any express provisions of law under which it is made. The avowed object of the G. O. being grant of monopoly forthwith to the Greater Hyderabad Central Consumers Stores. Hyderabad in the twin cities and of gradual grant of monopoly to the co-operative as wholesale dealers in the districts, that order to have legal force and effect must be justified by any of the two statutes viz., the Essential Commodities Act and the Defence of India Act or the two Orders promulgated thereunder. It is so because it is not the case of the Government that the order was made in exercise of any inherent powers vested in them. Indeed there is no statute which has conferred on them such unlimited liberty of action through executive directions. Such action for its justification and validity must needs be referable to some legal sanction or authority. The G. O., therefore may be justified if it could be validly made under any of the said two Orders, namely, the Licensing Order or the Sugar Control Order, for both of them have got force and sanction of the statute. While the former derives its legal sanctity from the Essential Commodities Act, the latter has been promulgated under the defence of india rules. That being the case, we have to notice the relevant provisions of the Acts and the orders made thereunder while considering the point at issue.
6. The Essential Commodities Act (Act X of 1955) was enacted by Parliament in exercise of the legislative powers conferred upon it by Entry 33 of list 3 which was an exercise of concurrent jurisdiction. The dominant object and intendment of the Act is to secure in the interests of the general public, equitable distribution of essential commodities like sugar etc. and availability at fair prices. Section 3 of the said Act says that if the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equable distribution and availability at fair prices, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. The Central Government has thus powers to take action under this Act if the conditions postulated by Sub-Section (1) exist. The action should be in the public interests and must be necessitated or deemed expedient for maintaining or increasing supplies of essential commodities and regulating their equitable distribution etc. as set out in the section. The measures to be taken to achieve the object of the Act are of necessity varied and manifold. Sub-clause (2) of Sec. 3 provides that the order may be made inter alia for purpose of production, controlling the price, regulating the storage, transport, distribution, disposal etc. of any essential commodity by means of licences and prohibiting or withholding from sale of such essential commodity ordinarily kept for sale, for requiring any person holding in stock any essential commodity to sell the whole or a specified part of the stock to the Central Government or State 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 in the order and for other causes specified in sub-clauses of Section 3(2). Section 4 refers to the powers that may be conferred and duties imposed by the order under Section 3 of the Central Government or the State Government or officers and authorities of the Central Government or State Government. Section 5 deals with the delegation of powers by means of notified order to the State Government or the officers or authorities subordinate to the Central or the State Government. Section 6 says that any Order made under Section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act. Section 7 provides penalties for contravention of the order under Section 3. It is manifest from the above provisions that making orders under Section 3 is the exclusive privilege of the Central Government, The State Government can have no such power or privilege unless they are delegated therewith by the Central Government. The delegation contemplated by Section 5 can be effected only by notified orders specifying the matters in relation to which and conditions subject to which the power is exercisable. The delegated powers, therefore, need not cover the whole field of operation or S. 3. Of course, apart from such delegation, certain powers may be conferred on the State Government under the Order itself. Orders passed under Section 3, whether under delegated authority or otherwise, shall indeed prevail over the other enactments. This in short is the scheme of the Act.
