BISHAMBHAR DAYAL CHANDRA MOHAN AND OTHERS ETC. ETC. versus STATE OF UTTAR PRADESH & ORS.

1137 BISHAMBHAR DAYAL CHANDR OTHERS ETC MOHAN AND . TC. v. STATE OF UTTAR PRADESH & ORS. November S, /98! [A. P. SEN AND BAHARUL [SLAM, JJ.J ..Uttar Prruinh Food Grains D~al~n ( Llc~lfs. ll!ld . I: Ordtr, 1978, clause Ord~r, 1976 and Ullar (4) Prad~sh a.r amood~d Food by Grai~s Notlfi:a~;o:e::::~~~~=1r.r;,adt) ( p VII Re3trlctwn on Hoordillf) dartd April 21, 1981-Ttllpr/nttr Musagt ls.su~d bu IM St ( -J/BO March J/ 1981 d' ·' ~ au OYtrnmtlfl datetl , regar: 1118 en,orcetMnl of t/w Ordn,_cq1Utitl4li lUll fd' t/ Articles U, 19(/)(g), /62, JOOA ll!ld 301 o/tk CoiUrftUJioll of /;Ia. 1a' tty o-

l) .( \ .

illrlstiKate Into Conztllllliolt facu, of up/a/ned. India, Article 32-Juri$1/ktioll of the Supnmt Court 10 " Worth Qlll/ pltrasu-" Law" occurrill/f ;, Artic/4 300A "at Q/IY time'' Qfld rtLJsonah/e ustrktion'', m~ani11g of,

In exercise or the powers vestetl under the Essential Commodities Act, 1951, the State Government of Uuar Pratl~h issued two orders, namely (I} the Uttar Prade$h Food Grains Dealers (Licensing and R~triction on Hoarding) Order, 1976 and (2) the Uttar Pradesh Food Grains (Procurement and Regulation of Trade) Order 1978. By irs teleprinter messase dated M:ucll 31, 1981 to all the . I ~egional Food Controllers, the State Government issued certain further instruc-.t ~IOns '?r ~ffectivc enforcement of the two 01ders aod io parricular regulatin~ the .J( tDICr·dJstnct and outside the State-movement of wheat by traders on pnvatc account, By Notification No. P-XXIX-Food·S·S(42)/80 dared April21, 1981, clause (4) of the t97tl Order, was amended providing that no wholesale dealer, commission asent, or 1 retuiler shall have in stock wheat more than 250 quintals, 2SO quintals and 20 qui mats IC'pc<:tively, at any time, since it was of 0~1n!on that it was occcssary or 0,.pedieot so to do for sccurins the equitable dtstnbutlon and availability ot foodgrsiDI at fair prices.

Pursuant to the powcu vc.trd in !hem, the Senior Marketing Inspector and 1~ Chief Murk~tioalnspector, Aara, Intercepted aod seized the truds laden wu~ Wheat o( tho petitioners wh" oru wholcs.1~ dcalen of foodgrains from the tlnron Territory of Delhland the States of PunJ'Ib and Haryaaa at the check Pradesh, Post at Saiyan and after 00 the border between tbe Slates brinaina thcnt back to the_ ~ucchasc of Uuar point Pradesh at Ag~ and un_loaded Madhya tha Wheat from the said trudts. While the peuuoners moved an apphcatron for tbc release o( the ac:iud wheat before the Additional District Maaisuate (Civil Supplies), Aara, tho Marketina Inspectors not only lodged Fint Information

Reports but obtained an interim order on M;ay 23, 1981 for the sale of the seized wheat as it was subject to speedy and natural decay. The seized wheat had been purchased by the State Government on Government account at the procurement price and the sale proceeds were credited into the treasury.

The petitioners challenged the teleprinter message dated March 31, 1981 and the Notification dated April 21, 1981 on the following grounds : (1) The Notification fixing the maximum limit of wheat permitted to be possessed by wholesale dealer at 250 quintals, at time, is an unreasonable restriction on the freedom of trade guaranteed under Article 19(1 )(g) of the Constitution; (2) there is no distinction made between wholesale dealer and commission agent in as much as the maximum limit of wheat allowed to be possessed by them is the same, i.e., 250 quintals at time and the fixation of such limit in the case of wholesale dealer is arbitrary, irrational and irrelevant and thus violative of Article 14 of the Constitution; (3) the instructions conveyed by the State Govern-ment by its teleprinter message dated March 31, 1981, placing restrictions on movement of wheat by traders on private account from the State of U.P. to various other States and on inter-district movement of wheat within the State, were violative of their fundamental rights under Article 19(1)(g) and Article 301 of the Constitution; (4) the seizure of the consignments of the wheat, while they were in transit in the course of inter-State trade and commerce from the Union Territory of Delhi and the States of Punjab and Haryana to various destinations in the States of Maharashtra and Madhya Pradesh, was without "the authority of law'' and in violation of Article JOOA or the Constitution; (5) the restriction must be by "law" or by an "order" having the force of law and not by recourse to the executive authority of the State under Article 162 of the Constitution, that is, by an executive action. The teleprinter messag~: of the State Government dated March 31, 1981 on the basis of which the seizures were effected in truth and substance, had no legal sanction and cannot be construed to be notified order within the meaning of sub. section (l) read with sub-section (5) of section 3 of the Essential Commodities Act; it was nothing but an executive direction. No executive action which operates to the prejudice of the citizens can be taken without the authority of law. The seizures effected were not in compliance with the instructions contained in the teleprinter message and not for breach of the two control Orders and, therefore, it was nothing but "colourable eltercise" of power. The real purpose of the seizure was procurement of wheat in furtherance of the directives of the Central Government without any legal sanction, since the farmers were not willing to sell their wheat at the procurement price; and (6) under sub. section 2(ii) of section 6A of the Act there being no control price for wheat, the wheat should have been sold by public auction by the Additional District Magistrate while passing an interim order.

Dismissing the petitions, the Court

HELD: 1:1. The restriction imposed by the State Government on whole-sale dealers of wheat is neither arbitrary nor is of an eltcessive nature beyond what is required in the national interest. To check speculative tendencies of the wholesale.traders and others who manipulate the market by withholding stocks of commodity and to obviate blackmarketing, the stock limit of wheat was lilted for wholesale dealers at 250 quintals at time, as in the case of commission agent, the underlying idea beini that the wholesale dealers should be allowed to

continue their trading activities within reasonable limits. The fixation of stock limit at 250 quintals implies that wholesale dealers can have at any time, in stock, wagon-load of wheat. The words "at any time" mean "at any given time", which means that wholesale dealer should not have in stock more than 250 quintals at time. But there is nothing to prevent wholesale dealer from entering into series of transaction during the course of the day. [1173 A-E]

1:2. The State Government had adopted va~ious measures in the interest of the general public for the control of production, supply and distribution of, and trade and commerce in, essential commodities. The Order fixing stock limit introduces system of checks and balances to achieve the object of the legislation, that is, to ensure equitable distribution and availability of essential commodities at fair prices. Looking to the prevailing conditions, the imposition of such restrictions sati~fies the test of reasonableness The fixation of such stock limit is not arbitrary or irrational having no nexus to the object sought to be achieved and is, therefore, intra ·;ires of Article 14. The limitation imposed fixing stock limit for wholesale dealer at 250 quintals is also reasonable re~triction within the meaning of Article 19(6) of the Constitution. [!174 A-D]

2:1. The teleprinter message No. PP-1061/XXIX-Food-5 dated 31st March, 1981 was in the nature of executive instruction of the State Government to the Regional Food Controllers of the various regions to be more vigilant and to secure ~ue observance of the control orders. [1156 B, E-F, 1163 C]

2:2. The instructions conveyed by the State Government by the impugned teleprinter message imposing the requirement for the making of an endorsement by the Deputy Marketing Officer or the Senior Marketing Officer or the physical verification of stocks of wheat during the course of transit, are not 'restriction' or an 'intrusion' on the fundamental right to carry on trade or business guaranteed under Article 19(1)(g) or on the freedom of trade, commerce and intercourse under Article 301. These are nothing but regulatory measures to ensure that the excess stock of wheat held by wholesale dealer, commission agent or retailer is not transported to place outside the State or from one district to another. Even if these requirements are considered to be 'restriction' on inter-State or intra-State trade, that is, across the State or from one part of the State to another, the limitation so imposed on the enjoyment of the right cannot be considered to be arbitrary or of an excessive nature and thus violative of Article 19(1)(g) or Article 301 of the Constitution. There being no ban on the export of wheat from the State of Uttar Pradesh to variou~; other States or from one district to another within the State, subject to the making of an endorsement by the Deputy Marketing Officer or the Senior Marketing Officer concerned, the Petitioners who an: wholesale dealers of foodgrains in the State or. ?"ttar. ~radesh ~re, therefore, free to carry on their business within the per-miSSible hm•ts, that 1s, they may carry on their trade or business or enter into inter-State or intra-State transactions of wheat subject to the stock limit of 250 quintals, at time. [ 1174 D-H, 1175 A-B]

2:3. The teleprinter message dated March 31, 1981 was direct sequel to the Centre's directives contained in its earlier teleprinter message and intended or meant to achieve three main objectives, namely, (i) to provide price support in wheat to purchasers with view to sustain, maintain and maximise the pro-

curement of wheat; (ii) to prevent hoarding and black-marketing; and (iii) to provide for equitable distribution and availability of wheat at fair prices. The directions were obviously meant to subserve the object of the legislation and were in public interest. The State Government was committed to provide price support in whe:~.t to producers and hence to maximise procurement of wheat, there is nothing unusual on the State Government issuing such executive instructions. [1156 E·F, 1160 D-E]

2:4. Even assuming that the impugned teleprinter message is not relatable to the control Orders, the State Government undoubtedly could, in exercise of the executive power of the State, introduce system of verification on movement of wheat fwm the State of Uttar Pradesh to various other States at the check post on the border and place restrictions on inter-district movement of wheat by traders on private account within the State. [1156 E-F]

Ram Jawaya Kapur v. State of Punjab [1955] 2 SCR 225 and Naraindas lndurkhya v.LState of Madhya Pradesh & Ors., [1974] 3 SCR 624, explained and followed.

