# [1981] 3 S.C.R. 92

- **Citation:** [1981] 3 S.C.R. 92
- **Court:** Supreme Court of India
- **Decided:** 1981-03-09
- **Case number:** Civil Appeal No. 2734 of 1980
- **Bench:** S.' Murtaza Fazal Ali, A.D. Koshal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1981-3-s-c-r-92-8254
- **Pages:** 45

## Headnote

Essential Commodities Act 1955, S. 3 and Sugarcane (Control) Order 1966,
Clause 8-Notification by Cane Commissioner-1mpo$ition of a ban for a month and
half on operation of power crushers of Khandsari units in· reserved area of millVa/idity of-Exemption in favour of vertical power crushers-Whether di~crimina·
tory and justified.
, In' the State of Uttar Pradesh, sugarcane was produced by the sugarmills
through the 'hydraulic process' and by the power crushers through the 'open pan
process'. Both the mills as also the crushers drew their raw material, namely
sugarcane from sugarcane growers. In order to facilitate production by the
sugar mills, most of which were controlled ·by the State, reserved area of. the
fields growing sugarcane was fixed through out the State.
D
With a view to removing nation-wide shortage of sugar, enhancing sugar
production and achieving an equitable distribution of the commodity so as to
make it available to consumers at reasonable rates, the Cane Commissioner in
exercise of the powers conferred under clause (8) of the Sugarcane (Control)
Order, 1966 issued a notification dated 9th October, 1980 which directed that no
power crusher other than vertical power crushers manufacturing gur or rab from
sugarcane grown on their own fields or a Khandsari unit or any agent of such
E
owner in the reserved area of a mill could be worked until December I, 1980.
F
G
H
The petitioners who were owners of power crushers of Khandsari units and
had taken out regular licences under the Uttar Pradesh Khandsari Sugar Manufacturers Licensing Order 1967, assailed the notification which limited the ban to
work power crushers for a period of one month and a half i.e. from October 9.
1980 to December 1, 1980 in writ petitions to this Court.
They contended:
(I) The notification, as also the Control Order under which it was passed are violative of Article J 9(1)(g) and the restrictions contained therein do not contain the
quality of reasonableness. (2) Clause 8 of the Control Order under which the
notification had been issued suffers from the vice of excessive delegation of
powers and is, therefore, voilative of Article 14 of the Constitution. lhe
Notification seeks to establish a monopoly in favour of the sugar mills at
the cost of the petitioners, and must be struck down as being violative of
Article 14.
(3) There is no rational nexus between the prohibition contained
in the Notification preventing the crushers of petitioners from working them
and the object sought to be achieved by it. (4) Clause 8 of the Control
Order does not contemplate a comolete prohibition of the production of an
article but envisages only a regulation of the period of hours of working.
(5) The Notification violates the principles of natural justice inasmuch as
it was passed without hearing the petitioners whose rights were curtailed as
they were put completely out of production. (6) The impugned Notification by
imposing a prohibition against the working of the power crushers amounts to a
partial revocation of the licences granted to the petitioners under clause 3 of the
(
I
I
.1
\
LAXMI KHANDSARI ETC. ETC. V, U;P, STATE
93
Licensing Order and is, therefore violative of clause 11. (7) The impugned
Notification goes against the very spirit and object of the Act of 1955 and in fact,
frustrates the equal distribution and production of sugar which was the objective
of the Notification.
·
On behalf of the respondent-State it was submitted that : (l) An _order
passed under clause 8 of the Control Order is of a legislative character and "there·
fore the question of the application of the principles of natural justice, does not
arise.
(2) The notification does not violate Article 14 or Article 19 because it is
in public interest and aimed at maintaining and securing proper and equitable
distribution of sugar.
(3) The Notification is justified by the fact that the
recovery of sugar from sugarcane in case of Khandsari · units run . by power
crushers is between 4

## Text

_Characters 0–39,829 of 117,553. This is a partial read: ask again with offset=39829 for what follows._

A
B
c
92
LAXMI KHANDSARI ETC. ETC.
v •
. STATE OF U.P. & ORS.
March 9, 1981
[S.' MURTAZA FAZAL ALI AND A.D. KOSHAL, JJ.J
Essential Commodities Act 1955, S. 3 and Sugarcane (Control) Order 1966,
Clause 8-Notification by Cane Commissioner-1mpo$ition of a ban for a month and
half on operation of power crushers of Khandsari units in· reserved area of millVa/idity of-Exemption in favour of vertical power crushers-Whether di~crimina·
tory and justified.
, In' the State of Uttar Pradesh, sugarcane was produced by the sugarmills
through the 'hydraulic process' and by the power crushers through the 'open pan
process'. Both the mills as also the crushers drew their raw material, namely
sugarcane from sugarcane growers. In order to facilitate production by the
sugar mills, most of which were controlled ·by the State, reserved area of. the
fields growing sugarcane was fixed through out the State.
