Ghulam Rasool Misger and etc. vs The State and Others

M.L. Bhat, J.—These three writ petitions are decided by a common judgment because there is a common question of law and fact involved

in all the three petitions.

Petitioners claim to be small scale industrial units registered as such by respondent No. 3 for manufacturing/ processing activity of copper

utensils which is reflected by the registration certificates granted to them. After registration, petitioners are said to have installed machinery for

production of various articles made out of copper. They are said to have obtained loan from the Jammu and Kashmir Bank for running their units.

Ever since the installation of their plant and machinery, the petitioners are manufacturing various copper utensils details whereof are given in para 4

of the writ petition (writ petition No. 254/85). A circular is said to have been issued to the petitioners by respondent No. 3 on 22-2-1985

whereby they are directed not to manufacture the utensils, mentioned in the said order by machine, and in the event of any violation of the said

order, they are told that their registration shall be liable to be cancelled. Director Industries and Commerce has by his letter dated 7-2-1985 asked

the General Manager, District Industries Centre Srinagar to issue the follow up orders, which the respondent No. 3, General Manager District

Industries Centre, Srinagar has issued. This letter and order seems to be based on some report which was prepared in respect of the complaint

against Copper utensils Manufacturing units.

Petitioner's case is that the restriction on their right to conduct trade is violative of their fundamental rights as guaranteed to them under Article

19(g) of the Constitution of India. It is stated that respondents 2 & 3 have no right, authority or competence to impose restriction on the

fundamental rights of the petitioners in respect of their trade which they are lawfully conducting. The said order is challenged on the anvil of

guarantees contained in Article 14 of the Constitution and it is prayed that the said order be quashed as being ultra vires the Constitution.

An application was made by some unit holders for being arrayed as parties to this writ petition. That application was allowed at an interim stage

and these unit holders were added as parties and on their behalf Shri K. N. Raina has appeared. The respondents as also the said unit holders who

were permitted to be added, were directed to file replies to the writ petitions.

One Mr. Vijay Bakaya Commissioner/ Secretary to Govt. Industries and Commerce Department has filed his reply to the writ petitions. It is

stated that none of the rights of the petitioners, muchless fundamental rights, are abridged by the Circular. The impugned circular is justified as a

reasonable restriction placed by the respondents on the petitioners right of trade. It is submitted that the Executive has the competence to issue

directions to regulate the trade and this regulation is consistent with the principles of 'Directive Principles of State Policy', which requires the State

Govt. to preserve the Art and Craft of the State. It is stated that copper industry is a cottage industry of the State and symbolises ancient art and

craft which was being obliterated by the machines. Therefore, it was necessary that manufacture of copper utensils be made by hand and not by

machine. Its manufacturing by machine has the effect of causing disappearance of the ancient art and craft which the State has endeavoured to

preserve. Carving on the copper utensils is possible only by hand and not by machine and after carving is engrafted on copper utensils, these are

called 'KANDKARI UTENSILS'. This can be processed only by hand and if any mechanical process is employed for the manufacture of these

utensils, that will damage the craft and the popularity of the craft in the internationl market. With a view to promote the craft and develop the

industry and make it an attraction for the tourists who visit the State, it was necessary to promulgate the impugned circular. The craft has a

historical background, therefore it needs to be preserved. In the registration certificates of the petitioners, respondent No. 2 has reserved the right

to cancel the permission for misuse or any unauthorised diversion of the material as determined by the Directorate of Industries. Utensils

manufactured by hand are manufactured by skilled artisans and they are very costly as compared to the utensils manufactured by the machine.

Therefore, it is likely that in the process as a result of competition between the two, hand made utensils may get extinct, thereby the art and craft

will be lost for ever as it would be replaced by machine made utensils which cannot represent that art and craft which the artisans have inherited

through rich heritage. Petitioners are said not to be authorised to manufacture the copper utensils by mechanical process. It is said that the Govt.

never intended and has not in fact granted permission to the petitioners to manufacture copper utensils by mechanical process. The petitioners are

also accused of having committed some pilferage in the Sales-tax which has necessitated the issuance of the circular. The restrictions which are

placed on the right of the petitioners are saved by Article 19(6) of the Constitution of India. Promissory estoppel set up by the petitioners is also

denied.

