# PRAG ICE & OIL MILLS & ANR. ETC v. UNION OF INDIA

- **Citation:** [1978] 3 S.C.R. 293
- **Court:** Supreme Court of India
- **Decided:** 1978-02-21
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/prag-ice-oil-mills-anr-etc-v-union-of-india-7325
- **Pages:** 41

## Headnote

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293
PRAG ICE & OIL MILLS & ANR. ETC.
v.
UNION OF INDIA
February 21, 1978 & May 5, 1978
IM. H. BEG, C.J., Y. V. CHANDRACHUD, P. N. BUAGWATI, S. MuRTAZA
FAZAL AI.I, P. N. SHINGHAL, JASWANT SINGH AND D. A. DESAI, JJ.)
Constitutton of India, 1950, Art. 31B read with Ninth
Schedule-Scope
and ambit of-Whether Art. 31B affords protection only to the :fcts. and '[{egulatiOns specified in Ninth Schedule, or also to orders and, not1ficat1ons issued
under those Acts and Regulations.
A
B
Constitulion of
India,
1950, Art 32 "Locus Sta11d1" of
'dealers' to inC
voke the 1urisdiction of the Supreme Court under Art. 32 and challenge the
provisions of tlze Price Control Order as of}endint.: fundamental ri?hts under
Arts. 14, 19(1) (/) and (g).
Mustard
Oil Price
Control
Order
1977
constitutional
validity a/-
Whether it violates Arts. 14 and 19 (1) (f) and (g)-Whether it is open to
such a challenge at all-Applicability of the doctrire of derivative protection.
Distinction between (a) "n1erely regulatory 0 1·der and
those
of
price
fixation or price control Order'' under s. 3(2) (c) of the Essential Commodities Act, and (b) "protection to a 111ere grant of powers" and "exercise of
that pOl-rer", explained.
Prite f1xativ11, tests of-Courts cannot interff!re
with ccono111ic
policies
.of the Government in cases of beneficial legislation ..
Sub-st:ction (1) of section 3 of the Essential
Commodities Act, 1955
which is placed in the Ninth Schedule of the Constitution, empowers the Central Govt. to provide by an order for regulating or prohibiting the production,
supply and distribution of an essential co1nmodity or trade or commerce therein, if it is of the opinion, that it is necessary or expedient so to do for maintaining or increasing supplies of any essential cornmcxlity or for securing its
equitable distribution and availability at a fair price. In exercise of the power
CO'nferred by s. 3 of the Essential Commodities Act, 10 of 1955, the Clovernment of India in its Ministry of Civil Supplies and
Cooperation issued on
September 30, 1977 the Mustard Oil (Price Control) Order, 1977.
The Price
Control Order provided by Clause (3) that no dealer \Vas either by hi1nself or
by any person on his behalf to sell or offer to sell any mustard oil at a retail
price exceeding Rs. 10 per Kg. exclusively of the cost of container but inclusive of taxes.
Clause 2 defines a dealer to mean a person eng<1ged in the
business cf purchase, sale, or storage for sale of mustard oil.
D
E
F
The Price Control Order was challenged in this Court by sevcrnl dealer.s
on the ground mainly, that it violated Articles 14
19(1)(f) and J9(l)(g)
G
of the Constitution.
Art. 301 w<1s ~ited but 1.1ot arg1;ed npo:1 with any 'ieriousness.
lipholding the validity of the impugned Price Control Order n-nd dismissing the appeals the Court,
HELD, : Per maiority
The Mustard Oil (Price Control Order.
1977)
is
con~t:tutionall'I valid.
H
The: iinpugned Price Control Order is not an act of hosfle disc··1minallon
against the traders.
Jt does not violate their right to property or their right
to trade o' business.
[319C; 331G]
294
SUPREME COURT REPORTS
[1978] 3 s.c.R.
A
Per Chand1achud, J. [as he 1hen was] (On behalf of
Bhagwati,
MurtazaB
c
D
E
F
G
H
Fazal Ali, Shinghal, Jaswant Singh, JJ. and !!ilnself).
I. On a pla.in reading of Art. 3 I A it ca•anot be said that the protective
umbrella of the Ninth Schedule takes in not only the acts anci regulations
specified therein but also orders and notifications issued under those acts and
regulations. !320 CJ
(a) Art. 31-B constitutes a grave encroachment on fundamental rights. and
though it is inspired by a radiant social philosophy, it must be construed as
strictly as one 1nay, for the simple reason that the guarantee of fundamental
rights cannot be permitted to be diluted by implications and inferences. The
Constitution which prescribes the extent to \Vhich a challenge to the constitutionality of a la\v is excluded, must be construed as demarcatin

## Text

_Characters 0–38,815 of 135,627. This is a partial read: ask again with offset=38815 for what follows._

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293
PRAG ICE & OIL MILLS & ANR. ETC.
v.
UNION OF INDIA
February 21, 1978 & May 5, 1978
IM. H. BEG, C.J., Y. V. CHANDRACHUD, P. N. BUAGWATI, S. MuRTAZA
FAZAL AI.I, P. N. SHINGHAL, JASWANT SINGH AND D. A. DESAI, JJ.)
