# JI rs. Dossibai X. B. Juj11blw.J v. Khl1TKl&and GorU111Ql

- **Citation:** [1962] 3 S.C.R. 936
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ji-rs-dossibai-x-b-juj11blw-j-v-khl1tkl-and-goru111ql-2405
- **Pages:** 35

## Headnote

1961
JI rs. Dossibai
X. B. Juj11blw.J
v.
Khl1TKl&and GorU111Ql
Das Gupta J.
1961
Septnnbtr 29.
•
936
SUPREME COURT REPORTS
[1962)
under s. 6 (1) of tho Rent Act the provision of
part II of the Act, apply.
The Trial Court nnd the High Court wer•
therefore right in holding that the City Civil Court,
Bombay, had 'no jurisdiction to try the suitll.
Tho a ppeale arc accordin~ly dismil!&'cl with
costs.
Thero will be one 1et of hearing fee for th•
four appeals.
Ap~nl di.<miased.
MANNALAL JAIN
t'.
TIIF. RTATF. OF ASSAM A?-.J) OTHERS.
(R. T'. 81NRA, c. J., R. K. DAS, A. TC SARIU.R,
N. RA.JAGOPALA AYYANGAR nnd
.T. R. MUDl!OLKAR, .T.T.)
Foo,/ Cnntro/-T.ire•r• '°' U"ho/,.alt dealing in rir• anii
padd.:1-l.icm'1°flfl Orda pre10-ibing co"'1itinna Jnr g,ant of
licP111:R--Stal1, r'r0t"rnml'nt
ia~uing inatructionR
lo
lictnaing
auf.1,oritif'8 to qranf licenceJ to co·oP'rative ~ocielit1 01ily-Propriety of---Grant of licl'nttt to ro-operative .!Dcittit11 and rtfttaal (()
othm-1.egalilf/ ~f-E,.ential Commodili'6 .A<I, 1955, (IO of
195.5), "· 3 mul 6-·-A•ROm FoodgraiM (Lir.<n•;ng and Co11trol)
nrd<r, IP61, cl. 5.
In exercise of the powers ronf<rred by s. 3 of the Ew.ntial O>mmodities Ar.t, 1955, the Assam Government made the
A"am Foo<lizrains (Licensing anrl Control) Order, 1961.
This
Order providt"d that no person could do bu~ine~s in foodgrains
including ric.- and parlrly, in \\•holcsal~ quantities except under
a licenc' i"ued thereunder.
Clause 5 of the Order laid down
in suh-ds. (a) to (e) matters which the licensin<r authority
!l}•all, among otht'r
matters, have rejrard to in granting
or
refusing
a
license;
sub-cl. (e) bring "whether the
applicant is a co-operative society".
In 1959, directions had
he.n issued to aU liccnsing authoritieo by the Government that
the rights of monopoly procurement had been given to Apex
Co-operative Society. The petitioner applied for a licence but
was ref115'd in view of the provisions of sub-cl. (e) of cl. 5 of
the Order. The petitioner challenged the order refusing the
licence on the grounds: (1) that sub-clause :el wu u/trg viua
•
r
"
-..--.
)
+
:l S.C.R. SUPRElllE COURT REPORTS
937
as it was beyond the powers granted to the S~ate Goyernment
under s. 3 read with s. 5 of the Act, and (n) !hat sub;cl· (e)
had been applied in a discriminatory manner with .a v1~~ to
create a monopoly in favour of the Apex Co-operative Society.
He'd, (per C.J., Das and Ayyangar, JJ.), that sub-cl. (e)
of cl. 5 of the Order was not ultra vires s. 3 read wit~ s._ 5 of
the Act, but the impugned order rejecting the apphca'.'?n of
the petitioner was bad as it infringed the rights of the petuwner
guaranteed under Arts. Hand 19 of the Constitution.
Section 3 of the Act authorised the making of an order
to achieve two objects, for maintaining or increa~ing supplies
of essential commodities and for securing their equitable di~tri
bution and availability at fair prices. Sub-clause (e) of cl. 5 of
the Control Order, 1961, which enabled the licensing authority
to prefer a co-operative society in certain circumstances in th~
matter of granting a licence, was not unrelated to the objects
mentioned in s. 3 of the Act.
A co-operative society may, by
reason of the place which it occupies in the village economy of
a particular area, be in a better position for maintaining or
increasing- supplies of rice and paddy and even for securing
their eq~itable 'distribution and availability at fair prices.
Ramanlal Nagardas v. JJ[. 8. Palnitkar, A.LR.
1961,
Guj. 38, distinguished,
Sub·clause (e) permitted the licensing authority to give
-._.._
preference to co-operative societjes in certain cases but it did
not have the effect of creating a monopoly in favour of
co-operatiVe societ:es. In the present case the licensing authority
refused lir.f'nce to the petitioner for the onJy reason and
purpose of granting a monopoly to co-operative societies; it
r
had administered •1e Jaw in a discriminatory manner and for
the purpose of achieving the ulterior object of cr

## Text

_Characters 0–39,731 of 72,239. This is a partial read: ask again with offset=39731 for what follows._

1961
JI rs. Dossibai
X. B. Juj11blw.J
v.
Khl1TKl&and GorU111Ql
Das Gupta J.
1961
Septnnbtr 29.
•
936
SUPREME COURT REPORTS
[1962)
under s. 6 (1) of tho Rent Act the provision of
part II of the Act, apply.
