TMI Blog1961 (9) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... d of licence for 1960 had already expired and a fresh application would have to be made for a license for 1961. A fresh application was accordingly made by the petitioner on February 4, 1961. But before that date: a fresh Assam Foodgrains (Licensing, and Control) Order, 1961 was made by the Governor of Assam and the application made by the Petitioner had to be dealt with under the new Order. No order having been made on this fresh application by the Deputy Commissioner, the petitioner moved this Court by means of a petition (C.M.P. No. 850 of 1961) asking for certain reliefs, one of which was that the respondents, namely, the licensing authorities, should be directed to consider the application of the petitioner and grant him a license. On April II, 1961 an order was made rejecting the application of the petitioner. This order which is impugned before us was in these terms. Having regard to the existing licenses in these areas (Mangaldai and Gauhati), and the quantity of foodgrains available therein, any further license would be superfluous. When the petition was again put up for hearing on May 1, 1961 the petitioner asked for time to amend his original, petition, which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Apex Marketing Society. The Society will procure paddy from the 'growers through various service Co-operative Societies spread over the district or sub-division. They will procure all available surplus paddy and deliver to Supply Department the quantity required for the buffer stock for those areas. Any paddy procured by them which is not required by us may be delivered to the mills. A copy of the letter was forwarded to all licensing authorities. on January 5, 1960, the Assam Foodgrains (Licensing and Control) Order, 1960, came into force. This replaced the earlier Order of 1958. Clause 5 of the 1960 Order was in these terms: 5. Maiters to be taken into consideration for granting a license. In granting or refusing a license under this Order, the licensing authority shall among other matters have regard to the following, namely:- (a) the stock of foodgrains available in the locality for which the license is required; (b) the number of persons who have applied for and/or been granted licenser, in respect of the foodgrains under this Order in the locality (c) the business ordinarily carried on by the applicant; and (d) the past activities of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier made by the petitioner to the High Court on June 7, 1960 were withdrawn and a fresh application was made on June 15, 1960, which, was directed against the order dated June 8, 1960. On August 10, 1960 the High Court again set aside the order and directed the licensing authority to act independently of instructions received from the Government and, to apply its mind to the merits of the application and, decide it in accordance with the relevant provisions of the Assam Foodgrains (Licensing and Control) Order, 1960. Again, no orders were made by the licensing authority till September 8, 1960 in accordance with the directions of the High Court, and the petitioner made two applications on that date: one for enforcing the direction of the High Court, and the other for initiating proceedings in contempt. These applications were admitted and it is stated that notices were served on the respondents, including the licensing authority, on that very date. On September 13, 1960 the licensing authority made another order, again rejecting the application of the petitioner. This order stated inter alia: For the areas for which the application have been made the Assam Co-operative Apex M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pposite, parties by way of contempt, mainly on the ground. that the order made on September 13, 1960, was not before it. On behalf of the petitioner the order dated April 11, 1961, has been impugned on two main grounds. The first ground of attack is that sub-cl.(e) of cl.5 of the control Order, 1961 is ultra vires, because it goes beyond the powers granted to the State Government under s. 3 read with S. 5 of the 'Essential Commodities' Act, 1955. The second ground of attack is that 'even if sub-cl. (e) of cl. 5 of the Control Order.. 1961, is intra vires being within the powers granted to the State Government, it merely allows the licensing authority to take into consideration, among, other relevant matters, the circumstance that the applicant for a licence is a co- operative society; it does not say that a monopoly right of procurement Should be given in favour of a co-operative society by excluding all. Others; therefore, it was not open to the, licensing authority to proceed on the footing as if that sub clause bad created a right of monopoly in favour of co-operatives. The argument. is that in the present case, the licensing authority instead of applying its mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssential Commodities Act, 1955 have not been challenged before us. What has been contended before us is that s.3 of the Act gives, certain powers to the Central Government, which powers the Central Government has delegated the State Government of Assam. These powers it is contended, do not authorise the insertion of sub-cl. (e) of cl. 5 of the Control Order, 1961; in other words the argument is that whether the applicant for a licence is a, co-operative Society or not has no relevance whatsoever to the objects fur which s. 3 grants the powers to the Central-Government or its delegate to make certain Orders. Sub-section (1) of a. 3 is relevant to this argument and reads: 3 (1) If the Central Government is of *onion that it is necessary or expedient an to do for maintaining or increasing supplies of my essential commodity or for securing their equitable 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. Sub-section (2) of s. 3 which we need not read enumerates the various categories of Orders which can be made in exercise of the powers conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is no disputed before us that sub- cls.