3:1. The State Legislature is competent to enact law on the subject covered by Entry 33, List HI, regulating trade and commerce in, and the pro-duction, and supply and distribution of •·foodstuffs". fhe Essential Commodities Act, 1955 was enacted by Parliament in ('Xercise of concurrent jurisdiction under Entry 73, List II, of the Seventh Schedule to the Constitution as amended by the Constitution (Third _Amendment) Act, 1954. The exercise of such concurrent jurisdiction would not deprive the State Legislature of its jurisdiction thereunder. The executive power of the State which is coextensive with the legislative power is subject to the limitation contained in Article 162 which directs that in any matter with respect to which the legislature of State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly conferred by the Constitution or by any Jaw made by Parliament upon the Union of authorities thereof. [1158 F-H, 1159 A-B]

3:2. The State in exercise of its executive powers is charged with the duty and the responsibility of carrying on the general administration of the State. So long as the State Government does not go against the provisions of the consti-tution of any law, the width and amplitude of its executive power cannot be circumscribed. If there is no enactment covering particular aspect, certainly the Government call carry on the administrative directions or instructions, until the legislature makes law in that behalf. Otherwise the administration would come to standstill. .£1157 B·C]

3:3. The executive power of "search and seizure" is necessary concomi-tant of welfare State. It tends to promote the well being of the nation. Many questions arising in the field of search and seizure are factual in nature, involving varying degrees of difference among the infinitely diverse facts. It is limitless area where not only every factual variation presents new constitutional question, but it is peculiar field in which the decisions of courts do not help in clarifying the law. The decisions in the field are of little precedental value, because the more the cases that are decided the more issues arise, through possible factual variation. (1159 B·E]

. .......

4:1. The quintessence of the Constitution is the rule of the law. The State or its executive officers cannot interfere with the rights of otht:rs unless they can point to some specific rule of law which authorises their acts. [1161 A]

Stale of Madhya Pradesh v. Thakur Bharat Singh, [1967] 2 SCR 454, Satwant Singh Sawhney v. Dr. Ramarathnam, Assistant Passport Officer, Government .of India, New Delhi & Ors., [1967] 3 SCR 525 at 542; Smt. Indira Nehru Gandhi v. Shri Raj Narain, [1976] 2 SCR 347 at 524, reiterated.

4:2. The Essential Commodities Act, 1955 is "Jaw" within the meaning of Article 302 of the Constitution imposing reasonable restrictions on the right to carry on trade and commerce as guaranteed by Article J9(1)(g) and Article 301 of the Constitution. The object of the Act is to provide, in the interest of the general public for the control, production, supply ·and distribution of, and trade and commerce in, certain essential commodities. 1161 D-E]

5. From the point of view either of Entry 54 List II or of Article 301 of the Constitution, the State Legislature is competent to set up the check posts and barriers on the State's borders, designed and meant to prevent evasion of sales ta~~: and other dues. Just as inter-State trade and commerce must pay its way and be subject to ta~~:ation, persons engaged in inter-state trade or commerce are equally subject to all regulatory measures. The check posts or barriers set up by the State Government under section 28 of the U.P. Sales Tax Act, 1948, which is legally accepted as valid and also considered not restriction or impediment to the freedom of trade, commerce and intercourse granted under Article 301 of the Constitution, can certainly be utilised as machinery for due observance of the laws, for eumple, for verification and control of movement of wheat by traders on private account from the State of Uttar Pradesh to various other States.

[1159 F, 1160 B-D]

6:1. The fundamental right to carry on trade or business guaranteed under Article 19(l)(g) or the freedom of inter-State trade, commerce and intercourse under Article 301 of the Constitution, has its own limitations. The liberty of an individual to do as he pleases is not absolute. It must yield to the common good. Absolute or unrestricted individual rights do not and cannot exist in any modern State. There is no protection of the rights [themselves unless there is measure of control and regulation of the rights of each individual in the interests of all. Whenever such conflict comes before the Court, it is its duty to har· monise the exercise of the competing rights. The Court must balance the indi-vidual's rights of freedom of trade under Article 19(1 )(g) and the freedom of inter-State trade and commerce under Article 301 as against the national interest. Such limitation is inherent in the exercise of those rights. [1!64 E-H]

6:2. Under Article 19(1l(g) of the Constitution, citizen has the right to carry on any occupation, trade or business and the only restriction on this un-fettered right is the authority of the State to make law imposing reasonable restrictions under clause (6}. [1165 A]

6:3. The expression "reasonable restriction" signifies that the limitation imposed on person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the :>ublic. The test pf. reasonableness. wherever prescribed1 should be applied to ea,ch individual

~-------------- - -----

statute impugned, and no abstract standard, or general pauern of reasonableness can be laid down as applicable in all cases. The restriction which arbitrarily or excessively invades the right cannot be said to contain the quality of reason-ableness and unless it strikes proper balanc~ between the freedom guaranteed in Article 19(1} {g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality. [1165 B-D]

6:4. Several steps taken, in the instant case, like prevention of movement of stock of wheat to various other States, movement of wheat from one district to another within the State only after the verification of the transaction and due endorsement by the Deputy Marketing Officer or th : Senior Marketing Officer concerned and also the physical verification at the check post on the State's borders etc. were designed to prevent price rise in wheat in the State of Uttar Pradesh and to prevent outflow of wheat from the State to various other States and from one district to another district within the State. The whole object was to ensure that the wholesale dealers in foodgrains did not corner stocks of wheat for the purpose of speculation, and hence the steps taken were reasonable and in the interests of the general public. If, therefore, the seizure can be justified on the basis of any valid law, it cannot be held to be illegal. [1165 D-H]

7:1. Article 301 imposes limitation on all legislative power in order to secure that trade, commerce and intercourse throughout the territory of India shali be free. Although Article 301 guarntees that trade, commerce intercourse throughout the country shall be free, the righ(to carry on inter-State trade and commerce may be subject to reasonable 1estrictions in the interests of the general public. [1165 A, 1166 A, C]

7:2. The word 'free' in Article 301 does not mean freedom from laws or from regulations. Article 301 guarantees freedom of trade, commerce and intercourse throughout the country from any State barriers. The whole object was to bring about the economic unity of the country under federal structure, so that the people may feel that they are members of one nation. One of the means to achieve this object is to guarantee to every citizen in addition to the freedom of movement and residence throughout the country, which is achieved by Article l9(1)(d) and (e) is the freedom of movement or passage of commodities from one part of the country to another. This freedom of trade, commerce and intercourse throughout the country without any "State barriers" is not confined to inter-State trade but also including intra-State trade as well. In other words, subject to the provisions of Part XIII, no restrictions can be imposed upon thtl flow of trade, commerce and intercourse, not only between the State and another, but betw<:!n ar1y two pJints within th~ territory of India whether any State border has to be crossed or not. [1166 D-H]

7:3. The regulatory measme or me'l.sure> impo>ing compensatory taxes do not come within the purview of th~ restrictions contemplated by Article 301. The regulatory measures should, however, be such as do not impede the freedom of trade, commerce and intercourse. [1166 H, 1167 A]

8:1. In view of the provisions of clause (3) of the 1976 Order read with clauses {4) & (6) of the 1978 Order, the validly seized e:tcess stock of wheat lying with such dealer, that is, wholesale dealer, commission agent or retailer, in truth and substance, became their"unlicensed stock". Here, if really the Delhi traders had purchased the excess stock of wheat from wholesale dealers, com·

-.-r ...

mission agents or retailers in the State of Uttar Pradesh, as is alleged, it is possible to contend that there was contravention of 'the provisions of clause (4) of the 1978 Order. The question whether the seizure was for any contravention of any order issued under section 3 of the Act has to be determined by the Additional District Magistrates (Civil Supplies), Agra, on the evidence adduced by the parties before him. The facts being controverted, the petitioners have no right to relief under Article 32 of the Constitution. [1168 D-H, llfi9 A-B)

8:2. Supreme Court can neither act on documents which are yet to be proved nor can they pronounce upon the genuineness of the transactions covered by them or record any finding on the basis of the documents when the facts are in dispute. [1169 E)

8:3. Normally, it is not the function of Supreme Court to investigate into facts in p!Oceediogs under Article 32 of the Constitution when they are controvert-ed with view to discerning the truth. The matter must, in situation like this, be left to the fact-finding body. For the establishment of their right to relief under Article 32, the petitioners must establish the necessary facts before the said Additional District Magistrate in the proceedings under section 6A of the Essential Commodities Act. If they fail to get relief in such proceedings, their obvious remedy lies in suit for damages for wrongful seizure. [1171 A-C)

9:1. The State Government cannot while taking recourse to the executive power of the State under Article 162 of the Constitution deprive person of his property. Such power can be exercised only by authority of Jaw and not by mere executive fiat or order. Article 162 being subject to other provisions of the Constitution, is necessarily subject to Article 300A. [1169 F-G]

Wazir Chand v. The Stale of Himachal Pradesh, [1955] 1 SCR 408; Bishan Das and Ot~rs v. The State of Punjab and Others, [1962] 2 SCR 69, referred to.

