# NARENDRA KUMAR AND OTHERS v. l'HE UNION OF INDIA AND OTHERS

- **Citation:** [1960] 2 S.C.R. 375
- **Court:** Supreme Court of India
- **Decided:** 1958-04-18
- **Bench:** B. P. Sinha, Jafer Imam, J. L. Kapur, K. N. Wanchoo, K. C. Das Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/narendra-kumar-and-others-v-l-he-union-of-india-and-others-1868
- **Pages:** 19

## Headnote

375
Fundamental Rights,...-Restrictions on such rights-Restriction,
if includes prohibition-Provision ·of law. placing total restraint on
the exercise of fundatrtental rights-Constitutionality-Trade in
imported copper-,-Law providing for fixation of price and issue of
permits, resulting in elimination of dealers from such trade-Validity
-Essential Commodities Act, I955 (Io of I955). s. 3-Non-ferrous
Metal Control Order, I958, els. 3, 4-Constitution of India, Arts. I4,
Tg(I)(j), I9(I)(g), I9(5), I9(6).
. . ()n ?ifferent dates ·prior to _April 3, 1958;. th~ petitioner~
entered mto contracts of purchase of copper with importers at
Bombay and Calcutta, but before they could' take delivery from
the importers the Government of India, in exercise of its powers
under s. 3 of the Essential Commodities Act, 1955; issued on
_April 2, 1958, the Non-ferrous Metal Control Order, 1958. Clause
3 of the Order provided that no person shall sell or purchase any
non-ferrous metal at a price which exceeded the amount represented by an addition of 3!% to its landed cost, while under cl. 4 no
person shall acquire any non-ferrous metal except under and in
accordance with a permit issued in this behalf by the Controller
in accordance with such principles as the Central Government
may from time to time specify. No such principles, however,
were published in the Gazette or laid before the two Houses of
Parliament, though certain principles governing the issue of
permits by the Controller were specified in a communication
addressed by the Deputy Secretary to the Government of India
dated April 18, 1958, to the Chief Industrial Adviser, by virtue of
which the Controller could issue permits only to certain manufactures and not to any dealer. On April 14, 1958, the petitioners
applied for permits to enable them to take delivery of the copper
in respect of which they had entered into contracts, but• the
applications were refused. Thereupon, the petitioners filed a
petition und~r Art. 32 of the Constitution of India challenging
the validity of the order refusing the grant of the permit and
contended, inter alia, (1) that the fixation of the price under cl. 3
of the Non-ferrous Metal Control Order, 1958, which had the
effect of driving the dealer out of business in imported copper
and likewise, cl. 4 of the said Order read with the communication
dated April 18, 1958, which had the effect of completely eliminat0
ing the dealers from the trade in imported copper, contravened
Arts. l9(1)(f) and l9(1)(g) of the Constitution, and that such total
eUmination of the dealer amounting as it will to prohibition of
any exercise of the right to carry on trade or to acquire property
I959
December 3
376
SUPREME COtJR'r REPORTS [1960(2)]
x959
was not a mere restriction on the rights and was outside the
saving provisions of els. (5). and (6) of Art. 19, (2) that the
Narendra Kumar principles specified in the communication dated April 18, '1958,
and Others
being discriminatory in nature as between the manufacturers and
.v.
. dealers in copper, infringed Art. 14, (3) that the said principles,
The Union af India in any case, had no legal force, as they were not mentioned in
and Others
the Non-ferrous Metal Control Order, nor were they notified in
the Official Gazette and laid before both Houses of Parliament
Das Gupta J.
in the manner laid down in sub-ss. (5) and (6) of s. 3 of the
Essential Commodities Act. It was f,aund that the result of the
abuse by the importers nf the practical monopoly given to them
of the copper market seriously affected the interests of the
general public in India, and that to protect these interests of the
public the impugned legislation in the form of Non-ferrous Metal
Control Order and the subsequent specification of principles was
made.
Held: (1) that the word "restriction" in Arts. 19(5) ·and
19(6) of the Constitution includes cases of "prohibition" also;
that where a restriction reaches the stage of total restraint of
rights special care has to be

## Text

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'"
S.C.R.
SUPREME COURT REPORTS
NARENDRA KUMAR AND OTHERS
I
v.
l'HE UNION OF INDIA AND OTHERS
(B. P. SINHA, C.J., JAFER IMAM, J. L. KAPUR,
K. N. WANCHOO and K. C. DAS GUPTA, JJ.)
375
Fundamental Rights,...-Restrictions on such rights-Restriction,
if includes prohibition-Provision ·of law. placing total restraint on
the exercise of fundatrtental rights-Constitutionality-Trade in
imported copper-,-Law providing for fixation of price and issue of
permits, resulting in elimination of dealers from such trade-Validity
-Essential Commodities Act, I955 (Io of I955). s. 3-Non-ferrous
Metal Control Order, I958, els. 3, 4-Constitution of India, Arts. I4,
Tg(I)(j), I9(I)(g), I9(5), I9(6).
