JI rs. Dossibai X. B. Juj11blw.J v. Khl1TKl&and GorU111Ql Das Gupta J. Septnnbtr 29. [1962) under s. 6 (1) of tho Rent Act the provision of part II of the Act, apply. The Trial Court nnd the High Court wer•
therefore right in holding that the City Civil Court, Bombay, had 'no jurisdiction to try the suitll. Tho a ppeale arc accordin~ly dismil!&'cl with costs. Thero will be one 1et of hearing fee for th•
four appeals. Ap~nl di.<miased. MANNALAL JAIN t'. TIIF. RTATF. OF ASSAM A?-.J) OTHERS. (R. T'. 81NRA, c. J., R. K. DAS, A. TC SARIU.R, N. RA.JAGOPALA AYYANGAR nnd .T. R. MUDl!OLKAR, .T.T.)
Foo,/ Cnntro/-T.ire•r• '°' U"ho/,.alt dealing in rir• anii padd.:1-l.icm'1°flfl Orda pre10-ibing co"'1itinna Jnr g,ant of licP111:R–Stal1, r'r0t"rnml'nt ia~uing inatructionR lo lictnaing
auf.1,oritif'8 to qranf licenceJ to co·oP'rative ~ocielit1 01ily-Pro- priety of—Grant of licl'nttt to ro-operative .!Dcittit11 and rtfttaal (() othm-1.egalilf/ ~f-E,.ential Commodili'6 .A<I, 1955, (IO of 195.5), "· 3 mul 6-·-A•ROm FoodgraiM (Lir.<n•;ng and Co11trol) nrd<r, IP61, cl. 5.
In exercise of the powers ronf<rred by s. 3 of the Ew.n- tial O>mmodities Ar.t, 1955, the Assam Government made the A"am Foo<lizrains (Licensing anrl Control) Order, 1961. This Order providt"d that no person could do bu~ine~s in foodgrains including ric.- and parlrly, in \\•holcsal~ quantities except under a licenc' i"ued thereunder.
Clause 5 of the Order laid down in suh-ds. (a) to (e) matters which the licensin<r authority !l}•all, among otht'r matters, have rejrard to in granting or refusing a license; sub-cl. (e) bring "whether the
applicant is a co-operative society". In 1959, directions had he.n issued to aU liccnsing authoritieo by the Government that the rights of monopoly procurement had been given to Apex
Co-operative Society. The petitioner applied for a licence but was ref115'd in view of the provisions of sub-cl. (e) of cl. 5 of the Order. The petitioner challenged the order refusing the licence on the grounds: (1) that sub-clause :el wu u/trg viua r
-..–. :l S.C.R. SUPRElllE COURT REPORTS as it was beyond the powers granted to the S~ate Goyernment under s. 3 read with s. 5 of the Act, and (n) !hat sub;cl· (e) had been applied in a discriminatory manner with .a v1~~ to create a monopoly in favour of the Apex Co-operative Society. He'd, (per C.J., Das and Ayyangar, JJ.), that sub-cl. (e)
of cl. 5 of the Order was not ultra vires s. 3 read wit~ s._ 5 of the Act, but the impugned order rejecting the apphca'.'?n of the petitioner was bad as it infringed the rights of the petuwner guaranteed under Arts. Hand 19 of the Constitution.
Section 3 of the Act authorised the making of an order to achieve two objects, for maintaining or increa~ing supplies of essential commodities and for securing their equitable di~tri bution and availability at fair prices. Sub-clause (e) of cl. 5 of the Control Order, 1961, which enabled the licensing authority to prefer a co-operative society in certain circumstances in th~ matter of granting a licence, was not unrelated to the objects mentioned in s. 3 of the Act.
A co-operative society may, by reason of the place which it occupies in the village economy of a particular area, be in a better position for maintaining or increasing- supplies of rice and paddy and even for securing their eq~itable 'distribution and availability at fair prices. Ramanlal Nagardas v. JJ[. 8. Palnitkar, A.LR.
1961, Guj. 38, distinguished, Sub·clause (e) permitted the licensing authority to give -._.._ preference to co-operative societjes in certain cases but it did not have the effect of creating a monopoly in favour of
co-operatiVe societ:es. In the present case the licensing authority refused lir.f'nce to the petitioner for the onJy reason and purpose of granting a monopoly to co-operative societies; it r
had administered •1e Jaw in a discriminatory manner and for the purpose of achieving the ulterior object of creating a mono- poly in favour of co-operative1_; which object was not within sub-cl. (e). The licensini>: authoritv was influenced, not by considerations mentioned in cl. 5 of the Order, but by the instructions issued by the State Government to grant Iicencci to co-operatives only.
It \vas not proper for the Government to issue instructions to the licensing authorities when they were required to act according to the provisions of law. Per Sarkar and Mudholkar,JJ, Sub-clause (e) of cl. 5 of
the Order served the object of s. 3 of the Act to maintain or increase the supplies of essential commodities and to secure their equitab]e di<1tribution and availability at fair prices and ,–y– was not ultra vires.
Even if the Order a1lowed only one .class, namely, co-operative societies, to do the business and prohibited others, it would still advance the objects of the Act; and the prohibition of the others doing the business would amount to reasonable restrictions under Art. 19(6).
J,961 Marmalal Jain v. 'The Stare of Assam 11'1 11.-1.i J.;,, v: TM 5,.,, •f Asscm S. l;. n,, J. ~UPft.EME COURT REPORTS [1962) N1mndra Kumar v. Tht, U11io1t of Ifldia, [19601 2 S.C.R.
375 and GU… C'*"'rM Importtr1 d: U1e<s' A•socialion v. Th• U .. ion of India, (W.P_ 65 of 1959, unreported), relied on. The licensing authority had not exercised its power under
sub·cl. (e) in a discriminatory manner in the present case. The authority was entitled to give preference to a co-operative society and that is what it has done. Though the result of this preference was to prevent the petitioner from carrying on his busine", it was in the circumstances, a rcuonablc rCltric· tion on hi• right "" it was nrcessary for securing foodgrains at reasonable prices and in adequate quantities.