9:2. The word 'law' in the context of Article 300A must mean an Act of Parliament or of State Legislature, rule, or statutory order, having the force of law, that is positive or State-made law. [1169 G·H]

9:3. The effect of the Constitution {Pourth) Amendment Act, 1955, is that there can be no 'deprivation' unle~s there is extinction of the right to property. Here, no doubt, the wheat hnd to be sold, as it was subject to spee-dy and natural decay, but the petitioners an.: entitled to the sale proceeds, if ultimately it is found by the Additional District Magistrate (Civil Supplies), Agra, that there wa~ no contravention by them of an order issued under section 3 of the Act. It IS true that the seizure was with intent to confiscate under section 6A of the Act, but that would not make the seizure illegal, if, ultimately, it is found that there was con~ravention of an order issued under section 3 of the Act. If the facts were not ·~ controversy and if the petitioners were able to prove that there was wrongful se•_zure of wheat by the State Government of Uttar Pradesh at the check post of Satyan on the border, whil¢ in transit, in the course of linter-State trade and commerce from the Union Territory of Delhi perh · th Jd · 1 • aps, ey wou entit_e to the return of th.: seized wheat, or, in the alternative, to the payment of pCice thereof. (1170 D-H, 1171 A]

9:4. The question that the seizures were in reality for procurement of wheat in furtherance of the directive of the Central Government, and not for breach of the two Control Orders and, therefore, were nothing but 'colourable exercise of power', is dependent on facts to be found on investigation. Further, the question that there being no control price for wheat, the wheat should have been sold by public auction, is again question that must be raised before the Addi-tional District Magistrate (Civil Supplies), Agra, in the proceedings pending before him under section 6A of the Act. [1171 C-D]

1146 su:PttEME cou&r REi>oRts

[1982]1 s.C.k.

(f) WP. Nos. 5841-50/81. {g) WP. Nos. 5656-58/81. (Under Article 32 of the Constitution of India) 8 Hari Sarup, M.N. Phadke, Soli J. Sorabjee, J.P. Goyal and C.M. Lodha, (M/s. B. Datta, R.A. Gupta, Miss Kamini Jaiswal, Rajiv Dutta, Manoj Swarup and Miss Lalita Kohli, R.S. Sharma, R.K. Jain, Pankaj Jain, P.K. Jain, K.K. Jain, K.B. Rohatgi, B.R. Kapur, B.S. Tawakley, S.R. Srivastava, N.N. Sharma, A.K. Goel, Mitter and Mitter and Co., S.K. Jain, Rajesh Jain, Mukul Mudgal, M. Qamaruddin, Mrs. M. Qamaruddin, Anis Suhrawardhy, A.P. Mohanty, K.K. Gupta, Ravi Prakash Gupta, C.K. Ratnaparkhi, S.C. Birla, M.C. Dhingra, and S.K. Gambhir for the appearing Peti-tioners.

G.N. Dikshit, O.P. Rana, Mrs. Shobha Dixit, R.N. Poddar, G. Gopalakrishan, A. V. Rangam, B.D. Sharma, D.P. Mohanty and A. Shroff for the Respondents.

· The Judgment of the Court was delivered by SEN, J. The issue in this and the connected 505 petitions under Art. 32 of the Constitution is of far-reaching significance. It raises questions of the highest importance as to the scope and extent of the executive power of the State under Art. 162 of the Constitution, in relation to regulation and control of trade and commerce in food-stuffs. It necessarily involves claim by the petitioners who are wholesale dealers of foodgrains that the exercise of such govern-mental power conflicts with the rule of law and is in flagrant viola-tion of the freedom of trade, commerce and intercourse guaranteed under Art. 301 of the Constitution and the fundamental right to carry on trade and business guaranteed under Art. 19 (1) (g) of the Constitution. These petitions fall into two distinct and separate categories, one by the wholesale dealers of foodgrains from the Union Territory of Delhi and the neighbouring States of Punjab and Haryana, and the other by the wholesale dealers of foodgrains from the State of Uttar Pradesh.

The short question that falls for consideration in some of the .writ petitions by wholesale dealers of foodgrains from the Union ·Territory of Delhi and the State of Punjab and Haryana is whether .the action of the State Government of Uttar Pradesh in setting up 'check-posts on its borders and the stoppage ~nd seizure of wheat in transit through the State of Uttar Pradesh during the course of inter-:state trade and commerce to various destinations in the States of Madhya Pradesh and Maharashtra at the check-post at Saiyan on the borde~. between the States of Uttar Pradesh and Madhya Pradesh • on tne strength of its instructions conveyed by its teleprinter message dated March 31, 198l, was in violation of Art. 301 of the Consti-tution.· '· In majority of the writ petitions by wholesale dealers from the State of Uttar Pradesh, two questions arise, (I) whether Notifi-·cation No. P-XXIX-Food-5-5 (42)/80 dated April 21, 1981, issued by the State Government of Uttar Pradesh, in exercise of the powers conferred by s. 3 read with s. 5 of the Essential Commodities Act, 1955 (hereinafter referred to as the Act), by which 'c1.4 of the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) Order, 1978, ~has been amended, providing that no wholesale dealer, commission agent or retailer shall have in stock wheat more than 250 quintals, 250 quintals and 20 quintals respectively, at any time, an-fringes the fund mental right to carry on trade or business guaranteed under Art. 19 (1) (g) and (2) whether the governmental instructions conveyed by its teleprinter message dated March 31, 1981, placing restrictions on movement of wheat by traders on private account from the State of Uttar Pradesh to various other States and on inter-district movement of wheat within the State, were in breach of the fundamental right under Art. 19 (1) (g) read with Art. 301· of the Constitution,

The following are the facts and circumstances so far as neces-sary to show as to how the legal questions are presented. It would be convenient first to deal with the writ petitions filed by the whole-sale dealers of foodgrains from the Union Territory of Delhi and the States of Punjab and Haryana seeking declaration that the impug~ ned action of the State Government of Uttar Pradesh in setting up check-posts on the borders of the State and directing seizure of wheat in transit through the State, on the strength of the impugned teleprinter message, conflicted with the guarantees of inter-State trade and commerce dealt with by Art. 301 of the Constitution.

Facts in all these cases are more or less similar. The petition-ers who are wholesale dealers of foodgrains from the Union Territory of Delhi and the States of Punjab and Haryana allege that between April 29-30, 1981, they, acting as commission agents, purchased wheat from the open market in Delhi and elsewhere and despatched the same by trucks to various destinations in the State of Maharashtra and to some places in the State of Madhya Pradesh. According to them, the trucks laden with wheat were accompanied by relative bills, goods receipts, inter-State transit passes etc., duly crossed the check-post at Faridabad and were also allowed to cross the check-post at Kotwan on the border between the Union Territory of Delhi and the State of Uttar Pradesh and were on their way to thei! respective destinations. They allege that the Senior Marketing Inspector, Agra, intercepted the trucks in question at the check-post at Saiyan on the border between the State of Uttar Pradesh and Madhya Pradesh between April 30, 1981, and May 2, 1981. The seized trucks were brought back to the purchase point at Ag1 and the wheat was unloaded. Thereupon, the petitioners rushed to Agra and made an application on May 4, 1981, under s.6A read with ss. 3 and 7 of the Act before the Additional District Magistrate (Civil Supplies), Agra, for the release of the seiz~d wheat. In the said application, the petitioners, inter alia, claimed and un-equivocally stated that there was no ban on export of wheat from the Union Territory of Delhi to other States, that the wheat in question was neither purchased at Agra, nor was it being transported from Agra to any other district in Uttar Pradesh, that Agra was place in transit, and that the instructions of the State Government contained in the impugned teleprinter message dated March 31, 1981 did not constitute validly notified order under sub-s. (5) of s. 3 of the Act.

The Chief Marketing Inspector, Agra, had in the meanwhile seized 42 trucks laden with wheat either at the check-post at Saiyan or at Agra and lodged first information reports at the Saiyan police station or at the Civil Lines police station in respect of the consign· ments alleging that the movement of wheat was in contravention of the impugned teleprinter message and was therefore seized, and in three of them it was alleged that the wheat had been purchased at Agra. On the report of the Chief Marketing Inspector, the AddiM tiona! District Magistrate (Civil Supplies), Agra drew up proceedings under s. 6A of the r Act ~and directed the police to complete the investigation within 15 days.

