TMI Blog1966 (10) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... e failed to comply with it. The appellant filed a petition under Art. 226 of the Constitution in the High Court of Assam against the said order contending, that the said order was malafide in the sense that though the reason given for refusal was that the number of non-tribal traders had. reached the maximum the Committee had in fact granted licences to new traders, and that the said order and section 3 of the Lushai Hills District (Trading by non-Tribals) Regulation, 2 of 1953 were invalid being violative of Art. 19(1)(e) and (g) of the Constitution. The High Court struck down that part of the said order which directed him to remove his properties from the District and which imposed fine but dismissed the rest of the petition, firstly, on the ground of delay and secondly on the ground that the said order was a valid order and was not discriminatory. The High Court also repelled the contention that the power of the Council was unrestricted or arbitrary. The High Court observed The power cannot be said to be unrestricted. The licence is to be granted or refused having regard to the underlying object (if the enactment. This Regulation was passed in pursuance of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide by such Regulations that no non-tribal shall carry on any trade without a licence. In pursuance of this power the District Councils enacted the Lushai Hills District (Trading by non-Tribal) Regulation, 2 of 1953 the preamble of which merely states that it was expedient to provide for the regulation and control of trading within the Lushai Hills District by persons other than scheduled tribes resident in the District. Section 3 of the Regulation provides that no person other than a Tribal resident in the District shall carry on wholesale or retail business in any commodities except under and in accordance with the terms of a licence issued by the District Council. The first proviso to this section does not concern us as it deals with perma- nent licences to be issued to persons who were carrying on business prior to the enactment of the Regulation. But the second proviso seems to apply to both permanent and temporary licences and lays down that if a licence is refused, the grounds of refusal should be recorded by the District Council. Sections 4 and 5 prescribe that a licensee should maintain accounts in prescribed forms and such accounts should be open to inspection by an auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or urgency of the evil sought to be remedied thereby, the disproportion of imposition, the prevailing conditions at the time should enter into the judicial verdict. In the State of Rajasthan v. Nath Mal(2) clause 25 of the Rajasthan Foodgrains Control Order, 1949 empowered certain specified officers to freeze any stocks of foodgrains held by any person and further provided that such stocks were liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for the purpose of Government procurement. The clause was struck down by this Court on the ground that while the authorities may fix the ceiling price at which foodgrains should be sold in the market by the dealers there was no such limitation on the power of the Government to acquire the stocks. It would therefore be open to the Government to requisition the stocks at a price lower than the ceiling price thus causing loss to the persons whose stocks are freezed, while at the same time the Government would be free to sell the same stocks at a higher price and make profit. No dealer would therefore be prepared to buy foodgrains at the market price when he knew that he was exposed to the risk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of by the licensee in order to attract the penal provisions. Clause (c) with which the Court was concerned embodied the last step that could be resorted to by the State Government to eliminate a recalcitrant operator from the field of mining industry provided he was guilty of repeated failures to comply with any of the provisions of the Act or the rules made thereunder. The discretion of the State Government under cl. (c) of s. 25 (1) was hedged in by important restrictions, viz., the repeated failure on the part of the licensee and the necessity for the State Government to afford reasonable opportunity to him to show cause why his licence should not be cancelled. In Kishan Chand Arora v. The Commissioner of Police(2) the majority judgment observed that in order to decide whether a provision in a pre- Constitution statute like the one in question there satisfied the test of constitutionality laid down by Art. 19(1)(g) read with Art. 19(6) the impugned section must be read as a whole and in a fair and reasonable manner and should not be declared void simply because considerations relevant to those articles are not immediately apparent from its language. These observations were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral terms to make Regulations and Clause 2 empowers it in particular to make Regulations prescribing that a non-tribal after the enactment of such a Regulation shall not carry on trade except under a licence. Reading Paragraph 10 fairly and as a whole it would seem that the Constitution-makers were anxious that the tribals should be safeguarded from unfair exploitation by non-tribals entering the District and carrying on money-lending and other activities. It appears that Regulation 2 of 1953 was passed for the avowed object set out in Paragraph 10 of the Sixth Schedule though its preamble merely states that it was expedient to regulate and control trade by non-tribals. Section 3 of the Regulation lays down a prohibition against any one carrying on trade without a licence and except in accordance with the terms of such licence. The effect of this section is that if a non- tribal wishes to carry on trade in the District but is refused the licence, such refusal would result in a total prohibition against him from carrying on any trade. Even if a licence is issued it can only be a temporary licence for one year only. If the Executive Committee to which this power is delegated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This