7. The Andhra Pradesh Sugar Dealers Licencing Order, 1963 purports to be made by the State Government under Section 3 in exercise of their delegated powers The avowed object of the order seems to be mainly licencing the dealers and prohibiting sale of sugar without a licence. By its provisions it prohibits all persons from carrying on business as a dealer except under and in accordance with the terms and conditions of a licence issued in this behalf by the licencing authority. Of course, the sale or purchase of sugar on Government account and the sale by banks of stocks of sugar hypothecated to them as provided in sub-clause (4) of Clause 3 of the Order are exempt from the operation of this order. The order makes detailed provisions for issue of or refusal to grant or renew the licence and also the remedy open to the aggrieved party and the consequences of the cancellation of the licence etc. The delegated powers of the State Government in making this Order under Section 3, is confined mainly to regulating by licence the sale, distribution etc., of sugar. Hence the impugned G. O. cannot derive any legal sanction from the limited scope of this Licencing Order. Strictly speaking it is not an order containing instructions for implementation of the provisions of the Licensing Order. Indeed it runs riot with it. It is difficult nay impossible to hold, consistent with the provisions of the Licencing Order which are express, explicit and frill and provide quasi-judicial machinery and give a right of appeal to the aggrieved party on refusal of grant or renewal of licence, that the grant of monopoly of trade is the end and aim or one of the objects of that Order, which indeed is the avowed object of the impugned G. O. Nor can the G. O. be deemed to be substantive Statutory Order by itself made under Section 3 of Act 10 of 1955 in exercise of any delegated power, for, delegated authority could be vested only by a notified order in a particular manner with specification of the covered field and conditions attached thereto. The G. O. was thus beyond the competence of the State Government in the light of the provisions of Act X of 1955. "Before we part with this case we must express our deep concern over the manner in which the State Government or its officers have issued instructions in the matter of granting of licences, instructions which clearly enough are not in consonance with the provisions of law governing the grant of such licenses. We doubt the wisdom of issuing executive instructions in matters which are governed by provisions of law; even if it be considered necessary to issue instructions in such a matter, the instructions cannot be so framed or utilised as to override the provisions of law. Such a method will destroy the very basis of the rule of law and strike at the very root of orderly administration of law."
9. It is contended on behalf of the respondents that the Government had a right under the Sugar Control Order to lift the stock themselves or to nominate a person for such purpose. Further, where the nominee is an officer of the Government, such officer can as well nominate any person or organisation to lift the quotas allotted for the States or the areas. So, then, if the 4th appellant has been nominated to lift the quota, the petitioners can make no grievance of the same. There has been thus no contravention of any provision of law at all. It is difficult to countenance this argument. The contention raised fails to take into account that the avowed object of the G. O. is not limited to lifting the quota but goes much further, in that thereunder, the 4th appellant alone has to be allotted that quota for the purposes of his wholesale business. In other words, the entire quota that is allotted for twin cities of Hyderabad and Secunderabad is allotted exclusively to him for trade and commerce in total negation of the rights of the other recognised dealers who, under the licence granted to them, have a right to deal in the commodity and get certain quota for that purpose from the Government. It is in fact a grant of monopoly in favour of the 4th appellant. While it is permissible to grant different quotas for different dealers having regard to their particular circumstances, certainly it was not competent to the Government to create a monopoly in favour of one person or organisation. Such a grant of monopoly is against the intendment of the provisions of both the Orders, namely, the Sugar Control Order and the State Licensing Order. Grants of monopolies are as a rule bad at common law except in cases of statute monopolies (i.e.,) the monopolies regulated by any statute. In a democratic set up of a social welfare State the grant of monopoly in relation to commodities essential to life, unless that be made in case of emergency and in the interests of the general public must be highly deprecated. The Constitution of India does not, as a rule, favour monopoly in trade and commerce. Of course, it has provided some exceptions. While acknowledging in Art. 301 the principle of freedom of trade and commerce throughout the territory of India and in Art. 19 freedom of the citizen to follow trade, it has, however, permitted monopoly in cases where trade, business, industry or service is carried by the State or by a corporation owned and controlled by the State. That is what is expressly provided in Art. 19(6)(ii). It has also permitted restrictions on freedom of trade and commerce in times of need; but they could be imposed only by act of Parliament, if that is deemed necessary in the interests of the general public. The trade in question is not carried on by the State, nor by the State owned and controlled corporation. Further it is not a monopoly in favour of the State or the corporation of the kind. It is a monopoly in favour of an individual or an organisation. The impugned G. O. could not have validly created such monopoly. The