The Trial Court nnd the High Court wer•
therefore right in holding that the City Civil Court,
Bombay, had 'no jurisdiction to try the suitll.
Tho a ppeale arc accordin~ly dismil!&'cl with
costs.
Thero will be one 1et of hearing fee for th•
four appeals.
Ap~nl di.<miased.
MANNALAL JAIN
t'.
TIIF. RTATF. OF ASSAM A?-.J) OTHERS.
(R. T'. 81NRA, c. J., R. K. DAS, A. TC SARIU.R,
N. RA.JAGOPALA AYYANGAR nnd
.T. R. MUDl!OLKAR, .T.T.)
Foo,/ Cnntro/-T.ire•r• '°' U"ho/,.alt dealing in rir• anii
padd.:1-l.icm'1°flfl Orda pre10-ibing co"'1itinna Jnr g,ant of
licP111:R--Stal1, r'r0t"rnml'nt
ia~uing inatructionR
lo
lictnaing
auf.1,oritif'8 to qranf licenceJ to co·oP'rative ~ocielit1 01ily-Propriety of---Grant of licl'nttt to ro-operative .!Dcittit11 and rtfttaal (()
othm-1.egalilf/ ~f-E,.ential Commodili'6 .A<I, 1955, (IO of
195.5), "· 3 mul 6-·-A•ROm FoodgraiM (Lir.<n•;ng and Co11trol)
nrd<r, IP61, cl. 5.
In exercise of the powers ronf<rred by s. 3 of the Ew.ntial O>mmodities Ar.t, 1955, the Assam Government made the
A"am Foo<lizrains (Licensing anrl Control) Order, 1961.
This
Order providt"d that no person could do bu~ine~s in foodgrains
including ric.- and parlrly, in \\•holcsal~ quantities except under
a licenc' i"ued thereunder.
Clause 5 of the Order laid down
in suh-ds. (a) to (e) matters which the licensin<r authority
!l}•all, among otht'r
matters, have rejrard to in granting
or
refusing
a
license;
sub-cl. (e) bring "whether the
applicant is a co-operative society".
In 1959, directions had
he.n issued to aU liccnsing authoritieo by the Government that
the rights of monopoly procurement had been given to Apex
Co-operative Society. The petitioner applied for a licence but
was ref115'd in view of the provisions of sub-cl. (e) of cl. 5 of
the Order. The petitioner challenged the order refusing the
licence on the grounds: (1) that sub-clause :el wu u/trg viua
•
r
"
-..--.
)
+
:l S.C.R. SUPRElllE COURT REPORTS
937
as it was beyond the powers granted to the S~ate Goyernment
under s. 3 read with s. 5 of the Act, and (n) !hat sub;cl· (e)
had been applied in a discriminatory manner with .a v1~~ to
create a monopoly in favour of the Apex Co-operative Society.
He'd, (per C.J., Das and Ayyangar, JJ.), that sub-cl. (e)
of cl. 5 of the Order was not ultra vires s. 3 read wit~ s._ 5 of
the Act, but the impugned order rejecting the apphca'.'?n of
the petitioner was bad as it infringed the rights of the petuwner
guaranteed under Arts. Hand 19 of the Constitution.
Section 3 of the Act authorised the making of an order
to achieve two objects, for maintaining or increa~ing supplies
of essential commodities and for securing their equitable di~tri
bution and availability at fair prices. Sub-clause (e) of cl. 5 of
the Control Order, 1961, which enabled the licensing authority
to prefer a co-operative society in certain circumstances in th~
matter of granting a licence, was not unrelated to the objects
mentioned in s. 3 of the Act.
A co-operative society may, by
reason of the place which it occupies in the village economy of
a particular area, be in a better position for maintaining or
increasing- supplies of rice and paddy and even for securing
their eq~itable 'distribution and availability at fair prices.
Ramanlal Nagardas v. JJ[. 8. Palnitkar, A.LR.
1961,
Guj. 38, distinguished,
Sub·clause (e) permitted the licensing authority to give
-._.._
preference to co-operative societjes in certain cases but it did
not have the effect of creating a monopoly in favour of
co-operatiVe societ:es. In the present case the licensing authority
refused lir.f'nce to the petitioner for the onJy reason and
purpose of granting a monopoly to co-operative societies; it
r
had administered •1e Jaw in a discriminatory manner and for
the purpose of achieving the ulterior object of creating a monopoly in favour of co-operative1_; which object was not within
sub-cl. (e). The licensini>: authoritv was influenced, not by
considerations mentioned in cl. 5 of the Order, but by the
instructions issued by the State Government to grant Iicencci
to co-operatives only.
It \vas not proper for the Government
to issue instructions to the licensing authorities when they were
required to act according to the provisions of law.
Per Sarkar and Mudholkar,JJ, Sub-clause (e) of cl. 5 of
the Order served the object of s. 3 of the Act to maintain or
increase the supplies of essential commodities and to secure
their equitab]e di<1tribution and availability at fair prices and
,--y-- was not ultra vires.
Even if the Order a1lowed only one
.class, namely, co-operative societies, to do the business and
prohibited others, it would still advance the objects of the Act;
and the prohibition of the others doing the business would
amount to reasonable restrictions under Art. 19(6).
J,961
Marmalal Jain
v.
'The Stare of Assam
11'1
11.-1.i J.;,,
v:
TM 5,.,, •f Asscm
S. l;. n,, J.
+
938
~UPft.EME COURT REPORTS
[1962)
N1mndra Kumar v. Tht, U11io1t of Ifldia, [19601 2 S.C.R.
