# The State of Bihar v. Abdul Majid. Mahajan C. ]

- **Citation:** [1954] 1 S.C.R. 803
- **Court:** Supreme Court of India
- **Decided:** 1954
- **Bench:** MEHR CHAND MAHAJAN c. J, Mukherjea, VIVIAN BosE, GHULAM HAsAN, Jagannadhadas
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-state-of-bihar-v-abdul-majid-mahajan-c-346
- **Pages:** 15

## Headnote

Constitution of India, Arts. 19(1) (g), 19 (6)-Clause 4(3) of the
Uttar Pradesh Coal Control Order, 1953, tuhether ultra vires the
Constitution.
A law or order which confers arbitrary and
uncontrolled
power upon the executive in the matter of regulating trade or
business in normally available commodities
must be held to be un~
reasonable.
Under
cl. 4(3)
of the Uttar Pradesh
Coal Control
Order, 1953,
the licensing authority has been given absolute power ,
1
to grant or refuse to grant,
rene~r or refuse to
~enew, suspend,
revoke,
cancel
or modify any licence under this Order and the
only thing he has to do is to record reasons for the action he takes.
Not only so, the power could be exercised by any person to whom
the State Coal Controller may choose
to delegate
the same,
and
the choice can be made in favour of any and every person. Such
provisions cannot be held to be reasonable :
Held, therefore that
the
provision of cl. 4(3)
of the Uttar
Pradesh
Coal Control
Order, 1953,
must be held to be void as
104
1954
The State of
Bihar
v.
Abdul Majid.
Mahajan C. ].
1954
January 11.
1954
Messrs. Dwarka
Prasad Laxmi
Narain
v.
The il°late of
Ultar Pradesh and
Two Others.
804
SUPREME COURT REPORTS
[1954]
imposing an unreasonable
restriction
upon
the freedom of trade
and business guaranteed under art. 19 (I ) (g) of the Constitution
and not coming within the protection afforded by cl. ( 6) of the
;i,rticle.
Yick Wo v. Hopkins (118 U.S. 356 at 373) referred to.
ORIGINAL JuRismcnoN : Petition No. 326 of 1953.
Original Petition under article 32 of the Constitution of India.
S. C. Isaacs (S. K. Kapur, with him) for the petitioners.
H. /. U mri gar for the respondents.
1954. January 11. The 'Judgment of the Court was
delivered by
MuKHERJEA J .-This is an application presented by
the petitioners under article 32 of the Constitution,
complaining of infraction of their fundamental
rights
guaranteed under article 14 and clauses (f) and (g) of
article
19 ( 1)
of the Constitution and praying for
enforcement of the same by issue of writs in the nature
of mandamus.
To appreciate the contentions that have been raised
on behalf of the petitioners, it would be necessary to
give a short narrative of the material facts.
The
petitioners are a firm of traders who had, prior to the
cancellation of their licence, been carrying on the business of retail sellers of coal at a coal depot held by
them in the town
of
Kanpur.
It is said that
the
District Magistrate of Kanpur as well as the District
Supply Officer, who figure respectively as respondents
Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time
upon the petitioners as well as other coal depot holders
of the town,
imposing restrictions
of various
kinds
upon the sale of coal, soft coke, etc. It is stated that
. prior to the 14th of February, 1953, the prices that
were fixed by the District Officers left the coal dealers a
margin of 20 per cent porfit upon the sale of soft coke
and 15 per cent profit on the sales of hard coke and
steam coal, . such profits being allowed on the landed
costs of the goods up to the depot. The landed costs
I
S.C.R.
SUPREME COURT REPORTS
805
comprised several items and besides ex-colliery price,
the middleman's commission and the railway freight,
there were incidental expenses of various kin\ls including labour duty, loading and unloading charges, cartage
and stacking expenses. After making a total of these
cost elements, an allowance was given for shortage of
weight at the rate of 5 mds. and odd seers per ton in
the case of soft coke and 3 mds.
and odd seers in the
case of hard · coke and steam coal, and it was on the
basis of the net weight thus arrived at that the price
was calculated. On the 14th of February, 1953, the
District Supply Officer issued a directive reducing the
selling prices of coke, coal, etc., much below the existing
rates.
This reduction
was
effected in a
three-fold
manner. In the first place, the allowance for

## Text

S.C.R.
