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1971 DIGILAW 88 (PAT)

Shivashankar Dokania v. State of Bihar

1971-07-30

G.N.PRASAD, S.SARWAR ALI

body1971
JUDGMENT : S. Sarwar Ali, J. 1. The hearing in this case was concluded on 8.4.1971. On the conclusion of the arguments learned counsel for the petitioners indicated that he was willing to withdraw those writ applications, provided the impugned notices requiring the petitioners to sell rice on the basis of the alleged agreements executed under Clause 13 of the Bihar Essential Food-grains Procurement ORDER :, 1969 (hereinafter referred to as the Procurement ORDER :1969) were withdrawn; and further the respondents undertook not to take action on the basis of the alleged breach of the agreement. In view of our observations made in the course of argument on the merit of the case it appeared to us that the offer of the petitioners was fair. At the request of the counsel for the parties we did not deliver the JUDGMENT : on the conclusion of hearing as the Standing Counsel No. 2, who appeared along with the Advocate General and was incharge of the case, wanted time to take instructions before making any commitments on behalf of the respondents. No information was given to us till the court closed for summer vacation. After the reopening we enquired whether the learned counsel has been able to obtain instructions. Since no instruction had been received by him we thought it proper to defer the delivery of JUDGMENT : for sometime more. Finally we were informed by the learned Standing Counsel No. 2 that he was not in a position to state anything on behalf of the respondents. We are, therefore, delivering this JUDGMENT : after some delay which was on account of the circumstances already mentioned. The petitioners in all these cases challenge the Procurement ORDER :and certain actions taken pursuant thereto. It will be sufficient to give some broad facts only which are common to all the writ applications. But before giving those essential facts it may be necessary to give some details regarding the Procurement ORDER :. 2. A notification dated 10.10.1969 was issued promulgating the Procurement ORDER :. The most important provision which has to be directly dealt with in these cases is Clause 13. But before giving those essential facts it may be necessary to give some details regarding the Procurement ORDER :. 2. A notification dated 10.10.1969 was issued promulgating the Procurement ORDER :. The most important provision which has to be directly dealt with in these cases is Clause 13. The effect of this clause is that every rice miller including the owner of a single huller rice mill had to sell to the State Government or Food Corporation of India rice of common variety equal in weight to a specified percentage of all varieties produced or manufactured in the rice mill on its own account. Clause 14 authorised the seizure of stocks in case of failure of rice millers to sell in accordance with the requirement of Clause 13. The relevant portion of Clause 13 may be quoted; Procurement of rice from rice-mills (1). Every rice-miller including the owner of a single huller rice-mill, shall sell to the State Government or the Food Corporation of India at his mill-premises such quantity of rice of common variety as shall be equal in weight to such percentage, of rice of all varieties produced or manufactured in his rice-mill on his own account everyday as may be fixed by the State Government from time to time by the general ORDER :notified in the Bihar Gazette subject to a maximum of 40 percent........... Provided further that, in lieu of sale of rice by a rice-miller, including the owner of a single huller rice-mill, to the State Government or the Food Corporation of India on percentage basis, the State Government, may, by ORDER :, direct him to sell to the State Government, at such rates as may be fixed by the State Government and published in the Bihar Gazette from time to time, such quantity of rice out of his total production during the period of the operation of this ORDER :, and in such periodic installments as may be fixed by the State Government or by any officer authorised by the State Government in this behalf, on the basis of the average total production of rice in his rice-mill during the corresponding periods of December, 1964 to June, 1965, the daily production capacity of the mill and any other factor which may be considered appropriate by the State Government. In regard to the owners of single huller rice-mills, the above power shall be exercised by the Collector of the district in which such single huller rice-mills are located, subject to the general approval of the State Government. It is not in dispute that the percentage of levy fixed by the State Government, at the relevant time was forty percent. 3. In pursuance of the proviso quoted above notification was issued on the 30th September, 1969 which is quoted in extenso in Paragraph 16 of C.W.J.C. 1439 of 1970. This notification authorised the Collectors of the districts to fix the quantity of rice to be sold by rice mills in lieu of levy on percentage basis. It also laid down the terms, conditions and the guidelines which had to be adopted by the Collectors. It is not in dispute that in all these writ applications the petitioners entered into agreements to sell to the State Government or its duly empowered officers or the representative of the Food Corporation of India quantities specified in the respective agreements. A copy of one of the agreements is Annexure 2 to C.W.J.C. 1439 of 1970. What, however, is disputed is as to whether they entered into the agreements Voluntarily, a question which need not be decided. It appears that there was default by the petitioners in carrying out the terms of the agreement. The authorities, therefore, took action under Clause 14 of the Procurement ORDER :by seizing the stock and directing the petitioner to show cause by different notices as to why they should not be prosecuted under Section 7 of the Essential Commodities Act 1955. Various other facts and submissions of law are mentioned in the writ applications. But it is not necessary to state those for the purpose of the disposal of these writ applications. 