# [1963] Supp. 2 S.C.R. 691 - **Citation:** [1963] Supp. 2 S.C.R. 691 - **Court:** Supreme Court of India - **Decided:** 1962-01-08 - **Bench:** B. P. Sinha, c. J.. P. B. GAJENDRA.GADKAR, K. N. Wanohoo, K. C. Das Gupta, j. C. SHAH - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1963-supp-2-s-c-r-691-2797 - **Pages:** 33 ## Headnote &ale Monopoly-Ktndu Lt.av...-Appoinlment of agemaAgreement toith agents-Validity of-Article 19 (6) (ii)-Scope and effect of-Rule 7 (6)-Validity of Act and••· 3, 4, 8,-0ris8a KenJu Leavea (Oontrol of Trade) Act, 1961 (Orisaa 28 of ,961), ••· 3, 4, 8-0onstitution of India, Arts. 19 (1) (/) and (g), 19 (6). Prior to 1961, the petitioner used to carry on extensive trade in the sale of Kendu leaves. In 1962, the State of Orissa acquired a monopoly in the trade of Kendu leaves and put restrictions on the fundamental rights of. the petitioner. Three notifications were issued by the State on January 8, 1962, January 25, 1962 and March 10, 1962 for that purpose. Jn .bis petition under Art. 32, the petitioner challenged the validity of the notifications and also the validity of the whole Act, particularly ss. 3 and 4, on the ~ound that they violated Art. 19 (I) (f) and (g). The petitioner prayed for a decla• ration that the whole act was ultra vires and also an order restraining ihe State from giving eft'ect. to the notification and the Act. Held, that the Orissa Kendu Leaves (Control of Trade) Act, 1961, is a valid piece of legislation. The creation of State monopoly in Kendu Leaves is within the scope of Art. 19 (6) of the Constitution as amended by the constitution (First amendmtnt) Act, 1951. A law creating a State monopoly in the narrow and limited sense is valid under the latter part of Art. 19 (6). ff it indirectly impinges on any other right, its validity cannot he challenged on that ground. If the sa\d law contains other incidental provisions which are not essential and do not constitute an integral part of .the monopoly created hy it, the validity of those provisions has to be tested under the ti.St part .of Art. 19 (6). If they directly impinge on any other fundamental right granted by Art; 19 (I), the validity of the said clauses has to be tested by reference to the correspon· ding clauses of Art. 19; 1962 December 5. 1962 Akadasi Ptuilum •• Stale of Ori11a 692 SUPREME COURT REPORTS [1963] SUPP. • The essential atrributes of the law creating a monopoly will vary with the nature of the trade or busines1 in which the monopoly is created. They will depend u1ron the nature of the commodity, the nature of commerce in which it is involved and several other circumstances. A law relating to State monopoly in respect of road transport or air transport would not normally infringe the citizen's fundamental right under Art. 19 (1) (f). Likewise, a State monopoly to manufacture steel, armaments, transport vehicles or railway engines and coaches can be provided for by law and that would not normally impinge on Art. 19 (I} (f). However, if the law creating such monopolies makes incidental provisions directly impinging on the citizens' right under Art. 19 (I) (f}, the case would be different. Having regard to the scheme of the State monopoly envisaged by the Act, s. 4 cannot be said to be such an essential part of the said monopoly as to fall within the expression "law relatilll{ to" under Art. 19 (6). The validity of s. 4 has to be tested in the light of the first part of Art. 19 (6) so far as the petitioner's rights under Art. 19 ( 1) (g} are concerned and under Art. 19 (5) so far as his rights under Art. 19 (I) (f) arc concerned. So tested, the restrictions regarding the fixation of prices .prel<'.ribcd bys. 4 are reasonable and in the interc.t of the general public both under Art. 19 (5) and Art. 19 (6). Hence s. 4 is valid. · Section 3 of the Act is also not open to any challenge. This section allows either the Government or an officer of the Government authorised in that beha,lf or an agent in respcr.t of the unit in which the leaves have grown, to purchase or transport Kcndu leaves. The Court was satisfied that the two categories of persons specffied in els. (b) and (c) are intended to work as agents of the Government and all their actions and dealings in pursuance of the provisions of the Act would be actions and dealings on behalf ## Text _Characters 0–39,776 of 68,108. This is a partial read: ask again with offset=39776 for what follows._ 2 S.C.R. SUPREME COURT REPORTS 691 AKADASI PADHAN f}, STATE OF ORISSA (B. P. SINHA., c. J.. P. B. GAJENDRA.GADKAR, K. N. WANOHOO, K. C. DAS GUPTA and j. C. SHAH, jj.) &ale Monopoly-Ktndu Lt.av...