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Prag Ice & Oil Mills & Anr. Etc Versus Union Of India

1978 (2) TMI 214 - SUPREME COURT

Writ Petition Nos. 712, 715-739, 760- 764, 765-770, 779-780, 781-84, 838-855, 861-873 & 874-892 of 1977. - Dated:- 21-2-1978 - PRAG ICE & OIL MILLS & ANR. ETC. Versus UNION OF INDIA BEG, M. HAMEEDULLAH CHANDRACHUD, Y.V. BHAGWATI, P.N. FAZALALI, SYED MURTAZA SHINGAL, P.N. SINGH, JASWANT DESAI, D.A. JUDGES DATE OF JUDGMENT 21/02/1978 JUDGMENT: ORIGINAL JURISDICTION: Writ Petition Nos. 712, 715-739, 760- 764, 765-770, 779-780, 781-84, 838-855, 861-873 & 874-892 of 1977. A. K. Sen (in WP .....

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Nos. 838-855/77 S. N. Kackar, Sol. Genl. (WP Nos. 812 & 838), R. P. Bhatt (WP 861), E. C. Agarwala and Girish Chandra for the respondent. 770, L. N. Sinha & U. P. Singh for R/State of Bihar in W. P. No. 765781-784/77 A. P. Chatterjee, Mukti Maitre & G. S. Chatterjee for R/State of West Bengal The following Judgments were delivered BEG, C.J.- The ninety-one writ petitions before us for delivery of our reasons in support of our order dated 23 November, 1977 dismissing them, raised a c .....

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ferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government hereby makes the following orders namely : 1. Short title, extent and commencement. (1)This Order may be called the Mustard Oil (Price Control) Order, 1977. (2) It extends to the whole of India. (3) It shall come into force at once. 2. Definition.-In this Order, "dealer" means a person engaged in the business of the purchase, sale or storage for sale of mustard oil. 3. Price at which a deale .....

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'). This provision lays down: "3(1) 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 equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations it may, by order, provide for regulating or prohibiting the production. supply and distribution thereof and trade a .....

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commodity ordinarily kept for sale; (f) for requiting any person holding in stock, or engaged in the production, or in the business of buying or selling, of any essential commodity," (a) to sell the whole or a specified part of. the quantity held in stock or produced or received by him, or (b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him. to the Central Governmen .....

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ers in such area and may also fix, or provide for the fixation of, such quantity on a graded basis, having regard to the aggregate of the area held by, or under the cultivation of, the producers. Explanation 2.-For the purpose of this clause, "production" with its grammatical variations and cognate expressions includes manufacture of edible oils and sugar;" We are not concerned here with other provisions of section 3 (2). Section 3(3), which will be relevant for the purposes of in .....

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neither clause (a) nor clause (b) applies, the price calculated at the market rate prevailing in the locality at the date of sale." Again, section 3A lays down: "3A(1) If the Central Government is of opinion that it is necessary so to do for controlling the rise in prices, or preventing the hoarding, of any foodstuff in any locality, it may, by notification in the Official Gazette, direct that notwithstanding anything contained in sub-section (3), the price at which the foodstuff shall .....

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in compliance with an order made with reference to clause (f) of sub-section (2), there shall be paid to the seller as the price therefore.- (a) where the price can, consistently with the controlled price of the foodstuff, if any, fixed under this section, be agreed upon, the agreed price; (b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any; (c) where neither clause (a) nor clause (b) applies, the price calculated with reference to the .....

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e so determined shall be final and shall not be called in question in any court." Additional sub-sections (3B) and (3C,) will also require consideration in order to arrive at the correct meaning of section 3(2). They read as follows "(3B) Where any person is required, by an order made with reference to clause (f) of sub-section (2), to sell to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Govern .....

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roval of the Central Government having regard to- (a) the controlled price, if any, fixed under this section or by or under any other law for the time being in force for such grade or variety of foodgrains, edible oilseeds or edible oils; (b) the general crop prospects; (d) the recommendations, if any, of the Agricultural grains, edible oilseeds or edible oils available at reasonable prices to the consumers, particularly the vulnerable section of the consumers; and (d) the recommendations, if an .....

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ion (3A) or any such notification, having been issued hag ceased to remain in force by efflux of time, then, notwithstanding anything contained in sub-section (3), there shall be paid to that producer an amount therefore which shall be calculated with reference to such price of sugar as the Central Government may, by order, (determine, having regard to- (a) the minimum price, if any, fixed for sugarcane by the Central Government under this, section; (b) the manufacturing cost of sugar; (c) the d .....

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s mind to get a true picture of the statutory context of the power of price control. The drastic measures which the Central Government may adopt, extending to virtually taking over of management of appointing Authorised Controllers of particular undertakings, so as to carry out the objects 'stated in section 3(1) of the Act, and the mechanism of control visualised to ensure due and proper exercise of the statutory powers are also very significant. The provisions containing these are : " .....

