# SRI VENKATA SEETARAMANJANEYA RICE AND OIL MILLS AND ORS v. STATE OF ANDHRA PRADESH ETC

- **Citation:** [1964] 7 S.C.R. 456
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, J. c. SHAH, N. Rajagopala Ayyangar, s. M. S!KRI
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sri-venkata-seetaramanjaneya-rice-and-oil-mills-and-ors-v-state-of-andhra-3149
- **Pages:** 15

## Headnote

Madras Essential Articles Control
and
Requisitioning
(Temporary) Powers Act, 1949 (Mad. 29 of 1949), ss. 3(1) (2)-
Applicability of the Act to electricity supplied by State-Intention of Legislature, consideration of-Notified orders
<>nhancing agreed rate by State-Whether valid under s. 3-ReguZate, meaning of-Increase of tariff-If reasonable and in interest of general public-Whether contravenes Arts. 14 and
19(1)-Constitution of India, Arts. 14 and 19(l)(g) and (f).
Electricity was supplied to the appellants by the respondent-state for manY. years past, and several individual agreements were passed between them prescribing the terms and
conditions for the supply. One of these terms stipulated the
rate at which the supply had to be charged. These agreements
did not contain any provision authorising the State to increase
the rates during their operation. The respondent-state issued
two notified orders enhancing the agreed rates. The orders
indicated that the main reason which inspired the increase
was that the existing electricity tariffs which were formulated
several years before, had become completely uneconomic and
meant continuously growing loss to the State. A large number of consumers challenged the validity of the two orders
in the High Court under Art. 226. The writ petitions were
allowed and the respondent was restrained from enforcing the
revised rates. These decisions were challenged by the respondent by appeals in the High Court, which took a different
view and dismissed the writ petitions. On appeals to this
Court, it was contended, inter alia that the respondent had
no authority to increase the rate, changing this important term
of the contract by taking recourse to s. 3(1) of the Madras
Essential Articles Control and Requisitioning (Temporary)
Powers Act. that the power to regulate the supply of essefltial
articles had to be applied in regard to transactions between
citizens and citizens and could not be applied to an essential
article which the State itself supplied; that the power to regulate conferred on the respondent by s. 3(1) could not include
the power to increase the tariff rate, that the notified orders
were invalid as they contravened the provisions of Art. 19(l)(f)
and (g) and that of Art 14 of the Constitution.
Held: (i) The challenge to the validity
of the notified
orders on the ground that they were outside the purview of
s. 3(1) of the Act could not be sustained.
The State is not bound by a statute unless it is so provided in express terms or by necessary implication. In applying
this rule, the court must attempt to ascertain the intention of
the Legislature by considering all the relevant provisions of the
statute together and not concentrating its attention on a particular provision which may be in dispute.
Where the quest!ion is not so much as to whether the State
is bound by the statute, but whether it can claim the benefit
of the provision of a statute, the same rule of construction
'
7 S.C.R.
SUPREME COURT REPORTS
457
may have to be applied. Where the statute may be for the pub19~4
lie good and by claiming the benefit. c".nferre~ on it bv i!s
. -
provisions the State may allege that it is servmg the public /" Venka~
good, it would sti.11 be necessary to ascertain whether t~e. in- Ric~~~d'Q;~3~n;lf:
tention of the l"'g1slature was to make the relevant proV1s1ons
and Otkera
applicable.
v.
Director of Rationing and Distribution v. Corporation of
Slale of Andhro
Calcutta, [1961] 1 S.C.R. 158 ahd Province of Bombay v. MuniPraluh etc.
cipa! Corporation of the City of Bombay, [1945-46] L.R. 73
I.A. 271, applied.
(ii) In construing s. 3 of the Act of the usual rule of construction must be adopted. s. 3 must not be read in isolation,
but must be considered in its proper setting and due regard
must be had for the other provisions of the Act and its general sch..,me and purpose.
(iii) The purpose of the Act is to secure the supply of
essential articles at fair prices, it would be irrelevant as to
who ma

## Text

_Characters 0–39,744 of 41,003. This is a partial read: ask again with offset=39744 for what follows._

1961
456
SUPREME COURT REPORTS
[1964]
SRI VENKATA SEETARAMANJANEYA RICE AND
OIL MILLS AND ORS.
v.
STATE OF ANDHRA PRADESH ETC.
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, J. c. SHAH,
N. RAJAGOPALA AYYANGAR AND s. M. S!KRI, JJ.J
Madras Essential Articles Control
and
Requisitioning
(Temporary) Powers Act, 1949 (Mad. 29 of 1949), ss. 3(1) (2)-
Applicability of the Act to electricity supplied by State-Intention of Legislature, consideration of-Notified orders
<>nhancing agreed rate by State-Whether valid under s. 3-ReguZate, meaning of-Increase of tariff-If reasonable and in interest of general public-Whether contravenes Arts. 14 and
19(1)-Constitution of India, Arts. 14 and 19(l)(g) and (f).
