TMI Blog1962 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... his mines, without reference to the impugned notifications. This petition was dismissed by the learned Judges of the High Court who, however, granted the appellant a certificate which has enabled him to file this appeal. 2. A few facts are necessary to be stated to appreciate the exact grievance of the petitioner and the grounds upon which the notifications etc. issued by Government are stated to contravene the Constitution and in particular to infringe the freedom granted to the appellant under Part III of the Constitution. The appellant is a lessee of certain manganese mines in two areas of Madhya Pradesh. The leases are stated to have been granted to him in the year 1953 for a period of 20 years each, with an option for renewal if the appellant so desired, under the Mineral Concession Rules, 1949, for a like period. It is an admitted fact that the internal demand for manganese ore in India is very inconsiderable, so that the ore is extracted mostly for the purpose of being exported out of India. Having regard to the date when the appellant obtained the mining leases, he could not have won any appreciable quantity of the metal during 1953, nor, of course, could he have exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained the aforesaid Act, the Central Government may, by order published in the Official Gazette, prohibit, restrict or impose conditions on the clearance, whether for home consumption or for shipment abroad of any goods or class of goods imported into India. Under the powers conferred by this section the Central Government issue the Exports Control Order, 1958 (or shortly the Control Order), Clause 3 of which provided that no person shall export any goods of the description specified in Schedule I except under and in accordance with a licence granted by the Central Government or by any officer specified in Schedule II. Manganese and iron ore were specified in the First Schedule. Clause 6 of this order sets out the grounds upon which the Central Government or the Chief Controller of Exports and Imports may refuse to grant a licence or direct a licensing authority not to grant a licence. In view of certain points urged before us it would be convenient to set out this clause in full :- 6. Refusal of licence. - The Central Government or the Chief Controller of Imports and Exports may refuse to grant a licence or direct any other licensing authority not to grant a licence : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively increasing measure through the State Trading Corporation which would in its turn rely on the mining interests in the country and use the existing trade mechanism to the extent practicable. For these reasons, they announced that a regulation would take place of the expert of these ores during the half year July-December, 1956 through three classes of exporters :- (1) Established shippers who would be granted export quotas on the average of the quantities exported during the years 1953, 1954 and 1955. (2) Mine-owners based on a annual average of the quantity of ore on which royalty was paid during the calendar years 1953, 1954 and 1955, and (3) The State Trading Corporation which would be given a quota on an ad hoc basis. It is only necessary to mention that the State Trading Corporation which is a Corporation owned and controlled by the Union Government came into existence by registration under the Indian Companies Act in May, 1956. Rail transport facilities co-extensive with the quota granted, were also assured for those to whom quotas were granted. There were clarifications and unsubstantial variations of this Press Note to which, however, it is not necessary to refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The established shippers, the mine-owners, exporters and the State Trading Corporation will be given an allotment of quota for a quantity equal to the quota for 1957-58. (ii) Firms and parties whose individual allotments are small are advised to form co-operative or limited companies. At the date when the writ petition out of which this appeal arises was filed, the policy-statement of May 26, 1958, was in force and it was the validity of the restriction and control exercised by it that was challenged as unconstitutional in the petition filed by the appellant. The position at that date may be summarised as follows :- (1) From and after July, 1956 the export of manganese ore had been controlled or restricted. (2) The restriction had taken the form of allotment of quotas for export granted to : (a) established exporters, i.e., comprising the category of these who had exported from 1953 onwards, (b) mine-owners who had similarly exported the ore won by them with a similar limitation as to the year when they should have exported, and (c) The State Trading Corporation which was granted an export quota on an ad hoc basis to cover every other quantity which could be expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be subject to the control of the Courts but as no relief based on such a complaint was claimed by the appellant, it is not necessary to pursue the point or examine its merits. 9. The case of the appellant has to be judged on the basis of two admitted features resulting from the policy statements of Government we have set out earlier : (1) That mine-owners who were new-comers , i.e., not having export performance in certain basic years, were excluded from direct participation in the export trade, but these persons had, in view of the practical absence of an internal market for manganese ore to sell their goods to others who had been granted facility for export. (2) That the category of persons to whom they could sell their ore were two (a) Established shippers, and (b) The State Trading Corporation, and with the nature of this market as already described. 10. The question raised for consideration by the appeal is whether the withholding of the right to engage in export trade from this class of mine owners constitutes an unreasonable restriction on their right to carry on business guaranteed by Article 19(1)(g) of the Constitution. 11. Pausing here we might put aside one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly to create a monopoly in favour of any particular person or group which is what Rule 6(h) has effected. 