Constitutton of India, 1950, Art. 31B read with Ninth
Schedule-Scope
and ambit of-Whether Art. 31B affords protection only to the :fcts. and '[{egulatiOns specified in Ninth Schedule, or also to orders and, not1ficat1ons issued
under those Acts and Regulations.
A
B
Constitulion of
India,
1950, Art 32 "Locus Sta11d1" of
'dealers' to inC
voke the 1urisdiction of the Supreme Court under Art. 32 and challenge the
provisions of tlze Price Control Order as of}endint.: fundamental ri?hts under
Arts. 14, 19(1) (/) and (g).
Mustard
Oil Price
Control
Order
1977
constitutional
validity a/-
Whether it violates Arts. 14 and 19 (1) (f) and (g)-Whether it is open to
such a challenge at all-Applicability of the doctrire of derivative protection.
Distinction between (a) "n1erely regulatory 0 1·der and
those
of
price
fixation or price control Order'' under s. 3(2) (c) of the Essential Commodities Act, and (b) "protection to a 111ere grant of powers" and "exercise of
that pOl-rer", explained.
Prite f1xativ11, tests of-Courts cannot interff!re
with ccono111ic
policies
.of the Government in cases of beneficial legislation ..
Sub-st:ction (1) of section 3 of the Essential
Commodities Act, 1955
which is placed in the Ninth Schedule of the Constitution, empowers the Central Govt. to provide by an order for regulating or prohibiting the production,
supply and distribution of an essential co1nmodity or trade or commerce therein, if it is of the opinion, that it is necessary or expedient so to do for maintaining or increasing supplies of any essential cornmcxlity or for securing its
equitable distribution and availability at a fair price. In exercise of the power
CO'nferred by s. 3 of the Essential Commodities Act, 10 of 1955, the Clovernment of India in its Ministry of Civil Supplies and
Cooperation issued on
September 30, 1977 the Mustard Oil (Price Control) Order, 1977.
The Price
Control Order provided by Clause (3) that no dealer \Vas either by hi1nself or
by any person on his behalf to sell or offer to sell any mustard oil at a retail
price exceeding Rs. 10 per Kg. exclusively of the cost of container but inclusive of taxes.
Clause 2 defines a dealer to mean a person eng<1ged in the
business cf purchase, sale, or storage for sale of mustard oil.
D
E
F
The Price Control Order was challenged in this Court by sevcrnl dealer.s
on the ground mainly, that it violated Articles 14
19(1)(f) and J9(l)(g)
G
of the Constitution.
Art. 301 w<1s ~ited but 1.1ot arg1;ed npo:1 with any 'ieriousness.
lipholding the validity of the impugned Price Control Order n-nd dismissing the appeals the Court,
HELD, : Per maiority
The Mustard Oil (Price Control Order.
1977)
is
con~t:tutionall'I valid.
H
The: iinpugned Price Control Order is not an act of hosfle disc··1minallon
against the traders.
Jt does not violate their right to property or their right
to trade o' business.
[319C; 331G]
294
SUPREME COURT REPORTS
[1978] 3 s.c.R.
A
Per Chand1achud, J. [as he 1hen was] (On behalf of
Bhagwati,
MurtazaB
c
D
E
F
G
H
Fazal Ali, Shinghal, Jaswant Singh, JJ. and !!ilnself).
I. On a pla.in reading of Art. 3 I A it ca•anot be said that the protective
umbrella of the Ninth Schedule takes in not only the acts anci regulations
specified therein but also orders and notifications issued under those acts and
regulations. !320 CJ
(a) Art. 31-B constitutes a grave encroachment on fundamental rights. and
though it is inspired by a radiant social philosophy, it must be construed as
strictly as one 1nay, for the simple reason that the guarantee of fundamental
rights cannot be permitted to be diluted by implications and inferences. The
Constitution which prescribes the extent to \Vhich a challenge to the constitutionality of a la\v is excluded, must be construed as demarcating the farthest 1imit of exclusion.
Considering the nature of the subject-matter whicb
article 31-B deals with, there is no justification for extending by judicial interpretation the frontierfi of the field which is declared by that article to be
immune from challenge on the ground of violation or abridgement of fundamental rights; tJ20 D-Ef
(b) The article affords protection to Act and Regulation specified in the
Ninth Schedule.
Therefore, whenever a challenge to the constitutionality of
a provision of law on the ground that it violates any of the fundamental rights
conferred by Part III is (Ought to be repelled by the Stat.<!
c;~ the plea that
the Jaw is placed in the Ninth Schedule, the narrow question to which one
must address oneself is whether the· impugned law is specified in that Schedule.
If it is, the provisions of Art. 31-B would be attracted and the challenge would'
fail without any further inquiry.
On the other hand, if the Jaw is, not specified in the Ninth Schedule, the validity of the challenge has to be examined'
in order to determine v"hether the provisioms thereof invade in any manner
any of the fundamental rights conferred by Part III.
It is then no answer to
say that though the particular la\v, as for example a Control Order, is not
specified in the Ninth Schedule, the parent Act under which the order is issued
is specified in lhat Schedule; [320 E-G]
(c) Extending the benefit of the protection afforded by Art. 31-B to any
action taken under an Act or Regulation which is specified in the Ninth
Schedule. is an unwarranted extension of the provisions contained in Article
31-B, neither justified by its language nor by the policy or principle underlying
it.