There 'vere no directions given by the State Government in 1961 to licensing authorities to grant licence~ only to co-operative societies and it could not be said that the licensing authority had only carried out the directions of the Government and had not
acted independently. In fact, the Order itself carried a direction in sub-cl. (e) to give preference to co-operative socicties. The co…aperative societies formed a class by them-
selves and a provision giving preference to s·Jch a clan better served the objects of the Act, and had a clear nexus with the object of the Act and did not offend Art. 14. ORIGINAL JURISDICTION : Petition No. 303 of
1960. Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. C. K. Daphtary, Solicitor-Geneml of India, N. Sharma, S. C. Nath and R. Gopal<lkrishnan, for
the Petitioner. M. C. Setalvad, Attorney·Genernl!or India and Naunit Lal, for the Respondents. I 061. September 29. The Judi,'lilent of Sinha C .. J., S. K. Das and Rajagopala Ayyangar waa
delivered by S. K. DAS, ,J.-This writ potition by one Mannalal Ja.in was originally filed on October 17, 1960, and the ordor eompla.ined of was dated September 13, 1960. This was an order made by
the Deputy Commissioner, Kamrup, Ga.uha.ti, rejcc. ting an application made by the petitioner ~or t~c grant of a license for the year l!l60 for d~l.mg m rioe a.nd paddy under the relevant prov1s1olll! of
the Assam Fooclgraine (Licensing and Control) Order, 1960. This writ petition was put up for 3 S.C.R. hearing in this Court on February 2, 1961. The hearing was, however, adjourned sine die, because
it was stated before us that the period of licence for 1960 had already expired and a fresh applica- tion would have to be made for a license for 1961. A fresh application was accordingly made by the
petitioner on February 4, 1961. But before that date a fresh Assam Foodgrains (Licensing and Control) Order, 1961 was made by the Governor of Assam and the application made by the petitioner
had to be' dealt with under the new Order. No order having been made on this fresh application by the Deputy Commissioner, the petitioner moved this Court by means of a petition (C.M.P. No. 850 of
1961) asking for certain reliefs, one of which was that the respondents, namely, the licensing authori- ties, should be directed to consider the application of the petitioner and grant him a license. On
April 11, 1961 an order was made rejecting the application of the petitioner. This order which is impugned before us was in these terms. "H-.ving regard to the existing licenses in these areas (Mangaldai and Gauhati), and
the quantity of foedgrains available therein, any further license would be superfluous." When the petition was again put up for hearing on May 1, 1961 the petitioner asked for time to amend
his original petition which related to the order refusing to grant him a license for 1960. Thia amendment became necessary by reason of the subsequent order passed on April 11, 1961, quoted
earlier, by which the petitioner's application for a license for 1961 was rejectPd. This amendment wa~ allowed. Therefore, we have now to deal with the writ petition as amended by the petition dated
May 5, 1961 (C.M.P. No. 1140 of 1961). It is necessary now to state the relevant facts out of which the petition has arisen. The petitioner states that he is an Indian citizen carrying on a
business dealing in rice and paddy in the district of Mann•lal Jain v. Tiu Sl.te of Assam S.K.Das J. .\/mmolal .!r1i11 7 /u Staft 9f .4JJam ~.k.lJ,,6 J. SUPREME COGRT REPORTS [1962]
1\amrnp in the State of Assam. Jn I!l55 W<l.B enacted the Essential CommoditiPs Act, I 055 (Act JO of l!Jii5). In exflrcise of tho powers eonfcrrccl by s. ~ of the said Act, reacl with ;i notification by
which t.he said powers were dcl1,gatccl by the Central Government to tho Govcmrncnt of Assam, the latter Gornrnrncnt made nu Ord('r callccl the As11am Foodgrnins (Licensing and Cuntrnl) Order,
1958. The result of this was that no dealing in rice and paddy in wholesale quantities was per- missible unless the petitioner obtain!'d a license from the relevant licensing authority. The petitioner
states that he obtained such a license in l!J:i8. This license expired on Decrmht•r :;i, l 9:i8. The case of tho' petitioner is that in J\J5D also he carried on his business though there is some dispute as to
whether he obtained a license for that yi,ar. On K"'·embcr :?G, ID.'i!I, the petitioner received a letter from the office of the Doputy Din·ctor of Supply, Gnuhati, which said that his lice1rne woulcl not bo
renewed after December 31, W5D. This communica- tion, it is stated, was the result of it decision taken by the Government of Assam on t lw !l.dviee of a. body called the Food Advisory Council to gi,·c a.
right of monopoly procurement of paddy to a co- operative society in the district of Kamrup known as the Aasam Co· operative Apex ?i!ark,.ting Society Ltd. (re~ponclent Ku. 6 beforn us). In a lotter dated
No\'cmbor 13, ID5D, tho Director of Supply, Assam, indicated the policy to be followed to give <'lfoct to the dC"cision aforesaid in these terms : "The right of monopoly procurement in
respect of Kamrup clistrict including ~fangaldai Suh·division, Taxpur Sub.division, Cachar district, :Nowgong district including United ,\Jikir and )forth Caehar Hills and North Lakhimpur 8ub.dh·ision has been given to
the Co· operative Apex Marknting Society. The Society will procure paddy from the growers ….-.-,,, through vario11s service Cu.operative Societies ,prcad ovN the district or suh-diTision. They
f' 3 S.C.R. will procure all available surplus paddy and deliver to Supply Department the quantity required for the buffer stock for those areas. Any paddy procured by them which is uot
required by us may be delivered to the mills." A copy of the letter was forwarded to all licensing authorities. On January Li, 1960, the Assam Food- grains (Licensing and Control) Order, 1960, came
into force. This replaced the earlier Order of 195~. Clause 0 of the 1960 Order was in these terms: "5. Mailers to be taken into consideruti:on for granting a license.-In granting or refusing
a license under this Order, the licensing authority shall among other matters have regard to the following, namely:- ( a} the stock of foodgrains available in the locality for which the licen~e is required;
1 b) the number of persons who have applied for and/or boon granted licenses in respect of the foodgrains under thi~ Order in the locality ; ( c) the business ordinarily carried 011 by
the applicant; and (d) the past activities of the applicant as a licensee or business man/firm : Provided that the State Government may from time to time modify the conditions for
granting a license." On January 28, 1960 the petitioner made his applica- tion for a license for the year HJGO. This applica- tion was rejected by an order dated February 17, 1960. The reason given for the rojection was in
these terms: "You are hereby informed that as the Co-operative Apex Marketing Society bas been given the right of monopoly purchase in the Kamrup district this year, your case cannot
be considered for issue of the license." Mannalal Jain v. The State of ABsam S;K;Das J. Ji!RI – JI tu11ttJi., l , I ain v. Tht Statt •f AJ.Hfm S.K. /iatt J. !J42 (Hl62) This reaaoa was obviously baaed on the decision as
to monopoly procurement which the Government of Assam had adopted. Against this order the petitioner moved the High Court of Asaam by means of a writ petition under Art. 226 of the Constitution.
The High Court allowed the petition mainly on the ground that the application of the petitioner for a. license for tho year 1960 was not coDBi<lorecl on merits by the liceneilljl: authority in accordance with tho pro-
visious of ol. 5 of the Assam Foodgrains (Licensing and Control) Order, 1960. The High Court did not go into the larger question whether the State could or conld not create a monopoly in the matter of procure-
ment of paddy under the said provisions by means of executive instructions issued to the licensing authoritits. It, however, qu&ahed tho order dat-0d February 17, 1960 and iBSued a writ of mandamus
directing the licensing authority to consider the application of the petitioner on merits and in accordance with the provisions of the aforesaid Control Order. Till June 7, l!J60 no order was
passcl1 by tho licensing authority, and on that date the petitioner rnado two applications to tho High Court, one for directing tho licensing authority to gmn t him a liceru;e for l!J60 and the other for
taking action for contempt of court. A notice of thoso applications, it is stated, was served on tho rcspondenUI. On June 8, 1960 the licensing auth- ority made another order refusing to grant a licenso
to the petitioner. '.Jlhis order stated that "as the Assam Co-operative Apex Marketing Society Ltd., had already been grant-0d a license to deal in rice and paddy, with its branches spread all over the
district, it was considered unncc•lSSary to grant further dealing licenses to individual dealers for the same area". On June !J, l!J60 the applications earlier macie by the petitioner to the High Court on –..-~ Jun<' 7, 1960 were withdrawn and a fresh applica-
tion was made on Juno 15, 1960, which was directed against tho order dated Jm1e 8, 1960. On 3 8.C.R. August lO, 1960 the High Court again set aside the order and directed the licensing authority to act in-
dependently of instructions received from the Govern- ment and to apply its mind to the merits of the .application and decide it in accordance with the relevant provisions of the Assam Foodgrains
(Licensing and Control) Order, 1960. Again, no orders were made by the licensing authority till September 8, 1960 in accordance with the directions of the High Court, and the petitioner made two
applications on that date: one for enforcing the direction of the High Court, and the other for initiating proceedings in contempt. These applica- tions were admitted and it is stated that notices
were served on the respondents, including the licensing authority, on that very date. On Septem· ber 13, 1960 tl1e licensing authority made another order, again rejecting the application of the
petitioner. This order stated inter alia: "For the areas for which the applications have been made the Assam Co-operative Apex Marketing Society Ltd., has earlier applied for and has been granted !iceme. This is a
relevant consideration under Clause 5 (b) of the AssamFoodgrains (Licensing and Control) Order, 1960. The stock of foodgrains avail- able in the area can easily be procured by the
party already given license. Being a cfl- operative, it has better facility in this respect. As such, I do not find it necessary to grant license to the applicant. The petition is, therefore, rejected".