13. The argument was put in a slightly different form by reference to the provisions of Article 19(6). Article 19(1)(g), after guaranteeing to all citizens the right to carry on any occupation, trade or business, had gone on to provide in Clause (6) the restrictions which may constitutionally be imposed on the right thus guaranteed, and the clause as it now stands after the first Amendment of the Constitution reads, to quote the material words : Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law insofar as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law insofar as it relates to, or prevent the State from making any law relating to, - (i) (ii) the carrying on by the State, or by corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. If the quantum of the export in a commodity could be restricted, the control that would effectuate this must necessarily extend to the persons engaged in or desirous of engaging in the export of that commodity and this would a fortiori be so, if the restriction takes the form of a prohibition of exports in a commodity altogether. If therefore the control or restriction could legally extend to the persons who are engaged in the trade; it would appear to follow as a logical step that the restriction might take the form of classifying the persons who might participate in the trade and the conditions subject to which any particular class might be permitted to do so. It would be a matter of policy for the Government to determine, having regard to the nature of the commodity and the circumstances attending the export trade in it, to lay down the basis for the classification between groups and fix their relative priorities etc. When Clause 6(h) permits canalising or the channelling of exports through selected agencies it does not no more than make provision for the classification into groups etc. which but one of the modes which the control under Section 3 of the Act might assume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State Trading Corporation was preferred as a principal agency for canalising the export trade in this commodity. The vital necessity of export earnings for sustaining national economy not being a matter of controversy, the question which the Government had to consider was how best to ensure the optimum earning from exports of manganese ore. India has no monopoly in the production of this ore and consequently the price of the commodity in the foreign market is dependent on world-wide factors. Having regard to the use to which the ore is capable of being put, viz., by steel factories in the production of steel, the foreign buyers, (and in this one factor to be taken into account is that in several foreign countries external trade is conducted through State agencies), are insistent that there shall be a regular supply of ore of uniform quality. There had been complaints in early years, when the trade in the commodity was unrestricted and not under any control, that the quality of the ore supplied was not according to sample, with the result that even the trade of those who took pains to maintain their quality of supplies suffered. It was in these circumstances that Government steppe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion could have been taken to the notifications on the arguments addressed to us by learned Counsel for the appellant. In such a state of circumstances the appellant would have been excluded but he could not still complain that he was illegally eliminated because this exclusion was necessary consequence of channelling or canalising of the exports through persons with previous experience in the field. 18. The real grievance of the appellant was that in preference to him and those like him, who win the ore to be exported, the State Trading Corporation which had no previous experience of the export trade should have been selected as the agency for canalising exports. There is no doubt that if the only test of differentiation was previous experience, the preference of the State Trading Corporation to the appellant and the others of the class to which he belongs, might not be justified, but that is not the sole test by which the matter has to be judged. We have set out earlier the grounds upon which choice of the State Trading Corporation as the agency for effecting the export trade was determined by the Government and we consider that for those reasons there was nothing improper in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol and a type of restriction which it was legally competent to be imposed under 6(h). In the case of other commodities, new-comers have been granted a quota. That however naturally depended upon the nature of the trade, the nature of the export market and other factors which it is the province of Government to take into account. Having stated this legal position, we would hasten to add that it was not the view of the Government that the export trade in manganese ore was such that new-comers could never be permitted into that trade is clear from the several policy-statements themselves in which, from time to time, they conveyed an assurance that the allotment of quotas to the new-comers was under consideration. In the case of a commodity like manganese ore for which there is not much of an internal market the denial of a right to any group or we shall add, to any individual to export would in effect affect him adversely forcing him to sell to others who have been given such a facility. Persons like the appellant were being fed on hopes of some relief to them and it was a case not merely of hope deferred making the heart sick, but of dashed hopes that led the appellant to approac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his favour. 25. The facts giving rise to this appeal may be briefly stated. The appellant is the lessee of manganese mines situated in the State of Madhya Pradesh. He carries on the business of mining and selling the ore raised therefrom. There is practically no internal market for manganese, and most of the manganese produced in India is exported to foreign countries. The internal trade in regard to manganese ore being negligible, it may be ignored for the purpose of this case. Till about the middle of 1956, miners, including the appellant, were free to deal with foreign buyers for exporting their products and to sell them at their sidings to exporters or to carry them to any port by obtaining necessary wagon allotments from the Railways. But from May, 1956, the Government of India issued various notifications progressively restricting the export quotas available to the shippers and mine-owners, culminating in a stage when direct export by mine-owners and shippers was stopped and the entire trade canalized through the State Trading Corporation originally formed by the Government as a private company under the Companies Act, 1956 and subsequently made into a public company. We s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not get any experience in the business of export compared to other experienced exporters. In any view, the ultimate effect of the policy statements is to create a monopoly in the export trade in manganese in favour of the State Trading Corporation and other qualified exporters, and later on solely in favour of the said Corporation, without at the same time safeguarding the interests of miners like the appellant by fixing appropriate quotas or otherwise : with the result, they are compelled either not to do the business at all or put themselves at the mercy of others, who are in a position to dictate terms and who may or not buy the ore from them. The implementation of the policy to the detriment of miners like the appellant is an unreasonable restriction on their right to carry on their business in mining and selling manganese ore. 27. Learned Counsel for the respondents contended that the petition filed by the appellant under Article 226 of the Constitution should be dismissed on the ground that it has become infructuous, as the year for which the licence was asked, namely, 1959, had run out. The learned Counsel also sought to support the order made by the first respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is true that the Central Government cannot interfere with internal trade under the colour of regulating export, but the power to prohibit, restrict