. . ()n ?ifferent dates ·prior to _April 3, 1958;. th~ petitioner~
entered mto contracts of purchase of copper with importers at
Bombay and Calcutta, but before they could' take delivery from
the importers the Government of India, in exercise of its powers
under s. 3 of the Essential Commodities Act, 1955; issued on
_April 2, 1958, the Non-ferrous Metal Control Order, 1958. Clause
3 of the Order provided that no person shall sell or purchase any
non-ferrous metal at a price which exceeded the amount represented by an addition of 3!% to its landed cost, while under cl. 4 no
person shall acquire any non-ferrous metal except under and in
accordance with a permit issued in this behalf by the Controller
in accordance with such principles as the Central Government
may from time to time specify. No such principles, however,
were published in the Gazette or laid before the two Houses of
Parliament, though certain principles governing the issue of
permits by the Controller were specified in a communication
addressed by the Deputy Secretary to the Government of India
dated April 18, 1958, to the Chief Industrial Adviser, by virtue of
which the Controller could issue permits only to certain manufactures and not to any dealer. On April 14, 1958, the petitioners
applied for permits to enable them to take delivery of the copper
in respect of which they had entered into contracts, but• the
applications were refused. Thereupon, the petitioners filed a
petition und~r Art. 32 of the Constitution of India challenging
the validity of the order refusing the grant of the permit and
contended, inter alia, (1) that the fixation of the price under cl. 3
of the Non-ferrous Metal Control Order, 1958, which had the
effect of driving the dealer out of business in imported copper
and likewise, cl. 4 of the said Order read with the communication
dated April 18, 1958, which had the effect of completely eliminat0
ing the dealers from the trade in imported copper, contravened
Arts. l9(1)(f) and l9(1)(g) of the Constitution, and that such total
eUmination of the dealer amounting as it will to prohibition of
any exercise of the right to carry on trade or to acquire property
I959
December 3
376
SUPREME COtJR'r REPORTS [1960(2)]
x959
was not a mere restriction on the rights and was outside the
saving provisions of els. (5). and (6) of Art. 19, (2) that the
Narendra Kumar principles specified in the communication dated April 18, '1958,
and Others
being discriminatory in nature as between the manufacturers and
.v.
. dealers in copper, infringed Art. 14, (3) that the said principles,
The Union af India in any case, had no legal force, as they were not mentioned in
and Others
the Non-ferrous Metal Control Order, nor were they notified in
the Official Gazette and laid before both Houses of Parliament
Das Gupta J.
in the manner laid down in sub-ss. (5) and (6) of s. 3 of the
Essential Commodities Act. It was f,aund that the result of the
abuse by the importers nf the practical monopoly given to them
of the copper market seriously affected the interests of the
general public in India, and that to protect these interests of the
public the impugned legislation in the form of Non-ferrous Metal
Control Order and the subsequent specification of principles was
made.
Held: (1) that the word "restriction" in Arts. 19(5) ·and
19(6) of the Constitution includes cases of "prohibition" also;
that where a restriction reaches the stage of total restraint of
rights special care has to be taken by the Court to see that the
test of reasonableness is satisfied by considering the question in
the background of the facts and circums1ances under which the
order was made, taking into account the nature of the evil that
was sought to be remedied by such law, the ratio of the harm
caused to individual citizens by the proposed remedy, the
beneficial effect reasonably expected to result to the general
public, and whether the restraint caused by the law was more
than was necessary in the interests of the general public.
'
.
Chintaman Rao v. The State of Madhya Pradesh, [1950] S.C R.
759, Cooverjee B. Bharucha v The Excise Commissiontr and The
Chief Commissioner, Ajmtr and Others, [1954] S.C.R 873 and
Madhya Bharut Cotton Association Ltd. v. Union of India, A.LR.
1954 S.C. 634, foliowed.
(2) that in the present case, the evil sought to be remedied
being the rise in price \vhich led to higher price of consumers'
goods in the production of which copper formed a major ingredient, the fixation of a price and a system of permits for the
acquisition of the material \\'ere reasonable restrictions in the
interests of the general public; and that els. 3 and 4 of the Nonferrous Metal Control Order, 1958, were accordingly, reasonable
restrictions within the meaning of Arts. 19(5) and r9(6)
(3) that the differentia which distinguished dealers as a class
from manufacturers placed in the other class had a reasonable
connection with the object of the legislation, and, consequently,
the principles specified in the communication dated April 18,
1958, did not contravene Art. 14 of the Constitution; and
(4) that the cl. 4 of the Non-ferrous Metal Control Order was
not effective without the principles to be specified by the Central
Governmel,lt in the manner laid down by sub-ss. (5) and (6) of
S.O.R.
