TMI Blog1953 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial crops. On 15-11-1949, a further notification was made under Section 4 of the Act declaring the district of Malabar as notified area under the Act in respect of the above commodities. In May 1950, a Market Committee was constituted under Section 4-A of the Act and on 26-11-1950 and 27-11-1950 the Committee published certain notices marked as Exs. A, B, B-1 and B. 2 and it is the Validity of these notices that is in question in this petition. Exhibit A provides that the merchants must, in order to do business in cocoanuts, copra and arecanuts, obtain licences on payment of fees as provided therein and register their names with the Market Committee and that they should execute an agreement undertaking to do business in accordance with the terms contained therein. Exhibit B is the form of the agreement to be executed by the merchants in favour of the Market Committee; Clause 2 thereof provides that the licensee should confine his purchases and sales to the licensed premises. Exhibit B. 1 is the application form for obtaining licences for selling and buying and Ex. B. 2, for storing and processing the commodities. The place or places where the business is to be carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 4 of the Act declaring the district of Tirunelveli, a notified area in respect of cotton; and on 18-3-1953 a further notification was issued under Section 4-A constituting a Market Committee. The Committee issued notices intimating the merchants that the Act and the rules had come into force on 1-1-1953, that licences should be taken as provided therein and that in default action will be taken against them. The petitioners are merchants carrying on business in cotton in various places in the district of Tirunelveli and they pray that a writ may be issued restraining the respondents from taking any action under the Act and the rules on the ground that they have become void under the Constitution. The petitioners in W. P. No. 135 of 1953 are other merchants in the district of Tirunelveli to whom the Market committee subsequently issued notices similar to those in W. P. No. 87 of 1953 and they claim the same relief as the petitioners in W. P. No. 87 of 1953 and on the same grounds. 5. The petitioners in W. P. No. 119 of 1953 are merchants carrying on business in tobacco at various places in the district of Coimbatore. On 11-9-1951, a notification was published under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egation that fundamental rights had been invaded, the court should be satisfied that these allegations were well founded before proceeding with the application, Patanjali Sastri C. J. observed as follows: In the present case, however, the appellants can have no grievance, as the respondents' allegation of infringement of their fundamental right tinder Article 19(1)(g) was based on their contention that the Act was 'ultra, vires' the State Legislature, and that contention having been accepted by the court below, there would clearly be an unauthorised restriction on the respondents' right to carry on their trade, registration and licence being required only to facilitate collection of the tax imposed. Reference was then made to the decision of the Supreme Court in -- 'Mohammad Yasin v. Town Area Committee, Jalalabad' [1952]1SCR572 wherein relief was granted under Article 226 on the ground that a by-law which required a trader to pay a fee before doing business was unauthorised and was in consequence a violation of the right to trade guaranteed by Article 19(1)(g). As the petitioners contend that the impugned Act has become void under the Constitution a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitution of the Market Committee and Section 16 for its supersession. Turning to the rules which have been framed under Section 18 of the Act, Rules 5 to 23 provide for election to the Market Committee; preparation of the electoral roll, constitution of subcommittees, framing of by-laws and so-forth. These provisions are not the subject of independent attack as they merely provide the machinery for carrying out the controls imposed by the second group of sections. It is these latter that really affect the petitioners and it is their validity that has been vehemently questioned before us. 11. Section 5(1) enacts that when an area is notified under Section 4, no person shall thereafter do business at any place within that area except under licence and in accordance with the conditions therein. There is a proviso that when a market has been established, no licence shall be granted to carry on business within such distance of the market as may be fixed by the Government. Exemptions are enacted in favour of co-operative societies and persons who purchase for their own use. There is also power to exempt small dealers. Section 5(3) provides that no person shall use any place within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Rule 10, which provides for compulsory reference of disputes to arbitration is a restriction on the mode of carrying on of business. The following passage from Halsbury's Laws of England, Vol. 32, p. 338, para. 554, was relied on as showing what freedom of business signified. It is the general principle of the common law that a man is entitled to exercise any lawful trade or calling as and where he wills; and the law has always regarded jealously any interference with trade, even at the risk of interference with freedom of contract, as it is public policy to oppose all restraints upon liberty of individual action which are injurious to the interests of the state. It is contended that the provisions of the Act and the rules already set out infringe the rights of a citizen to trade as and where he wills and must be held to be obnoxious to Article 19(1)(g) and void. 13. The Act does undoubtedly restrict the