# PARVEJ AK.TAR AND ORS v. UNION OF INDIA AND ORS

- **Citation:** [1993] 1 S.C.R. 803
- **Court:** Supreme Court of India
- **Decided:** 1993-02-05
- **Bench:** Lalit Mohan Sharma, S. Mohan, N. Venkatachala
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/parvej-ak-tar-and-ors-v-union-of-india-and-ors-11723
- **Pages:** 29

## Headnote

Handlooms (Reservation of Articles for Production) Act, 1985:
A
B
Sections 3 and 4-0rder reserving certain articles for exclusive produc.: C
tion by handlooms-Constitutiona/ validity of-Whether in conflict with
clause 20 of Cotton Textile (Control) Order, 1948.
Constitution of India, 1950:
Articles 14, 19(1)(g), 39(b) & (c), 43-0rder u/s. 3(1) of the HandD
looms (Reservation of Articles for Production) Act, 1985-Reserving of certain aTticles for exclusive production by handlooms-Whether amounts to
protective discrimination-Whether creates unreasonable restriction 011 powerloom industry-Wh~ther in the nature of creating monopoly-Direcfive Principles of State Policy-<Jiving effect to.
E
In the present Writ Petition and the transferred cases, the constitu·
tional validity of Handlooms (Reservation of Articles for production) Act,
1985 and the order dated 4th August, 1986 issued under S.3(1) of the Act,
directing that certain articles/class of articles to be exclusively reserved
for production by handlooms, has been challenged on the ground of F
violation of Articles 14 and 19(1)(g) of the Constitution oflndia.
On behalf-of the petitione.rs, it was contended that total reservation
of certain items of ta1lles in favour of handlooms would have the effect of
creating a monopoly; the total prohibition of manufacture of certain
clothes by the powerloom sector violated Article 19(1) (g) of the Constitu· G
tion; that the periodic review provided under Section 3(5) or the Act bas
not taken place at all; that the restrictions did not serve any public
interest; and that the Act and the Cotton Textile (Control) Order, 1948
could not operate in the same field and so the orders dated 4.8.86 issued
under the Act were ultra vires.
803
H
804
SUPREME COURT REPORTS
[1993} 1 S.C.R.
A
On behalf of the Respondents it was contended that the Act was
entirely different from the Cotton Textiles (Control) Order 1948 issued
under the Essential Commodities Act, and as such there was absolutely nd
.
.
repugnance. It was also contended that an Expert Committee was con·
stituted to go into bandloom, powerloom and textile mUI industries, and
B
based on this Committee's report, textile policy stakments were issued
and the Act therefore was a product of overall assessment to protect
handloom industry which was sinking in spite of the various co11cessions.
Dismissing the matters, this Court,
C
HELD : 1. It is incorrect to state that the powerloom sector has
come to be affected. Originally, the holders of four powerlooms were
exempt. But these powerloom owners diverted their products to larger
powerloom owners. Once those te'xtiles enter the market there was no
possibility of finding out whether they bad been manufactured by the
owners of four powerlooms. Therefore, it became necessary to impose this
D prohibition. When the Act advances a directive principle contained under
Article 39(b) and (c), it cannot be called unreasonable. (8110-EJ
2. The Cotton Textile Control Order 1948 issued under the Essential
Commodities Act deals with the production while the Handlooms (Reser·
E vation of Articles for Production) Act, 1985 is an Act which dl'.als entirely
with handloom. The order issued under Section 3 of the Act is only for
protection and development of haodloom industry. There is no question
of botlt the Cotton Textile Control Order and the Order under challenge
operating in the same field. In view of the non-obstante clause in S.3(1) of
the Act, the subject of handlooms textiles was taken out of the purview of
F
Industries (Development and Regulation) Act, 1951 and a separate Act
has been passed. Merely because clause 20 or the Cotton Textile Control
Order confers an enabling power that does not mean that an order issued
under the Essential Commodities Act will prevail. The objects or the Act
and the Essential Commodities Act under which the Cotton Textile (Con·
G trol) order is issued are different. Therefore, the order D!lder Section 3(1)
or the Act does not run

## Text

_Characters 0–39,700 of 60,408. This is a partial read: ask again with offset=39700 for what follows._

PARVEJ AK.TAR AND ORS.
v.
UNION OF INDIA AND ORS.
FEBRUARY 5, 1993
[LALIT MOHAN SHARMA, CT., S. MOHAN AND
N. VENKATACHALA, JJ.]
Handlooms (Reservation of Articles for Production) Act, 1985:
A
B
Sections 3 and 4-0rder reserving certain articles for exclusive produc.: C
tion by handlooms-Constitutiona/ validity of-Whether in conflict with
clause 20 of Cotton Textile (Control) Order, 1948.
Constitution of India, 1950:
Articles 14, 19(1)(g), 39(b) & (c), 43-0rder u/s. 3(1) of the HandD
looms (Reservation of Articles for Production) Act, 1985-Reserving of certain aTticles for exclusive production by handlooms-Whether amounts to
protective discrimination-Whether creates unreasonable restriction 011 powerloom industry-Wh~ther in the nature of creating monopoly-Direcfive Principles of State Policy-<Jiving effect to.