On May 23, 1981, the Additional District Magistrate (Civil Supplies), Agra under sub-s. (2)(i) of s. 6A of the Act passed interim orders for the sale of the seized wheat as it was subject to speedy and natural decay, at the request of the Senior Marketing Inspector, similar to the one reproduced below :

These proceedings under s.6A of the Essential Commo· dities Act started on the report of SMI Saiyan dated 30.4.1981 ( Paper No. 1 ) whereby it was brought to the notice of this Court that truck nos ..... were caught carrying 120 quintals ...... of wheat respectively beyond Saiyan border outside the State in contravention of the order!; issued by the Government vide telex No. 1061/29-Food-5 dated 31.3.1981 F.I.R. was lodged at P.S. Saiyan in respect of the above contravention. Notice under s. 6B of the EC Act was issued to the O.Ps ...... who were driving the trucks at the time of search and seizure.

Replies were filed by the owners of the wheat conten-ding that the said rules were not part of any Control Order under Section 3 of the EC Act nor they bad any legal sanction for want of publication in the Official Gazette. The O.Ps. have pleaded that they were taking their goods in transit through Agra and in fact the movement of wheat so made by them wa:. inter-state movement which was not banned by the Central Government or State Government.

I heard the learned counsels on behalf of the O.Ps. and the learned PO as well. In these proceedings final orders cannot be passed at this stage as the matter is still under investigation .

PO directed to put up progress of investigation within 15 days from now.

In the meanwhile I order that the wheat seized by SMI Saiyan be got purchased at the Official Price so that the same does not get damaged. The sale proceeds be got deposited in Government Treasury under proper Head of Account.

This interim order is being passed under sub-s. (2) (i) vf s.6A of the Essential Commodities Act, 1955. File be put up after 15 days along with report of prosecuting office regarding progress of investigation.

N. N. Varma Addl. Collector, Agra

23.5.1981

The seized wheat has been purchased by the State Government on Government account at the procurement price and the sale proceeds credited into the Treasury.

The State Government has filed counter-affidavit of the Chief Marketing Officer, Lucknow, in all these cases as also the affidavits of the Senior Marketing Inspectors at Agra controverting the allega-tions made by the petitioners. It is stated that the source of the power to effect the seizure was not the impugnecl teleprinter message, but the power of search and seizure conferred on an E~f01;cement Officer und~r cl. 6 of the U.P. Foodgrains Dealers (Lice~s!~g and Restrictton on Hoarding) Order, 1976 and under cl,6 of the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) Order, 1978 (hereinaft~r called the 1976 ,Order and 1978 Order respectively), both of which were issued by the State Government, in exercise of the powers under s .. 3 of the Act, read with Government of India, Ministry of Agriculture (Department of Food). Notification No. G. S.R. 888 dated June 28, 1961, No .. GSR 316 (E) dated June 20, 1972, No. GSR 452 (E) dated October 25, 1972, No. GSR 168 (E) dated March 13, 1973 and No. GSR 800 dated June 9, 1978 respectively, since it was of opinion that it was necessary or expedient so to do for securing the equitable distribution and availability of foodgrains at fair prices. The State Government contends that the impugned tele-printer message dated March 31, 1981 was in the nature, of an execu-tive instruction issued by the State Government under its undoubted powers under Art. 162 of the Constitution for the due observance of the provisions of the two Control Orders. It is said that no person can carry on business in foodgrains as dealer or as ,commission agent except under and in accordance with the terms and condJtions of valid licence issued in that behalf under ct. 4 of the '1976 Qrder. It is also said that no wholesale dealer, commission agent odrader can have in stock more than 250 quintals, 250 quintals and 20 quin-tals respectively, at any time. It is asserted that the State Govern-

ment has the right to set up check-posts for the purpose of verifi-cation so that there is no contravention of the provisions of the two Control Orders, particularly with view to ensure that excess quantity of wheat is not transported in violation of the 1978 Order to other districts or other States.

The State Government in the counter-affidavit of the Chief Marketing Officer, Lucknow, specifically denies the allegations made by the petitioners that the 42 trucks laden with wheat seized at the check-post at Saiyan on the border between the States of Uttar Pradesh and Madhya Pradesh or at Agra were in transit during the course of inter-State trade and commerce.

With regard to the seizure of the wheat, it is averred in para 13 of the counter-affidavit:

"The correct fact is that the authority on the bona fide apprehension that the wheat so moved actually was purcha-. sed from the State of Uttar Pradesh from nearby places and the same was being moved to other States on the garb of outside wheat. It is submitted that such traders who are exporting wheat alleged to have purchased from places other than the State of Uttar Pradesh and were/are carrying the same to other States, have only to satisfy the authorities concerned ofthe bona fides of such transactions. However there is no · ban on such movement from one State to another."As regards the check-posts, it is submitted that the State Govern· mentis committed to provide price support in wheat to farmers at Rs. 130 per quintal. This commitment also ·involves purchase of wheat directly from the farmers without interference from traders/ middlemen, who try to purchase wheat from the farmers at .lower prices and sell the same at Government purchase centres with sub- · stantial profits. Such transactions are effected in fictitious names,, This not only frustrates the procurement policy of the Government but also prejudicially and financially affects the producers' interests. In para 5 it is accordingly averred : .

"In order to curb the above tendencies and preventing the activity of traders/middlemen the State Government ~ have provided simple system of verifying all transactions by traders. · · · · .. ;·) ..' . 1: .•

[i98i1 i s.c.k.

This procedure involves getting all transactions of wheat verified by the Deputy Regional Marketing Officer indicating inter alia the name of the persons to whom the stocks are sold, their licence numbers etc. and quantum of stocks sold, price paid etc. This process will make it simul-taneously very difficult for traders to buy at low price from farmers and resell at high prices at the Government pur-chase centres."

As regards the impugned teleprinter message it was stated that it was issued by the State Government in order to sustain and maintain and maximise the procurement of wheat by introducing system of verification at the check-posts.

The State Government contests the right of the pettuoners falling in the first category, that is, wholesale dealers of wheat from the Union Territory of Delhi and the States of Punjab and Haryana, to relief under Art. 32 of the Constitution who question the legality and propriety of the seizures. It is matter for investigation which is pending before the Additional District Magistrate (Civil Supplies), Agra and, according to it, the question cannot be decided without full itr ... estigation into facts.

In support of the writ petitions, learned counsel appearing for the petitioners have, in substance, urged three grounds. (1) There was nothing to prevent the State Government from making law placing reasonable restriction on the freedom to carry on any occupation, trade or business guaranteed under Art. 19(1) (g) read with Art. 19(6) of the Constitution, or on the freedom of trade. commerce and intercourse, throughout the territory of India, guaran-teed under Art. 301 of the Constitution, but the restriction must be by "law" or by an "order having the force of law" and not by recourse to the executive authority of the State under Art. 162 of the Constitution, i.e., by an executive action. (2} The seizure of the consignments of the wheat, while they were in transit in the course of inter-State trade and commerce from the Union Territory of Delhi and the States of Punjab and Haryana to various desti-nations in the States of Maharashtra and Madhya Pradesh, was without the "authority of Jaw" and in violation of Art. 300A of the Constitution. The seizure of the wheat being wrongful, the peti-tioners were entitled to an appropriate writ, direction or order for the return of the seized wheat or the price thereof. (3) The impugn-ed teleprinter message of the State Government dated March 31, 1981 on the basis of which the seizures were effected, in truth and

sub~tance, had no legal sanction and cannot be construed to be notified order within the meaning of sub-s. (I) read with sub-s. (5) of s. 3 of the Act: it was nothing but an executive direction. No executive action which operates to the prejudice of citizen can be taken without the authority of taw. It was asserted that the seizures effected were in compliance of the instructions contained in the impugned teleprinter message and not for breach of the two Control Orders and therefore it was nothing but "colourabte exercise" of power. , The real purpose of the seizure was procurement of wheat in furtherance of the directives of the Central Government, without any legal sanction since the farmers were not willing to sell their wheat at the procurement price.

Learned counsel fllr the petitioners also challenge the action of the Additional District Magistrate (Civil Supplies) Agra in passing an interim order in terms of sub-s. (2) (i) of s. 6A of the Act for the sale of the seized wheat on Government account and for the sale proceeds to be credited into the treasury in an appropriate Head of Account; it is urged that under sub-s. (2) Iii) of s. 6A of the Act there being no control price for wheat, the wheat should have been sold by public auction.