D
With a view to removing nation-wide shortage of sugar, enhancing sugar
production and achieving an equitable distribution of the commodity so as to
make it available to consumers at reasonable rates, the Cane Commissioner in
exercise of the powers conferred under clause (8) of the Sugarcane (Control)
Order, 1966 issued a notification dated 9th October, 1980 which directed that no
power crusher other than vertical power crushers manufacturing gur or rab from
sugarcane grown on their own fields or a Khandsari unit or any agent of such
E
owner in the reserved area of a mill could be worked until December I, 1980.
F
G
H
The petitioners who were owners of power crushers of Khandsari units and
had taken out regular licences under the Uttar Pradesh Khandsari Sugar Manufacturers Licensing Order 1967, assailed the notification which limited the ban to
work power crushers for a period of one month and a half i.e. from October 9.
1980 to December 1, 1980 in writ petitions to this Court.
They contended:
(I) The notification, as also the Control Order under which it was passed are violative of Article J 9(1)(g) and the restrictions contained therein do not contain the
quality of reasonableness. (2) Clause 8 of the Control Order under which the
notification had been issued suffers from the vice of excessive delegation of
powers and is, therefore, voilative of Article 14 of the Constitution. lhe
Notification seeks to establish a monopoly in favour of the sugar mills at
the cost of the petitioners, and must be struck down as being violative of
Article 14.
(3) There is no rational nexus between the prohibition contained
in the Notification preventing the crushers of petitioners from working them
and the object sought to be achieved by it. (4) Clause 8 of the Control
Order does not contemplate a comolete prohibition of the production of an
article but envisages only a regulation of the period of hours of working.
(5) The Notification violates the principles of natural justice inasmuch as
it was passed without hearing the petitioners whose rights were curtailed as
they were put completely out of production. (6) The impugned Notification by
imposing a prohibition against the working of the power crushers amounts to a
partial revocation of the licences granted to the petitioners under clause 3 of the
(
I
I
.1
\
LAXMI KHANDSARI ETC. ETC. V, U;P, STATE
93
Licensing Order and is, therefore violative of clause 11. (7) The impugned
Notification goes against the very spirit and object of the Act of 1955 and in fact,
frustrates the equal distribution and production of sugar which was the objective
of the Notification.
·
On behalf of the respondent-State it was submitted that : (l) An _order
passed under clause 8 of the Control Order is of a legislative character and "there·
fore the question of the application of the principles of natural justice, does not
arise.
(2) The notification does not violate Article 14 or Article 19 because it is
in public interest and aimed at maintaining and securing proper and equitable
distribution of sugar.
(3) The Notification is justified by the fact that the
recovery of sugar from sugarcane in case of Khandsari · units run . by power
crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges
between 9-1/2 to 11-1/2 per cent, so that utilisation of sugarcane in the case of
mills is double of that of the power crusher.
(4) The Khandsari produced by the
crushers has got a very narrow sphere of consumption as it is used mostly by
halwais or villagers, whereas sugar produced .by the sugar mills is consumed
in far larger quantities by the public. The action taken in order to protect
national interest and distribution of sugar to. the entire country on .rational
basis cannot be said to be an unreasonable restriction.
(5) There is a
marked difference between the quality of Khandsari and that of sugar
produced by the mills in their character, specification, etc. (6) The question of
natural justice does not arise because the crusher owriers were fully aware of the
situation and had also knowledge of the conside1ations which prevailed with the
Government in stopping crushers for a short period in order to boost production·
by the sugar mills and fix support price for the sugarcane supplied to the mills.
(7) Clause 8 of the Control Order uses the words 'period or working hours' which
are wide enough to embrace within their ambit a fixed period of time covering
more than a day as also hours of work on any working day.
Dismissing the writ petitions and appeals,
HELD : The impugned Notification cannot be said to contain the quality
of unreasonableness but is per se fair and reasonable. In so far as the word
'vertical' used in the Notification is concerned, it must be struck down as being '
A
c
D
E
violative of Article 14. This, however, does not. render the entire Notification
F
void because the word 'vertical' is clearly severable. from the other portions of
the Notification. All that has to be done is to read the Notification without the
word 'vertical' as a result of which the exemptions from the ban will include all
owners of power crushers whether vertical or horizontal which manufacture
Gur or rab from sugarcane grown on their fields. As the Notification has already
spent its force, if any order is passed in future, the Government will see that
such an invidious discrimination is not repeated. [ 134F; 124H-125B]
G
l(i) Where a citizen complains of the violation of fundamental rights
contained in any of sub-clauses (a) to (g) of Article 19 the.onus is on the State to
prove or justify that the frestraint or restrictions imposed on the fundamental
rights under clauses 2 to 6 of the Article are reasonable.
(104 CJ
Saghir Ahmed v. The State of U.P. and Ors. (1955] 1 S.C.R. 707 and
Mohammed Faruk v. State of Madhya Pradesh and Ors. (1959] l S.C.C. 853.
H
A
B
c
94
SUPREME COURT REPORTS
(1981] 3 S.C.R.