E
In the present Writ Petition and the transferred cases, the constitu·
tional validity of Handlooms (Reservation of Articles for production) Act,
1985 and the order dated 4th August, 1986 issued under S.3(1) of the Act,
directing that certain articles/class of articles to be exclusively reserved
for production by handlooms, has been challenged on the ground of F
violation of Articles 14 and 19(1)(g) of the Constitution oflndia.
On behalf-of the petitione.rs, it was contended that total reservation
of certain items of ta1lles in favour of handlooms would have the effect of
creating a monopoly; the total prohibition of manufacture of certain
clothes by the powerloom sector violated Article 19(1) (g) of the Constitu· G
tion; that the periodic review provided under Section 3(5) or the Act bas
not taken place at all; that the restrictions did not serve any public
interest; and that the Act and the Cotton Textile (Control) Order, 1948
could not operate in the same field and so the orders dated 4.8.86 issued
under the Act were ultra vires.
803
H
804
SUPREME COURT REPORTS
[1993} 1 S.C.R.
A
On behalf of the Respondents it was contended that the Act was
entirely different from the Cotton Textiles (Control) Order 1948 issued
under the Essential Commodities Act, and as such there was absolutely nd
.
.
repugnance. It was also contended that an Expert Committee was con·
stituted to go into bandloom, powerloom and textile mUI industries, and
B
based on this Committee's report, textile policy stakments were issued
and the Act therefore was a product of overall assessment to protect
handloom industry which was sinking in spite of the various co11cessions.
Dismissing the matters, this Court,
C
HELD : 1. It is incorrect to state that the powerloom sector has
come to be affected. Originally, the holders of four powerlooms were
exempt. But these powerloom owners diverted their products to larger
powerloom owners. Once those te'xtiles enter the market there was no
possibility of finding out whether they bad been manufactured by the
owners of four powerlooms. Therefore, it became necessary to impose this
D prohibition. When the Act advances a directive principle contained under
Article 39(b) and (c), it cannot be called unreasonable. (8110-EJ
2. The Cotton Textile Control Order 1948 issued under the Essential
Commodities Act deals with the production while the Handlooms (Reser·
E vation of Articles for Production) Act, 1985 is an Act which dl'.als entirely
with handloom. The order issued under Section 3 of the Act is only for
protection and development of haodloom industry. There is no question
of botlt the Cotton Textile Control Order and the Order under challenge
operating in the same field. In view of the non-obstante clause in S.3(1) of
the Act, the subject of handlooms textiles was taken out of the purview of
F
Industries (Development and Regulation) Act, 1951 and a separate Act
has been passed. Merely because clause 20 or the Cotton Textile Control
Order confers an enabling power that does not mean that an order issued
under the Essential Commodities Act will prevail. The objects or the Act
and the Essential Commodities Act under which the Cotton Textile (Con·
G trol) order is issued are different. Therefore, the order D!lder Section 3(1)
or the Act does not run counter to clause 20 of Cotton Textile Control
Order. [816H, 822F, 8240]
Ch. Tika Ramji v. State of Uttar Pradesh, (1956} SCR 393 and
Harishankar Bag/a v. 171e State of Madhya Pradesh, (1955) SCR 380 at 391,
H relied on.
PARvEJ AKTAR v. U.0.1.
805
3. There is no question of monopoly created in favour of bandloom A
industry. Certain kinds of textiles are reserved lo the bandloom industry.
Stlll there are number of items available for powerloom owners which they
can manufacture. The items of textiles generally manufactured in the mill
and powerloom sectors have been left out from reserved items. Only those
items which have traditloually been manufactured ou, bandlooms have B
been reserved for this sector. Recently when the powerloom started
producing the items which were traditionally being manufactured on
bandlooms, that caused a serious inroad into the baudloom Industry. The
result was an unequal competition for the bandloom sector. Handloom
Industry is the biggest cottage Industry in the country and is next only to
agricultural sector in providing rural employment. The protection bas C
been given by the Government to bandloom weavers because the Uvellhood
of bandloom weavers is threatened due to the· production of all types of
items and varieties by the powerloom Industry. It is common knowledge
that the handloom weavers are economically very poor and will have no
alternative employment in the rural areas unless protected through reser· D
vatlon of varieties for them. Therefore, the restrictions on the powerloom
industry are not only reasonable but also fully justified. Moreover, the
protection given to the bandloom industry is In furtherance of the objectives laid down in the directive principles. Even if these restrictions result
in the total exclusion of the powerloom sector, such restrictions are
reasonable. [824G-H, 826E, F, G, 827A]
E
Orient Weaving Mills v. Union of India, AIR 1963 SC 98 and Narendra
Kumar v. Union of India, (1960] 2 SCR 375, relied on.
Rustom Cavasjee Cooper v. Union of India, (1970] 3 SCR 530, distln·
guisbed.