SUPREME COURT REPORTS
803
hands of the Crown has been made subject to the writ
of civil court. It can be seized in execution of a decree
attached. It is
thus difficult to see on what grounds
the claim that the Crown cannot be sued for arrears of
salary directly by the civil servant, though his creditor
can take it, can
be based
or
substained.
What
could be claimed in England by a petition of right
can be claimed in this country by ordinary process.
For the reasons given above we are of the opinion
that this appeal is without force
and we accordingly
dismiss it with costs.
Appeal dismissed.
Agent for the appellant : & H. D/zebar.
Agent for the respondent : S. P. Varma.
MESSRS. DW ARKA PRASAD LAXMI NARAIN
ti.
THE STATE OF UTTAR PRADESH AND
TWO OTHERS.
[MEHR CHAND MAHAJAN c. J., MUKHERJEA, VIVIAN
BosE, GHULAM HAsAN and JAGANNADHADAS JJ.]
Constitution of India, Arts. 19(1) (g), 19 (6)-Clause 4(3) of the
Uttar Pradesh Coal Control Order, 1953, tuhether ultra vires the
Constitution.
A law or order which confers arbitrary and
uncontrolled
power upon the executive in the matter of regulating trade or
business in normally available commodities
must be held to be un~
reasonable.
Under
cl. 4(3)
of the Uttar Pradesh
Coal Control
Order, 1953,
the licensing authority has been given absolute power ,
1
to grant or refuse to grant,
rene~r or refuse to
~enew, suspend,
revoke,
cancel
or modify any licence under this Order and the
only thing he has to do is to record reasons for the action he takes.
Not only so, the power could be exercised by any person to whom
the State Coal Controller may choose
to delegate
the same,
and
the choice can be made in favour of any and every person. Such
provisions cannot be held to be reasonable :
Held, therefore that
the
provision of cl. 4(3)
of the Uttar
Pradesh
Coal Control
Order, 1953,
must be held to be void as
104
1954
The State of
Bihar
v.
Abdul Majid.
Mahajan C. ].
1954
January 11.
1954
Messrs. Dwarka
Prasad Laxmi
Narain
v.
The il°late of
Ultar Pradesh and
Two Others.
804
SUPREME COURT REPORTS
[1954]
imposing an unreasonable
restriction
upon
the freedom of trade
and business guaranteed under art. 19 (I ) (g) of the Constitution
and not coming within the protection afforded by cl. ( 6) of the
;i,rticle.
Yick Wo v. Hopkins (118 U.S. 356 at 373) referred to.
ORIGINAL JuRismcnoN : Petition No. 326 of 1953.
Original Petition under article 32 of the Constitution of India.
S. C. Isaacs (S. K. Kapur, with him) for the petitioners.
H. /. U mri gar for the respondents.
1954. January 11. The 'Judgment of the Court was
delivered by
MuKHERJEA J .-This is an application presented by
the petitioners under article 32 of the Constitution,
complaining of infraction of their fundamental
rights
guaranteed under article 14 and clauses (f) and (g) of
article
19 ( 1)
of the Constitution and praying for
enforcement of the same by issue of writs in the nature
of mandamus.
To appreciate the contentions that have been raised
on behalf of the petitioners, it would be necessary to
give a short narrative of the material facts.
The
petitioners are a firm of traders who had, prior to the
cancellation of their licence, been carrying on the business of retail sellers of coal at a coal depot held by
them in the town
of
Kanpur.
It is said that
the
District Magistrate of Kanpur as well as the District
Supply Officer, who figure respectively as respondents
Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time
upon the petitioners as well as other coal depot holders
of the town,
imposing restrictions
of various
kinds
upon the sale of coal, soft coke, etc. It is stated that
. prior to the 14th of February, 1953, the prices that
were fixed by the District Officers left the coal dealers a
margin of 20 per cent porfit upon the sale of soft coke
and 15 per cent profit on the sales of hard coke and
steam coal, . such profits being allowed on the landed
costs of the goods up to the depot. The landed costs
I
S.C.R.
SUPREME COURT REPORTS
805
comprised several items and besides ex-colliery price,
the middleman's commission and the railway freight,
there were incidental expenses of various kin\ls including labour duty, loading and unloading charges, cartage
and stacking expenses. After making a total of these
cost elements, an allowance was given for shortage of
weight at the rate of 5 mds. and odd seers per ton in
the case of soft coke and 3 mds.
and odd seers in the
case of hard · coke and steam coal, and it was on the
basis of the net weight thus arrived at that the price
was calculated. On the 14th of February, 1953, the
District Supply Officer issued a directive reducing the
selling prices of coke, coal, etc., much below the existing
rates.
