Punjab Dal Besan and Oil Mills and ors. Vs. State of Madhya Pradesh - Court Judgment

Oza, J.

1. This petition has been filed by the petitioners who claim to be the maunfacturers of edible oil and, as a byproduct thereof, oil cake.

2. According to the petitioners, sixty per cent, of the total oil-seeds expelled results in oil-cakes. Out of these oil-cakes manufactured in the factories, substantial quantities are exported generally to Bombay and other places where by solvent extraction process further oilis extracted, and the remaining deoiled cakes are exported out of India where they are used in the production of protein preparations.

3. The Government of India, exercising powers under Sections 3 and 5 of the Essential Commodities Act, 1955 issued Order No. 1844 dated the 18th June 1966 whereby power to issue regulations or orders under Section 3 of the Essential Commodities Act, 1955, was conferred on the State Government subject to the limitation provided in that order. While exercising powers under the aforesaid Order, the State Government issued the -- Madhya Pradesh Cattle Fodder (Export Control) Order, 1972, which was published in the Madhya Pradesh Gazette dated the 5th August 1972 vide notification No. 7101-2993-XXX-(i) 72 dated the 4th August 1972, Clause 2 (b) of this Order defined the term 'Cattle Fodder', and this definition included cotton-seeds and oil cakes. Consequently by this Order restrictions were imposed on the export of cattle fodder to any place outside Madhya Pradesh except under a permit from the State Government. AS the term 'cattle fodder' included cotton-seeds and oil-cakes also, the Order out restrictions on the export of these commodities as well.

4. The State Government, vide notification No. 7991-3349-XXX-(i)-72 dated the 5th September 1972, published in the Gazette dated the 8th September, 1972, amended the definition of 'cattle fodder' and excluded oil-cakes and cottonseeds from the definition. Thus the restriction on the export of oil-cakes and cotton-seeds was lifted.

5. Thereafter again by notification No. 10706-5129-XXX-(a)-72 dated the 30th November 1972. published in the Madhya Pradesh Gazette of 30th November 1972, the State Government amended the definition of 'Cattle Fodder' including in it oil-cakes consumable by cattle and thus again put restriction on the export of oil-cakes from the State to any other place outside.

6. According to the petitioners, oil-cakes from cotton-seeds and cottonseeds themselves are only used as a food for cattle in this State, and the other oil-cakes are not ordinarily used. It is also alleged by the petitioners that although the Order provided that oil-cakes could not be exported from the State without a permit still in fact no permits were issued, and even when prayers were made to the Collector, Indore, for issuance of permits, they were refused and the refusal was on the basis that the Government intended to impose a ban on the export of oil-cakes. According to the petitioners, as a result of this the stocksof oil-cakes accumulated and as there was no market for the commodity the stocks are being dumped in the industries. The petitioners further alleged that they advertised in the newspapers for sale of these oil-cakes even at concessional rates and had also offered them to the Government, but neither the Government nor anyone else came forward to purchase the oil-cakes and these accumulated stocks have led to a situation where the petitioners may be compelled to close down their industries. The petitioners have stated in the petition their total stocks which, valued, according to them, at Rs. 96,20,640/-, and are lying in the godowns. According to the petitioners, this prohibition of export imposed by the State Government by the impugned Order is not at all in the interests of general public and is in contravention of their rights under. Article 19(1)(g) of the Constitution. It was also alleged by. the petitioners that on the one hand the export of oil-seeds was permissible whereas on the other oil-cakes were not allowed to be exported. According to them, cattle-feed manufactured by some of the industries in the State, which used oil-cake as a necessary constituent of the manufacture of cattle-feed, is not covered by the Order, and in this manner the impugned Order is also discriminatory.

7. According to the respondent, these Orders were issued to maintain adequate supply of cattle-fodder. About the rest of the facts alleged by the petitioners, the respondent has chosen not to make any specific reply. As regards the refusal for issuance of permits by the Collector, the allegation that the Collector was authorized to issue permits was denied in the return. It is also stated in the return that the refusal by the Collector is not on the ground that the Government intended to impose a total ban on the export