This time instead of going to the High Court of Assam, the petitioner came here and filed his wl'it petitic·n on October 17, 1960 (Writ Petition No. 303 of 1960). Thereafter, certain proceedings
took place in this Court to which we have earlier referred in the first paragraph of this judgment. The amended writ petition as it now stands is directed against the order of the licensing authority
dated April II, 1961, by which it rejected tho Msnnirlal J ~in \'l Tiu 3tirte 6/ Assam S. K' Dar J. 19~/ A-laf'llfJJksJ Jain v. Thi Stale of AsJam S .. 1..:. Dt1s J. !l44 SUPRE~m COURT REPORTS
[l!JG!? aµplieatiou of the petitioner for a lioense for l!l61. The provisions of the Assam Foodgraine (Licensing and Control) Order, 1000, Bre no lo.nger relevant, because a fresh Order called the Asoam Foodgrains
(Licen>ing and Control) Order, l!J6l, was made by the Gon~rnor of Assam. We shall hereinafter call this the Control Order, 1961. It is necessarv to :·ead here cl. 5 of the Control Order, 1961.
"5. ~falters to be token into consideration jUJ" granting n license.-Iu granting or refusing a license under this Order, the licensing authority shall, among other matters, have regard to tho following, namely:-
(a) the stock of foodgrailrn available in the locality for which tho license is required; (bl the number of per~ons who have applied for and those who have been granted li"ensfs in respect of the foougrains under this
Order in the lorality; (c) the business ordinarily carried on by the applicant; (d) the past activities of the applicant as a licensee or business man/firm; and ( c) whether the applicant is
a CO· operative society." It should be noticed that the pr01·iso to old el. 5 was omitted and a. nc'" snb·el. ( e) was added. This snb·cla.use enables the licensing authority, in granting or refusing a license, to have regard to the
<'onsidcration whether the applicant is a co.opera- tive society. To complete the statement of facts, it ru11y ]><~rhapB be obsc1:ved that on Nove~bcr ~0, l!HiO, tho High Court reJected the applic:i.t10n for
procreding against the opposite parties by way of contempt, mainly on the ground that the ?rder made on Scptt•mbcr rn, J!)(iO, was not before 1t. On behalf of the petitioner the order dated
April 11, l!J(il, has been impugned on tlvo main …. 3 S.C.R. SUPREME COURT HEPORTS grounds. The first ground of attack is tl1at su1'-cl.(e) of cl. 5 of the Control Order, 1961 is ultra vires,
because it goes beyond the powers granted . to the State Government under s. 3 read with s. 5 of the Essential Commodities Act, 1955. The second ground of attack is that even if sub-cl. (e) of cl. 5 of
tho Control Order, 1961, is intra vires being within the powers granted to the State Government, it merely allows the licensing authority to take into consideration, among other relevant matters, the
circumstance that the applicant for a licence is a co-operative society; it docs not say that a mono- poly right of procurement should be given in favour of a co-operative society by excluding all
others; therefore, it was not open to the licensing authority to proceed on the footing as if that sub- clause had created a right of monopoly in favour of co-operatives. Tho argument is that in the
present case the licensing authority instead of applying its mind to the provisions of cl. 5 of the Control Order, 1961, went by the instructions issued by the State Government to grant a right of
monopoly to co-operative societies and based its order on such instructions, in spite of directions to tho contrary given by the High Court on earlier applications made by the petitioner.
In other words, it is contended t.hat the impugned order was a mere colourable exercise of P'.•Wer in tho si·nse that instead of exercising tho powers in accordance with the provisions of law by which the licensing
authority had to be guided, it acted in accordance with the instructions of the State Government and granted a monopoly in favour of co-operative socie- ties, such monopoly not being contemplated by the
provisions of cl. 5 of tho Control Order, 1961; there- fore, the impugned order was bad being without any legal authority or jurisdiction, and as it took away the right of the petitioner to carry on his trade,
and furthermore made a discrimination against him for the purpose of granting a monopoly to respondent No. 6 not contempla.ted by law, it violated the Manna/al Jain v. TM Stille of AsJ·am
S.lf.·Das J. JI an114'4J J aiti v. Tlw StaU of As.sam S. K. Das]. !HG f I 962] petitiouer'd rights unl·Jr Arts. 14 and llJ of the Constitution. He is accordingly cntitlod to come to
this Court under Art. 32 of the Constitution to havo the order qua.shed. The petitioner has also elaimed that for the same reasons, the grant of a licenso in favour of respondent Xo. ti should also be quashed.
On behalf of the respondents, the' State of Assam, its officers, and the Assam Co-operative Apex Marketing Society Ltd. (respondent No. 6), it has been urged that neither of the aforesaid t'vo grounds
of attack is valid. On their behalf tho argument is that sub-e!.(e) of cl. 5 of tho Control Order, 1961, is within the authority and power granted to the ::>ta.to Government undor s. :~read withs. 5 of the Essential
Commodities Act, 1955. Secondly, it is contended that 110 monopoly has boen granted to the A881lm Co-operative Apex .Marketing ::locicty Ltd., and the order of the licensing authority datod April 11, 19Gl
is baaed on the considerations referred to in sub.els. (a) ancl (b) of cl. 5 of the Control Order, 1961, a.nd cannot be assailed on a petition under Art. 32 of the Constitution. We proceed now to a consideration of the
grounds of attack and the replies thereto. As to the first ground of attack it must be made clear at the very outset that the vires of the Essential Commodi- ties Act, i!l55 have not been challenged before us.
What has been contended before us is that s.3 of the Act gives certain powers to the Central Government, which powers the Central Govcrnm('lnt has delegated the State Government of Assam.
Theso powers it iR contended, do not authorise the insertion of sub·cl. (c) of cl. 5 of the Control Order, 1961; in other wor<ls the argument is that whether the applicant for a licence is a co-operative Society or
not has no relova1rnc \Yhatsoever to the objects fur which s. 3 grimts tho powers to the Centrnl Govern. mont or its delegate to make certain Orders. Sub.section ( 1) of s. 3 is relevant to this argument
and reads: 3 S.C.R. SUPREMECOURT REPORTS · "3 (l} If the Central Government is of opinion .that it is necessary or expedient so to do for maintaining or increasing supplies of 1my essential commodity or for securing their
equitable distribution and availability at fair prices, it may by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce
therein." Sub-section (2) of s. 3 which we need not read enumerates the various categories of Orders which can be made in exercise of the powers conferred by 8ub-s.(l), but without prejudice to the generality
of those powers. Now, the argument before us 1s that the powers under s. 3 can be exercised when the Central Government or its delegate is of opinion that it is necessary or expedient to exercise the
powers to achieve two objects: (a) for maintaining or increasing supplies of any essential commodity, or (b) for securing their equitable distribution and availability at fair prices. It is contended that the
circumstance whether the applicant for a licence is a co·operative society or not has no connection whatsover with the aforesaid two objects and therefore, sub-cl. (e} of cl.5 of the Control Order, 1961
is not within the powers granted by s. 3 of the Act. We cannot accept this a.grument in the very broad terms in which it has been stated. Weare satisfied that cl. 5 of the Control Order, 1961
does not provide for a monopoly in favour of co- operative societieA. The clause enumerates five matters and states that the licensing authority shall have regard to those matters in granting or
refusing a license. The fore matters enumerated in the C'lause are not exhaustive of the matters which the licensing authority may consider; because the clause says that the matters enumerated
therein a.re five "among other matters" which the licensing a'.lthority may consider. Obviously enough it is open to the licensing authority to Af anrul/,,J Jain v. The Stale of A.seam
S. K. Das J. l~S-1 .\/ •M•i•I ]On v. Tiu Statt •/ A•,•m S. K. D<s J. [1962) consid~r all matters relevant to the grant or refusal of a license and the five matters enumerated in the clause merely highlight some of those matters.
