# LALA HARi CHAND SARDA v. MIZO DISTRICT COUNCIL & ANR

- **Citation:** [1967] 1 S.C.R. 1012
- **Court:** Supreme Court of India
- **Decided:** 1966-10-28
- **Case number:** Civil Appeal No. 648 of 1964
- **Bench:** K. Svd!Ia Rao, R. S. Bachawat A!'Id J.M. Shelat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/lala-hari-chand-sarda-v-mizo-district-council-anr-3895
- **Pages:** 15

## Headnote

B
L11shai Hills
Disirict (Irading by
no11-Triba/s)
Regulation (2 o/
.1963)., s. 3-Trading licence •to 11on-Tribal-lf
violative of Art. 19 of
the Constitwion--Co11stitutio11 of India, An. 19(1J(g)-/f loits s. 3 of
L11sltai HI/ls District Regulation.
'The Executive Committee of Mizo District Council refusod to further
renew the temporary licence issued to
the appellant, a non-1rader,
for
trading in Mizo District. Tho licence could be issu-od for one year only
C
and the appellant was trading after applying and obtaining its renewal
from time to time. The appellant filed a writ petition, contending, that
the order was ma/a fide in the sense that though the reason given for refusal was that the number of non-Tribal traders had reached the maximum,
the Committee had in fact granted licences to new traders, and that the
S>id order and s. 3 of the Lushai Hills District (Trading by non-Tribals)
Regulation, 1953 was invalid
bein~ violative of Art. 19( 1) (g) of the
D
Constitution.
The High Court mamtained the order.
In appeal to this
·Court.
HELD : (Per Subba Rao, C. J. and Shelat, J.) : Section 3 of the
Regulation is violative of Art, 19(1)(g) of the Constitution.
Even if the Sixth Schedule can be said to contain a policy and the
Regulation may be •aid to have been enacted
in pursuance of such a
policy an analysis of the Regulation •hows that that is not sufficient. Even
1f a statute lays down a policy it is conceivabk that its implementation
may be left in such aa arbitrary manner that the statute providing for
such implemenation would amount to an
unreasonable
restriction. A
provision which leaves an unbridled power to an authority cannot in any
sense be characteris..ed as reasonable.
Section 3 of the Regulation is one
such provision.
The Regulation contain.~ no principle or criterion on which the Executive Committee should grant or refuse ro grant a licence or its renewal;
nor does it provide any machin·~ry under which an applicant can !how
.cause why his application for a licence or its renewal should not be rejected; nor does it provide any superior a~thority before whom such an
applicant can establish that the refusal by the Commit!.,. is arbitrary or
without any proper cause; and it leaves the trader not only at the mercy
·of the Committee but also without any remedy.
In the pre;ent case, the Committee had given the reason for refusal to
renew the licence, but the order did
not state what that maximum wa!
·or who prescribed such a number and under what authority or what was
1he criterion for fixing any particular maximum.
[1020 D; 1021 A-Pl
(Per Bachawat, J. dissenting) : Section 3 of the Regulation
is not
violative of Arts. 14 and 19(l)(g) of the Constitution.
If paragraph I 0 of the Sixth Schedule of the Constitution cannot be
·regarded as violative of any provision in the Constitution, it is impossible
to saJ that s. 3 of the Regulation which is in strict coaformity with yaragraph 10 i• violative of Art•. 14 and 19(1) (g). The protection o the
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HARICHAND v. MIZO DIST. COUNCIL (She/at, J.)
1013
A
interests ?f the Sched)Jled .Tribes is to !Je ~he guiding. policy regulating.
the exercISe of the dIScretion of the D1Str1ct
Council Ill the matter of
granting or withholding trading licences to non-tribal traders.
B
c
In the present case, the Executive Committee found that the maximum
limit of non-trihal traders had been reaclred, and in the interest of the
tribal it was not desirable to issue licence to more non.tribal traders. It
was neither alleged nor shown that the Committee discriminated between
similarly situated persons.
[1023 G; 1024 C-D; 1025 H]
CIVIL APPELLATE
JURISDICTION : Civil Appeal No. 648
of 1964.
Appeal by special leave from the judgment and order dated
November 23, 1960 of Assam and Nagaland High Court in Civil.
Rule No. 88 of 1960.
Sukumar Ghose, for the appellant.
The respondent did not appear.
The Judgment of SUBBA RAO, c. J. and SHELAT, J. was delivered by SHELAT., J. BACHAWAT, J. delivered a di

## Text

LALA HARi CHAND SARDA
A
v.
MIZO DISTRICT COUNCIL & ANR.
October 28,
1966
[K. SVD!IA RAO, C. J., R. S. BACHAWAT A!'ID J.M. SHELAT, JJ.}
B
L11shai Hills
Disirict (Irading by
no11-Triba/s)
Regulation (2 o/
.1963)., s. 3-Trading licence •to 11on-Tribal-lf
violative of Art. 19 of
the Constitwion--Co11stitutio11 of India, An. 19(1J(g)-/f loits s. 3 of
L11sltai HI/ls District Regulation.