4. Learned counsel for the petitioners made several submissions in support of the writ applications. But since these applications have to be allowed on a short point it is not necessary to detail and deal with them in this JUDGMENT :. 5. Clause 13 of the Procurement ORDER :under challenge, so far as is relevant, has already been quoted by me. It may be compared with the Bihar Rice and Paddy Procurement ORDER :, 1970 promulgated on 30th of October, 1970. 5. Clause 13 of the Procurement ORDER :under challenge, so far as is relevant, has already been quoted by me. It may be compared with the Bihar Rice and Paddy Procurement ORDER :, 1970 promulgated on 30th of October, 1970. Relevant portion of Clause 3 of this ORDER :is as follows:-- Levy on rice: (1) Subject to the provisions of Sub-clause (3), every licensed miller shall sell to the State Government at the procurement price at his mill-premises such quantity of rice of common variety as shall be equal in weight to forty percent of rice of all varieties produced or manufactured in his rice-mill every day beginning with the date of commencement of this ORDER :and until such time as the State Government otherwise direct: The Procurement ORDER :of 1970 was challenged in (1) C.W.J.C. 2043 of 1970 and other analogous writ applications, which were decided by a Bench of this Court on 15.2.1971. The validity of Sub-clause (1) of the Procurement ORDER :has been considered in Paragraph 13 of the JUDGMENT :. It was held that the provision for sale or delivery of rice of common variety equal in weight to 40 per cent of all varieties of rice dealt with by the miller imposed unreasonable restriction on the fundamental right of the miller as guaranteed under Article 19(1)(g) of the Constitution. It would be useful to quote the whole of that paragraph, although the said paragraph deals with certain other aspect in respect of wholesale dealers with which we are not concerned in this case. Under Sub-clause (1) of Clause 3 of the Procurement ORDER :it is imperative for every licensed miller to sell to the State Government at the procurement price at his mill premises such quantity of rice of common variety as shall be equal in weight to 40 percent of rice of all varieties produced or manufactured in his rice mill every day beginning with the date of commencement of the ORDER :and until such time as the State Government otherwise direct. Similarly under Sub-clause (2) every licensed wholesale dealer has been enjoined to deliver to the State Government at the procurement price at his business premises such quantity of rice of common variety as shall be equal in weight to 40 percent of all varieties of rice produced or got milled from paddy in stock on the date of commencement of the ORDER :and 40 percent of all varieties of rice purchased by him or coming into his custody or possession for sale or disposal through him on commission basis or in any other manner every day beginning with the date of commencement of the ORDER :and until such time as the State Government otherwise direct. By the first proviso to Sub-clause (1) and the proviso to Sub-clause (2) provision has been made for avoiding double levy on the same quantity of paddy or rice. A person other than a licensed miller or a licensed wholesale dealer, who is not an agriculturist or a landless labour getting such paddy up to 3 quintals in a week, hulled at a rice mill of huller type having not more than one huller, has been directed to sell through the miller at the procurement price such quantity of rice of common variety as shall be equal in weight to 25 per cent of price of all varieties so milled. The wholesale dealer has been directed to deliver to the State Government such quantity of rice of common variety as shall be equal in weight to 40 percent of all varieties of rice purchased by him or coming into his possession as commission agent. Under the Sub-clause (5) of Clause 3 any person on whose behalf the licensed wholesale dealer holds any stock of rice, which he has been required to sell to the State Government under Sub-clause (2) is not entitled to recover from the wholesale dealer on account of the value of the stock so sold anything more than the price payable to the licensed wholesale dealer under the said Clause. The provision for sale or delivery to the State Government of such quantity of rice of common variety equal in weight to 40 percent or 25 percent, as the case may be, of all varieties of rice dealt with by the miller or the wholesale dealer, in my opinion, is an unreasonable restriction which cannot be supported. The liability arises every day. The liability arises every day. Every day the miller or the wholesale dealer may deal with rice of common variety. A third person may not bring to the mill paddy of common variety so as to enable the miller to sell to the State Government as against the dehusked paddy equal in weight to 25 percent of rice of common variety. A wholesale dealer dealing with rice of his principal on commission basis may not always have to deal with rice of common variety. As a result of the restriction imposed under Clause 3 of the miller and the wholesale dealer, irrespective of the fact as to which variety of rice has been dealt with by him on a particular day either on his own account or on account of a third person, he had been required to sell or deliver to the Government such quantity of rice of common variety as shall be equal in weight to 40 or 25 percent of all varieties