When a particular Act or Regulation is placed in the Ninth Schedule, the·
Parliament may be assumed to have applied its mind to the provisions of the
particular Act or Regulation and to the desirability, propertly or necessity or
placing it in thei Ninth Schedule in order to obviate a possible challenge to
its provisions on the ground that they offend against the provisions of part
III.
Such an assumption cannot, in the very nature of things, be made in
the case of an order issued by the Govt. under an Act or Regulation which is
placed in the Ninth Schedule.
The fundamental rights will be eroded of their
significant content if by judicial interpretation a constitutional immunity is ex·
tended to Orders to the val:ditv of v,:hich the Parliament, at least theoretically,
has had no opportunity to apply its mind.
Such an extension takes for granted
the supposition that the authorities on whom power is conferred to take appropriate action under a statute will act within the permissible constitutional limitations, a supposition which past experience' does not justify and to some
ext!!nt fahi-fies. r321 C-Fl
2. The nr·holding of laws, by the application of ~he theory of derivative
immunity is foreign to the scheme of our Constitution and accordingly Orders
and Notifications issued under Acts and Regulations which are specified in
the Ninth Schedule 1nust meet the challenge that they offend against the provisions of Part 111 of the Constitution. The in1munity enj,..oyed by the parent
Act by reason of its being placed in the Ninth Schedule cannot proprio vigore
be extended to an off-spring of the Act like a Price Control Order issued under
the authority of the Act.
It is therefore open to the petitioners to invoke the
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PRAG ICE & OIL MILLS V. UNION
295
\vrit jurisdiction of this Court for determination of the question whether
the
provisions of the Price Control Order violates Art. 14, 19(l)(f) and 19(l)(g)
of the Constitution.. [321 F~G]
Va,\a/Jtlal Maganbhai Sanjanmal v. State of Bombay and Ors., [1961] 1 SCR
341, Latafat Alikhan and Ors. v. State of U.P., [1971] Supp. S.C.R. 719; Explained.
A
Godavari Sugar Mills Ltd. and Ors. v. S. B. Kanible and Ors. [1975] 3 S.C.R.
B·
585; Applied.
3. Price Control Order does not offend against J\.rt. 14 of the Constitution :
[323 F]
(a) The averments in the various Writ Petitions are far too vag~e and
general to justify the application of Art. 14.
The petitioners have failed to
show by acceptable data that they fall into a separate class altogether, and
cannot therefore be subjected to the restraints of a.
:-:ingle
order
of price
fixation. [323 H, 324 A]
(b) Variation in economic factors governing the mustard_ oil trade fr<:?m
region to region or differences in the pattern of trade in different growing
regions and n1anufncturing centres cannot by itself justify the argument that
different prices must be fixed for different regions 21Dd that failure to do so
\voulJ necessarily entail discrimination. [324 A-B]
c
(c) Dealers in mustard oil, wherever they operate can legitimately comD•
prise a single class for the purpose of price fixation, especially as it is undisputed that the t\vo basic constants of the trade are : (i) the cost ot mustard
seed constitutes 94 per cent of the cost of the mustard oil and (ii) about 3.12
kilo2rams of seed goes into the extraction of one kilogram of oil. Fixation
of different prices for different regions \vill, in this background, frustrate the
very object of the exercise that an essential commodity should be made available to the consumer at a fair prite. [324 B-C]
(d) There is no reliable data to support the contention,
that dealers
in
different regions are so differently situated in the context of and in relation to
the purpose for which the Price Control ()rder is issued that fixation of con1mon price for dealers all over the country can reasonably be described as discriminatory as against some of them. [324 E]
(e) The charge of over-i•,1clusiveness for the mere reason that dealers in a
certain region have to import their raw material from another region cannot
be accepted. Perhaps the high rate of turnover and consumption in a region
like West Bengal n1ay easily absorb the additional cost of freight.
The GovernF.
ment of India. in fixing one common price for mustard oil for the whole country, has not acted like Herod who ordered the death of all male children born
on a particular day because one of them would some day bring about his downfall. 1324 E-Fl
State of Guiarat v. Sri Ambica Mills Ltd., [1974] 3 SCR
760
@
782
referred to .
(f) The mechanics of price fixaition has necessarily lo be lef't to the judgment of the executive· and unless it is patent that there is hostile discrimination
against a class of operators, the processual basis of price fixation has
to be
accepted in the generality of cases as valid. [325 B]
SarasH·ati Industrial Syndicate Ltd. v. l./nion of India [1975] 1 S.C.R. 956.:
referred to.