Electricity was supplied to the appellants by the respondent-state for manY. years past, and several individual agreements were passed between them prescribing the terms and
conditions for the supply. One of these terms stipulated the
rate at which the supply had to be charged. These agreements
did not contain any provision authorising the State to increase
the rates during their operation. The respondent-state issued
two notified orders enhancing the agreed rates. The orders
indicated that the main reason which inspired the increase
was that the existing electricity tariffs which were formulated
several years before, had become completely uneconomic and
meant continuously growing loss to the State. A large number of consumers challenged the validity of the two orders
in the High Court under Art. 226. The writ petitions were
allowed and the respondent was restrained from enforcing the
revised rates. These decisions were challenged by the respondent by appeals in the High Court, which took a different
view and dismissed the writ petitions. On appeals to this
Court, it was contended, inter alia that the respondent had
no authority to increase the rate, changing this important term
of the contract by taking recourse to s. 3(1) of the Madras
Essential Articles Control and Requisitioning (Temporary)
Powers Act. that the power to regulate the supply of essefltial
articles had to be applied in regard to transactions between
citizens and citizens and could not be applied to an essential
article which the State itself supplied; that the power to regulate conferred on the respondent by s. 3(1) could not include
the power to increase the tariff rate, that the notified orders
were invalid as they contravened the provisions of Art. 19(l)(f)
and (g) and that of Art 14 of the Constitution.
Held: (i) The challenge to the validity
of the notified
orders on the ground that they were outside the purview of
s. 3(1) of the Act could not be sustained.
The State is not bound by a statute unless it is so provided in express terms or by necessary implication. In applying
this rule, the court must attempt to ascertain the intention of
the Legislature by considering all the relevant provisions of the
statute together and not concentrating its attention on a particular provision which may be in dispute.
Where the quest!ion is not so much as to whether the State
is bound by the statute, but whether it can claim the benefit
of the provision of a statute, the same rule of construction
'
7 S.C.R.
SUPREME COURT REPORTS
457
may have to be applied. Where the statute may be for the pub19~4
lie good and by claiming the benefit. c".nferre~ on it bv i!s
. -
provisions the State may allege that it is servmg the public /" Venka~
good, it would sti.11 be necessary to ascertain whether t~e. in- Ric~~~d'Q;~3~n;lf:
tention of the l"'g1slature was to make the relevant proV1s1ons
and Otkera
applicable.
v.
Director of Rationing and Distribution v. Corporation of
Slale of Andhro
Calcutta, [1961] 1 S.C.R. 158 ahd Province of Bombay v. MuniPraluh etc.
cipa! Corporation of the City of Bombay, [1945-46] L.R. 73
I.A. 271, applied.
(ii) In construing s. 3 of the Act of the usual rule of construction must be adopted. s. 3 must not be read in isolation,
but must be considered in its proper setting and due regard
must be had for the other provisions of the Act and its general sch..,me and purpose.
(iii) The purpose of the Act is to secure the supply of
essential articles at fair prices, it would be irrelevant as to
who makes the supply; what is relevant is to regulate the
supply at a fair price.
(iv) ft is well-settled that the function of a clause like
cl. (2) of s. 3 is merely illustrative. In other _words the proper
approach to adopt in construing els. (D andl (2) of s. 3 is ta
assum"' that whatever is included in cl. (2) is also included
in cl. (1).
King Emperor v. Sibnath Banerjee, 72 I.A. 241 and Santosh
Kumar Jain v. State, [1951] S.C.R.. 303, applied.
(v) The word 'regulate' is wide enough to confer power
on the State to regulate either by increasing the rate or decreasing the rate, the test being what is it that is necessary
or ·expedient to be done to maintain, increase or secqre supply
of the essential articles in question and to arrange for its
equitable distribution and its availability at fair prices.
(vi) Having regard to all the circumstances in this case,
th" change made in the tariff were reasonable and in the interests of the general public.
(vii) There was ats0lute no material on the record of
the appeals on which a plea under Art. 14 of the Constitution
could even be raised.
OVIL APPELLATE JURISDICTION: Civil Appeals Nos. 429
439, 591, 592, 597, 689, 694, 724, 725 and 727 of 1962 and
15, 139, 140, 159, 267 to 269, 331, 334, 337, 340, 342, 343,
347, 352, 389, 746 and 748 of 1963. Appeals from the judgments and order dated December 19, 1958, March 7, 1959,
March 11, 1959, April 22, 1959, April 24, 1959 in Writ
Appeals Nos. 135, 122 of 1957 etc.
T. V. R. Tatachari, for the appellants (in C.A. Nos. 429
to 434 and 694 of 1962 and C.A. No. 269 / 63).
M. C. Setalvad. P. Kodandaramayya, E. V. Bhagarathi
Rao and T. V. R. Tatachari, for the appellants (in C.A. Nos.
438 and 439 I 62).