(ii) Fundamental rights enshrined in Part III of the Constitution are neither
absolute nor unlimited but are subject to reasonable restrictions which may be
imposed by the State in public · interest under clauses 2 to 6 of Article 19.
What are rearnnable restrictions would naturally depend on the nature and
circumstances of the case,
the character of the statute, the object which
it seeks to serve, the existing circumstances, the extent of the evil sought
to be remedied as also the nature of restraint or restriction placed on the rights
of the citizen. No hard or fast rule of universal application can be laid down,
but if the restriction imposed appear to be consistent with the Directive Principles
of State Policy they would have to be upheld as the same would be in public
interest and manifestly reasonable. [1050-E, G]
(iii) Restrictions may be partial, complete, permanent or temporary but they
must bear a close nexus with the object in the interest of which they are imposed.
Sometimes even a complete prohibition of the fundamental right to trade may
be upheld if the commodity in which the trade is carried on is essential to the life
of the community and the said restriction has been imposed for limited period in
order to achieve the goal. Freezing of stocks of foodgrains in order to secure
equitable distribution and availability on fair prices have been held to be a
reasonable restriction. [105H-106A, CJ
Narendra Knmar and Ors. v. The Union of India and Ors. [1960] 2 S.C.R~
D
375, M/s. Diwan Sugar and General Mills {P) Ltd. and Ors. v. The Union of India,
[1959] 2 Supp. S.C.R. 123 and The State of Rajsthan v. Nath Mal and Mitha
Mal, [1954] S.C.R. 982 referred to.
E
F
G
H
(iv) In determining the reasonableness of restrictions imposed by law in the
field of industry, trade or commerce, the mere fact that some of the persons
engaged in a particular trade may incur loss due to the imposition of restrictions
will not render them unreasonable because it is manifest that trade and industry
pass through periods of prosperity and adversity on account of economic, social
or political factors. In a free economy, controls have to be introduced to ensure
availability of consumer goods, like food-stuffs, cloth or the like at a fair
price and the fixation of such a price cannot be said to be an unreasonable
restriction. [107-A-B]
(v) Where restrictions are imposed on a citizen carrying on a trade or
commerce in an essential commodity, the aspect of controlled economy and fair
and equitable distribution to the consumer at a reasonable price leaving an
appreciable margin of profit to the producer is undoubtedly a consideration
which does not make the restriction unreasonable. [107 Cl
State of Madras v. V.G. Row, [1960] 2 S.C.R. 375, Mineral Development
Ltd. v. The State of Bihar and Anr., [1960] 2 S.C.R. 609, Collector of Customs,
Madras v. Nathe/la Sampathu Chetty and Anr. [1962]3 S.C.R. 786 and Mis. Diwan
Sugar and General Mills ( P.) Ltd. and Ors. v. U.O.I. [1959] 2 Supp. S.C.R. 123
referred to.
(vi) A restriction on the right of a trader dealing in essential commodities,
or fixation of prices aimed at bringing about distribution of essential commodities
keeping the consumers interests as the prime consideration cannot be regarded as
unreasonable. [110 Cl
In the instant case, the Petitioners by rushing to Court the moment the
Notification was issued, deprived the State as also themselves of the ?.Ctual con1
LAXMI KHANDSARI ETC. ETC. V. U.P. STATE
95
sequences of the notification and the prejudice which it really ritay have caused.
A
They did not at all show any patience in waiting for a while to find out if the
experiment functioned successfully and in the long run paid good dividends. As
the petitioners obtained stay orders the experiment died a natural death and the
Notification remained ineffective. [1110-E]
\
Pratr lee and Oil Mills and Anr. etc. v. Union of India, [1978) 3 S.C.R. 293,
referred to.
B
(vii) In the case of essential commodities like sugar the question of the
economic production and distribution thereof must enter the verdict of the Court
in deciding the reasonableness of the restrictions. In such cases even if the
margin of profit left to the procedure is slashed that would not make the restric·
tion unreasonable. The reason is that such a trade or commerce is subject to rise
and fall in prices and other diverse factors, and if any measure is taken to strike
a just balance between the danger sought to be averted and the temporary deprivation of the right of a citizen to carry on his trade, it will have to be upheld as
reasonable restriction. [112 G-113A]
Shree Meenakshi Mills Ltd. v. U.0.1. [1974) 2 S.C.R. 398 and Saraswati
Industrial Syndicate Ltd. v. U.O.I. [1975) I S.C.R. 956 referred to.
(viii) The restriction imposed by the Notification in stopping the crushers
for the period 10th October to !st December, 1980 is in public interest and bears
a reasonable nexus to the object which is sought to be achieved, namely, to reduce
shortage of sugar and ensure a more equitable distribution of this commodity.
Taking an overall picture of the history of sugar production it· cannot be said that
the stoppage of sugar crushers for a short period is more excessive than the
c
D
situation demanded.
E
Madhya Bharat Cotton Association Ltd. v. Union :of India and Anr. A.I.R.