'The Executive Committee of Mizo District Council refusod to further
renew the temporary licence issued to
the appellant, a non-1rader,
for
trading in Mizo District. Tho licence could be issu-od for one year only
C
and the appellant was trading after applying and obtaining its renewal
from time to time. The appellant filed a writ petition, contending, that
the order was ma/a fide in the sense that though the reason given for refusal was that the number of non-Tribal traders had reached the maximum,
the Committee had in fact granted licences to new traders, and that the
S>id order and s. 3 of the Lushai Hills District (Trading by non-Tribals)
Regulation, 1953 was invalid
bein~ violative of Art. 19( 1) (g) of the
D
Constitution.
The High Court mamtained the order.
In appeal to this
·Court.
HELD : (Per Subba Rao, C. J. and Shelat, J.) : Section 3 of the
Regulation is violative of Art, 19(1)(g) of the Constitution.
Even if the Sixth Schedule can be said to contain a policy and the
Regulation may be •aid to have been enacted
in pursuance of such a
policy an analysis of the Regulation •hows that that is not sufficient. Even
1f a statute lays down a policy it is conceivabk that its implementation
may be left in such aa arbitrary manner that the statute providing for
such implemenation would amount to an
unreasonable
restriction. A
provision which leaves an unbridled power to an authority cannot in any
sense be characteris..ed as reasonable.
Section 3 of the Regulation is one
such provision.
The Regulation contain.~ no principle or criterion on which the Executive Committee should grant or refuse ro grant a licence or its renewal;
nor does it provide any machin·~ry under which an applicant can !how
.cause why his application for a licence or its renewal should not be rejected; nor does it provide any superior a~thority before whom such an
applicant can establish that the refusal by the Commit!.,. is arbitrary or
without any proper cause; and it leaves the trader not only at the mercy
·of the Committee but also without any remedy.
In the pre;ent case, the Committee had given the reason for refusal to
renew the licence, but the order did
not state what that maximum wa!
·or who prescribed such a number and under what authority or what was
1he criterion for fixing any particular maximum.
[1020 D; 1021 A-Pl
(Per Bachawat, J. dissenting) : Section 3 of the Regulation
is not
violative of Arts. 14 and 19(l)(g) of the Constitution.
If paragraph I 0 of the Sixth Schedule of the Constitution cannot be
·regarded as violative of any provision in the Constitution, it is impossible
to saJ that s. 3 of the Regulation which is in strict coaformity with yaragraph 10 i• violative of Art•. 14 and 19(1) (g). The protection o the
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HARICHAND v. MIZO DIST. COUNCIL (She/at, J.)
1013
A
interests ?f the Sched)Jled .Tribes is to !Je ~he guiding. policy regulating.
the exercISe of the dIScretion of the D1Str1ct
Council Ill the matter of
granting or withholding trading licences to non-tribal traders.
B
c
In the present case, the Executive Committee found that the maximum
limit of non-trihal traders had been reaclred, and in the interest of the
tribal it was not desirable to issue licence to more non.tribal traders. It
was neither alleged nor shown that the Committee discriminated between
similarly situated persons.
[1023 G; 1024 C-D; 1025 H]
CIVIL APPELLATE
JURISDICTION : Civil Appeal No. 648
of 1964.
Appeal by special leave from the judgment and order dated
November 23, 1960 of Assam and Nagaland High Court in Civil.
Rule No. 88 of 1960.
Sukumar Ghose, for the appellant.
The respondent did not appear.
The Judgment of SUBBA RAO, c. J. and SHELAT, J. was delivered by SHELAT., J. BACHAWAT, J. delivered a dissenting Opinion.
11
Shelat, J.
We regret our inability to agree with the conclusion
reached by Bacha wat J.
The appellant, a non-tribal, started trading at Aijal, Mizo
District, in 1957 under a temporary licence issued by the Mizo
District Council investing about Rs. 50,000/- therein. The tempc;>rary licence could be issued at a time for a year only and therefore·
E
he applied for and obtained its renewal from time to time upto
May 31, 1960.
He applied for a further renewal whereupon the
Executive Committee of the District Council passed an order dated
July II, 1960 refusing any further renewal and directing him to·
remove his properties from the District by the end of July 196(}
and imposed a fine of Rs. 500/- in case he failed to comply with
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it.
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H
The appellant filed a petition under Art. 226 of the Constitution in the High Court of Assam against t).i.e said order contending
that the said order was ma/a fide in the sense that though the reason
given for refusal was that the number of non-tribal traders had
reached the maximum tl!e Committee had in fact granted licences.
to new traders, and that the said order and section 3 of the Lushai
Hills District (l;'rading by non-Tribals) Regulation, 2 of 1953 were
invalid being violative of Art. 19(l)(e) and (g) of the Constitution.