M. C. Setalvad, and R. Ganapathi Iyer, for the appellants (in C. A. Nos. 436, 437, 724, 725 and 727 / 62).
'
458
SUPREME COURT REPORTS
[1964]
1964
K. Srinivasamurthy and Naunit Lal. for the appellants
Sri Venkata
(in C. As. Nos. 591, 582, 597, and 689 /62 and 140, 267
Seetaramanjaneya and 268 / 63).
Riu and OilMiU.
and Others.
K. Jayaram and R. Thiagarajan, for the appellants (in
State of'.4ndhra C.A. Nos. 139, 159, 330, 334, 337, 340, 342, 343, 347 and
PradeBh etc.
352/ 63).
K. R. Chaudhuri, for the appellants (in C.A. Nos. 15 and
389 of 63).
A. Vedavalli and A. V. Rangam, for the appellant (in
C. As. Nos. 746, and 748 of 63).
D. Narsaraju, T. Anantha Babu, M. V. Goswami and
B. R. G. K. Achar, for the respondents (in C. As. Nos. 435437, 724, 725 and 727 / 62).
D. Narsaraju, T. Anantha Babu, Yogcshwar Prasad and
B. R. G. K. Achar, for the respondents (in C. As. Nos. 429434, 438, 439 and 694/62 and 269 of 63).
D. Narsaraju, T. Anantha Babu, M. S. K. Sastri and
B. R. G. K. Achar, for the respondents (in C.A. Nos. 591,
597 and 689/62 and 140, 267 and 268/63) and respondent
No. 1 (in C.A. No. 592/62).
J. V. K. Sarma and T. Satyanarayana, for respondent
No. 2 (in C.A. No. 592/62).
D. Narsaraju, T. Anantha Babu, R. Gopalakrishnan and
B. R. G. K. Achar, for the respondents (in C. As. Nos. 15,
139, 331, 334, 337, 340, 342, 343, 347, 352, 159, 389 and
746-748/63).
March 25, 1964. The judgment of the Court was delivered by
Qajendreyadkar, C.J.
GAJENDRAGADKAR, C. J.-The principal question of law
which arises in this group of 37 civil appeals relates to the
construction of section 3 of the Madras Essential Articles
ControI and Requisitioning (Temporary Powers) Act, 1949
(No. 29 of 1949) (hereinafter called 'the Act'). The dispute
which has given rise to these appeals centres round the validity
of
two
notified
orders
issued
by
the
respondent, State of Andhra Pradesh on the 28th January, 1955,
and 30th January, 1955 respectively, and it is the contention
of the appellants that the said notified orders are outside the
purview of s. 3. The appellants in all these appeals are supplied electricity by the respondent for many years past, and
several individual agreements have been passed between
I
them and the respondent during the period 1946 to 1952
prescribing the terms and conditions on which the said
supply would be 'made to them. One of these terms stipulated
the rate at which the supply of electricity had to be charged
,
•
/7 S.C.R.
SUPREl\IE COURT REPORTS
459
1964
against the consumers. The impugned orders have purported
to increase this rate, and the appellants contend that the
Sri Venkara
respondent had no authority to change this important term s,,taramanjaneya
of the contract to their pre1· udice by taking recourse to Rfre and Oil Mills
and Otliers
s. 3(1) and issuing notified orders in that behalf. That, in
v.
substance, is the nature of the controversy between the parties
Stare 01 AndAra
before us.
Pradc41 etC.
G'ajendragadCar ,C.J ~
It appears that the Government of Madras, and subsequently, its successor, the respondent, had a single power
grid system for the whole State comprising Tungabhadra and
Machkund Hydro Electric System and the Thermal System
of Nellore. The entire energy was integrated into one power
system. The Government of Madras entered into agreements
with several consumers in the State, including the appellants,.
for the supply of energy in bulk at the specified rates which
were called tariffs, for the years 1951 and 1952. These agreements were to be in operation for ten years. It is common
ground that these agreements did not contain any provision
authorising the Government to increase the rates during their
operation. The charges fixed were calculated at graded regressive rates according to increasing slabs of consumption
units, and the overall unit rates including the demand
charge were not to exceed 66 annas without prejudice to the
monthly minimum payment and the guaranteed consumption.
The Government of Andhra then issued the two impugned
orders relating to Machkund and Nellore, and Tungabhadra
and Chittoore District areas respectively, enhancing the
agreed ra.tes. These enhanced rates were specified in Schedules A and B attached to the said orders. According to these
orders, these increased tariffs were to take effect from the date
on which meter readings were to be taken in the month of
February, 1955 and were to operate for the future., The
increase in the rates effected by these orders was thus to operate
not retrospectively, but prospectively. The impugned orders
indicate that the main reason which inspired the said orders
was the knowledge that the existing electricity tariffs which
were formulated nearly 15 years before. had become completely uneconomic; the charges of labour and the price
level of all material had enormously increased; and that inevitably meant continuously growing loss to the Government.