In reply, learned counsel for the State has repelled all these conten ions. It is submitted that the source of power to effect the seizure was not the impugned teleprinter message, but the two Control Orders issued under s. 3 of the Act. He asserted that the wheat in question was not being transported during the course of inter-State trade and commerce from the Union Territory of Delhi and the States of Punjab and Haryana to various other States. The wheat had in fact been purchased at Agra and was being lifted from the State of Uttar Pradesh and had, therefore, to be seized at the check-post at Saiyan and at Agra. He points out that under cl. 3 of the 1976 Order, no person can carry on business as dealer or commission agent, except and in accordance with the terms and conditions of licence issued in that behalf by the licensing autho-rity. According to him, the seized wheat had been purchased at Agra in the course of trade, and they were not isolated transactions and, therefore, the Delhi traders committed contravention of cl. 3 of the 1976 Order. It is also pointed out that ct. 4 of the 1978 Order, as amended, provides that no person who is wholesale dealer, commission agent or retailer shall have in stock wheat in quantities exceeding 250 quintals, 250 quintals and 20 quintals at time. It is further pointed out, cl. 14 of the 1976 Order, and cl. 6

SUPAEME couRT REPORTS

of the 1978 Order confer the power of search and seizur~ on an enforcement officer or the licensing authority or any other officer authorised by the Government in that behalf, and the expression "enforcement officer'' defined in cl. 2 (e) of the former Order ··a~d cl .. 2(d) of the latter, includes the Chief Marketing Inspector. According to the learned counsel the Government instructions con-8 veyed in the impugned teleprinter message is merely in the nature of an executive instruction for the enforcement of the two Control Orders. In support of the contentions, he a,lso relies on the exe-cutive power of the State under Art:· J62 of the Constitution. In the premises, the contention on behalf of the State is that the question whether the seized wheat was liable to be confiscated or not under s. 6A of the Act, was _a matter pending ~djudication. be~ore the Additional District Magi_strate (Civil Supplies) Agr~. Tbafdepends on whether 0~ not there was contrave~tion by the petitione'rs of ~~y of the Order issued under s. 3 of the Act and, therefor~,. carinotj),e determined without full investigation into t_he facts. . . ~; ;~

The Inter-Zonal Wheat (Movement Control) Order, ~ 97~~ issued by the Central Government. in exercise of the powers con~ ferred by s. 3 of the Act has been rescinded with effect from April 13, 1977. The result of this is that the whole country constitutes single zone for free movement of wheat except ·in such States where an order is issued under s. 3 read with s. 5 of the Act, placing ban on export of wheat such as in the State of Rajasthan .. Admittedly~ the State Government of Uttar Pradesh has not issued any order under s. 3 read with s. 5 of the Act, placing ban on export of wheat from the State or any restriction on inter·district movement of wheat within the State. The State Government does .nbt contest this position and indeed, the Chief Marketing Officer in, his counter~ affidavit states : '

"The State of Uttar Pradesh has not banned the move- · ment of wheat outside the State' or from one district to another district within the State. It is submitted that sueh traders who are transporting wheat alleged to be purchased ·; from place other than the State of Uttar Pradesh and were fare carrying the same to other States other· th<m Uttar Pradesh have only to satisfy the authorities con-cerned of the bona fides of the transactions. However, there is no ban on such movement from one ·State fo another." • ' ' ,'' I ' ~ :

BISHAMBHAR DAYAL V. U.P. STATE (Sen, J.)

The impugned teleprinter message dated March 31, 1981 runs as follows :

"For:

Regional Food Control, Agra/Bareilly /Dehradun I Faizabad/ Gorak hpu r Jbansi/ Hald wani/ Kanpur/ Meerut/ Varanasi Lucknow (by Hand) From:

Secretary (Food) Lucknow.

No. TP-1061/XXIX-Food-5

Dated: Lucknow: March 31, 1981.

Refer Tel TP-712/XXIX-Food-5-5(1)/81 of 9th March 1981 regarding renewal of and issue of new licences to dealers(.) Government committed to provide benefits of support price to producers hence to ensure that maximum quantity of wheat is purchased by agencies (.) Para (.) After careful consideration Government have decided that with effect from first April 1981 till thirtieth June 1981 no repeat no fresh licences are to be issued to any person who wish to deal in wheat, wheat products or both as whole-saler commission agent retailer (.) Para (.) Government have also decided that during April 1981 to June 1981 movement of wheat by traders on private account to out-side district shall be regulated only on the endorsement of Deputy Regional Markering Officer concerned and hitherto this power being exercised by Senior Marketing Inspector shall not repeat not be used by them (.) Para (.) At the same time easy availability of wheat in open markets is to be ensured(.)Keeping all the relevant factors in view endorsement by Dy. R.M.O. should be made judiciously on genuine and bonafide grounds(.)Para( .. )Dy. RMO will send daily report to RFC of the cases in which such permission is granted or endorsement made( .. )RFC will compile and send weekly report to Government(.)Permission to be given very sparingly and general impression made should be that they will not gain by doing any trading in wheat(.) Visit Mandis regularly and check quantities lying in traders premises(.)Presence of larg;f( ~~oy~s with trade me~ns ~tail'

is not during their job properly(.)lnform all concerned immediately for strict compliance(.) Dated : Lucknow; March 31, 1981 Sd/-

M. Subrahmanyam

Secretary

Food & Civil Supplies Sec. 5 U.P. Secretariate, Lucknow."

There can be no doubt that the aforesaid teleprinter message was in the nature of executive instructions of the State Government to the Regional Food Controllers of the various regions to secure ~ compliance with the orders. It may be mentioned that the State Government was committed to provide price support in wheat to producers and hence to maximise procurement of wheat, issued instructions that no fresh licences till June 30, 1981 were to be granted to any person who wished to deal in wheat, wheat products, or both, as well as wholesale dealer, commission agent or retailer. It further conveyed the policy decision of the Government that during April 1981 movement of wheat by traders on private account to outside districts shalt be regulated only on the endorse-ment of the Deputy Marketing Officer concerned and not by the Senior Marketing Inspectors as hitherto before. The Government also directed the Regional Food Controllers to ensure easy avail-ability of wheat in open market. As regards the making of endorse-ment, they were advised that the powers should be exercised with due circumspection. They were also asked to visit the mandis and keep constant vigil on the stocks lying with the traders. There appears to be nothing unusual on the State Government issuing such executive instructions.

Even assuming that the impugned teleprinter mes!>age is not relatable to the two Control Orders, the State Government un-doubtedly could, in exercise of the executive power of the State, introduce system of verification on movement of wheat from the S!atc of Uttar Pradesh to various other States at the check-posts on the bc)rder and place restrictions on inter-district movement of wheat by traders on private account within the State. The executive power of modern State is not capable of any precise definition. In Ram .lawaJ·a Kapur v. State of Punjab([1]), Mukherjea, C.J., dealt \'v·ith the scope of Arts. 73 and 162 of the Constitution. The learned Chief Justice observed that neither of the two Articles contains any

(I) (1955] 2 S.C.R. 225,

[I9S~] I s.C.k.

t lS8 SUPREME COtJitt REPORTS

guaranteed by it to the citizens. Consequently, even if the acts of the executive are deemed to be sanctioned by the legislature, yet they can be declared to be void and in-operative if they infringe any of the fundamental rights of the petitioners guaranteed under Part III of the Constitu-tion. On the other hand, even if the acts of the executive 8 are illegal in the sense that they are not warranted by law, but no fundamental rights of the petitioners have been infringed thereby, the latter would obviously have no right to complam under article 32 of the Constitution though they may have remedies elsewhere if other heads of rights are infringed.

In Naraindas Indurkhya v. State of Madhya Pradesh & Ors(l) Bhagwati, J., speaking for the Court, reiterated the principles laid down by Mukherjea, C.J. in Ram Jawaya Kapur's case (supra) and held that the State Government could act in exercise of the execu-tive power of the State under Art. 162 of the Constitution in rela-D tion to any matter with respect to which the State Legislature has power to make laws even if there was no legislation to support such executive action. There is no denying the fact that the State Legislature is competent to enact law on the subject covered by Entry 33, List III, which reads :

33. Trade and commerce in, and the production, supply and distribution of,-

(b) foodstuffs, including edible oilseeds and oils.

The Essential Commodities Act, 1955 was enacted by Parlia· ment in exercise of concurrent jurisdiction under Entry 33 List III of the Seventh Schedule to the Constitution as amended by the Constitution (Third Amendment) Act, 1954. The exercise of such concurrent jurisdiction would not deprive the State legislature of its jurisdiction thereunder. The State legislature, therefore, could still make law on the subject regulating trade and commerce in, G. and the production, supply and distribution of 'foodstuffs' and the only question that would arise is one vf repugnancy dealt with in Art. 254 of the Constitution. The executive power of the State being co-extensive with its legislative powr.r under Entry 33, List llJ, it relates to all matters covered by the subject 'foodstuffs',

(I} [1974] 3 SCR 624.

trade and commerce in, and the production, supply and distribution thereof. This is, of course, subject to the limitation contained in Proviso to Art. 162 which directs that in any matter with respect to which the legislature of State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly conferred by the Constitution or by any law made by Parliament upon the Union or authorities thereof.

This leads us to another aspect of the problem of considerable difficulty and importance. The subject 'search and seizure', is field which has not come before the court with considerable fre~ quency, but this is hard fact of life which the citizen does encounter very often. The executive power of 'search and seizure' is neces~ sary concomitant of welfare State. It tends to promote the well~ being of the nation. Many questions arising in the field of search and selzure are factual in nature. They involve varying degrees of difference among the infinitely diverse facts. Every factual variation presents not only new problem, but also new constitutional question. It is limitless area in which different issues may arise with vast variations of facts which are involved in each individual case. This is, indeed, peculiar field in which the decisions of courts do not help in clarifying the law. The decisions in the field are of little precedental value because, the more the cases that are decided, the more new issues arise, through possible factual variations.