of rice dealt with by him. To illustrate the gross unreasonableness of this restriction, I shall give a few examples. If a miller has dehusked any 100 quintals of paddy which on being dehusked produced say 60 quintals of fine rice, I do not know how the miller will discharge his obligation of selling 25 per cent of 60 quintals of rice. A third person who has got his paddy dehusked may not have paddy of common variety. He will insist on taking delivery of the rice of his fine variety. There is no provision for any adjustment with him. The miller will have to deliver 15 quintals of course rice which is called common variety, to the State Government at the procurement price. Wherefrom and how he will discharge the obligation except if possible by delivering the rice from his own stock of coarse rice. For dehusking paddy of a third person an unreasonable burden has been thrown on the miller which at price, apart from resulting in great loss to the miller, may not be capable of being discharged. Similarly, say, a wholesale dealer has got 100 quintals of fine rice in stock on account of a third person who appointed the dealer as his commission agent. He will have to deliver to the State Government 40 quintals of coarse rice as against the 100 quintals of fine rice. Similarly, say, a wholesale dealer has got 100 quintals of fine rice in stock on account of a third person who appointed the dealer as his commission agent. He will have to deliver to the State Government 40 quintals of coarse rice as against the 100 quintals of fine rice. The third person cannot be liable under Sub-clause (5) of Clause 3 while the wholesale dealer will have to sell and deliver 40 quintals of coarse rice from his own stock. This again, is patently unreasonable restriction on the right of the dealer to carry on his trade. Even dealing with paddy or rice, on their own account, the miller or the wholesale dealer will be confronted with the situations where they will not be able to discharge their daily liability of selling or delivering such quantity of rice of common variety as shall be equal in weight to 40 percent of all varieties of rice dealt with by him. In the earlier two Procurement ORDER :s, similar provision although less stringent in the matter of percentage were there. Those provisions are under challenge in different cases. I am not called upon to express any opinion in regard to them. But it will not be out of place to point out one distinction between the previous provision and the present one, is that there was a provision for compounding and delivery on an agreed basis by the miller or wholesale dealer while there is no such provision in the present Procurement ORDER :. I must not be understood to opine that if and when such a provision is there, it will save it from the attack of unreasonableness. To me the provisions in the Madhya Pradesh Rice Procurement (Levy) ORDER :, 1970 and West Bengal Rice Mills (Control and Levy) ORDER :, 1970 are understandable where the provision is for procurement of certain percentage of rice of all varieties on fixing the Procurement price of all varieties. I think the Government would have been well advised either to procure by levy certain percentage of common variety of rice only on the stock of rice of common variety dealt with by the miller or the wholesale dealer or certain percentage of all varieties of rice according to the stock dealt with by him. I think the Government would have been well advised either to procure by levy certain percentage of common variety of rice only on the stock of rice of common variety dealt with by the miller or the wholesale dealer or certain percentage of all varieties of rice according to the stock dealt with by him. But the provision as it is, to my mind, has got to be struck down as being violative of Article 19(1)(g) of the Constitution and not saved by Clause (6), I may, clarify one point here that although in the Copper's case dissenting, from the previous view of the court it has been held that there may be cases where to hold the constitutional validity of law it has to be tested not only with reference to Article 31(2) of the Constitution but also with reference to Article 19, strictly speaking I have not tested the provision of Clause 3 of the Procurement ORDER :on that principle. On the basis of the decision in (2) the Bank Nationalisation Case and in view of what has been said in Paragraphs 58 to 60 at pages 596 and 597 of the A.I.R. Report, it was argued on behalf of the petitioners that no opportunity was given to them when the procurement price was fixed on the basis of the price likely to prevail during the post-harvest period. I do not think that the law contained in the Procurement ORDER :can be struck down on the ground of violation of Article 19(1)(f) or (g) in regard to the procedural matter when, according to me, it has stood the test of Article 31(2). But that apart, the ground on which I have held the law to be violative of Article 19(1)(g) is altogether different and distinct from the one discussed with reference to Article 31(2). The Procurement ORDER :of 1969 in Clause 13 laid down the maximum amount of levy at 40 percent, the actual percentage to be fixed by the State Government from time to time. It is not in dispute that in the instant cases 40 percent was fixed by the State Government as the percentage of levy. It would, therefore, appear that at the relevant time the percentage of Levy both in 1969 Procurement ORDER :as also in the Procurement ORDER :of 1970 was 40 percent. It is not in dispute that in the instant cases 40 percent was fixed by the State Government as the percentage of levy. It would, therefore, appear that at the relevant time the percentage of Levy both in 1969 Procurement ORDER :as also in the Procurement ORDER :of 1970 was 40 percent. It is, therefore, clear that the reason which induced a Bench of this Court to hold that Clause 3 of the Bihar Rice and Paddy Procurement ORDER :, 1970 was violative of Article 19(1)(g) of the Constitution, is fully applicable to Clause 13 of the Procurement ORDER :under challenge in these cases. 