# P. V. SIVARAJAN v. THE UNION OF INDIA AND ANOTH]}R

- **Citation:** [1959] Supp. 1 S.C.R. 779
- **Court:** Supreme Court of India
- **Decided:** 1958-07-04
- **Bench:** S. R. Das, s. K. DAS, P. B. Gajendragadkar, K. N. W Anchoo, M. Hidayatullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-v-sivarajan-v-the-union-of-india-and-anoth-r-1634
- **Pages:** 8

## Headnote

Coir Industry, Regulation and Control of-Registration of
exporter and licensee-Quantitative test-Constitutional validity-Coir
Industry Act, z953 (45 of z953), s. 26, rr. z8, z9, zo(z)(a), ZI, zz(a)
-Con$titution of India, Arts. z9, z4.
,
The petitioner, an unsuccessful applicant for registration as.
an exporter and licensee for exporting coir products, challenged
the vires of the rr. 18, 19, 20(1)(a), 21 and 22(a) mad~ by the
Central Government in exercise of its powers under sJ 26(1) of
the Coir ·Industry Act, 1953 (45 of 1953). The Act had for its
object the regulation and control of the Coir industry ih public
interest. It was contended on his behalf that the iiμpugned
rules, which prescribed the quantitative, and not the qualitative,
test for registration of established exporters, were inc<ilnsistent
with the provisions of the Act and as such, ultra vires the Act
and that they tended to create a monopoly in the expqrt trade
of coir commodities and thereby destroy the business of small
dealers and discriminated between those who carried on large
scale business and those who carried on small scale business and
thus impugned Art(>. 19 and l4 of the Constitution.
Held, that the contentions.were without substance an'1 must
be negatived.
There was no provision in the Coir Industry Act, 19$3· that
excluded or prohibited the application of the quantitative test
and the rules were in no way inconsistent with the A¢t nor in
excess of the powers conferred on the Central Government by
s. 26 of the Act.
'
Where an Act sought to control an industry i!l public
interest it would obviously be for the rule making authority to
decide which rules and regulations would meet the reqqirement
of public interest. Such rules and regulations, though reasonable
within the meaning of Art. 19(6), might cause hardship to those
who failed to comply with them. But once it was conceded that
the regulation and control of the trade were justified im public
interest, Art. l9(1)(g) could not be invoked to challenge the validity of the rules.
Nor did the impugned rules violate Art. 14 of the Gonstitution. The classification of traders under rr. 18 and' 19 was
clearly founded on an intelligible differentia that had a ,rational
relation to the object of the Act. The exemption made by the
rules in favour of co-operative societies from some of the relevant
tests indicated that the Legislature intended to encourage small
Dacemb1r rz.
780
SUPREME COURT REPORTS [1959] Supp.
traders. It was not, therefore, correct to say that the rules
would lead to a monopoly in the trade.
P. V. Siv<Jrajan
ORIGINAL JURISDICTION:
Petition No. 121 of 1958.
v.
Th• Union of India
Petition under Article 32 of the Constitution for
and Another
enforcement of Fundamental rights.
G. B. Pai and Sardar Bahadur, for the petitioner.
M. G. Setalvad, Attorney-General for India, B. Sen
and T. M. Sen, for t'he respondents.
1958. December II. The Judgment of the Court was
delivered by
GajendfagadAa, J
GAJENDRAGADKAR, J.-The petitioner has been do-
-
ing business as an exporter of coir product.a to foreign
countries for the last twenty years. On July 4, 1958,
he applied to respondent 2, the Chairman, Coir Board,
Ernakulam, requesting that he should be registered as
an established exporter. This application was accompanied by an income-tax clearance certificate and
attested copies of bills of lading. Respondent 2
declined to register the petitioner on the ground that
his application was defective inasmuch as the requisite
certificate regarding his financial status had not been
produced and no evidence had been given to show
that he had exported the minimum quantity required
(500 Cwts.).