situation is clearly seen from the fact that though section 9 of the Regulation authorises the Executive Committee to cancel a licence-presumably both permanent and temporary-if the licensee is convicted of contravention of any of the provisions of the Regulation, the power of refusal under section 3 is not limited or circumscribed by any such provision or any other criterion. The power of refusal is thus left entirely unguided and untrammelled. How arbitrary the exercise of such unguided power can be is seen from the fact that the Executive Committee not only refused to renew the appellant's licence but also directed him to remove his property by the end of July 1960 and imposed a fine if he failed to do so. It is true that the Executive Committee in the present case has given the reason for refusal to renew the licence, viz., that the number of licensees had reached the maximum. But the order does not state what that maximum is or who prescribed such a number and under what authority or what is the criterion for fixing any particular maximum. Indeed there is nothing in the Regulation empowering the Council much less the Executive Committee to lay down any such maximu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a proper cause for refusal. Equally it does not show any guiding criterion on which the Committee should decide to grant or refuse a licence or its renewal. The Regulation contains no provisions on the basis of which an applicant would know what he has to satisfy in order to entitle him to a licence. The power to grant or not to grant is thus entirely unrestrained and unguided. The Regulation leaves a trader not only at the mercy of the Committee but also without any remedy. Therefore even if the Sixth Schedule can be said to contain a policy and the Regulation may be said to have been enacted in pursuance of such a policy the analysis of the Regulation shows that that is not sufficient. Even if a statute lays down a policy it is conceivable that its implementation may be left in such an arbitrary manner that the statute providing for such implementation would amount to an unreasonable restriction. A provision which leaves an unbridled power to an authority cannot in any sense be characterised as reasonable. Section 3 of the Regulation is one such provision and is therefore liable to be struck down as violative of Art. 19(1)(g). For the reasons aforesaid, we would declare th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibes resident in the district. (2)In particular and without prejudice to the generality of the foregoing power, such regulations may. (d)Prescribe that no person who is not a member of the Scheduled Tribes resident in the district shall carry on wholesale or retail business in any commodity except under a licence issued in that behalf by the District Council : Provided that no regulations may be made under this paragraph unless they are passed by a majority of not less than three-fourths of the total membership of the District Council : Provided further that it shall not be competent under any such. regulations to refuse the grant of a licence to a money- lender or a trader who has been carrying on business within the district since before the time of the making of such regulations. On March 17, 1953 the Lushai Hills District Council with the assent of the Governor of Assam and in exercise of its powers under paragraph 10 of the Sixth Schedule to the Constitution made and promulgated the Lushai Hills District (Trading by non- Tribals) Regulation, 1953 (Regulation No. 2 of 1953). Section 3 of the Regulation reads: 3. No person, other than a Tribal resident in the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaker sections of the people and, in particular, the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation. Pursuant to this policy, the Constitution itself has made numerous provisions for the protection of the Scheduled Tribes. Paragraph 10(2)(d) of the Sixth Schedule is one of such provisions. Section 3 of the Regulation has been enacted pursuant to the power conferred by paragraph 10(2)(d)of the Sixth Schedule with the object of preventing exploitation of the Scheduled Tribes by non- tribal traders and protecting the interests of the Scheduled Tribes. The licensing power is vested in the District Council which is a high ranking body with legislative, judicial and executive functions. It is apparent on the face of the Constitution of which paragraph 10(2)(d) of the Sixth Schedule forms an intergral part and on a fair reading of s. 3 of the Regulation read in the light of paragraph 10(2)(d) that the protection of the interests of the Scheduled Tribes is to be the guiding policy regulating the exercise of the discretion of the District Council in the matter of granting or withholding trading licenses to non- tribal traders. It is left to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;T' are as follows : 1. This license is cancellable or renewable by the Executive Committee as and when thought fit contingent on good conduct and behaviour while in Lushai Hills. 2. Trading should be done on cash basis only. 3. The License holder should report without fail to the Executive Committee on the expiry of the validity of this license, and submit this license. The Executive Committee of the District Council is constituted under r. 19 of the Assam Autonomous District (Constitution of District Councils) Rules, 1951 framed by the Governor of Assam in exercise of the powers conferred by sub-paragraph (6) of paragraph 2 of the Sixth Schedule to the Constitution, and is vested, inter alia, with the executive functions of the District Council. The validity of the Rules is not in issue. It is not contended that the Rules are ultra vires the Regulation. The discretion vested in the licensing authority by Rules 4, 5 and 7 is not restricted by condition No. 1 of the license. The licensing authority may refuse to renew or to issue the license if it finds that such a course would promote the interests of the Scheduled Tribes. In the present case, the Executive Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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