1954 S.C. 634 referred to.
2(i) The Control Order has been .passed under the authority of section 3 of
the Act of 1955 which has been held to be constitutionally valid and not in any
way discriminatory so as to attract Article 14. The Control Order itself contains
sufficient guidelines, checks and balances to prevent any misuse or abuse of the
power. The Central Government under clause 8 on whom the power is conferred
is undoubtedly a very high authority who must be presumed to act in a just and
reasonable manner. [119 E-F]
Chinta Lintram and Ors. v. Government of India and Ors. [1971] 2 S.C.R. 871
and V.C. Shukla v. State (Delhi Admn.), [1980] 3 S.C.R. 500.
(ii) There was no question of creating auy monopoly to benefit the mills.
A very large majority of the mills were controlled by the State or co-operative
societies and only a small fraction of them were working in the private sector.
In view of tht low working cost of the crushers they sought to outcompete the
mills and deprive them of the requisite amount of sugarcane which they should
F
G
have got. It was not only just but also essential to boost the production of the
H
factories so that while sugar may be produced on a large scale and sugarcane
may not be wasted which would have been the case if most of the sugarcane went
A
B
c
96
SUPREME COURT REPORTS
[1981] 3 S.C.R.
to the crusher. The recovery. of sugarcane juice by the mills is double that by
the crushers and if the latter were allowed to operate the wastage would have
been almost 50 per cent which could have been avoided if sugarcane was allowed
to be utilised by the mills. [121 E-G]
(iii) If in the larger public interest it becomes necessary to compel the
sugarcane growers to supply sugarcane to the mills at a particular rate in order
to meet a national crisis, no person can be heard to say that his rights are taken
away in an unjust or discriminatory fashion. Personal or individual interests must .
yield to the larger interests of conw1r1ity. This was the philoiophy behind the
passing of the Act of 1955. [123 F-G]
3. It has not been proved that there is any real distinction between a
vertical and a horizontal power crusher. Both are regarded as falling in the same
class. The Notification by exempting vertical power crushers and prohibiting
horizontal power crushers is clearly discriminatory and the discrimination is not
justified by any rational nexus between the prohibition and the object sought to
be achieved. [124 G]
4. (i) Clause 8 used the words 'period or hours to be worked'. A plain
reading of this expression reveals that the words 'period' and 'hours' have been
used to connote to_ different aspects. Clause 8 contemplates regulation of working
D
of the sugar by two separate methods-{!) Where only hours of work per day are
to be regulated or fixed, and (2) the word 'period' which has nothing to do with
the hours to be worked but it refers to another category of regulation, namely,
whether a crusher is to run or not for a particular period of time. [125 D-E]
E
F
G
H
In the instant c;ise, the Notification has resorted ·to the first category, viz.
the 'period' of the working of the crushers, that is about one and a half month,
and has not at all touched or impinged upon the working hours of the crushers. If,
however, the notification had fixed certain hours of the day during which only
the crushers could work, then the Notification would have resorted to the alternative'mode of regulation, which obviously has not been done. The impugned
Notification is, therefore, wholly consistent with the provisions contained in
clause 8 of the Control Order. [125 G-126A]
5. (i) Two prominent features exclude the rules of, natural justice in the
instant case. Section 3 of the Act of 1955 under which the Control Order wa&
passed really covers an emergent situation so as to meet a national crisis, involving the availability or distribution of any essential commodity which may make
it necessary to restrict or control the business carried on by a citizen. There
was an acute shortage of sugar which was not made available to consumers at
reasonable rates and the situation caused serious dissatisfaction among the people.
Nothing short of immediate and emergent measures taken to solve this crisis.
would have eased out the situation. If hearing was to be given to so may owners
of power crushers, it would have completely defeated and frustrated the very
object not only of the ,Notification but also of the Act of 1955 and created
complications which may have resulted in a further deterioration of an already
serious situation. If the rules of natural justice were not applied in such an emerg·
ent case, the petitioners cannot be heard to complain. Afterall, the Notification
directed stoppage of operation only for a very short period and the petitioners
would have had an opportunity of recouping their loss after they were allowed to
function because the proportion of consumption of Khandsari Sugar was limited.
. .......,,.
}
\
·-,,.
LAXMI KHANDSARI ETC. ETC. V. U.P. STATE
97
The petitioners were, thertfore, not seriously prejudiced but have rushed to this
A
Court rather prematurely.
[128 B-C; F-129 A]
Mohinder Singh Gill and Anr. v. The Chief Election Commissioner, New
Delhi ond Ors: [1978] 2 S.C.R. 272, Maneka Gandhi v. U.0.I. [1978] 2 S.C.R.
621, S.L. Kapoor v. Jagmohan, [1980] 4 S.C.C. 379 and Prag Ice and Oil Mills
and Anr. v. U.O.l. [1978] 3 S.C.R. 293, referred to.
(ii) The impugned Notification is a legislative measure. The rules of natural
ju·stice therefore stand completeli excluded ;and no question of hearing arises.