_4. The Price Control ()rder is not vi0lative of the petitioners' rights under
articles 19(l)(f) and 19(l)(g) of the Constitution. [326 G]
(a) It is impossible to determine in these writ petitions the accuracy
of
the petitioners' allegation that they purchase mustard seed
from
month
to
month and from week to week as the crushing of the seed progresses. Most of
A
B
c
D
E
G
2se
SUPREME COURT REPORTS
[1978) 3 S.C.R·
the growers of mustard seed are small agriculturists who have
hardly
any
staying ability and are therefore compelled to sell their produce immediately
after the harvesting season, that is to say, between March and
June. If the
prices of mustard seed prevailing during that period are taken into account, it
is difficult to accept that the price of Rs. 10/- per kilogram is so patently unreasonable as to be violative of the petitioners' right to hold property or to do
trade or business [326 G-H, 327 A]
(b) Since the bulk of the- purchases are made by the petitioners immediately
after the harvesting season considering the general pattern of the
trade
in
mustard seed, it is wholly unaecessary to control the price of mustard seed, in
order effectively to control the price of mustard oil. [327 B-C]
(c) The contention that the consequence of the Price Control Order cannot be looked at for the purpose of deciding whether the price of mustard oil
was fixed in accordance with legally acceptable principles cannot be upheld.
No Court can shut its eyes to the fact that the Price Control Order produced
the salutary and tangible result of bringing down .the price of raw material.
[327 C-D]
(d) A mere literal or mechanical construction is not appropriate
\Vhere
important questions such as the impact of an exercise of a legislative power on
constitutional provisions and safeguards thereunder are concerned. In cases
of such a kind, two rules of construction have to be kept in mind : ( 1) that
Courts genera-Hy lean towards the constitutionality of :t legislative measure upon
the presumption that. a legislature will not deliberately flout a constitutional
safeguard or right, and that (2) while construing an enactment, the Court must
exan1in~ its object and the purpose, the mischief it seeks to prevent and :tscertain from such factors its true scope and meaning. [327 E-fJ
Vrajlal Mani/al & Co. and Ors. v. State of M.P. and Ors. [1970] I S.C.R.
400, 409, reiterated.
(e) The dominant purpose of the provisions of sub-section (1) and 2(c)
of Section 3 of the Essential Commodities Act 1955 is to ensure the availability
of essential commodities to the consumers at a fair price.
And though patent
inju&tice to the producer is not to be encouraged, a r~asonable return en investment or a reasonable rate of profit is not the stne qua non of the validity of
action taken in furtherance of the powers conferred bys. 3(1) and s. 3(2)(c)
of the Essential Con1midities Act. The interest of the consumer has
to be
kept in the forefront and the prime consideration that an essential commodity
ought to be made available to the common man at a fair price. must rank in
priority over every other t:O'nsideration .. [328 A-B]
(f) Even in the absence of satisfactory proof of the extent of the profits
made by the petitioners in past years, the circumstance that the petitioners may
have to suffer a loss over a short period immediately follo\ving upon the promulgation of the Price Control Order will not render the Order constitutionally
invalid. The interplay of economic factors and the laws of demand and suppl~
are bound eventually tn have their impact on the pattern of prices pre\'ailinP
in the market.
If the dealer cannot la\vfully sell the fini-;hed product at more
than Rs. 10/- per kilogram, the price of raw material is bound to adjust itself
to the price of the product. Subsequent events unmi<::ta·kably demonstrate the
effect of such interplay and the favourable reaction' which 1.he Price Control
Order has produced on the price of mustard seed.
Tn matters of the present
nature, such provisions have to be viewed through a socially constructive. not
legally captious microscope to discover a glaring
unconstitutional
infit"mity,
that when laws affecting large chunks of the community are
enacted
stray
misfortunes are inevitable and that soc1<tl legislation without tears,
affecting
vc<Jted rights is virtually impossible. [328 C-Fj
R. Pancrjce v. Anita Pan, [1975] 2 SCR 774 :W 782 folicrwed.
H
(g) The in1pugned Price Control Order is not so unreasonable as
to
be
constitutionally invalid. It is enough compliance with the con~titutional mandate if the basis adopted for price· fixation is not shown to be so patently unrea.sunnhl~ as to he in excess of the power to fix the price. [328 G]
.
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PRAG ICE & OIL MILLS V. UNION
297
Saraswati Industrial Syndicate v. Union of India,
[1975]
1 SCR
956;
A
referred to.
(h) In1n1ediatcly prior to the promulgation of the. price co~trol or~ter the
consumer was denied the chance to get the mustard 011 at a price wh1.ch he
could reasonably afford.
For him, therefore, the ~~pply had alrea?Y dried up.
If after the issuance of the order, the supply pos1t1on shows no improvement,
th~t consequence cannot be legitimately attributed to the operation of the Price
Control Order. At worsti the Order can then be said to have failed to achieve
its purpose. r329 A-BJ
(i) Just as the industry cannot cor:i-iplain of r.ise. an.-1 fall of _prices due to
economic factors in an open market it cannot s1mtlarly complain
of some
increase or reduction in prices as a result of a notification issued under s~ctio!1
3(1) of the Essential Commcxlities Act because, such increase or reduction is
also based on economic factors.
Ensuring a fair price to the consumer was
the dominant object and purpose of the Esssential Commodities Act an~ that
object would be· completely lost sight of, if the producer's profit was kept in the
forefront. [329 D-E]
Shree Meenakshi Mi;ls Ltd. v. Union of India, [1974] 2 SCll 398, Secretary
of .-'grinif111rt' v. Central Reig Refining Co., 94 Lavv. Edn. 381; t.tpphed.