or control exports of goods carries with it, by implication, the power to do all things intimately connected with the regulation of export trade. If the power was confined only to the export point, it would defeat the purpose of the Act. The main object of regulating export trade is to assist the national economy. This object can be achieved only by devising ways and means to promote export and to secure favourable balance of trade. A machinery will have to be evolved to select the goods which the country can spare or may prefer to exchange for more essential foreign goods, to find suitable foreign markets for them and to take necessary steps to establish a reputation for Indian goods by securing qualitative standards, prompt deliveries and honest dealings, and to prevent avoidable hardships by allotting quotas to businessmen or equitable principles, to fix reasonable rates for their goods and to discharge similar other duties. This cannot be achieved if the control of the Central Government is confined only to the exportation point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export their goods subject to the export control rules. By this Press Note the Government introduced a change in this policy. The following reason are given for changing the policy : (1) The existing trading mechanism is quite inadequate to cope with the developments that took place in certain countries in the matter of purchase of ores, and their effect on Indian foreign trade. (2) The pre- occupation of control authorities with the equitable distribution of available wagon space amongst mining and trading interests has made it virtually impossible for the limited resources to be used to the maximum advantage or for economical arrangements to be made for the transportation of ores and for their handling at the ports. (3) The trading interests entered into large contracts and some of them were not able to fulfil them. (4) The mining industry did not have an adequate scope for development on sound lines. For the foregoing reasons, the Government propounded the following new policy : Government have therefore come to the conclusion that it would be necessary for them to play a more positive role to overcome the obstacles in the way of augmenting foreign exchange earnings from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The High Court narrated the said steps as follows : (1) To begin with, the Manganese trade was controlled by a system of licensing of Export Quotas. (2) Press Notes dated July 14, 1956, July 30, 1956, August 6, 1956, September 4, 1956, and June 1, 1957 show that the quotas granted to shippers and mine-owners were with one excerption progressively reduced for each successive period. (3) Until the fifth statement dated September 4, 1956 was made, the case of mine-owners who had no previous shipment to their credit was not within the contemplation of Government policy. In that statement Government announced that it was considering their case but at no later stage does it appear that their case was specifically provided for until the State Trading Corporation took over. (4) During the period covered by the 7th statement, the State Trading Corporation was introduced into the picture and freely competed with private interests. During this period small quota-holders were advised to from co-operatives or companies and were discouraged.(5) From the date of the 8th statement, viz., March 12, 1959, it is clear that the full freedom of private trading as before was virtually stop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period would expire on June 1, 1959, and the 8th statement issued on March 12, 1959, provided for the period between July 1959 and 1960, during which period the State Trading Corporation had obtained a virtual monopoly in export trade in manganese. It was more likely that the licence and the quota asked for related to the year 1959-60. This should also be clear from the fact that the application was disposed of by the first respondent only by his order dated December 17, 1958. Be it as it may, I shall consider the argument alternatively. The argument based upon the alleged existence of a free market wherein the petitioner could sell his manganese ore to recognised exporters is not only unrealistic but also unfair to the petitioner. What was the market wherein the petitioner could sell his manganese ore for reasonable prices ? Admittedly he could not sell in the internal market, for there was practically no such market. None of the recognised exporters, either the established shippers or the State Trading Corporation, was bound to purchase any quota from the petitioner of the miners in the position of the petitioner. The recognised exporters were in a position to dictate terms and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mine-owners like the petitioner. Such an unjust position cannot be brushed aside on a simple allegation that they can export through the Corporation. There may be some justification for this, if the Corporation, after March, 1959, and, before that, the established exporters, were bound to some quota the mine-owners like the appellant. The livelihood of a person cannot be made to depend upon the passing moods of an officer of a State Corporation, however well-intentioned he may be in the discharge of his duties. The scheme of channelling of exports through an agency or agencies could certainly be dovetailed with that of equitable apportionment of quotas amongst persons producing or doing business in manganese ore without any detriment to the object of promoting export trade. Any scheme of canalisation of exports through specialised agencies must be governed by definite rules whereunder provision is made giving stability and guarantee of fair treatment in ordinary times as well as in times of emergency. For instance appropriate rules could be framed fixing quotas for each mine- owner the expected total quantity of export, having regard to the quality and the quantity of manganese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y says that if a valid law is made conferring a power on the State to carry on trade or business to the exclusion, complete or partial, of citizens, such a law will not infringe the fundamental right guaranteed under Article 19(1)(g) of the Constitution. It does not also say, as learned Counsel for the appellant argues, that unless such a law is made, every interference by the State with the trade of a citizen in exercise of a power under some other law would necessarily be an unreasonable restriction : such an interference will not have the protection of the amended provision of the Constitution, but must be judged by the standard provided by the first part of Article 19(6); it would be valid, if it was a reasonable restriction on the exercise of the petitioner's fundamental right made in the interest of the general public. The decision of this Court in Saghir Ahmad v. The State of U.P. - 1955 (1) SCR 707, 727 does not really help the appellant. There, this Court was considering the question whether the U.P. Road Transport Act,1951 (11 of 1951) violated the fundamental rights of private citizens guaranteed under Article 19(1)(g) of the Constitution, and was protected by Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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