-Appoinlment of agemaAgreement toith agents-Validity of-Article 19 (6) (ii)-Scope and effect of-Rule 7 (6)-Validity of Act and••· 3, 4, 8,-0ris8a KenJu Leavea (Oontrol of Trade) Act, 1961 (Orisaa 28 of ,961), ••· 3, 4, 8-0onstitution of India, Arts. 19 (1) (/) and (g), 19 (6). Prior to 1961, the petitioner used to carry on extensive trade in the sale of Kendu leaves. In 1962, the State of Orissa acquired a monopoly in the trade of Kendu leaves and put restrictions on the fundamental rights of. the petitioner. Three notifications were issued by the State on January 8, 1962, January 25, 1962 and March 10, 1962 for that purpose. Jn .bis petition under Art. 32, the petitioner challenged the validity of the notifications and also the validity of the whole Act, particularly ss. 3 and 4, on the ~ound that they violated Art. 19 (I) (f) and (g). The petitioner prayed for a decla• ration that the whole act was ultra vires and also an order restraining ihe State from giving eft'ect. to the notification and the Act. Held, that the Orissa Kendu Leaves (Control of Trade) Act, 1961, is a valid piece of legislation. The creation of State monopoly in Kendu Leaves is within the scope of Art. 19 (6) of the Constitution as amended by the constitution (First amendmtnt) Act, 1951. A law creating a State monopoly in the narrow and limited sense is valid under the latter part of Art. 19 (6). ff it indirectly impinges on any other right, its validity cannot he challenged on that ground. If the sa\d law contains other incidental provisions which are not essential and do not constitute an integral part of .the monopoly created hy it, the validity of those provisions has to be tested under the ti.St part .of Art. 19 (6). If they directly impinge on any other fundamental right granted by Art; 19 (I), the validity of the said clauses has to be tested by reference to the correspon· ding clauses of Art. 19; 1962 December 5. 1962 Akadasi Ptuilum •• Stale of Ori11a 692 SUPREME COURT REPORTS [1963] SUPP. • The essential atrributes of the law creating a monopoly will vary with the nature of the trade or busines1 in which the monopoly is created. They will depend u1ron the nature of the commodity, the nature of commerce in which it is involved and several other circumstances. A law relating to State monopoly in respect of road transport or air transport would not normally infringe the citizen's fundamental right under Art. 19 (1) (f). Likewise, a State monopoly to manufacture steel, armaments, transport vehicles or railway engines and coaches can be provided for by law and that would not normally impinge on Art. 19 (I} (f). However, if the law creating such monopolies makes incidental provisions directly impinging on the citizens' right under Art. 19 (I) (f}, the case would be different. Having regard to the scheme of the State monopoly envisaged by the Act, s. 4 cannot be said to be such an essential part of the said monopoly as to fall within the expression "law relatilll{ to" under Art. 19 (6). The validity of s. 4 has to be tested in the light of the first part of Art. 19 (6) so far as the petitioner's rights under Art. 19 ( 1) (g} are concerned and under Art. 19 (5) so far as his rights under Art. 19 (I) (f) arc concerned. So tested, the restrictions regarding the fixation of prices .prel<'.ribcd bys. 4 are reasonable and in the interc.t of the general public both under Art. 19 (5) and Art. 19 (6). Hence s. 4 is valid. · Section 3 of the Act is also not open to any challenge. This section allows either the Government or an officer of the Government authorised in that beha,lf or an agent in respcr.t of the unit in which the leaves have grown, to purchase or transport Kcndu leaves. The Court was satisfied that the two categories of persons specffied in els. (b) and (c) are intended to work as agents of the Government and all their actions and dealings in pursuance of the provisions of the Act would be actions and dealings on behalf of the Government and for the benefit of the Government. Ifs. 3 is valid, s. 8 which authorises ihe appointment of agents, must also be held valid. When the State carries on any trade, business or industry it must inevitably carry it on either departmentally or through its ofl'iccrs appointed for that purpose. In the very nature of things, the State cannot function without the help of its servants or employees and that inevitably introduces the concept of agency in a narrow and limited sense. There are some trades or businesses in which it may be inexpedient to undertake the work of trade or business departmentally or with the assistance ·- 2 S.C.R. SUPREME COURT REPORTS 693 of State servants. In such cases, it is open to the State to employ the services of agents, provided the agents work on behalf of the State and not for themselves. Rule 7 (5} provides that on appointment as agent the person appointed shall execute an agreement in such form as Government may direct. This rule is bad because it leaves it to the sweet will and pleasure of the offi= concerned to fix any terms and conditions on an ad hoc basis. This is beyond the competence of the State Government. The terms and conditions of the agreement must be prescribed by rules. When the agreement actually made in this case is considered, it leaves no room for doubt that the person appointed under the agreement to work the monopoly of the State is not an agent in the strict and narrow sense of the term con .. templated by Art. 19 (6) (ii). The agent appointed under this agreement