Panipat Cooperatire Sugar Mills Y. Union of India, A.I.R. 1973 SC 536;
Anakapalle Cooperativ.: Agricultural and Industrial Society Ltd. v. Union of
India, A.LR. 1973 S.C. 734; held inapplicable.
P;·c11;·cr Au1on1obiles Ltd. & Anr. v. Union of lt?dia, [1972J 2 S.C.R. 526;
distinguished
(j) Courts of law cannot be conYerted into tribunals
crujities and inequities
of
complicated
experimental
[331 A-Bi
for relief from the
~~onomic legislation.
5. The contention that the Price· Control Order is arbitrary because it is
c
D
not limited in point of time is without any merit.
In the very nature of things
E
orders passed under s. 3(1) read withs. 3(2) of the Essential
Commidities
Act are designed primarily to meet urgent situations which
require
prompt
and timely attention,
If a price control order brings about an improvement in
the supply position or if during the period that such an order is in operation
there is a fall in prices so as to bring an essential commodity within the reach
of the ordinary consumer, the order shall have lost its justification and would
in all probability be \vithdrawn. l'hat in fact is what has happened in the
instant case. It appears that the suplll)' position having improved or so at any
rate seems to be the assessment of the situation bf the Governnient, the order
F
has heen It'Cently \vithdrawn. [331
C~E]
6. The intervention of the middlemen is an acknowledged reality
of all
trades and b:iisinesses. The fact that the middleman's profit increases the price
of goods which the consumer has to pay, is axiomatic. It has been the endea~
vour in modern times for those responsible for social control to keep the
middleman's activities to the minimum and to attempt to replace- them largely
by cooperative purchase societies of consumers. The 1~limination of the middle·
men is bound !P cause trouble and inconvenience, but the ultimate saving in
G
the CO$t of the finished product could more than balance that inconven1rnce.
The argument of the petitioners really amounts to a rigid insistence that they
are entitled to carry on their business as they please, n1ostly in a traditional
manner, regardless of its impact on public i'Ilterest.
But, property rights. are
not ~bsolute, and important as the right of property may be, the right of the
pubhc that such rights be regulated in common interest is of greater importance.
f331 G-I!, 332 A-BJ
Leo Nebbia v. People of the State of New York, 78 Law Edn. p. 940 and
H
Narendra Kumar and Ors. v. Union of India and Ors .• [1960] 2 SCR 375
referred to.
A
B
D
·.
298
SUPRE1>1E COURT REPORTS
[J 978] 3 S.C.R·
7. If the Government bas got the power to fix a fair price of an
essential
commodity, it cannot be said that they have under a pretext trespassed upon a
field '\\·hich does not properly belong to them. The power conferred by s. 3( 1)
of the Essential Commodities Act is undoubtedly purposive.
The Price Control
Order was promulgated by the Government in order to achieve the purpose set
out in s. 3 ( 1) of the Act:
The fact that a legislative remedy or an administrative order passed in exercise of a statutory power is ineffective to mitigate an evil
may show that it has failed to achieve its purpose, highlighting thereby the paradox of reform.
By fixing a fair price for mustard oil, the Government has not
committed a veiled and subtle trespass upon private rights or upon a leg\sla\i\·i:
fidd which is not open to them to occupy. (332 E-G]
K. C. Gajapafi Narayannai Rao and Ors .. v. State of Orissa [1954) SCR; 1;
Joseph Bea!tl1an5 v. People "of the State of llVnols, 96 Law. Edn. 919 referred
to.
8. To be able to find fault with a law is not to demonstrate its
invalidity.
The Parliament having entrusted the fixation of prices to the expert judgment
of the Government it would be wrong for this Court, to examine each and every
minute detail pertaining to the Governmental decision. The Government
is
entitled to make pragmatic adjustments which may be called for by particular
circumstances and the price control can be declared unconstitutional only if it
is patently arbitrary, discriminatory or demonstrably irrelevant to the policy
which the legislature is free to adopt. The interest of the producer and the
investor is only one of the variables in the constitutional calculus of reasonableness and Courts ought not to interfere so long as the exercise of Governmental
power to fix fair prices is broadly within a "Zone of re31'>cuablenes~·'.
T·he
impugned Price Control Order is, therefore, valid and the challenge made thereto by the petitioners has to fail. [333 B-G}
Metropolis Theater Co. v. Ctty of Chica~o, 57 T.awyers Edn. 730; Pren1ier
Auto1nobiles & Anr. v. Union of India [1972] S.C.R. 526; J>ern1ian Basin Area
Rate Cases, 20 Law. Ed. 2d. 312 referred to.
E
Per Beg, C.J. (On behalf of Desai J. and himself) (Contra)
G
11
1. Article 31-B, no doubt, speaks of "specified" Acts and Regulations.
But
it makes no distinction whatsoever between any grants of powers
and their
exercise. Powers are granted or conferred so as to be exercised and not to be
kept in cold storage for purposes of some kind of display only as though they
were exhibits in a show case not meant for actual use. The whole object of a
protection conferred upon powers meant for actual use is to protect their use
against attacks UJ?OTI their validity based upon provisions of Part III. If this be
·1he correct position. it would, quite naturally and logically, follo"': that their
use is what is really protected. [30 F-H]
.