freedom of a citizen to trade as and where he wills ; indeed it was enacted for the very purpose of controlling business in commercial crops. The point for determination is whether the restrictions contained therein are reasonable and valid under Article 19(6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stem afforded great protection, to the producers and that special legislation should be undertaken to establish such markets in every cotton growing area. The Royal Commission on Agriculture in India recorded a considerable body of evidence on the state of the trade in food crops and it showed the need for legislative action for safeguarding the interests of the producers (vide report dated 1928). In 1931 the Indian Central Banking Enquiry Committee considered in Chapter VII of its report the conditions with reference to marketing. It is therein pointed out that the village producer was seldom able to get a proper price because he was chronically indebted to the middlemen who advanced loans on the security of the crops to be grown and were thus in a position to dictate their own terms and that the bargains were seldom fair to the seller. It was also observed that for want of facilities for ware-housing the produce, the grower was not in a position to wait and sell the commodities for proper price (vide pages 78 and 79). In 1933 the Act now under consideration was passed with the object of providing for the better regulation of buying and selling of commercial crops and the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (1942) 87 Law ED 315 (D).) Under the Indian Constitution, they must be upheld under Article 19(6) as reasonable and enacted in the interests of the general public. 17. It is next argued that even if marketing legislation should in general be held to fall within the scope of Article 19(6), some of the provisions contained in the impugned Act and the rules go far beyond what is reasonable, having regard to the purpose of the Act and must therefore be rejected as void, and that further, as those provisions are inseparably mixed up with the rest of them, the Act and the rules must in their entirety be held to be void. Reliance was placed on the decision of the Supreme Court in -- 'Chintamanrao v. State of Madhya Pradesh' [1950]1SCR759 , where an Act which prohibited the carrying on of the business of beedi manufacture during agricultural season was held to be in excess of the requirements as the prohibition extended not only to agricultural labour but to other labour as well. The following observations of Mahajan J., were quoted: The phrase 'reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the right should not be ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to grant or refuse licences as he might choose and a provision which makes the exercise of a fundamental right dependent on the absolute discretion of administrative authorities must be held to be unconstitutional. The learned Advocate General did not dispute the correctness of this position; he merely stated that as a fact there had not even been a single instance of refusal to grant a licence. It may be conceded that the intention of the legislature was that all persons who apply for licences should get them and that none should be refused, though being a pre-Constitution enactment, the language is undoubtedly wide. As it stands, the section must be held to be void in so far as it confers on the Collector an authority to refuse a licence at his will. This conclusion however does not entail the consequence of the entire licensing regulation becoming void, because its only result is that all applicants are entitled to obtain licences provided they pay the prescribed fee and comply with the other conditions. 19. 'Rule 37': This rule provides that buyers and sellers whose names are not registered by the Market Committee shall not buy or sell within the notified area. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and had nothing to do with and was not hi the least intended to affect, the rights of merchants to carry on business. In other words, that section was enacted only as part of the first group of provisions establishing the machinery for the enforcement of the Act and its inclusion by the enactment of Section 18(2)(v-a) and Rule 37 is the second group of provisions relating to the regulation of business is an extension based on a misapprehension of the true purpose of Section 6. The contention of the petitioners that these provisions are inconsistent with Article 19(1)(g) and could not be upheld under Article 19(6) is well founded. -It is true that under Rule 37 the buyer or seller is entitled to get his name entered in the register as a matter of right but if he does not choose to do so, the only penalty which he incurs is that he is not entitled to take part in the election to the Market Committee. He is not further liable to be deprived of his right to carry on business. To this extent Rule 37 is void. This conclusion again does not affect the validity of the rest of the provisions as the only result of it is that merchants who would be entitled to carry on business but for Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling the sellers to seek purchasers in their own premises and would render business impossible. It is conceded for the respondents that the condition that a person should purchase commodities in his own premises is unreasonable; that it was sufficient if purchases were made from persons who had licence to sell in their premises and that that was all that was meant to be laid down in the by-law. If it went further, it would be in excess of the Statute and must be held to be void. 23. (3) 'Restriction as to the manner of carrying on business'. The only contention that was urged under this heading was that there were certain provisions for compulsory arbitration and that they were a restraint on