SUPREME COURT REPORTS
377
s. 3 of the Essential Commodities Act and as the principles
x959
specified in the Communication dated April 18, 1958, wei;e not
-
notified in the Gazette nor laid before both Houses of Parliament, Narendra Kuma•
as re.quired under by s. 3, sub-ss. (5) and (6), of the Act, cl. 4
and Others
could not be enforced. Accordingly, cl. 4 of the Order, as it '
.v.
.
stood, was void till such time as the principles are published in The Union of India
~
accordance withs. 3, sub-ss. (5) and (6).
and Others
ORIGINAL JURISDICTION: Petition No. 85 of 1958.
Petition under Article 32 of the Constitution of
India for enforcement of Fundamental Rights.
0. B. Agarwala, R. Gopalakrishnan and K. P. Gupta,
for the petitioners.
H. N. Sanyal, Additional Solicitor-General"of India,
B. Sen and R.H. Dhebar, for the respondents.
1959. December 3.
The Judgment of the Court
was delivered by
DAS GUPTA J.-The three persons who have filed
Das Gupta f,
this petition under Art. 32 of the Constitution for
enforcement of their fundamental rights conferred
by Art. 14, Art. 19(l){f) and Art. 19(l)(g) thereof are
dealers in imported copper and carry on their business
at J agadhri in the State of Punjab. On different dates
prior to April 3, 1958, they entered into contracts of purchase of copper with i_mporters at Bombay and Calcutta.
Before, however, they could take delivery from the
importers the Government of India issued on April 2,
1958, an order called the~· Non-ferrous Metal Control
Order, 1958 " hereafter referred to as "the order" in
exercise of its powers. under s. 3 of the Essential
Commodities Act (Act X of 1955)-referred to hereafter as "the Act ". In this order "non-ferrous
metal" was defined to mean "imported copper, lead,
tin and zinc in any of the forms specified in the
Schedule of the order." The Order was from the
very beginning made applicable to imported copper.
The price was controlled by cl. 3 of the Order which
provides in its first sub-clause that "no person shall
sell or offer to sell any non-ferrous metal at a price
which
exceeds the amount represented by an
addition of 3~% to its landed cost," and in its second
sub-clause that " no person shall purchase or offer to
378
SUPREME COURT REPORTS [1960(2))
z959
purchase from any person .non.-ferrous metal at a price
N
-
higher than at which it is permissible for that other
ar<ndm Kumar
jj t
h"
d
b cl (") "
CJ
·
and Other;
per~on to se
o
Im. un er su - . I .
~use 4 is
v.
designed to regulate the acquisition of non-ferrous
The Union of India metal by permit only and provides that "no person
and Others
shall acquire or agree to acquire any non-ferrous
metal except under and in accordance with a permit
Das Gupta f.
issued in this behalf by the Controller in accordance
with such principles as the Central Government may
from time to time specify". Clauses 5 and 6 of the
Order made it obligatory on the importers to notify
quantities of non-ferrous metal imported and to maintain certain books of account, while the last clause,
i.e .. cl. 7 confers powers on the Controller to enter and
search any premises in order to inspect any book or
document and to seize any non-ferrous metal in certain
circumstances. This Order was published in the
Gazette of India on April 2, 1958. No principles
specified by the Central Government in accordance
with cl. 4 of the Order were however published either
on this date or any other date. Certain principles
were however specified by the Central Government in
a communication addressed by the Deputy Secretary
to the Government of India dated April 18, 1958, to
the Chief Industrial Adviser fo the Government of
India, New Delhi. The relevant portion of this communication is in these words :
"The following principles shall govern the issue
of permits by the Controller i-
(1) In respect of the scheduled industries under the
Control of the Development Wing, the Controller will
determine the 6 monthly requirements of actual users
based on their production in the year 1956;
(2) In the case of small scale inaustries the Chief
Controller of Imports and Exports on the certificate
of the State Directors of Industries will inform the
Controller of the quantities that the units would be
entitled to and thereupon the Controller will make
such quantities available to these units from time to
timf);
(3) The Controller
shall normally
release one
month's requirements at a time to the consuming units
•
S.C.R.
SUPREME COURT REPORTS.
379
and the permit shall be valid for a period of two
z959
months; but if heavy imports are reported the Con- Narendra Kumar.
troller shall have the discretion to issue stocks in
and Others
larger quantities."
,
v.
The position immediately on the issue of the Order The Union of India
on April 2, 1958, thus was that no person could buy or
and Others
sell imported copper at a price above the landed cost
Das Gupta J.
plus 3~% thereof and that no person could acquire or
agree to acquire such copper except under a permit
issued by the Controller. In isE1uing such permits the
Controller was to be governed by such principles as the
Central Government would specify. After the principles were specified in the letter of the 18th of April,
the Controller could no longer issue any permit to a
dealer and could issue permits only to certain manufacturers as indicated in paras. 1 and 2 of the letter.