The Accountant-General made queries in respect of th~ recurring loss and drew pointed attention of the State Government
to the deficits in the working of the Power System. Accordingly, the question of revision of tariffs was considered in the
State of Madras, but was not decided because reorganisation
of the States was then in contemplation. After the respondent
State was born, its Chief Engineer sumbitted proposals for
460
SUPREME COURT REPORTS
[1964]
1964
revii:ions of tariffs in all the areas covered by the relevant
Sri Venkata
schemes. That is how the impugned notified orders came to
8eetaramani_antya be ii:sued by the respondent.
Rsce and Oil Mills
and Other
The appellants were naturally aggrieyed by these orders,
8
v.
,
because they added to their liability to pay the rates for the
1f.!df.f':f:'.'a, supply of electricity by the respondent to them. Accordingly,
-
a large number of consumers moved the Andhra Pradesh
Gajendraqadkar,0.J.High Court under Art. 226 of the Constitution, and challenged the validity of the two impugned orders. The learned
sing:le Judge who heard these writ petitions upheld the appellants' plea and came to the conclusion that the impugned
orders were not justified by the authority conferred on the
. respondent by s. 3 of the Act, and were unauthorised, illegal
and inoperative. In the result, the writ petition filed by rnme
of the appellants before us were allowed and an appropriate
order was issued against the respondent restraining it from
enforcing the revised tariff rates.
These decisions were challenged by the· respondent by
preferring several Letters Patent Appeals. The Division
Bench which heard these Letters Patent Appeals took a
different view; it held that on its fair and reasonable construction, s. 3 did confer authority on the respondent to
issue the impugned orders, and so, the challenge made to
the validity of the said orders could not be sustained. That
is why the Letters Patent Appeals preferred by the respondent were allowed and the writ petitions filed by the appellants were dismissed. It is against these orders that the appellants have come to this Court with a certificate issued by
the said High Court.
After the Division Bench had pronounced its decision
on this point, several other writ petitions were filed by other
consumers, and naturally the single Judge who heard them
followed the decision of the Division Bench and dismissed
the said writ petitions. The consumers who were aggrieved
by the decision of the learned single Judge were then allowed to come to this Court directly by special leave, because
the points which they wanted to raise were exactly the same
as were raised by the other consumers who had come to this
Court against the principal decision of the Division Bench.
The present group of appeaJs thus consists of matters which
have been decided by a Division Bench of the Andhra
Pradesh High Court, as well as those which have been decided by a learned single Judge, and they all raise the- same
common question about the construction of s. 3 of the Act,
and the validity of the impugned notified orders.
Before addressing ourselves to the question of construin:~ s. 3, it is necessary to recapitulate the legislative history
of the Act. It will be recalled that during the Second World
-
7 S.C.R.
SUPREME COURT REPORTS
461
War, the Government of India passed the Defence of India
1961
Act (No. 35 of 1939) on the 29th of September, 1939. By
s.; Venkata
virtue of the powers conferred on the Central Government s.-a-"4•""!f<J
by s. 2 of the said Act, several Rules came to be framed by R""' ~:Z ~7,!;"
Central Government known as the Defence of India Rules.
v.
Amongst these Rules was Rule 81(2) which clothed the sia;,•:J..1M.Ara
Central Government with power to issue orders which may
'_ e1e.
appear to the Central Government to be necessary or ex- Gajendraga<ik&r,O.J.
pedient for securing "the defence of British India, or the
efficient prosecution of the war, or for maintaining supplies
and services essential to the life of the community". These
Rules were in operation during the continuance of the war.
After the war came to an end, it was realised that the economic situation in the country continued to be serious, and
for the proper regulation of economic affairs, it was thought
necessary to continue the orders issued under the Defence
of India Rule 81(2), because shortage of supply of essential
articles was very much in evidence then. The purpose of continuing the orders was to ensure the supply of essential articles to the community at large at reasonable prices and to
secure their equitable distribution. In due course, the Defence
of India Act came to an end in 1946, but the Central Legislature thought it necessary to pass another Act to take its
place and that was the Essential Supplies (Temporary
Powers) Act, 1946 (No. 24 of 1946). On the same lines, the
Madras Legislature passed an Act in 1946 (No. 14 of 1946).
Later, it was replaced by Act No. 29 of 1949 with which
we are concerned in the present appeals. After the respondent State was created under the Scheme of Reorganisation
of States, it passed Act No. 1 of 1955 and this Act received
the assent of the President on the 21st of January, 1955. By
this Act, the Legislature of the respondent State virtually
adopted the Madras Act. As a result, the impugned orders
are, in substance, referable to s. 3 of the Madras Act.
Before we part with this topic, it may be mentioned
that when the Madras Act was passed, its Schedule gave a
list of the essential articles as defined by s. 2(a) and these
articles were 12 in number. When the Andhra Legislature
passed Act No. 1 of 1955 and adopted the Schedule of essential articles for its purpose, the number of these articles was
reduced to two; they are charcoal and electrical energy. The
Andhra Act was originally intended to be in operation until
the 25th January, 1956, but it was later continued from time
to time. It is common ground that when the impugned_ orders
were passed, section 3 of he_ Act was in operation and the
present appeals have been argued on the basis that the said
section is constitutionally. valid, so that the main point which
calls for our decision is the construction of the said section.
