ORDER
Sadashiva, J
1. This Petition was listed for orders, With the consent of the learned Counsel appearing on both the sides, the same was heard on merits and disposed of by this Order.
2. The petitioners have presented this Petition for a Writ of Certiorari quashing the Directives dated 5.8.1994 issued by the first respondent in No. F.5(6)/94-P1ant (B) produced at Annexure-B and for a further Writ of Mandamus directing the second respondent to conduct all its future auctions of the coffee without reference to the Directives issued by respondent-1 at Annexure-B.
3. That, in view of the sharp rise in auction prices of coffee and the resultant upward trend in retail prices, the first respondent in pursuance of Section 20 of the Coffee Act, 1942 (for short 'the Act'), directed the second respondent to implement the Directives mentioned in Annexure-B to arrest steep rise in retail prices of coffee in domestic market. The Directives issued vide Annexure-B reads as follows :
'1) That the Coffee Board shall release export permits for coffee not exceeding 1,10,000 tonnes for the period from 1.1.1994 to 31.12.1994 and at the rate of monthly quota not exceeding 5000 tonnes from September to December 1994.
2) The Coffee Board shall not per export of 'C' Grades, BBB and Pea berry grades till further orders except in such cases for which valid applications have been received by the Board and upto 5.8.1994.'
4. The second respondent was asked to file compliance report to the Ministry of Commerce.
5. The petitioners are the registered owners of registered estate. Having been aggrieved by the aforesaid Directives they have presented this Petition to quash the same, inter alia, contending that the first respondent has no legal authority to issue such Directives in respect of free sale quota allotted to the registered estate, and the Directives issued are illegal and unenforceable, as being issued in mala fide exercise of powers. It is further contended that the Directives are wholly without jurisdiction, arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution of India.
6. The admitted facts are, that India is one of the coffee producing Countries in the world, the other Countries being Brazil, Columbia, Indonesia, Kenya, Costarica, Gwatemala and a few African Countries. The production of coffee in India is negligible compared to the world production on an average. During the years 1993-94, the production of coffee by coffee producing Countries mentioned above fell sharply due to frost and other adverse climatic conditions and political instability, on account of which the prices in coffee in the international market increased substantially during 1994. This rise in prices in the international market affected the prices of Indian coffee, as the reserved price fixed at the Coffee Board Common Auctions, is based on the International Coffee Organisations Indicator prices. Consequent upon the rise in prices of coffee in the international market, there has been a sharp rise in price of coffee in domestic market. The rise in price of coffee in the domestic market at two centres, namely, Bangalore and Madras, as stated by the respondents is as follows :
Name of the centreRaw CoffeeCoffee Power
Plant
APlant
PB Ar.
Chy
ABAr.
Chy
PBRob.
Chy
PBRob.
Chy
PBPlantationRobusta
BANGALORE
1. Jan.9446.4048.30 45.7546.5049.0050.2572.00_2. Feb.51.8053.60 44.8047.0041.2043.0072.00 _3. March51.2053.20 42.8048.8040.4040.4070.00_4. April58.2059.60 50.0051 .5047.5048.2086.00_5. May87.2587.25 83.6584.2568.7568.75110.00_6. June95.8097.50 86.8087.2580.5079.75128.00_7. July165.40164.60 155.20154.60127.80127.40174.00_8. Aug.132.60132.60 124.00122.80111.20107.00168.00_MADRAS
1. Jan.60.0075.00__55.00_86.00_2. Feb.60.0070.00__50.00_84.00_3. March60.0070.00__50.00_74.00_4. April60.0066.00__48.00_78.00 _5. May90.0095.00__66.0066.0095.00_6. June98.00100.00__74.0076.00114.00_7. July170.00180.00__146,00146.00115.00_
Similarly, the rise in price of coffee at two centres in the State of Karnataka is as follows, as per Annexure-RI annexed to the Statement of Objections of first respondent :
Name of the centrePlantation Ar.ChyAr.ChyRob.Rob.APBABPBABPB
Bangalore
1.8.94161.25161.25151.25151.50128.00128.2512.8.94132.00131.50118.25117.25108.00108.7513.8.9447.0065.2541.0044.0033.5035.00Chik.
1.8.94128.00119.00114.00104.0096.0087.0012.8.94128.00119.001 1 4.00104.0096.0087.0013.8.9447.0064.5040.0545.0031.5033.30
7. In view of the rise in price of coffee as indicated above, the first respondent has issued the impugned Directives, as a measure to check the rising trend in prices of coffee in domestic market. By the said Directives the Central Government imposed a restriction in respect of coffee which shall be permitted for export, limiting the same not exceeding 1,10,000 tonnes for the period from 1.1.1994 to 31.12.1994 and at the rate of monthly quota not exceeding 5000 tonnes from September to December 1994. Consequently, the petitioners are not entitled to export their entire free sale quota, resulting in dimunition of profits.
8. Sri P.B. Appaiah, the learned Counsel appearing for the petitioners, submits that the coffee industry in the Country is governed by the provisions of the Act and the Rules framed thereunder. The Central Government has constituted the Coffee Board (for short 'the Board') under Section 4 of the Act, for the purpose of the Act, That, under the provisions of the Act, every owner of the land planted with coffee plants is required to apply to registering officer appointed in this behalf to register him as owner; the Central Government has reserved certain powers for itself, That, under the provisions of the Act, the Board shall allot to each registered estate a free sale quota, not exceeding 50% of the probable total production of the estate in the year for sale; such free sale quota may be sold by the registered owners in any manner they like including export; The Board empowered to grant authorisation to export, shall issue export permits in respect of free sale quota without reference to any other provisions of the Act; by virtue of Section 20 of the Act, the Board has power to grant authorisation to export coffee from India in the prescribed manner and in prescribed cases and Rule 44 of the Coffee Rules, 1955 (for short 'the Rules') prescribes the cases in respect of which the Board may authorise the export of coffee, and free sale quota, since not covered by Rule 44, the first respondent - Central Government, has no authority to issue any order in exercise of its power under second Proviso to Section 20 of the Act. The impugned Directive therefore, violates Section 20 of the Act and Rule 44 of the Rules. It is next contended by the petitioners that, as free sale quota is not one of the cases prescribed by Rule 44, it is free from all constraints and limitations and the respondents have no legal sanction either to prohibit or restrict the same being exported.