375 and GU... C'*"'rM Importtr1 d: U1e<s' A•socialion v. Th•
U .. ion of India, (W.P_ 65 of 1959, unreported), relied on.
The licensing authority had not exercised its power under
sub·cl. (e) in a discriminatory manner in the present case.
The authority was entitled to give preference to a co-operative
society and that is what it has done. Though the result of
this preference was to prevent the petitioner from carrying on
his busine", it was in the circumstances, a rcuonablc rCltric·
tion on hi• right "" it was nrcessary for securing foodgrains at
reasonable prices and in adequate quantities.
There 'vere no
directions given by the State Government in 1961 to licensing
authorities to grant licence~ only to co-operative societies and
it could not be said that the licensing authority had only
carried out the directions of the Government and had not
acted
independently.
In fact, the Order itself carried a
direction in sub-cl. (e) to give preference to co-operative
socicties.
The co...aperative societies formed a class by themselves and a provision giving preference to s·Jch a clan better
served the objects of the Act, and had a clear nexus with the
object of the Act and did not offend Art. 14.
ORIGINAL JURISDICTION : Petition No. 303 of
1960.
Under Article 32 of the Constitution of India
for the enforcement of Fundamental Rights.
C. K. Daphtary, Solicitor-Geneml of India,
N. Sharma, S. C. Nath and R. Gopal<lkrishnan, for
the Petitioner.
M. C. Setalvad, Attorney·Genernl!or India and
Naunit Lal, for the Respondents.
I 061. September 29.
The Judi,'lilent of Sinha
C .. J., S. K. Das and Rajagopala Ayyangar waa
delivered by
S. K. DAS, ,J.-This writ potition by one
Mannalal Ja.in was originally filed on October 17,
1960, and the ordor eompla.ined of was dated
September 13, 1960.
This was an order made by
the Deputy Commissioner, Kamrup, Ga.uha.ti, rejcc.
ting an application made by the petitioner ~or t~c
grant of a license for the year l!l60 for d~l.mg m
rioe a.nd paddy under the relevant prov1s1olll! of
the Assam Fooclgraine (Licensing and Control)
Order, 1960. This writ petition was put up for
-·
•
'
,,
•
3 S.C.R.
SUPREME COURT REPORTS
9311
hearing in this Court on February 2, 1961. The
hearing was, however, adjourned sine die, because
it was stated before us that the period of licence
for 1960 had already expired and a fresh application would have to be made for a license for 1961.
A fresh application was accordingly made by the
petitioner on February 4, 1961. But before that
date a fresh Assam Foodgrains (Licensing and
Control) Order, 1961 was made by the Governor of
Assam and the application made by the petitioner
had to be' dealt with under the new Order. No
order having been made on this fresh application
by the Deputy Commissioner, the petitioner moved
this Court by means of a petition (C.M.P. No. 850 of
1961) asking for certain reliefs, one of which was
that the respondents, namely, the licensing authorities, should be directed to consider the application
of the petitioner and grant him a license. On
April 11, 1961 an order was made rejecting the
application of the petitioner. This order which is
impugned before us was in these terms.
"H-.ving regard to the existing licenses
in these areas (Mangaldai and Gauhati), and
the quantity of foedgrains available therein,
any further license would be superfluous."
When the petition was again put up for hearing on
May 1, 1961 the petitioner asked for time to amend
his original petition which related to the order
refusing to grant him a license for 1960. Thia
amendment became necessary by reason of the
subsequent order passed on April 11, 1961, quoted
earlier, by which the petitioner's application for a
license for 1961 was rejectPd.
This amendment
wa~ allowed. Therefore, we have now to deal with
the writ petition as amended by the petition dated
May 5, 1961 (C.M.P. No. 1140 of 1961).
It is necessary now to state the relevant facts
~
-
out of which the petition has arisen. The petitioner
states that he is an Indian citizen carrying on a
business dealing in rice and paddy in the district of
1961
Mann•lal Jain
v.
Tiu Sl.te of Assam
S.K.Das J.
.\/mmolal .!r1i11
"·
7 /u Staft 9f .4JJam
~.k.lJ,,6 J.
940
SUPREME COGRT REPORTS
[1962]
1\amrnp in the State of Assam.
Jn I!l55
W<l.B
enacted the Essential CommoditiPs Act, I 055 (Act JO
of l!Jii5).
In exflrcise of tho powers eonfcrrccl by
s. ~ of the said Act, reacl with ;i notification by
which t.he said powers were dcl1,gatccl by
the
Central Government to tho Govcmrncnt of Assam,
the latter Gornrnrncnt made nu Ord('r callccl the
As11am Foodgrnins (Licensing and Cuntrnl) Order,
1958.
The result of this was that no dealing in
rice and paddy in wholesale quantities was permissible unless the petitioner obtain!'d a license
from the relevant licensing authority. The petitioner
states that he obtained such a license in l!J:i8.
This license expired on Decrmht•r :;i, l 9:i8.
The
case of tho' petitioner is that in J\J5D also he carried
on his business though there is some dispute as to
whether he obtained a license for that yi,ar.