In view of the requirement of cl. 4 of the Order the
petitioners applied on April 14, 1958, for permits to
enable them to take delivery of the copper in respect
of which they had entered into contracts with different
parties. Though no formal order appears to have
been passed on these applications, it is not disputed
that the applications for permits were refused and no
permits were issued to these petitioners. The main
contention of the petitioners is two-fold. First, it is
said that cl. 4 of the Order read with the principles
specified in the letter of the 18th' April violates the
right conferred on them as citizens of •India by Art.
19(1)(£) of the Constitution of India to acquire property and also the right conferred by Article 19(l)(g)
to carry on trade, that these violations are not within
the saving provisions of Art. 19(5) and 19(6) of the
Corn:ititution and therefore are void. Secondly, it is
- said that the fixatio~ of the price at the landed cost
plus3!% as the maximum also abridge therights conferred on them by Arts. 19(l)(f) and 19(l)(g) of the
Constitution and that this also is not saved by the
provisions in Arts. 19(5) and 19(6) and so are void.
A further contention is that the principles specified
being discriminatory in nature as between the manu~
facturers and dealers in copper have resulted in
violatin.g the rieht to equal protection of l&Wf! to tlie
380
SUPREME COURT REPORTS [1960 (2)]
•959
petitioners and thus infringe the right guranteed by
Narendra K""'"' Art. 14 of the Constitution. As regards the principles
and Othm
specified in the letter of the 18th April it was further
v.
contended that as they form an integral part of the
The Unipn of India" Order " by which alone the Central Government can·
and Others
regulate the distribution and supply of essential coinDas Gupta J.
modities under s. 3 of the Act it was necessary for them
to be notified in the Official Gazette as required by its
5th sub:section and to be laid before both Houses of
Parliament as required by its 6th sub-section and as
these requirements were not fulfilled, the principles
have no legal force.
Alternatively, it was contended
that if the principles are considered not to form part
of the order made by the Central Government the
regulation in so far as it was by these principles,
was outside the Act as s. 3 empowers the Central
Government to provide for regulating or prohibiting
the production and supply of essential commodities
and trade and commerce in essential commodities by
an order only and not otherwise.
The petitioners pray for an appropriate writ or
order or direction (I) restraining the respondents, the
Union of India, the Chief Industrial Adviser to the
Government of India and the Development Officer,
Ministry of Industry from enforcing els. 3 and 4 of the
order; (2) to quashing the order of the Development
Officer rejecting the petitioners' application for grant
of permit by a 'direction to the 2nd and 3rd respon-
•
dents to grant the applications for permits and (3)
restraining them from granting permits to others than
the petitioners in respect of copper covered by their
contracts with importers.
The application was opposed by the respondents,
their main contention being that els. 3 and 4 of the
Order and the "principles" specified are laws which
impose reasonable restrictions on the exercise of·rights
conferred by Arts. 19(I)(f) and 19(l)(g) in the interest
of the general public.·
While this was the main contention on behalf of the
respondents, it was also contended that as the petitioners have not challenged the validity of the
Essential Commodities Act and have admitted the
•
,
.
S.C.R.
SUPREME COURT REPORTS
381
power of the Central Government to make an order
I959
in exercise of the powers conferred by s. 3 of the N
d-K
Act it is not open to the Court to consider whether the
0
""/~the::ar
law made by the Government in making the non-
"'' v.
ferrous metal control order and in specifying the The Union of India
principles under cl. 4 of the order violates any of the
and Others
fundamental rights under the Constitution. It is
urged that once it is found that the Government has
Das Gupta f.
power under a valid law to provide for regulating or
prohibiting the production, supply and distribution of
an essential commodity and trade and commerce
therein as soon as it is of opinion that it is necessary
or expedient so to do for maintaining or increasing
supplies of the essential commodity or for securing its
equitable distribution and availability at fair prices,
the order made by them can be attacked only if it is
outside the power granted by the section or if it is
mala fide.
Mala fides have not been suggested and we
are proceeding on the assumption that the Central
Government was honestly of opinion that it was neces-
+
sary and expedient to make an order providing for
regulation and prohibition of the supply and distribution of imported copper and trade and commerce
t.herein. So long as the Order does not go beyond such
provisions, the Order, it is urged, must be held to be
good and the consideration of any question of infringement of fundamental rights under the Constitution is
1
wholly beside the point. Such an extravagant argument has merely to be mentioned to deserve rejection.
If there was any reason to think that s. 3 of the Act
confers on the Central Government power to do
anything which is in conflict with the Constitutionanything which violates any of the fundamental rights
conferred by the Constitution, that fact alone would be
sufficient and unassailable ground for holding that the
section itself is void being ultra vires the Constitution.