The petitioner was told that unless he
complied with the requirements asked for within seven
days his application would be rejected without further
notice. The petitioner found that he could not comply with the directions issued by respondent 2 and so
it became impossible for the petitioner to get registration and licenc

## Text

(1) S.C.R.
SUPREME COURT REPORTS
779
P. V. SIVARAJAN
v.
THE UNION OF INDIA AND ANOTH]}R
(S. R. DAS, c. J., s. K. DAS, P. B. GAJENDRAGADKAR,
K. N. W ANCHOO and M. HIDAYATULLAH, JJ.)
Coir Industry, Regulation and Control of-Registration of
exporter and licensee-Quantitative test-Constitutional validity-Coir
Industry Act, z953 (45 of z953), s. 26, rr. z8, z9, zo(z)(a), ZI, zz(a)
-Con$titution of India, Arts. z9, z4.
,
The petitioner, an unsuccessful applicant for registration as.
an exporter and licensee for exporting coir products, challenged
the vires of the rr. 18, 19, 20(1)(a), 21 and 22(a) mad~ by the
Central Government in exercise of its powers under sJ 26(1) of
the Coir ·Industry Act, 1953 (45 of 1953). The Act had for its
object the regulation and control of the Coir industry ih public
interest. It was contended on his behalf that the iiμpugned
rules, which prescribed the quantitative, and not the qualitative,
test for registration of established exporters, were inc<ilnsistent
with the provisions of the Act and as such, ultra vires the Act
and that they tended to create a monopoly in the expqrt trade
of coir commodities and thereby destroy the business of small
dealers and discriminated between those who carried on large
scale business and those who carried on small scale business and
thus impugned Art(>. 19 and l4 of the Constitution.
Held, that the contentions.were without substance an'1 must
be negatived.
There was no provision in the Coir Industry Act, 19$3· that
excluded or prohibited the application of the quantitative test
and the rules were in no way inconsistent with the A¢t nor in
excess of the powers conferred on the Central Government by
s. 26 of the Act.
'
Where an Act sought to control an industry i!l public
interest it would obviously be for the rule making authority to
decide which rules and regulations would meet the reqqirement
of public interest. Such rules and regulations, though reasonable
within the meaning of Art. 19(6), might cause hardship to those
who failed to comply with them. But once it was conceded that
the regulation and control of the trade were justified im public
interest, Art. l9(1)(g) could not be invoked to challenge the validity of the rules.
Nor did the impugned rules violate Art. 14 of the Gonstitution. The classification of traders under rr. 18 and' 19 was
clearly founded on an intelligible differentia that had a ,rational
relation to the object of the Act. The exemption made by the
rules in favour of co-operative societies from some of the relevant
tests indicated that the Legislature intended to encourage small
Dacemb1r rz.
780
SUPREME COURT REPORTS [1959] Supp.
traders. It was not, therefore, correct to say that the rules
would lead to a monopoly in the trade.
P. V. Siv<Jrajan
ORIGINAL JURISDICTION:
Petition No. 121 of 1958.
v.
Th• Union of India
Petition under Article 32 of the Constitution for
and Another
enforcement of Fundamental rights.
G. B. Pai and Sardar Bahadur, for the petitioner.
M. G. Setalvad, Attorney-General for India, B. Sen
and T. M. Sen, for t'he respondents.
1958. December II. The Judgment of the Court was
delivered by
GajendfagadAa, J
GAJENDRAGADKAR, J.-The petitioner has been do-
-
ing business as an exporter of coir product.a to foreign
countries for the last twenty years. On July 4, 1958,
he applied to respondent 2, the Chairman, Coir Board,
Ernakulam, requesting that he should be registered as
an established exporter. This application was accompanied by an income-tax clearance certificate and
attested copies of bills of lading. Respondent 2
declined to register the petitioner on the ground that
his application was defective inasmuch as the requisite
certificate regarding his financial status had not been
produced and no evidence had been given to show
that he had exported the minimum quantity required
(500 Cwts.).