The High Court struck down that part of the said order which
directed him to remove his properties from the District and which
imposed fine but dismissed the rest of the petition, firstly, on the
ground of delay and secondly on the ground that the said order was
a valid order and was not discriminatory.
The High Court also
repelled the contention that the power of the Council was unrestricted or arbitrary. The High Court observed :-
1014
-SUPREME COURT REPORTS
(1967) l S.C.R.
"The power cannot be said to be unrestricted. The
licence is to be granted or refused having regard to the
underlying object of the enactment. This Regulation was
passed in pursuance of the provisions of the Sixth Schedule
of the Constitution which gives specific power to the District
Council to pass regulations affecting the right of nonTribals to trade within the tribal areas and in order to
effect
tl!e purpose underlying
the provision of the
Sixth Schedule this Regulation was enacted. If having
regard to the scope of trade in that locality the number
of licences is restricted by
the authorities, it cannot
be said that the
exercise of such a power is discriminatory."
This appeal by special leave challenges the correctness of this order
by which the High Court dismissed the petition.
The appellant's contention before us was that the said order
B
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was invalid as it was based on an invalid provision of law which
infringed his fundamental right to carry on business at Aijal under
Art. 19(l)(g.), that the refusal to allow him to carry on his busiD
ness amounted to an unreasonable restriction and that section 3
of the Regulation which empower; the Council to refuse to permit
him to carry on business was invalid as it conferred on the Council
an arbitrary and uncanalized power enabling it to refuse to grant
a licence or its renewal according to its sweet will.
The Sixth Schedule to the Constitution constitutes the Miw
E
District, formerly known as the Lushai Hills District, as an autonomous district. Paragraph 10 of that Schedule provides for the
power of the District Council to make Regulation for the control
of money-lending and trading by non-tribals. Clauses 1 and 2 of
that paragraph read as under :-
(I) The District Council of an autonomous district
F
may make regulations for the regulation and control
of money-lending or trading within the district by persons other than Scheduled Tribes resident in the
District.
(2) Jn particular and without prejudice to the generality
0f the foregoing power, such regulations may
G
(a) prescribe that no one except the holder of a
licence issued in that behalf shall carry on the business of money landing
(b)
W
H
(d) prescribe that no person who is not a member
·of the Scheduled Tribes residem in the District shall
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HARICHAND v. MIZO DIST. COUNCIL (She/at, J.)
l 0 I 5
carry on wholesale or retail business in any commodity except under a licence issued in that behalf
by the District Council.
Paragraph 10 thus empowers the District Council to make Regulations for regulating and controlling money-lending and trading
by non-tribals in the District and in particular to provide by such
Regulations that no non-tribal shall carry on any trade without
a licence. In pursuance of this power the District Council enacted
the Lushai Hills District (Trading by non-Tribal) Regulation, 2 of
1953 the preamble of which merely states that it was expedient
to provide for the regulation and control of trading within the Lushai
Hills District by persons other than scheduled tribes resident in the
District. Section 3 of the Regulation provides that no person other
than a Tribal resident in the District shall carry on wholesale or
retail business in any commodities except under and in accordance
with the terms of a licence issued by the District Council. The first
proviso to this section does not concern us as it deals with permanent licences to be issued to persons who were carrying on business
prior to the enactment of the Regulation. But the second proviso
seems to apply to both permanent and temporary licences and lays
down that if a licence is refused, the grounds of refusal should
be recorded by the District Council. Sections 4 and 5 prescribe
that a licensee should maintain accounts in prescribed forms and
such accounts should be open to inspection by an authorised
officer. Section 6 empowers the Executive Committee to make
rules for carrying out the purposes of the Regulation and in particular to provide the form and conditions of the licence, the fees
therefor, the procedure for applying for a licence,
the forms
of accounts to be maintained by the licensee and for any other
matter connected with or ancillary to the matters aforesaid. Section
9 authorises the Executive Committee to cancel the lioonce of a
trader if he were convicted for contravention of any of the provisions of the Regulation. In exercise of the aforesaid power the
Executive Committee framed the Lushai Hills District (Trading
by non-Tribals) Rules, 1954. Rule 5(2)(a) provides that the terms
and conditions of the licence shall be strictly adhered to by the
licensee, a contravention thereof being punishable under the law
for the time being in force. The Rule also provides that no temporary licence shall be granted for a·· period exceeding one year at
one time. Rules 6 and 7 deal with permanent licences, that is,
licences granted to non-tribals carrying on business
before the
enactment of the said Regulation. We are not concerned with
those Rules as the appellant is not one of those persons entitled
to a permanent licence.