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rce with respect to any undertaking or part thereof," (a) the authorized controller shall exercise his functions in accordance with any instructions given to him by the Central Government, so, however, that he shall not have any power to give any direction inconsistent with the provisions of any enactment or any instrument determining the functions of the persons in charge of the management of the undertaking, except in so far as may be specifically provided by the order; and (b) the undert .....

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served on such individual- (i) by delivering or tendering it to that individual, or (ii) if it cannot be so delivered or tendered, by affixing it on the outer door or some other conspicuous part of the premises in which that individual lives, and a written report thereof shall be prepared and witnessed by two persons living in the neighbourhood. 3 (6) Every order made under this section by the Central Government or by 'any officer or authority of the Central Government shall be laid before b .....

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rwise". The petitioners assail the control order on four grounds : firstly, that it violates the fundamental rights of the petitioners to property under Article 19 (1) (f) and to carry on their trade and business guaranteed by Article 19(1) (g) of the Constitution; secondly, that the petitioners are denied the benefits of Article 14 of the Constitution; thirdly, that the order is hit by Article 301 of the Constitution; and, fourthly, that the Central Order is outside the scope of section 3 .....

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India as may be required in the public interest." Although, Article 302 does not speak of "reasonable" restrictions, yet, it is evident that restrictions contemplated by it must bear a reasonable nexus with the need to serve "public interest". It the tests of Section 3 of the Act are satisfied by an Order, it could not fail to serve public interest. Hence, from this point of view also, it is enough if we consider whether the Control Order falls within section 3 of the A .....

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lacing it there by a constitutional amendment is that section 3 of the Act became free from any limitations based on the provisions of Part III of the Constitution. Article 31B, providing for a removal of the protection to fundamental rights given by Part III of our Constitution, lays down : "31B. Validation ofcertain Acts and Regulations.- Without prejudice to the generality. of the provisions contained in article 31A, none of the Acts and Regulations specified in the Ninth Schedule nor an .....

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at Article 31B protects only Acts and Regulations specified in the Ninth Schedule from the vice of invalidity for inconsistency with provisions of Part III of the Constitution but not anything done or to be done in future under any of the provisions of 3 0 9 any Act so specified, such as an order passed under section 3 of the Act., If section 3 of the Act, which was held in Shri Hari Kishan Bagla v. State of Madhya Pradesh(1) to pass the tests of validity imposed by articles 14 and 19 (1) (f) an .....

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if one may so put it, "written into" section 3 of the Act itself. They would control the scope of orders which could be passed under it. That is, undoubtedly' the way in which guarantees of fundamental rights could and should function if the Act containing section 3 itself had not been placed in the Ninth Schedule so as to take, away ',be guaranteed of fundamental rights from the substance of it. The question of interpretation before us is : What is the effect of putting the Ac .....

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ep of the orders passed under it. But, if it has no such effect upon section 3 of the Act itself, orders passed under it would continue to be subject to provisions of section 3 of the Act as controlled by Articles 14 and 19 of our Constitution so that they will have to satisfy what may be described as a "dual test" : firstly that of provisions of section 3 of the Act itself; and, secondly, that of provisions of Chapter III of the Constitution containing fundamental rights. Learned Coun .....

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show case not meant for actual use. The whole object of a protection conferred upon powers meant for actual use is to protect their use against attacks upon their validity based upon provisions of Part 111. If ',his be the correct position, it would, quite naturally and logically, follow that their use is what is really protected. (1) [1955] 1 SCR380. In practice, it is the- exercise of power which is generally assailed and not the mere conferment of it which raises the somewhat different q .....

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cise of their fundamental rights. The distinction between protection to a mere grant of powers and to their exercise, therefore, seems specious in the context of the protection. It cannot explain why, if section 3 is protected by the Ninth Schedule. the exercise of power granted by it, which manifests itself. in control orders, is not protected. It would be so protected, if at all, not be- cause the orders to be made in future, as such are protected, but because the power actually conferred and .....

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is protected by the Ninth Schedule. Orders purporting to be made under section 3 of the Act must, however, satisfy the tests found in section 3 itself in every case. They can never escape the basic tests whether section 3, the source of their authority, is protected by the Ninth Schedule or not. The further tests imported by Articles 14 and 19 of the Constitution into section 3 could be applied to these orders only so long as these added tests are attached to or can be read into section 3 of th .....

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a particular scheme found in an Act of which details are to be filled in later by administrative orders of experts. It is doubtful whether the Essential Commodities Act, 1955, could be spoken of as a piece of "skeleton" legislation. Section 3, sub-s.(1) of the Act provides for delegation of powers to the Central Government in order that it may carry out certain purposes by framing appropriate schemes and evolving policies which may meet the purposes of the Act. These schemes and polic .....