The passing of the notification was a trial and error method adopted to deal with
a very serious problem. [129 G-H, 130 F]
Chairman, Board of Mining Examination and Anr. v. Ramjee, [1977] 2 S.C.R.
904, Joseph Beauhernais v. People of the State of Illinois, 96 L.ed. 919 at 930 and
Bates v. Lord Hai/sham of St. Marylebone and Ors. [1972] 1 W.L.R. 1373;
at 1378 referred to.
6.
A revocation of licence means that the licence has not been suspended
but cancelled for all times rto come entailing civil consequences and complete
abolition of the right for the exercise of which the licence was granted. A tern·
porary suspension of the working of the crushers owned by the petitioners cannot
amount to a revocation, either complete or partial. The proviso to sub-clause
(2) of clause 11 of the Control Order does not at all envisage a partial or periodical revocation of a licence. The proviso ccrres into play only if a licence is
revoked or cancelled once for all. The proviso is wholly inapplicable to the facts
of the instant case. [132 C-D]
State of Maharashtra v. Mumbai Upnagar Gramodyog Sangh, [1969] 2 S.C.R.
392.
7.
The Notification ex-facie cannot be said to have been passed without
due care and deliberation. The impugned Notification having been passed under
section 3 of the Act it fulfils all the conditions contained therein, viz. it is expedient for maintaining or increasing the supply of an essential commodity, namely
sugar which is included in clause (e) of the section 3 of the Act of 1955 and it
regulates the supply and distribution of the essential commodities of the trade and
commerce. Neither the Control Order nor the impugned Notification is against
the tenor and spirit of section 3. It is manifestly clear from the circumstances
disclosed that it is in pursuance of the aim and object for which section 3 was
enshrined in the Act of 1955 that the Control Order and the Notification were
promulgated. [133E; H-134 CJ
8. In case Government decides to impose a ban in future on the power
crushers or other units, a bare minimum hearing not to all the owners of
Khandsari units but to only one representative of the Association representing
them, and getting their views, would help the Government in formulating its
policy. Even if an emergent situation arises,· a representation against the
proposed action may be called for from such Association and considered after
giving the shortest possible notice. [135A-B]
B
c
D
E
F
G
9.
Whenever any steps for banning production is taken, the Government
H
has to evolve some procedure to detect the defaulters and ensure compliance of
the baning order. [136 C]
98
SUPREME COURT REPORTS
[1981] 3 S.C.R,
A
ORIGINAL JURISDICTION : Writ Petitions Nos. 5637-41, 5643-45,
5646-47, 5649-51, 5597-98, 5553-67, 5609-11, 5516-20, 5623-28, 5657,
5673-74, 5702-23, 5668, 5659-67, 5733, 5740-42, 5782-84, 5763-64,
5762, 5747-52, 5779-81, 5745, 5785, 5737-39, 5841-43,
5786-5797,
5861-62 and 5863-64 of 1980.
B
(Under Article 32 of the Constitution.)
c
AND
Civil Appeal No. 2734 of 1980.
Appeal by special leave from the Judgment and
Order
dated 12.11.1980 of the Allahabad High Court in W.P.No. 3115/80.
R.A. Gupta for the Petitioners in WPs.5637-41/80, 5797, 5733/80
and CA No.2734180.
A.P.S. Chauhan, Roopendra Singh. Gajraj Singh,
and C.K.
Ratnaparkhi for the Petitioners in WP 5762/80.
D
B.S. Chauhan, Birj Bihari Singh Sridhar for the Petitioner in
E
F
G
H
WP 5745/80.
Rameshwar Dial and Sarwa Mitter
for the Petitioners in
WPs 5782-84/80.
R.K. Garg,S.N. Kacker, R.K. Jain and R.P. Singh for the
Petitioners in WPs
5553-5567, 5616-5620,
5646, 5647, 5750-52,
5779-81, 5623-28, 5646-47, 5649-5651, 5643-45,5702
to 5723, 56735674, 5659 to 5667, 5740-42, 5737-39 and 5841-43/80.
R.P. Singh for the Petitioners in WPs 5609~1 l & 5597-98/80.
Soli J.Sorabjee, Arvind Minocha and Mrs. Veena Minocha for
the Petitioners in WP 5661 /70.
Mohan Behari Lal for the Petitioners in WPs 5785/80, 5786/80,
and 5657/80.
A.K. Gupta for the Petitioners in WPs 5763-64/80.
Lal Narain Sinha Att. Genl., S.C. Maheshwari Addi. Advocate
General (U.P.), O.P. Rana, Mrs.Shobha Dikshit for the Respondents
in all the matters.
The Judgment of the Court was delivered by,
FAZAL Au, J. Inspired by the objective of removing nation-wide
shortage of sugar and for the purpose of enhancing sugar production
...
.. .,,
LAXMI KHANDSARI ETC. ETC. V. U.P. STATE (Faza/ Ali, J.)