This reduction
was
effected in a
three-fold
manner. In the first place, the allowance for shortage
of weight was made much less than before ; second! y, a
sum of Rs. 4-12-0 only was allowed for all the incidental
expenses, and thirdly, the margin of profit was cut
down to 10 per cent. On the 22nd of May, 1953, a
representative petition was filed by seven colliery depot
holders of Kanpur including the present petitioners
challenging the validity of the executive order, dated
the 14th of February, 1953, mentioned above inter alia
on the ground that it infringed the fundamental rights
of the petitioners under articles
14 and
19 of the
Constitution.
There was an application for ad interim
.stay in connection with this petition which came up
for hearing before the learned Vacation Judge of this
court on the 1st of July,
1953. On that day an undertaking was given by the State of Uttar Pradesh to the
effect that they would withdraw the order of the 14th
February, '.1953, and apparently the consideration that
weighed with the State in giving this undertaking was
that it was
a purely executive order without any
legislative sanction behind it. The order of the 14th
February was in fact
withdrawn, but on the 10th of
July, 1953, the State of Uttar Pradesh promulgated. by
a notification an order intituled "The Uttar Pradesh
Coal
Control Order,
1953" purporting to act in
exercise of the powers conferred upon it by _section 3(2)
of the Essential Supplies Act, 1946, read with the notified order of the Government of India issued under
1954
Messrs. Dwarka
Prasad Laxmi
Narain
v.
The Stale of
Uttar Pradesh aM
Two Others.
Mukhtrjea ] .. •
1954
Mtssrs. Dwarka
PraJad Laxmi
Narain
v.
The State of
Uttar Pradesh and
Two Others.
Mukh•r.J'a J.
806
SUPREME COURT REPORTS
[1954]
section 4 of the Act. As the constitutionality of this
Coal Control Order is the main object of attack by the
petitioners in the present proceeding, it would be
convenient to set out the material provisions of the
order in respect of which the controversy between the
parties primarily centers :
"THE UTTAR PRADESH COAL CoNTROL
ORDER, 1953.
2. In this Order unless there is anything repugnant
in the subject or context
(a) "Coal" includes coke but does not include
cinder and ashes.
( c) "The
Licensing
Authority"
means
the
District Magistrate of the District or any other officer
authorised by him to perform his functions under this
Order and includes the District Supply Officer of the
district.
( d) "Licensee" means a person holding a licence
under the provisions of this Order in Form 'A' or in
Form 'B'.
3. (1) No person shall stock, sell, store for sale or
utilise
coal
for burning bricks or shall otherwise
dispose
of coal in this State except under a licence in
Form 'A'
or 'B'
granted under this Order or in accordance with the provisions of this Order.
(2) Nothing contained in sub-clause (1)-
(a) Shall in so far as it relates to taking out a
licence for stocking or storing coal for their own consumption, apply to the stocks held by persons or
undertakings obtaining coal on permits of the District
Magistrate or the State Coal Controller for their own
consumption.
(b) Shall apply to any person or class of
persons
exempted from any provision
of the above
sub-dame
by the State Coal Controller, to the extent of their
exemption.
4. (1) Every application for licence under this Order
shall be made in the form given in Schedule I appended
to this Order. ·
S.C.R.
SUPREME COURT REPORTS
807
(2) A licence granted under this Order shall be in
Form 'A' or Form 'B' appended to this Order and the
holder of a licence granted
under this
Order shall
comply with any directions that may be issued to him
by the Licensing Authority in regard to the purchase,
sale, storage or distribution of coal.
(3) The Licensing Authority may grant, refuse to
grant, renew or refuse to renew a licence and may
suspend, cancel, revoke or modify
any licence or any
terms thereof granted by him under the Order for
reasons to be recorded. Provided
that
every
power
which is under this Order exercisable by the Licensing
Authority shall also be exercisable by the State Coal
Controller or any person
authorised by him in
this
behalf.
7. The State Coal Controller may by written order
likewise require any person holding stock of coal to
sell the whole or any part of the stock to such person
or class of persons
and on such terms
and prices as
may be determined in accordance with the provisions
of clause (8).