On
K"'·embcr :?G, ID.'i!I, the petitioner received a letter
from the office of the Doputy Din·ctor of Supply,
Gnuhati, which said that his lice1rne woulcl not bo
renewed after December 31, W5D. This communication, it is stated, was the result of it decision taken
by the Government of Assam on t lw !l.dviee of a.
body called the Food Advisory Council to gi,·c a.
right of monopoly procurement of paddy to a cooperative society in the district of Kamrup known
as the Aasam Co· operative Apex ?i!ark,.ting Society
Ltd. (re~ponclent Ku. 6 beforn us). In a lotter dated
No\'cmbor 13, ID5D, tho Director of Supply, Assam,
indicated the policy to be followed to give <'lfoct to
the dC"cision aforesaid in these terms :
,
-
-
"The right of monopoly procurement in
respect of Kamrup clistrict including ~fangaldai
Suh·division, Taxpur
Sub.division, Cachar
district, :Nowgong district including United
,\Jikir and )forth Caehar Hills and North
Lakhimpur 8ub.dh·ision has been given to
the Co· operative Apex Marknting Society. The
Society will procure paddy from the growers
....-.-,,,
through vario11s service Cu.operative Societies
,prcad ovN the district or suh-diTision. They
,+
f'
3 S.C.R.
SUPREME COURT REPORTS
941
will procure all available surplus paddy and
deliver to Supply Department the quantity
required for the buffer stock for those areas.
Any paddy procured by them which is uot
required by us may be delivered to the mills."
A copy of the letter was forwarded to all licensing
authorities.
On January Li, 1960, the Assam Foodgrains (Licensing and Control) Order, 1960, came
into force.
This replaced the earlier Order of 195~.
Clause 0 of the 1960 Order was in these terms:
"5. Mailers to be taken into consideruti:on
for granting a license.-In granting or refusing
a license under this Order, the licensing
authority shall among other matters have
regard to the following, namely:-
( a} the stock of foodgrains available in
the locality for which the licen~e is required;
1 b) the number of persons who
have
applied for and/or boon granted licenses in
respect of the foodgrains under thi~ Order in
the locality ;
( c)
the business ordinarily carried 011 by
the applicant; and
(d) the past activities of the applicant
as a licensee or business man/firm :
Provided that the State Government may
from time to time modify the conditions for
granting a license."
On January 28, 1960 the petitioner made his application for a license for the year HJGO.
This application was rejected by an order dated February 17,
1960. The reason given for the rojection was in
these terms:
"You are hereby informed that as the
Co-operative Apex Marketing Society bas been
given the right of monopoly purchase in the
Kamrup district this year, your case cannot
be considered for issue of the license."
1961
Mannalal Jain
v.
The State of ABsam
S;K;Das J.
Ji!RI -
JI tu11ttJi., l , I ain
v.
Tht Statt •f AJ.Hfm
-
S.K. /iatt J.
!J42
SUPREME COURT REPORTS
(Hl62)
This reaaoa was obviously baaed on the decision as
to monopoly procurement which the Government
of Assam had adopted.
Against this order the petitioner moved the
High Court of Asaam by means of a writ petition
under Art. 226 of the Constitution.
The High
Court allowed the petition mainly on the ground
that the application of the petitioner for a. license
'
for tho year 1960 was not coDBi<lorecl on merits by
the liceneilljl: authority in accordance with tho provisious of ol. 5 of the Assam Foodgrains (Licensing
and Control) Order, 1960. The High Court did not go
into the larger question whether the State could or
conld not create a monopoly in the matter of procurement of paddy under the said provisions by means
•
of executive instructions issued to the licensing
authoritits. It, however, qu&ahed tho order dat-0d
February 17, 1960 and iBSued a writ of mandamus
directing the licensing authority to consider the
application of the petitioner on merits and in
accordance with the provisions of the aforesaid
Control Order.
Till June 7, l!J60 no order was
passcl1 by tho licensing authority, and on that date
'
the petitioner rnado two applications to tho High
Court, one for directing tho licensing authority to
gmn t him a liceru;e for l!J60 and the other for
taking action for contempt of court. A notice of
thoso applications, it is stated, was served on tho
rcspondenUI.
On June 8, 1960 the licensing authority made another order refusing to grant a licenso
to the petitioner. '.Jlhis order stated that "as the
Assam Co-operative Apex Marketing Society Ltd.,
had already been grant-0d a license to deal in rice
and paddy, with its branches spread all over the
district, it was considered unncc•lSSary to grant
further dealing licenses to individual dealers for the
-
-
same area".
On June !J, l!J60 the applications
earlier macie by the petitioner to the High Court on --..-~
Jun<' 7, 1960 were withdrawn and a fresh application was made on Juno 15, 1960, which was directed
against
tho
order dated Jm1e 8, 1960. On
.+
'
3 8.C.R.
SUPREME COURT REPORTS
943
August lO, 1960 the High Court again set aside the
order and directed the licensing authority to act independently of instructions received from the Government and to apply its mind to the merits of the
.application and decide it in accordance with the
relevant provisions of the Assam Foodgrains
(Licensing and Control) Order, 1960. Again, no
orders were made by the licensing authority till
September 8, 1960 in accordance with the directions
of the High Court, and the petitioner made two
applications on that date:
one for enforcing the
direction of the High Court, and the other for
initiating proceedings in contempt. These applications were admitted and it is stated that notices
were served on the respondents, including the
licensing authority, on that very date. On Septem·
ber 13, 1960 tl1e licensing authority made another
order, again rejecting the application of the
petitioner. This order stated inter alia:
"For the areas for which the applications
have been made the Assam Co-operative Apex
Marketing Society Ltd., has earlier applied
for and has been granted !iceme. This is a
relevant consideration under Clause 5 (b) of
the AssamFoodgrains (Licensing and Control)
Order, 1960. The stock of foodgrains available in the area can easily be procured by the
party already given license.