9. It is next contended by Sri P.B. Appaiah, learned Counsel for the petitioners, that by virtue of Section 16 of the Act, the Central Government has powers to fix the price or prices at which the coffee may be sold, wholesale or retail, in the Indian market. Section 16 is intended to check the rise in prices of coffee in the Indian market. The authority which is empowered to fix the price or prices of coffee in Indian Market has failed to exercise such power and if the Central Government was really interested in taking measures to check the sharp rise in prices of coffee in domestic market, it should have invoked its power under Section 16, instead of issuing the impugned Directives. In the guise of checking the rise in price of coffee in the domestic market, the first respondent has resorted to curb the export to deprive the petitioners of their legitimate right to export to make legitimate profits from their free sale quota. Even after issue of impugned Directives there is no fall in prices of coffee in the domestic market. The action of the Central Government in issuing the impugned Directives, therefore, lacks good faith and the same has been issued in mala fide exercises of power. It is further contended that the impugned Directive has deprived the petitioners of their right to carry on their business for which they are legally entitled to. Thus, the Directive violates Article 19(1)(g) of the Constitution of India.
10. Sri S.G. Sundaraswamy, learned Senior Counsel appearing for respondents 2 and 3 and Sri Ashok Harnahalli, learned Central Government Standing Counsel, would submit that the Petition is misconceived and it is liable to be dismissed. The petitioners have no Fundamental Right to carry on export business nor they have any absolute right to export coffee to make huge profit determinate to the interest of domestic consumers. They are not deprived of their rights to sell free sale quota in the domestic market nor they have been totally prohibited to export. However in view of the steep rise in price of coffee in domestic market, the total quantity of coffee to be exported, otherwise than by Board is restricted in the interest of consumers as well as the industry and such restriction is a reasonable one. There is no violation of any provision relating to the Fundamental Rights, much less Article 14 or Article 19(1)(g) of the Constitution of India. They further contended that any export of coffee shall be made only under the provisions of the Coffee Act and not under any other provisions of any other Act as the provisions of the Customs Act, 1962 are made applicable for export of coffee, as if the provisions made by Section 20 of the Act has been made by notification issued under Section 11 of the Customs Act. Section 20 of the Act, states that coffee shall be exported from India only by the Board or under its authorisation granted in the prescribed manner and prescribed cases, and second Proviso to Section 20 empowers the Central Government to specify by order in writing, the quantity of coffee which shall be permitted for export during any year. Section 20 is not controlled by any of the provisions much less by Section 22. It is always open to the Central Government to issue such orders in writing as it deems fit to issue, in order to protect not only the interest of the coffee producer but also the interest of the coffee Industry as the coffee consuming public is likely to switch over to other beverages on account of exhorbitant price of coffee in the domestic market. Rule 44, no doubt prescribes two cases, but it is not exhaustive. Even otherwise, the provisions of the Act must be read in such a way to give an harmonious meaning to the purport and intent of the Act. In these circumstances, the learned Counsel appearing for the respondents, submit that the Central Government has power to impose any restrictions on the export of free sale quota in the interest of the coffee industry.
11. Sri S.G. Sundaraswamy, learned Senior Counsel appearing for respondents 2 and 3, further submits that the Act gives certain powers to the Central Government to develop the coffee industry, and to see that the coffee is available at a reasonable price and one such course is to fix the price of coffee under Section 16 of the Act. But that course being one of the courses does not prevent the Government from adopting any other course legally permissible. Non-compliance with one provision would not render the action of the Government under a different provision invalid, unless such action is motivated by mala fides, the impugned Directive is valid, legal and enforceable. He further submits that where the Government has adopted a measure to check the rise in prices, it is not within the province of this Court to examine whether the course adopted by the Government is proper or not, even though the course adopted may ultimately fail. Only in cases of mala fide exercise of powers the action of the Government would be subject to a Judicial Review and not otherwise.
12. It is relevant to note that the petitioners have not challenged the Constitutionality of Section 20 of the Act nor they contend that the Central Government has no authority to make any order specifying the quantity of coffee which shall be permitted for export in exercise of its power under second Proviso to Section 20 of the Act.
13. In view of the aforesaid facts and circumstances, the following Questions would arise for Consideration in this Petition :
1. Whether the Central Government has no authority of law to specify in writing, the quantity of free sale quota coffee which shall be permitted for export, in exercise of its power under second Proviso to Section 20 of the Act?
2. Whether the impugned Directive has been issued by the first respondent, the Central Government, in the mala fide exercise of its power and whether it offends Articles 14 and 19(1)(g) of the Constitution of India?
POINT NO. 1.