The check-posts and barriers on the borders of the State of Uttar Pradesh are set up under s. 28 of the U.P. Sales Tax Act, 1948 and are designed and meant to prevent evasion of sales tax and other dues. The constitutional validity of s. 28 and its cognate provisions, ss. 28A to 28C has, rightly, if we may say so, not been challenged before us. From the point of view either of Entry 54, List II, or of Art. 301 of the Constitution, there is no question of any lack of competence in the State legislature to set up the check~ posts and barriers on the State's borders. These provisions, read with the requirements ofr. 83(4) of the U.P. Sales Tax Rules, 1948 require that the owner, driver or any other person in-charge of the vehicle or vessel shall, in respect of such goods c;:arried in the vehicle or vessel as are notified under sub-s. (1) of s. 28A, carry with bim, declaration in Form XXXI, certificate in Form XXXII, transit pass in Form XXXIV in duplicate, cash memo, bill of sale or challan and trip-sheet in triplicate. The factual existence of these check~

{1982] I s.c.ft

SUPREME coURt REI•o.ltts

posts or barriers on the State's borders is not denied, nor their legality challenged. It is not suggested that the setting up of these check-posts is restriction on the freedom of trade, commerce and intercourse guaranteed uncer Art. 301 of the Constitution, or is stich as directly and immediately restricts or impedes the free flow or movement of goods. It is also not suggested that these regula. tory measures in setting up the check-posts on the State's borders are su~h as impede freedom of trade, commerce and intercourse. Just as inter-State trade and commerce must pay its way and be subject to taxation, persons engaged in such inter-State trade or commerce are equally subject to all regulatory measures. There is no reason why the check-posts or barriers set up by the State Government under s. 28 of the U.P. Sales Tax Act, 1948, cannot be utilised a~ machinery for due observance of the laws, e.g. for verification and control of movement of wheat by traders on private account from the State of Uttar Pradesh to various other States.

The instructions conveyed by the State Government by the impugned teleprinter message dated March 31, 1981, were direct sequel to the Centre's directives contained in its earlier teleprinter message. It was intended and meant to achieve three main objec-tives, namely, (1) to provide price support in wheat to purchasers with view to sustain, maintain and maximise the procurement of wheat; (2) to prevent hoarding and blackmarketing; and (3) to provide for equitable distribution and availability of wheat at fair prices. These directions were obviously meant to subserve the object of the legislation and were in public interest.

These cases were argued with much learning and resource particularly with reference :to the rule of law and the consequent limitations on the executive power of the State under Art. 162 to 'trench' upon the fundamental right to carry on trade or business guaranteed under Art. 19 (I) (g) and the freedom of trade, com-merce and intercourse throughout the territory of India guaranteed under Art. 301 of the Constitution. It necessarily involves claim by the State that the measures ·.taken by tbe State Government by the impugned teleprinter message were nothing but regulatory mea-sures to ensure that the excess stock of wheat held by wholesale dealer, commission agent or retailer is not transported to place outside the State or from one district to not her within the State and therefore were not 'restriction' on the fundamental right 1o carry on trade or business guaranteed under Art. 19 (I)(g) or on the freedom of trade, commerce and intercourse under Art. 301.

81SHAMBHAR DAYAL v. U.P. STATE (Sen, J.)

The quintessence of our Constitution is the rule of law. The State or its executive officers cannot interfere with the rights of others unless they can point to some specific rule of law which authorises their acts. In Srate of Madhya Pradesh v. Thakur Bharat Singh(~), the Court repelled the contention that (by virtue of Art. 162, the State or its officers may, in the exercise of executive authority, without any legislation in support thereof, infringe the rights of citizens merely because the legislature of the State has power to legislate in regard to the subject on which the executive order is issued. It was observed :

"Every act done by the Government or by its officers must, if it is to operate to the prejudice of any person, be supported by some legislative authority."

The same principle was reiterated by the Court in Satwant Singh Sawhney v. Dr. Ramarathnam, Assistant Passport Officer, Government of India, New Delhi & Ors(2), and Smt. Indira Nehru Gandhi v. Shri Raj Naraine).

There can be no doubt that the Essential Commodities Act, 1955, is 'law' within the meaning of Art. 302 of the Constitution imposing reasonable restrictions on the right to carry on trade and commerce as guaranteed by Art. 19(1)(g) and Art. 301 of the C0nstitution. The object of the Act is to provide, in the interests ofthe general public, for the control, production, supply and distri-bution of, and trade and commerce in, certain essential commodities. To appreciate the points involved, it is necessary to set out the material statutory provisions. Sub-s. (I) of s. 3 of the Act provides as follows :

"3(1). If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or in-creasing 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 opera-tions, it may, by order, provide for regulating or prohibi-ting the production, supply and distribution thereof and· traue and commerce therein.''

(1) [1967] 2 SCR 454.

(2) [1967] 3 SCR 525@ 542. (3) [1976) 2 SCR 347@ 524.

; . ...,

(ii) where no such price is fixed, order the same to be sold by public auction:

Provided that in case of foodgrains, the Collector may, for its equitable distribution and availability at fair prices, order the same to be sold through fair price shops at the price fixed by the Central Government or by the State Government, as the case may be, for the retail sale of such foodgrains to the public.''

Learned counsel for the State Government, in all fairness, does not assert that the impugned teleprinter message having regard to the requirements of sub-s. (5), has the effect of notified Order under s. 3 of the Act placing ban on export of wheat from the State or imposing restriction on inter-district movement of wheat. It is submitted that it only conveyed the instructions of the State Government requiring the Regional Food Controllers to be more vigilant to secure due observance of the laws. The question still remain whether the instructions conveyed by the teleprinter message had the force of Jaw.

It is therefore to be considered whether the instructions con-veyed by the State Government by the impugned teleprinter message were relatable to the two Control Orders and therefore could be considered to be 'law' or an order having the force of law placing reasonable restriction on the freedom to carry on any occupation, trade or business guaranteed under Art. 19(1 )(g) read with Art. 19(6) of the Constitution or on the freedom of trade, commerce and intercourse throughout the territory of India guaranteed under Art. 301 o the Constitution. It is further to be considered whether the seizure of wheat in transit was with authority of law.

It is submitted that although the impugned teleprinter message dated March 31, 1981 was in the nature of executive instructions of the State Government to the Regional Food Controllers of the various regions to secure compliance with the two Control Orders, it had the force of law. It is pointed out that under licence con· ditions Nos. 11, 12 and 13 of the licence issued in Form under cl. 4 of the 1976 Order, dealer is required to comply with any direction that may be given by the State Government in regard to purchase, sale or storage for sale of foodgrains, to furnish such information relating to his business as may be demanded of him and to carry out such instructions as rna¥, fro~ tim<: to time, be ~iven,

[1982] 1 s.c.k

by the State Government or the licensing authority, and to give all facilities at all reasonable times, to the enforcement officer or the licencing authority or any officer authorised by him or the State Government for the inspection of the stocks etc. It is further pointed out that the State Government of Uttar Pradesh has by Notification No. P-XXIX-Food-5 -5(42)/80 dated April 21, 1981, in exercise of the powers conferred by s. 3 read with s. 5 of the Act, with the prior concurrence of the Central Government, issued the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) (First Amendment) Order, 198l. By cl. 2 thereof, new cl. 4 has been substituted in the 1978 Order by which the stock limit of dealers in foodgrains has been re-fixed, as it was of the opinion that it was necessary and expedient so to do for securing equitable distribution and availability of wheat at fair prices. The new ct. 4 provides that no wholesale dealer, commissiM agent or retailer~ shall have in stock, wheat more than 250 quintals, 250 quintals and 20 quintals respectively, at any time. The re--fixation of the stock limit of wholesale dealers at 250 quintals, at any time. is to ensure 0 that wholesale dealers in the State of Uttar Pradesh do not try to corner stocks of wheat for purposes of speculation. The submission is that the State Government without placing any restriction on movement of wheat from the State of Uttar Pradesh to various other States, has virtually frozen the excess stock of wheat lying with wholesale dealers of foodgrains in the State. There is, in our opinion, considerable force in these submissions.

The real question at issue is whether or not the seizure of wheat was with the authority of law. The fundamental right to carry on trade or business guaranteed under Art. 19( 1 )(g) or the freedom of inter-State trade, commerce and intercourse under Art. 301 of the Constitution, has its own limitations. The liberty of an individual to do as he pleases is not absolute. It must yield to the common good. Absolute or unrestricted individual rights do not and cannot exist in any modern State. There is no protection of the rights themselves unless there is measure of control and regulatior of the rights of each individual in the interests of all. Whenever such conflict comes before the Court, it is its duty to harmonise the exercise of the competing rights. The Court must balance the individual's rights of freedom of trade under Art. 19(I)(g) and the freedom of inter-State trade and commerce under Art. 301 as against the national interest. Such limitation is inherent in the exercise of those rights.