the freedom to do business. The relevant provisions are Section 18(2) (ix) and Rule 10 (3) and (4), Provisions of this kind are usual in marketing regulations and it is difficult to hold that they are unreasonable; and even if they are invalid, that does not affect the validity of the Act as a whole and in that view, the question whether they are valid does not arise for decision at this stage. It may be mentioned that there is no provision in the Act or in the rules for filing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of commodities. The position is the same as in the professions where there are both the Income Tax and the profession tax imposed by two different statutes. Secondly, it is a novel and somewhat startling proposition to advance that a Statute good in itself, should become bad in conjunction with others. Article 13 enacts that any law which is inconsistent with the fundamental rights declared in Part III should be void; and when it is alleged that a particular law is bad as infringing the right to free trade guaranteed by Article 19(1)(g) the court has power to strike it down only if that law is not reasonable and in the interests of the general public. It does not possess a general jurisdiction to conduct an enquiry into the totality of the burdens imposed on a citizen by all the laws and to grant any relief, if it is satisfied that it is heavy. That is a matter for the legislature to consider. The error involved in this argument will be manifest when once it is actually sought to be applied to a particular legislation. Supposing the court to hold that the aggregate of the burdens imposed by the several statutes taken together was unreasonable, are all of them to be struck down o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to raise the necessary lands for building a market by what is, in substance an exaction from the merchants was unjust and opposed to the true spirit and purpose of the Act. In W. P. No. 75 of 1953, there is this further fact that there is in Virudhunagar a market owned and maintained by a charity known as Virudhunagar Nadar Abhivridhi Panjukadai Mahimai . This market has been in existence for over half a century and has been largely used by the merchants of the locality. It contains stalls for effecting sales, godowns for stocking goods, hotels, parks and other amenities. Certain charges called mahimai are collected on all transactions that take place within the market; and they are constituted into a trust fund which is utilised for the maintenance of schools and for religious purposes. The petitioners complain that the result of this notification would be to put this ancient and useful market out of commission, and how is it reasonable, asks Mr. Rajah Aiyar, to close the existing market without substituting another in its place? It must be admitted that there is considerable force and justice in these contentions. But then the Act provides special machinery for the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be driven to hawk their goods be lore licensed premises scattered over the district before they could find a purchaser. We must again hold that these are matters which should more appropriately be placed before the Government for consideration and cannot be urged in these proceedings. In the result it must be held that though Section 5(4) and Rule 37 are void to the extent mentioned above, that does not affect the validity of the rest of the provisions and that the Act and the rules must be held to be valid under Article 19(6). 27. 2. The next point for decision is whether the Act and the rules fire in contravention of Article 301 of the Constitution. The argument on behalf of the petitioners is that this Article is based on Section 92 of the Constitution Act of Australia which provides that a trade and commerce amongst States shall be absolutely free ; that decisions on that section have held that marketing Statutes are void as repugnant to it; that in enacting that trade, commerce and intercourse throughout the territory of India shall be free , Article 301 extends the principle of Section 92 to Intra-State as well as Inter-State commerce and in consequence, Marketing Acts w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Australian National Airways Pty., Ltd. v. The Commonwealth', 71 CLR 29 (I) is not very relevant as it only decided that an Act of the Commonwealth granting monopoly of the right to transport passengers and goods by air, to a commission appointed under the Act was void in so far as it denied the rights of others to engage in inter-State intercourse. Clements and Marshall Pty., Ltd v. Field Peas Marketing Board, (Tas)', 76 CLR 401 (J) relates to a Tasmanian statute which provided that a commodity notified under the Act should vest in a Board which was to arrange for its sales within and without the State. This was held to infringe Section 92. This decision is similar on the facts to the one in -- '48 CLR 266 (H)'. In -- 'Cam and Sons Pty., Ltd. v. The Chief Secretary Of New South Wales', g4 CLR 442 (K) an Act of New South Wales requiring that the first sale of fish or oysters should be in a market established or recognised under the Act was held to be obnoxious to Section 92 in so far as it related to fish or oysters intended for inter-State trade. But not in so far as it related to intra-State sales. In -- 'Wilcox Mofflin Ltd. v. state of New Sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be conducted, is not a mere prohibition and may be valid in its application to inter-State trade notwithstanding Section 92 , (page 127). In -- 'Commonwealth of Australia v. Bank of New South Wales', 1950 AC 235 (P) dealing with this aspect of the question, Lord Porter observed (at p. 309): On this, and on a cognate matter, the distinction between restrictions which are regulatory and do not offend against Section 92 and those which