Being a cfloperative, it has better facility in this respect.
As such, I do not find it necessary to
grant license to the applicant. The petition
is, therefore, rejected".
This time instead of going to the High Court
of Assam, the petitioner came here and filed his
wl'it petitic·n on October 17, 1960 (Writ Petition
No. 303 of 1960). Thereafter, certain proceedings
took place in this Court to which we have earlier
referred in the first paragraph of this judgment.
The amended writ petition as it now stands is
directed against the order of the licensing authority
dated April II, 1961, by which it rejected tho
1961
Msnnirlal J ~in
\'l
Tiu 3tirte 6/ Assam
S. K' Dar J.
19~/
A-laf'llfJJksJ Jain
.
v.
Thi Stale of AsJam
S .. 1..:. Dt1s J.
!l44
SUPRE~m COURT REPORTS
[l!JG!?
aμplieatiou of the petitioner for a lioense for l!l61.
The provisions of the Assam Foodgraine (Licensing
and Control) Order, 1000, Bre no lo.nger relevant,
because a fresh Order called the Asoam Foodgrains
(Licen>ing and Control) Order, l!J6l, was made by
the Gon~rnor of Assam.
We shall hereinafter call
this the Control Order, 1961. It is necessarv to
:·ead here cl. 5 of the Control Order, 1961.
•
"5.
~falters to be token into consideration
jUJ" granting n license.-Iu granting or refusing
a license
under this Order, the licensing
authority shall, among other matters, have
regard to tho following, namely:-
(a) the stock of foodgrailrn available in
the locality for which tho license is required;
(bl the number of per~ons who have
applied for and those who have been granted
li"ensfs in respect of the foougrains under this
Order in the lorality;
(c)
the business ordinarily carried on
by the applicant;
(d) the past activities of the applicant
as a licensee or business man/firm; and
( c) whether
the applicant is
a CO·
operative society."
It should be noticed that the pr01·iso to old el. 5
was omitted and a. nc'" snb·el. ( e) was added.
This snb·cla.use enables the licensing authority, in
granting or refusing a license, to have regard to the
<'onsidcration whether the applicant is a co.operative society. To complete the statement of facts,
it ru11y ]><~rhapB be obsc1:ved that on Nove~bcr ~0,
l!HiO, tho High Court reJected the applic:i.t10n for
procreding against the opposite parties by way of
contempt, mainly on the ground that the ?rder
made on Scptt•mbcr rn, J!)(iO, was not before 1t.
On behalf of the petitioner the order dated
April 11, l!J(il, has been impugned on tlvo main
....
-
•
.+
-
-
3 S.C.R.
SUPREME COURT HEPORTS
grounds. The first ground of attack is tl1at su1'-cl.(e)
of cl. 5 of the Control Order, 1961 is ultra vires,
because it goes beyond the powers granted . to the
State Government under s. 3 read with s. 5 of the
Essential Commodities Act, 1955.
The second
ground of attack is that even if sub-cl. (e) of cl. 5 of
tho Control Order, 1961, is intra vires being within
the powers granted to the State Government, it
merely allows the licensing authority to take into
consideration, among other relevant matters, the
circumstance that the applicant for a licence is a
co-operative society; it docs not say that a monopoly right of procurement should be given in
favour of a co-operative society by excluding all
others; therefore, it was not open to the licensing
authority to proceed on the footing as if that subclause had created a right of monopoly in favour
of co-operatives.
Tho argument is that in the
present case the licensing authority instead of
applying its mind to the provisions of cl. 5 of the
Control Order, 1961, went by the instructions issued
by the State Government to grant a right of
monopoly to co-operative societies and based its
order on such instructions, in spite of directions to
tho contrary given by the High Court on earlier
applications made by the petitioner.
In other
words, it is contended t.hat the impugned order was
a mere colourable exercise of P'.•Wer in tho si·nse
that instead of exercising tho powers in accordance
with the provisions of law by which the licensing
authority had to be guided, it acted in accordance
with the instructions of the State Government and
granted a monopoly in favour of co-operative societies, such monopoly not being contemplated by the
provisions of cl. 5 of tho Control Order, 1961; therefore, the impugned order was bad being without any
legal authority or jurisdiction, and as it took away
the right of the petitioner to carry on his trade,
and furthermore made a discrimination against him
for the purpose of granting a monopoly to respondent
No. 6 not contempla.ted by law, it violated the
\
1961
Manna/al Jain
v.
TM Stille of AsJ·am
S.lf.·Das J.
--
1961
JI an114'4J J aiti
v.
Tlw StaU of As.sam
S. K. Das].
!HG
SUPREME COURT REPORTS
f I 962]
petitiouer'd rights unl·Jr Arts. 14 and llJ of the
Constitution. He is accordingly cntitlod to come to
this Court under Art. 32 of the Constitution to havo
the order qua.shed.
The petitioner has also elaimed
that for the same reasons, the grant of a licenso in
favour of respondent Xo. ti should also be quashed.
On behalf of the respondents, the' State of
Assam, its officers, and the Assam Co-operative Apex
Marketing Society Ltd. (respondent No. 6), it has
been urged that neither of the aforesaid t'vo grounds
of attack is valid.