14. In order to consider the aforesaid Questions, it is necessary to know the provisions of the Act and the Rules. The Act is promulgated to provide for the development under the control Union, of the coffee Industry. By Section 2 of the Act, it is declared that it is expedient in the public interest that the Union should take under its control the coffee industry. Section 3 defines certain expressions. Section 4 deals with the constitution of Coffee Board for the purpose of the Act. The Coffee Board consists of (i) a Chairman to be appointed by the Central Government by notification in the gazette; and (ii) three Members of Parliament of whom two shall be elected by the House of People and one by the Council of States, and the Government may also appoint such number of members not exceeding 29, to represent the interest Governments of the Principal coffee growing States; coffee growing industries, coffee trade interests; curing establishment, interests of labour, interest of consumers and such other interests as in the opinion of the Central Government, ought to be represented on the Board. Section 14 of the Act deals with the registration of owners of coffee estates. Those who have been registered under Section 14(1) of the Act in respect of any estate are called registered owners and such estate is registered estate as per the definition provided in Section 3 of the Act. Section 16 of the Act empowers the Central Government to fix the price or prices at which coffee may be sold whole-sale or retail in the Indian market by notification in the official gazette and where once the price is so fixed neither the registered owners nor the licenced cursors nor dealers shall sell coffee wholesale or retail in the Indian market at a price or prices higher than the price or prices fixed by the Central Government under Section 16(1) of the Act. Section 20 of the Act deals with the export of coffee. Section 22 of the Act as substituted by Amendment Act of 1994 provides for allotment of free sale quota. Section 25 deals with the surplus coffee and surplus pool. Section 26 empowers the Board to take all practical measures to market the coffee. Sections 35 to 38 of the Act are penal provisions. Section 48 deals with the rule making power of the Central Government and Rule 44 of the Rules deals with the export of coffee. It is admitted that prior to 14.1.1994, the date on which the Coffee Amendment Ordinance, 1994, was brought into force, there was no free sale quota. What was then available, was only the internal sale quota which Section 3(h) of the Act defined as follows :
'(h) 'Internal sale quota' means that portion stated in terms of bulk or weight, of the whole of the coffee produced by the estate in the year, which a registered estate is permitted under this Act to sell in the Indian Market:'
Section 22 of the Act, prior to amendment dealing with internal sale quota reads as follows :
'22. (1) Unless with the previous sanction of the Central Government, the Board decides that no internal sale quotas shall be allotted, the Board shall, as soon as may be, allot to each registered estate an internal sale quota for the year.
(2) The internal sale quota shall be a fixed percentage, common to all registered estates, of the probable total production of the estate in the year as estimated by the Board.
(3) The Board may at any time vary the internal sale quota by varying the fixed percentage common to all registered estates, or may express the whole or any part of the internal sale quota of an estate in terms of bulk instead of in terms of weight.'
It is admitted by the parties that internal sale quota which was being allotted to each registered estate by virtue of the unamended provision of Section 22 was very negligible and virtually to meet the domestic need of the grower.
15. By virtue of Amendment of the Act in 1994, this expression 'internal sale quota' and the allotment of such quota has undergone a sea-change from January 1994. Expression 'internal sale quota' as defined by Section 3(h) of the Act and Section 22 of the Act are substituted by new Sections and they read as under :
'3(h) 'free sale quota' means that portion, stated in terms of bulk or weight, of the whole of the coffee produced by the estate in the year, which a registered estate is permitted under this Act to sell.'
'22. (1) Unless with the previous sanction of the Central Government the Board decides that no free sale quotas shall be allotted, the Board shall, as soon as may be, allot to each registered estate a free sale quota for the year.
(2) The free sale quota shall be a fixed percentage, common to all registered estates, not exceeding fifty per cent, of the probable total production of the estate in the year as estimated by the Board:
Provided that the Board may, with the the previous sanction of the Central Government, allot such quota at a percentage higher than fifty per cent of the said probable total production. (3) The Board may at any time vary the free sale quota by varying the fixed percentage common to all registered estates, or may express the whole or any part of the free sale quota of an estate in terms of bulk instead of in terms of weight.'
A comparative reading of these provisions, Section 3(h) and Section 22, as they stood earlier to amendment and as they read after the amendment indicates that the Central Government has conferred a big bonanza in favour of each registered estate. Under the old provision, internal sale quota was to be allotted only for the purpose of selling the same in Indian Market and the quantities so allotted was admittedly negligible when compared to the production. After amendment, it is left to the sweet will and pleasure of the owner to sell the free sale quota wherever he wants. By virtue of new Section 22, the Board shall allot free sale quota to each registered estate, unless it decides otherwise with the previous sanction of the Central Government, not exceeding 50% of the probable total production of the estate in the year and in some cases with the previous sanction of the Government a percentage in excess of 50% may also be allotted. In the result, an owner who was allowed to retain a meagre quantity of internal sale quota is now allowed to sell 50% of his total production not only in domestic market, but also in international market. This amendment has benefitted many coffee producers and the coffee growers have started exporting their produce. In the result, it appears no sufficient coffee was available in the domestic market and the price of coffee in the domestic market started rising sharply every day, This situation appeared to have forced the Central Government to issue the impugned Directives, in exercise of its power under second Proviso to Section 20 of the Act. Section 20 of the Act as amended reads as follows :
'20. No coffee shall be exported from India otherwise than by the Board or under an authorisation granted by the Board, in the prescribed manner and in the prescribed cases and the provisions of the Customs Act 1962 shall take effect as if the provision made by this section had been made by notification issued under Section 11 of that Act.
Provided that nothing herein contained shall apply to coffee -
(i) shipped as stored on Board any vessel or aircraft in such quantity as the Collector considers reasonable, having regard to the number of the crew and passengers and the length of the voyage or journey, as the case may be, on which the vessel or aircraft is about to proceed, or
(ii) carried as per personal baggage of a passenger not exceeding such quantities as the Central Government may, by notification in the Official Gazette, specify, or
(iii) exported for such purposes and in such quantities as the Central Government may specify in the like manner.
Provided further that the Central Government may, by order in writing specify the quantity of coffee which shall be permitted for export during any year and where any such order is made, no coffee shall be exported from India in excess of the said quantity.
Provided further that the Central Government may exempt from the operation of this Section, either absolutely or subject to conditions, the export of coffee from India to the State of Jammu and Kashmir or to any foreign settlement bounded by India.'
Rule 44 of the Rules which deals with the export of coffee reads as follows :
'44. EXPORT OF COFFEE :- (1) This Board may authorise the export of coffee under Section 20 under such terms and conditions as it may deem fit in any of the following cases, namely :
(i) coffee sold by the Board in pursuance of its functions under Section 26;
(ii) roasted or prepared coffee.