All that can be said is that sub-cl. (e) enables the licensing authority to prefer a co-operative sociotv in certain ciroumstanccs in the matter of grantin;., a li;onsc; in other words, there mav be cases o~
localitiea where the considerations· set out in sub·cl. (e) may override other considerations in the matter of granting a license. We do not think that su h- cl. ( t>) has any more far reaching effect. Indeed
the learned Attorney-G~meral appearing for the respondents conceded that sub-cl. (e) of cl. 5 did not have the effect of creating a monopoly in favour of co-operative societies. Proceeding, therefore, on the footing that
sub-cl. (e) of cl. 5 does not provide for the crea- tion of a monopoly, can it be said that it is out- side the powers conferred on the Stnte Govern- ment by s. 3 of the Essential
Commodities Act, 1 \l55 ? It is not disputed before us that sub-ch. (a) to (d) fall within the powers conferred by s. 3. lllattcra such as the stock of foodgrains available in the locality for which the license is
require<!, the numb<>r of persons who have applied for and those who have been granted licem!ls in the loc1'1ity, the business ordinarily carried on by the applicant, and the past activities of the appli-
cant as a licensee or busin08sman, aro undoubtedly matters whioh have relation to the two objoctll mentioned in a. 3. Can it be said that tho fifth matter mentione<I in sub-cl. (e) viz., whether the
applicant is & co·operative society is completely unrelatrd to those two objects? We aro m1ablo to say that it is. In tho counter-affidavit filed on behalf of the respondents it has beon stated that
co-opernti..-o 1ocieties have better facilities for procuring foodgraina and are in a position to ensure scheduled prioes to the farmers who grow paddy. It has beon further statod that amongst the co-
operative socictioe are primary societies which 3 S.C.R. SUPREllIE COURT -REPORTS consist of the growers of paddy; there are .also .co-operative societies called supply co-operatives,
which are in a position to eliminate middle-man's profits. · In para- 4 it was stated that the National Development Council decided that the 'State should take over wholesale trade in foodgrains with a
view to maintaining ·price leveh which are. fair to the producer and the consumer and reduce to the minimum · the disparity between the ·prices received by the farmer ·and the prices paid. by. _the
consumer throughout the year. It was also decided that an adequate number -of primary marketing societies should be set up and linked with -village co-operatives which should serve as agencies for
collection P.nd sale of foodgrains at assured prices at the vii' 5e level. The affidavit the_n stated : In view of the decision of :the National De~ ,lopment Council, the -_ Go_vernment _of
Assam in consultation with their State Food Advisory Council decided that in making procurement of rice and paddy in the State, preference should be given to the co-opera- tive societies wherevei; they have resources
and facilities." 'We are of the view that by reason of. the. position which co-operative societies may occupy in _the village economy of a. particular area, it cannot be laid down as a general proposition that sub-cl.( e)
of cl. 5 of of the Control Order, 1!!61, is- unrcla- -ted to the objects mentioned ins. 3 of the Essen- tial Commodities Act, 1955. There may be places or areas where co-operative societies a.re in· a better
position for maintaining or increasing supplies of rice and paddy and even for securing their equit- -able distribution and availability at fair prices. We must, therefore, repel the very broadly stated
contention of the learned counsel for the petitioner that sub-cl. (e) of el. 5 of the Control Order,- 1961, can have no relation whatsoever to the two objects mentioned- in s. 3 of the Essential Commodities
Act,1955. On behalf oC the petiticiner reliance }Janna/al Jafo ·- .-,.v; -.- '·' Th~ State of .4.fsam . .. [1962) was placed on the decision in -Ramanlal Nagard~s v. 1l!. S. Palnitkar (1) •• That· was a
case m A-lil1Ulal11l Jain v. which the validity of State action in entrus- The State •f Amm _ ting wholesale distribution of sugar which is s.-K-, v-., j. an essential commodity under the Essential Com-
modities Act, 195.5, to Co-operative Societies only and excluding other dealers holding similar licenses like the co-operative societies from -such distribution, was challenged and arose for consi-
deration. It was held that a State -could .make a classification for the purpose of achieving parti· . cular legislative objects but the classification must -satisfy two conditions : (1) it· must be founded on
intelligible differentia, and (2) the differentia – must have a rational relation to the objects sought to be achieved. The question was considered from the -point of view of Art. 14 of the Constitution
and it was held that the action of the State Govern- . ment in entrusting wholesale distribution of sugar to co-operative societies to the exclusion of other licence-holders amounted ·to a
discrimination which violated the right guaranteed under Art. 14. The principles underlying Art. 14 of the Constitu- tion are now well-settled and have been enunciated and explained in a number of decisions of this
Court and we consider it unnecessary to refer to those principles in detail. In the case under our consideration no discrimination has been made -between one class of license-holders and another
class of license-holders as in the case of Ramanlal Nagardas v. M. S. Palnitkar (1). What has happened in the present ·case is that licenses have been ·granted only to co-operative societies and a license
has been denied to the petitioner, the lict-nsing authority proceeding on the footing that a monopo- . ly must be created in – favour of CO· operative societies. A discrimination has indeed . taken –
place as against the petitioner, a discrimination · which is not justified by the provisions of cl. – 5 of the Control Order, 1961. In dealing with the application of the petitioner tho licen&ing authority
– – (I) A. I. R. 1961 Guj. 38. 3 S.C.R. SUPREME.COURT REBORTS has made. & discriminationwhich. is- not justified· by cl. t;, That would take us to the second argu• ment of the learned counsel for the petitioner,
but on his first argument the decision in: Ramain- lal Nagardas v. M. S. Palnitkar (1) is of no assis' tance. Sub-clause ( e) of cl. 5, we have already stated, enables the licensing authority to give
preference to a co-operative society in cel'tain crioumstances; but it does not create a monopolyi · in favour of co-operative societies. The prefe- rence given has a reasonable relation to the objects
of the legislation set out ins. 3 of the Act; therCL fore, sub-cl. (e) of cl. 5 of the Control Order, 1961, cannot be held to be bad on the ground of class legislation, but the passing of an order. under the
sub-clause for a purposs not contemplated by it will amount to discrimination and denial ofthe guarantee of equal protection of the law. This brings us to the second argument urged
on behalf of the petitioner and here we think that the learned counsel for the petitioner is on much surer ground. It was open to the licensing. autho- rity to give preference to co-operative societies, if
it was of the opinion that granting a license to a co.operative society in a particular locaJity would facilitate the objects of s. 3 of the Act. This is not what the licensing authority did. He repeate-
dly refused a license to the p3titioner, for the only reason and purpose of granting a monopoly to co-operative societies. In other words, the dis- crimination .that has been made by the licensing
authority is really in the administration of the law. It has been administered in a discrimina- tory manner and for the purpose of achieving an ulterior· object, namely, the creation of a monopoly
in favour of co-operatives, an object which, clearly enough, is not within sub-cl. (e) of cl. 5 of the Control Orner, 1961. We have quoted- earlier the varrious orders which the licensing authority
had paesed. Those orders clearly show that the licensing authority refused a licence to the (I) A.I.R.. J!Hil Guj. 38. 19ff .1.11 Qflnralol Jaia v. Tht Stalt.of .. ,~.ssmn S. K, Das J,
i' }.! annaltd Jain v. TM Stal1 of .A.Jsam S.K. DasJ. 952 ' [H.102) petitioner not on ~ounds referred to in aub-cls.(a) and (b) of cl. 5 but – on the ground that the State Government had decided to introduce · a
right of monopoly procurement of paddy in favour of co-operative societies and therefore, no licenses should be granted – to individual dealers other _ than co.-operath'e societies. ·Judged against the
background of facts to which we,' have earlier referred :in this Judgment, the impugned order dated April II, l!J61 appears to us to have ·been based on the same ground, namely, the creation
of a monopoly in favour. of co-operatives, even though the order refers to existing licenses and the quantity of foodgrains available iii the lcicality. – In the course of the hearing before us, the case
was adjourned in order to give the parties an opportunity of filing necessary affidavits to 'show whether individual dealers other than co-opera- tfres have been completely excluded in the whole
of the State in tho matter of dealing in paddy. The affidavits show that private dealers have been completely excluded. In the affidavit filed on behalf of respondent No. I, it has been stated in
-para. 4: . "It is not denied that in the year 1961 licenses for the procurement of paddy have been issued to the co-operatives in all the paddy producing districts· in Assam." To · show
however that no – monopoly ha! been created in favour of a particular co-operative society. like respondent No. 6, it has been stated that a number of co-operative societies_ have been
or are being granted licenses for the procurement of paddy. In our view these statements in tho – affidavits filed on behalf of the respondents show only one and one object viz., creation of a mono-
poly in favour of co-operatives. To achieve that object the State Government has resorted to _ an indirect ; method. Instead of making an· Order authorising – such monopoly (if. the State was
.,._ 3 S.C.R. competent to make such an Order under the Essential Commodities Act, 1955, as to which we express no opinion), it has chosen to adopt the indirect method of issuing instructions to the licensing
authorities in all the districts to grant licenses to co-operatives only. The vice of the impugned order lies in the licensing authority accepting such ins· tructions mid passing an order in accordance there-
with. The duty of the licensing authority was to pass orders in accordance with cl. 5 of the Control Order, 1961. Instead of doing that, it passed an order in accordance with the instruotions given to it on
behalf of the State Government, instructions which appear to us to be not in consonance withsub-cl.(e) of cl. 5; because sub-cl. ( e) contemplates a prefe· rence to co-operative societies in certain circum·
stances, but not a monopoly in their favour. We accordingly hold that the impugned order is bad as violating the rights of the petitioner guaranteed under Arts. 14and19 of the Constitution.
