Girdhari Lal vs The State of Punjab and Others

Shamsher Bahadur, J.—Girdhari Lal as proprietor of Messrs. Bharat Engineering Works, Jullundur, has sought to challenge by his petition under Articles 226 and 227 of the Constitution the order passed by the appropriate authorities of the State Government cancelling his quota of pig iron.

The petitioner claims to be an allottee of raw material consisting of pig iron as a proprietor of a small scale industry. It is not in dispute that the District Industries Officer made an inspection of the factory of the petitioner on 19th of March, 1964, and certain irregularities which were found by him are mentioned in the letter which he sent to the petitioner on 21st of March, 1964. A complaint was made that the furnaces of the petitioner were lying in a state of long disuse and castings had been obtained from Batala and not moulded in the factory itself. To demonstrate the normal consumption of pig iron in the factory fictitious entries had been made according to the inspection made by the Officer, and some entries were actually found to this effect relating to 20th and 21st March, 1964. According to the register, the quantity of pig iron in stock was actually less than what it should have been. The result of the inspection, in the view of the Officer, was that, quotas which had been received by the petitioner had been "misutilised." The petitioner was asked to submit his explanation before the 30th of March, 1934. The petitioner furnished his reply before the appointed date and stated that the entries had been made by the petitioner because he was going out of station and pig iron had been fussed to the workers for 20th and 21st March, 1964. The suggestion that no moulding was done in the factory itself was repudiated and the District Industries Officer Jullundur was asked to visit the factory to satisfy himself. Eventually, the quota was cancelled by a letter which was sent to the petitioner on 5th of October, 1964.

Mr. Thapar, the learned counsel for the petitioner, submits that the quota being supplied on basis of installed capacity, cannot be cancelled and any misuse could be punished only under sections 7, 8 and 9 of the Essential Commodities Act. It is further submitted by him the it the Iron & Steel Control Order, 1956, does not authorise the cancellation of the quotas. It is lastly contended that the cancellation amounts to an unreasonable restriction and is violative of Article 19 of the Constitution.

With regard to the first point, it, is the case of Mr. Thapar that the cancellation of quota hits the labourers more than the factory owner himself and is certainly not countenanced by the provisions of the Essential Commodities Act. It is true that section 7 refers to the penalties to which a person renders himself liable by contravention of any order made u/s 3. The penalty u/s 7 mentions sentences of imprisonment and fine which can be inflicted by a Court, and also forfeiture of the property in respect of which the order has been contravened. Section 8 refers to attempts and abetment while section 9 again imposes sentences of imprisonment and fine for those who submit false statements. The Iron & Steel Control Order of 1956, which applies to the industry, mentions in clause 8 that :-

Where any quota certificate, permit or written order, referred to in clause 4 or 5 is revoked by the authority which issued it, the person to whom it was issued shall forthwith return it to the authority which issued it.

Mr. Sachar, for the State, rightly contends that the revocation is implied not only by the wording of clause 8 of the Iron and Steel Control Order, but also in consequence of the provisions of the General Clauses Act that the authority which has power to issue a license or quota has also a right to cancel it. Now, u/s 3 of the Essential Commodities Act, 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, supply and distribution thereof and trade and commerce therein. The Government or the authority to which this task is delegated would be acting in vacuo if it were to be assumed that though the power to give a license is mentioned the authority to revoke it is not to be inferred there from Regulation to secure equitable distribution necessarily implies that the power of grant carries with it the power to cancel a license or quota. A commodity being in short supply generally requires equitable distribution by the Government and if Mr. Thapar''s contention is accepted a grantee may flout the authority by misusing the quota or license for it is his contention that even if such a miscreant is sent to jail under the punitive provisions of the Essential Commodities Act the quota would still be available to the industrial unit to which it was originally allocated. There is neither any rational ground nor authority in support of the proposition for which Mr. Thapar contends.

The petitioner, in my opinion, cannot invoke assistance of Article 19 of the Constitution. As observed by Mr. Justice Das Gupta, speaking for the Court, in Fedco (P) Ltd. and Another Vs. S.N. Bilgrami and Others, at page 418:

There can be no invariable standard for ''reasonableness'' in such matters except that the Court''s conscience must be satisfied, that the person against whom an action is proposed has had a fair chance of convincing the authority who proposes to take action against him that the grounds on which the action is proposed are either non-existent or even if they exist they do not justify the proposed action.

The District Industries Officer had inspected the site and found irregularities. The result of this inspection was duly communicated to the petitioner who was given an adequate opportunity to furnish an explanation. I he petitioner availed of the opportunity, and furnished an explanation which was found to be unsatisfactory. The petitioner could not demand a re-inspection as the Officer had seen for himself and was satisfied that the factory had remained in disuse for a long time. It is not denied that entries for 20th and 21st of March, 1964 were found written when the inspection was made on the 19th March, 1964. The explanation for this extraordinary procedure was also found to be unsatisfactory. Can it be urged in these circumstances that the petitioner had not been furnished a reasonable opportunity to show cause against the proposed action? Can it further be said that if the cancellation of a quota amounts to a restriction it is not reasonable? Besides, as was observed in Makhan Singh Vs. State of Punjab (and connected appeals), case by their Lordships of the Supreme Court:

...as soon as a Proclamation of Emergency has been issued under Article 352 and so long as it lasts, Article 19 is suspended and the power of the legislatures as well as the executive is to that extent. made wider. The suspension of Article 19 during the pendency of the proclamation of emergency removes the fetters created on the legislative and executive powers by Article 19....

In my opinion, there is no force in this petition which fails and is dismissed with costs.