(2) The Board shall issue orders for the export of coffee and permits for re-importation of exported coffee in Forms C and D respectively.'
Section 26 of the Act provides for sale of coffee by the Board and it reads as follows :
'26. (1) The Board shall take all practical measures to market the coffee included in the surplus pool, and all sales thereof shall be conducted by or through the Board.
(2) The Board may purchase for inclusion in the surplus pool coffee not delivered for inclusion in it.'
Placing reliance on these provisions Sri P.B. Appaiah, learned Counsel for the petitioners, submits that by virtue of Section 22 of the Act, the petitioners have been allotted their free sale quota. He further submits that, Section 20 of the Act empowers the Board to authorise the export of coffee from India in the prescribed manner and in prescribed cases: free sale quota is not one of the cases in respect of which authorisation may be issued under Rule 44 of the Rules; The Central Government is empowered to issue an order specifying the quantity of coffee which shall be permitted for export under Section 20 of the Act and free sale quota not being one of the cases covered by Section 20 of the Act, the impugned order is without authority of law.
15. He further submits that Section 20 of the Act is controlled by Section 22 of the Act and therefore the coffee retained by the petitioners under the free sale quota is not subject to any restrictions in terms of the second Proviso to Section 20 of the Act.
16. I am not able to pursuade myself to agree with the contention of Sri Appaiah. It is not possible to hold that Section 22 of the Act controls Section 20 of the Act. They are independent provisions dealing with two different subjects in the coffee industry. Under Section 22 of the Act, a benefit is conferred on the estate for allotment of free sale quota. By virtue of Section 22 of the Act the second respondent may allotted free sale quota not exceeding 50% of the probable total production in the estate in the year as estimated by the Board and the registered owners are entitled to sell such free sale quota in the manner they like. But sale of coffee by export is a different subject in the coffee industry. It is governed by Section 20 of the Act. By virtue of Section 20 of the Act, no coffee shall be exported from India otherwise than by the Board or under an authorisation granted by the Board. The power to grant authorisation to export coffee from India vests with the Board and the said power is controlled by the second Proviso to Section 20 of the Act. By order in writing, the Central Government is empowered to specify the quantity of coffee which shall be permitted for export during any year. So long as this provision continues in the statute any export of coffee from India is subject to the said provision. From the reading of Sections 20 and 22 of the Act it is not possible to hold that Section 22 of the Act controls Section 20 of the Act.
17. Sri P.B. Appaiah next contends that Rule 44 of the Rules prescribes cases in which the Board may authorise the export of coffee under Section 20 of the Act, and, second Proviso to Section 20 empowers the Central Government by order in writing, to specify the quantity of coffee which shall be permitted for export covered by Section 20 and free sale quota not being covered by Section 20 of the Act the impugned Directive is unsustainable for having been issued in violation of Section 20 of the Act.
18. This contention is also liable to be rejected for more than one reason. Rule 44 of the Rules prescribes the cases in which the Board may authorise export of coffee and it does not deal with the power of the Central Government to restrict the quantity of the coffee from being exported. It is true that there is no reference to free sale quota in Rule 4.4. It is to remembered that Rule 44 has been on the statute for a very long time prior to the introduction of free sale quota by the Act. Rule 44 of the Rules must be read with Section 20 of the Act and if there is any variance between the Section and the Rule, the Rule shall be construed in such a manner so as to give an harmonious meaning for the purpose of the Act. The purport and intent of the Act is the development of the coffee industry under the control of the Union. There is no dispute that the coffee industry includes coffee plantation, raising of coffee, its delivery, curing, marketing research trade and all other allied activities. The trade in coffee is subject to the provisions of the Act. The Coffee Board constituted under the provisions of the Act is entrusted with the regulation of the procurement and sale of coffee. By virtue of Section 20 of the Act it is the Board alone which has power to export coffee or to grant authorisation for the export of coffee. The grant of authorisation by the Board no doubt shall be in the prescribed manner and in prescribed cases and Rule 44 of the Rules prescribes the cases in respect of which authorisation is to be given. Just because Rule 44 does not include the free sale quota within its ambit, it does not mean that the registered owner is entitled for grant of authorisation to export coffee without any restriction. If the Rule does not provide for grant of authorisation to export free sale quota, then it must be considered in the light of the scheme of the Act with a particular reference to Section 20 of the Act. If free sale quota is not mentioned in Rule 44 of the Rules, in respect of cases in which the Board may grant authorisation to export it cannot be said that the registered owner is entitled for permit to export such quota without reference to the second Proviso to Section 20 of the Act.
19. The second Proviso to Section 20 of the Act deals only with the power of the Central Government to specify the quantity of coffee which shall be permitted for export during any year. This Proviso does not confine only in respect of cases for which authorisation may be granted by the Board, it includes all other cases also. In view of Section 20 of the Act, no coffee shall be exported from India otherwise than by the Board, or under an authorisation granted by the Board and having regard to the scheme of the Act and in order to give harmonious meaning to the purport and intent of the Act, the only possible inference that could be drawn in the circumstances of the case is that the free sale quota is also covered by the second Proviso to Section 20 of the Act, The contention of Sri P.B. Appaiah is, therefore liable to be rejected and accordingly Point No. 1 is answered in the negative.
POINT NO. 2. -
20. It is next contended by Sri P.B. Appaiah that the restriction imposed by the impugned Directives violate Article 19(1)(g) of the Constitution of India inasmuch as it deprives the petitioners of their right to carry on business in export of coffee thereby limiting their legitimate profits. Article 19(1)(g) of the Constitution of India guarantees the right of every citizen to carry on any occupation, trade or business, subject to the restrictions imposed by Clause (6) of Article 19(2), which reads as follows :
'19(2) (6) Nothing in Sub-clause (g) of the said clause shall affect the operation of any existing law in so far it imposes, or prevent the State from making any law imposing, in the interests of general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any taw relating to -
(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or
(ii) the carrying on by the State or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.