2. A delegated or derivative power could not rise higher or travel beyond
the source of that power from which it derives its authority and force If
Bar?la's case is good law (no party has questioned its correctness~ Articles 14
and l9(1)(f) and (g) could be deemed to be, "written into" Section 3 of the
Act itself.
They would control' the scope of orders which could be pa5sed under
it That is, undoubtedly the way in which guarantees of fundamental
rights
could and should function if the Act containing Section 3 itself had not been
placed in the Ninth Schedule so as to take away the guarantees of fundamental
rights from the substance of it. [309 B-CJ
Hari Krishna Bagla v. State of M.P., [1955] I S.C.R. ,380; referred to.
3. If the effect was to widen the orbit of section 3 of the. Essential Commodities Act or to remove the limitations put by Articles 14 and 19 upon the
exercise of powers under it, the logical and natural result would be to enlarge
also the scope or sweep of the Orders passed under it But, if it bas no such
effect upon section 3 of the Act itself, orders passed under it \vould continue to
be subject to provisions of section 3 of the Act as controlled by Articles 14 and
1 o of the Constitution ~o that the.v will have to satisfy what may be described
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PRAG ICE & OIL MILLS V. UNION
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as a "dual test", firstly, that of provisioils of section 3 _of .the Act . i~self; and
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secondly, that of provisions of Chapter III of the Const1tuhon conta1n1ng fundamental rights. r3o9 D-F]
4. The Ninth Schedule does not provide any protection at all a_gai~st attacks
based upon either the vice of excessive delegation or want of leg1slat1v~ competence defects which could be said to vitiate the grant of powers despite their
place in the Ninth Schedule.
The distinction between protection to a mere grant of powe~ and to
their
exercise therefore seem specious in the context of the protection.
It .cannot
explain 'why, if se~tion 3 is protected by the Ninth Schedule,
t_he
exercise ot
power granted by it, which manifests itself in control orders is not protected.
It would be so protected, if at all, not because the Orders to be made in future.
as such are protected but because the power actually ~:onferred and found
in
existen~e in section 3 is protected. The protection is given to a power 'Nhich
is specified and in existence which has to be used for certain purposes and not
to what may be specified in future. [310 A-CJ
5. If orders passed under section 3 of the Act also get a protection
it
would be what may be described as a "derivative" protection so long as the
·Orders are covered by section 3 of the Act. It is available only so Jong as and
because the source of their' authority-section 3 of the Act-is protected by the
Ninth Schedule.
Orders purporting to b~ tn<Y:le under se~tion 3 of the Act
must, ho"ever satisfy the tests found in section 3 itself in every c:::ise.
They
.can never cscane the basic tests whether section 3, the source of their autho~
rity, is protected by the Ninth SChedule or not. The further tests imported
by }\rticles 14 and. 19 of the Constitution i_nto section .3 'ould be appHed
to these orders only so long as tliese added tests arc atta1;hed to or can be
read into section 3 of the Act, but not <ifter they have been
del1L"'e~atcly
delinked or removed from section 3.
The term "skeleton" legislation is used
somctin1es for denoting the broad outlines of. a particular schcm.e found in an
Act of .which details are to be filled in later by administrative orders of experts.
Essential Commodities Act, 1955, cannot be spoken of as a piece of "skeleton"
legislation. f310 D, F-G]
6. Section 3, sub-section (1) of the Act provides for delegation of powers to
the Central Government in order that it may carry out certain purposes
by
framing appropriate schemes and evolving policies which may meet the purposes
-0f the Act. These schemes and policies to serve the stated purposes may differ
as regards the nature of means adopted and even in the particular objectives
sought at particular times to accord with changing circumstances. Orders passed
under section 3 of the Act, in pursuance of such schemes or policies, do not
become parts of the Act for the purposes of 1he Ninth Schedule of. the Constitution.
Orders passc<l under the Act, before its inclusion in the Ninth Schedule.
could also be said to be protected directly by the Ninth Schedule if mentioned
there.
But, there could be no independent and direct protection of this Schedule
conferred upon orders pa<Ssed under the Act. [310 (J-1{, 311 A-BJ
Godavari Sugar Mills Ltd. and Ors. v. S. B. Kamble and Ors.,
[1975]
2
S.C.R. 885 referred to.
7. H the section under which the control order was passed is protected from
any attack based on the provisions of Part Ill of the Constitution, the onlv
question will be v:hether the Control Order is covered by the protected empoweiing provision. If it falls outside the e-mpowering provisions it- would be invalid
in any case. If it falls within the empowering provision but could be found to
be struek by the provisions of Art. 19(1)(f) and (g) of the Constitution. an
attack on the Control Order by reason of Article 19(1){f) and (g) would be
really one against the e,mpowering provisions itself which
is
protected. The
Control Order, therefore, enjoys \Vhat may be called
derivative
protection.
[312 A-CJ
Latafat A/ikhan and Ors. v. State of U.P .. , [1971] Supp. S.C.R. 719 @ 720;
applied .