99
in order to achieve an equitable distribution of the commodity so as
A
to make it available to consumers at reasonable rates and thereby
relieving the sugar famine, the Cane Commissioner, Government of
Uttar Pradesh by virtue of a Notification dated 9th October, 1980,
acting under
clause 8 of the Sugarcane (Conrtol) Order, 1966
(hereinafter referred to as the 'Control Order') directed that no
power crusher, with certain exceptions, of a khandsari unit or any
B
agent of such owner in the reserved area of a mill could be worked
until December 1, 1980. The exact contents of the Notification may
be extracted thus:
"Lucknow, Thursday 9th October 1980
In exercise of the powers under clause 8 of the Sugarcane
(Control) Order, 1966 read with the Central Government,
Ministry of Food & Agriculture, Community Development and
Cooperation (Department of Food), Government of India
Order No. GSR 122/Ess. Comm/Sugarcane dated July 16, 1966,
I, Bhola Nath Tiwari, Cane Commissioner, Uttar Pradesh
hereby direct tha(no owner of power Crusher (other than those
vertical power crushers which manufacture Gur or Rab from
Sugarcane grown on their own fields) or a Khandsari Unit or
any agent of such owner shall in any reserved area, of any
Sugar Mill work the Power Crusher, or the Khandsari Unit
prior to December l, 1980 during the Year 1980-81.
By Order
Bhola Nath Tiwari
Cane Commissioner
Uttar Pradesh"
The Control Order was passed by the Central Govermment in
exercise of the powers conferred on it by s.3 of the Essential Commodities Act, 1955 (hereinafter referred to as the 'Act of 1955'). In
order to understand the contentions raised. by the parties it may be
necessary to analyse the prominent features of the above Notification
with reference to the situation it was intended to meet.
It is not disputed that sugar was being produced in the State of
U.P. by the sugar mills through hydraulic process and by the power
crushers through what is known as the 'open pan process'. Both the
mills as also the crushers drew their raw material, namely, sugarcane,
from the sugarcane growers. In order to facilitate production by the
sugar mills, most of whom were controlled by the State, a reserved
area of the field~ growing sugarane was fixed throughout the State
c
D
E
F
G
H
A
B
c
D
E
F
G
H
100
SUPREME COURT REPORTS
[1981] 3 s.c.R.
The Notification applied only to the reserved areas of a mill and not
to any other areas.
Jn other words, any area which fell outside the
reserved area was not affected by the Notification and the power
crushers situated in that area could still manufacture Khandsari by
the
open pan process.
Thus, it would be seen that the ban imposed by the notification was confined only to a particular arei. in the
State of U.P.
Secondly, the Notification limited the ban to work power
crushers only to a short period of one month and a half i.e., from
October 9, 1980 to December 1, 1980. Thirdly, (and it has also not
been disputed) the owners of power crushers of khandsari units, who
are the petitioners in these cases, had taken out regular licences under
the U.P.
Khandsari Sugar Manufacturers Licensing Order of 1967
(hereinafter referred to as the 'Licensing Order'). It, therefore,
logically follows that the power crushers owned or' worked by the
conditions of the licences under which they were working the crushers.
Fourthly, what was prohibited by the Notification was only the
manufacture of khandsari while the production of gur or rab from
sugarcane grown in the fields belonging to the owners of the crushers
was left out of the ambit of the Notification.
We have mentioned these essential features of the Notification
because the most important argument put forward before us by the
counsel for the petitioners has been that it imposes unreasonable
restrictions on the right of the petitioners under Art.19( l)(g) of the
Constitution to carry on their trade namely, production of khandsari.
A subsidiary argument buttressing the main contention was that the
Notification intends to create a monopoly in favour of the sugar mills
at the cost of the crushers owned by the petitioners and is, therefore,
clearly violative not only of Art. 19(l)(g) but also of Art. 14 of the
Constitution. We would, however, deal with this aspect of the matter
when we examine the contentions raised by the counsel · for the
parties.
The Attorney-General, appearing for the Union of India,
and Mr.
Maheshwari, Additional Advocate-General appearing
for the State of U.P., contended that, decision to ban the
power crushers of the petitioners was taken as a part of a high
powered policy to boost the production of sugar which had
fallen during the year 1979-80 with the result that in the current
year the country faced a great sugar famine. As the situation
called for some positive action to increase the production, the
matter having been discussed at the 34th Annual Convention of
J
f
\
LAXMI KHANDSARI ETC. ETC. v. U.P. STATE (Fazal Ali, J.)
101
Sugar Technologists of India, it was decided to ban the production of
A
khandsari by the power crushers for a limited period.
A large number of documents in the nature of affidavits,
counter- affidavits, reports and books have been filed by the counsel
for both the parties in support of their respective contentions. We
might also mention here that the Notification has since spent its force
and, in fact, was not carried into effect because immediately after it
was issued the present writ petitions were filed in this Court and the
petitioners obtained stay of the operation of the Notification from
this Court. The Attorney-General, however, insisted that the matter
should be finally decided so. that if the Central Government wants to
take any steps of this kind in future it may be aware of the correct
constitutional or legal position. The petitioners also insisted that the
constitutional and legal questions involved in these cases may be
decided even though our decision may be more or less of an academic
value.