F
State of Rajasthan v. Mohan Lal Vyas, [1971] 3 SCC 705; Municipal
Committee v. Haji Ismai~ AIR 1967 Puojab 32; Maniram Budha Chamar v.
Pamala/ Motiram Chamar, AIR 1962 Madhya Pradesh 275; Mohd. Hanif
Quareshi v. State of Bihar, [1959] SCR 629; State of Madras v. V.G. Row, G
[1952] SCR 597; Virendra v. State of Punjab, [1958] SCR 308; Mohd. F1J1Uk
v: State of Madhya Pratksh, [1970] 1 SCR 156 and Municipal Corporation
of the City of Ahmeda/Jad v. Jan Mohammed Usman/Jha~ (1986] 2 SCR 700,
referred to.
4. Article 14 requires that all persons subject to a legislation must H
806
SUPREME COURT REPORTS
(1993] 1 S.C.R.
A be treated alike. Equals must be treated alike, iu like drwmstances and
conditions. Undoubtedly, the handloom sector forms a distinguishable
class separate from powerloom sector or mills sector. The reservation of
certain articles for exclusive production In the handloom sector has the
objective of protecting the handloom sector against unequal and powerful
B
c
competition by the mechanised powerloom/mills sector. At the same time,
it is also necessary to ensure continued production coupled with sustained
employment to the handloom weavers largely concentrated in the rural
areas. This is also in accord with the Government's declared policy of
supporting handloom sector due to its large employment potential. Thus
the classification has a rational nexus with the objective of the Act.
[829G,H; 830A,B]
S. The handlooms are operated manually, the number of persons
employed Is many times more than powerloom for production of similar
quantities of cloth •. The reservation of articles for handlooms does not
D pose any serious threat to powerlooms. It has been proved by the fact that
1
even thougb the handlooms reservation orders have been on the statute
book sin<-e 1950, the powerlool"• have continued to proliferate and there
is no reason to believe that any of these looms are likely to be closed due
'
to the Reservation Order. The powerlocm owners are only required to
'
E
diversify their line of produi;tion so that they do not produce cloth
reserved for bandlooms. Since .the Government policy bas always been to
F
'
create more employment partlcillarly in rural areas, it will be unthinkable
to Imagine the social problems' that will be created if the employment of
millions of handloom weavers is taken away by allowing powerlooms to
produce all items without any reservation. [829B·E]
6. Sub-section (1) of Section 3 of the Act states that the order
specifying the articles for exclusive production of handloom could be
issued for the prot.-ction and development of handloom industry from
time to time. Therefore, the reservation is not for all time to come. It could
G be revised periodically. Atleast once II year there could be a meeting of the
·Advisory Committee. [8.lOC,E]
7. The interest of the powerloom sedor has been taken into account
and powerlooms were represented albeit indirectly on the Advisory Com·
mittee. The sub..:ommittees formed by the Advisory Committee had visited
H many places in the country and discussed the matter with officers of the
--
PARVEJ AICTAR v. U.0.1. [MOHAN J.)
807
State Governments and met persons representing different texltte sectors. A
'r.
Apart form the reports received from the sob-committees, the repttsentattons received by the Government from various textile interests were
duly considered by the Advisory Committee before making their recom·
mendations. It Is, therefore, Incorrect to say that proper opportunity was
not provided to the petittoners for making representations. Moreover, B
representatives from powerloom sector, mills sector and powerloom silk
sector have been specffically included In the Advisory Committee. It can•
not therefore be said that no opportunity was afforded to powerloom
sector and that under Section 3 of the Act regard was had only to the
handloom industry while under clause 20 of the Cotton Textile Control
Order an over all view of all the Industries could be taken. (8318-E]
c
--
CIVIL EXTRAORDINARY JURISDICTION : Writ Petition
(Civil) No. 1526 of 1987.
-y--
(Under Article 32 of tbe Coostitution of India).
D
D.P. Gupta, Solicitor General, Altaf Ahmed, Additional Solicitor
General, M,N. Krisbnamaoi, V. Shekbar, Ms. A. Subhashini, K. Swamy, R.
Jagannath Goulay, Ms. Malini Poduval, R. Mohan, R.F. Nariman, P.H.
Parekh, Sahu, MA. F"iroz, Sudarsh Menon, M.K.D. Namboodri, A Sobba
Rao, Ranjit Kumar, R.N. Keshwani, Hireudra Krishna Dutt, Mrs. Nandini E
Gore, Mrs. M. Karanjawala, Ms. Sushma Suri, Anil Kumar Sangal and B .
.... __.....l_._
Krishna Prasad for the Appearing Parties.
The Judgment of the Court was delivered by
MOHAN, J. The writ petition and the transferred cases challenge tbe F
validity of Handlooms (Reservation of Articles for Production) Act, 1985
(22 of 1985) (hereinafter referred to as the Act) and tbe order bearing No.
-~.