Notification dated 22-8-1983 and SRO 436 is relied upon and it is submitted that on the basis of that SRO respondents have the effective

control over the regulation of the business which they have in fact exercised. The reply given by the newly added parties through their

representatives is brief. It is contended that there are two thousahd member units in the Cottage Industry and it involves livelihood and the very

existence of thousands of craftsmen working in these units, it is in the public interest to give protection to the cottage industries against the

individuals who are manufacturing copper utensils by machine. The individual interest has always to yield to the collective interest of a greater

number of people. The restriction placed on the petitioners is justified under Article 19(6) of the Constitution.

It is submitted that to protect ancient craft and to sustain it against extinction by unhealthy competition, State has the power to impose the

restrictions which restrictions are consistent with the directive principles of State policy. The petitioners are said to have no restriction if they also

choose to make these utensils by hand. The impugned order protects the cottage industry and thousands of units. Therefore, it is in the interests of

public good that such an order should be saved. Because of unhealthy competition between machine made and hand made utensils, it was the duty

of the State to regulate the trade. The newly added parties have also referred to petitioners conduct about the sales tax evasion which was not

exempted in their case.

In their rejoinder affidavit, the petitioners have reiterated their contentions raised in the writ petition and submitted that without legislative

enactment, the executive has no power to restrict the fundamental rights of the petitioners. Whatever is said in the reply affidavit is denied.

Mr. Z.A. Shah appearing for the petitioners has raised the following contentions :

i. That the Circular issued by the Director or General Manager Industries is without jurisdiction as they have no authority to impose restrictions on

the fundamental rights of the petitioners;

ii. Even if they are said to have jurisdiction to issue such a circular, the circular is bad because it is not traceable to any law or rule which is valid.

According to him, there must be some law regulating the trade and thereafter any circular can be issued under that law. Without there being any

law, respondents 2 & 3 have no authority to issue circulars.

iii. It is the State Govt. alone which can under its plenary executive powers issue executive orders in respect of regulation of trade. Director of

Industries or any authority under him cannot be termed as State Govt. having the executive powers. Therefore any order issued by them which has

the effect of restricting the trade is violative of petitioners fundamental rights.

iv. The State even under the Directive Principle of State policy has to develop the modern technique side by side and it cannot place absolute

restriction on the use of machinery in regard to the manufacture of utensils;

v. It is the preservation of KANDKARI art and not the manufacture of utensils which is sought to be preserved. The machines do not deal with

KANDKARI art. That can be preserved without placing restriction on the machinery;

vi. The restriction is said to be unguided and arbitrary and offends the guarantees under Article 14 of the Constitution.

It may be stated that under its executive powers State has competence to issue instructions in respect of the matters for which the legislature of

the State has power to make the law. Therefore, if executive instructions issued by the State under its plenary powers remain within the bounds of

law, these cannot be interfered with by any Court and cannot be said to be without jurisdiction. Therefore the only question about the executive

orders which can be determined by the Court is whether the State has issued such orders within the bounds of its power and within the limits of

law which are binding on the State also. If the State has transgressed its own powers while issuing the orders, these orders can be challenged

under the provisions of the Constitution as being ultra vires the fundamental rights and as being repugnant to the provisions of the Constitution. This

is one aspect of the matter. Other is, whether executive powers of the State can be performed by its functionaries and whether any instruction

issued by them which has the effect of abridging the fundamental right can be said to be valid.

I would therefore consider in the first instance whether the circular impugned in the writ petitions could be issued without being traceable to any

law and if it can be issued, who is competent to issue it.

State legislature undoubtedly has the power to make laws regulating the trade and to impose any reasonable restriction on the conduct of trade

which restriction is justified on the anvil of conditions laid down in Article 19(6) of the Constitution of India. If a regulation by way of restriction or

controlling a trade can be made through an enactment of legislature, it can equally be made by executive instructions because State has power to

issue instructions in respect of everything for which the legislature can make laws. This power is inherent in the State and in its said power, it is

competent to regulate the trade and control the trade provided it does not offend Article 19(g) and it is saved by Article 19(6) of the Constitution

of India. The reasonableness or otherwise of the restriction or regulation placed on trade would depend on the nature of the trade and the

restriction which is placed on it, the manner in which the restriction is placed, the authority who has placed the restriction and the purpose of the

restriction, so on and so forth. There is no gain-saying that State under its executive powers can place restrictions on conduct of trade provided

these restrictions are in the interest of State and in the interests of general public and are saved by Article 19(g) of the Constitution of India. The

State's power in this regard is beyond challenge if it satisfied the requirements of Article 19(6) of the Constitution of India regard being had to the

nature of the trade and nature of restrictions placed on it.