The petitioner was told that unless he
complied with the requirements asked for within seven
days his application would be rejected without further
notice. The petitioner found that he could not comply with the directions issued by respondent 2 and so
it became impossible for the petitioner to get registration and licence applied for by him. That is why he
filed the present petition under Art. 32 of the Const.itution and prayed for the issue of a writ or order in
the nature of mandamus to direct the second respondent to grant the petitioner registration and licence as
applied for by him and to prohibit or restrain the said
respondent from acting on, or implementing, the rules
issued under the Coir Industry Act, 1953, by issue of
a writ of certiorari, prohibition or such other writ or
order appropriate to protect his rights. The petitioner also prayed that "if found necessary " the said
(1) S.C.R.
SUPREME COURT REPORTS
781
i
rules should be declared to be ultra vires the powers
r958
of the Central Government and invalid being ln viola-
/ .
.
tion of the fundamental rights guaranteed by Arts. 14 P. 1 • Siva•a;an
and 19 of the Constitution. The Union of In~ia has The Uni:~ of India
been impleaded as respondent 1 to the petition.
and Anothe•
Before dealing with the points raised by the petition
it would be necessary to refer briefly to the provisions Gajendra:adkar J.
of the Coir Industry Act, 1953 (45 of 1953), heteinafter
called the Act, and the rules framed under it in 1958.
This Act w.as enacted by the Parliament because it
was thought expedient in the public interest that the
Union should take under its control the coir industry
(s. 2).
Section 4 of the Act provides for the establishment and constitution of the Coir Board and s~ 10 enumerates its functions and duties. Under s. 10(1) it
shall be the duty of the Board to promote by such
measures as it thinks fit the development under the
control of the Central Government of the coir industry. Sub-section (2) enumerates the measure~ which
the Board may take with the object of developing the
coir industry without prejudice to the generality of the
provisions of sub-s. (1).
Amongst the measures thus
enumerated, sub-s. (2) (b) refers to the regulatiqn under
the supervision of the Central Government of the production of husks, coir yarn and coir products ~y registering coir spindles and looms for manufacturing coir
products, as also manufacturers of coir products,
licensing exporters of coir, coir yarn and coir products
and taking such other appropriate steps as; may be
prescribed. Sub-section (2)(g) refers to the promotion
of co-operative organisation among produpers of
husks, coir fibre and coir varn and manufacturers of
coir products, and sub-s. ·(2)(i) refers to the 11icensing
of retting places and warehouses and otherwise regulating the stocking and sale of coir fibre, coir )'larn and
coir products both for internal market and for exports.
Section 26(1) confers on the Central Government
power to make rules for carrying out the purposes of
the Act subject to the condition of previous publication. Sub-section (2) enumerates the matters in respect of which rules may be made, in particular and
without prejudice to the generality of the power
782
SUPREME COURT REPORTS [1959] Supp.
'958
conferred by sub-s. (1).
Sub-section (2) (k) refers inter
P. v. SivarajP• alia to the registration of manufacturers of coir prov.
ducts and the conditions for such registration and the
Th• Union of India grant or issue of licences under the Act; and sub-s.
and Another
(2)(1) deals with the form of applications for registra-
.
-
tion and licences under the Act and the fee, if any, to
Ga1endragadhor J. be paid in respect of any such applications.
Under the powers conferred by s. 26 the Central
Government framed rules in 1958. For the purposes
of the present petition it would be relevant to refer to
rr. 17 to 22.
Rule 17 deals with registration and
licensing of exports; and it provides that no person
shall, after the coming into force of the rule, export
coir fibre, coir yarn or coir products unless he has been
registered as an exporter and has obtained .an export
licence under these rules.
The proviso deals with
exemptions with which we are not concerned. Rule 18
lays down that any person who has .in any of the
three years immediately preceding the commencement
of the .rules exported not less than twenty-five tons of
coir yarn or coir products other than coir rope, or ex.
ported any quantity of coir fibre or coir rope, may be
registered an an exporter of coir yarn, coir products
other than coir rope or coir fibre or coir rope as the
case may be.