On their behalf tho argument is
that sub-e!.(e) of cl. 5 of tho Control Order, 1961, is
within the authority and power granted to the ::>ta.to
Government undor s. :~read withs. 5 of the Essential
Commodities Act, 1955. Secondly, it is contended
that 110 monopoly has boen granted to the A881lm
Co-operative Apex .Marketing ::locicty Ltd., and the
order of the licensing authority datod April 11, 19Gl
is baaed on the considerations referred to in sub.els.
(a) ancl (b) of cl. 5 of the Control Order, 1961, a.nd
cannot be assailed on a petition under Art. 32 of the
Constitution.
We proceed now to a consideration of the
grounds of attack and the replies thereto. As to the
first ground of attack it must be made clear at the
very outset that the vires of the Essential Commodities Act, i!l55 have not been challenged before us.
What has been contended before us is that s.3 of
the Act gives certain powers to
the Central
Government, which powers the Central Govcrnm('lnt
has delegated the State Government of Assam.
Theso powers it iR contended, do not authorise the
insertion of sub·cl. (c) of cl. 5 of the Control Order,
1961; in other wor<ls the argument is that whether
the applicant for a licence is a co-operative Society or
not has no relova1rnc \Yhatsoever to the objects fur
which s. 3 grimts tho powers to the Centrnl Govern.
mont or its delegate to make certain Orders.
Sub.section ( 1) of s. 3 is relevant to this argument
and reads:
,
•
-
3 S.C.R.
SUPREMECOURT REPORTS
947
· "3 (l} If the Central Government is of
opinion .that it is necessary or expedient so
to do for maintaining or increasing supplies of
1my essential commodity or for securing their
equitable distribution and availability at fair
prices, it may by order, provide for regulating
or prohibiting the production, supply and
distribution thereof and trade and commerce
therein."
Sub-section (2) of s. 3 which we
need not read
enumerates the various categories of Orders which
can be made in exercise of the powers conferred by
8ub-s.(l), but without prejudice to the generality
of those powers. Now, the argument before us 1s
that the powers under s. 3 can be exercised when
the Central Government or its delegate is of opinion
that it is necessary or expedient to exercise the
powers to achieve two objects: (a) for maintaining
or increasing supplies of any essential commodity,
or (b) for securing their equitable distribution and
availability at fair prices. It is contended that the
circumstance whether the applicant for a licence is
a co·operative society or not has no connection
whatsover with the aforesaid two objects and
therefore, sub-cl. (e} of cl.5 of the Control Order, 1961
is not within the powers granted by s. 3 of the Act.
We cannot accept this a.grument in the very
broad terms in which it has been stated. Weare
satisfied that cl. 5 of the Control Order, 1961
does not provide for a monopoly in favour of cooperative societieA. The clause enumerates five
matters and states that the licensing authority
shall have regard to those matters in granting or
refusing a license. The fore matters enumerated
in the C'lause are not exhaustive of the matters
which
the licensing authority
may
consider;
because the clause says that the matters enumerated
therein a.re five "among other matters" which the
licensing a'.lthority may
consider.
Obviously
enough it is open to the licensing authority to
-
1961
Af anrul/,,J Jain
v.
The Stale of A.seam
S. K. Das J.
l~S-1
.\/ •M•i•I ]On
v.
Tiu Statt •/ A•,•m
S. K. D<s J.
948
SUPREME COURT REPORTS
[1962)
consid~r all matters relevant to the grant or refusal
of a license and the five matters enumerated in
the clause merely highlight some of those matters.
All that can be said is that sub-cl. (e) enables the
licensing authority to prefer a co-operative sociotv
in certain ciroumstanccs in the matter of grantin;.,
a li;onsc; in other words, there mav be cases o~
localitiea where the considerations· set out
in
sub·cl. (e) may override other considerations in the
matter of granting a license. We do not think that
su h- cl. ( t>) has any more far reaching effect. Indeed
the learned
Attorney-G~meral appearing for the
respondents conceded that sub-cl. (e) of cl. 5 did
not have the effect of creating a monopoly in
favour of co-operative societies.
Proceeding, therefore, on the footing that
sub-cl. (e) of cl. 5 does not provide for the creation of a monopoly, can it be said that it is outside the powers conferred on the Stnte Government by s. 3 of the
Essential
Commodities
Act, 1 \l55 ? It is not disputed before us that
sub-ch. (a) to (d) fall within the powers conferred
by s. 3. lllattcra such as the stock of foodgrains
available in the locality for which the license is
require<!, the numb<>r of persons who have applied
for and those who have been granted licem!ls in
the loc1'1ity, the business ordinarily carried on by
the applicant, and the past activities of the applicant as a licensee or busin08sman, aro undoubtedly
matters whioh have relation to the two objoctll
mentioned in a. 3. Can it be said that tho fifth
matter mentione<I in sub-cl. (e) viz., whether the
applicant is & co·operative society is completely
unrelatrd to those two objects? We aro m1ablo to
say that it is.
In tho counter-affidavit filed on
behalf of the respondents it has beon stated that
co-opernti..-o 1ocieties have better facilities for
procuring foodgraina and are in a position to ensure
scheduled prioes to the farmers who grow paddy.