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respectfully agree, the most one can say is that orders passed under the Act, before, its inclusion in the Ninth Schedule, could also be said to be protected directly by the Ninth Schedule if mentioned there. But, there could be no independent and direct protection of this Schedule conferred upon orders passed under the Act before us just as none could be given to either the amendments of an Act or to regulations passed under the Act which were considered in Godavari Sugar Mills case (supra). A .....

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is converted, at prices below those at which they could themselves produce oil. It is submitted that to-require them to do so amounts to confiscation of property contrary to law as well as a restriction upon the right guaranteed by Article 19(1)(g) of the Constitution upon them to carry on an industry or business free from unreasonable restrictions. Valid restrictions, it is submitted, can only be reasonable and in the interests of the general public. It was suggested that the protection of Art .....

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tatute protected by Art. 3 1 B, it is difficult to say that the rule must further be scrutinised under Arts. 14, 19 etc, Rule 4(4) seems to us to be a rule which does not go beyond the powers conferred under s. 6(xvii), read with s. 44 of the Act. At any rate, s. 6(xvii) and rule 4(4) are part of a scheme of land reform in U.P. and would be protected from attack under Art. 31B of the Constitution". In that case, the rule made under the provisions of the Imposition of Ceiling on Land Holding .....

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und that, although section 3 of the Act may be protected by the 9th Schedule of the Act, yet, an order passed under this provision is not so protect- ed. Although, we agree that the impugned order is not protected for this reason, yet, if the section under which it was passed is protected from any attack based on the provisions of Part III of the Constitution, the only question which survives is whether the control order is covered by the protected empowering provision. If it falls outside the e .....

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in the empowering provision. No further test, based on fundamental rights in Chapter III of the Constitution, can be applied to it in such a case. All the tests of validity of the impugned price control or fixation order are, therefore, to be found in section 3 of the Act. Section 3 makes necessity or expediency of a control order for the purpose of maintaining or increasing supplies of an Essential commodity or for securing its equitable distribution at fair prices the criteria of validity. it .....

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has also to be remembered that the object is to secure equitable distribution and availability at fair prices so that it is the interest of the consumer and not of the producer which is the determining factor in applying any objective tests at any particular time. Hence the most important objective fact in fixing the price of mustard oil, which is consumed generally by large masses of people of limited means is, the paying capacity of the average purchaser or consumer. Statistics of rise in pric .....

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laries of middle classes which do not share the profits of an inflationary economy. In other words, a fixation of price above ₹ 10/- per kg. of mustard oil could have, contributed to push the country down the slippery slope of inflation towards economic crisis and disaster. Price control and planning may have been forced upon all nations of the world due to the needs and exigencies of modern "total" warfare. But, as has been observed, the problems of the aftermath or of the peace .....

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to check rise in prices of essential commodities. We have listened to long arguments directed at showing us that producers and sellers of oil in various parts of the country will suffer so that they would give up producing or dealing in mustard oil. It was urged that this would, quite naturally, have its repercussions on consumers for whom mustard oil will become even more scarce than ever ultimately. We do not think that it is the function of this Court or of any Court to sit in judgment over .....

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efore this Court or could not reasonably produce mustard oil at a cost which could make it reasonable for them to sell it at ₹ 10 /per kg. Learned Counsel before us have tried to perform this impossible task. We think that it should not even have been attempted in a case of this kind because the price at which mustard oil was sold commonly in the market not very long ago and the price which prevailed at the time when the control order of 30th September, 1977, was passed are matters of comm .....

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o not go into the great mess of materials which have been sought to be placed before us from the point of view of present cost of producing mustard oil and the fixation of a reasonable price based on a determination of that. The more essential questions to answer, from the point of view of provisions of section 3 of the Act were : Can the mass of ordinary consumers pay more than ₹ 10/- per kg ? Even if the price of mustard oil is fixed at less than the cost price to the ducers, is it not n .....

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t is, the actual cost of production to the purchasers could certainly not be the sole or the decisive factor. It could only be one out of a Dumber of relevant facts and circumstances. The net result of the mass of statistics placed before us on behalf of the petitioners is that the price fixed should have been about ₹ 3/-per kg. more, that is to say, about ₹ 13/- per kg. Even if we accept this to be correct estimate for normal times, when fair and reasonable profits to the producers .....

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that social control which becomes inevitable under certain conditions. Indeed, it seems quite unavoidable, under any system which adopts socialistic measures to achieve the common good. The argument on behalf of the Union is that the result of this fixation, even below cost price, will necessarily produce desired effects upon the free sector in which price of mustard seed is still not controlled. The control imposed will make it impossible for producers to offer excessive prices for mustard oil .....