The appellant being a citizen of India and the Mizo District
being part of the Union Territory he has undoubtedly a fundamental right under Art. 19(1 )(g) to carry on trade in any part of
1016
SUPREME COUil T llEPOll TS
(1967) I S.C.A.
the country including the \llizo District.
Any restriction infrinA
ging such a right can only be sustained if it is a reasonable restriction imposed in the interest of the general public as envisaged by
Art. 19(6). In State of Madras v. V.G. Row(') this Court laid do"'n
an elaborate test of reasonableness which has since been accepted
in several subsequent decisions.
Patanjali Sastri C. J. in that
decision observed
-
e
"In considering the reasonableness of laws imposing
restrictions on fundamental rights both the substantive
and procedural aspects of the impugned law should be examined from the point of view of reasonableness and the
test of reasonableness, ivherever prescribed should be
applied to each individual statute impugned and no
abstract standard or general pattern of reasonableness
can be laid down
as applicable
to all cases. The
nature of the right
alleged to have been infringed,
the underlying purpose of the restriction imposed, the
extent or urgency of the evil sought to be remedied thereby,
the disproportion of imposition, the prevailing conditions
at the time should enter into the judicial verdict."
In the Stale of Rajastlzan v. Nath Ma/('l dausc 25 of the Rajasthan
Foodgrains Control Order,
1949 empowered certain specified
officers to freeze any stocks of foodgrains held by any person and
further provided that such stocks were liable to be requisitioned
or disposed of under orders of the said authority at the rate
fixed for the
purpose
of
Government procurement.
The
clause was
struck down by this Court on
the
ground that
while the authorities
may
fix
the
ceiling price
at
which
foodgrains should be sold in the market by the dealers there was
no such limitation on the power of the Government to acquire
the stocks. It would therefore be open to the Government to
requisition the stocks at a price lower than the ceiling price thus
causing loss to the persons wh0se stocks are freezed, while at the
same time the Government would be free to sell the same stocks
at a higher price and make profit.
No dealer would therefore
be prepared to buy foodgrains at the market price when he knew
that he was exposed to the risk of his stocks being frcezed any
moment and the same being requisitioned
at the procurement
rate.
The clause thus left it entirely to the discretion of the executive to fix any compensation it liked.
The decision held that
clause 25 placed an unreasonable restriction upon
the carrying
on of trade or business, was thus an infringement of the right under
Art. 19(1)(g) and was therefore to that extent void. In R.M. Seshadri
v. The District
Magistrate, Tanjore(') two conditions
subject
to which the appellant was granted a licence and which compelled
a licensee to exhibit in his cinema theatre at each
performance
(I) 119521 S. C.R. 597.
(2) [19541 S. C.R. 982.
(3) [1955] I S. C.R. 686.
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HARICHAND v. MJZO DIST. COUNCIL (Shelat, J.)
1017
one or more approved films of such length and for such length of
time, as the Provincial or the Central Government may direct
and which also compelled the licensee to exhibit at the commencement of each performance not less than 2000 feet of one or
more approved films were struck down as imposing unreasonable
restrictions on the right of the licensee to carry on his business.
At page 689 of the Report the Court observed :-
"Neither the length of the film nor the period of
time for which it may be shown is specified in the condition and the Government is vested with an unregulated discretion to compel a licensee U> exhibit a film of any length
at its discretion which may consume the whole or the greater
part of the time for which each performance is given ....
As the condition stands, there can be no doubt that there
is no principle to guide the licensing authority and a condition such as the above may lead to the loss or total
extinction of the business itself. A condition couched in
such wide language is bound to operate harshly upon the
cinema business and cannot be regarded as a reasonable
restriction. It savours more of the nature of an imposition than a restriction."
In Mineral Development Ltd. v. The State of Bihar( 1} this Court on
the other hand upheld the validity of s. 25(l)(c) of the Bihar Mica
Act, 1947 on the ground that the provisions of that section did
E
not impose any unreasonable restriction. In upholding the validity of the said provisions the court observed that the section
clearly provided ascertainable standards for the State Government
to apply to the facts of each case. Clauses (a), (b), (c) and (d) of
section 25(1) described with sufficient particularity the nature of the
defaults to be committed and the abuses to be guilty of by the
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licensee in order to attract the penal provisions. Clause ( c) with
which the Court was concerned embodied the last step that could
be resorted to by the State Government to eliminate a recalcitrant
operator from the field of mining industry provided he was guilty
of repeated failures to comply with any of the provisions of the
Act or the rules made thereunder. The discretion of the State
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Government under cl. (c) of s. 25 (!) was hedged in by important
restrictions, viz., the repeated failure on the part of the licensee
and the necessity for the State Government to afford reasonable
opportunity to him to show cause why his licence should not be
cancelled. In Kishan Chand Arora v. The Commissioner of Police(2)
the majority judgment observed that in order to decide whether
a provision in a pre-Constitution statute like the one in question
H
there satisfied the test
of constitutionality laid down by Art.