21. Article 19(1)(g) of the Constitution was thus intended to protect rights of the citizen to practice any profession, or to carry on any occupation, trade or business against State action other than in the legitimate exercise of its power to regulate private rights in the public interest.
22. In the light of the aforesaid proposition with reference to Article 19(1)(g) read with Clause (6) of 19(2) of the Constitution, it is to be examined whether the impugned Directives operate as unreasonable restriction on the rights of the petitioners to carry on trade or business.
23. The object of the Act is the development of the coffee industry under the control of the Union. The Coffee industry comprises of interests of many groups, such as, Governments of Principal coffee growing States, Coffee-growing industry, Coffee trade interest, curing establishment, interest of labour and interest of consumers etc. Accordingly, the Board has been constituted, comprising of persons capable of representing the interest of the aforesaid groups under Section 4 of the Act. By virtue of Section 26 of the Act, the Board shall take all practical measures to market the coffee included in the surplus pool and by virtue of Section 20 of the Act, the Board is empowered to export coffee from India or to grant authorisation for export and by second Proviso to Section 20 of the Act, the Central Government is given authority to specify, by order, the quantity of coffee which shall be permitted for export during any year. It is, therefore, clear that for the purposes of the Act, the Central Government has power to make such order in the interest of the industry. It is to be noted that the petitioners have not challenged the validity of Section 20 of the Act nor there is any allegation of mala fides.
It is not in dispute that for various reasons, there has been a sharp rise in prices of coffee in domestic market. From Annexure-1, it is seen the price of plantation coffee powder in January 1994, was between Rs. 74 and Rs. 84 per KG, and by the end of July 1994, the same was between Rs. 150 and 174 per K.G. It is stated in the Statement of Objections, that the sharp rice in price was due to excess export of coffee and consequent non-availability of coffee for sale in the domestic market which has adversely affected the consumers' interest. Sri S.G. Sundaraswamy, learned Senior Counsel, appearing for respondents 2 and 3, submits that it is likely to have an adverse effect on the coffee industry as the consumers are likely to switch over to other beverages on account of exhorbitant rise in price of coffee besides causing great hardship to coffee consuming public. Taking all these factors into consideration, the Central Government has issued the impugned Directives in order to check the rising trend in prices of coffee in the domestic market in the interest of general public as well as the industry and therefore there is no unreasonableness or arbitrariness in issuing the impugned Directives.
24. In G.T.N. TEXTILES LTD. AND ANOTHER vs . ASSISTANT DIRECTORS, R.O.T. COMMISSIONER AND OTHERS : [1993]2SCR403 , the validity of a Notification issued by the Textile Commissioner in exercise of his power under Clause 16 of the Textile (Control) Order, 1986 came up for consideration; the operative portion of the said Notification as extracted by the Supreme Court reads as under -
'2. Every producer of yarn shall pack yarn for civil consumption in hank form in each half yearly period commencing from April-September 1990, period and in every subsequent half yearly period in proportion of not less than fifty per cent of total yarn packed by him during each half-yearly period for civil consumption.
Provided that not less than eight per cent of the yarn required to be packed, in hank form shall be of counts 40s and below in regard to Category I at Annexure-I to this Notification.
Provided further that the obligation to pack hank yarn pertaining to a particular half-yearly period can be fulfilled before the end of the month succeeding such period to which the obligation pertains.'
The admitted facts in the said case are that there are two methods of packing the yarn ; (i) the cone form packing which is used in power-loom and hosiery industry; and (ii) hank form packing which is exclusively used in handloom industry. For the cone form packing, the ring frame cops are fed to the winding machines and for the hank form packing the cops are fed to reeling machines. According to the appellants they are packing yarn in cone form and they have not installed the reeling machines and as such it is not possible to pack the yarn in hank form. Among other contentions, the appellants have contended before the Supreme Court that the respondents cannot compel the appellants to manufacture something for which the appellants have not installed the necessary machinery and other super-structure and the Notification, therefore, infracts their Fundamental Right under Article 19(1)(g) of the Constitution.
25. The Supreme Court has briefly stated the substance of the objections of the respondents as stated in their Statement of Objection before the Andhra Pradesh High Court. It reads as follows :
'9. The textile industry consists of three sectors namely, Mill-Sector, Powerloom Sector and Handloom Sector. The primary product in the industry is yarn. It is produced only by the Mill-sector. The powerloom and handloom sectors manufacture fabrics and they depend upon the Mill-Sector for yarn. The yarn is packed in two forms, namely, cone form and hank form. The cone form is consumed entirely by the Powerloom Sector and the hank form by the Handloom Sector. The handloom industry is the largest cottage industry in India. Nearly one-third of the country's requirement of Cloth is met by this Sector. As per the National Handloom Census, 1987-88 there were 3.9 million handlooms spread all over the country out of which three million were engaged in production of cotton cloth. The Handloom Sector provided direct employment to 8.4 million during 1988-89 and indirect employment to millions of people. The production target for Handloom Sector for the Seventh Plan was 4600 million mtrs. In order to achieve the said production target a minimum of 460 millions kgs. of hank was required. The employment generated in the three sectors during the year 1988 was 84.22, 50.95 and 11.81 lakh persons in Handloom Sector, Powerloom Sector and Mill-Sector respectively. The production of cloth for Handloom Sector during the Eighth plan has been targeted at 7000 million mtrs. out of which cotton cloth is 6510 million kgs. In order to achieve this target 561 million kgs of hank yarn is required. Against the said requirement only 355 million kgs. of cotton yarn is being packed in hank form. According to the respondents there is a big gap between the demand and supply. This causes scarcity of yarn in the market and results in unemployment in Handloom Sector. In order to make available sufficient quality (quantity ?) of hank yarn at reasonable prices and also for the sustenance of Handloom workers, it became necessary to reserve hank yarn for Handloom Sector by making it obligatory on the part of the manufacturers of yarn to pack a certain percentage of their production packet for civil consumption in the form of hanks.'