The State cannot exercise its inherent power arbitrarily and in such a manner which would be unjust discriminatory and unfair. Even acting

under its plenary powers State is to be fair and fairness in action cannot be dispensed with by the State also. That would mean, it has to act without

bias and arbitrariness and without discrimination. If any action even if taken in the interests of trade is unfair, biased, mala fide or unreasonable,

same shall have to be struck down for it would be violative of guarantees contained in Article 14 of the Constitution which seeks for every citizen

equality of law and equal protection of law. The concept is based on rule of law which ensures fairness in action and said action being free from

arbitrariness. These are the broad guidelines as to how the State can issue instructions regulating or restricting any practice or profession or trade.

The impugned regulation is not issued by the State. It is issued by the respondent No. 3 under the instructions of respondent No. 4. The

Commissioner/Secretary to the Govt. Industries Department has justified the action, but he has not said anything as to whether respondents 2 & 3

had the competence to issue such a regulation. If they have no competence, then obviously the regulation is to be held without jurisdiction. On this

point there was a great deal of debate. Mr. Z. A. Shah contending that respondents 2 & 3 had no jurisdiction to issue the impugned circular which,

in his opinion have curtailed the rights of the petitioners to conduct business, on the other hand Mr. Zahoor and Mr. Raina submitting that they have

a right to regulate the business because if it permitted the petitioners to conduct the business, its mode of conduct also can be guided by them.

If the business is permitted to be conducted or registered by respondents 2 & 3, of course they have a right to regulate the business which is to

be done under their permission. Granting registration or permission to the petitioners would within its fold include right and competence in the

person who has granted that permission to regulate and supervise the business. Therefore, any regulation which would aim at regulating or

controlling the business can be issued by a person who has initially granted the permission to conduct the business. But such an authority cannot

violate the guarantees under Art, 19(g) of the Constitution, unless it is shown that restriction is reasonable. So the question which is to be

determined, while considering the respective submissions of the learned counsel for the parties, will be, whether the regulation/circular issued by

respondent No. 2 is merely a regulation regulating the trade as contended by respondents, or it is a restriction on the fundamental rights of the

petitioners to conduct the business. The respondents in the present case have stated that it is a reasonable restriction. Therefore, the burden will be

on them to bring it within the purview of Article 19(6) of the Constitution. This question, therefore, would need an indepth examination.

In the State of Madras Vs. V.G. Row, test was laid down by the Supreme Court in respect of reasonableness of restriction. It is the nature of

the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied

thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive

factors and forming their own conception of what is reasonable, in all the circumstances of a given case, scales of values as also philosophy of

Judges would play an important role. In this authority, the Govt. order had declared an association which was known as People's Education

Society as unlawful within the meaning of Indian Criminal Law Amendment Act of 1908. The society was held to have interfered with the

administration of the law and the maintenance of law, therefore the said order was passed. The order was held to be violative of Article 19 and

declared ultra vires by the Madras High Court which was upheld by the Supreme Court.

In Naraindas Indurkhya Vs. The State of Madhya Pradesh and Others, the State had prescribed text book for schools under its executive

powers which power was challenged, but the Supreme Court held that power was vested in the State to regulate the school education and the said

power of issuing executive instructions was not arbitrary in any manner. The executive instructions issued by the State in this authority was held to

have not infringed the right of any one, therefore on consideration it was held to be valid.

In Bennett Coleman and Co. and Others Vs. Union of India (UOI) and Others, , the majority view was that liberty of the press is an essential

part of the freedom of speech and expression guaranteed by Article 19(1). Therefore any restriction on the circulation of papers or on the

propagation and free circulation of Publication will be a restriction on the fundamental rights. All Executive Actions which operate to the prejudice

of any person may be justified provided it is brought within the exception under which the State can impose restriction on any right.

Kharak Singh Vs. The State of U.P. and Others, was an authority about the life and personal liberty of an individual whose rights were

restricted by the U.P. Government. Under the regulation which was held to have no statutory force, petitioners movement therein was restricted

which came to be criticized by the Supreme Court.

In Rai Sahib Ram Jawaya Kapur and Others Vs. The State of Punjab, , if was held that power of executive Government to carry on trade or

business without specific legislation such course is not violative of any of the articles of Constitution. The Government, was held entitled to

formulate policy for transaction of any business and this was said on the anvil of Articles 162, 73 and 53 of the Constitution of India. The State

Govt. had taken selection, printing and publishing of school text books. Previously the Govt. used to invite publishers to submit their books for

approval and after selection leave printing and publishing to same publishers. The private publishers alleged infringement of their rights under Article

19(1)(g). The Supreme Court dismissing the petition held that all persons have a right to carry on any trade or business but the method of

publication of books in the present case did not amount to any infringement of rights because the right of publication in respect of other books was

not taken away. Only the State had approved for publication, the books which were prescribed for the school education. Thus it could not be

considered to be an infringement of fundamental rights.