8. (1) No licensee in Form 'B' and no person acting
on his behalf shall sell, agree to sell or offer for sale,
coal at a price exceeding the price to be declared by
the Licensing Authority in accordance with the formula given in Schedule III.
(2) A licensee in Form 'A' or any other person
holding stock of coal or any other person acting for or
on behalf of such licensees or person transferring or
disposing of such stocks to any person in accordance
with clause 6 or clause 7 shall not charge for the coal
a price exceeding the landed cost, plus incidental and
handling charges, plus an amount not exceeding 10
per cent of the landed cost as may be determined by
the Licensing Authority or the State Coal Controller.
Explanations :-( 1)
Landed
cost means the excolliery price of the coal plus the L.D.C.C. and Bihar
Sales tax plus middleman's commission actually paid
and railway freight.
1954
Messrs. Dwarlca
Prasad Laxmi
Narain
v.
The Staie of
Uttar Pradesh and
Two Others.
MukherJea. J.
1954
Mems. Dwarka
Prasad Laxmi
Narain
v.
The State of
Uttar Pradesh and
Two Othtrs.
MukMrjea J.
808
SUPREME COURT REPORTS
[1954]
(2) Incidental and handling charges mean the cost
of unloading from wagons, transporting to stacking
site, unloading at the stacking site, plus godown rent,
plus choukidari cliarges, if any, not exceeding Rs. 8-8-0
per ton as may be determined by the Licensing Authority or the State Coal Controller according to local
conditions.
11. The District Magistrate shall within a week of
the commencement of this Order prepare and publish
in a local paper a list of persons carrying on the business of sale of coal in his district and upon the publication of the list, the persons included therein will be
deemed for purposes of this Order to be licensee until
three months next following the publication of the list
in Form A or B as may be specified.
12. If any person contravenes any of the provisions
of this Order,
or
the
conditions of licence granted
thereunder, he shall be punishable under section 7 of
the Essential Supplies (Temporary Powers) Act, 1946,
with imprisonment for a term which may extend to
three years or with fine or with both and without prejudice to any other punishment to which he may be
liable ........ "
Schedule III referred to in the Order is as follows :
SCHEDULE III.
(Formula for declaration of prices of soft coke/hard
coke/steam coal).
I.
Ex-colliery Price
2.
L.D.C.C. and Bihar Sales tax
3.
Middleman's commission
4.
Railway freight
5.
Incidental and handling charges including
(i) Unloading from wagons.
(ii) Transport upto premises of
stacking
(iii) Unloading and stacking at
the premises or depot.
Actuals.
Actuals.
Actuallv paid subject to the maximum'Iaid down under clause 6
of the Government of India
Colliery Control Order, 1g45.
Actuals.
Maximum of Rs. 8-8-o per ton aa
may be determined
by the
Licensing Authority according
to local conditions, provided
that at places which are" extraordinarily distant from the railway head a higher rate may be
a_llowed by the Licensing Autho·
rity.
S.C.R.
SUPREME COURT REPORTS
809
6.
7.
B.
(iv) Godown rent and chaukidari
charges, if any
(v) \.Yeigl1ing charg,s, if any.
Local taxes Octroi, etc.
Shortage
Profit
Actuals.
1\1ot exc~eding ~~! maunds per ton
in the case of soft coke and 2~
maunds in the case of hard coke
and stf'am coal as
mav be
determin..:d by the Licensing
Authority.
At 10 per cent on total items 1 to 6
abov;: except item No. 5.
It is said that on the 16th of July, 1953, the respondmt No. 2 issued a declaration whereby he fixed
the retail rates for the sale of soft coke, coal, etc. at
precisely the same figures as they stood in the directive
issued on the 14th of February, 1953. The result,
according . to the petitioners, was that the selling prices
were reduced so much that it was not possible for the
coal traders to carry on their business at all. In accordance with the provision of clause 11 of the Control
Order set out above,
the
petitioners'
name appeared
in the lis\ of B licence holders and they did apply for a
licence in the proper form as required by clause (4). The
licence,
it is said, was prepared,
though not actually
delivered over to the petitioners.