When, as in this case, no challenge is made that s. 3
of the Act is ultra vires the Constitution, it is on the
assumption that the powers granted thereby do not
violate the Constitution and do not empower the
Central Government to do anything which the Constitution prohibits. It is fair and proper to presume that
'49
382
SUPREME COURT REPORTS (l!J60 (2)]
'959
in passing this Act the Parliament could not possibly
Narendra Kum<1r have intended the words used by it, viz., "may by
and Others
order provide for regulating or prohibiting the producv.
tion, supply and distribution thereof, and trade and
n, Union of India commerce in," to include a power to make such pro-
""d Othm
visions even though they may be in contravention of
the Constitution.
The fact that the words "in
Das Gupta].
accordance with the provisions of the articles of the
Constitution" are not used in the section is of no
consequence. Such words have to be read by necessary
implication in every provision and every law made by
the Parliament on any day after the Constitution came
into force. It is clear therefore that when s. 3 confers
power to provide for regulation or prohibition of the
production, supply and distribution of any essential
commodity it gives such power to make any regulation
or prohibition in so far as such regulation and prohibition do not violate any fundamental rights granted by
the Constitution of India.
It is therefore necessary for us to consider, even
though mala fides on the part of the Government are
not alleged, whether the Jaw made by the Central
Government by way of subordinate legislation, is a
law, which though abridging or taking away the rights
conferred by Art. 19(1)(£) and (g), is within the saving
provisions of 19(5) and 19(6).
On the face of it cl. 4 of
the Order read with the principles specified in the
letter of the 18th April has the effect of completely
eliminating the dealers from the trade in imported
copper. It is also reasonably clear that independently
of cl. 4 read with the principles, the fixation of the
price at which the copper can be bought and sold at
3t% above the landed cost has the effect of driving
the dealer out of business in imported copper. The
statement made on behalf of the Union of India in
paragraph 11 of the counter affidavit that an addition
of 3~% of the landed cost was made in fixing the price
in para. 3 of the Order in order to enable the importers
to earn a margin of profit justifies the conclusion that
this will be the minimum price at which the importers
will sell. Any dealer would have thus to pay at the
rate of landed cost plus 3t% thereof in getting any
·-
.
y
\-
-
S.0.R.
SUPREME COURT REPORTS
383
supply of copper from the importers. Such dealer is
z959
however prevented from charging from his customer
h
1 d d
1
3
Narendra Kumar
anything more t an the an e cost p us !% thereof.
d 0111
The position therefore clearly is that henceforth any
an v. ers
actual consumer of the commodity would have to get it The Union of India
direct from the importer and the channel of distribuand Others
tion through the dealer would disappear.
Das Gupta J.
In deciding whether this total elimination of dealer
from trade in imported copper is within the saving
provisions of Art. 19(5) and Art. 19(6) we have first to
consider the question whether such total elimination is
a mere restriction on the rights under Arts. 19(1)(£)
and 19(l)(g) or goes beyond" restriction."
On behalf of the petitioners it has been urged that
the prohibition of the exercise of a right must be distinguished from restriction on the exercise of a right,
and when the Constitution speaks of laws imposing
reasonable restrictions on the exercise of rights it does
not save laws which prohibit the exercise of any such
right. It is urged that the total elimination of the
dealer amounting as it will to prohibition of any
exercise of the right to carry on trade or to acquire
property would therefore be in any case outside the
saving provisions of els. 5 and 6 of Art. 19.
Certain observations made by Kania, C. J., and
S. R. Das, J. (as he then was) in Gopalan's Gase (1)
appear at first sight to lend support to this argument.
At p. 106 of the Report, Kania, U. J., after pointing
out that the deprivation of personal liberty has not
the same meaning as restriction of free movement in
the territory of India observed:-" Therefore Art. 19(5)
cannot apply to a substantive law depriving a citizen
of personal liberty. I am unable to accept the contention that the word "deprivation" includes within
its scope '.' restriction" when interpreting article 21 ".
Das, J., at p. 301 of the Report, says:-
"Clause (5) of Art. 19, qualifies sub-clause (d) of
clause (1) which should, therefore, be read in the
light of cl. (5).
The last mentioned clause permits
the State to impose reasonable restrictions on the
(1) [19.10] s.c.R. ss.
r959
N at'endra K uma1·
and Others
v.
384
SUPitEME COURT REPOnTs [1960 (2))
exercise of the right of free movement throughout
the territory of India as explained above. Imposition of reasonable restrictions clearly implies that
The Union of lnditi
and Others
the right of free movement is not entirely destroyed
but that parts of the right remain."
It has to be noticed, however, that these observations were made in the context of an argument of
conflict between Art. 19(5) and Art. 21 of the Constitution and could not have been intended for general
application.