It has beon further statod that amongst the cooperative socictioe are primary societies which
'
'
~:
•
I
3 S.C.R.
SUPREllIE COURT -REPORTS
consist of the growers of paddy; there are .also
.co-operative societies called supply co-operatives,
which are in a position to eliminate middle-man's
profits. · In para- 4 it was stated that the National
Development Council decided that the 'State should
take over wholesale trade in foodgrains with a
view to maintaining ·price leveh which are. fair
to the producer and the consumer and reduce to
the minimum · the disparity between the ·prices
received by the farmer ·and the prices paid. by. _the
consumer throughout the year. It was also decided
that an adequate number -of primary marketing
societies should be set up and linked with -village
co-operatives which should serve as agencies for
collection P.nd sale of foodgrains at assured prices
at the vii' 5e level. The affidavit the_n stated :
In view of the decision of :the National
De~ ,lopment Council, the -_ Go_vernment _of
Assam in consultation with their State Food
Advisory Council decided that in making
procurement of rice and paddy in the State,
preference should be given to the co-operative societies wherevei; they have resources
and facilities."
-
'We are of the view that by reason of. the. position
which co-operative societies may occupy in _the
village economy of a. particular area, it cannot
be laid down as a general proposition that sub-cl.( e)
of cl. 5 of of the Control Order,
1!!61, is- unrcla-
-ted to the objects mentioned ins. 3 of the Essential Commodities Act, 1955. There may be places
or areas where co-operative societies a.re in· a better
position for maintaining or increasing supplies of
rice and paddy and even for securing their equit-
-able distribution and availability at fair prices. We
must, therefore, repel the very broadly stated
contention of the learned counsel for the petitioner
that sub-cl. (e) of el. 5 of the Control Order,- 1961,
can have no relation whatsoever to the two objects
mentioned- in s. 3 of the Essential Commodities
Act,1955.
On behalf oC the petiticiner reliance
1981
}Janna/al Jafo
·- .-,.v; -.- '·'
Th~ State of .4.fsam
'
.
. ..
950
SUPREME COURT REPORTS
[1962)
was placed on the decision in -Ramanlal Nagard~s
v. 1l!. S. Palnitkar (1) •• That· was a
case m
A-lil1Ulal11l Jain
v.
which the validity of State action in entrusThe State •f Amm _ ting wholesale distribution of sugar which is
s.-K-, v-., j.
an essential commodity under the Essential Commodities Act, 195.5, to
Co-operative
Societies
only and excluding other dealers holding similar
licenses like the co-operative societies from -such
distribution, was challenged and arose for consideration. It was held that a State -could .make
a classification for the purpose of achieving parti·
. cular legislative objects but the classification must
-satisfy two conditions : (1) it· must be founded on
intelligible
differentia, and (2) the differentia
'./
- must have a rational relation to the objects sought
to be achieved. The question was considered from
the -point of view of Art. 14 of the Constitution
and it was held that the action of the State Govern-
. ment in entrusting wholesale distribution of sugar
to co-operative societies to the exclusion of other
licence-holders
amounted ·to a
discrimination
which violated the right guaranteed under Art. 14.
The principles underlying Art. 14 of the Constitution are now well-settled and have been enunciated
and explained in a number of decisions of this
Court and we consider it unnecessary to refer to
those principles in detail. In the case under our
consideration no discrimination has been made
-between one class of license-holders and another
class of license-holders as in the case of Ramanlal
Nagardas v. M. S. Palnitkar (1). What has happened
in the present ·case is that licenses have been
·granted only to co-operative societies and a license
has been denied to the petitioner, the lict-nsing
authority proceeding on the footing that a monopo-
. ly must be created in - favour of
CO· operative
societies.
A discrimination has indeed . taken -
place as against the petitioner, a discrimination
· which is not justified by the provisions of cl. - 5 of
the Control Order, 1961.
In dealing with the
'
..
application of the petitioner tho licen&ing authority
~
- - (I) A. I. R. 1961 Guj. 38.
3 S.C.R.
SUPREME.COURT REBORTS
951
has made. & discriminationwhich. isnot justified·
by cl. t;, That would take us to the second argu•
ment of the learned counsel for the petitioner,
but on his first argument the decision in: Ramainlal Nagardas v. M. S. Palnitkar (1) is of no assis'
tance. Sub-clause ( e) of cl. 5, we have already
stated, enables the licensing authority to give
preference to a co-operative society in cel'tain
crioumstances; but it does not create a monopolyi ·
in favour of co-operative societies. The preference given has a reasonable relation to the objects
of the legislation set out ins. 3 of the Act; therCL
fore, sub-cl. (e) of cl. 5 of the Control Order, 1961,
cannot be held to be bad on the ground of class
legislation, but the passing of an order. under the
sub-clause for a purposs not contemplated by it
will amount to discrimination and denial ofthe
guarantee of equal protection of the law.
This brings us to the second argument urged
on behalf of the petitioner and here we think that
the learned counsel for the petitioner is on much
surer ground. It was open to the licensing. authority to give preference to co-operative societies, if
it was of the opinion that granting a license to a
co.operative society in a particular locaJity would
facilitate the objects of s. 3 of the Act.
This is
not what the licensing authority did. He repeatedly refused a license to the p3titioner, for the only
reason and
purpose of granting a monopoly
to co-operative societies. In other words, the discrimination .that has been made by the licensing
authority is really in the administration of the
law.
It has been administered in a discriminatory manner and for the purpose of achieving an
ulterior· object, namely, the creation of a monopoly
in favour of co-operatives, an object which, clearly
enough, is not within sub-cl. (e) of cl. 5 of the
Control Orner, 1961.
We have quoted- earlier
the varrious orders which the licensing authority
had paesed. Those orders clearly show that the
licensing authority refused a licence to the
(I) A.I.R.. J!Hil Guj. 38.
19ff
.1.11 Qflnralol Jaia
v.
Tht Stalt.of .. ,~.ssmn
S. K, Das J,
i'
1961
}.! annaltd Jain
v.