seems to carry on the trade substantjally on his own account. If he makes any profit after paying the amount specified in the contract,. that profit is his. If he incurs any loss, that loss is his. He is not made accountable to the State Govcrnm'.:nt and the State Government is not resp.)nsible for his actions. It is impo3Sible to hold that the agreement is consistent with the terms of s. 3 of the Act. Hence, the agreement is invalid. The State Government cannot implement the provisions of the Act with the assistance of agents appointed under the said invalid agreement. Motilal v. Tho Government of the State of U.P. l.L.R. ~1951] l All. 269, A. K. Gopalan v. Stat,e of Madras, [1950] S. C. R. 88, Ram Sin~h v. Tile Stato of Delhi, [1951] S. C.R. 451, Express Newspapers (P} Ltd. v. Union of India, (1959] S:C. R. 12, State of Bom.bay v. R. M. D. Ghamarbaugwala, [1957) S. C. R. 874. lilz parte Bright in Resmith, [1879] 10 L R. Ch. D. 566 and Weiner Barria, (1910] l K. B. 285, referred to. Saghir Ahmed v. State of U. P. [19551 1 S. C. R. 707, Parbhani Transport Go-operatiiM Society Ltd. v. The Regional Tra"'Port Authority, Aurangabad, [1960] 3 S. C. R. 177, Dosa Satyanarayanamurty v. The Andhra Pradesh State Road Transport Oorporatian, [1961] l S. C.R. 642 and H. G. Narayanappa v. State of. J4ysore, [1960] 3 S. C. R. 742, relied upon. ORIGINAL JURISDICTION: Petition No. 73 of 1962. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. 1962 Akadasi Padhan v. Stat1 of Ofissa 1962 AJailr1.J'i Padhtm v. Slate uj Orissa Gaj1nJrag11dkar, J. 694 SUPREME COURT REPORTS [l!J631 SUPP. G. 8. Pathak and G. P. Lal, for the petitioner. M. G. Betalcarl, Attorney-General of lndfo, Dinabanrlhu Sahu, Advocate-General for the Btcite of Orissa, G. B. Agarwala, R.H. Dhebar, and R. N. Sachtkey, for respondent No. 1. 1962. December 5. The Judgment of the Court was delivered by · GAJENDRAGADKAR, J.-In challengiug the validity of the Orissa Kendu Leaves (Control of Trade) Act, 1961 (No. 28 of 1961) (hereinafter called the Act), this petition under Art. 32 of the Consti· tution raises an important question about the scope aod effect of the provisions of Art. 19 (6). The petitioner Akadasi Pradhan owns about 130 acres of land in village Bettagada, Sub-division Rairakhel in the District of Sambalpur, and in about 80 acres of the said land he grows Kendu leaves. Kendu leaves are used in the manufacture of Bidis; and so, prior to 1961, the petitioner used to carry on extensive trade in the sale of Kendu leaves by transporting them to various places io and outside the District of Sambalpur. But since the Act was pa;sed in HJ61 and it came into force on the 3rd of January, 1962, the Sta(e has acquired a monopoly in the trade of Keodu leaves, and that ha~ put severe restrictions on the fundamental rights .of the petitioner under Articles 19 (1) (f) and (g). That, in substance, is the basis of the present petition. The petition alleges that, in substance, the Act creates a monopoly in favour of certain individuals described as Agents by the relevant provisions of the Act, and in that sense, it is a colourable piece of legislation: Under the relevant provisions of the Act, three notifications have been is5ued, and the validity of these notifications is al~o challenged by the petition. The first notification published on the 8th of January, 1962 under section 5 of the Act, gives a schedule of the Districts, the number of units 2 S.C.R. SUPREME COURT REPORTS 695 in which the districts are divided and the local areas covered by the said units. The District of Sambalpur in which the petitioner resides has been divided into five units and the petitioner's lands fall under units 2 and 5. On .January 10, 1962, applications were called from persons who desired to be appointed as Agents of the Government of Orissa for purchase of and trade in Kendu leaves, and the notification by which these applications were called for made it clear that the Government reserved to itself the right to reject any or all applications in respect of any unit without assigning any reason whatsoever. Then followed the notification of the 25thjanuary, 1962, which prescribed the price for the Kendu leaves @ 50 leaves per naya paisa. This notification stated that the said price had b~en fixed by the State Government in consultation with the Advisory Committee appointed under s. 4 of the Act. The la~t notification to which reference must be made is the notification which was issued on March 10, 1962, making certain corrections in the units of the loci.I areas notified by the notification of the January 8, 1962. The validity of these notifications is challenged by the petitioner on the ground that the relevant provisions under which the said notifications are issued are invalid, .and also on the general ground that the Act in its entirety is ultra virea. The petition has averred that sections 3, 5, 6 and 16 of the Act are invalid because they contravene Art. 14, but this part of the case has not been argued before us. The main attack has been directed generally against