DCP/BNP/1(2) 1986 dated 4th August, 1986 issued under sub-section (1)
of Section 3 of the Act. This Act is to provide for reservation of certain
articles for exclusive production by handiooms and for matters connected
therewith. On 31st of March, 1986, the Act came into force. Section 4 of G
tbe Act provides for coostituton of an Advisory Committee to make
rccommendatioos to the Centr Government to determine the nature of
.?---
any article or class of articles that may be reserved for exclusive jiroduction
by handlooms. On 2nd June, 1986, in exercise of the powers conferred
. under Section 4 of the Act, the Central Government constituted an· Ad- H
808
SUPREME COURT REPORTS
(1993) 1 S.C.R,
A visory Committee. The said Advisory Committee submitted its recomlliendations. After considering those recommendations the impugned order
dated 4th of August, 1986 was issued directing certain articles/class of
articles to be exclusively reserved for production by handlooms. It is this
order which is attacked on the following grounds in all these cases.
B
The Act and the impugned order are violative of Articles 14 and
19(1)(g) of the Constitution.
Accordingly to Mr. M.N. Krisbnamani, learned counsel for the·
petitioners total reservation of certain items of textiles in favour of handC loom would have the effect of creating a monopoly. This Court in State of
Rajasthan v. Mohan Lal Vyas, (1911) 3 SCC 705 has categorically laid down
that no monopoly can be created in favour of an individual. Similar views
have been expressed by the High Courts as seen from Municipal Committee
v. Haji Ismail, AIR 1%7 Punjab 32 and Maniram Budha Chamar v. Pamala/
D Motiram Chamar, AIR 1%2 Madhya Pradesh 275.
Equally, when there is a total prohibition of manufacture of these
clothes by the powerloom sector, that again, violates Article 19(1)(g) of the
Constitution. In support of his submission, the learned counsel relies on
Rustom Cavasjee Cooper v. Union of India, {1970) 3 SCR 530 and also
E
Narendra Kumtir v. Union of India, (1%0] 2 SCR 375.
F
The next argument of the learned counsel is that though under Rule
3(5) the Advisory Committee is to meet once a year, that has not taken
place at all. The idea of such a provision is that there must be a periodic
review which review has not taken place at all.
The restrictions in this case if, are to be justified, it should be in public
interest. Here, no public interest is subserved. On the contrary, when the
powerloom goods are available at a lower rate to the detriment of powerloom
mantifacturers, the restrictions have come to be imposed. This submission is
G sought to be fortified by relying on Mohd. Hanif Quareshi v. State of Bihm;
(1959) SCR 629 and State of Madras v. V.G. Row, (1952] SCR 597 at 607.
Mr. R.F. Nariman, learned counsel appearing for Textile Mills from
Gujarat in Transferred Cases Nos. 111-117of1988 would argue as under:
H
The Cotton Textile (Control) Order 1948 dated 2nd August, 1948
--
--
PARVEJ AKTAR v. U.0.1. [MOHAN J.]
809
and the impugned Act cannot operate in the same field. Section 6 of the A
Essential Commodities Act, 1955 contains a non-obstante clause. Clause 20
of the Cotton Textile (Control) Order, 1948 confers power on the Com_missioner to reserve just as the Notification issued under the Handlooms
Act. Therefore, these orders will prevail as against the impugned. order
because Section 3 of the Act says 'notwithstanding Industrial Development B
Regulation Act'. The Cotton Textile Commissioner while issuing orders
under clause 20 is enable to augment production of handloom industry.
Therefore, this order cannot operate against the same.
Under Section 3 of the Act, the authority only looks at the handloom
industry while under clause 20 the Cotton Textile Commissioner must have C
regard to the over all textile industry. Hence, the Notification under Section
3 is ultra vires of clause 20.
The subjective satisfaction of this Advisory Committee constituted
under Section 4 alone is taken into consideration without regard to the
petitioner's representation. This is bad in law in view of V.G. Row's case D
(supra). The same view was reiterated in Virendra v. State of Punjab, [1958)
SCR 308.
By the impugned order there is a serious dislocation of powerloom
industry and substantive rights guaranteed under Article 19(l)(g) of the E
Constitution have been violated by Sections 3, 4, 5, and 18 of the Act. Such
restrictions amounting to prohibition have been struck down by this Court
in Mohd. Faruk v. State of Madhya Pradesh, [1970) 1 SCR 156 and
Municipal Corporation of the City of Ahmedabad v. Jan Mohammed Usmanbhai, [1986) 2 SCR 700.
If the restrictions are unreasonable, certainly the Court will refuse to
uphold the same.
Mr. Altaf Ahmad, learned Additional Solicitor General appearing
F
for the respondent, Union of India, meeting these arguments, states as G
follows.
·
The Cotton Textile (Control) Order, 1948 is traceable to List III
Entry 33 of 7th Schedule of the Constitution. While the impugned Act is
covered by List II Entries 24 and 27 this is supplementary to the Industrial
Development and Regulation Act, 1951 which is traceable to List I EntrY H
810
SUPREME COURT REPORTS
[1993) 1 S.C.R.