B
c
This brings us now to the various contentions raised by counsel
D
for the petitioners and the respondents.
As the Notification has
already spent its force, we propose to deal only with the important
and relevant contentions that have been advanced before us.
The counsel for the petitioners headed by Mr.Garg, Mr. Mridul
and others raised the following constitutional points before us :-
E
(1)
The Notification, as also the Control Order under
which it was passed are clearly violative of of Art. 19(1)(g) and
the restrictions purported to be placed on the right of the petitioners not do contain the quality of reasonableness.
(2) Clause 8 of the Control Order under which the impugned
Notification has been inssued suffers from the vice of excessive
delegation of powers and is, therefore, violative of Article 14
of the Constitution. By the same token, as the impugned
Notification seeks to establish a monopoly in favour of the
sugar mills at the cost of the petitioners, invidious discrimination is writ large on the very face of the Notification which
must be struck down as being violative of Art. 14 .
. (3) There is absolutely no rational nexus between the
probibitkm contained in the Notification preventing the cruF
G
shers of the petitioners from working them and the object
H
sought to be achieved by it. Thus, the State had selected the
petitioners for hostile ·discrimination between one segment
A
B
c
D
E
F
G
H
102
SUPREME COURT REPORTS
[1981] 3 S.C.R.
and another of persons engaged in the purchase of sugarcane, its sale and production of sugar without striking a just
balance between the manufacturers of gur, khandsari and
sugar. India Jives in villages and it was not understandable
why the Central Government was bent on reducing the support price of sugarcane which was adversely affecting the
sugarcane growers because while the mills were not able to
pay a reasonable price the crushers were able to pay a handsome price for the sugarcane supplied to them by the growers.
When tested for reasonableness, therefore, the Notification
completely fails.
(4) Clause 8 of the Control Order does not contemplate
a complete prohibition of the production of an article but
envisages only a regulation of the period or hours of working.
(5)
The Notification· violates the principles of natural
justice inasmuch as it was passed without hearing the petitioners
whose valuable rights were curtailed as they were put completely out of production even though for a short period.
(6) The impugned Notification violative of clause 11 of the
Control Order itself inasmuch as the prohibition against the
working of the power crushers amounts to partial revocation of
the licences of the petitioners granted to them under clause 3 of
the Licensing Order. Clause 11 of the Control Order clearly
provides that no adverse orders could be passed against any
manufacturer without hearing him.
(7)
Even though the impugned Notification purports to
have been passed under the Control Order which itself was
passed under s. 3 of the Act of 1955 yet if the notification is
properly considered and the mischief it causes is borne in mind,
it goes against the very sprit and object of the Act of 1955 and,
in fact, frustrates the ,equal distribution and production of sugar
which apparenly seems to be the objective of the impugned
notification.
The Attorney-General and the Additional Advocate General
appearing for the Union of India and the State of U.P. respectively
countered the submissions made by the petitioners on the following
grounds:
(1) An order passed under clause 8 of the Control Order
is of a legislative character and therefore the questsion of the
LAXMI KHANDSARI ETC. ETC. v. U.P. STATE (Fazal Ali, J.)
103
application of the principles of natural justice to it does not
A
arise.
(2) The Notification does not violate Art. 14 or 19 because
it is in great public interest and is aimed at maintaining and
securing proper and equitable distribution of [sugar in view of
the nation wide shortage of the commodity.
(3) The Notification is justified by the fact that recovery of
sugar from sugarcane in case of khandsari units run by power
crushers is between 4 to 6 per cent whereas in the case of sugar
factories it ranges between 9! to 11 t per cent, so that utilisation
of sugarcane in the case of mills is double that of the power
crushers. In these circumstances, khandsari units and mills belong to two different classes which cannot}be said to be similarly
situate so as to attract Art. 14 (vi de pp. 69-70 of W.P .55655567 of 1980 Bhagwati Sugar Industry's case).
(4) The khandsari produced by the crushers has got a very
narrow sphere of consumption as it is used mostly by halwais or
villagers, whereas sugar produced by the sugar mills is consumed
in far larger quantities by the public in India generally and in
foreign countries after export. Therefore, the sugar mills fall
within a special class and the question of hostile discrimination
does not arise.
Similarly, the action taken in order to protect
national interests and distribution of sugar to the entire country
on a rational basis cannot be said to be an unreasonable
restriction.
(5)
There is a marked difference between the quality of
khandsari and that of sugar produced by the mills in their
character, specification, etc., which is evident from the various
reports filed by the State.
(6)
The. question of natural justice does not arise because
the crusher owners were fully aware of the situation and had
also knowledge of the considerations which prevailed with the
Government in stopping crushers for a short period in order
to boost production by the sugar mills and fix support price
for the sugarcane supplied to the mills. However, as
the
Notification has expired, if proper guidelines are laid down by
the Court, before passing a fresh order the State will certainly
hear the petitioners in order to know their point of view.