the validity of the whole Act and sections 3 and 4 in particular on the ground that they violate Art. 19 ( l) ( f) and (g). The relief claimed by the petitioner is· that this Court may declare that the whole Act is ultra vires and restrain respondent No. l, the State of Orissa, from giving effect either to the provisions of the impugned notifications or to 1962 Akad(lj·i Padha11 ... State of Orissa Gajendragadkar, J, 1962 Al.:adiui Ptidhan v. Stl.llt (if Orissa G'ajcw/ragadkar, J. 696 SUPREME COURT REPORTS [1963] SUPP. the provisions of the impugned Act. The challenge made by the petitioner to the validity of the Act and the relevant notifications is met by respondent No. 1 mainly on the ground that the Orissa Legislature was competent to pass the Act and that its provisions do not contravene Art. 19 (1) (f) or (g). It is urged that under Art. 19 ,(6), the State Legislature is empowered to create a State monopoly in any trade or business and a monopoly thus created cannot be successfully challenged either under Art. 19(1) (f) or under Art. 19 ( 1) (g). In support of its case that the prices fixed under the Act and the scheme of enforcing the State monopoly adopted by the Act arc reasonable, respondent No. 1 has referred to the previous legislative history in respect of Kendu leaves, and has pointed out that the Act was passed in pursuance of the recommendations made by a Taxation Enquiry Committee appointed by the State Government in 1959. Besides, it has emphasised that 75% of the Kendu leaves produced in the State of Orissa grow in Government lands, and the monopoly created by the Act affects only 25% of the total produce of Kendu leaves in the State. The affidavit filed by respondent No. 1 also shows that the price fixed in consultation with the Advisory Committee is fair and reasonable and would leave a fair margin of profit to the grower of kendu leaves. It is on ·these rival contentions that the validity· of the Act as well as the notifications has to be considered in the present petition. Before referring to the relevant provisions of the Act, it would be relevant to refer to the legislative background in respect of Kendu leaves. In 1949, the Government of Orissa had passed an order in exercise of its powers conferred on it by subsection (1) of s. 3 of the Orissa Essential Articles Control and Requisitioning (Temporary Powers) Act, 2 S.C.R. SUPREME COURT REPORTS 697 1947. This Order was called the Orissa Kcndu Leaves (Control and Distribution) Order, 1949. The broad scheme of this Order was that the area in the State was divided into units, and licences were issued to persons who were entitled to trade in Kendu leaves. The District Magistrate fixed the minimum rate from time to time and the Order provided that the licensees were bound to purchase Kendu leaves from the pluckers or owners of private trees and forests at rates not below the minimum prescribed. In other words, the trade of Kendu leaves was entrusted to the licensees who were under an obligation to purchase Kendu leaves offered to them at prices not below the minimum prescribed by the Order. This Order was followed by the Orissa Kendu Leaves Control Order, 1960, passed under the same provision of the Orissa Act of 194 7. The licensees were continued under this Order, but some other provisions were made, such as the appointment of a Committee for each District to fix the minimum price. In other words, the licensing system continued even under this latter Order. It appears that when there was a change in the Government of Orissa, the monopoly created in favour of the licensees was changed over to controlled competition, and when the Congress Government, came back to power, it was faced with the problem that the controlled competition introduced by its predecessor had led to a loss in Government revenue. That is why, in pursuance of the recommendations made by the Taxation Enquiry Committee, the present Act .has been passed with the object of creating a State monopoly in the trade of Kendu leaves. It would thus be seen that though the Act creates a State monopoly in the trade of Kendu leaves, a kind of monopoly in favour of the licensees had been in operation in the State since 1949, 1962 Akada~·i Padhart v. Stat1 of Oris.fa Gajtmfragadkar, J. 1962 --- A karlas i padhan v. Stale of Orissa Glljendragadkar, J, 698 SUPREME COURT REPORTS [1963]SUPP. except for a short period when the experiment of controlled competition was tried by the Coalition Government which was then in power. Let us now examine the broad features of the Act. The Act consists of 20 sections, and as its preamble indicates, it was passed because the Legislature thought that it was expedient to provide for regulation of trade in Kendu leaves by creation of State monopoly in such trade. Section 2 of the Act definrs "agent" as meaning an agent appointed under section 8, and "unit" as a unit constituted under section 5; "grower of Kendu leaves" means any person who owns lands on which Kendu plants grow or who is in possession of such lands under a lease or