462
SUPREME COURT REPORTS
[1964],
1964
Mr. Setalvad for the appellants contends that in conBri v enkata
strui:1g s. 3, we ought not to concentrate on the words used
seetaramanjaneya in s. 3 in isolation, but must look at the said section along ,
Bi<• and Oil Mills with the other provisions of the Act. The rule of harmonious
and Olhers
·
h
·
th
tru
ll
v.
constructton, e urges, requires
at we must so cons
e a
Stale of Andhra the provisions of the Act as to avoid any conflict or repugProdesh
etc.
nancy between them. So construed, section 3, according to
Gajend"'!ladkar, O.J. him, cannot be said to confer power on the respondent to
enha nee the tariff rate ohargeable against the appellants in
respect of the supply of energy made by the respondent to
them. The whole scheme of the Act indicates clearly that
the power to regulate the supply of an essential article which
has been conferred on the State Government has to be
applied in regard to transaction between citizens and
citiz•!ns and cannot be applied to an essential article
which the State itself supplies. It would be odd, he suggests,
if the State Government is given the power to issue a notified order regulating the rates at which it should supply
energy which it itself produces. Therefore, the dealings by
the State Government in the matter of supply of energy to
the wnsumers should be deemed to be outside the provisions
of s. 3, and that would make the impugned orders invalid.
The question as to whether the State Government would
be bound by the provisions· of legislative enactments passed
by the State Legislature has sometimes led to difference in -
judicial opinion; but the decision of this Court in the Director
of Rationing and Distribution v. The Corporation of Calcutt.2 and Ors.(') must be taken to have settled this question.
The effect of the majority decision rendered in that case is
to :recognise the validity of the rule of interpretation of
statutes enunciated by the Privy Council in Province of
Bombay v. Municipal Corporation of the City of Bombay(')
and that rule is that the State is not bound by a statute un-.
less it is so provided in express terms or by necessary implication. In applying this rule, it is obviously necessary that
the Court must attempt to ascertain the intention of the
Legislature by considernig all the relevant provisions of
the statute together and not concentrating its attention on
a particular provision which may be in dispute between the
par1 ies. If, after reatling all the relevant provisions of the
sta~Jte, the Court is' satisfied that by necessary implication
the obligation imposed by the statute should be enforced
aga:inst the State, that conclusion must be adopted. If there
are express terms to that effect, there is, of course, no difficulty. In dealing with this vexed question, sometimes it is
nec•!ssary also to enquire whether the conclusion that the
State is not bound by the specific provision of a given statute,
(') [1961] 1 S.C.R 158.
(') 73 I.A. 271.
7S.C.R.
SUPREME COURT REPORTS
463
would hamper the working of the statute, or would lead to
l964
the anomalous position that the statute may lose its effiSri Venkata
cacy, and if the answer to either of these two questions Se.eJar•".;""<i•nt~a
. d'
h
th
bl'
.
.
d b th
h uld Rice""" O•l Milla
m 1cates t at
e o 1galion impose
y
e statute s o
and au.era
be enforced against the Stat~, the Court would be inclined
•·
to infer by necessary implication that the State, in fact, is
Stj,~:J,1,.W:/:.•
bound by the statute.
Where, however, the question is .not so much as to Gajendrayiulkar,O.J.
whether the State is bound by the statute, but whether it
can claim the benefit of the provision of a statute, the same
rule of construction may have to be applied. Where the
statute may be for the public good, and by claiming the benefit conferred on it by its provisions the State may allege
that it is serving the public good, it would still be necessary
to ascertain whether the intention of the legislature was to
make the relevant provisions applicable to the State. This
position is also established by the decision of the Privy
Council in Province of Bombay(') and it still continues to be
a law in this country.
Incidentally, we may add that where the Crown seeks
to take advantage of a statute and urges that though· it is
not bound by the statute, it is at liberty to take advantage of
it, English Law does not easily entertain such a plea, though
there are observations made in some judicial .pronounce-
. ments to the contrary. As Halsbury points out, "it has been
said that, unless it is expressly or impliedly prohibited from
doing so, the Crown may take advantage of a statute notwithstanding that it is not bound thereby." Having made
this statement, Halsbury has added. a note of caution by
saying that "there is only slender authority for this rule, and
since both the rule and such authority as does exisf have
also been doubted, the rule cannot, perhaps, be regarded as
settled law(')".
To the same effect is the comment made by Maxwell
when he quotes with approval the view expressed by Sir
John Simon that the decisions which recognise the right of
the Crown to take advantage of a statutory provision "start
with a passage in an unsuccessful argument of a law officer
which was not even relevant to the case before the court,
but which has been taken out by a text-writer and repeated
for centuries until it was believed that it must have some
foundation(')".