We must, therefore, quash the order of the licensing authority dated April 11, 1961. We must also qua.sh the order by which the licensing authority granted a licence in favour of respondent No. 6.
The licensing authority must now consider the application of the petitioner for a license for the year 1961 on merits along with the applicatic•n of respondent No. 6 and such other applications as
may be still pending. In dealing with these appli- cations the licensing authority must have regard to the provisions of cl. 5 of the Control Order, 11:161, and such other provisions of law as have
a bearing on them, in the light of the observations made in this judgment. It would be the duty of the licensing authority to ignore all instructions which are not in consonance with the provisions
of law by which it is to be guided. As the year 1961 will come to an end within a few months, the applications should be dealt with as expeditiously al pO!lsiDie so that the right of· the petitioner may
Mannalal Jain v. Tiu St•fe of Assam S. K. flas 7. l!MI MMtUlalJ•in v Thi 8141; of ,foam S.K. DasJ. Stukar J. !)54, SUPREME COURl' REPORTS [19621 not be rcnd~red infrnctuous by reason of the
d~la.y made in di"osing of tho applications. Befor~ we part with this case wo · expreM our <loop conoom over tho manner in which the State· Governmen~ or its officers havo issued instruction!
in the ma.ttijr <if granting of licenses, instructions which clearfy enough are not in consona.noo with the provisions of law governing the grnnt of such licenHcs. We doubt the wisdom of issuing executive
instructions in matters which a.ro governed by provi- sions of law; on•n if it be consi<;lered necessnry to issue instructions in such n. matter, the instruc- tions cannc;it be so framed or utilised as to o,·er-
ri<lc tho Pi·.,visions of ll\w. Such a method will destroy the very basi~ of the rule of law and strike at tho Vl'ry root of orderly administration of Jaw. We have thought it necessary to refer to
this matter because we feel that the instructions which the State Government or its officer.a have issued in the matt"'r of gmnti.ng of licenses for tho procurement of paddy are not in consonance with
the provisions of ol. 5 of tho Control Otder 1961. In t•e result the petition is allowed with costi; and the necessary orders should no\v iasuo ru1 directed above. s.uUUR ,J.-The petitioner is a ci~izen of India
an<l carri~ on bu.~int1ss as dealer in rice and paddy in the Sta.te of Assam. Siner. 1958, dealing. in rice and paddy was controlled in that State by Orders made by tho State Government frniµ timo to th,ne
undor theEssential Commodities Act, 1955 by virtne of powers delegated to it by the Central Go"\'ern- mont under s. 5 of that Ac-. These Ordtirs here- after co.lleci LicPlll!ing Orders, provided qiat no
person. could engage in any business involving purchaso,.salo or storage for so.lo of any foi)dgte.ins, which inc,J.uded rice and paddy, in wholesale quanti~ ti68 exoegt under and in: &0eorda.nce with the terms
and conCiitiona of a licence illsued thereunder. Purahaae..o.r aal• in·wholeale quanti~iea waa defined :i i:.:>.c:. i .. SUPREME COURT'R!EP'OR'T~ '955 as purchase or sale of quautitics Axceeding ten
maunds in any one transaction. The pedtinner had obtained a license to deal in paddy for the .' 1958. It is not clear whether he hitd obtained a license to do so for 1959. With these years,
however, this case is not concerned. On January 28, 1960, the petitioner h11.d a pp lied under the Licensing Order then in force for a license to deal in paddy in Kamrup district of
Assam for the year 1960. His application was refused by an order made on February 17, 1960 on the ground that it could not be considered as.'[the Co-operative Apex Marketing Society had been given
the right of monopoly purchase in Kamrup district. The petitioner then moved the High Court of Assam under Art. 226 of the Constitution to quash this order. On April 27, 1960, the High Court delivered
judgment quashing the order on the ground that the authority concerned was bound to consider the petitioner's application for licence and had failed to do so. The High Court issued a writ of mandamus
directing that the petitioner's application be consi- dered on its merits. As the licensing authority did not consider the petitioner's application till June 7, l9GO, the latter on that date moved the
High Court. again for enforcement of the writ issued. On receipt ofihe notice this motion, tho licensing authority passed an order on June 8, 1960 again refusing to grant the petitioner the licence. This
order stated, "Your petition is considered. As the Assam Co·OJl>erative Marketing Society has already been granted a licence to deal in rice and paddy with branches spread all over this
district, it is considered unnecessary to grant further dealing licences to individual. dealers for the same aFea. Hence the petition is rejected." The petitioner thereupon' dropped his motion
to the H;gh Court of Assam of June 7, 1960 and !no"ted tlie High Court;' afresh tinder Axt,' 226 against the order of lJune 8, 1960 refusing him the licence .961 .td.anna/al Jtzirl
v. The State of Asscm- Sarkar J, 11161 Jl-1.Jjain v. Tiit Stak of AJJom Sarka:]. [1962] and the High Court on August 8, 1960, quashed it on the ground that the licensing authority had to
act in a quaE-judicial capacity and tl1at it had decided the case on the in8tructions of tho Stato Govern- ment without considering for itself the merits of the case in terms of the Licensing Order.
The autho- rity was again directed to decide the case in a quasi- juclicial capacity. The licensing authority not having taken up for decision the petitioner's caso for thcJ grant of
Jiccnco as directed by tho High Court, he moved the High Court on September 8, HJGO for appro- priate reliof1. On receipt of the notico of this motion the licensing authority passed an
order on September 13, 1960, again refusing to grant lieonoo tu the petit.ioncr and certain other private dealers. The order stated, "For the areas for which the applications have been ma.de the As sam Co-opora-
th-e Apex Marketing Socioty has carlior applied for and has been granted licence. This is a relevant consideration under cl. 5(b) of the Assam Foodgrains (Licensing and Control) Order, lOGO.
The stock of foodgra.ins available in the area can caHily be pro- cured by the party already given the licence. Being a Co-operative Society it has better facility in this respect. As such I do not find it necessary to grant
licence to those applicants. The petitions are htere- foro rejected". Thereupon tho High Court on :November 10, l!l60, made an order on tho peti- tioner's a.forosaid motion of September 8, 1960
discharging the rule as the order asked for had boon mad<l. It o bscr-red that the order of September 13, 1960 was not before it and it waa competent to say whether that order was in conso-
nance with its order of August 8, 1960. It also observed that it did not find sufficient reason to take any action against the licensing . authority for the dl·lay in the matter of the disposal of the
application for licence. Before proceeding furth<lr I would J.We tp point out that the Assam Foodgrains (Licensing ~nd 3 S.C.R. · !J57 Control) Order; 1960 being the Licensing Order by
which the petitioner's application for licence for 1960 was governed did not contain any· provision enabling any preference to be given to a co-opera- tive society in the matter of the grant of licence.