After having satisfied that the impugned Notification has been issued in the interest of general public and also for the larger interest of the textile industry, the Supreme Court rejected the contention of the petitioner that it infracts Article 19(1)(g) of the Constitution and similarly the contention that it violates Article 14 of the Constitution was also rejected with the following observation -
'12. Mr. Vaidhyanathan further contended that under the impugned notification unequals have been treated as equals. According to him different mills have installed different machinery and have different equipments. The contention is that the impugned notification is violative of Article 14 as it has been made uniformly applicable to mills which do not have the same capacity to produce hank yarn. We see no force in the contention. The impugned notification has been made applicable uniformly to all the producers of yarn. The appellants are required to pack yarn in hank form in the proportion as provided in the notification keeping in view the total yarn packed by the mill concerned. In any case the grievance of the appellants has been substantially mitigated by the press note dated May 11, 1990 issued by the Textile Commissioner, Bombay. The relevant part is reproduced hereunder :- '(2) The Government have now reinstituted the erstwhile relaxation fulfilled by transfer of surplus hank yarn packing of another producer. Secondly, the Government have also allowed a producer to get hank yarn reeled through another producer having extra relying capacity with the permission of the Central Excise Authorities and with the arrangements through the State Handloom Corporations and Apex Handloom Co-operative Organisations in the areas having concentration of handloom weavers.'
26. Having regard to the reasons that in view of the sharp rise in auction prices of coffee and the resultant upward trend in retail prices and in order to take measures to check the rising trend in prices of coffee in domestic market, the impugned Directive has been issued by the Central Government. It is made applicable uniformly to all registered growers and the exporting agencies and it is not confined to any particular group or section of the industry. The State has taken into consideration the larger interest of the consumers as well as the coffee industry. In the absence of challenge to the validity of Section 20 of the Act and in the absence of any allegations of mala fides against the respondents in issuing the impugned Directive, the Directive having been issued by the Central Government in exercise of its statutory power, in the public interest is unexceptionable.
27. The next contention of Sri P.B. Appaiah, learned Counsel for the petitioners is, that the impugned Notification has been issued by the Central Government in mala fide exercise of its powers in order to deprive the petitioners of their right to make legitimate profits by exporting coffee in the guise of bringing down the prices of coffee in the domestic market, without invoking its power under other provisions of the Act, by which the said objective could have been easily achieved. In this context, Sri Appaiah places emphasis on Section 16 of the Act. Section 16 of the Act gives right to the Central Government to fix the price or prices at which coffee may be sold wholesale or retail in Indian market. It is his submission that if it was really the intention of the Central Government to bring down the rising price of coffee in the domestic market, the Central Government could have very well fixed the price of coffee by a notification published in the Gazette. Instead, the Central Government has resorted to second Proviso to Section 20 of the Act only to deprive the petitioners of their right to export, by restricting the quantity of coffee for export and it is impossible to arrest the rise in price of coffee which is evident from the particulars submitted by the respondents themselves.
28. Refuting the contention of Sri Ashok Haranahalli, learned Standing Counsel for Central Government, that the Government has restricted the quantity of coffee from being exported in order to prevent hoarding which is possible in case the price is fixed by the Central Government in exercise of its power under Section 16 of the Act, Sri Appaiah contends that it does not lie in the mouth of the Central Government to state so, when the Board fails to take any action of whatsoever nature under Section 38(B) of the Act wherever the coffee is not delivered to the surplus pool by the growers.
29. It is true that the Act reserves right to the Central Government to fix price or prices at which coffee may be sold wholesale or retail in the domestic market. It also empowers the Board to seize the coffee which is not delivered by the growers for inclusion in surplus pool as prescribed by Section 25 of the Act, in accordance with Section 38(B) of the Act. It is also true that they are one of the means to prevent hoarding and regulate the sale of coffee in domestic market at a price within the reach of the consumers. Mere failure to fix the price by the Central Government for sale of coffee in the domestic market or Board's failure to seize the coffee which is not delivered to the surplus pool of the Board as required to be delivered under Section 25 of the Act, will not invalidate the impugned Directive on that count, where the Central Government has authority of law to regulate the sale of coffee in the domestic market by different means, to arrest the sharp rise in prices of coffee so that coffee is available to the consumers at a price within their reach, it is always open to the Central Government to adopt any one of the means and such means will not become invalid in law just because, the Government has failed to adopt Other means. It is for the Central Government to take a decision, which according to it, is best suited in the circumstances of the case to achieve its object and if the Central Government takes one of the courses it cannot be the subject matter of Judicial Review, nor it is within the province of this Court to determine which is the best means of the means available. This Court cannot sit in Judgment over the decision of the Central Government to examine whether the course adopted by the Central Government is proper and effective. It is also not within the province of this Court to invalidate the action of the Central Government even though it ultimately fails, to achieve the object for which it was taken. In a situation like this, it is always open to the Central Government to adopt a trial and error method and such trial and error method would not invalidate any action taken by the Central Government, if Central Government has jurisdiction under law to take such action. Having rejected the contention of the petitioners that the Central Government has no jurisdiction to issue the impugned Directive under second Proviso to Section 20 of the Act and in the absence of any allegations of mala fide against the respondents, it is not possible to accept the contention of the petitioners that the impugned Directive has been issued in mala fide exercise of their power in order to deprive the petitioners of their legitimate right to earn legitimate profits. It is nobody's case that the impugned Directive has been issued with a view to confer largesse or any benefit on any section of the industry. It is issued in respect of export of coffee as such. Just because the Government did not take action under Section 16, the action under the second Proviso to Section 20 of the Act cannot be termed illegal or invalid.