(a) (a) to (d)fall within the powers conferred by s. 3. Matters such as the stock of foodgrains, available in the locality for which the license is required, the number, Of persons who have applied for and those who have been granted licenses in the locality, the business ordinarily carried on by the applicant, and the 'Past activities of the applicant as a licensee or businessman, are undoubtedly matter which have; relation to the two objects mentioned in s. 3. Can it be. said that the fifth matter mentioned in sub-cl. (e) viz., whether the applicant is a co-operative society is completely' unrelated to those two, objects? We are unable to say that it is. In the counter-affidavit filed on. behalf of the respondents it has; been stated that cooperative societies have better facilities for procuring foodgrains and are in a position to ensure scheduled prices to the farmers who, grow paddy. It has been further stated that amongst the cooperative societies, axe primary, societies which consist of the growers of paddy there are also cooperative societies called supply co-operatives which are in a position to eliminate middle-man' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust satisfy two conditions : (1) it must be founded on intelligible differentia, and (2) the differentia must have a rational relation to the objects sought to be achieved. The question was considered from the point of view of Art. 14 of the Constitution and it was held that the action of the State Government in entrusting wholesale distribution of sugar to cooperative societies to the exclusion of other licence-holders amounted to a discrimination which violated the right guaranteed under Art. 14. The principles underlying Art. 14 of the Constitution are now well-settled and have been enunciated and explained in a number of decisions of this Court and we consider it unnecessary to refer to those principles in detail. In the case under our consideration no discrimination has been made between one class of license holders and another class of license-holders as in the case of Ramanlal Nagardas V. M. S. Palnitkar A. I. R. 1961 Guj. 38. What has happened in the present' case is that licenses have been granted only to cooperative societies and a license has been denied to the petitioner, the licensing authority proceeding on the footing that a monopoly must be created in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment had decided to introduce a right of monopoly procurement of paddy in favour of co-operative societies and therefore, no licenses should be granted to individual dealers other than cooperative societies. Judged against the background of facts to 'which we have earlier referred in this Judgment, the impugned order dated April 11, 1961 appears to us to have been based on the same ground, namely, the creation of a monopoly in favour of co-operatives, even though the order refers to existing licenses and the quantity of foodgrains available in the locality. In the course of the hearing before us, the case was adjourned in order to give the parties an opportunity of filing necessary affidavits to show whether individual dealers other than co-operatives have been completely excluded in the whole of the State in the matter of dealing in paddy. The affidavits show that private dealers have been completely excluded. In the affidavit filed on behalf of respondent No. 1, it has been stated in para. 4: It is not denied that in the year 1961 licenses for the procurement of paddy have been issued to the co-operatives in all the paddy producing districts in Assam. To show h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1961 will come to an end within a few months., the applications should be dealt with as expeditiously as possible so that the right of the petitioner may not be rendered infructuous by reason of the delay made in disposing of the applications. Before we part with this case we express our deep concern over the manner in which the State Government or its officers have issued instructions in the matter of granting' of licenses, 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 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. We have thought it necessary to refer to this matter because we feel that the instructions which the State Government or its officers have issued in the matter of granting of licenses for the procurement of paddy are not in consonance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am co- operative Marketing Society has already been' granted a licence to deal in rice and paddy with branches spread all over this district, it is considered unnecessary to grant further dealing licences to individual dealers for the same area. Hence the petition is rejected. The petitioner thereupon dropped his motion to the High, Court of Assam of June 7, 1960 and moved the High Court afresh under Art. 226 against the order of June 8, 1960 refusing him the licence and the High Court on August 8, 1960, quashed it on the ground that the licensing authority had to act in a quasi-judicial capacity and that it bad decided the case on the instructions of the State Government without considering for itself the merits of the case in terms of the Licensing Order. The authority was again directed to decide the case in a quasijudicial capacity. The licensing authority not having taken up for decision the petitioner's case for the grant of licence as directed by the High Court, he moved. the High Court on September 8, 1960 for appropriate reliefs. On receipt of the notice of this motion the licensing authority passed an order on September 13, 1960, again refusing to grant lic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion might stand adjourned. An order was thereupon made adjourning the petition sine die. Thereafter the petitioner on February 4, 1961, made a fresh application for licence for dealing in paddy for the year 1961. An order was made by the licensing authority on this application on April 1 1, 1961, in these terms : Having regard to the existing licences in these areas (Mangaldai and Gauhati), and the quantity of food grains available therein, an further licence would be superfluous. In the result the petitioner was refused licence for the year 1961. Thereafter, the petitioner under orders obtained from this Court amended hi,$ petition and now seeks to challenge the. order of April 11, 1961. The respondents to this petition axe the State of Assam and some of its officers including the licensing, authority concerned, as also. the Assam Co-operative Apex Marketing Society, hereafter called the Apex Society. As I have already said, the application for licence for 1961 was governed by the Licensing Order, 1961. The dispute in this case mainly turns on cl. (e) of paragraph 5 of this Order. That paragraph is in these terms: In granting or refusing a licence under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplies of essential commodities which include foodgrains and to secure their equitable distribution and availability at fair prices. Clause (e0 of paragraph 5 of the Licensing Order, 1961 certainly allows a co-operative society to be Preferred. in the matter of a grant of licence. The question then is, would the object of the, Act be achieved if the trade in paddy is given to co-operative societies ? I think it would. A co-operative society is one which has as its object the promotion of the, economic interests of its members in accordance with co-operative principles : see s. 4 of the Co-operative Societies Act, 1912. A society carries on business in accordance with co-operative principles when it trades with its own members, the profit motive not being paramount in such business. When, therefore, a licence to purchase paddy is given to a co-operative society of growers, what happens is that the seller sells to a body of which he is a member. The result is the virtual elimination of the middleman and a consequential reduction in the price. The following observation,% from the judgment of this Court in Narendra Kumar v. The Union of India [1960] 22 S. C. R. 375 are, to my mind, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grant of these permits in a certain communication to the Chief Industrial Adviser. Under these principles, no permit could be issued to a dealer but it could only be issued to certain manufacturers. The result was that the dealer's trade was totally prohibited and only certain manufacturers were eligible for permits to carry on the trade of rolling non-ferrous metals. Certain dealers moved this Court under Art. 32 for a declaration that el. (4) read with the principles formulated by the Government was bad as offending Art. 19(1)(f) and (g). This Court held that (p. 387) : It is reasonable to think that the makers of the Constitution considered the word restriction to be sufficiently wide to save laws 'inconsistent' with Art. 19(1), or taking away the rights' conferred by the Article, provided this inconsistency or taking away was reasonable in the interests of the different matters mentioned in the clause. There can be no doubt therefore that they intended the word restriction' to include cases of 'prohibition' also. The contention that a law prohibiting the exercise of a fundamental right is in no case saved, cannot therefore be accepted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of grounds on which the Central Government or the Chief Controller of Imports and Exports might refuse to grant a licence or direct any other licensing authority not to grant a licence. The ground mentioned in el. (h) of this paragraph was ,if the licensing authority decide to canalise imports and the distribution thereof through special or specialised agencies or channels. It appears that since 1958, licences had been granted to the State Trading Corporation. No applications for licences had been, made by the petitioners or any other trader at any time since 1957. It was however contended that so long as paragraph 6(h) of the Order remained, it was useless for the private traders to apply for licences. The argument advanced on behalf of the petitioners was that paragraph 6(h) was void being in contravention of Art. 19(1)(f) and (g). In regard to this argument this Court observed: It is obvious that if a decision has been made that imports shall be by particular agencies or channels the granting of licence to any applicant outside the agency or channel would frustrate the implementation of that decision. If therefore a canalization of imports is in the interests of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to create a monopoly in favour of the Apex Society. The first thing that I wish to observe is that licences have not been given for the year 1961 to the Apex Society but they have been given to a large number of primary co-operative societies of growers. I find it difficult, in any case, to appreciate how this can be said to create a monopoly. It may amount to a prohibition of trade by some persons. That however is a different matter with which I have already dealt. I may state here that it appears that in 1960 the licences had been issued to the Apex Society, but that is not the situation now. Whether what was done in 1960 was strictly legal or not is not a question that now arises, for we are no longer concerned with the licences for 1960. I Before proceeding further, I think it right to I say a few things about the co-operative societies with which we are concerned. About 1957, the Assam Government sponsored the formation of the Apex Society. I would like to remind here. that it is one of the directive principles of the Constitution that co-operative societies should be encouraged. Now, the structure of the Apex Society is like a pyramid. It appears to have three tiers. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marketing and service societies. It is to these societies that the licences had been issued of which, a grievance is being made by the petitioner. It appears that after the Apex and the subsidiary societies had been formed, the State Government with the concurrence of the Central Government decided on a policy of procuring paddy in certain specified areas only through these societies. The State Government thereupon issued instructions to certain officers at the end of 1959 at procurement of paddy for the Kharif year 1959-60 would be made through the co-operative societies. It may be that it was for this reason that the licensing authority had stated in its order of February 17, 1930, earlier mentioned, that the petitioner's application for a licence could not be considered. I have now to remind that the Licensing Order, 1960 did not contain any provision enabling preference 'being given to a co-operative society in the grant of a licence. This case however is not concerned any more with regard to a licence for the year 1960 or the validity of any order of the licensing authority refusing to grant the petitioner any licence for that year.. Returning to the contention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have 'to be held to have been made under these instructions. I am unable to take such a view of the matter. As already stated, the High Court had by its Order of August 10, 1960 asked the licensing authority to proceed in a quasi-judicial manner. There is no reason to think that the licensing authority had not observed this direction of the High Court. It also seems to me reasonable to think that the Assam Government inserted cl. (e) in paragraph 5 of the Licensing Order, 1961 in view of the judgments of the High Court of Assam to which I have earlier referred. The Assam Government obviously intended that the licensing authority would in view of cl. (e) give preference to the co-operative societies. Furthermore, s. 4 of the Act provides that an order made under s. 3 conferring powers on any officer or authority may contain directions to him as to the exercise of such powers. In my view, for the reasons earlier stated, a direction in the Licensing Order to give preference to co-operative societies would not be bad. It seems to me that cl. (e) of paragraph 5 of the Licensing Order, 1961 really amounts to such a direction. It was not necessary after the Licensing Order, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