In P.P. Enterprises and Others Vs. Union of India (UOI) and Others, . Sugar (Control) Order of 1966 regulating storage of sugar was held

valid and it was held to come within the purview of Article 19(6) of the Constitution of India. As it had imposed reasonable restriction. Reasonable

restriction was held to impose on a person in enjoyment of that right, a restriction which was in the interests of public. Freedom of trade or

profession was permitted to be controlled by, in given cases, by Article 19(6) which in the opinion of the Supreme Court would be a social

control. With a view to prevent hoarding and black marketing in Sugar, State Govt. had issued instructions to dealers restricting their right to keep

sugar in excess of the quantity specified in the order. It was held to be regulatory and not prohibitory because the State would not permit the

traders to indulge in blackmarketing and hoarding of sugar.

Pathumma and Others Vs. State of Kerala and Others, . In this authority the awareness of the growing requirements of society, the increasing

needs of the nation, the burning problems of the day and the complex issues facing the people, which the legislature through beneficial legislation,

seeks to solve was commented and the Courts in its attempt to protect the fundamental rights were cautioned to strike a balance between the

fundamental rights and the larger and broader insterests of society. On this principle Kerala Agriculturists (Debt Relief) Act, 1970 and the

restrictions imposed by the Act were held to be reasonable within Article 19(5) and it was held that they do not violate Article 19(1)(f). The

legislation was framed to save the agriculturists from the exploitation of the money lenders. Therefore it was held to be valid on the principle of

Directive Principle of State Policy also.

Manick Chand Pal and Others Vs. Union of India (UOI) and Others, , is an authority wherein the restrictions placed in the Gold Control Act

u/s 16(7) requiring a licensed dealer or refiner to declare gold was held to be valid and not violative of Articles 14 and 19. The restriction was by

an authority of law, therefore, valid.

From the aforesaid authorities it would be manifestly clear that the right to trade can be regulated but it cannot be prohibited, if it is lawful and

does not offend any law or rule framed by the State. In the present case the manufacturing of copper utensils is a lawful business. Therefore, it can

be regulated and respondents 2 & 3 have the power to regulate the same. Regulation of the trade is not necessarily restricting the trade. But in the

guise of regulation an authority has no power to prohibit or restrict the trade which citizen has right to conduct. In the present case the circular has

prohibited the petitioners to manufacture copper utensils on the machine and it has threatened them with cancellation of their licence in this regard.

This would not be a regulation of trade which the petitioners are conducting, but this would be a prohibition and restriction which is violative of

Article 19(1)(g). Under that Article citizens of India have been guaranteed right to practice any profession, or to carry on any occupation, trade or

business. This provision is to be read with Article 19(6) which in the words of the Supreme Court contains a provision empowering the State to

have a social control over this right. So any restriction imposed on the said right must be in the interests of general public and reasonable. So the

respondents are obliged to prove that requirements of Article 19(6) are proved by the Circular which is impugned in the writ petition. The circular

does not speak of any public interest or does not mention as to why a prohibition is placed on the rights of the petitioners to conduct business. That

is sought to be proved by the affidavit of the Secretary/Commissioner Industries. The order and letter on which the said order is based do not

suggest even remotely that public interest was taken into consideration by respondents 2 & 3 while imposing the restrictions. The restrictions are

placed because it appears some complaints were received against the Copper utensil manufacturing units. As to who were the complainants, what

was the nature of the complaint and why such complaints were taken into consideration without hearing the petitioners is not spelled out. However,

even without receiving complaints as indicated, respondents 2 & 3 could regulate the trade but under the power to regulate the trade, they could

not issue an order of banning the petitioners from manufacturing copper utensils on machine and in the event of their failure to follow the

instructions, threaten them of cancelling their registration.

In the counter it has been stated that in order to preserve KANDKARI carving on the copper utensils, it was necessary to impose the ban on

machine made utensils. This is sought to be justified on Section 17 of the Constitution of Jammu and Kashmir. Section 17 of the Constitution of

Jammu and Kashmir reads as under : --

State to take certain steps for promoting crafts and cottage industries. The State shall in order to rehabitate, guide and promote the renowned

crafts and cottage industries of the State, initiate and execute well considered programmes for refining and modernising techniques and modes of

production, including the employment of cheap power so that unnecessary drudgery and toil of the workers are eliminated and the artistic value of

the products enhanced, while the fullest scope is provided for the encouragement and development of individual talent and initiative.