B
c
D
E
F
G
H
104
SUPREME COURT REPORTS
[1981] 3 S.C.R.
A
(7)
Clause 8 of the Control Order uses the words 'period
or working hours' which are wide enough to embrace within
their ambit a fixed period of time covering more than a day as
also hours of work on any working day.
We might also mention that some of the sugarcane growers
B
have supported the arguments advanced by the petitioners. We now
proceed to scrutinise and examine the contentions of the counsel for
the petitioners.
c
D
E
F
G
H
On the contention according to which the impugned notification
is violative of Art. 19(1)(g), it may be necessary to dwell in some
detail. It is no doubt well settled that where a citizen complains of the ·
violation of fundamental rights contained in sub-clause (g) of clause (I)
of Art.19 or for that matter in any of sub clauses (a) to (g) thereof, the
onus is on the State to prove or justify that the restraint or restric-
,tions imposed on the fundamental rights under clauses 2 to 6 of the
Article are reasonable. In the instant case, we are mainly concerned
with sub-clauses 4, 5 and 6 of Art.19. As far back as 1955 this Court .
in Saghir Ahmad v. The State of U.P, and Ors.(1) made this position
very clear and observed as follows:-
... There is undoubtedly a presumption in favour of the
constitutionality of a legislation.
But when the enactment on
the face of it is found to violate a fundamental right guaranteed
under article I 9(1) (g) of the Constitution, it must be held to be
invalid unless those who support the legislation can bring it
within the purview of the exception laid down in clause (5) of the
article. If the respondents do not place any materials before the
Court to establish that the legislation comes within the per·
missible limits of clause (6), it is surely not for the appellants to
prove negatively that the legislation was not reasonable and
was not conducive to the welfare of the community."
A similar view was taken in Mohammed Faruk v. State of
Madhya Pradesh and Ors.(2) where this Court,!speaking through Shah,
J. reiterated the position mentioned above in the_ following words:
"When the validity of a law placing restriction upon the
exercise of fundamental rights in Article 19(1) is challenged, the
onus of proving to the satisfaction of the Court that the restriction is reasonable lies upon the State."
(1) [1955] 1 S.C.R. 707.
(2) [1969] 1 s.c.c. 853.
LAXMI KHANDSARI ETC. ETC. V. U.P. STATE
105
We, therefore fully agree with the contention advanced by the
1 A
petitioners that where there is a clear violation of Art. l 9(l)(g), the
State has to justify by acceptable evidence, inevitable consequences or
sufficient materials that the restriction, whether partial or complete,
is in public interest and contains the quality of reasonableness.
This
proposition has not been disputed by the counsel for the respondents,
who have, however, submitted that from the circumstances and
B
materials produced by them the onus of proving that the restrictions
are in public interest and are reasonable has been amply discharged
by them.
This brings us to the main question as to the circumstances
\
under which restriction imposed by the State can be said to contain
the quality of reasonableness.
For this purpose, almost all
the
decisions of this Court on the subject have been placed before us and
it may be necessary to notice those of them which have a close bearing
on the point at issue.
c
It is abundantly clear that fundamental rights enshrined in
D
Part III of the Constitution are neither absolute nor un.limited but are
subject to reasonable restrictions which may be imposed by the State
in public interest under clauses 2 to 6 of Art.19. As to what are
reasonable restrictions would naturally depend on the nature and
circumstances of the case, the character of the statute, the object
which it seeks to serve, the existing circumstances, the extent of the
evil sought to be remedied as also the nature of restraint or restriction placed on the rights of the citizen.
It is difficult to lay down
any hard or fast rule of universal appplication but this Court has consistently held that in imposing such restrictions the State must adopt
an objective standard amounting to a social control by restricting the
rights of the citizens where the necessities of the situation demand.
It is manifest that in adopting the social control one of the primary
considerations which should weigh with the Court is that as the
directive principles contained in the Constitution aim at the establishment of an egalitarian society so as to bring about a welfare state
within the frame-work of the Constitution, these principles also
should be kept in mind in judging the question as to whether or not
the restrictions are reasonable. If the restrictions imposed appear to
be consistent with the directive principles of State policy they would
have to be upheld as the same would be in public interest and
manifestly reasonable.
Further, restrictions may by partial, complete, permanent or
temporary but they must bear a close nexus . with the object in the
E
F
G
H
106
SUPREME COURT REPORTS
[ 1981) 3 s.c.R.
A
interest of which they are imposed. Sometimes even a complete
prohibition of the fundamental right to trade may be upheld if the
commodity in which the trade is carried on is essential to the life of
the community and the said restriction has been imposed for a
limited period in order to achieve the desired goal.
B
c
D
E
F
G
H
Another important consideration is that the restrictions must
be in public interest and are imposed by striking a just balance between the deprivation of right and the danger or evil sought to be
avoided.