19(l)(g) read with Art. 19(6) the impugned section must be read
(I) [1960] 2 S.C.R. 609.
(2) [1961] 3 S. C. R. 13S.
Ml7Sup.CI/66-20
1018
SUPREME COURT llBPOllTS
[1967] 1 s. c. It.
as a whole and in a fair and reasonable manner and should not be
declared void simply because' considerations relevant to those
articles are not immediately apparent from its language. These
observations were made in connection with a pre-Constitution
enactment. Even then Subba Rao J. (as he then was) with whom
Sinha C. J. agreed uttered a note of caution saying that it was not
the function of the court to search for an undisclosed policy in the
crevices of the statute, for by doing so "this court will not only
be finding an excuse to resuscitate an invalid law but also be en·
couraging the making of laws by appropriate authorities in derogation of fundamental rights." Even according to the majority
decision, there must be disclosed in the statute apparently or otherwise, a policy guiding the exercise of power conferred thereunder
by the concerned authority.
These authorities clearly demonstrate that the fundamental
right of a citizen to carry on trade can be restricted only by making
a law imposing in the interest of the general public reasonable
restrictions on the exercise of such a right, that such restrictions
should not be arbitrary or excessive or beyond what is required in
the interest of the general public and that an uncontrolled and
uncanalized power conferred on the authority would be an unre·
asonable restriction on such right. Though a legislative policy
may be expressed in a statute, it must provide a suitable machinery
for implementing that policy in such a manner that such implementation does not result in undue or excessive hardship and arbi·
trariness. The question whether a restriction is reasonable or not
is clearly a justiciable concept and it is for the court to come to
one conclusion or the other having regard to the considerations
laid down in State of Madras v. V. G. Row.(1) It is also well
established that where a provision restricts any one of the funda·
mental rights it is for the State to establish the reasonableness of
such restriction and for the court to decide in the light of 1he circumstances in each case, the policy and the object of the impugned
legislation and the mischief it seeks to prevent.
With this background we now proceed to examine the provisions of the Regulation and consider whether the power granted
under section 3 amounts to a reasonable restriction so as to save
it
under Art. 19(6). As already stated, under Paragraph 10 of
the Sixth Schedule the District Council has the power to enact
Regulations for regulating and controlling money-lending or trad·
ing by non-Tribals in the District. Clause I empowers the Council
in general terms to make Regulations and Clause 2 empowers it
in particular to make Regulations prescribing that a non-tribal
after the enactment of such a Regulation shall not carry on trade
except under a licence.
Reading Paragraph 10 fairly and as a
(I} (1952] S.C.R.. 597.
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HARICHAND v. MIZO DIST. COUNCIL (She/at, J.)
1019
whole it would seem that the Constitution-makers were anxious
that the tribals should be safeguarded from unfair exploitation .by
non-tribals entering the District and carrying on money-lending
and other activities. It appears that Regulation 2 of 1953 ~as
passed for the avowed object set out in Paragrap~ 10 of the S~xth
Schedule though its preamble merely states that 1t was expedient
to regulate and control trade by
non-tribals. Section 3 of the
Regulation lays down a prohibition against any one carrying on
trade without a licence and except in accordance with the terms
of such licence. The effect of this section is that if a non-tribal
wishes to carry on trade in the District but is refused the licence,
such refusal would result in a total prohibition against him. from
carrying on any trade. Even if a licence is issued it can only be a
temporary licence for one year only. If the Executive Committee
to which this power is delegated by the Rules were to refuse to
renew it such refusal would mean that he has to stop the trade which
he was until then carrying on. In the first case it is a prohibition
and in the other a total extinction of his trade. It is clear from the
Regulation and the Rules made thereunder that there is no right
of appeal to any superior authority against a refusal to grant or
renew a licence. There is also no provision either in the Regulation or in the Rules empowering any civil court to adjudicate
against any such order of the Executive
Committee. A nontribal trader therefore has no remedy whatsoever against such an
order though the refusal to grant or renew a licence amounts to
his being totally barred from trading in one case and his business
or trade being destroyed in the other. Even if a non-Tribal obtains
a licence and starts a trade investing therein a large capital, there
would be no security for such trade as the licence would be for
one year only. The Executive Committee can refuse to renew his
licence and such refusal would
as aforesaid result in the total
extinction of his trade. Under the second proviso to section 3 the
Committee no doubt has to record the grounds for refusal but that
is hardly a safeguard against an arbitrary refusal, for, the Regulation does not constitute any superior authority with power to
revise such an order or to examine whether the grounds are legal
or proper. Though the Regulation provides that no non-tribal
can carry on any trade· without a licence issued by the Council
it is the Executive Committee under the Rules to which an application has to be made for such a licence or for a renewal thereof
and in the event of the Committee refusing to grant such a licence
or refusing to renew it the applicant is left without any remedy
whatsoever. A perusal of the Regulation shows that it nowhere
provides any principles or standards on which the Executive Com·
mittee has to act in granting or refusing to grant the licence. The
non-tribal trader either wishing to start a trade or continue his
trade started on a grant of licence is entirely at the mercy of the
Executive Committee for the grant or the renewal of a licence.