Directive principles contained in Part IV of the Indian Constitution are not applicable to State of Jammu and Kashmir. However, State of Jammu

and Kashmir has framed its own policy of directive principle.

Section 17 (supra) prescribes that State can take steps for promoting crafts and cottage Industries. It has at the same time to make programme for

refining and modernising the techniques and modes of production. The policy appears to be that while encouraging the Cottage Industries and

Craft and while promoting the same, State has side by side to take steps to modernise the techniques and modes of production. The section does

not exclude the use of machinery in any craft or cottage industry absolutely. In fact it lays stress on the technical development also. Therefore

manufacturing of utensils on machine would not be violative of Section 17 of the Constitution of Jammu and Kashmir. Moreover that is not the

reason given by the respondents 2 & 3 for issuing the prohibition to the petitioners. The impugned circular which cannot be termed as a regulation

for regulating the trade is sweeping in nature and arbitrary in content. It issues prohibition without assigning the reasons as to why the prohibition

was required to be imposed. If the prohibition was with a view to regulate the trade, one would probably uphold it, but without giving the reasons,

object and purpose, respondent No. 2 seems to have acted in an arbitrary manner and without authority of law. The view which I have taken is

that the impugned circular is prohibition on trade which is guaranteed to the petitio.ner under Article 19(1)(g). The right could be restricted or

prohibited if the respondents had shown that the restriction was imposed under Article 19(6) of the Constitution. That would be that it was in the

interests of general public. No material is placed on the record by the respondents to indicate that what public interest would be served by

imposing the prohibition. Merely stating in the affidavit that there are number of artisans who are likely to be affected by machine made tools, is not

enough, unless data in detail is given indicating the number of artisans engaged in the hand made utensils, the number of artisans not engaged in

manufacturing of machine made utensils and all other relevant conditions. Nothing has been placed before this Court by the respondents in the

counter. If the respondents want to justify the circular on the anvil of Article 19(6) of the Constitution of India, they were bound to disclose the

material to this Court justifying their action. It was all the more necessary because the impugned circular does not give any reasons for imposing

prohibition on the petitioners in respect of manufacturing of utensils on machine. The restriction which is imposed by the respondents 2 & 3 by the

impugned circular is therefore without authority and is rendered unconstitutional besides being arbitrary, it does not lay down the purpose for which

it was issued.

Mr. K. N. Raina has submitted that individual good is to be always subordinated to collective good. He has in the affidavit stated that there are

two thousand craftsman engaged in the trade, but it is not stated in what manner these craftsman have suffered by the petitioners' installation of

machinery for purposes of manufacturing of copper utensils. It is admitted that the petitioners do not engraft carving on the copper utensils. That

cannot be done by the machine. If that cannot be done by the machine, the right of the artisans is not shown to have been violated by the

installation of machine and by machine made utensils.

However, I do not intend to say that the State cannot by a valid legislation or by a valid order impose restrictions on the petitioners to

manufacture the utensils on machine, but there must be reasons for that and those reasons must be covered by Article 19(6) and they must be

spelled out from the order and from the policy which the State will evolve in this regard. Respondents 2 & 3 without evolving the policy and

without mentioning even the public interest which they had in mind, have by a sweeping order imposed prohibition on the petitioners in respect of

manufacturing of utensils.

Right to grant registration for manufacturing of utensils would not empower respondents 2 & 3 to make an arbitrary order prohibiting the

manufacturing of utensils on machine. They could make a report to the executive and the executive could strictly in accordance with Article 19(6)

regulate the trade by imposing restriction on it provided that would appear in the interests of public and appear reasonable. The circular which is

impugned in this writ petition is neither shown to be in the public interest in the counter nor reasonable. Therefore the circular impugned in the writ

petition is liable to be struck down.

In the view which I have taken, the other points, which Mr. Z. A. Shah has formulated during his submission need not be answered.

Respondent No. 1 is at liberty to impose any restriction on the trade provided it conforms to the guarantees contained in Article 19(6) of the

Constitution of India. Since the impugned circular is violative of Article 19(1)(g) and Article 19(6) also, therefore, it cannot be sustained.

In the result, the writ petitions are allowed. There will be no order as to costs.