8. Shri C. K. Daphtary, learned counsel for the petitioners, contended that the allegations in the petition, which have been verified in an affidavit sworn in by the petitioners, have not at all been controverted in the return. According to the learned counsel, the affidavit, filed in support of the return, is not in accordance with law. The only thing stated therein was that the allegations in the return were true to the belief of the deponent. But it was neither based on personal information nor on any information received. According to the learned counsel, in the return evasive and irresponsible replies have been suggested to the various allegations of fact made by the petitioners, and even these replies do not and support from a proper affidavit.Learned counsel contended that in these circumstances the petition will have to be decided on the facts alleged by the petitioners themselves. He contended that there is nothing to indicate that the order restricting the export of oil-cakes from the State was issued in the interest of general public. He referred to all the three Orders -- the original Order and the two modifications within short intervals -- to indicate that the State Government did not apply its mind to any of the circumstances calling for the issuance of such an order. Learned counsel contended that the Order was in excess of the authority delegated under the order of the Central Government under Section 5 of the Essential Commodities Act, 1955, as although that Order empowered the State Government to issue orders in connection with Section 3 (1) and (2) of the Essential Commodities Act, still it provided that the delegation of powers under Clause (d) of Sub-section (2) will not extend to inter-State transport or distribution. According to the learned counsel, the present Order imposing restriction on export interferes with inter-State transport and on that ground it was bad in law. He also contended that in view of Article 304 of the Constitution, it was beyond the powers of the State Legislature to enact any law restricting inter-State trade.

9. Shri Dharamadhikari, learned Advocate General for the State, contended that the Order was issued to maintain adequate supplies of cattle-fodder for cattle in the State. He also contended that in view of the drought situation in the neighbouring States it was in the interest of general public that the State should issue such an order restricting the export of cattle-fodder out of the State. He. however, frankly conceded that nothing to that effect has been stated in the return. As regards the affidavit filed with the return, learned Advocate General conceded that apart from law rules of this High Court require an affidavit in a proper form. He, however, contended that the officer on behalf of the State, who submitted the return, could only deny the facts within his knowledge. As regards the question about the Order being in excess of the delegated authority, learned Advocate General contended that the State Government thought that Order No. S.O.1844 dated the 18th June, 1966 provided by Sub-clause (i) that the Order could not prejudicially affect the transport and distribution under any other order of the Central Government, and as there was no order of the Central Government to that effect the State Government thought that it was within its powers to issue such an Order. As regards the objection about Article 304 of the Constitution, learned Advocate General contended that the said article would not be attracted as the Order issued by the State Government is not a legislation enacted by the State Legislature but is only an Order issued by the State Government in exercise of the powers delegated to it by the Order of the Central Government under the Essential Commondities Act. He also contended that in fact the question about the jurisdiction of the State Government to issue such an Order under the delegated powers is a matter going to the, root of the matter, and if the petition could be decided on that ground alone, it may not even be necessary to go into other questions. As regards the refusal pf the Collector for the issuance of permits, learned Advocate General contended that no doubt the orders passed by the Collector, Indore, go to show that he refused to issue permits on an assumption, that there was a total ban. But, according to him, that was not the correct situation. He referred to a copy of a circular-letter issued by the State Government to all the District Collectors, filed as Annexure A to the return, and on that basis contended that the Collectors were authorized to issue permits, although in the return the stand taken was that the Collector was not authorized to issue permits. He, however, contended that If this circular-letter does not authorise the Collectors to issue permits under the impugned Order, then the State Government was the only authority entitled to issue permits, and if the State Government did not choose to confer powers on subordinate officers to exercise their discretion, the Order could not be said to be unreasonable on that ground also

10. Shri Daphtary, learned counsel for the petitioners, contended thatthe Order empowered the State Government to authorize any officer subordinateto it, but it did not lay down the processby which permission could be refused orgranted, and consequently the orderplaced arbitrary powers with the Government or the authorities authorized by It and it cannot, therefore, be said that itwas not unreasonable,

11. The return of the State Government does not indicate any reasons to show that after application of mind to the special circumstances it was thought fit in the interest of general public to issue an Order of this kind. Although the learned Advocate General attempted to suggest certain reasons, but it appears that such was not the stand taken by the State in Its return. It is also significant that in the course of four months the State Government modified the Order twice. All these circumstances and theabsence in the return of any adequate reasons to justify the Order indicate that the Order was passed without applying mind. It was contended by the learned Advocate General that the restriction was a mere regulation and was not a total prohibition. However, the orders issued by the Collector show that he understood the policy of the State Government to be of a total ban and, therefore, refused permission for issuance of permits. Learned Advocate General contended that these orders are bad. But about the authority of the Collector to issue permits, the stand taken by the learned Advocate General was contrary to that taken in the return. A circular letter issued to the Collectors has been filed along with the return as Annexure A. A perusal of it goes to show that it does not pertain to oilcakes. That letter is marked as 'confidential'. One fails to understand that if the Government intended to authorize, the Collectors for issuance of permits for export of oil-cakes, there was any reason to issue a circular in a confidential manner. In fact, it ought to have been published so that the public at large may know that Collectors are authorised to issue permits. All this goes to show that although the Order did talk of export with permits, but in fact it amounts ed to a total prohibition.