30. The Supreme Court in the case of PRAG ICE & OIL MILLS AND ANOTHER vs . UNION OF INDIA : 1978CriLJ1281a , while considering the question as to the correctness of the mode adopted for fixing the price of the mustard oil has held as follows :
'69. To sum up, it seems to us impossible to accept the contention of the petitioners that the impugned Price Control Order is an act of hostile discrimination against them or that it violates their right to property or their right to do trade or business. The petitioners have taken us into the minutest details of the mechanism of their trade operations; and they have attempted to demonstrate in relation thereto that a factor here or a factor there which ought to have been taken into account while fixing the price of mustard oil has been ignored. Dealing with a similar argument it was observed in Metropolis Theatre Co., v. City of Chicago (1913) 57 Law Ed 730) that to be able to find fault with a law is not to demonstrate its invalidity. 'It may seem unjust and oppressive, yet be free from judicial interference. The problems of government are practical ones and may justify, if they do require, rough accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not always discernible; the wisdom of any choice may be disputed or condemned. Mere errors of government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void...'
31. In K. RAMANATH vs. STATE OF TAMIL NADU AND ANOTHER : [1985]2SCR1028 , Supreme Court dealing with a similar situation relating to prohibition of transport movement and otherwise carrying of paddy outside Thanjavur District and two taluks each in South Arcot District and Thiruchinapally district, the Supreme Court has held as follows :
'23. The power to regulate or prohibit the production, supply and distribution of, and trade and commerce in, essential commodity may be exercised in innumerable ways- One of the ways in which such regulation or control over the production, supply and distribution of, and trade and commerce in, an essential commodity like foodstuffs may be exercised by placing a ban on inter-State or intra-State movement of foodstuffs to ensure that the excess stock of foodstuffs held by a wholesale dealer, commission agent or retailer is not transported to places outside the State or from one district to another with a view to maximise the procurement of such foodstuffs from the growers in the surplus areas for their equitable distribution at fair prices in the deficit areas. The placing of such ban on export of foodstuffs across the State or from one part of the State to another with a view to prevent outflow of foodstuffs from a State which is a surplus State prevents the spiral rise in prices of such foodstuffs by artificial creation of shortage by unscrupulous traders. But such control can be exercised in a variety of ways otherwise than by placing compulsory levy on the producers, for example, by fixing a controller price for foodstuffs, by placing a limit on the stock of foodstuffs to be held by a wholesale dealer, commission agent, or retailer, by prohibiting sales except in certain specified manner, etc. These are nothing but regulatory measures.'
32: In G.B. MAHAJAN AND OTHERS vs. THE JALAGAON MUNICIPAL COUNCIL AND OTHERS : AIR1991SC1153 , the Supreme Court dealing with the validity of an unconventional scheme adopted by Jalagoan Municipality to put its property for better use, in the interest of the Municipality, with reference to the contentions of the petitioners that, as a matter of policy, it is not open and permissible to a Governmental authority to adopt such unconventional method, has held as follows:
'14. On a consideration of the matter it appears to us that the argument that a project envisaging a self-financing scheme, by reason alone of the particular policy behind it, is beyond the powers of the local authority is somewhat too broadly stated to be acceptable. A project, otherwise legal, does not become any of the less permissible by reason alone that the local authority, instead of executing the project itself, had entered into an agreement with a developer for its financing and execution. The criticism of the project being 'unconventional' does not add to or advance the legal contention any further. The question is not whether it is unconventional by the standard of the extant practices, but whether there was something in the law rendering it impermissible. There is no doubt, a degree of public accountability in all governmental enterprises. But, the present question is one of the extent and scope of judicial review over such matters. With the expansion of the State's presence in the field of trade and commerce and of the range of economic and commercial enterprises of government and its instrumentalities there is an increasing dimension to governmental concern for stimulating efficiency, keeping costs down, improved management methods, prevention of time and cost over-runs in projects, balancing of costs against time-scales, quality-control, cost-benefit ratios etc. In search of these values it might become necessary to adopt appropriate techniques of management of projects with concomitant economic expediencies these are essentially matters of economic policy which lack adjudicative disposition, unless they violate constitutional or legal limits on power or have demonstrable pejorative environmental implications or amount to clear abuse of power. This again is the judicial recognition of administrator's right to trial and error, as long as both trial and error are bona fide and within the limits of authority. We might recall the memorable words of what Justice Brandeis said :
'The discoveries in physical science, the trumps in invention, attest the value of the process of trial and error. In large measure, these advances have been due to experimentation ..' '... There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs ....' 'To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal systems that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment....' '.... But in the exercise of his high power, we must be ever on our guard, lest we erect our prejudices into legal principles....' (See: New State Ice Company v. Earnest A. Liebmann, 285 US 262 at 310-11 -Dissenting opinion of Brandeis, J.)
In regard to Courts and policy we might recall the following words of a learned author :
'The Courts are kept out of the lush field of administrative policy, except when policy if inconsistent with the express or implied provisions of a statute which creates the power to which the policy relates or when a decision made in purported exercise of a power is such that a repository of the power, acting reasonably and in good faith, could not have made it. In the later case, 'something overwhelming' must appear before the Court will intervene, That is, and ought to be, a difficult onus for an applicant to discharge. The Courts are not very good at formulating or evaluating policy. Sometimes when the Courts have intervened on policy grounds, the Court's view of the range of policies open under the statute or of what is reasonably policy has not won public acceptance. On the contrary, curial views of policy have been subjected to stringent criticism. In the world of politics, the Court's opinions on policy are naturally less likely to reflect the popular view than the policies of a democratically elected Government or of expert administrators...' 'The considerations by reference to which the reasonableness of a policy may be determined are rarely judicially manageable....' (Emphasis Supplied)
(See: 'The Purpose and Scope of Judicial Review' - by Sir Gerard Brennan in 'Judicial Review of Administrative Action in the 1980s' Oxford University Press.)