otherwise; and "permit" means a permit issued under section 3. Section 3( 1) provides that no person other than {a) the Government; (b) an officer of Government authorised in that behalf; or (c) an agent in respect of the unit in which the leaves have grown; shall purchase or transport Kendu leaves. It is thus clear that by imposing restrictions on the purchase or transport of Kendu leaves, section 3 has created a monopoly. There are two explanations to s. 3(1) and two sub-sections to the said section, but it is unnecessary to refer to them. Section 4 deals with the fixation of sale price. Section 4( 1) lays down that the price at which Kendu leaves shall be purchased shall be fixed by the State Government after consultation with the Advisory Committee constituted under s. 4(2). After the price is thus fixed, it has to be published in the Gazette in the manner prescribed not later than the 31st day of January, and after it is published, the price would prevail for the whole of the year and shall not be altered during that period. The proviso to s. 4(1) permits different prices to be fixed for diffcrrent units, having regard to the five factors specified in clauses (a) to (e). Clause {a) has reference to the prices fixed under any law during the preceding three 2 S.C.R. SUPREME COURT REPORTS 699 years in respect of the area in question; cl. (b) refers to the quality of the leaves grown in the unit; cl. (c) to the transport facilities available in the unit; cl. (d) to the cost of transport; and cl. ( e) to the general level of wa~es for unskilled labour prevalent in the unit. Section 4(2) provides that the Advisory committee to be constituted by the Government shall con- , sist of not less than six members as will be notified from time to time; and the proviso to it lays down that not more than one-third of such members shall be from amongst persons who are growers of Kendu leaves. Under sub-section (3), it is provided that it shall be the duty of the Committee to advise Government on such matters as may be referred to it by Government; and sub-section ( 4) prescribes that the business of the Committee shall be conducted in such manner and the members shall be entitled to such allowances, if any, as may be prescribed. Se:tion 5 allows the constitution of units, and s. 6 provides for the opening of depots, publication of price list and the hours of business etc. Section 7( 1) imposes an obligation on the Government and the authorised officer or agent to purchase Kendu leaves offered at the price fixed under s. 4 in the manner specified by it; under the proviso, option is left to the Government or any officer or agent not to purchase any leaves which in their opinion are not fit for "the purpose of manufacture of bidis. Section 7(2) provides for a remedy to a person aggrieved by the refusal of the Government to purchase the Ken Ju leaves. Section 7(3) deals with cases where leaves offered are suspected to be leaves from the Government forests and it lays down the manner in which such a case should be dealt with. Section 8 deals with the appointment of agen(s in respect of different units and it allows one person to be appointed for more than one unit. Under s. 9, every grower ofKendu leaves has to get himself registered in the prescribed manner if the quantity of leaves grown by him during the year is likely to exceed ten standard maunds. Section 10 1962 Akadasi Padhan v. State of Ori.ssa Gajendragadkar, J. 1962 .4.kada~i Padha11 v. State of Orissa Gaje11dragndkar, J, 700 SUPREME COURT REPORTS [1963]SUPP. authorises the Government or its officer or agent to sell or otherwise dispose of Kendu leaves purchased by them. ·Section 11 provides for the application of net profits which the State Government may make as a result of the operation of this Act; this profit has to be divided between the different Samitis and Gram Pancha) ats as prescribed by the said section. Section 12 deals with delegation of powers; s. 13 confers power of entry, search and seizure; s. 14 deals with penalty; s. 15 deah with offences and s. 16 makes the offences cognizable; Section 17 makes savings in respect of acts done in good faith; by section 18, Government is given power to make rules; by section 19, the Orissa Essential Articles Control and Requisitionin~ (Temporary Powers) Act, 1955 is repealed in so far as it relates to kendu leaves; and s. 20 gives the power to the State Government to remove doubts and difficulties. These are the broad features of the Act. The first contention which has been raised by Mr. Pathak on behalf ot the petitioner is that the creation of State monopoly in respect of the trade of purchase of kendu leaves contravenes the petitioner's fundamental rights under Art. 19(1) (f) and (g). There has been some controversy before us as to whether the petitioner can claim any fundamental right under Art. 19(1) (g). The learned AttorneyGcneral contended that the petitioner is merely a grower of kendu leaves and as such, though he may be entitled to say that the restrictions imposed by the Act affect his right to