A
52 of the 7th Schedule. Under the Industrial Development and Regulation
Act Section 2 talks of declaration. Section 3(h) states as to what is meant
by Schedule. Secyion 3(i) states 'Schedule' means a Schedule to this Act.
Item 23 of 1st Schedule deals with textiles including those dyed, printed or
otherwise processed. Handloom industry is taken out of the purview of
B Industrial Development and Regulation Act· and a separate enactment,
namely, Handlooms (Reservation of ArtiCles for production) Act, 1985 (22
of 1985), the impugned Act, has been made. Cotton Textile (Control)
Order, 1948 deals with finished products. That is why it is traceable to
Entry 33 of List III of 7th Schedule which deals with production. Therefore,
the impugned Act is entirely different from the Cotton Textile (Control)
C Order, 1948 which is an order issued under the Essential Commodities Act.
There is absolutely no repugnance.
In a similar situation dealing with Sugarcane Control Order this
Court explained the position vis-a-vis Industrial (Development and Regulation) Act, 1951 in Ch. Tika Ramji v. State of Uttar Pradesh, [1956) SCR 393.
D The ratio of that judgment will apply here.
The Handloom Act only gives effect to the directive principles under
Article 39(b) and (c) of the Constitution. In such a case, this Court has
always upheld such restrictions. As to the reasonableness, of these restric-
- _,
E tions, the learned counsel would strongly rely on the counter affidavit and
particularly, the report of the Iiligh-powered Study Team under the Chair-
~- ·
manship of Mr. B. Shivaraman, which has been quoted therein. If public
F
G
H
interest warrants, restrictions could include prohibitions as well. The case
in point is Narendra Kumar v. Union of India, [1960) 2 SCR 375.
Mr. Dipankar P. Gupta, learned Solicitor General supplementing the
argument submits that the Government studied the over all problem of
textile industry for a number of years. In 1%4, the powerloom inquiry was
constituted. In 1974, a high power Study Team constituted under the
Chairmanship of Mr. B. Sivaraman, the then Member, Planning Commission made the following observation in respect of effect of powerlooms and
the employement in the handlooms sector in their report: ·
'Every new ·powerloom itself put out of action six
handlooms in the country. A handloom actually is a family
industry and not an individual's field alone. When National Policy is to support the expansion of the rural industry
-
itn -
PARVEJ AKTAR v. U.0.1. [MOHAN J.]
of handloom in order to give more employment in the
rural sector, we shall be working at ,cross purpose in
encoura~ at the same time powerlooms to displace a
large number ofhandlooms.'
811
A
Then, a Study Group was constituted in 1981., An Expert Committee
was constituted to go into handloom, powerloom and textile mill industries. B
Based on this, from time to time, iextile policy statements were issued. In
the year 1981 and 1985, it is found that next only to agricultural sector,
handloom sector provides major rural employment. Therefore, the impugned Act is a product of over all assessment. to protect a handloom
industry which was sinking in spite of the various concessions.
C
It is incorrect to state that the powerloom sector has come to be
affected. Originally, the holders of four powerlooms were exempt. But
these powerloom owners diverted their products to larger powerloom
owners. Once those textiles enter the market there was not possibility of D
finding out whether they· had been manUfactured by the owners of four
powerlooms.
Therefore, it became necessary to impose this prohibition. When the
Act advances a directive principle contained under Article 39(b) and (c),
it cannot be called unreasonable.
E
We shall first examine the background leading to the passing of the
impugned enactment.
On 8.1.63, the Government of India appointed a committee, called
'The Powerloom Enquiry Committee' under the Chairmanship of Shri
Ashok Mehta. This. Committee submitted its report to the Government of
India on 5.6.1964. Amongst others, the Committee recommended that the
production of coloured sarees should be reserved exclusively for handloom
sector. In a reference to reservation, the committee has said:-
"Even with the phased programmes of introduction of
powerlooms in the handloom sector, the handloom sector
would continue to play a prominent role for some decades.
It will be necessary therefore, to ensure that this Sector is
given assistance by a further Reservation of field of
F
G
H
812
SUPREME COURT REPORTS
(1993] 1 S,C.R.
A
production.'
B
c
D
E
F
The said Study Team under the Chairmanship of Mr. B. Sivaraman
inter alia made the following recommendation:
'It will be noticed that three items are reserved exclusively for the handlooms and powerlooms units having
up to 4 powerlooms. Any breach of these orders is punishable under the Essential Commodities Act. In actual practice, however, the orders are honoured more in breach
than in compliance and there is very little of prosecution
under the Essential Commodities Act. The most glaring
example of such breach is the production of coloured
cotton sarees by the powerlooms of Maharashtra. Litigation of various nature is entered into by the powerloom
sector to delay the proces of law. As a result, even the
little punitive action that is attempted becomes infructuous. There is also the inherent difficulty of dealing with
the elght items which are also open to powerloom units
with four looms and less. Once the goods leave a powerlooms it becomes vecy· difficult to establish whether these
were produced iJr' a 'unit with more than four powerlooms
or in a smaller unit. As a result, the protection suppt)sed
to have been given to the. handloom sector by reserving
certain items of production for the sector has been substantially only on paper. and the powerloom sector has
been producing the reserved items whenever it has found
it profitable to do so. The team recommends that the eight
items .which are also open powerloom units with four
looms and less "shall be reserved exclusively for the handloom sector.'