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s. They could hot claim a right to carry on business or manufacture on their own terms. Such is not the right guaranteed even by article 19 (1) (g) of the Constitution. However, as we have already indicated, it seems that the Act was put in the Ninth Schedule to prevent the invocation of Articles 14, 19 and 31 for obstructing measures so necessary as price fixation of essential commodities is for promoting the objectives of a socialist welfare economy. This, in our opinion, would be a sufficient .....

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7, that price of mustard oil has fallen in the neighbourhood of ₹ 7/- per kg. Apparently, this is enough to cover reasonable profits of producers as well as middlemen. We are informed that the impugned Control Order has itself been withdrawn by the Central Government. We can take judicial notice of those facts which illustrate the extreme inadvisability of any interference by any court with measures of economic control and planning directed at maximising general welfare. It is not the func .....

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test of reasonableness contemplated by Article 19(6) need arise because it would then be a purely illegal I restriction upon the right conferred by Article 19(1) (g) which would fall for lack of authority of any law to support it. We have also heard considerable argument on principles of fair fixation of price which, it was submitted, must take into account the cost of production as well as a reasonable amount of profit to the manufacturer and the middleman. As indicated above, such principles .....

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in cases where the effects of a policy or a measure adopted in achieving purposes set out in Section 3 (1 ) are matters of guess work, after experimentation, the actual consequences can be indicated with a fair amount of certainty only by giving sometime for a policy to work and reveal its results. Presence of such features in a case cannot invalidate price fixation of which the direct objects are set out in section 3(1) of the Act. Mr. Kacker, learned Solicitor General has rightly drawn our att .....

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the petitioners is misdirected inasmuch as it proceeds on the assumption that what could be no more than a relevant consideration is the whole and sole object of section 3(1) of the, Act. About other matters there is practically no evidence so that we are left in the region of guesswork. No case has been cited before us to show that an Order meant to serve a purpose the execution of which may, as indicated above, require fixation of price even below cost price for the time being, is outside Sect .....

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been achieved, the order could be withdrawn if it became evident to the Government that such control would not achieve the desired object. It is extremely hazardous for Courts to enter the sphere of experimentation in matters of economic policy which must be, left to the Government of the day. It will be seen from the provisions of Section 3 (3) of the Act that price fixation on certain given principles is enjoined only when there is an order under Section 2 (f) of the Act compelling the sale o .....

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ial cases on given principles. The cases cited before us on price control relate to the sphere in which the criteria for fixation of were indicated either by a statutory provision or by orders= thereunder. In Panipat Cooperative Sugar Mills v. Union of India(1), this Court said : "Two principal questions arise in these appeals : (1) what is the true interpretation of s. 3 (3C) and (2) whether the price of ₹ 124.63 was in accordance with the provisions of S. 3 (3C) ?" Thus, statut .....

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of India(3), in the following words (1) [1973] 2 S.C.R. 860. (2) [1974] 2 S.C.R. 398. (3) [1972] 2 S.C.R. 526. .lm15 "The Premier Automobiles (supra) decision does not consider that the concept of fair prices vanes with circumstances in which and the purposes for which the price control is sought to be imposed. This decision because of the special agreement there does not consider that the fixation of fair price with a view to holding the prices line may be stultified by allowing periodic i .....

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judgment on examination of correct and rational principles and should direct deviation from the report of the Commission of Inquiry appointed by it with the concurrence of the parties only when it is shown that there has been a departure from the established princi- ples or the conclusions of the commission are shown to be demonstrably wrong or erroneous.'.' In other words, the judgment was not to provide a precedent for anything similar to be done by Courts in other cases. In Saraswati .....

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not been followed in fixing the price. Nevertheless, the criterion adopted must be reasonable." The guiding factors laid down in clause (7) of the Sugar Control Order, 1966, were held to afford only indicate to help the Government in fixing prices on the lines indicated in the Control Order. We think that unless, by the terms of a particular statute, or order, price fixation is made a quasi-judicial function for specified purposes or cases, it is really legislative in character in the type .....

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to be complied with or particular types of evidence to be taken on any specified matters as conditions precedent to its validity. The test of validity is constituted by the nexus shown between the order passed and the purposes for which it can be passed, or in other words by reasonableness judges by possible or probably consequences. It is true that even executive or legislative action must be confined to the limits within which it can operate. It must fall reasonably within the scope of the po .....

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ity to the extent that even the protection of guaranteed fundamental rights cannot stand in the way of its view or opinion of such necessity and expediency, it challenge on the grounds on which it was attempted before us could not succeed. We may also mention that the view we have taken of the dominant purpose of section 3(1) of the Act is in accordance with the following elucidation of its purpose in Meenakshi Mills case (supra): "The question of fair price to the consumer with reference t .....

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ew York(1), where the guarantee of due process against capricious action was involved. in this country, such guarantees in regard to rights of property or to carry on industry or trade or business could only arise by reason of Articles 14 and 19 of the Constitution which it, excluded here because of the protection conferred upon section 3 of the Act by the 9th Schedule of the Constitution. I may, however, mention that in Permian Basin Area Rate cases(2), where the majority of learned judges of t .....