I now come to the present petition. _It was moved in this Court by the petitioner under Art. 32 of the Constitution challenging the validity of tho order of the Licensing authority dated September
13, 1960, and asking that the licence granted to the Assam Co-operative Apex .Marketing .Society be declared illegal and for an order directing the .. licensing authority to consider the applications for
licences according to the provisions of the Licensing Order. 1960. – Tho petition came up for hearing on February 2, 1961. By that date the year for which ·- the petitioner had asked for a licence had expired
and tho Licensing Order, 19GO had been replaced. by another Order of 1961. In the result the petition had become substantially infructuous. The petitioner, therefore, suggested to this Court that
he would make an application for a licence for the year 1961 and in the meantime the petition might stand adjourned. An order was thereupon made adjourning the petition sine die. Thereafter the petitioner on J!'ebruary 4, 1961,
made a fresh application for licence for dealing in paddy for the year 1961. An order was made by the licensing authority on this application on April l l, 1961, in tl1ese terms : "Having regard to the
existing licences in these areas (.M1mgaldai and GauhatiJ, and tho quantity of food grains avail- able therein any further licences would .. be . super· fluous." In the result the petitioner was refused
licence for the year 1961. Thereafter, the peti- tioner under orders obtained from this Court amended his petition and now seeks to challenge the order of April II, 1961. The respondents to
this petition arc the State of Assam and some of _ ite officers including the licensing authority – Al annalal Jain v. The Stele of Assam Sark11r J. llH Jl-..141 J•in v. Tit, S'41e of A,,.,.
Sarlwu ]. 958 ; SUPREME COURT'R'EPORTS [l!l62) concer~e<l, 'as a.!so the Assam Co-operative apex llfarketmg Soc1cty, hereafter called the Apex Society. As I have alroady sni<l, the application for
l1ccneo for 1961 was goYerned by the Licensing Or<ler, 1961. Tho <lisputo in this case mainly turns on cl. (e) of paraJraph 5 of this Order. That paragraph ia in these terms: «In granting or refusing a licenco under
this Order, the licensing authority shall, among other matters, have regard to the following, namely :- (a) the stock of foodgrai.ns avail- able in the locality for which tho liocnce
is required; (b) the number of persons who havo applied for and those who have beon granted licences in respect of the foodgrnins undor this Order in the loca- lity; (t•) tho buiiinoss ordinarily carried
on by tho applicant; (d) the past activities of the appli- eant as a licensee or bu.qincss man/firm; and ( e) whether the appliuant is a co- operative society." It is not in dispute that in the areas to which
the Licensing Order 1961, had been applied, licen- ce~ to deal in paddy had been given to various Co-operative Societies which were subsidiarios · of tho Apex Society and no licence had been given to
any private dealer. The respondents say that these grants were duly made under cl. (e) of para- graph 5 of tho Licensin~ Orde~, Hl_ul. It is ·this actiGn which forms tho mam grievance of the
petitioner. He puts his cont-ention on two grounds. F!rst, ~e says that cl. (c) of p9.~~~raph. 5 of •the L1censmg 9rder l!l~ l 1s ultra vire.~ M 1t has no ………….. 3 s:C.R. relation to the object of the Essential Commodities
Act under which it was made. Secondly, he says that .in any event the Order has been applied in a discriminatory manner and with a view to create a monopoly in favour of the Apex Society to deal
in paddy and the petitioner's fundamental rights under Arts. 19(l)(g) and 14 have thereby been violated. It does not seem to me that either of these two contentions is well founded.
I shall first consider whether paragraph 5(e) of the Order is ultra vires the Act. Now it is important to note that the validity of the Act is not challenged. It would follow that if the Order made under the Act
is not ultra vires, it would be perfectly valid. It is s. 3 of the Act which enables the Orders to be made. That section so far as relevant is in these terms: S. 3 (1).-If the Central Government is
of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability
at fair prices, it may, by order, provide for regulating or prohibiting the production, sup· ply and distribution thereof and trade and commerce therein. The object of the Act, therefore, is to main-
tain or increase the supplies of essential commodi- ties which include foodgrains and to secure their equitable distribution and availability at fair prices. Clause (e) of paragraph 5 of the Licensing Order,
1961 certainly allows a co-operative society to be preferred in the matter of ii grant of licence. The question then is, would the' object of the Act be achieved if the trade in paddy is given to co-oper-
ative societies ? I think it would. A co.operative society is one which has as its object the promotion of the economic interests of its members in accord- ance with co-operative principles : see s. 4 of the
11161 Mannalal Jain v. The Stau •f .i=m Sarlesr J, J~61 MtWt4/a/ Jain Tlit St4Jt of A t1am S•rl>or J. StJPREME COURT REPORTS [1062] Co-operative Societies Act, 1912. A society carries
on businOSB in aocordanco with co-operative prmc1- ples when it trades with its own members, tho profit motive not be:ing paramount in such busi- ness. When, therefore, a licenco to purohe.se paddy
is gfren to & co-operative society of growers, what happens is that tho seller sells to a body of which he is a member. The result is the virtual elimin- ation of tho middleman and a consequential
rcdu<>- tion in the price. Tho following observations from the judgment of this Court in iVaremlra ]( umar v. The Union of India(') are, to my mind, very apposite in the present context :
"That middleman's profitl! increase the price of goods which the consumer has to pay is axiomatic." (p. 389). "It has therefore been the endeaYour at least in modern time11 for those responsible for social control to keep
middlemen's activities to the minimum and to replaoe them largely by co.operative sale societies of producers and co-operative sale societies of the consumers." (p. 390). Therefore, I feel no doubt that if tho purchase
of paddy is left to growers co-operatives-and that is what cl. (e) of paragraph 5 aims at-rice, which ill husked paddy, can reasonably be expected to be made available to the consumers at a fair price.
That would servo the object of the Act and the clause c,annot, therefore, be said to be ultra viru the Act. Tlwn it is said that cl. (e) of paragraph 5 would result in creating a monopoly in favour of co-ope-
rative societies and that would be illegal and also outside tho object of the Aot. This cont<intion also seems to me to be ill founded. It seem8 to me that if parngra.ph 5 had cunt1•incd only cl. (e) dir(!cti:ng
preference being gi\·en to co-operative societies in tho matter of grant of licences – and that is tho basis on which the present contention is advanced- that would not have made ·it bad.
The question (11 li 960] 2 S. C.R. 375. 3 S.C.R. of creating a monopoly does not really arise in such a case. The Order may then allow one class only, namely, co-operative societies, to do the
business. That would, as I have already stated, advance the object of the Act. It would also how- ever amount to a prohibition of others doing the business. The only questjon then would be whet-
her such prohibition would be reasonable under Art. 19(6). That is how the matter appears to have been considered by this Court in two cases to which I will now refer. The first is the case of Narendra Kumar( 1)
earlier mentioned. There an order called the "Non-ferrous Metal Control Order, 1~58" had been issued under s. :3 of the Essential Commodities Act, as the Licensing Order now under consideration also was
Clause (4) of the order there considered provided that no person could acquire any non-ferrous metal except under a permit issued by the Controller in accordance with such principles as the Central
Government might from time to time specify. Subse- quently, the Central Government enunciated certain principles for the grant of these permits in a certain communication to the Chief Industrial
Adviser. Under these principles, no permit could be issued to a dealer but it could only be issued to certain manufacturers. The result was that the dealer's trade was totally prohibited and only
certain manufacturers were eligible for permits to carry on the trade of selling non-ferrous metals. Certain dealers moved this Court under Art. a2 for a declaration that cl. (4) rea.d with the principles
formulated by the Government was bad as offending Art. 19( I )(f) and (g). rhis Court held that (p. 387): "It is reasonable to think that the makers of the Constitution considered the
word "restriction" to be sufficiently wide to save laws 'inconsistent' with Art. 19(1), or 'taking away the rights' conferred by the (1) [1960] 2 S. C, R. 375, 1~61 MannalalJain The State of As.ram
Sarkar J, I~•l N(11fnal•l J•in v, Tht Stall of .{H•m Barker]. [!1962] Article, provided this incm1sistcncy or taking away was reasonable in the interest.s of tho different matters mentioned in the clause.