1020
SUPllBMI! OOURT UPOllT$
{1967] I S.C.ll.
There being no principles or standards laid down in the'Regulation
there arc obviously no restraints or limits within which the power
of the Executive Committee to refuse to grant or renew a licence
is to be exercised. This situation is clearly seen from the fact
that though section 9 of the Rcguiation authorises the Executive
Committee to cancel a licence-presumably both permanent and
temporary-if the licensee is convicted of contravention of any of
the provisions of the Regulation. the power of refusal under section 3 is not limited or circumscribed by any such provision or any
other_ criterion.
The lpowcr of refusal is thus
left
entirely
unguided and untrammelled. How arbitrary the exercise of such
unguided power can be is seen from the fact that the Executive
Committee not only refused to renew the appellant's licence but
also directed him to remove his property by the end of July 1960
and imposed a fine if he failed to do so.
'
It is true that the Executive Committee in the present case has
given the reason for refusal to renew the licence, viz., that the
number of licensees had reached the maximum. But the order
does not state what that maximum is or who prescribed such a
number and under what authority or what is the criterion for fixing
any particular maximum. Indeed there is nothing in the Regulation
empowering the Council much less the Executive Committee to lay
down any such maximum number nor docs the Regulation prescribe any principles on which such a m'uimum number is to be
fixed.
The Executive Committee can at any time and on its whim
arbitrarily fix a maximum number and refuse to grant or renew a
licence. Such a maximum number may also vary from time to
time. The result would be to prevent any newcomer to trade in
the District or to destroy the trade of a licensee carrying on his
business under a licence. At the end of each year every nontrihal trader would be at the mercy of the Executive Committee
and would not even know whether he would be permitted to continue his trade. Even the Rules made under section 6 do not
lay down any principles or standards.
Ruic 7 is couched in general
terms and provides that the Executive Committee may refuse to
renew any licence granted to a non-tribal trader afte~ the conunencement of the Regulation.
Rule 4 empowers the Committee to make
such enquiry as it deems proper into the antecedents and character
of any new applicant and then reject or accept his application.
The Ruic, however, does not lay down any standards on the basis
of which the Committee has to decide whether the antecedents or
the character are su~h that the application should be rejected. The
Committee therefore can in any given case reject an application
merely stating that the antecedents of an applicant are not good
or proper wirhout the applicant knowing what standards of character or antecedents he has to conform to.
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HARICHAND v. MIZO DIST. COUNCIL (Bachawat, /.)
102i
Even though it may perhaps be said that the Sixth Schedule
to the Constitution shows a policy to safeguard the tribals from
being exploited and the Regulation was enacted in exercise of the
power conferred thereunder that is not enough to save the restriction from the vice of being unreasonable. It provides no principles
on which such a policy is to be implemented.
As already stated,
the Regulation contains no principle or criterion on which the Executive Committee should grant or refuse to grant a licence or its
renewal. It does not provide any machinery under which an
applicant can show cause why his application for a licence or its
renewal should not be rejected. It does not also provide any superior authority before whom such an applicant can establish that :he
refusal by the Committee is arbitrary or without afiy proper cause.
Indeed the Regulation does not contain any· provision laying
down what is and what is not a proper cause for refusal. Equally
it does not show any guiding criterion on which the Committee
should decide to grant or refuse a licence or its renewal. The
Regulation contains no provisions on the basis of whieh an applicant· would know what he has to satisfy in order to entitle himto a licence. The power to grant or not to grant is thus entirely unrestrained and unguided ... The Regulation leaves a trader
not
only at the mercy of the Committee but also without ariy remedy.
Therefore even if the Sixth Schedule can be said to contain a policy
and the Regulation may be said to have been enacted in pursuance
of such a policy the analysis of the Regulation shows that that is not
sufficient. Even if a statute lays down a policy it is conceivable that
its implementation may be left in such an arbitrary manlier that the
statute providing for such implementation would amount to an
unreasonable restriction. A provision which leaves an unbridled
power to an authority cannot ip. any sense be characterised as
reasonable. Section 3 of the Regulation is one such provision and
is therefore liable to be struck down as violative of Art. 19(1)(g).
For the reasons aforesaid, we would declare that section 3 of
the Regulation is an unreasonable restriction on the fundamental
right guaranteed under Art. 19(1)(g) and therefore void. The
said order dated July II, I 960 having been made under such a void
provision is illegal and void. We would therefore set aside the
said order as having been made under an illegal provision of law
and allow the appeal with costs.