In FORWARD CONSTRUCTION CO, vs. PRABHAT MANDAL : AIR1986SC391 , a similar self-financing project was embarked upon by the Municipal Corporation of Bombay. It is true, the present argument as to the manner of execution of the project being ultra vires the powers of the local authority was not in terms raised there. But some of the arguments have a familiar ring. This Court, noticing the financial feature of the scheme observed (at page SC 399: AIR 1986) :
'The mere fact that the Corporation was to make a gain of the non-refundable premium did not mean that was the only purpose which was in view. The purpose obviously was the best utilisation of the available space. If in a commercial zone the Corporation was able to make available accommodation for commercial purpose we do not see why such a venture cannot be one either for the purpose of promoting public safety, convenience or in the nature of facilities being made available as a part of the improvement of the city. If commercial activities are to be pin-pointed in a commercial zone and for that purpose the Municipal Corporation takes a step to provide accommodation for commercial purposes it cannot be said that the property of the Corporation was being acquired or held for purposes other than the purposes of the Act.' (p. 115) While the concern of public law is to discipline the public power by forging 'legal techniques as both part of the way in which public power is made operational and part of the process through which it is attempted to render such public power legitimate and to think of issue of legal regulation of public power in a way that goes deeper than particular instances and seeks to elaborate issues of general principle'. There is, however, as Professor Wade points out, ample room, within the legal boundaries for radical differences of opinion in which neither side is unreasonable. In Tameside case Lord Denning pointed out the error of confusing differences of opinion, however strong, with unreasonableness on the part of one side or the other. Lord Diplock said that the very concept of administrative discretion involves a right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred.
In the ever increasing tempo of urban life and the emerging stresses and strains of planning, wide range of policy options not inconsistent with the objectives of the statute should be held permissible. Referring to the 'Role of the Judges in Public Law Litigation' a learned author says :
'Administrative law is, in essence, a search for a theory of how public policy should be made. Two powerful traditions mark the boundaries of that search. On one side, we leave the choice among competing values to a largely unstructured process of pulling and hauling by individuals directly accountable to the citizenry. On the other side, we demand a highly structured process of party-controlled proof and argument before a neutral arbiter to resolve disputes over the application of rules to specific facts. Between these extremes is that vast landscape we call policy making -- the reconciliation and elaboration of lofty values into operational guidelines for the daily conduct of society's business.' (See: 'Policy making Paradigms in Administrative Law' --Colin S. Diver -- Harward Law Review -- Vol.95 -- 393).
It appears to us that in the context of expanding exigencies of urban planning it will be difficult for the Court to say that a particular policy option was better than another. The contention that the project is ultra vires of the powers of the Municipal Council does not appeal to us.
15. We hold that Contention (a) does not justify quashing of the impugned Resolution of the Municipal Council.'
In view of the aforesaid Decisions of the Supreme Court, it is clear that the adoption of one course by the Central Government to arrest the sharp rise in prices of the coffee as against other courses available would not render the impugned Directives invalid.
33. Sri Appaiah next contends that the impugned order does not state the reasons for issuing the Directives and any reason stated in the Statement of Objection cannot be read as a reason for issuing the Directives. He derives support for his contention from the Decision of the Supreme Court in MOHINDER SINGH GILL AND ANOTHER vs. ELECTION COMMISSIONER, NEW DELHI : [1978]2SCR272 , the relevant portion of which reads as follows :
'8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order had in the beginning may, by the time it comes to court on account of challenge, get validated by additional grounds later brought out.'
In this context, it is material to extract the impugned order which reads as follows :
F.No. 5(6)/94-Plant (B)MOST IMMEDIATE.CARE FOR THE GIRL GOVERNMENT OF INDIACHILD. MINISTRY OF COMMERCE,NEW DELHI 110 011.5th August, 1994.ToChairman,Coffee Board,Bangalore 560 001.Sub: Measures to check the rising trend in prices ofcoffee in domestic market.Sir, In view of the sharp rise in auction prices of coffee and resultant upward trend in retail prices, Central Government have, in pursuance of Section 20 of the Coffee Act, 1942 decided that the Coffee Board shall implement the following directives with immediate effect :
(i) The Coffee Board shall release export permits for Coffee not exceeding 1,10,000 tonnes for the period 1.1.1994 to 31.12.1994 and at the rate of a monthly quota not exceeding 5000 tonnes from September to December, 1994.
(ii) Coffee Board shall not permit export of 'C' grades, 'BBB' and Pea berry grades, till further orders except in such cases for which valid applications have been received by the Board till and upto 5th August, 1994.
A compliance report on the above directives may be furnished to this Ministry. Yours faithfully,Sd/ Dr. S. Mitra,Director'.
From the reading of the impugned Directives it is not possible to hold that it does not contain any ground for issuing the same. The impugned order contains the ground and the same has been elaborated in the Statement of Objections filed on behalf of respondent-1.
34. In order to find out whether the impugned Directives contain any reason or not, the entire order must be read as a whole to ascertain the real meaning and implication of the Directives. It is seen from the impugned Directives, that in view of the sharp rise in auction prices of coffee and resultant upward trend in retail prices, the Central Government have, in pursuance of Section 20 of the Act, decided that the Coffee Board shall implement the Directives stated therein with immediate effect as a measure to check the rising trend in prices of coffee in domestic market. The cause for issuing impugned Directives being obviously to arrest the sharp rise in price of coffee in domestic market, it is not possible to hold that the order does not contain any ground. It is sufficient if the ground capable of understanding its meaning and implication is mentioned in the Directives and it need not contain the basis for such ground.
35. The other contention of Sri P.B. Appaiah, the learned Counsel for the petitioners, that the impugned Directives are unsustainable, in view of their application in respect of a portion of the year as the Government has no authority to split the period for which it has authority to issue Directives, does not merit consideration, as there is no bar for the Central Government to issue Directives for any period in a year.
36. For the reasons aforesaid, Point No. 2 is also answered in the negative.
37. In the result, I make the following Order :
(i) Writ Petition is dismissed. Rule discharged.
(ii) In the circumstances of the case, there shall be no order as to costs.