6. I may mention that in C.W.J.C. 2043 of 1970 it was observed:-- But it will not be out of place to point out one distinction between the previous provision and the present one, is that there was a provision for compounding and delivery on an agreed basis by the miller or wholesale dealer while there is no such provision in the present Procurement ORDER :. I must not be understood to opine that if and when such a provision is there, it will save it from the attack of unreasonableness. At the hearing of these applications no argument was advanced that the second proviso to Clause 13 had the effect of making the restriction imposed under the clause reasonable in the circumstances of the case. What, however, was contended was that since the petitioners had entered into an agreement to sell specified quantity as mentioned in their respective agreements, their liability was contractual and as such this Court should not grant them any relief even if there be some infirmity in the Procurement ORDER :or some of the clauses thereof. This argument does not appear to me to be correct. It would be proper here to refer to the agreements themselves. The preamble of one of the agreements is as follows:-- This agreement made this 1st day of December, 1969 (Name of month) one thousand nine hundred sixty nine between Shiva Shankar Dokania Oil, Rice and Flour Mills, Barharwa (hereinafter called the miller) on the one part and the Governor of the State of Bihar (through the Collector hereinafter called the State Government) on the other part. Whereas under Clause 13 of the Bihar Essential Foodgrains Procurement ORDER :, 1969 read with the State Supply and Commerce Department Notification No. S.O. 983 dated the 28th October, 1969 and C.S.R. 73 dated the 30th October, 1969 all Rice Millers including the owners of single huller rice mills are bound to sell to the State Government or the Food Corporation of India at their mill premises such quantity of common variety of rice of fair average quality as may be specified by the State Government from time to time by a notification published in the Bihar Gazette as shall be equal in weight to 40 percent of the quantity of rice of all varieties produced or manufactured in their rice mills on their own account every day beginning with the date of commencement of this ORDER :at such rates as may be fixed by the State Government and published in the Bihar Gazette from time to time. And whereas in terms of the second proviso to Sub-clause (1 of Clause 13 of the Bihar Essential Foodgrains Procurement ORDER :, 1969 the State Miller Shiva Shankar Dokania Oil, Rice and Flour Mills, Barharwa (insert here the name of the first party with the name and style of his rice mill) has in lieu of the aforesaid percentage levy of 40 percent on his daily production of rice on his own account agreed to sell and deliver to the State Government or to any duly empowered officers of the State Government or to the representative of the Food Corporation of India as the case may be 800 (Eight hundred) quintals of rice as per details given in the schedule annexed herewith. This preamble clearly shows that agreements were entered into by virtue of the power which the Collector had in pursuance of Clause 13 of the Procurement ORDER :, 1969. Had it been an agreement independent of the Procurement ORDER :the position would have certainly been different. But if Clause 13 itself is held to be invalid and unconstitutional any agreement entered into by the Collector in pursuance of the power derived under that clause cannot be of any avail to the respondents. I am thus unable to accept the contention raised on behalf of the respondents in these cases. But if Clause 13 itself is held to be invalid and unconstitutional any agreement entered into by the Collector in pursuance of the power derived under that clause cannot be of any avail to the respondents. I am thus unable to accept the contention raised on behalf of the respondents in these cases. In my view, for the reasons fully discussed in Paragraph 13 of C.W.J.C. 2043 of 1970, which paragraph has been quoted extenso by me, Clause 13 of the Procurement ORDER :under challenge imposes unreasonable restriction on the petitioners in respect of their right to carry on their occupation, trade or business. The clause has, therefore, to be struck down as constitutionally invalid. If Clause 13 is invalid, as I have so held, there cannot be any doubt that Clause 14 is also invalid. It is also clear that no action can be taken on the basis of infringement of Clause 13 aforesaid. 7. The petitioners have challenged the entire Procurement ORDER :but in my view it is not necessary to consider and decide the constitutionality of any clause other than Clauses 13 and 14 at their instances, as the other parts of the Procurement ORDER :relate to wholesale dealers and cultivators, and petitioners are neither of them. In the result the applications succeed in part. Clauses 13 and 14 of the Bihar Essential Foodgrains Procurement ORDER :, 1969 are held to be constitutionally invalid. The respondents are restrained from enforcing the agreements entered into between the petitioners and the respective Collectors of the districts. The seizure of foodgrains of the petitioners is held to be illegal and the respondents are directed not to take any action on the basis of the alleged failure of the petitioners to fulfill the agreements alleged to be entered into between the petitioners and the Collectors of their districts. The petitioners will be entitled to costs. Hearing fee Rs. 100/- in each case. G.N. Prasad, J. I agree.