Under Art. 19(1 )(g) of the Constitution, citizen has the right to carry on any occupation, trade or business and the only restriction on this unfettered right is the authority of the State to make law imposing reasonable restrictions under cl. (6). The principles underlying in cis. (5) and (6) of Art. 19 are now well settled and ingrained in our legal system in number of decisions of this Court, and it is not necessary to burden this judgment with citations. The expression 'reasonable restriction' signifies that the limitation imposed on person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, : and no abstract standard, or general pattern of reasonableness can be laid down as applicable in all cases. The restriction which arbitw rarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes proper balance between the freedom guaranteed in Art. 19(1)(g) and the social control permitted by cl. (6) of Art. 19, it must be held to be wanting in that quality.The nature of the right alleged to have been infringed is that wholesale dealers in foodgrains from the State of Uttar Pradesh or elsewhere are prevented from moving their stock of wheat to various other States or from one district to another without the transaction being verified and duly endorsed by the Deputy Marketing Officer or the Senjor Marketing Officer concerned. The other restriction on the enjoyment of their right placed by the impugned teleprinter message is that there should be physical verification at the checkw posts on the State's borders. These steps were designed to prevent price rise in wheat in the State of Uttar Pradesh and to prevent outflow of wheat from the State to various other States and from one district to another district within the State. The whole object was to ensure that the wholesale dealers in foodgrains did not corner stocks of wheat for the purpose of speculation. It cannot be said that they do not contain the quality of reasonableness or were not in the interests of the general public. In judging the validity of these restrictions, the Court has to strike proper balance between the freedom guaranteed under Art. 19(l)(g) and the social control per-mitted by Art. 19(6).

If, therefore, the seizure can be justified on the basis of any valid law, it cannot be held to be illegal. This is equally true of Art. 301. Art. 301 imposes general limitation on all legislative

[1981] 1 s.C.R

SUPREME COURt REPORtS

power in order ·to secure that trade, commerce and intercourse throughout the territory of India shall be free. Having placed general limitation on the legislative powers of Parliament and the State Legislatures, Art. 302 relaxes that restriction in favour of Parliament by providing that that authority may, by law, impose such restrictions on the freedom of trade, commerce and intercourse R between one State and another and within any part of the territory of India in the public interest. Likewise, Art. 304(b) provides that notwithstanding anything in Art. 301 or Art. 303, legislature of State may, by law, impose 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 purpose of cl. (b) shall be introduced or moved in the legislature of State without the previous sanction of the President. Although Art. 301 guarantees that trade, commerce and intercourse throughout the country shall be free, the right to carry on inter-State trade and commerce may be subject to reasonable restrictions in the interests of the general public.

The word 'free' in Art. 301 does not mean freedom from laws or from regulations. Art. 30! guarantees freedom of trade, com-merce and intercourse throughout the country from any -State barriers. It declares that subject to the other provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free. The whole object was to bring about the eco-nomic uaity of the country under federal structure, so that the people may feel that they are members of one nation. , One of the means to achieve this object is to guarantee to every citizen the freedom of movement and residence throughout the country. That is achieved by Art. 19(1 )(d) and (e). No less important is the freedom of movement or passage of commodities from one part of the country to another. The progress of the country as who~e also requires free flow of commerce and intercourse as between different parts, without any barrier. This freedom of trade, com-merce and intercourse throughou: the country without any 'State barriers' is not confined to inter-State trade but also includes intra-G State trade as well. In other words, subject to the provisions of Pan XIII, no restrictions can be imposed upon the flow of trade, commerce and intercourse, not only between one State and another, but between any two points within the territory of India whether any State border has to be crossed or not.

It is now well settled that the regulatory measures or measures imposing compensatory taxes do not come within the purview of the

restrictions contemplated by Art. 301. The regulatory measures should, however, be such as do not impede the freedom of trade, commerce and intercourse. It cannot be said that the instructions conveyed by the State Government by the impugned teleprinter message imposing the requirement for the making of an endorseA ment by the Deputy Marketing Officer or the Senior Marketing Officer cr the physical verification of stocks of wheat during the course of transit, are 'restriction' on the freedom of trade, commerce and intercourse within the country, i.e, across the State or from one part of the State to another. These are nothing but regulatory measures to ensure that tbe excess stock of wheat held by wholesale dealer, commission agent or retailer is not transported to place outside the State or from one district to another. Even if these requirements are construed to be 'restriction' on the inter-State or intra-State trade, the limitation so imposed on the enjoyment of the right cannot be considered to be arbitrary or of an excessive nature. Nor can it be said that such restrictions do not satisfy the test of reasonableness.

The question whether or not the seizure of the wheat was for contravention of any order issued under s. 3 of the Act is pending investigation before the Additional District Magistrate (Civil Supplies), Agra. For the establishment of their rights the petitioners have still to establish that the wheat in question was bought by them in open market in Delhi and elsewhere and was being merely transported through the State of Uttar Pradesh in the course of inter-State trade and commerce. If that be so, then there was no contravention of any order issued by the Central Government under s. 3 or by the State Government under s. 3 read with s. 5 of the Act. If, on the contrary, the wheat had been purchased by them at Agra or nearby places within the State of Uttar Pradesh, the ques-tion would arise whether such purchase, storage or sale of wheat was in contravention of any of the two Control Orders. ln case there was such contravention of any of the provisions of the two Control Orders, then there was undoubtedly the power of search and seizure. The case of the State Government before us was that the source of power to effect the seizure was the two Control Orders. It was asserted that the wheat was not being transported during the course of inter-State t.t;ade and commerce from the Union Territory of Delhi to various other States, but had, in fact, been purchased at Agra and was being lifted from the State of Uttar Pradesh and bad therefore to be seized at the check-post at Saiyan and at Agra. Under cl. 3 of 1976 Order, no person can carry on business as

dealer or commission agent except and in accordance with the terms and conditions of licence issued in that behalf by the licensing authority. The term 'dealer' is defined in s. 2(c) of the Order to mean person engaged in the business of purchase, sale or storage for sale of foodgrains. According to the State, the seized wheat had been purchased at Agra in the course of trade and they were not isolated transactions and, therefore, the Delhi traders committed contravention of cl. 3 of the 1976 Order. Cl. 14 thereof confers the power of search and seizure on an enforcement officer or the licensing authority or any other officer authorised by the State Government in that behalf. The expression 'enforcement officer' is defined in cl. 2(e) of that Order and it includes the Chief Marketing Officer and in that capacity the Chief Marketing Officer, having reason to believe that contravention of the provisions of the Order had been, was being, or was about to be committed, had the power to seize the trucks at the check·post at Saiyan and effect the seizure of the trucks laden with wheat and bring them to the purchase point at Agra.Furthermore, under cl. 4 of the 1978 Order, as amended, no person who is wholesale dealer, commission agent or retailer, shall have in stock wheat in quantities exceeding 250 quintals, 250 quintals and 20 quintals respectively at time. Cl. 6 confers the power of search and seizure on an enforcement officer which term as defined in cl. 2(d) likewise includes the Chief Marketing Inspector. Under cl. 6(d), the Chief Marketing Inspector, as an enforcement officer, had the power to seize any article in respect of which he had reason to believe that contravention of the Order had been, was being, or was about to be committed. The fixation of the maximum limits of stocks of wheat at 250 quintals. 250 quintals and 20 quintals respectively, which wholesale dealer, commission agent or re· tailer may hold, at any one time, has necessarily the effect of freezing the excess stock of wheat lying with such dealer. This also results in preventing the movement of such excess stock of wheat from the State of Uttar Pradesh to various other States or from one district to another. The excess stock of wheat lying with such dealer, that is, wholesale dealer, commission agent or retailer, in truth and substance, became their 'unlicensed stock'. If really the Delhi traders had purchased the excess stock of wheat from wholesale dealers. commission agents or retailers in the State of Uttar Pradesh, as is alleged, it is possible to contend that there was contravention of the provisions of cl. 4 of the 1978 Order. The question whether the seizure was for any contravention of any Order issued under

s. 3 of the Act has to be determined by the Additional District Magistrate (Civil Supplies), Agra, on the evidence adduced by the parties before him.

The facts being controverted, the petitioners have no right to relief under Art. 32 of the Constitution. Each of the petitioners has filed sheaf of documents showing that the wheat had been purchased in the open market in Delhi and elsewhere, that the trucks laden Y.ith their wheat were accompanied by the relevant bills, goods receipts, inter-State transit passes etc., that the trucks in question were allowed to cross the check-posts at Kotwan on the border between the Union Territory of Delhi and the State of Uttar Pradesh but were seized either at the check-posts at Saiyan on the border between the States of Uttar Pradesh and Madhya Pradesh or at Agra, while they were in transit through the State of Uttar Pradesh. It was also asserted that all the documents were seized and taken away by the Senior Marketing Inspector, and that he bad given an acknowledgment 0f the same. Learned counsel appear-ing for the State vehemently contends that these doc~ments wer.e not shown to the authorities concerned and it is for the petitioners to prove these documents before the Additional District Magistrate (Civil Supplies), Agra, in support of their claim We cannot act on the documents because the transactions are still to be proved. It is asserted on behalf of the State Government that such documents could always be brought into existence, particularly when none of the transactions were effected through Bank. This Court cannot obviously pronounce upon the genuineness of the transactions or record any finding on the basis of the document' when the facts are in dispute.There still remains the question whether the seizure of wheat amounts to deprivation of property without the authority of law. Art. 300A provides that no person shall be deprived of his property save by authority of law. The State Government cannot while taking recourse to the executive power of the State under Art. 162, deprive person of his property. Such power can be exercised only by authority of law and not by mere executive fiat or order. Art. 162, as is clear from the opening words, is subject to other provisions of the Constitution. It is, therefore, necessarily subject to Art. 300A. The word 'law' in the context of Art. 300A must mean an Act of Parliament or of State Legislature, rule, or statutory order; having the force of law, that is positive or State made law. The decisions in Wazir Chand v. The State of Him(lch~l

to the payment of price thereof. The State contests the right of the Court to investigate into the facts, particularly when the matter is fact in issue in the aforesaid proceedings before the Additional District Magistrate (Civil Supplies), Agra. Normally, it is not the function of this Court to investigate into facts in proceedings under Art. 32 of the Constitution when they are con~roverted with view to discerning the truth. The matter must, in situation .like this, be left to the fact-finding body. For the establishment of their right to relief under Art. 32, the petitioners must, in our opinion, establish the necessary fact before the said Additional District Magistrate in the proceedings under s. 6A of the Act. If they fail to get relief in such proceedings, their obvious remedy lies in suit for damages for wrongful seizure.