dispose of his property under article 19(1) (f), he cannot claim to be a person whose occupation, trade or business has been affected. For the purpose of the present petition, we have, however, decided to proceed on the basis that the petitioner is entitled to challenge the validity of the Act both under Art. l!l (1) (f) and Art. 19(1) (g); and that makes it necessary to examine the argument raised by Mr. Pathak that the creation of the State 2 S.C.R. SUPREME COURT REPORTS 701 monopoly contravenes Art. 19 (1) (g). Mr. Pathak suggests that the effect of the amendment made by the Constitution (first Amendment) Act, 1951 in Art. 19(6) is not to exempt the law passed for creating a Stage monopoly from the application of the rule pre.cribed by the first part of Art. 19(6). In other words, he suggests that the effect of the amendment is merely to enable the State legislature to pass a law creating a State monopoly, but that does not mean that the said law Will still not have to be justified on the ground that the restrictions imposed by it are reasonable and are in the interests of the g~neral public. On the other hand, the learned Attorney-General contends that the object of the amendment was to put the monopoly laws beyond the pale of challenge under Art. 19(1) (f) and (g). It would thus be noticed that the two rival contentions take two extreme positions. The petitioner's argument is that the monopoly law has to be tested in the light of Art. 19(6) : if the test is satisfied, then the contravention of Art. 19(1) (g) will not invalidate the law. On the other hand, the State contends that the monopoly law must be deemed to be valid in all its aspects because that was the very purpose of making the amendment in Art. 19(6). Before proceeding tu examine the merits of these contentions, it is relevant to recall the genesis of the amendment introduced by the Constitution (First Amendment) Act, 1951. Soon after the Constitution came into force, the impact of socio-economic legislation, passed by the legislature in the country in pursuance of their welfare policies, on the fundamental rights of the citizens _in respect of property came to be examined by 'Courts, and the Articles on which the citizens relied were 19(1) (f) and (g) and 31 respectively. In regard to State monopolies, there never was any doubt that as a 1962 Akadasi Padhan v. State of Ori.tsa Gajendragadkar, J. 1962 .A.kadasi Padhan v. Stat1 of Orissa Gajendragadkar, J. 702 SUPREME COURT REPORTS [1963] SUPP. result of Entry 21 in List III both the State and the Union Legislatures were competent to· pass laws in regard to commercial and mdustrial monopolies, combines and trusts, so that the legislative competence of the Legislatures to create monopolies by legislation could not be questioned. But the validity of such legislation came to be challenged on the ground that it contravened the citizen's rights under Art. 19(1) {f) and (g). As a typical case on the point, we may refer to the decision of the Allahabad High Court in Moti Lal v. The Government of the State of Uttar Pradesh('). The result of this decision was that a monopoly of transport sought to be created by the U.P. Government in favour of the State operated Bus Service, known as the Government Roadways, was struck down as unconstitutional, because it was held that such a monopoly totally deprived the citizens of their rights under Art. 19(1) (g). As a result of this decision it was realised by the Legislature that the legislative competence to create monopolies would not necessarily make monopoly laws valid if they contravened Art. 19(1). That is why Art. 19t6) came to be amended. Incidentally, it may be of interest to note that about the same time, the impact of legislative enactments in regard to acquisition of property on the citizens' fundamental rights to property under Art. 19(1) (f) also came for judicial review and the decisions of Courts in respect of the acquisition laws in turn led to the amendment of Art. 31 on two occasions; firstly, when the Constitution (First Amendment) Act was passed in 1951 and secondly, when the Constitution (Fourth Amendment) Act was passed in 1955. · Article 19(6) as amended reads thus : "Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State (1) l.L.R.. (1951) 1 AU. 269. \ 2 S.C.R. SUPREME COURT REPORTS 703 from making any law imposing, in the interests of the general public, rea5onable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or t>revent the State from· making any law relating to,- (i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii) the carrying on by the State or by corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise." It would be noticed that the amendment provides, inter alia, that nothing contained in Art. 19(1) (g) will prevent the State from making any Jaw refating to the carrying on by the State of any trade, business, industry or service, whether to the exclusion, · complete or partial, of citizens or otherwise ; and this clearly means that the State may make a law in respect of any trade, business, industry or service whereby complete monopoly could be created by which citizens are wholly excluded from the trade, business, industry or service in question; or a }aw may be passed whereby citizens are partially excluded from such trade, business, industry or service ; and a law relating to the carrying on of the business either to the complete or partial exclusion of citizens will not be affected because it contravenes Art. 19 (1) (g). The question which arises for our decision is : what exactly is the scope and .effect of this provision ? 