Bachawat, J. The appellant is a non-tribal trader. Since
1957 he carried on business at Aijal in Mizo District under temporary licenses issued on behalf of the District Council. The license
was renewed from time to time.
In 1959, a license valid till December 31, 1959 was issued, and at the appellant's request, the
period of the license was extended from tinie to time up to May 31,
1960. By his letter dated July II, 1960,
the Revenue Officer,
Mizo District Council informed the appellant that the Executive
1022
SUPREME COURT
REPORTS
[1967) I S.C.ll.
Committee of the Mizo District Council had decided that his
license could not be extended as the number of the license-holders
had reached its maximum limit, and the appellant was directed to
shift all his properties outside the Mizo District within July 1960,
failing which a fine of Rs. 400/- would be imposed upon him. The
appellant filed a writ application in the Assam High Court asking
for the issue of a writ setting aside this order and directing the Mizo
District Council to renew his license. The Assam High Court
quashed the order in so far as it imposed a fine of Rs. 500/-, and
directed the appellant to remove his
goods. The High Court,
however, maintained the order in so far as it refused to renew the
license. The appellant now appeals to this Court by special leave.
The Mizo District formerly kr.own as the Lushai Hills District
is a tribal area in Assam, and is one of the autonomous districts
constituted by paragraph 1 of the Sixth Schedule to the Constitution of India. Paragraph 10 of the Sixth Schedule gives power
to the District Council to make regulations for the control ofmoneylending and trading by non-tribals. The inaterial part of paragraph 10 is in these terms;
"10. Power of District Council to make regulations
for the control of money-lending and trading by non-tribals.-
(1) The District Council of an autonomous district may
make regulations for the regulation and control of moneylending or trading within the district by persons otber
than Scheduled Tribes resident in the district.
(2) In particular and without prejudice to the generality of the foregoing power, such regulations may.
(d) Prescribe that no person who is not a member of
the Scheduled Tribes resident in the district shall carry on
wholesale or retail
business in any commodity except
under a licence issued in that behalf by the District Council :
Provided that no regulations may be made under
this paragraph unless they are passed by a majority of
not less than three-fourths of the total membership of the
District Council :
Provided further that it shall not be competent under
any such regulations to refuse the grant of a licence to
a money-lender or a trader who has "been carrying on
business within the district since before the time of the
making of such regulations."
On March 17, 1953 the Lushai Hills District Council with the
a5sent of tbe Governor of Assam and in exercise of its powers
under paragraph JO of the Sixth Schedule to the Constitution made
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HARICHAND v. MIZO DIST. COUNCIL (Bachawat, /.)
I 023
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and promulgated the Lushai Hills District (Trading by !1on-Tribals)
Regulation,
1953 (Regulation No. 2 of 1953). Sect10n 3 of the
Regulation reads:
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"3. No person, other than a Tribal resident in the
District shall carry on wholesale or retail business in any
commodities in this District except under and in accordance
with the terms of a license issued in that behalf by the
District Council under the provisions of this Regulation:
Provided that such a license shall not be refused to a
person who has been carrying on such business within the
district since before the commencement of this Regulation :
Provided further that if such a license is refused, the
. grounds of refusal shall be recorded in writing by the District Council."
·
The contention of the appellant is that s. 3 of the Regulation
gives to the District Council an arbitrary power of issuing and withholding licenses to a non-tribal and is repugnant to Arts. 14 and
19(1 )(g) bf the Constitution. The High Court held that the section
is not violative of Art. 14. The point that the section infringes
.Art. 19(1)(g) was not argued in the High Court. However, on the
merits the attack on s. 3 based on both Arts. 14 and 19(l)(g) must
fail.
Paragraph !0(2)(d) of the Sixth Schedule to the Constitution of India specifically empowers the District
Council of an
autonomous district to make regulations prescribing that a nontribal resident of the District shall not carry on businGss in any
commodity except under a license issued in that behalf by the District Council. The Sixth Schedule to the Constitution lays down
the policy for the administration of the tribal areas in the State
of Assam. Paragraph I 0 is an integral part of this Schedule.
This paragraph is not violative of Arts. 14 and 19(1)(g), nor is it
so contended. Section 3 of the Regulation is in strict conformity
with this paragraph.
If paragraph I 0 of the Sixth Schedule cannot
be. regarded as violative of any provision in the Constitution, it is
impossible to say that s. 3 of the Regulation which is in strict conformity with paragraph 10 is violative of Arts. 14 and 19 (l)(g)
of the Constitution. This conclusion is sufficient to dispose of the
argument based on Arts. 14 and 19(!)(g).