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S. (78 Law. En.) 502. (2) 20 L. Ed. 2d. p. 312. with certain principles after taking evidence and hearing parties effected. Nevertheless, the duty of the petitioners was held to extend to demonstrating the unreasonableness and injustice of the consequences. A fortiori, patent injustice and unreasonable injury to the interests of consumers must be shown if a measure of price control, in the nature of either legislative or purely administrative action, is assailed. So long as the action taken is n .....

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y us on 23rd November, 1977 is, in our opinion, fully justified. ORDER Y. V. CHANDRACHUD, P. N. BHAGWATI, S. MURTAZA FAZAL ALI, P. N. SHINGHAL AND JASWANT SINGH JJ. We will give our reasons later since as at present advised, with great respect, we are not disposed to agree with a part of the reasoning of the learned C.J. (Dated May 5, 1978) CHANDRACHUD, C.J.-On September 30, 1977, the Government of India in its Ministry of Civil Supplies and Cooperation issued the Mustard Oil (Price Control) Ord .....

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. The Price Control Order was challenged in this Court by several ,dealers on the ground, mainly that it violates articles 14, 19 (1 ) (f) and 19 (1) (g) of the Constitution. Article 301 was cited but not argued upon with any seriousness. The argument that the Price Control Order offends against the right to property and the right to carry on trade or business requires 'for its appreciation and decision the awareness that by the 40th Amendment passed in 1976, the Essential Commodities Act wa .....

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same immunity. This contention has found favour with the learned Chief Justice, Shri M. H. Beg but, with respect, we are unable to share his view. Article 3 1 A of the Constitution saves laws which provide for matters mentioned in clauses (a) to (e) thereof from a challenge under articles 14, 19 or 31 notwithstanding anything contained in article 13 of the Constitution. Article 31A which was introduced by the Constitution (First Amendment) Act, 1951, validates certain Acts and Regulations provid .....

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otective umbrella of the Ninth Schedule takes in its ever widening wings not only the Acts and Regulations specified therein but also Orders and Notifications issued under those Acts and Regulations. Article 31B constitutes a grave encroachment on fundamental rights and doubtless as it may seem that it is inspired by a radiant social philosophy, it must be construed as strictly as one may, for the simple reason that the guarantee of fundamental rights cannot be permitted to be diluted by implica .....

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or abridgement of fundamental rights. The article affords protection to Acts and Regulations specified in the Ninth Schedule. Therefore, whenever a challenge to the constitutionality of a provision of law on the ground that it violates any of the fundamental rights conferred by Part III is sought to be repelled by the State on the plea that the law is placed in the Ninth Schedule, the narrow question to which one must address oneself is whether the impugned law is specified in that Schedule. If .....

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nt Act under which the Order is issued is specified in that Schedule. The Mustard Oil (Price Control) Order, 1977, was passed under section 3 of the Essential Commodities Act, 1955, which by the relevant part of its sub-section (1) empowers the Central Government to provide by an order for regulating or prohibiting the production, supply and distribution of an essential commodity or trade and commerce therein, if it is of the opinion that it is necessary or expedient so to do for maintaining or .....

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er words, speaking of a provision directly in point, s. 3(1) of the Act of 1955 is not open to challenge on the ground, to take a relevant instance, that it violates the guarantee contained in article 19 (1) (f) or 19 (1) (g) of the Constitution. But there is no justification for extending the protection of that immunity to an Order passed under section 3 of the Act like the Mustard Oil (Price Control) Order. Extending the benefit of the protection afforded by article 31B to any action taken und .....

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order to obviate a possible challenge to its provisions on the ground that they offend against the provisions of Part III. Such an assumption cannot, in the very nature of things, be made in the case of an Order issued by the Government under an Act or regulation which is placed in the Ninth Schedule. The fundamental rights will be eroded of their significant content if by judicial interpretation a constitutional immunity is extended to Orders the validity of which the Parliament at least theore .....

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constitution and accordingly orders and Notifications issued under Acts and Regulations which are specified in the Ninth Schedule must meet the challenge that they offend against the provisions of Part III of the Constitution. The immunity enjoyed by the parent Act by reason of its being placed in the Ninth Schedule cannot proprio vigore be extended to an offspring of the Act like a Price Control Order issued under the authority of the Act. it is therefore open to the petitioners to invoke the .....

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dule to the same extent as the Essential Commodities Act under which that order was issued and which has been placed in the Ninth Schedule. In Vasantlal Maganbhai(1), the vires of section 6(2) of the Bombay. Tenancy and Agricultural Lands Act, 1948, was challenged on the ground that it suffered from the vice of excessive delegation. In exercise of the power con feared by section 6(2), the State Government had issued a Notification fixing the maximum rent payable by tenants of lands situated in t .....