1962 Akmlasi Patlhan v. State of Orissa Gojendragadkar, J. 1962 Akat!asi Padhan v. State of Orissa Gajendragadkar, J, 704 SUPREME COURT REPORTS [1963] SUPP. In attempting to construe Art. 19(6), it must be borne in mind that a literal construction may not be quite appropriate. The task of construing important Constitutional provisions like Art. 19(6) cannot always be accomplished by treating the said problem as a mere exercise in grammar. In interpreting such a provision, it is essential to bear in mind the political or the economic philosophy underlying the provisions in question, and that would necessarily involve the adoption of a liberal and not a literal and mechanical approach to the problem. With the rise of the philosophy of Socialism, the doctrine of State ownership has been often discussed by political and economic thinkers. Broadly speaking, this discussion discloses a difference in approach. To the socialist, nationalisation or State ownership is a matter of principle and its justification is the general notion of social welfare. To the rationalist, nationalisation or State ownership is a matter of expediency dominated by considerations of economic efficiency and increased output of production. This latter view supported nationalisation only when it appeared clear that State ownership would be more efficient, more economical and more productive. The former approach was not very much influenced by these considerations, and treated it a matter of principle that all important and nation-building industries should come under State control. The first approach is doctrinaire, while the second is pragmatic. The first proceeds on the general ground that all national wealth and means of producing it should come under national control, whilst the second supports nationalisation only on grounds of efficiency and increased output. The amendment made by the Legislature in Art. 19 (6) shows that according to the Legislature, a law relating to the creation of State monopoly should be presumed to be in the interests of the general public. Art. Ul (6) (ii) clearly shows that I 2 S.C.R. SUPREME COURT REPORTS 705 there is no limit placed on the power of the State in respect of the creation of State monopoly. The width of the p'lwer conferred on the State can be easily assessed if we look at the words used in the clauses which cover trade, business, industry or service. It is true that the State may, according to the exigencies of the case and consistently with the requirements of any trade, business, industry or service, exclude the citizens either wholly or partially. In other words, the theory underlying the amendment in so far as it relates to the concept of State monopoly, does not appear to be based on the pragmatic approach, but on the doctrinaire approach which socialism accepts. That· is why we feel no difficulty in rejecting Mr. Pathak's argument that the creation of a State monopoly must be justified by showing that the restrictions imposed by it arc reasonable and arc in the interests of the general public. In our opinion, the amendment clearly indicates that State monopoly in respect of anv trade or business must be presumed to be reasonable and in the interests of general public, so far as Art. W(l) (g) is C!)ncerned. The amendment made in Arl. HI {l.i) shows that it is open to the Stale to make laws for creating State monopolies, either partial or complete, in respect of any trade, business, industry or service. The State may enter trade as a monopolist either for administrative reasons, or with the object of mitigating the evils flowing from competition, or with a view to regulate prices, or improve the quality of goods, or even for the purpose of making profits in order to enrich the State exchequer. The Constitution-makers had apparently assumed that the State rponopolics or schemes of nationalisation would fall under, and he protected by Art. l!l {ll) as it orig-inally stood; but when judicial decisions rendered the said a~umption invalid, it was thought nece1sm'y to cbrify the intention of the Constitution by maki~g IJ6l Akt!dtni Pfflum •• Slate q/ Oriss• Cnjr.ndrn.