The Government of India appointed a Study Group on 'Reservation of
G Handlooms' on Uth August,_ 1980 under ihe Chairm~hip of Textile
Commissioner who has given the following recommendations in respect of
certain articles for exclusive production by handlooms:
H
'It may be true that owing to the dispersed nature of the
industry, the much needed orientation of production to
market needs is very mucl;i waniing in the handloom sector.
---
f.
l
..
PARVEJ AKTAR v. U.O.l. (MOHAN J.]
Yet more important is the inherent technological disadvantage of the handloom sector and the unequal competition that it has to face from the mill and powerloom sector
on this account."
813
A
It is· a matter of common knowledge that the bulk of the bandlooms
in the country produce 'break and butter item' such as grey dboties, sarees, B
towels and plain household fabrics. It is these looms which have suffered
on account of the growing competition from the powerlooms. It is in this
context that the reservation of certain items of bandlooms acquires importance.
c
In order to obviate the possibility of further litigations, the Study
Group feels that it would be advisable to have a separate legislation for the
bandloom sector.
The Expert Committee observed in April 1985 thus:
"The vast growth of powerlooms has been due to certain
advantages which they have enjoyed vis-a-vis the composite
mills. These are low wages, low fiscal levies on yarn, absence of levy on grey fabrics which are the only products
of the powerlooms, wbl)1•sale evasion of protective labour
legislation, low overheads, low requirements of working
capital and flexibility in changing the product-mix to suit
market demands, etc. As against this, it must be recognised
that there are also certain advantages with the composite
mills. For instance, the yatn costs to the powerlooms are
about 8% higher than for the composite mills. The composite mills also have the advantage of much higher level
of technological capabilities and marketing strength with
reputed brand names established in the market and better
quality control. On balance, however, the advantage was
distinctly with the powerlooms so far as the production of
cotton fabrics is concerned. That this advantage bas put
the composite mills in some difficulty cannot be gainsaid.
In any policy calculated to restore health to the textile
industry, it would be necessary to approximately e<iualise
the advantages and disadvantages of these two sectors and
the Committee has attempted to do this through its
D
E
F
G
H
814
SUPREME COURT REPORTS
[1993) 1.S.C.R.
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recommendations."
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It is also relevant to note that the 7th Five Year Plan strcsSes the
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necessity for reservation of articles of the handloom seaor. The relevant
extract of which is given below:
"For the purpdse of policies, the powerlooms in the
organised mill sector and the unorganised powerloom
sector shall be treated at par and allowed to compete on
the basis of their inherent strength and capabilities. Effective measure, however, would be ·evolved to prevent·
encroachment of the powerloom sector on items reserved
for handlooms. During the Vllth Plan emphasis would be
laid on cooperativisation and development of handlooms
through Central State level corporations, modernisation
of looms and provision of technological inputs, ensure
adequate availability of yarn and other raw materials,
increase the production of mixed and blended fabrics on
handloom, design support to imporve the competitiveness
of the product so as to eliminate the co.st of handicap of
handloom vis-a-vis powerlooms, improve marketing and
infrastructure support and strengthen the· data base.
Reservation would continue under 'Handlooms (Reservation of Articles for Production) Act, 1985". The provision
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of this Act would be enforced and the machinery for this
purpose suitably strengthened. New Spindleage would be
installed in cooperative sector to the extent possible. To
improve the welfare of the/ handloom weavers, a contributory thrift fund scheme and worsbed-cum-housing
scheme would be taken up in the Seventh Plan".
Due to the recommendations of the various Committees under the
textile policy statements announced by the Government from time to time,
G the reservation of certain articles for production of handloom bad continued from 1.6.1950 under the Cotton Textiles (.Control) Order, 1948
issued under Section 3 of the Essential Commodities Act, 1955. However,
experience showed that these orders were challenged in course of law, from
time to time. The thrust of the argument on behalf of the powerloom was
H that they had given higher production and the powerloom cloth was
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PARVEJ AKTAR v. U.0.1. [MOHAN J.)
815
cheaper than handloom fabric. Therefore, it was contended that the A
Notification issued under the Essential Commodities Act which, in effect,
seeks to prohibit production was not in consonance with the Essential
Commodities Act. It was further urged that the Notification provides for
cxcmption from compliance of. reservation order if sufficient reason was
adduced by the producer. It was claimed by the powerloom owners that B
they were not afforded such an opportunity to adduce evidence. To overcome such difficulties, Government of India promulgated the Handlooms
(Reservation of Articles of Production) Act, 1985.