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ot be challenged on the ground that it violated article 31. Subba Rao J., who was in minority, did not consider the latter point regarding the validity of the Notification issued under section 6(2) because he took the view that section 6(2) suffered from the vice of excessive delegation and was therefore unconstitutional. This decision undoubtedly lends support to the contention of the Union Government that if an Act or Regulation is specified in the Ninth Schedule, any order or notification iss .....

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validity of the notification was that in substance it amended the provisions of section 6(1) and was therefore a fresh legislation to which article 31B could not apply. The Court rejected that argument and held that if section 6(2) was 'Valid, the exercise of the power validly conferred on the Provincial Government could not be treated as a fresh legislation. The decision in Latafat Ali Khan (supra) contains no reasons beyond the bare statement that "if a statutory rule is within the po .....

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to examine the question whether statutory rules framed under the Act which was placed in the Ninth Schedule would enjoy the same immunity. (1) [1961] 1 S.C.R. 341. (2) [1971] Supp. S.C.R. 719. The decision of this Court in Godavari Sugar Mills Ltd. and Ors v. S. B. Kamble and Ors.(1), appears to us to be in point and it supports the petitioners' contention that the benefit of article 31B of the Constitution cannot be extended to an order or notification issued under an Act which is placed in .....

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d to amendments made to an Act or Regulation subsequent to its inclusion in the Ninth Schedule, the result would be that even those provisions would enjoy the protection which were never scrutinised and could not, in the very nature of things, have been scrutinised by the prescribed majority vested with the power of amending the, Constitution. That, according to the Court, would be tantamount to giving a power to the State Legislature to amend the Constitution in such a way as would enlarge the .....

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s held that the entitlement to protection cannot be extended to provisions which were not included in the Ninth Schedule and that this principle would hold good irrespective of the fact whether the provision in regard to which the protection was sought dealt with new, substantive matters or with matters which were merely incidental or ancillary to those already protected. This decision shows unmistakably that the circumstance that a Control Order is a mere creature of the parent Act and is incid .....

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rgument is that the impugned Order treats the entire country as one unit regardless of regional variations relating to factors like the cost of procurement of raw material and freight. The contention, in other words, is that the order is over- inclusive since it treats unequals as equals by imposing an identical burden upon a wider range of individuals than those who can legitimately be treated as constituting one single class for the purpose of remedying the mischief at which the law aims. In t .....

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the trade may differ in different growing regions and manufacturing centres like Uttar Pradesh, Rajasthan, Bihar, West Bengal, Punjab and Orissa. But that by itself cannot justify the argument that different prices must be fixed for different regions and that failure to do so would necessarily entail discrimination. 'Dealers' in Mustard Oil, wherever they operate, can legitimately comprise a single class for the purpose of price fixation, especially as it is undisputed that the two basi .....

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hey notoriously migrate to areas where higher prices rule. Besides, the grievance of the West Bengal dealers, that since they have to import mustard seed from Uttar Pradesh their cost of production is higher than in Uttar Pradesh can be met with the answer that in any event, West Bengal has also to import at least 1/3rd of its total annual requirement of 1.3 lakhs of Metric tonnes of Mustard Oil. Uttar Pradesh grows 66% of the total production of mustard seed whereas West Bengal grows only 6%. T .....

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have to import their raw material from another region. Perhaps, the high rate of turnover and consumption in a region like West Bengal may easily absorb the additional cost of freight. We are therefore unable to hold, to use the language of Mathew J., in State of Gujarat vs. Shri Ambica Mills Ltd. (1) that the Government of India, in fixing one common price for mustard oil for the whole country, has acted like Herod who ordered the death of all male children born on a particular day because one .....

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n an All-India basis or for a unit of fix zones. That contention was rejected by this Court but the case is (1) [1974] 3 S.C.R. 760, 762. (2) [1975] 1 S.C.R. 956. an instance of how a division of the country into separate zones for the purpose of fixing the price of an essential commodity does not offer a commonly acceptable solution. It is doubtless that if lower prices were fixed for Uttar Pradesh on the ground that the dealers there were not required to import raw material from outside, a hue .....

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the petitioners' contention that the Price Control Order is violative of the petitioners' right under articles 19(1) (f) and 19 (1 ) (g) of the Constitution. The case of M/s Prag Ice & Oil Mills who are petitioners in Writ Petition No. 712 of 1977 is as follows : The average cost of production mustard oil, when the Price Control Order was issued, was about ₹ 1351.10p ' per quintal i.e. ₹ 13.51 per kilogram. Taking into consideration overhead costs and allowing for a .....

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0 per kilogram since the retailer has to provide for a margin of at least ₹ 1.50 per kilogram for his costs and a small I profit. Thus the petitioners have to suffer a loss of over ₹ 5/- per kilogram as a result of the Price Control Order. By this method, the petitioners are deprived of their right to acquire and hold their property and carry on their trade or business of extracting, manufacturing and selling mustard oil. The price of ₹ 10/- per kilogram has been fixed, accordi .....