. 8. The Act was pnt in the Ninth Schedule to prevent the invocation of Arti-
.cles 14, 19 and 31 for obstructing measures to necessary as price fixation of
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SUPREME COURT REPORTS
[1978] 3 s.c.R.
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essential commodities is for promoting the objectives of a
socialist welfare
economy. This would be a sufficient answer to all the arguments on the unconstitutionality of fixing the price of mustard oil below what is claimed to be the
cost price. [314 GJ
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As the impugned order of 30th September, 1977, falls within the provisions
of s. 3, question of violating a fundamental right does not arise. If an impugn~
ed order were to fall outside section 3 of the Act, no question of applying any
test of reasonableness contemplated by Article 19(6) need arise because it would
then be purely illegal restriction upon the right conferred by Art.
19(l)(g)
which \vculd fail for lack of authority of any la\\-· to support it. l315 B-C]
9. Section 3 makes necessity or expediency of a control order for the purpose·
of 1naintaining or increasing supplies of an essential commodity or for securing
its equitable distribution at fair prices the criteria of validity. It is evident that
an assessment of either the expediency or necessity of a measure, in the light of
all the facts and circumstances which have a bearing on the subjects of price
fixation, is essentially in a subjective matter.
Objective criteria may enter into
determinations of particular selling prices of each kilogram of mustard oil
at
various times.
But, there is no obligation here to fix the price in such a way as
to ensure reasonable profits to the producer or manufacturer, because the object
is to secure equitable distribution and availability at fair prices so that it is the
interest of the consumer and not of the producer which is the determining factor
in applying any objective tests at any particular time. The most
important
objective fact in fixing the price of mustard oil, which is consumed generally by
large masses of people of limited means, is the paying capacity of the average
purchaser or consumer. r312 D-Gl
10. Principles of fair fixation of price apply only in those cases where there
is an obligation upon the price fixing authority to take certain matters mto
account which have a bearing on cost of production and are designed to secure
fair share of profits to the producers. Section 3 of the Act has very different
purposes in vie\\'.
It may be .that the cost of production and reasonable amount
of profits to the manufacturers have an indirect bearing on matteN set out tn
section 3(1) of the Act.
But, in case.s where the effects of a policy or a -
measure adopted in achieving purposes set out in section 3 ( 1) are matters of
guess work, after experimentation, the actual consequences can be indicated with
a fair amount of certainty only by giving sometime for a policy to work out and
reveal its results.
Presence of such features in a case cannot invalidate price
fixation of which the direct objects are set out in s. 3(1) of the Act. [315
D·Fl
A price fiXation to meet the general purposes set out in section 3 ( 1) of the
Act, aimed at reversing the vicious inflationary spiral of rising prices
may
appear arbitrary or unreasonable judged by standards applicable to price fixation
aimed at giving reasonable profits to producers which is not the object of
section 3(1) of the Act. [315 G-Hl
The whole machinery of control of supplies with a view to their equitable
dist~bution and securi?g their av~ilability_ at !air pr~ces, is much. more comprehensive than the machinery for pnce fixation in special cases on given principles.
Price fixation on certain given principles is enjoined under s. 3 ( 3) of the Act
only when there is an order under s. 2(f) of the Act rompelling the sale of a
whoJe stock or a specified part of it to the Central or a State Government or to
authorities or persons as directed by them.
Again, section 3(a)(iii) provides a
machinery for price fixation in special cases. Similar is position with orders
under sections 3B and 3C. r3t6 D-El
11. It is not the function of Supreme Court or of any Court to sit in judgment over matters of e~onomic policy as must necessarily be left to the Government of the day to decide.
Many of them, as a measure of price fixation must
necessarily be, are matters of prediction of ultimate results on which even
experts can seriously err and doubtless differ.
Courts can certainly not be
expected to decide them without even the aid of experts. That a price fixed at
Rs. 10/- per kg., as a part of an attempt to break the vicious inflationary circle
is not at all an unreasonable step. [313 C-D]
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l'RAG ICE & OIL MILLS V. UNION
301
But the. Court can take judicial notice of subsequent facts. The effect of the
orde.r of 30·9-77 was so beneficial that the price of mustard oil has fallen in the
meighbourhood of Rs. 7/· per kg. which illustrates the extreme inadvisability of
.any interference by any Court with measures of economic control and planning
directed at maximising general welfare. It is not the function of the Courts to
·-Obstruct or defect such beneficial measures devised by th1~ Government of the
day. Courts cannot pass judgments on the wisdom of such actions,
unless
.actions taken are so completely unreasonable that no la\v can be cited to sanction
them. [314 11, 315 A-Bl
12. Unless, by the terms of a particular statute, or order, price fixation is
111ade a quasi-judicial function for specified purposes or cases, it is really legislative in character because it satisfies the tests of legislation.
A
legislative
measure does not concern itself with the facts of an individual case. It is meant
to lay down a general rule applicable tu all persons or objects or transactions of
A
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a -particular kind or class. In the case before us, the control order applies to
sales of mustard oil anywhere in India by any dealer.