The question that the seizures were in reality for procurement of wheat in furtherance of the directive of the Central Government, and not for breach of the two Control Orders and, therefore, were nothing but 'colourable exercise of power', is dependent on facts to be found on investigation. Further, the question that there being no control price for wheat, tile wheat should have been sold by public auction, is again question that must be raised before the Additional District Magistrate (Civil Supplies), Agra, in the pro-ceedings pending before him under s. 6A of the Act.

Turning to the petitions under Art. 32 of the Constitution by wholesale dealers of foodgrains from the State of Uttar Pradesh, learned counsel appearing for these petitioners challenged the im-pugned teleprinter message dated March 31, 1981, and the Noti-fication No. P. XXlX-Food-5-5(42)/80 dated April 21, 1981, issued by the State Government of Uttar Pradesh, by which cl. 4 of the Uttar Pradesh Foodgrains (Procurement and Regulation of Trade) Order, 1978, has been amended, particularly on three grounds, namely, (I) the impugned notification fixing the maximum limit of wheat permitted to be possessed by wholesale dealer at 250 quin-tals, at time, is an unreasonable restriction on the freedom of trade guaranteed under Art. 19{1)(g) of the Constitution; (2) there is no distinction made between wholesale dealer and commission agent inas much as ~the maximum limit of wheat allowed to be possessd by them is the same, i.e., 250 quintals at time and the fixation of such limit in the case of wholesale dealer is arbitrary, irrational and irrelevant and thus violative of Art. 14 of the Consti-tution; and (3) the instructions conveyed by the State Government by its teleprinter message dated March 31, 1981, placing restrictions

on movement of wheat by traders on private account from the State of Uttar Pradesh to various other States and on inter-district move-ment of wheat within the State, were in breach of their fundamental right under Art. l9(l)(g) read with Art. 301 of the Constitution.

The first and second contentions may conveniently be dealt with together. In order to appreciate these contentions, it is necessary to state few facts :

During the year 1979-80, the country was victim to very serious drought which affected with Khanf as well as Rabi crops. The Government of India, therefore, fixed target of 9.5 million tonnes of wheat to be purchased in the summer months of 1981 for the national buffer stock. It fixed the procurement price at Rs. 130 per quintal as against the support price of Rs. 127 per quintal re-commended by the Agricultural Price Commission to provide better incentive to the farmers. The procurement was carried out as measure of price support without any restriction on movement from one State to another. However, some of the States were implementing local laws with regard to ensuring that the private trade adhered to the stock limit restrictions on them and did not try to corner stocks for speculation purposes. The original target fixed for procurement was 9.5 million tonnes but at the end of June, only 6.5 million tonnes had been purchased, leaving deficit of 3 million tonnes. The result was that the Government of India was thus forced to buy 1.5 million tonnes of wheat in the world market. The Government's procurement drive was mainly frustrated by wholesale dealers of foodgrains cornering the stocks of wheat by paying price higher than the procurement price to the farmers.

The imperatives of the situation demanded that the speculative . tendencies of the trade were curbed by strictly enforcing the stock limits of traders. Under original cl. 4 of the Uttar Pradesh Food-grains (Procurement and Regulation of Trade) Order, 1978, whole-sale dealer, commission agent or retailer could have in stock wheat not more than 750 quintals, 750 quintals and 100 quintals respectively, at any time. In view of the worsening situation in the national buffer stock and in the light of the experience gained during the past few years, the State Government was of the opinion that it was necessasy and expedient to re-fix the stock limits of such dealers. This was expected to maximise procurement of wheat to meet the requirement of public distribution, as well as, the buffer stock.

It cannot be asserted that the restriction imposed by the State Government on wholesale dealers of wheat is either arbitrary or is of an excessive nature. The fixation of the stock limit of wheat to be possessed by wholesale dealers, at any time, at 250 quintals is an important step taken by the State Government to obviate hoarding and black-marketing in wheat which is in short supply. It is hardly necessary to emphasise the extent and urgency of the evil sought to be remedied thereby. Perhaps fixation of the minimum limit of wheat permitted to be possessed by wholesale dealer at 250 quintals, at time, is too low, but the restriction so imposed cannot be • treated to be arbitrary or of an excessive nature, beyond what is required in the national interest. It is matter of common know--ledge that wholesale dealers of foodgrains mainly operate in large cities and towns and have the means and capacity to manipulate the market by withholding stocks of commodity. There was need to check such speculative tendencies in the trade. It was therefore felt expedient to re-fix the stock limit of wheat for wholesale dealers at 250 quintals at time, as in the case of commission agent. The underlying idea is that the wholesale dealers should be allowed to continue their trading activities within reasonable limits. The .,. fixation of stock limit at 250 quintals implies that wholesale dealers can have at any time, in stock, wagon-load of wheat. In Krishan La/ Praveen Kumar & Ors. etc. v. The State of Rajasthan(l), this Court has interpreted the words 'at any time' as meaning 'at any given time'. This means that wholesale dealer should not have in stock more than 250 quintals at time. But there is nothing to 1 prevent wholesale dealer from entering into series of transactions during the course of the day. This Court in Krishan La/ Parveen Kumor' s case (supra) and Suraj Mal Kailash Chand & Ors. v. Union of India & Anr.,e) has upheld the validity of similar notification -dated March 23, 1981, issued by the State Government of Rajasthan ~ in exercise of the powers conferred by cl. 18 of the Rajasthan Trade Articles (Licensing and Control) Order, 1980, fixing the maximum limit of wheat to be possessed by dealer at any one time at 200 quintals, on the ground that it is reasonable restriction by the State Government within the meaning of Art. 19{6) of the Consti~ tution. In view of these decisions, it is difficult to conceive as to how the contention based on Art. J 9( l)(g) of the Constitution can survive.

(1) W.Ps. 4839-4845/81 decided on September 4, 1981.

(2) W.Ps. 8334-43/81 decided. 911 September ,fS, 1981,

True it is, if the governmental action is arbitrary or there is no rational nexus to the object sought to be achieved it is liable to be struck down as violacive of Art. 14 of the Constitution. The State Government has adopted various measures in the interest of the general public for the control of production, supply and distri-bution of, and trade and commerce in, essential commodities. To obviate hoarding and blackmarketing in foodstuffs, it has promul-gated the Order. It introduces system of checks and balances to achieve the object of the legislation, i.e., to ensure equitable distri-bution and availability of essential commodities at fair prices. It cannot be said that looking to the prevailing conditions, the impo-sition of such restrictions does not satisfy the test of reasonableness. Nor can it be said that the fixation of such stock limit is arbitrary or irrational having no nexus to the object sought to be achieved and is, therefore, violative of Art. 14. On the contrary, the limi-tation imposed fixing stock limit for wholesale dealer at 250 quintals is reasonable restriction within the meaning of Art. 19(6) of the Constitution.One further point requires to be noticed. The contention that the action taken by the State Government in issuing the impugned teleprinter message amounts to an 'intrusion' on the fundamental right to carry on trade or business under Art. 19( l)(g) or on the freedom of trade, commerce and intercourse under Art. 301 of the Constitution appears to be wholly misconceived. As already stated the instructions conveyed by the State Government by the impugned teleprinter message imposing the requirement for the making of an endorsement by the Deputy Marketing Officer or the Senior Mar-keting Officer or the physical verification of stocks or wheat during the course of transit, are not 'restriction' on the fundamental right to carry on trade or business guaranteed under Art. 19{1 )(g) or on the freedom of trade, commerce and intercourse under Art. 301. These are nothing but regulatory measures to ensure that the excess stock of wheat held by wholesale dealer, commission agent or retailer is not transported to place outside the State or from one district to another. Even if these requirements are considered to be 'restriction' on inter-State or intra-State trade, that is, across the State or from one part of the State to another, the limi-tation so imposed on the enjoyment of the right cannot be considered to be arbitrary or of an excessive nature and thus violative of Art. 19(l){g) or Art. 301 of the Constitution. The State Government in its return has stated that there is no ban on the export of wheat from the State of Uttar Pradesh t9 v~riou.s <;>tber Stat~s Ql' from one

district to another within the State, subject to the making of an endorsement by the Deputy Marketing Officer or the Senior Mar-keting Officer concerned. The petitioners who are wholesale dealers of foodgrains in the State of Uttar Pradesh are, therefore, free to carry on their business within the permissible limits, i.e., they may carry on their trade or business or enter into inter-State or intra-8 State transactions of wheat subject to the stock limit of 250 quintals at time.

In the result, the writ petitions must fail and are dismissed. The stay orders passed by the Court, from time to time, stand vacated. Formal orders for vacating stay granted in those matters need not be issued. There shall be no order as to costs.

Petitions dismissed .