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vit that in March 1977, the retail price of mustard oil in several mustard oil consuming centres ranged between ₹ 9.75 and ₹ 10.81 per kilogram. It became necessary to issue the impugned Order in view of the fact that the price of mustard oil was increasing persistently in spite of the fact that-the prices of other edible oils were showing a declining trend. The available stocks disappeared from the market suddenly and the Government had to intervene in order to control the distribut .....

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; 10/- per kilogram, it was possible for the petitioners to make a small profit but, whether or not the dealers. made any profit, the validity of the Price Control Order was not liable to be challenged on the ground that the dealers would incur a loss if they were obliged to sell mustard oil at ₹ 10/- per kilogram. The question as to which was the fair price to the consumer was kept by the Government in the forefront and by that method alone could the dominant object of the Essential Commo .....

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hat the millers effect the bulk of their purchases during the first quarter of the year and therefore, the petitioners could not be heard to contend that the price of mustard seed after the coming into force of the impugned Price Control Order should be taken into account for determining the cost which they have to incur in producing mustard oil. The affidavit contains a table showing the prices paid by the millers and the prices, received by the farmers for the mustard seed. The fair price of t .....

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abad, Hapur, Gauhati, Hathras, Jullundur, Kanpur, Moga, Rohtak and Sriganganagar., Those prices yield a mean price of around ₹ 350/- per quintal of mustard seed and upon that basis the retail price works out to be less than ₹ 10/- viz., ₹ 9.95 per kilogram. Considering these rival contentions and the data which has been produced,before us in support thereof, we are unable to accept the petitioners' submission that the Price Control Order is violative of their rights under a .....

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d are therefore compelled to sell their produce immediately after the harvesting season, that is to say, between March 32 7 and June. If the prices of mustard seed prevailing during that period are taken into account, it is difficult to accept that the price of ₹ 10 per kilogram is so patently unreasonable as to be violative of the petitioners right to hold property or to do trade or business. the petitioners that it is futile to fix the price of oil without at the same time fixing the cei .....

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en ₹ 480/- and ₹ 530/- per quintal in September 1977, prices after the promulgation of the impugned Price Control Order had come down to a range between ₹ 365/and ₹ 390/- per quintal. This has not been denied by the petitioners but they describe the phenomenon as irrelevant for the purpose of determining the legality of the Price Control Order. Their contention, in which we find no' substance, is that the. consequence of the Price Control Order cannot be looked at for .....

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or mechanical construction is not appropriate where important questions such as the impact of an exercise of a legislative power on constitutional provisions and safeguards ,hereunder are concerned. In cases of such a kind, two rules of construction have to be kept in mind : (1) that courts generally lean towards the constitutionality of a legislative measure impugned before them upon the presumption that a legislature would not deliberately flout a constitutional safeguard or right, and (2) th .....

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ribution and availability at a fair price. Sub-section (2) (c) of section 3 provides that without prejudice to the generality of the power conferred by sub-section (1), an order made under that sub-section may provide for controlling the price at (1) [1970] S.C.R.400,409. which any essential commodity may be bought or sold. The dominant purpose of these provisions is to ensure the availability of essential commodities to the consumers at a fair price. And though patent injustice to the producer .....

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pressed by the play of statistics on the part of the petitioners which is designed to show that as a result of the Price Control Order, they are faced with a loss of about ₹ 5/- per kilogram on the sale of mustard oil. We will ignore, while we are on this point, the pronounced reiteration of the respondent that the, petitioners have made huge profits in past years and that their concerns are sufficiently prosperous to be able to absorb a small loss for a temporary period. But even in the a .....

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ealer cannot lawfully sell the finished product at more than ₹ 10/- per kilogram, the price of raw material is bound to adjust itself to the price of the product. Subsequent events unmistakably demonstrate the effect of such interplay and the favourable reaction which the Price Control Order has produced on 'the, price of mustard seed. But above all things, it is necessary to bear in mind in matters of the present nature what Krishna Iyer, J., said in B. Banerjee v. Anita Pan.(1) that .....

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reasonable as to be constitutionally invalid. As observed by Beg J., in Saraswati Industrial Syndicate, (supra) it is enough compliance with the constitutional mandate if the basis adopted for price fixation is not shown to be so patently unreasonable as to be in excess of the power to fix the price. Learned counsel for the petitioners expressed the fear that the fixation of an uneconomic price will drive the manufacturers out of the market and thus the very source of supply of an essential comm .....

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cannot be legitimately attributed to the operation of the Price Control Order, At best, the Order can then be said to have failed to achieve its purpose. This discussion will not be complete without reference to the decision of a Constitution Bench of this Court in Shree Meenakshi Mills Ltd. v. Union of India(1). The question which arose in that case was as regards the validity of a notification fixing fair prices of cotton yarn. It was contended on behalf of the petitioners therein that the pr .....