Its validity does not
depend on the observance of any procedure to be complied with or particular
C
types of evidence to be taken on any specified matters as conditions precedent to
its validity. The test of validity is constituted by the nexus shown between the
-0rder passed and the purposes for which it can be passed, or, in other words by
-reasonableness judges by possible or probably consequences. [317 G-H, 318 A]
Panipat Corporation Sugar Mills v. Union of India, [1973] 2
SCR 860;
Meenakshi _Mills Ltd. v. Union of India r1974] 2 5CR 398; Prenlier Auto1nobile Ltd. Y. [jnfon of India, [1972] 2 SCR 526; Sarnsiva:i Industrial Syndicate
ltd. etc. v. Unior, of India, [1975] 1 SCR 956; 1eferred to.
D
13. Even executive or le:gislative action must be confined to the limits within
which it can operate. It must fall reasonably within the scope of the powers
.conferred. The scope of the powers conferred depends upon
terms
of the
empowering provision. The empowering provision in the instant case is widely
worded. The validity of section 3 has not been challenged. and it could not be
challenged by reason of Article 31·B after its inclusion in the 9th Schedule of
t.ne Constitution. [318 B~CJ
14. In a case in which the Central Government i3 judge of expediency
and necessity to the extent that even the protection of the guaranteed fundamental
rights cannot stand in the way of its vie\v or opinion of such necessity and
~xpediency, a challenge on the grounds on which it was attempted could not
succeed. [318 C-D]
15. Patent injustice and unreasonable injury to the interests of consumers
must be ~hown if a measure of price control, in the nature of either legislative
'Of purely administrative action, is assailed.
So long as the action taken is not
so patently nnjus1 and un-reasonable as to lead to the irresis1ible conclusion
that it could not fa.11 within section 3(1) of the Act it cannot be :-;et nsidc or
<lec1ared invalid. The test has to be th&t of consequences on objectS' sought by
section 3(1). o~ the Act. .Judged by .this test, the order of 30th
September,
1977, fall within the purview of section 3 of the Act and it has served its
purposes. [319 A-CJ
I.co NC'bbia Y. People of the State of New York, 29 lJ.S. (78 Law. Elln.)
502; Pcnnian Basin Area Rate Cases (20 Law Edn. 2d) p. 312 referred to.
ORIGINAL JURISDICTION: Writ Petition Nos. 712, 715-739, 760764, 765-770, 779-780, 781-al, 838-855, 861-873 &
874-892 of
1977.
A. K.
S~n _(in WP. 712), V. M. Tarkunde (in WP 71539) J. L. Jam (m WP 861-892) & P. P. Juneja for the petitioners in
W. P. Nos. 712, 715-739, 874-892 and 861-873/77.
D. Gvburdhan for the Petitioners in WP Nos. 760-64 & 765-70/
/7.
2--277 SCI/78
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302
SUPREME COURT REPORTS
(1978] 3 S.C.R·
A. K. Sen (in WP 779-780), S. B. Sanyal, Ajit K. Mittar & P. K.
Mukherjee for the petitioners WP 779-80/77
D. P. Mukherjee & A. K. Ganguli for the petitioners in W. P. Nos.
781-784/77.
S. S. Ray, A. K. Punja & H. K. Puri for the Petitioners in W.P.
Nos. 838-855/77
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(WP 861), E. C. Agarwala and Girish Chandra for the respondent.
L. N. Sinha & U. P. Singh for R/State of Bihar in W. P. No. 765770, 781-784/77
A. P. Chatterjee, Mukti Maitre & G. S. Chatterjee for R/State of
West Bengal
The following Judgments were delivered
BEG, C.J.-The ninety-one writ petitions before us for delivery of
our reasons in support of our order dated 23 November, 1977 dismissing them, raised a common question of the valiuity of an order
(hereinafter referred to as 'the Control Order'), passed on 30th September, 1977, by the Ministry of Civil Supplies and Cooperation of
the Government of India, which runs as follows :
"ORDER
New Delhi, the 30th September 1977
S.O.
WHEREAS the Central Government is of opinion that
it is necessary and expedient so to do for secnring equitable distribution and availability at fair prices, of mustard oil;
NOW, THEREFORE, in exercise of the powers conferred by
section 3 of the Essential Commodities Act, 1955 (10 of 1955), the
Central Government hereby makes the following orders namely :
1. Short title, extent and commencement. (1 )This Order may be
cal!ed the Mustard Oil (Price Control) Order, 1977.
(~) It extends to the whole of India.
( 3) It shall come into force at once.
2. Definition.-ln this Order, "dealer" means a person engaged
in the business of the purchase, sale or storage for sale of mustard oil.
3. Price at which a dealer may sell.-No dealer shall, either by
himself or by auy person on his behalf, sell or offer to sell any mustard
oil at a retail price exceeding Rs. 10/- per kilogram, exclusive of the
cost o; container but inclusive of taxes.
Sd/-
(T. Balakrishnan)
Joint Secretary to the Govt. of India
(File No. 26(16)/77-ECR)"
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PRAG !CE & OIL MILLS V. UNION (Beg, C.J.)
303
The Control Order was passed in exercise of the powers conferred
upon the Central Government by section 3 of the Essential Commodities Act, 1955 (hereinafter referred to as 'the Act').