Therefore, in construing s. 3 of the Act we cannot permit the respondent to rely upon the artificial rule that since
(') 73 I.A. 271.
I') Halsbury's Laws of England, Vol. 36, p. 432, para 654.
~') Maxwell on Interpretation of Statutes, 11th Ed. p. 136
464
SUPREME COURT REPORTS
[1964]
1964
the respondent claims a benefit under s. 3, that construc8,.; Venkaw
tion should be adopted which supports such a claim. Thus,.
Be<tara~nja~ya the position is that when we construe s. 3, we must adopt
R••0•"ffWJ..M•11• the usual rule of construction; we must not read s. 3 in iso-
•• v. "·
lation, but must consider it in its proper setting and must
Swee of Andhra have due regard for the other provisions pf the Act, and
Praiuhete.
its general scheme and purpose.
Gajendragadl:al', O.J.
Reverting then to Mr. Setalvad 's main argument, it may
be conceded that when the Act was passed in 1949, mainly ·
and primarily the power conferred by s. 3 on the State
Government must have been intended to regulate the supply
of essential articles made by one citizen to another. The
Stale had not then entered commercial activities on a large
scale and when s. 3(1) contemplated notified orders issued
for
the
purpose
of securing equitable distribution and
availability at fair prices of essential articles, the legislature
could not have in its mind supply of essential articles made
by the State itself. That is one point in favour of Mr. Setalvad's construction. If we examine the scheme of the Act, it
may also have to be conceded that some of the provisions
may not be applicable to the State. Take, for instance, the
provision of s. 4 which relate to the powers of requisitioning and acquisition of properties, and the subsequent two
sections that deal with payment of compensation and release
from requisition respectively; these provisions may not be
applicable to the State. Take, again, the control of agriculture which is contemplated by s. 7; it would not be applicable to the State. Section 12 which deals with penalties
may also be inapplicable to the State, and so, would s. 13
be inapplicable, because it deals with abetment and assistam;e of contravention 9f the provisions of the Act. Therefore, the general scheme of the Act and some of its provisions seem to suggest that the State may not have been within the contemplation of the Act.
But it is obvious that the rule of harmonious constrμcticn on which Mr. Setalvad has solely rested his case, can
be invoked successful1y by him only if the words used in
s. 3 are capable· of the construction which he suggests. If
the said words are capable of two constructions one of which
supports the appellants' case and the other that of the respondent, it would be legitimate to adopt the first construction. because it has the merit of harmonising the provisions
of s. 3 with the general scheme and purpose of the Act. On
the other hand, if the words used in s. 3(1) are not reasonably capable of the construction for which the appellants
contend, then it would be unreasonable and illegitimate for
the Court to limit the scope of those words arbitrarily solely
for the purpose of establishing harmony between the
•
I
7 S.C.R.
SUPREME COURT REPORTS
465
Act. Therefore, it
1964
assumed object and the scheme of the
is necessary tq, examine the words used
fully. Let us first read s. 3(1) :-
in s. 3 very careSri Ve1'kala
Seetaramanjaneya
Rice and Oil Muz.t.
"The State Government so far as it appears to them
and Others.
to be necessary or expedient for maintaining, instate ofAtUlhra
creasing or securing supplies of essential articles
Pradeahetc.
or for arranging fQr their equitable distribution Ga.j d --;;dk
O.J
and availability at fair prices may, by notified
en rag
"'•
•
order, provide for regulating or prohibiting the
supply, distribution and transport of essential
aticles arid trade and commerce therein''.
Sub-section (2) provides that without prejudice to the generality of the. powers conferred by sub-section (i), an order
made thereunder may provide for objects specified in clauses
(a) to (k). The majority of these objects may not be applicable to the State, while, conceivably, some may be applicable to it.
Section 3(1) is obviously intended to secure supplies cf
essential articles and to arrange for their equitable distribution and availability at fair prices. If electrical energy is
one of the essential articles mentioned in the Schedule,
there can be no difficulty in holding that a notified order
can be issued under s. 3(1) for regulating the supply of the
said energy and making it available at a fair price. Indeed:
it is not disputed and cannot be disputed that if electrical
energy is produced by a private licensee and is then supplied
to the consumers, such a supply would fall within the mischief of s. 3(1), and the terms on which it can and should be
made to the consumers can be regulated by a notified order.
There can also be no serious dispute that the terms of a contract entered into between a private supplier of electrical
energy and the consumer could be modified by a notified
order. Section 3(i) undoubtedly confers power on the State
Government to vary ang modify contractual terms in respect
of the supply or distribution of essential articles. If that be
so, on a plain reading of s. 3(1) it seems very difficult to
accept the argument that the supply of electrical energy which
is included in s. 3'(1) if it is made by a private producer
should go outside the said section as soon as it is produced
by the. State Government. The emphasis .is not on who produces and supplies, but on the continuance of the equitable
distribution and supply of essential articles at fair prices.