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n an open market, it cannot similarly complain of some increase in or reduction of prices as a result of a notification issued under section 3(1) of the Essential Commodities Act because, such increase or reduction is also based on economic factors. Dealing with the contention that a reasonable profit must be assured to the manufacturers, the Court held that ensuring a fair price to the consumer was the dominant object and purpose of the Essential Commodities Act and that object would be complet .....

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versity on account of economic and sometimes social and political factors. In a , largely free economy when controls have to be introduced to ensure availability of consumer goods like foodstuff, cloth and the like at a fair price, it is an impracticable proposition to require the Government to go through the exercise like that of a Commission to fix the prices." Another passage from the judgment of the learned Chief Justice which has an important bearing on the instant case is to the follo .....

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ing made huge profits in prosperous years, all these enter into the calculation of a fair price in an emergency created by artificial shortages." On this aspect of the matter, the Court cited with approval a passage from an American decision, Secretary of Agriculture v. Central Reig Refining Company(1) to the effect that Courts of Law cannot be converted into tribunals for relief from the crudities and inequities of complicated experimental economic legislation. Counsel for the petitioners .....

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es Act under which it is statutorily obligatory to ensure to the industry a reasonable return on the capital employed in the business of manufacturing sugar. These decisions can, therefore, have no application to cases of price fixation under section 3 (1) read with section 3 (2) (c) of the Act. Cases failing under sub-sections 3A, 3B and 3C of section 3 of that Act belong to a different category altogether. It is customary in price fixation cases to cite the oft- quoted decision in Premier Auto .....

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that may be involved, we should base our judgment on examination of correct and rational principles and should direct deviation from the report of the Commission which was an expert body presided over by a former judge of a High Court only when it is shown that there has been a departure from, established principles or the conclusions of the Commission are shown to be demonstrably wrong or erroneous." By an agreement of parties the (1) 94Law Ed. 381. Court was thus converted into a Tribunal .....

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ment. The decision thus proceeded partly on an agreement between the parties and partly on concessions made at the Bar. That is the reason why the judgment in Premier Automobiles (supra) cannot be treated as a precedent and cannot afford any appreciable assistance in the decision of price fixation cases. The contention that the Price Control Order is arbitrary because it is not limited in point of time is without any merit. In the very nature of things, orders passed under section 3(1) read with .....

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d in the instant case. It appears that the supply position having improved, or, so at any rate seems to be the assessment of the situation by the Government, the order has been recently withdrawn. Learned counsel for the petitioners laid great stress on the circumstance that, as is shown by the affidavit filed on behalf of the Union Government, the Price Control Order did not take into account the circumstance that the cost of production of mustard oil includes a fairly large margin of profit of .....

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ds which the consumer has to pay, was described by this Court in Narendra Kumar and Others v. The Union of India and Others 1 [1960] 2S.C.R.375. as 'axiomatic. As observed in, that case, since the middle mans charges often add to a considerable sum, it has been the endeavour in modern times for those responsible for social control to keep the middleman's activities to the minimum and to attempt to replace them largely by cooperative sale societies of producers and cooperative purchase so .....

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e, the right of the 'public that such rights be regulated in common interest is of greater importance. These correlative rights, as observed in Lea Nebbia v. People of the State of New York(1), are always in collision : "No exercise of the private right can be imagined which will not ever slight, affect the public; no exercise of the to regulate abridge his liberty or affect his property. But subject only to constitutional restraint the private right must yield to the public the words o .....

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individual liberty." Counsel for the petitioners characterised the fixation of price in the instant case as a veiled transgression of power conferred by section 3 (1 of the Essential Commodities Act. In support of that submission the judgment of this Court in K. C. Gajapati Narayan Deo anti Others v. The State of Orissa [1954] S.C.R. 1. was cited in which it was said that when a legislative power is defined by reference to purpose, legislation not directed to that purpose will be invalid. .....

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t a legislative remedy or an administrative order passed in exercise of a statutory power is effective to mitigate an evil may show that it has failed to achieve its purpose, highlighting thereby the paradox of reform. But, as observed in Joseph Beaubarnais v. People of the State of Illinois 78 Lawyers' Edition 940. , that "is the price to be paid for the trail- and-error inherent in legislative efforts to dial with obstinate social issues". We are, therefore, unable to hold that b .....

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nism of their trade operations and they have attempted to demonstrate in relation thereto that a factor here or a factor there which ought to have been taken into account while fixing the price of mustard oil has been ignored. Dealing with a similar argument it was observed in Metropolis Theater Company v. City of Chicago(1) that to be able to. find fault with a law is not to demonstrate its invalidity. "It may seem unjust and oppressive, yet be free from judicial interference. The problems .....

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