12. The order issued by the Central Government under Section 5 of the Essential Commodities Act, 1955, dated the 18th June, 1966. rung thus:--

'In exercise of the powers conferred by Section 5 of the Essential Commodities Act, 1955, (10 of 1955), the Central Government hereby directs-

(a) that the powers conferred on it by Sub-section (1) of Section 3 of the said Act to make orders to provide for the matters specified in Clauses (d), (e), (f), (g), (h), (i), (ii) and (i) of Sub-section (2) thereof shall, in relation to all commodities other than foodstuffs and fertilizers (whether inorganic; organic or mixed); be exercisable also by a State Government or, in relation to a Union territory, by the administrator thereof, subiect to the following conditions, namely:--

(i) that the delegation of powers under Clause (d) shall not extend to inter-State transport or distribution and the cowers under that clause shall not be exercised So as to prejudicially affect such transport or distribution in pursuance of any order of the Central Government.' This clearly goes to show that although powers were delegated to the State Government, but in regard to orders under Section 3(2)(d) of the Essential Commodities Act the State Government was not authorized to issue any Order (i) in affect inter-State transport or distribution (2) or to affect prejudicially such transport or distribution in pursuance of any order of the Central Government. Apparently the orders of the State Government imposing restrictions on the export of cattle-fodder, vide notification No. 7101-2993-XXX-(i)-72 dated the 4th August 1972, did impose by clause 3 of It restrictions on the export of cattle-fodder. Clause 3 of the order reads thus-

'3. No person shall export or attempt to export or abet the export, of cattle-fodder except under and, in accordance with a permit issued by the State Government or by an Officer authorized in that behalf by the State Government:

Provided that nothing contained in this clause shall apply to the export of cattle-fodder:--

'(i) On Government account:

(ii) under and in accordance with Military Credit Notes: or

(iii) by or on behalf of the Dandakaranya Development Authority.'

It cannot be doubted that restriction on export of cattle-fodder from the State to a place outside it will fall within the scope of inter-State transport. The provision in the Central Government's Order referred to above does not confer power on the State Government to issue orders which would affect inter-State transport. Consequently the Order issued by the State Government, in exercise of the delegated powers, imposing restrictions on the export of oil-cakes to any place outside the State will be beyond the powers conferred on the State Government by the Order issued by the Central Government under Section 5 of the Essential Commodities Act. Therefore the Order issued by the State Government vide notification No. 7101-2993-XXX-(i)-72 dated the 4th August 1972, modified by notification No, 10706-5129-XXX-(i)-72, dated the 30th November 1972 is beyond the powers of the State Government, and consequently it is illegal and not enforceable.

13. As to the objection about Article 304 of the Constitution, it cannot be doubted that Article 304 refers to the legislative functions of the State. Article 304 of the Constitution reads thus-

'Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law:--

(a) impose on goods imported from Other States or the Union Territories any tax to which similar goods manufactured pr produced in that State are subject, so, however, as not to discriminate between goody so imported and goods so manufactured or produced: and

(b) impose such reasonable restrictions an the freedom of trade, commerceor inter-course with or within that State as may be required in the public interest;

Provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.'

In view of the specific language used in Article 304 and also of the fact that while issuing the impugned Order the State Government acted under the delegated powers and did not enact anything in exercise of its legislative functions, the objection about Article 304 of the Constitution could not be raised in respect of the impugned Order.

14. The question about the restriction on the fundamental right of the petitioners under Article 19(1)(g) of the Constitution and the reasonableness of the restriction was also raised before us. As stated earlier, there is much controversy about total prohibition or mere regulation and also about the facts considered by the State Government before issuance of the impugned order. But as the Order is beyond the powers of the State Government under the delegated authority and on that ground itself the Order has been found to be bad in law, in our opinion it is not necessary for us to go into the question about the reasonableness of the restriction and to examine the Order on that basis.

15. In view of the discussion above, the petition is allowed. The Order passed by the State Government (No. 7101-2993-XXX-(i)-72 dated the 4th August 1972), modified by notification No. 10706-5129-XXX-(i)-72 dated the 30th November 1972, is declared to be illegal and not operative. It is, therefore set aside. The petitioners shall be entitled to the costs of this petition. Counsel's fee Rs. 250/- (Rs. Two Hundred & Fifty), if certified. The security amount deposited shall be refunded to the petitioners.