are something more than regulatory and do so offend, their Lordships think it proper to make certain further observations, it is generally recognised that the expression 'free' in Section 92 though emphasised by the accompanying 'absolutely' yet must receive some qualification. It was, indeed, common in the present case that the conception of freedom of trade, commerce intercourse in a community regulated by law presupposes some degree of restriction on the individual. As long ago as 1916 in -- 'Duncan v. State of Queensland', 22 CLR 556 (Q), Sir Samuel Griffith C. J. said, 'But the word 'free' does not mean 'extra legem' any more than freedom means anarchy'. We boast of being an ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfronted by reason of Section 92 sought to solve them by enacting limitations in Part XIII itself on the freedom guaranteed in Article 301. In this case we are concerned with two of them Articles 302 305, Article 304(b) confers on the State Legislature power to pass a law imposing such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest provided that no bill or amendment for the purposes of Clause (b) shall be introduced or moved in the legislature of a State without the previous sanction of the President . It will be within the competence of the State legislature to enact marketing laws under this provision. Article 304(b) applies in terms only to legislation to be enacted after the Constitution and the present Act which was passed in 1933 will be outside its operation. Article 305 provides that nothing in Articles 301 and 303 shall affect the provisions of any existing law except in so far as the President may by order otherwise provide . In W. P. Nos. 75, 87, 119, 135 and 155 of 1953, the notifications under Section 4 extending the operation of the Act over the areas in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 in respect of intra-State trade. The question thus raised is one of some difficulty. There is in support of the contention of the petitioners the language of the Article which is a deliberate departure from that of Section 92, and this wording is again repeated in Article 304(b), where the expression within that State cannot apply to inter-State trade, though the marginal note, if reference to it is legitimate, would support the contention that it could. But if Article 301 is to be Miterpreted as guaranteeing freedom in intra-State commerce as well, there may be difficulty in reconciling it with Article 19(6) which enacts that restrictions on the right to trade would be valid if they are reasonable and made in the interests of the general public. It is true that there is a similar saving in Article 304(b), but then it is subject to a condition which does not find a place in Article 19(6) that the previous sanction of the President should have been obtained therefor. It is suggested that Article 19(1)(g) views the matter from the point of view of the citizen, whereas Article 301 views it from the point of view of trade. In other words, the operation of Article 19(1)(g) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, and, therefore, neither imposes additional burdens on the latter nor grants any special favours to the former. That clearly is the sense which the words bear in Article 301 in so far as it relates to inter-State trade, it may be mentioned that the view had been expressed on Section 92 of the Australian Act that the freedom guaranteed therein was freedom from interference at the frontier where the goods pass from one State into another and support for it was found in the setting of that section in the Constitution Act. This argument found some favour with Lord Wright who observed in 1936 A. C. 578 (R), The true criterion seems to be that what is meant is freedom as to the frontier or to use the words of Section 112, in respect of goods passing into or out of the State, (page 630). The matter was again considered in 1950 A. C. 235 (P). After referring to the observations of Lord Wright quoted above, Lord Porter observed. Those words must (as must every word of every judgment be read 'secundum subjectam materiam'. They were appropriate to their context and must be read in their context. They cannot be interpreted as a decision either that it is only the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Section 11 provides that the Market Committee shall levy fees on the notified commercial crops bought and sold in the notified area at such rates as it may determine. This is followed by an explanation which is as follows: For the purpose of this sub-section, all notified commercial crops leaving a notified area shall, unless the contrary is proved, be presumed to be bought and sold within such area. Section 11-A provides for the levy of subscription for collecting and disseminating marketing information. Rule 28(1) prescribes the scale of fees to be levied under Section 11(1); and Rule 28(3) the licence fees chargeable under Section 5. The question is whether these charges are valid. On our finding that there is need for regulation of the marketing of commercial crops and the system of licensing is a part of a scheme to carry it out, there can be no valid objection to the levy of a licence fee, and though it was suggested that it was heavy, there are no materials on which the suggestion could be supported. Rule 28(3) must accordingly be held to be valid. Nor can there be any objection to the levy under Section 11-A. It is a fee charged for obtaining and disseminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interested individuals and, secondly, that the fund raised does not fall into the general mass of the proceeds of taxation but is applicable for a special and limited purpose. Neither of these considerations appears to their Lordships to have the weight which it is desired to attach, to them.....The fact that in the circumstances the persons particularly interested are singled out and charged with a special contribution appears to their Lordships to be a natural arrangement. Nor is the fact that the levy is applicable for a special purpose of any real significance. Imposts of that character are common methods of taxation -- taxation for the road fund in this country was a well-known example , (pp. 121-122). We must accordingly hold that the amounts to be collected under Section 11 are taxes notwithstanding that they are not brought into the consolidated fund of the State under Article 266(1) but constituted into a separate fund and that the levy is only on a section of the public. 