If the object which s. 3(1) has in mind is such equitable distribuiton and availability at fair prices of essential articles,
then that object would still continue to attract the provisions
of s. 3(1) even though the essential article may be produced
by the State and may be supplied by it to the consumers.
\
466
SUPREME COURT REPORTS
[1964)
1964
The words used in s. 3(1) are so clear, unambiguous and
Sri Venkata
wi~e that it would be unreasonable to limit their scope artiSeelarama~:iane.ya ficially on the ground that by giving effect to the wide
-~~-1
. .
..
andOthers.
anguage of the sechon, we might reach a result which 1s
v.
not completely harmonious or consistent with the assumed
:>ta~rad"f.h j,~dhra object and purpose of the Act. Indeed, as we have just indi-
-
cated, if the purpose of the Act is to secure the supply of
~ajendrOIJ•dkar,O.J. essential articles at fair prices, it would be irrelevant as
to who makes the supply; what is relevant is to regulate the
sup:ply at a fair price. Therefore, we are not prepared to
accede to Mr. Setalvad's argument that s. 3(1) does not confer on the respondent the power to modify the terms of
agreements between it and the appellants.
Mr. Setalvad, no doubt, contended that in construing
s. 3(1), we may have regard to the fact that most of the
clauses under s. 3(2) would be inapplicable to the respondent
State, and so, he virtually suggests that even though the
words in s. 3(1) may be wide, their width should be controlled by the limited scope of the clauses prescribed by subsection (2). We are not prepared to accept this argument.
After the decision of the Privy Council in King Emperor v.
Silinath Banerjee('), it is well-settled that the function of a
clause like clause (2) of s. 3 merely illustrative (vide also.
Santosh Kumar Jain v. The State(')). In other words, the
proper approach to adopt in construing clau·ses (]) and (2)
of s. 3 is to assume that whatever is included in clause (2)
is also included in clause (!). That is not to say that if the
words of clause (!) are wide enough to include cases not included in clause (2), they must, for that reason. receive a
narrower construction. Therefore, we must ultimately go
back to clause (!) to decide whether the supply of electrical
energy made by the respondent to the appellants can be
regulated by a notified order issued under it or not, and the
answer to that question must, in our opinion, be in the affirmative.
In this connection, it may be pertinent to refer to
s. 3(2}(b) which provides for controlling the prices at which
any essential article may be bought or sold. It is not easy
to see why this clause cannot take in articles which may be
purchased or sold by the State. The clause is so worded that
the transactions of sale and purchase of all essential articles
would be included in it. It is true that where the State wants
to sell its essential articles, it may be able to regulate the
prices and control them by means of an executive order;
·but that is not relevant and !llaterial in construing the effect
(') 72 I.A. 241 at p. 248.
(') 1951 S.C.R. 303.
7 S.C.R.
SUPREME COURT REPORTS
467
of the words; if the words take within their sweep. essential
1961
articles sold by the State, there is no reason why 1t should
Sri Venkata
not be competent to the State to issue a notified order con-
•1::;•::-di~Af;I\.
trolling the prices in that behalf.
and Others
In regard to the purchase of essential articles by the
State of. Andhra
State, the position is still clearer. If the State wants to purPradVJh eic.
chase essential articles. power to regulate th~ pnces of such Gajewlragadkar,C.J.
articles would seem to be clearly mcluded m s. 3(2)(b). Indeed, during the course of his arguments, Mr. Setalvad did
not seriously dispute this position. Therefore, when 'he
State wants to purchase essential articles, it can regulate
the price in that behalf by means of a notified order issued
under s. 3(1) and that shows that in the cases of both sale
and purchase of essential articles by the State, s. 3(2)(b)
read with s. 3(1) would clothe the State with the power to
issue the relevant notified order.
Then, it was faintly argued qy Mr. Setalvad that the
power to regulate conferred on the respondent by s. 3(1)
cannot include the power to increase the tariff rate; it would
include the power to reduce the rates. This argument is entirely misconceived. The word "regulate" is wide enough to
confer power on the respondent to regulate either by increasing the rate, or decreasing the rate, the test being what
is it that is necessary or expedient to be done to maintain,
increase, or secure supply of the essential articles in question and to arrange for its equitable distribution and its
availability at fair prices. The concept of fair prices to which
s. 3(1) expressly refers does not mean that the price once·
fixed must either remain stationary, or must be reduced in
order to attract the power to regulate. The power to regulate
can be exercised for ensuring the payment of a fair price,
and the fixation of a fair price would inevitably depend upon
a consideration of all relevant ·and economic factors which
contribute to the determination of such a fair price. If the
fair price indicated on a dispassionate consideration of all
relevant fa.c.tors turns out to be higher than the price fixed
and pre~a1hng, then the power ~o regulate the price must
necess~nly . mclude t.he power to mcrease the price so as to
make 1t farr. That 1s why we do not think Mr. Setalvad is
right in contending that even though the respondent may have
the power to regulate the prices at which electrical energy
should be supplied by it to the appellants, it had no power to
enhance the said price. We must, thert!fore, hold that the
challenge to the validity of the impugned notified orders on
the ground that they are outside the purview of s. 3(1) cannot
be sustained.