~~Jl.:.r, J, Jg(j2 .4.Wasi PadMn •• Slate of Orissa Gojendragadkar, J. 706 SUPREME COURT REPORTS [1963] SUPP. the amendment. It is because the amendment was thus made for purposes of clarification that it begins with the words "in particular". These words in· dicate that restrictions imposed 011 the fundamental rights guaranteed by Art. 19 (1) (g) which are re· asonable and which are in the interests of the general public, are saved by Art. 19(6) as il originally stood; the subject-matter' covered by the said pro· vision being justiciable, and the amendment adds that the State monopolies or nationalisation Schemes which may be introduced by legislation, are an illustration of reasonable restrictions imposed in. the interests of the general public an.d must be treated as such. That i~ why the question about the validity of the laws covered by the amendment is no longer left to be tried in Courts. This brings out the doctrinaire approach adopted by the amendment in respect of a State monopoly as such. This conclusion, however, still leaves two somewhat difficult questions to be decided; what docs "a law relating to" a monopoly used in the amendment mean ? And what is the effect of the amendment on the other provisions of Art. rn (I) ? The Attorney·Gencral contends that the effect of the amendment is that whenever any law is passed creating a State monopoly, it will not have to stand the test of reasonableness prescribed by the first part of Art. 19(6) and its reasonableness or validity cannot be examined under any other provision of Art. 19 (1). Taking the present Act, he urges that if the State monopoly is protected by .the amendment of Art. 19 (6), all the relevant provisions made by the Act in giving effect to the said monopoly are also equally protected and the petitionefil cannot be heard to challenge their validity on any ground. What is protected by the amendment must be held to be constitutionally valid without being tested by any other provisions of Art. 19 (1). That, in sub· stance, is the position taken by the learned Attorney. General. 2 S.C.R. SUPREME COURT REP.ORTS 707 In dealing with the question about the precise denotation of the clause "a law relating to", it is necessarv to bear in mind that this clause occurs in Art. l!l(6) which is, in a sense, an exception to the main provision of Art. l 9( l )(g). Laws protected by Art. l!J ( 6) a re regarded as valid even though they impinge upon the fundamental right guaranteed under Art. l!l( I ){g ). That is the effect of' the scheme contained in Art. l!l(l) read with clauses (2) to (6) of the said Article. That being so, it would be unreasonable to place upon the relevant clause an unduly wide and liberal comtruction. "A law relating to" a State monopoly cannot, in the context, include all the provisions contained in the said law whether they have direct relation with the creation of the monopoly or not. In our opinion, the said expression shou Id be construed to mean the law relating to the monopoly in its absolutely essential featurt'S. If a law is passed creating a State monopoly, the Court should enquire what are the provisions of the said law which are basically and essentially necessary for creating the State monopoly. It is only those csscntia 1 and basic provisions which are protected by the latter part of Art., 19(6). If there are other provisions made by the Act which are subsi· diary, incidental or helpful to the operation of the monopoly, they do not fall under the said part and their validity must be judged under the first part of Art. 19(6). In other words, the effect of the amendment made in Art. 19(6) is to protect the law relating to the creation of monopoly and that means that it is only the provisions of the law which are integrally and essentially connected with the creation of the monopoly that are protected. The rest of the provisions which may by incidental do not fall under the latter part of Art. 19(6) and would inevitably have tu satisfy the test of the first part of Art. 19(6). The next question to consider is: what is the 19'2 Akcd11Ji P•ihcn v. State nJ Ori.is• Gajtttdragatlkar, J. 1962 Akadasi Padhan v. State of Oris.ra GajendragaJkar, J, 708 SUPREME COURT REPORTS [1963] SUPP. effect of the amendment on the other fundamental rights guaranteed by Art. 19(1) ? It is likely that a law creating a State monopoly may, in some cases, affect a citizens' rights under Art. 19(l)(f) because such a law may impinge upon the citizens' right to dispose of property. Is the learned Attorney-General right when he contends that laws protected by the latter part of Art. 19(6) cannot be tested in the light of the other fundamental rights guaranteed by Art. 19( 1) ? The answer to this question would depend upon the nature of the law under scrutiny. There is no doubt that the several rights guaranteed by the 7 sub-clauses of Art. 19(1) are separate and distinct fundamental rights and they can be regulated only if the provisions contained in clauses (:l) to (6) arc respectively Satisfied. But in dealing with the question as to the effect of a law which seeks to regulate the fundamental right guaranteed by Art. Hl(l)(g) on the citizen's right guaranteed by Art. 19(l)(f), it will be necessary to distinguish between the direct purpose of the Act and its indirect or incidental effect. If the legislation seeks directly to control the citizens' right under Art. l\J(l)(g), its validity has to be tested in the light of