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Judgment
These are two petitions filed under Article 226 of the Constitution. The petitioners 1 to 3 in C. M. P. No. 5917 of 1951 are certain cotton
growers in the district of Tinnevelly and petitioners 4 to 8 are merchants who are carrying on business in cotton. These petitions have been filed by
them questioning the validity of the two notifications S. R. O. Nos. 379 and 388 dated 19-3-1951 issued under Clause 18 and Clause 6
respectively of the Cotton Control Order, 1950.
The relevant portion of S.R.O. No. 379 runs as follows:
I hereby direct that notwithstanding anything contained in the Textile Commissioner''s notification No. S.R.O. 597 no person shall except in
accordance with the permission in writing of the Textile Commissioner, the Director (cotton) or an Assistant Director (cotton) in the office of the
Textile Commissioner transport or cause to be transported kapas or cotton by rail, road or water from any place within any of the areas described
below to any place outside that area.
Then follows a grouping of the cotton growing districts into five areas. We are concerned in these petitions with area No. 5, S. R. O. No. 388
provides that there should be no sale or purchase of cotton to any person in this area ""unless such cotton is sold to anyone of the persons specified
below"". Then follows a list of persons. These persons have been referred to in these proceedings as ""Nominees"". For all the five areas similar
notifications have been issued specifying nominees.
The complaint of the petitioners is that both these notifications prevent them from carrying on trade and violate their fundamental rights under
Article 19(1)(g) and that they cannot be upheld under Article 19(5) as they are unreasonable and are not in the interests of the public.
We shall now consider the validity of S.R.O. No. 379. In substance it prohibits the export of goods in any area to any place outside that area
except with the permission of the Government. The object of this notification is clearly to regulate the supply and demand of cotton and to control
the price and it cannot be doubted that it is in the interest of the public. It is argued that by reason of these restrictions the petitioners are prevented
from disposing of the goods freely and for proper prices but as the prices are fixed and as the demand is much more than the supply it is difficult to
see how the restrictions can ad-versely affect the interests of the petitioners. As pointed out in the counter affidavit the references are to Pakistan
market rates in the affidavit of the petitioner (?) suggests that the real complaint is that they are prevented from exporting their goods outside the
country and making huge profits thereby. If the notification has the effect of preventing them from doing that, it is in the interests of the public and is
reasonable and must be held to fall within the Article 19(5). It is next contended that this notification is opposed to Article 301 which runs as
follows:
Subject to the other provisions of this part trade and commerce and intercourse throughout the territory of India shall be free.
It is argued that the right to free trade conferred by Article 301 would be taken away only by legislation by Parliament under Article 302 and that
as there has been no such legislation the notification S.R.O. No. 379 must be held to be bad but in the Control Order of 1949, Clause 17 contains
a similar prohibition and by virtue of Article 305 that clause will control Art. 301. This objection must accordingly be overruled. In the result We
hold that notification S.R.O. No. 379 is valid and not unconstitutional.
We shall take up notification No. 388 for consideration. In this connection it is necessary to refer to some of the provisions of the Cotton
Control Order of 1950. Clause 9 provides that no person shall produce, sell or carry on business in cotton except under licence in Form No. A
and in accordance with the conditions therein. Under Clause 10 any person desiring a licence might apply to the licensing authorities and under
Clause 11 provision is made for the grant of licence on payment of licence fee. The licence is to specify the period for which it shall be valid and
there is a provision for renewal on payment of further fee. The licence which is in form A prescribes various conditions under which the licensee is
to carry on business. Now petitioners 3 to 8 have obtained licences under these provisions. Their complaint is that though they have been granted
licence to carry on trade the notification S.R.O. No. 388 virtually prevents them from doing any business. Under the notification they are prevented
from purchasing cotton and therefore they can sell only their own goods and if they are not cotton growers there are no goods which they can sell.
It is stated in the affidavit that there are over 1000 licence-holders and most of them must under this notification find their trade gone. It is
undeniable that under these circumstances all Jhe elaborate provisions regarding granting of licences have become idle formalities and the licence
itself an empty and costly honour. As against this, the notification brings into existence a small body of monopolists. They alone have the right to
purchase cotton and the consequence is that the trade which was carried on by 1000 licensehol-ders has come to be concentrated in their hands.
It has not been shown how the interests of the public are served by eliminating a large class of merchants and substituting in their place a close
oligarchy of middlemen. We shall now consider the authorities cited by the learned advocate for the petitioners. In ''Rashid Ahmed v. Municipal
Board, Kairana'', (1950) 13 S.C.J. 324 the Commissioner of the Municipality of Kairfna granted a monopoly of the right to do wholesale business
in vegetables within the municipal limits to one Habib Ahmed. Previous to that one ''Rashid Ahmed was carrying on wholesale business in
vegetables and fruits within the municipality & in view of the grant of monopoly to Habib Ahmed was refused licence to carry on business. This
refusal was held to be void under the Constitution as having much more than the reasonable restrictions on trade. In Chintaman Rao Vs. The State
of Madhya Pradesh, it was held a total prohibition against carrying on business in beedies during the agricultural season was unreasonable and void
under Article 19(1)(g). Mahajan J. in delivering the judgment of the Court observed as follows:
The point for consideration in these applications, is whether the Central Provinces and Berar Act LXIV of 1948 comes within the ambit of this
saving clause or is in excess of its provisions. The learned counsel for the petitioners contends that the impugned Act does not impose reasonable
restrictions on the exercise of the fundamental right in the interests of the general public but totally negatives it. In order to judge the validity of this
contention it is necessary to examine the impugned Act and some of its provisions. In the preamble to the Act, it is stated that it has been enacted
to provide measures for the supply of adequate labour for agricultural purposes in bidi manufacturing areas. Sections 3 and 4 cited above
empower the Deputy Commissioner to prohibit the manufacture of bidies during the agricultural season. The contravention of any of these
provisions is made punishable by Section 7 of the Act, the penalty being imprisonment for a term which may extend to six months or with fine or
with both. It was enacted to help in the grow more food campaign and for the purpose of bringing under the plough considerable areas of fallow
land.
The question for decision is whether the statute under the guise of protecting public interests arbitrarily interferes with private business and imposes
unreasonable and unnecessarily restrictive regulations upon lawful occupations; in other words, whether the total prohibition of carrying on the
business of manufacture of bidies within the agricultural season amounts to a reasonable restriction on the fundamental rights mentioned in Article
19(1)(g) of the Constitution. Unless it is shown that there is a reasonable relation of the provisions of the Act to the purpose in view, the right of
freedom of occupation and business cannot be curtailed by it.''
There can be no doubt that the notification S.R.O. No. 388 has the effect of preventing most of the merchants from carrying on any business
and must result in the extinction of their trade and all this for no demonstrable advantage to the public. We are accordingly of opinion that this
notification must be declared to be unconstitutional and void.
In the result C.M.P. No. 5917 of 1951 will be ordered with costs and C.M.P. No. 5974 of 1951 will be dismissed with costs, advocate''s fee
Rs. 250 in each.
We certify that the case involves a substantial question of law as to the interpretation of the Constitution and in particular Article 14 and Article
19(1)(f) and (g) read with Article 19(5) and (6).