G. O. is not a statutory order either. It is not made under the defence of india rules as pre-essential requisites of exercising jurisdiction thereunder are conspicuous by their absence and it does not conform to the required formalities either, for, such power is exercisable only under a statutory notified Order. The impugned G. O. embodies an executive instruction which is not backed up by any provision of law and hence too inadequate to defeat the rights of the recognised dealers or hold these rights in abeyance by refusing stocks of sugar to them. It is indisputable now that all the petitioners are licence holders. Their licences have been renewed even after the said G. O. and the writ proceedings in this court have started. Some of them have been renewed when the appeals were pending. They were issued by competent authority. The holders thereunder have a subsisting right to trade in sugar. It is impossible to conclude that they have obtained licences in vain after incurring delay and expense. It is equally difficult to assume that the licencing authority did not grant the licence having regard to the objects of the Act and needs of the time, When they have licences, the recognised dealers are entitled to get stocks requisite for their trade according to the quotas fixed in exercise of sound discretion by the competent authority. The impugned G. O. ought not to stand in their way and defeat their statutory and constitutional rights. It is, however, urged that Articles 14 and 19 have become effete by reason of proclamation dated 3-11-1962 and also notification dated 11-11-1962 under Article 359 of the Constitution and the petitioners cannot now complain of Infraction of fundamental rights and that the Government on account of emergency can grant monopoly to the 4th appellant in exercise of its inherent right. Whatever be the extraordinary powers of the Government in times of emergency, certainly when the Defence of India Act and the Rules thereunder or the Essential Commodities Act provide that a particular power should be exercised in a particular manner by a particular Government on existence of particular set of facts any substantial departure therefrom cannot give validity to the acts done. Under the defence of india rules when public interest so demand, in view of the fact that the provisions of Art. 19 have become effete by reason of operation of Art. 358, the trade may us well be placed under the control or in the hands of only a particular person or persons. But such an inevitable situation must be made out and the Government, whether Central or State, must form that opinion and exercise powers as a result having regard to and only in furtherance of the purposes of the said statute. That is not the case here. It is also argued in this case that, the impugned G. O. is made in implementation of the policy laid down by the Central Government to encourage the co-operative societies. But we think that the G. O. does not acquire legal validity only on the basis that it is made in furtherance of Central Governments policy which is calculated to promote the interests of certain types of organisation. What the statutes as discussed above say is that the order must be motivated by the interests of the general public and not the interests of a particular group or groups. It is significant that even the instructions of the Central Government issued on 17-4-1963 are to the effect that the quota for the period allocated should be sub allocated in such a manner that minimum dislocation of distribution takes place and there are no complaints of unemployment and favouritism and that in nominating the dealers there should be as wide a dispersal as possible. It is no doubt true that at later stages the Central Government stressed upon the need of fostering co-operative movement and encouragement of such societies. But that is not to say that while implementing the provisions of law or orders having the force of statute, considerations which have no nexus with the object of that law, should prevail or any such orders may be made as would interfere with the working of the said provisions or completely neutralise them. Preference, if any, to be given should firstly be warranted or contemplated by the provisions of law and not by the administrative instructions which run riot with them. Further preferential treatment even if it is permitted or contemplated in certain circumstances, it need not and ought not take the form of monopoly which is an extreme step and save in exceptional cases cannot be tolerated in a democratic set up of a social welfare State. We, therefore, fell, in the absence of any formal order having statutory force, the administrative instructions of the Central Government and executive directions of the State Government based thereon cannot be permitted to prevail over or interfere with the just working of the provisions of the statutory orders.
10. The result of the above discussion ii that the impugned G. O. is not a delegated piece of legislation. It does not purport to be made under the defence of india rules or under any valid statute or order having statutory force. It is a mere executive instruction. It interferes with the proper working of the Andhra Pradesh Sugar Dealers Licensing Order of 1963 and Sugar Control Order (Central of 1963). It tends to hold in abeyance, defeat or destroy the rights of the petitioners, which are expressly or by necessary implications recognised by the said Orders. It is prone even to set at naught the fundamental rights of the petitioners vouchsafed by the Constitution of India. The said G. O. cannot be permitted to stand in the way of carrying out the purpose and object of the two statutory orders. Our learned brother, was, therefore, right in issuing Writ of Mandamus as prayed for. We, therefore, dismiss all the appeals with costs. Advocates Fee Rs. 50 in each. Appeals dismissed.