Das Gtipla J,
It is worth noticing that in the same year when in
Chintaman Rao v. The State of Madhya Pradesh (1 ) the
constitutionality of the Central Provinces and Berar
Regulation of Manufacture of Bidis (Agricultural
Purposes) Act, came up for consideration, Mahi>jan, J.,
delivering the judgment of the Court, after pointing
out that the question
was whether the total
prohibition of carrying on the business of manufacture of bidis within the agricultural season amounted to a reasonable restriction of the fundamental
rights mentioned in Art. 19(l)(g) of the Constitution,
based his decision that the impugned law did not
come within the saving provisions of Art. 19(6) of the
Constitution on the view that the test of reasonableness was not satisfied and nut on a view that " prohibrtion " went beyond " restriction".
At p. 764 of t.he
Report the learned Judge srLys:
"The effect of the provisions of the Act, however,
has no reasonable relation to the object in view but
is so drastic in scope that it goes much in excess of
that object. Not only are the provisions of the
statute in excess of the requirements of the case
but the language employed prohibits a manufacturer
of bidis from. employing any person in his business,
no matter wherever that person may be rPsiding.
In other words, a manufacturer of bidis residing in
this ama cannot import labour from neighbou:·ing
places in the district or province or from outside the
province. Such a prohibition on the face of it is of
an arbitrary nature inasmuch as it has no relation
whatsoever to the object which the legislation seeks
(1) [1950] S.C.R. 759·
-
..
: .
--· -
- •-"
•
S.C.R.
SUPREME COUR1' REPORTS
385
to achieve and as such cannot be said to be a reasonz959
able restriction on the exercise of the right."
Narendra Kumar
The law was struck down because the restriction in
and Others
this case amounting to prohibition was not reasonable
v.
and not because it was a prohibition.
The Union of India
and Others
In Saghir Ahamad' s Case (1) and in Chamarbaugwala' s Case (2) the question whether prohibition of the
Das Gupta J.
exercise of a right was within the meaning of restrictions on the exercise of a right used in cl. 6 was raised
but the Court decided to express no final opinion in
the matter and left the question open. In Cooverjee' s
Case (3) the Court extended the provisions of cl. 6 of
Art. 19 to a law which had the effect of prohibiting
the exercise of a right to carry on trade to many
citizens. Mahajan, J., delivering the judgment of the
Court observed :
"In order to determine the reasonableness of the
restriction regard must be had to the nature of the
business and the conditions prevailing in that trade.
It i;; obvious that these factors must differ from
trade to trade and no hard and fast rules concerning all trades can be laid down. It can also not be
denied that the State has the power to prohibit
trades which are illegal or immoral or injurious to
the health and welfare of the public.
Laws prohibiting trades in noxious or dangerous goods or
trafficking in women cannot be held to be illegal as
enacting a prohibition and not a mere regulation.
The nature of the business, is, therefore, an important factor in deciding the reasonableness of-the
restrictions."
In Madhya Bharat Cotton Association Ltd. (4), the Court
had to consider the constitutionality'()f an order which
in effect prohibited a large section of traders, from
carrying on their normal trade in forward contracts.
In holding the order to be valid, Bose, J., delivering
the judgment of the Court said " Cotton being a
commodity essential to the life of the community, it
is reasonable to have restrictions which may, in cert~in
(1) (1955] I S.C. R. 707.
(2) [1957] S.C.R. 874.
(3) (1954] S.C.I<. 873, 879.
(4) A.I.H. 1954 S.C. 634.
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386
SUPREME COURT REPORTS [1960 (2)]
z959
circumstances, extend to total prohibition for a time;
Narend•a Kumar of all normal trading in the commodity." .· .
•
and othm .
It is clear that in these three cases, viz., Ghintaman
·· v. ···
- Rao's Gase('), Gooi·erjee's Gase(') and .Madhya Bharat
The Union of India Gotton Association Ltd. Gase('). the Court considered
and Othm
the real question to be whether the interference with
Das Gupt; .J. , the fundamental right, was "reasonable" or not in
the interests of the general public and that if the
answer to the question was in the affirmative, the law
would be valid and it would be invalid .if the test of
reasonableness was not passed. Prohibition was in
•.
. all these cases treated as only a kind of "restriction".
· Any other view would, ·in our opinion, . defeat the
intention of the .Constitution.
After Art. 19(1) has conferred on the citizen the
several rights set out in its seven sub:clauses, action
is at once taken by the Constitution in· els. 2 to 6 to
keep the way of social control free from unreasonable
impediment. The raison d'etre of a State being the
welfare of the members of the State by suitable legislation· and appropriate administration, the whole .
purpose of.the creation of the State would be frustrat-
. ed if the conferment of these seven rights would result
in cessation of legislation in the extensive fields where
these seyen rights operate. But without the saving
provisions that would be the exact result of Art. 13 of ·
the Constitution. It was to guard against this position
that the Constitution provided in its els. 2 to 6 that .
even in the fields of these rights new laws might be
made and old laws would operate where this was
necessary for general welfare. Laws imposing reasonable restriction on the exercise of the rights are saved
by cl. 2 in respect· of rights under sub-cl. (a) where the
restrictions are "in the interests of the security of the
State; " and of o.ther matters mentioned therein; by
el. 3 in respect of the rights conferred by sub-cl. (b)
where the restrictions are " in the interests of. the
public order; by els. 4, 5 and 6 in respect of the rights
conferred by sub-els. (c), (d), (e), (f) & (g) the restrictions
are " in the interest of the general public "-in cl. 5
which is in respect of rights conferred by sub.els. (d),
(1) [1950) S.C.R. 759·
(i) [19'4) sn 879.