It is necessary to set out the· statement of objects and reasons of this
Act which runs as follows:
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"STATEMENT OF OBJECTS AND REASONS
The handloom industry is characterised by sizeable \
unemployment and under-employment which are due to
factors like lack of organisation of weavers, inadequate
availability of inputs, inluding working capital and absence
of a regular and reliable marketing system, which can
observe the entire production. Of all these the lack of
adequate marketing systell' is one single factor which
·comes in the way of proper development of handlooms.
Although a number of de¥Clopmental measures have been
undertaken towards impl'O'ICll\ent of the industry yet due
to marketing difficulties production in the Handloiim sector continues to suffer. The inhereat technological constraints suffered by the handloom sector put a
. disadvantage when the sector is forced to compete v.ith
mill and poweloom sectors in the open market. It is in this
context that reservation of certain items for exclusive
production by handloom ai;quires importance. The policy
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of reservation of certain items for exclusive production by
handloom has been adopted since 1950. Fust under the
Cotton Textiles (Control) Order 1948 and later under the
provisions of the Essential Commodities Act, 1955. This
policy has helped the handloom sector to a considerable
extent. However, during the last few years, these reservation orders issued under the Essential, Commodities Act
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SUPREME COURT REPORTS .
(1993) 1 S.C.R.
had been challenged in various courts of law. Though their
validity hiid been uphold it is considered desirable to have
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a separate legislation so as to obviate "the possibility of
further litigation which may seriously affect the implementation of the reservation orders. A study group appointed
by the Goverment to go into this question has also suggested that it would be desirable to have a separate
legislation. It has been decided to accept this recommendation, this question has also· suggested that it ·would be
desirable _to have a separate legislation. It has been
"ii~clded to accept this recommendation.
· The Bill apart from enabling the Central Government
to reserve by notified order certain articles or class of
articles for exclusive production by handlooms after taking
into consideration the recommendations of an Advisory
-Committee constituted under _the provisions of the Bill,
provid:s for prohibition of manufacture of such articles
of cla5s of articles by powerloom or the other sectorism
"penalties for the contravention of the provisions of the
order and other matters necessary for implementing the
provisions of the Bill also provides for giving an exemption
to certain articles covered ·.by. the order if the Central
Government ronsiders it;neeessary so to do for the-puri)oses of the Handloom industry.
J
V.P. Singh
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New Delhi
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. The 22nd August, 1984." _
With this background, we will examine the provisions of the Act in
juxtaposition to the Industrial D~elopment and Regulation Act and Cotton Textile Control Order.
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The Cotton Textile a;ntrol Order is an ,;rder issu~d under the
Essential Commodities Act. The object of the Essential Commodities Act
is to provide, in _the intere'st of general public, for -the. control of the
production, supply and distribution, and trad~ and. comm;r~ jn certain,
H commodities.
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PARVEJ AKTAR v. U.0.1. [MOHAN J.)
Sub-section (1) of section 3 states as follows:
'Notwithstanding anything contained in the Industries
(Development and Regulation) Act, 1951, the Central
Government may, if it is satisfied, after considering the
recommendations made to it by the Advisory Committee,
that it is necessary so to do for the protection and tkvelopment of the handloom industry, by order published in the
Official Gazette, direct, from time to time, that any article
or class of articles shall, on and from such date as may be
specified in the order (hereinafter referred to as the date
of reservation), be reserved for exclusive production by
handlooms.' (Emphasis supplied)
817
This Act is traceable to Entry 33 of List III of the 7th Schedule of
the Constitution. It runs as follows:
'Trade and commerce in, and the production, supply and
distribution of, -
(a) the products of any industry where the control of
such industry by the union is declared by Parliament by
law to the expedient in the public interest, and imported
goods of the same kind as such products;
(b) foodstuffs, including edible oilseeds and oils;
(c) cattle fodder, including oilcakes and other concentrates;
(d) raw cotton, whether ginned or unginned, and cotton seed; and
(e) raw jute.'
Industrial Development and Regulation Act, 1951 is an Act which
brll1gs under centr~ COl)trol the development and regulation of number· of
industries, , the actiftid of which affect the country as a whole and the
developmc;nt 9f which must be governed by economic factors of all India
import. The planning of future· development on sound and balanced lines
is S'.
•ht to be secured by licensing of all new undertakings by the Central
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SUPREME COURT REPORTS
(1993) 1 S.C.R.
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Government. The Act is traceable to List I Entiy 52 which reads as under:
"lndustries, the oontrol of which by the Union is
declared by Parliament by law to be expedient in the
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public interest.'
Section 2 of the said Act reads:
'Declaration as to expediency of control by the Union.-
It is hereby declared that is expedient in ue public
interest that the Union should take under its control the
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industries specified in the First Schedule."
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Section 3 is the definition section. In clause (h) it defines 'Schedule'
meaning a Schedule to this Act, while 'schedule industry' is defined under
clause (i) meaning any of the industries specified in the Fuest Schedule.
Item 23 of First Schedule is defined as under.