The attack based on Arts. 14 and 19(1 )(g). must fail on other
grounds also. For economic and political reasons, our Constitution has taken special care of the Scheduled Tribes. One of the
guiding principles of State policy embodied in Art. 46 of the Constitution is that the State shall promote with special care the edu-
1024
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(1961] I S.C.R.
cational and economic interests of the weaker sections of the people
and, in particular, the Scheduled Tribes, and shall protect them
from social injustice and all forms of exploitation. Pursuant
to this policy, the Constitution itself ha.5 made numerous provisions
for the protection of the Scheduled Tribes. Paragraph 10(2)(d)
of the Sixth Schedule is one of such provisions. Section 3 of the
Regulation has been enacted pursuant to the power conferred by
paragraph 10(2)(d)of the Sixth Schedule with the object of preventing exploitation of the Scheduled Tribes by non-tribal traders
and protecting the interests of the Scheduled Tribes. The licensing
power is vested in the District Council which is a high ranking
body with legislative, judicial and executive functions.
It is apparent on the face of the Constitution of which paragraph I 0(2)( d)
of the Sixth Schedule forms an intergral part and on a fair reading
of s. 3 of the Regulation read in the light of paragraph 10(2)(d)
that the protection of the interests of the Scheduled Tribes is to be
the guiding policy regulating the exercise of the discretion . of the
District Council in the matter of granting or withholding trading
licenses to non-tribal traders. It is left to the District Council
to decide in each individual case whether the grant of the license
would best promote the interests of the Scheduled Tribes. The
restriction imposed by s. 3 on the right of a non;tribal to carry on
business in a tribal area is not arbitrary or unreasonable and is
not violative of Arts. 14 and 19(1)(g).
Another contention of the appellant is that the licensing authority could refuse to issue license only if it found that the appellant
did not show good conduct and behaviour while in the Mizo
Hills, as stated in condition No. I of the temporary trading license.
I am unable to accept this contention. Rules 2 (a), 4, 5 and 7 of
the Lushai
Hills District (Trading by non-Tribals) Rules, 1954
made
by the Executive
Committee of the District Council
with the previous approval of the the Governor of Assam in
exercise of the powers conferred by s. 6 of the Regulation are
as follows :
"2. Definition.-In these rules, unless there is anything
repugnant or the context otherwise requires :-
(a) 'Executive Committee' means
the Executive
Committee of the Lushai Hil!s District Council constituted
under the Assam Autonomous Districts (Constitution of
the District Councils) Rules, 1951.
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"4. Verification of applicant's antecedents and chaH
racter.-The Executive Committee may after making such
enquiries as it deems proper into the antecedents and charac-
"
ter of any new applicant, reject or accept any application.
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llARiCHAND v. MIZO DIST. COUNCIL (Bachawat, i.)
1025
5. Grant of License.-(!) When application is accepted
a lic:ense to trade shall be issued to the applicant (hereinafter called 'Licensed Trader') after receipt of the fee as
specified in these rules.
Temporary trade License.-(2)(a). The terms
and
conditions of the license as entered on the face of the
license as in Appendix 'A' shall be strictly adhered to by
the licensee, and any contravention thereof shall be punishable under the law for the time being in force.
(b) No temporary License shall be granted for a period
exceeding one year at any one time.
7. Provision for refusal to renew permanent license.-
Subject to the provisions of section 3 of the Lushai Hills
District (Trading by Non-Tribals) Regulation, 1953, the
Executive Committee may refuse to renew any license granted to the Non-Tribal Traders after the commencement
of the Regulation."
The standard terms and conditions of the temporary license in
Form 'T' are as follows :
"1. This license is cancellable or renewable by the
Executive Committee as and when thought fit contingent
E
on good conduct and behaviour while in Lushai Hills.
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2. Trading should be done on cash basis only.
3. The License holder should report without fail to the
Executive Committee on the expiry of the validity of
tlris license, and submit this license."
The Executive Comnrittee of the District Council is constituted
under r. 19· of the Assam Autonomous
District (Constitution
of District Councils) Rules, 1951 framed by the Governor of Assam
in exercise of the powers conferred by sub-paragraph (6) of paragraph 2 of the Sixth Schedule to the Constitution, and is vested,
inter alia, with the executive functions of the District Council.
The validity of the Rules is not in issue. It is not contended
that the Rules are ultra vires the Regulation. The discretion
vested in the licensing authority by Rules 4; 5 and 7 is not restricted by c-0ndition No. I of the license. The licensing authority
may refuse to renew or to issue the license if it finds that such
a course would promote the interests of the Scheduled Tribes.
In the present case, the Executive Committee found that the maximum limit of non-tribal traders had been reached, and in the interest of the tribals it was not desirable to issue license to more
1026
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[ 1967] I S.C.R.
non-tribal traders. It is neither alleged nor shown that the ExeA
cutive Committee discriminated between similarly situated persons.
In the result, the appeal is dismissed.
ORDER
In accordance with the Opinion of the majority, the appeal is
B
allowed with costs.
Y.P.
Ml 7Sup.Cl/66-2,5<)0--, ! 4-6-67--0IPP •