Rule 19 provides for the registration of
persons other than those covered by r. 18 and it lays
down inter alia that such persons may be registered as
exporters _of coir yarn if, during the period of twelve
months immediately preceding the date of application,
a minimum quantity of twenty-five tons of coir yarn
had been rehanked or baled in a factory owned or
otherwise possessed by the applicant and registered
under the Indian Factories Act, 1948, or, if the applicant has had a total purchase turnover of one hundred tons of coir yarn.
The proviso to this rule
authorises the Chairman by notification to exempt
from the operation of this rule any co-operative
society the members of which are owners, of industrial
establishments or any Central Co-operative Ma:rketing
l::lociety.
Rules 20 and 22 prescribe the mode of making au application for registration as an exporter and
for licence respectively while r. 21 provides for the
(1) S.C.R.
SUPREME COURT REPORTS
783
cancellation of registration. The present petition does
z95B
not challenge the validity of any of the provi~ions of
the Act. It, however, seeks to challenge the vires of P. v. Sivarajqn
v.
rr. 18, 19, 20(1)(a), 21 and 22(a).
The Union of India
There i8 no doubt that coir and coir products play
a"d Another
an important role in our national economy. They are
commodities which earn foreign exchange, th,e total Gajendragadhar J.
value of our exports in these commodities being of the
order of Rupees Ten Crores per year. It was found
that several malpractices had crept in the ·export
trade of these commodities such as non.fulfilment of
contracts, supplying goods of inferior qualities and
cut-throat competition; and these in turn considerably
affected the volume of the trade. That is why Parliament thought it necessary that the Union should take
under its control the coir industry in order to rt;igulate
its export trade. It is with the object of developing
the coir industry that the Coir Board has been established and the registration and licensing of exporters
has been introduced. The petitioner does not qispute
this position and makes no grievance or complaint
against the relevant provisions in the Act.
It is, however, urged that the relevant rules which
prescribe the quantitative test for the registration of
established exporters are ultra vires becausii the
introduction of the said test is inconsistent with the
provisions of the Act. In this connection Mr. Pai, for
the petitioner, sought to rely on the report subJillitted
by the Ad-Hoc Committee for external marketing
which the Coir Board had appointed on August 20,
1954. His grievance is that the report of the said
Committee does not recommend the adoption of the
quantitative test, but seems to suggest that a qqalitative test would be more appropriate; and that, according to Mr. Pai, also indicates that the quantitative
test had been improperly prescribed by the rules. We
are not impressed by these arguments. It is clear that
there is no provision in the Act which excludes Of prohibits the application of the quantitative test in making rules for registration of exporters or for istming
licences for export trade. In fact the Act has deliiberately left it to the rule-making authority to frame .rules
784
SUPREME COURT REPORTS [1959] Supp.
1958
which it ma.y regard as appropriate for regulating the
trade ; and so it would be impossible to accept the
.p. V. Sivarajan
h
h
l
k"
v.
argument t at t e ru e-ma mg authority was bound
The Union of India to prescribe the qualitative rather than the quantitaaud Another
tive test. Besides, it does not appear that the report
.
of the Committee on which Mr. Pai relied definitely
Ga1eudragadkar J. indicated its partiality for the adoption of the qualitative test. Indeed Appx. XI to the said report would
suggest that the Committee in fact was not averse to
the adoption of a quantitative test; but even if the
Committee had expressly recommended the adoption
of a qualitative, not a quantitative, :test, it would be
idle to suggest that the Coir Board was bound to accept
the said recommendation or that the Central Government was not competent to make rules contrary to the
recommendations of the Committee. The validity of
the rules can be successfully challenged if it is shown
that they are inconsistent with the provisions of the
Act or that they have been made in excess of the
powers conferred on the rule-making authority by
s. 26 of the Act. In our opinion, no such infirmity has
been established in respect of the impugned rules.