'23. TEXTILES (INCLUDING THOSE DYED,
PRINTED OR OTHERWISE PROCESSED}:
1. made wholly or in part of cotton, including cotton
yarn, hosiery and rope;
2. made wholly or in part of jute, including jute twine
and rope;
3. made wholly or in part of woo~ including wool tops,
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woollen yarn, hosiery, carpets· and druggets;
4. made wholly or in part of silk, including silk yarn
and hosiery;
5. made wholly or in part of syiithetic, artificial (manG
made) fibres, including yarn and hosiery of such fibres."
The impugned Act is traceable to Items 24 and V of List D of tbs
7th Schedule of the Constitution which run as under:
'24. Industries subject to the provisions of (Entries 7 and
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PARVEJ AKTAR v. U.O.I. (MOHAN J.]
819
"'1:1. Production, supply and distribution of goods subject
· to the provisions of Entry 33 of List ill.'
Therefore, handloom industry has · been taken out of Industrial
Dewlopment and Regulation Act and a separate enactment has been
)llllde.
In the light of the foregoing provisions, we shall examine the question
~y whether Cotton Textile Control Order and the impugned Act can operate
in the same field Section 6 of the Essential Commodities Act states:
'Effect of orders inconsistent with other enactments:
Any order made under Section 3 shall have effect
notwithstanding anything inconsistent therewith contained
in any enactment other than this Act or any instrument
having effect by virtue of any enactment other than this
Act.'
In view of the non-obstante clause it is argued that the Cotton Textile
Control Order will prevail over the impugned Act.
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We do not think this argument is correct because the Cotton Textile E
Control Order deals with finished products which is one of the Items
mentioned in Entry 33 of List III of the 7th Schedule of the Constitution
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and the object of an order issued under Section 3 of the Essential Com-
. modities Act has already been seen,
Clause 20 of the Cotton Textile Control Order enables the CommisF
sione~ to issue directions just as the present order.
When section sub-section (1) of Section 3 of the impugned Act says
'l'lotwithstanding anything contained in the Industries (Development and·
Regulation) Act, 1951" it means it has an overriding effect. that was the
reason why subject of handlo~m.textile was taken out of the purview of the G
Fust Schedule of Industries (De\.i:lQl!D'ent and Regulation) Act, 195l-and
-_r'- _ a separate Act had come to be passed. Merely because clause 20 of the
Cotton Textile Control Order corifers an enabling power that does not
mean that ·an order issued under the Essential Commodities Act will
prevail.
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SUPREME COURT REPORTS
(1993] 1 S.C.R.
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In this connection, reliance is placed by .Mr. Nariman, learned counB
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sel, on Harishankar Bag/a v. The State of Madhya Pradesh, (1955] SCR 380
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at 391 which runs as follows:
"Sectio~ 6 of the Act cited above declares that an order
made under section 3 shall have effect notwithstanding
anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect
by virtue of any enactment other than this Act. In other
words it declares that if there is any repiignancy in an
order made under section 3 with the provisions of any
other enactment, then notwithstanding that inconsistency
the provisions of the Order will prevail in preference to
the provisions of other laws which are thus inconsistent
with the provisions of the Order."
In dealing with the validity of Sugarcane Control Order, .1955 this
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"The relevant Entries in the respective Lists of the
Seventh Schedule to the Constitution are as follows:
List I, Entry 52: Industries, the control of which by the
Union is declared by Parliament by law to the· expedient
in the public interest.
List II, Entry 24: Industries subject to the provisions
of entry 52 of List I.
Entry 27: Production, supply and distribution of goods
subject to the provisions of entry 33 of List III.
List III, Entry 33: As it stood prior to its amendment:-
Trade and commerce in and production, supply and
distribution of, the products of industries where the control of such industries by the Union is declared by Parliament by law to be expedient in the public interest.
Entry 33 as amended by the Constitution Third
Amendment Act, 1954: Trade and commerce in, and the
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PARVEJ AKTAR v. U.0.1. (MOHAN J.]
821
production, supply and distribution of, -
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(a) the products of any industry where the control of
such industry by the Union is declared by Parliament by
law to be expedient in the public interest, and imported
goods of the same kind as such products;
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(b) foodstuffs, including edible oilseeds and oils;
(c) cattle fodder, including oilcakes and other concentrates;
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( d) raw cotton, whether ginned or unginned, and cotton- seed; and
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(e) raw jute.
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Production, supply and distribution of goods was no
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doubt within the exclusive sphere of the State Legislature
but it was subject to the provisions of Entry 33 of List III
which gave concurrent powers of legislation to the Union
as well as the States in the matter of trade and commerce
in, and the production, supply and distribution ef, the
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products of industries where the control of such industries
by the Union was declared by Parliament by law to the
expedient in the public interest. The controlled industries
were relegated to Entry 52 of List I which was the ex-
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elusive province of Parliament leaving the other industries
within Entry 24 of List II which the exclusive province of
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the State Legislature. The products of industries which
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were comprised in Entry 24 of List II were dealt with by
the State Legislatures which had under· Entry 27 of that
List power to legislate in regard _to the production, supply
and distribution of goods, goods according to the definiG
ti on contained in article 366 ( 12) including all raw
materials, commodities and articles.