There can be no <l.oubt therefore that they intended the word 'restriction' to include cases of 'prohibition' also. The contention that a law prohibiting the exercise of a funda- mental right is in no case saved, cannot thoro-
foro bo accepted." Haviug considered the facts of tho case, the Court et•me to the conclllsion that cl. ( :~) of the Order, tho legality of which aloo had been challenged, and cl. (4) were valid provisions. It observed that,
(p. 390): "It must therefore be held that cl. 3 of the Order even though it results in the eli- minination of the dealer from the trade. ia a reasonable restriction in the interests of the
gerniral public. Clause 4 read with the priliaiplcs specified must also ho hold for the same reason to oo a reasonable restric- tion." I ought here to point out that the principles
enunciated by tho Government worn held to be of no effect 111 thoy had not been issued in complianoo with sub-BS. (5) and (6) of s. ~of the Essential Commodities Act and on that basis petition w&s
allowed and a writ was issued restraining tho Union from giving effect to cl. ·i of the order so long as the principlos governing the iBl!uc of pormits were not duly epocified. This however does not affect
the force of the observations that I have earlier read from tho judgment in tho case. It seems to me that these observations fullv qpply to tho present case. '!'he order read with
t'hc policy statement though it rosulted in a complete prohibition in trading by dealer~ and in the creation of what· the· •petitioner would oall a monopoly in favour of certain manufacturers was
held to be good as a reasonable rostriCJtion on tho 3 s.c.R. dealer's right· to trade under Art. 19(6) and the wriil was issued only because the formalities re- quired for specifying the policy statement had not
been complied with. There is no defect in the issue of the Licensing Order, 1961, with which the present case is concerned. Therefore, the only question would be whether such a prohibition of
the trade of tho dealers like the petitioner, if any, by the Licensing Order, 1961 would be reasonable in the circumstances of this case. Tho other case to which I wish to refer is
Glass Ohatons I inporters d: User's Association v. The Union of India (1 ) decided by this Court on April 10, 1961. That case arose out of a petition under Art. 32 by certain importers of glass chatons.
There, the Central Government had issued an order under the Import and Export (Control) Act, 1947, called the Imports (Control) Order, 1955, prohibit- ing the import of glass chatons except under a
licence. Paragraph 6 of the Order laid down a number of grounds on which the Central Govern- ment or the Chief Controller of Imports and ilxpeTts might refuse to grant a licenoe or direct
any other licensin~ authority not to grant a licence. The ground mentioned in cl. (h) of this paragraph was "if the licensing authority decide to canalwe imports and the distribution thereof through special
or specialised agencies or channels." It appears that since 1958, licences had been granted to the Sta.te Trading Corporation. No applications for licences ha.d been made by the . petitioners or any
other trader at any time since 1957. It was however contended tha.t so long as paragraph 6(h) of the Order remained, it was useless for the private traders to apply for licences. The argu-
i.:wnt advanced on behalf of the petitioners was that para.graph 6(h) was void being in contravention of Art. 19(l)(f) and (g). In regard to this argument thia Court observed: (I) (W. P. 65of1959, unrepoTted).
Mannalal Jain v. The Stat_t of Assam Sarkar J. 1~1 Jlan1crlal Jain v. TArt Sielt of A.uam Sarkor ]. SUPM.ME OOURT R:ti:PORTS [ 1962) "Iii is obvious that if a decision has been made that imports shall be by particular
agenciee or channels the granting of licence to an1 applicant outside the agency or channel would frustrate tho implementation of that deci~ion. If therefore a canalization of imports is in tho interests of the general
public the refusal of imports licences to applicants outside the agencies or channels docided upon must nooessarily be held also in tho interests of tho genera.I public. Tho rPal question theroforo is : Is the canalization
through special or specialized agencies or channels in the interests of the general public." The Court held that it was unable to accept the argument that a decision that imports shall be
canalised is per se not a reasonable restriction on the right to trade. On the facts of the case, the Court took the view that a decision to canaliae imports of glass chatons was in the interest of tho
general public. In this case, it had been contended that the Government was creating a monopoly in favour of tltc State Trading Corporation. The Court held tilat the period of permits granted to
the State Trading Corporation having alroady expired, the (jUestion did not really arise. But, ns would have been noticed earlier, tho Court really dealt with the same contention in deciding
the validity of para.graph G(h) of the Order. This decision londt eqm~lly strong support to the view that preferl'nco directed to be given by cl. ( e) of paragraph 5 of the J,iconsing Order with which we
are concerned to co·operntive societies would not necessarily render it invalid. I feel no doubt on the facts. of the prcsellt case that a preference to co-operative sooietieB. e1'Ml.
if th'e.t resufted in the deniers being prevented altogothcr from dealing in paddy, would ~ ' reasonable rstriction on the Ia.tter's right of tra.dc. Asaam is a deficit State in foodgrains. It ii the
, .. '1'.., 3S.C.R. duty of the State Government to see that the people living within it~ boundaries are supplied with adequate foodgrains and that at a reasonable price. If paddy is procured for the use of the consumers
in the State through a co-operative society, there is good reason, as already stated, to think that rice at a reasonable price would be available to the piiople of Assam. I will later in detail discuss the
structure and the activities of the co-operative societies to whom licences had been granted. What I will have to say there will amply establish that it was a reasonable step to have taken to put the
trade in charge solely of the co-operative societies. I turn now to the petitioner's second conten- tion, namely, that cl.(e) of paragraph 5 has been worked in a discriminatory manner so as to create
a monopoly in favour of the Apex Society. The first thing that I wish to observe is that licences have not been given for the year 1961 to the Apex Society but they have been given to a large number
of primary co-operative societies of growers. I find it difficult, in any case, to appreciate how this can be sa.id to create a monopoly. It may amount to a prohibition of trade by some persons. That
however is a different matter with which I have already dealt. I may state here that it appears that in 1960 the licences had been issued to the Apex Society, but that is not the situation now.
Whether what was done in 1960 was strictly legal or not is not a question that now arises, f:>r we are no longer concerned with the licences for 1960. Before proceeding further, I think it right to
say a few things about the co-operative societies with whioh we are concerned. About 1957, the Assam Government sponsored the formation of the Apex Society. I would like to remind here that
it is one of the directive principles of the Constitution that co-operative societies should be emiottraged. Now, the structure of the Apex Society ii like a pyr&mid~ It appears to have three
tiers. On the top is the Apex Society. Under it M annal al Jain v. The State ef Assam SarkarJ. lHI M.,…1,/Jrn v. n. S1w of .-4H.-n Stnkt11 .T. SUPREME COUR'.r REPORTS [1962) come va.!'i.ous
primary marketing co-op&a.tivo societies. At the bottom rung a.re a. large number of primary co-operativo secvico societies. Tho membership of tho markoting. societies co11Bists mostly of cultivators anq service sociuties, and of
the servico societies, m9stly of cultivators. 'The function of the Apex Society appears to be to co- ordinate the working of tho subsidiary socioties and to obtain moneys from theCo-operativo A pox Bank
an<l thereo11t mako advances to the cultivators through the subsidiary societies, to help them in thoir cultivation. The sorvice societies procure from the growers tho paddy grown by them which
they can spa.re and realiso tho moneys advanced to them out of tho price of the paddy purchased. The money rAaliBed is duly passed on to the Apex Society. The paddy collected is sold by the service
societies to the marketing soci!lties. The ma.rketing societies in tlicir turn delii-or part of the paddy to· the Government for creating a buffer atook and the. rem&<ining qva.ntity to mill11 for milling inoo rice, irr
both cases · &<Joording to the direction~ of the Government. Tho benefits dorivod from the whole scheme are obviously very large. The middlem~n are oliminM!ld. Tho grow61'1 being themselves
members of the 11ocietie11, participa.te in their proftts 'vha.tever they are. This helpe to keep down the price becam1e e. sorvico •ociety in p888ing on the pa.ddy to the marketing society charges
v~ry little by way of profit and thnt profit is shared by the growors who are its mombera. This cn1tblee the growers to sell at a comparativoly lower priee. The growers ha.v, further the adva.Dta.ge of loans. from
the Apex Society to holp them in the \vork of ouitivation; -'h!llle loans can bo easily advanocd a.nd 011 liberal terms.boca.uso their repayment is aec.nrod by the prn<>e118 of purchase of the produce through
the sPrvice eocietios. It would be roMona.ble to think that "1is would encourage cultivation a,nd ro1ult in l~er quanti.ties of foodgraina being produced. ~ would also help to aehiovG tbo
__ .., _ _…__. a s.c.R. SUPREME OOURT REPORTS 9f)7 object of the Act. It may further be pointed out that each of these societies is a body corporate: .see s.18 of the Co-operative Societies Act, 1912.