(3) A.I.R. •95'1 S.C. 634.
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SUPRJ<;ME COURT REPORTS
387
(e) & (f) also where the restrictions are "for the pro-
'959
tection of the interests of any scheduled tribe". But N
.. ::-K
fi
h
·
· •
.
h I
Id h
b
are-ra
umar
or t ese saving provisions sue
aws wou
ave een
and Others
void because of Art. 13, which is in these words:-
v.
"All laws in force in the territory of India immediately The Unian of India
before the commencement of this Constitution, in so
and Others
far as they are incon~istent,with the provisions of this ' Dai Gupta. ].
Part, shall, to the extent of such inconsistency be
void; (2) The State shall not make any law wh\ch
takes away or· abridges the rights conferred by this
Part and any law made in contravention of this clause
shall, to the extent of the contravention, be void ... "
As it was to remedy the harm that would· otherwise
be caused by the provisions of Art. 13, that these
saving provisions were made, it i!'l proper to remember the words of Art.13 jn interpreting the words
·"reasonable restrictions " on the exercise of the right
as used in cl. (2). It is reasonable to think that the
makers of the Constitution considered the word
"restriction" to be sufficiently wide to save laws
"inconsistent" with Art. 19(1), or "taking away the
rights" comerred by the Article, provided this inconsistency or taking away was reasonable in the
interests of the different matters mentioned in the
clause. There can be no doubt therefore that they
intended the word "restriction " to include cases of
·"prohibition" also. The contention that a law prohibiting the exercise of a fundamental right· is· in no
case saved, cannot therefore be accepted. · It is undoubtedly correct, however, that when, as in the
present case, the restriction reaches the stage of prohibition special care has to be taken by the Court to
see that the test of reasonableness is satisfied. The
greater the restriction, the more the need for strict
scrutiny by the Court.
In applying the test of reasonableness, the Court
has to consider the question in the background of the
facts and circumstances under which the order was
made, taking into account the nature of the evil that
was sought to be remedied by such law, the ratio of
the harm caused to individual citizens by the proposed
remedy, to the beneficial effect reasonably expected to
388
SUPREME COURT REPORTt:i [1960 (2)]
r959
result to the general public. It will also be necessary
to consider in that connection whether the restraint
Narendra f(uma• caused by the law is more than was necessary in the
and Others
v.
interests of the general public.
Th' Union of India
The position of the copper trade at the end of
and Others
March, 1958, within two days of which the impugned
order was made is fairly clear. Copper is so largely
n., Gupta J.
required by the industries in India for producing
various consumer's goods and also sheets and other
articles which are needed as raw material in other
industries that the position that it is an essential commodity cannot be and has not been disputed. The
quantity of copper produced in India is so small as
compared with the normal needs of the Industry that
for many years the Industry had to depend on imports
from abroad. It was apparently because of the
importance of this metal for the industries in India
that copper was kept for a long time in the Open
General List and free import was permitted. 'Vhen
however the foreign exchange position of the country
deteriorated and it was felt necessary in the larger
interests of the country to conserve foreign exchange
as much as possible copper was excluded from the
Open General List from July 1, 1957, and it became
necessary to .obtain a licence before copper could be
imported. During the period July to September 1957
licences were granted to both established importers of
coppers as also to actual users not being established
importers. Durii:g the period October 1957 to March
1958, licences were granted to established importers
only. Whatever the motive of such exclusion of
actual users might have been, the result was disastrous.
Having a practical monopoly of this imported commodity a handful of importers was in a position to
dictate terms to consumers and by March 1958 the
price of copper in India per ton was Rs. 3,4 77 as against
the international price of Rs. 2,221. It is not disputed
that result of the abuse by the importers of the
practical monopoly given to them of the copper market
seriously affected the interests of the general public in
India. Nor is it disputed that it was in an honest
effort to protect these interests of the public that the
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S.C.R.
SUPREME COURT REPORTS
389
impugned legislation in the form of Non-ferrous Metal
z959 ·
Co_ntr_ol Order and the subsequent specification of Narendra Kumar
prmc1ples was made.
and Others
The first evil sought to be remedied by the law being
v.
thus the rise in price-which was bound to be reflected The Union uf India
in the higher price of the consumers' goods in the
and Others
production of which copper formed a major ingrPdient
Das Gupta].