TM Stal1 of .A.Jsam
S.K. DasJ.
952 '
SUPREME COURT REPORTS
[H.102)
petitioner not on ~ounds referred to in aub-cls.(a)
and (b) of cl. 5 but - on the ground that the
State Government had decided to introduce · a
right of monopoly procurement of paddy in favour
of co-operative societies and therefore, no licenses
should be granted - to individual dealers other
_ than co.-operath'e societies. ·Judged against the
background of facts to which we,' have earlier
referred :in this Judgment, the impugned order
dated April II, l!J61 appears to us to have ·been
based on the same ground, namely, the creation
of a monopoly in favour. of co-operatives, even
though the order refers to existing licenses and
the quantity of foodgrains available iii the lcicality.
- In the course of the hearing before us, the case
was adjourned in order to give the parties an
opportunity of filing necessary affidavits to 'show
whether individual dealers other than co-operatfres have been completely excluded in the whole
of the State in tho matter of dealing in paddy. The
affidavits show that private dealers have been
completely excluded.
In the affidavit filed on
behalf of respondent No. I, it has been stated in
-para. 4: .
·
·
"It is not denied that in the year 1961
licenses for the procurement of paddy have
been issued to the co-operatives in all the
paddy producing districts· in Assam."
To · show
however that
no - monopoly ha!
been created in favour of a particular co-operative
society. like respondent No. 6, it has been stated
that a number of co-operative societies_ have been
or are being granted licenses for the procurement
of paddy.
In our view these statements in tho -
affidavits filed on behalf of the respondents show
only one and one object viz., creation of a monopoly in favour of co-operatives. To achieve that
object the State Government has resorted to _ an
indirect ; method.
Instead of making an· Order
authorising - such monopoly (if. the State was
.,._
•
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I ..
' +
3 S.C.R.
SUPREME COURT REPORTS
953
competent to make such an Order under the Essential
Commodities Act, 1955, as to which we express
no opinion), it has chosen to adopt the indirect
method of issuing instructions to the licensing
authorities in all the districts to grant licenses to
co-operatives only. The vice of the impugned order
lies in the licensing authority accepting such ins·
tructions mid passing an order in accordance therewith. The duty of the licensing authority was to
pass orders in accordance with cl. 5 of the Control
Order, 1961. Instead of doing that, it passed an order
in accordance with the instruotions given to it on
behalf of the State Government, instructions which
appear to us to be not in consonance withsub-cl.(e)
of cl. 5; because sub-cl. ( e) contemplates a prefe·
rence to co-operative societies in certain circum·
stances, but not a monopoly in their favour.
We accordingly hold that the impugned order
is bad as violating the rights of the petitioner
guaranteed under Arts. 14and19 of the Constitution.
We must, therefore, quash the order of the licensing
authority dated April 11, 1961. We must also
qua.sh the order by which the licensing authority
granted a licence in favour of respondent No. 6.
The licensing authority must now consider the
application of the petitioner for a license for the
year 1961 on merits along with the applicatic•n of
respondent No. 6 and such other applications as
may be still pending. In dealing with these applications the licensing authority must have regard
to the provisions of cl. 5 of the Control Order,
11:161, and such other provisions of law as have
a bearing on them, in the light of the observations
made in this judgment. It would be the duty of
the licensing authority to ignore all instructions
which are not in consonance with the provisions
of law by which it is to be guided. As the year 1961
will come to an end within a few months, the
applications should be dealt with as expeditiously
al pO!lsiDie so that the right of· the petitioner may
1961
Mannalal Jain
v.
Tiu St•fe of Assam
S. K. flas 7.
l!MI
MMtUlalJ•in
v
Thi 8141; of ,foam
S.K. DasJ.
Stukar J.
!)54,
SUPREME COURl' REPORTS
[19621
not be rcnd~red infrnctuous by reason of the
d~la.y
made in di"osing of tho applications.
.
Befor~ we part with this case wo · expreM our
<loop conoom over tho manner in which the State·
Governmen~ or its officers havo issued instruction!
in the ma.ttijr <if granting of licenses, instructions
which clearfy enough are not in consona.noo with the
provisions of law governing the grnnt of such
licenHcs. We doubt the wisdom of issuing executive
instructions in matters which a.ro governed by provisions of law; on•n if it be consi<;lered necessnry
to issue instructions in such n. matter, the instructions cannc;it be so framed or utilised as to o,·erri<lc tho Pi·.,visions of ll\w. Such a method will
destroy the very
basi~ of the rule of law and
strike at tho Vl'ry root of orderly administration
of Jaw.
We have thought it necessary to refer to
this matter because we feel that the instructions
which the State Government or its officer.a have
issued in the matt"'r of gmnti.ng of licenses for tho
procurement of paddy are not in consonance with
the provisions of ol. 5 of tho Control Otder 1961.
In t•e result the petition is allowed with
costi; and the necessary orders should no\v iasuo
ru1 directed above.
·
s.uUUR ,J.-The petitioner is a ci~izen of India
an<l carri~ on bu.~int1ss as dealer in rice and paddy
in the Sta.te of Assam.
Siner. 1958, dealing. in rice
and paddy was controlled in that State by Orders
made by tho State Government frniμ timo to th,ne
undor theEssential Commodities Act, 1955 by virtne
of powers delegated to it by the Central Go"\'ernmont under s. 5 of that Ac-. These Ordtirs hereafter co.lleci LicPlll!ing Orders, provided qiat no
person.