·
That takes us to the next question as to whether the impugned notified orders are invalid, because they contravene
468
SUPREME COUR'I REPORTS
(1964]
I .
1964
the provisions of Art 19(l)(f) and (g) of the Constitution.
Sri Venkata
The. impugned orders have been notified by virtue of the
·~~etaramantane¥• power conferred on the respondent by s. 3(1) and may there-
"'"'' aw.I Oil Mills ·
b
ted
l
f
'
aw.I Other•.
tore, e trea .
as aw or the purpose of Art. 19. We may
v.
al~o assume m favour of the appellants that the right to reSta~,i,1.dhra ce1ve the supply of electricity at the rates specified in the
__
etc.
agreements is a right which falls within Art. 19(1)(0 or (g).
Gajendraqwlkar,G.J. Even so, can it be said that the impugned notified orders
are not reasonable and in the interests of the general public?
That is the question which calls for an answer in dealing
with the present contention. It is true that by issuing the
impugned notifii:d orders, the respondent has successful1y
altered the rates agreed between the parties for their respective contracts and that, prima facie, does appear to be
unreasonable. But, on the other hand, the evidence shows
that the tariff which was fi i,;~d several years ago had become
completely out of date and he reports made by the Accountant-General from time to time clearly indicate that the responden.t was supplying electricity to the appellants
at the
agreed rates even though 1t was incurring loss from year to
year. Therefore, it cannot l>e said that the impugned notified
orders were not justified on the merits. The prices of all
commodities and· labour charges having very much increased
meanwhile, a case had certainly been made out for increasing the tariff for the supply of electrical energy. But it could
not be possible to hold that the restriction imposed on the
appellants' right by the increase made in the rates is reasonable and in the interests of the general public solely because
the impugned orders have saved the recurring loss incurred
by the respondent under the contracts. If such a broad and
general argument were accepted, it may lead to unreasonable and even anomalous consequences in some cases. This
question, however, has to be considered from the point of
view of the community at large; and thus considered, the
point which appears to support the validity of the impugned
orders is that these orders were passed solely for the pur.-
pose of assuring the supply pf/electrical energy and that
would clearly be for the goOd of the community at large.
Unless prices were increased, there was risk that the supply
of electrical energy may itself have come tp an end. If the
respondent thought that the agreements made with the appellants were resulting in a heavy loss to the public treasury
from year to year, ·it may have had to consider whether the
supply should not be cut down or completely stopped. It
may well be that the respondent recognised its obligation to
the public at large and thought that supplying electrical
energy to the consumers who were using it for profit-making
purposes. at ,a loss to the public exchequer would not ?e
reasonable and legitimate, and it apprehended that the legislature may well question the propriety or wisdom of such
I
~
I
'l S.C.R.
SUPREME COURT REPORTS
469
.a course; and so, instead of terminating the .contracts, de1964
cided to assure the supply of eledrical energy at a fair price
Sri Venkata
.and that is why the impugned notified orders were issued. Seetaramanjaneya
We ought to make it clear that there has been no suggestion Ric~::a'"ii?,;,;.
1
'
118
before us that the prices fixed by the impugned notified
v.
orders are, in any sense, unreasonable or excessive, and it State 01 Andhra
'
'
'fi
h
h
· d
'ff h
t
• t
Pradesh etc.
1s s1gn1 cant t at even t e revise
tan
as o come m o
_
operation prospectively and not retrospectively. Therefore, Gajendragadkar,O.J.
having regard to all the circumstances in this case, we are
disposed to hold that the change made in the tariff by the
notified orders must be held to be reasonable and in the interests of the general public.
Mr. Setalvad also attempted to challenge the validity
of the impugned orders on the ground that they contravene
Art. 14 of the Constitution. In support of this contention,
he invited our attention to the allegation made in Writ
Petition No. 923 of 1956. In that writ petition, one of the
petitioners stated that the rate prescribed under the agree-
. ments had not changed and had remained stationary as far
as consumers under the State Government's licensees were
concerned. The affidavit appears to concede that certain
other licensees had increased their rates, but that increase,
it is claimed, was negligible or nominal; and so, the argument \vas that the rate,s which are widely divergent between
consumer and consumer constitute a contravention of Art.
14. Mr. Setalvad fairly conceded that these allegations are
vague and indefinite and no other material has been produced either by the petitioner who has made this affidavit,
or by any of the other petitioners who moved the High
Court for challenging the validity of the impugned orders.
1!1 fact, we do not know what the rates charged by other
licensees are and have been, and how they compare with
the rates prescribed by the original contracts as well ras the
rates enhanced by the impugned notified orders. We ought
to add that the Division Bench of the High Court appears
to be in error when it assumed that the respondent was the
~ole supplier of electrical energy in the State of Andhra. It
is true.