The societies form a net work over the entire surplus grain producing area of Assam, each working in its own area. A vast number of growers of foodgrains are the members of the primary marketing and
service societies. It is to these societies that the licences had been issued of which a grievancP is being made by the petitioner. It appears that after the Apex and the sub- sidiary societies had been formed, the State Govern-
ment with the concurrence of the Central Govern- ment decided on a policy of procuring paddy in certain specified areas only through these societies. The State Government thereupon issued instructions
to certain officers at the ·end of 1959 that procure- ment of paddy for the Kharif year 1959-60 would be made throu~h the co-operative societies. It may be that it was for this reason that the licensing
authority had stated in its order of February 17, 1930, earlier mentioned, that the petitioner's applica. tion for a licence could not he considered. I have now to remind that the Licensing Order, 1960 did
not contain any provision enabling preference being given to a co-operative society in the grant of a licence. This case however is not concerned any more with regard to a licence for the year 1960 or
the validity of any order of the licensing authority refusing to grant the petitioner any licence for that year. Returning to the contention that the power under paragraph 5 (e) of the Licensing Order had
been exercised in a discriminatory manner, I wish first to observe that under the Order which I have already held to be good, the authority concerned in granting the licences was entitled to prefer a
co-operative society, and this is what it has done. Though the result may have been to ·prevent the petitioner from carrying on the trade of purchasing and selling paddy, that in my view is, in the
M annatal Jain v. 'The State ·of Assam Sark 1r J. 1!>61 Mannoi11J Jain v. T~ S1ctt of A_15111n Surkar .]. [1962) circumstances of this case, a reasonablo restriction on hiR right to tra.rle for that was necessary to secure
for the people of Assam supply of foodgrains at n reasonable price anrl in adequate quantities. f ha\•e Very grave doubtR if the licensing authr- l'ity waR intended to act in a quasi-judicial capacity
in the matter of granting licences. It haR to be romemhcrcd that the question before it was not so much of tho comp,•ting right8 of various applicants or of :my lis between an :i.pplicant :ind the State.
The duty of the lic,•nsing authority was to ad\·ance the object of t.hc Act in terms of the Lict>nsing Order. Its main consi1foration has to be to f!1•e that tho liC<·nc<>B granted h~· it helped to mako focdgrains
available at a fair price to the people of AaR!'ID. Tho Act ga1·e tho po,,..crs for that purpost>. ft ii because this pmpose is l<'gitimato that tlH' reRultant prohibi- tion of trading by pri,·atc dealers is also legitimate.
I belicrn that tlw two caaes I have carlior mentioned proceeded on the basis that the licensing authority was not a quasi-judicial officer. It is not necessl\fy for me however to pronounce finally on this ques-
tion. It wa.q contcnclecl that the licensing authoritv in granting the licence to tho co-operative societ.}, had only carried out the directions of the Govern- ment ancl had not actor! independently.
I find no basis fur this contention apart from tho bald allrga- tion of the petitioners which is dcni<'d by the rcs- pond•·nt. No directions by tho Assam Governmt•nt for the year 19t31 have been procl11cecl. The instrn0-
tions to which I have oRrlicr refcrrecl r<•quiring thP licence to be given to the co-operative societies were confined to tho yel\r l!l5!l-GO. That had no force in regard to the year l!l61 with which we arc
concerned. Those instructions cannot be taken as opcmting for all time to com" for then t.he licensing authority's order granting licences to a co-opcrativt· society in future years will always ha\•e to ho held
to have boen made under these inRtruetions. I am unable to take such a view of tho matter. As 3 S.C.R. already stated, the High Court had by its Order of' August LO, 1960 asked the licensing authority to
proceed in a quasi-judicial manner. There is no" reason to think that the licensing authority had not observed this direction of the High Court. It also seems to me reasonable to think that
the Assam Government inserted cl. (e) in paragrarih 5 of the Licensing Order, 1961 in view of the judg- · ments of the High Court of Assam to which I have earlier referred. The Assam Government obviously
intended thA.t the licensing authority wonld in view of cl. (e) give preference to the co-operative societies. Furthermore, s. 4 of the Act provides that an order made under s. 3 conferring powers on any officer or
authority may contain directions to him as to the exercise of such powers. In my view, for the reasons earlier stated, a direction in the Licensing Order to give preference to co-operative societies
would not be bad. It seems to me that cl. (e) of paragraph 5 of the Licensing Order, 1961 really amounts to such a direction. It was not necessary after the Licensing Order, 1961 for the Government
of Assii.m therefore to give any other direction to the licensing authority. I do not think any question of violation of' Art. 14 can be seriously pressed. If the duty of the licensing authority was quasi-judicial in its nature,
then it is difficult to appreciate how it can be said that it~ decision would offend Art. 14. In anv case, it seems to me quite clear that the co-operative socie- ties form a class by themselves and a provision
giving preference to such a class, would be a good provision because the object of the Act would be better served thereby for the reasons earlier mentioned; such provision would have a clear
next1s with the object of the Act and therefore satisfy the test of Art. 14. Looking at the matter from any point of view it seems to me that the Order of the licensing authority giving preference to the co-operative
19<1 Jlannaltil Jain v. Thi State of Assam Sark4r :. 1'61 A-fann.Jal .J cin v. Tht Stott nf Assam Smltor .!. M1ulhollcar ]. IIU October 3. 9i0 SUPREME COl"'RT REPORTS [1962) ~ocieties is not open to any objection.
In my vi°'" 0that was a 1air Order to luwo been made in the circumstances of thi11 case. I would for these roasons dismiss this pcti- ti on. MuDHOI.KAH, .J.-I agree with the judgment
<loliv<'red by Sarkar, J. BY CovRT-ln accordance with the opinion of thP- majority thi8 Writ Petition is allowed with costs. Petition allowed. STATE OF SAURASHTRA v. JA:llADAR i\fOHA~IAD ABDULLA AND ORS.
(B. P. SINHA, c. J., s. K. DAS, A. K. SAHKAR, N. RAJAGOPALA AYYA~GAR and J. R. l\Iun110LKAH, JJ.) Art of Sf(Jte-Junag,zdh State—-When integrated into lndia- l'olitical Queation-RPjerence to Government for opinion-Grant& by :Ya.,<W-Re.mmplion hy Adinini•tra/,or-lf en bt challeng•d in Municipal courts Government of India Act J9,J6 (26 Geo v. Ch .. 2;, "· 5, Ii, 2!19(!).
The Nawab ofjunagadh State made gt ants of properties in favC>ur of the respondents before I 9l7. After India attained independence the Nawab fled the country. At the request of the Nawab's Council the Government of India took over the administration of the State and on :\ovember 9, 1947 1 the Rt'gional Commissioner assumed charge of the administration on behalf of the Government of India. The Regional Commis- sionc1· appointed an Admini>trator of Junagadh State.
In December 1948, the elected representatives of Junagadh and certain other neighbouring States recommended to the Govern· ment of India and to the United State that of Saurashtra that the States be integrated. Thereafter, the administration of .Juna~adh State was integrated with the United State of
Saurashtra on January 20, 1949. On different dates between·……- November 9. 1947, and January 20, 1949, the Administrator passrd ordOJs cancelling the grants in favour of the respondents and took pl'Sleuion of the properties. The respondents filed civil suits for the recovery of the properties on the ground that