-an order controlling the price would of course be the
first obvious step for fighting this evil. Experience
has shown however that if nothing else is done it is
practically impossible to make the control of price
effective. The essential subsidiary step therefore was
to introduce a system of permits so that the persons
acquiring copper could be known. A system of permits
would also be of great help in ensuring that the raw
material would go to those industries where it was
needed most and, distributed in· such quantities to
several industries in different parts of the country as
would procure the greatest benefit to the general public.
Clause 3 of the Order fixes a price while cl. 4 introduces
a system of permits for the acquisition of the material.
Some fixation of price, being essential to keep prices
within reasonable limits, must therefore be held to be
a reasonable restriction in the interests of the general
public. Was it nP-cessary, however, that the prices
should be fi'xed in such a manner as to eliminate the
dealer completely, as has been done in the instant case ?
The introduction of a system of permits was also
clearly necessary in the interests of the general public.
Was it necessary however to specify the principles
that would drive the dealer out of business? These
questions require careful consideration, for the injury
inflicted on the dealer by such elimination is· very
great and in spite of the presumption of Constitutionality that attaches to every law the Court ought
to examine with special care laws which result, as in
the present case, in total restraint of rights conferred
by the Constitution .
That middleman's profits increase the price of goods
which the consumer has to pay is axiomatic. It is
entirely wrong to think that the middleman gets his
profits for nothing and one has to remember that the
so
390
SUPREME COURT REPORTS [1960 (2)]
r959
middleman by forming the distribution
channel
Narendra [{umar between the producers and consumers relieves th!" proand Others
ducers of the burden of storing goods for a length of
v.
time and the risk attendant thereto and relieves the
The Union of India consumers of the trouble and expense of going to the
and Others
producer who mrty be and often is a long distance
away. It is however in the very nature of things that
Das Gupta].
the middleman has to charge not only as regards the
interest on the capital in vested by him, and a reasonable remuneration for mangemont but also in respect of
the risks undertaken by him-what the economists call
the" entrepreneur's risk." These charges often add to a
considerable sum. It has therefore been the endeavour
at least in modern times for those responsible for social
control to keep middlemen's activities to the minimum
and to replace them largely by co-operative sale
societies of producers and co-operative
purchase
societies of the consumers. While it is clear that the
middleman does perform important services, it is
equally clear that the interests of the public would be
best secured if these services could be obtained at a
price lower than what the mifl.dleman would ordinarily
charge. If the middleman ceases to function because
of the fixation of price at landed cost plus 3!%, the
manufacturers who require copper as their raw
material will ha veto establish contacts with importers.
This will mean some trouble and inconvenience to
them but it is reasonable to think that the saving in
the cost of obtaining the raw material would more than
compensate them for this. The lower cost of the raw
material is also likely to be reflected-in a competitive
market-in the lower price of the consumer's goods, of
which copper is a raw material, and thus redound to
the benefit of the general public.
It must therefore be held that cl. 3 of the Order even
though it results in tho elimination of the dealer from
the trade is a reasonable restriction in the interests of
the general public. Clause 4 read with the principles
specified must also be held for the same reason to be a
reasonable restriction.
It was next urged. that these principles are discriminatory as between ruanufo,cturers and dea.lers a.nd SQ
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SUPREM:E1 COURT REPORTS
391
violate Art. 14 of the Constitution. Quite clearly the
1959
dealers and manufacturers are by these principles
1
d · d'CC
1
d
h··1
c
Narendra Kumar
pace rn iuerent c asses an
w 1 e some ·manu1acand Others
turers are eligible for permits dealers are not. It is
v.
equally clear however from what has already been said The Union of India
about that the differentia which distinguish dealers as a
and Others
class from manufacturers placed in the other class have
a reasonable connection with the object of the legisDas Gupta J.
lation. There is therefore no substance in the contention that the specification of the principles violates'
Art. 14 of the Constitution.
While however cl. 3 of the Order is clearly within
the Act, the question whether cl. 4 read with the principles is within the Act or not is not free from difficulty.
If the principles had been specified in the Order itself
and/or had been notified in the Official Gazette and
laid before both the_Houses of Parliament in the manner
indicated in sub-ss. (5) and (6) of s. 3 of the Act, the
regulation by cl. 4 would have been within the Act.
These principles were not however mentioned in the
Order nor were they notified or laid before both Houses
of Parliament in the manner laid down in sub-ss. (5)
and (6) of s. 3. The regulation in so far as it is by these
principles is therefore not a regulation by an order
under s. 3 of the Act but wholly outside it and so would
not come within the protection of the saving provisions of els. 5 and 6 of Art. 19 of the Constitution.
But without the principles, cl. 4 of the Order is not
effective.
The system of permits which this clause is
designed to introduce can come into existence only if
the permits can be issued ; but permits can be issued
only in accordance with the principles laid down by
the Central Government.