36. In this view, two contentions have been urged before us: (1) The tax levied under the explanation to Section 11 is really one on inter-State trade and therefore repugnant to Article 286(2). M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial Legislature under the Government of India Act, 1935, under Entry 48 in List No. 2 in the Seventh schedule. Under the Constitution also it is the State alone that has competence over it under Entry 54 in the State List in the Seventh schedule. Therefore a Law of the State imposing sales-tax will be valid even without resort to Section 143(2) of the 1935 Act or Article 277 of the Constitution. The argument of Mr. K. Rajah Aiyar is that even though the State legislature has jurisdiction to impose a sales-tax, it did not purport to do so and so the levy must stand or fall as a fee. This is too wide a contention, for the legality of a charge must depend not on the label which is given to it but on what is, in substance, its true character. The matter however is complicated by the fact that there is in Madras a General Sales-tax Act 9 of 1939 in force and Section 3 therein fixes the maximum rate at which tax could be levied and it is open to argument that to construe the levy of a fee under Section 11 as a sales-tax would conflict with the express provisions of the Madras General Sales-tax Act. But as no levy has been imposed under Section 11 on any 01 the petitioners, its le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the notified area in a disadvantageous position. But if marketing legislation is for the welfare of the general public, as we have held that it is, then the omission to notify other areas might be a matter on which the persons in the non-notified area might have grievance. We do not see that the merchants within the notified area themselves have any good ground for complaint. This objection also is overruled. 38. It remains to deal with the special contentions put forward by the petitioners in W. P. No. 75 of 1953. They are it will be remembered merchants of Virudhunagar and trustees of a charity which owns and maintains a market which is largely used by the merchants of the locality. The contention that there was no need to extend the operation of the Act to a place where there is already in existence a large and well-established market and especially when there is no market established under the Act has already been considered. The further contention advanced on their behalf is that as the result of the notification is that no business in cotton and groundnuts could be carried on in the market, the petitioners are prevented from running their markets as they might will an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Town Area Committee provided that any person could sell within the area provided he obtained a licence on payment of the requisite fees. It was held that as this levy was unauthorised, the by-law requiring the trader to obtain a licence on payment of the prescribed fee was an unlawful interference with his right to carry on business. Neither of these authorities is in point, as they are with reference to fundamental rights guaranteed by Article 19(1)(g). That article recognises the right of an individual to do business. It recognises the right of an owner to hold property and that will include the right to use it as a market. Independently of these rights, it does not recognise a further right in the citizens to hold markets. The petitioners cannot complain that they are prevented from carrying on business; nor can they state that they are prevented from using the building as a market. Apart from any contention that the restrictions placed on them in the matter of carrying on of business or in holding of property are unreasonable, there cannot be a claim that any right of theirs to hold a market has been infringed. 39. A question similar to the one now under discussi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded as being unreasonable if the authority imposing such restriction had the power to do so. The considerations applicable to a bus-stand are also applicable to a market and by parity of reasoning it must be held that no fundamental rights of the petitioners have been infringed by the notification under challenge. 40. The last contention relates to a charge called Mahimai which is collected as a matter of trade usage on all transactions. Section 14 of the Act prohibits trade allowances which are not authorised by the rules or by-laws. By-law 25(b) framed by the Ramanathapuram Market Committee expressly prohibits deductions on account of Mahima' . The contention of the petitioners is that this is a legitimate trade allowance, and that by-law 25(b) is illegal. This question does not arise for decision at this stage. But having heard full arguments on the question, we are satisfied that Mahimai cannot be claimed as a trade allowance. It is a deduction made out of the price payable to the seller and is intended to be utilised for purposes of charity. It has nothing to do with the transaction as such and is really a contribution levied at the time of the transaction for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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