It is then contended that the relevant rules would
ultimately tend to establish a monopoly in the export
trade of coir commodities and would thereby extinguish
the trade or business of small dealers like the petitioner. It is also contended that the application of the
quantitative test discriminates between persons carrying on business on a large sea.le a.nd those who carry
on business on a small scale. That is how Arts. 19
and 14· of the Constitution are invoked and the
validity of the· relevant rules is challenged on the
ground that they violate the fundamental rights of the
petitioner under the said Articles. We think there is
no substance in this contention.
If it is conceded that the regulation of the coir
industry is in the public interest, then it would be
difficult to entertain the argument that the regulation
or control must be introduced only on the basis of a
qualitative test. It may well be that there are several
difficulties in introducing and effectively enforcing the
qualitative test. It is well-known that granting
(1) S.C.R. SUPREME COURT REPORTS
785
permits or licences to export or import dealers on the
x958
basis of a quantitative test is not unknown in regard P v 5 .
.
to export and import of essential commodities. It · · ;~araJan
would obviously be for the rule-making authority to The Union of India
decide which test would meet the requirem~nts of
and Another
public interest and what method would be most
. -
expedient in controlling the industry for the 1'ational Ga1endragadkar J.
good.
Besides, even the adoption of a qualitative test
may tend to extinguish the trade of those who do not
satisfy the said test; but such a result ,cannot
obviously be treated as contravening the fundamental
rights under Art. 19. Control and regulation 'of any
trade, though reasonable within the meaning of
Art. 19, sub-Art. (6), may in some cases lead tq hardship to some persons carrying on the said tnade or
business if they are unable to satisfy the requirements
of the regulatory rules or provisions validly introduced ; but· once it is conceded that regulation of the trade
and its control are justified in the public inter~st, it
would not be open to a person who fails to satisfy the
rules or regulations to invoke his fundamental . right
under Art. 19(l)(g) and challenge the validity of the
regulation or rule in question. In our opinion, therefore, the challenge to the validity of the rules on the
ground of Art. 19 must fail.
The challenge to the validity of the said rulE~s on
the ground of Art. 14 must also fail, because the
classific~tion of traders made by rr. 18 and 19 is
clearly rational and is founded on an intelligible
differentia distinguishing persons falling undev one
class from those fa.Hing under the other. It i~ also
clear that the differentia has a rational relation to the
object sought to be achieved by the Act. As we have
already pointed out, the export trade in coir commodities disclosed the existence of many malpractices
which not only affected the volume of trade but also
the reputation of Indian traders ; and one of the main
reasons which led to this unfortunate result was that
exporters sometimes accepted orders far beyond their
capacity and that inevitably led to non-fulfi.lmeht of
contracts or to supply of inferior commodities. In
99
786
SUPREME COURT REPORTS [1959] Supp.
z958
order to remedy this position the trade had to be
P v 5 .
.
regulated and so the intending exporter was required
• · ~~ara;an to satisfy the test of the prescribed minimum capacity
The Union of India and to establish the prescribed minimum status before
and Another
his application for registration is granted. In this
connection it may also be relevant to point out that
Gajendragadkar J. the rules seem to contemplate the granting of exemption from the operation of some of the relevant tests
to co-operative societies ; and that shows that the
intention of the Legislature is to encourage small
traders to form co-operative societies and carry on
export trade on behalf of such societies; and so it
would not be possible to accept the argument that the
impugned rules would lead to a monopoly in the trade.
It is thus clear that the main object which the rules
propose to achieve is to remove the anomalies and
malpractices prevailing in the export trade of coir
commodities and to put the said trade on a firm and
enduring basis in the interest of national economy.
We are, therefore, satisfied that the challenge to the
impugned rules on the ground of infringement of Art.
14 of the Constitution must also fail.
In the result we hold that there is no substance in
the petition. It accordingly fails and is dismissed
with costs.
Petition dismissed.