By a letter dated the
3rd of October, 1953, the
Area
Rationing
Officer,
Kanpur,. accused
t11e
petitioners
of
committing a
number of irregularities in connection with the carrying on of the coal depot. The charges mainly were that
there were two other depots held and financed by the
petitioners themselves in the names of different persons
and that the petitioners had entered into agreements
for sale of coal at more than the fixed rates. The petitio'.1ers
submitted an explanation which was not .considered to be
satisfactorv and bv an order elated the
13t:1 of October, 1953; the District
Supply
Officer,
Kanpur,
cancelled
the
petitioners'
licence.
In
the
present petition the
petitioners have challenged the
valiclitv of the Coal Control Order of the 10th of July,
1953,
the declaration of prices made on the 16th of
July following and also the order cancelling
tf1e
~eti
tioners' licence on the 13th of October, 1953.
15-95 s. c. I./59
1954
MeJsrr. Dworka
Prasad Laxmi
,h'Orain
v.
Tht State of
Uttar PradeJh atid
Two Others.
MuAherjea J.
l954
Messrs. Dwarka
Prasad Laxmi
}larairi
"·
The Stale of
Uttar Pradesh and
Tw1 Others.
Muk lerjea 1,
810
SUPREME COURT REPORTS
[1954}
The constitutional validity of the littar Pradesh
Coal Control Order has been assailed before us substantially on the ground that its provisions vest an
unfettered and unguided discretion in the licensing
authority or tl1e State Coal Controller in the matter of
granting or revoking licenses, in fixing prices of coal
and imposing conditions upon the traders ; and these
arbitrary
powers
cannot only
be
exercised by
the
officers
themselves but may
be
delegated
at
their
option to any person they like. It is argued t'.lat these
provisions imposing as they do unreasonable rt strictions
upon the right of the petitioners to carry on their
trade
and business
conflict with their fundamental
rights under article 19 ( 1) (g) of the Constitution and
are hence void. With regard to the order oated the
16th of July, 1953, by which the prices of coke, coal,
etc. were fixed, it is pointed out that it was not only
made
in exercise
of
the arbitrary
pow.er
~onferred
upon the licensing authority by the Coal Control
Order, but the prices as fixed, are palpably discriminatory as would appear from comparing them with the
prices fixed under the very same Control Order in
other places within the State of Uttar Pra( esh like
Allahabad, Lucknow and Aligarh. The order of the
13th October, 1953, cancelling the petitioners' licence
is challenged on the ground that the charges made
against the
petitioners were vague and indefinite and
'.hat the order was
m~de with the ulterior object of
driving
the petitioners
out
of
the
coal
business
altogether. It is said further that as a resuit of the
cancellation
order,
the petitioners
have bern made
incapable of disposing of the stocks already in their
possession, though at the same time the holding of
such stock after the cancellation of their licwce has
become an offence under the Coal Control Order.
It is not disputed before us that coal is an essential
commodity under the Essential Supplies
(Temporary
Powers) Act of 1946, and by virtue of the delegation
of powers by the Central Government to the Provincial Government under section 4 of the Act, t1ie Uttar
Pradeslf Government was competent to make provi-
~iohs, by notified order, for regulating the supply and
s.c.R..
SUPREME COURT REPOR'TS
811
distribution
of coal in such a way as they considered
proper with a view to secure the objects as specified
in section 3 of the Act. All that is necessary is that
these proYisions should not infringe the fundamental
rights of the citizens guaranteed under Part III of the
Constitution and if they impose restrictions upon the
carrying on of trade or business, they must be reasonable
restrictions
imposed
in the interests of the
general public as laid down in article 19 ( 6) of the
Constitution.
Nobody can dispute that for
ensuring equitable
distribution
of
commodities
considered
essential
to
the
community
and their
availability
at fair prices,
it is quite a reasonable thing to regulate sale of these
commodities through licensed vendors to whom quotas
are allotted
in specified
quantities
and who are not
permitted to sell them beyond the prices that are fixed
by the con trolling authorities. The power of granting
or withholding licences or of fixing the prices of the
goods would necessarily have to be vested in certain
public officers or bodies and they would certainly have
to be left with some amount of discretion in these
matters. So far no exception can be taken ; but the
mischief a.rises when the power conferred on such
officers is an arbitrary power unregulated by any rule
or principle and it is left entirely to the discretion of
particular persons to do anything they like without
any check or control by any higher authority. A law
or order, which .confers arbitrary and uncontrolled
power upon the executive in the matter of regulating
trade or business
in normally available commodities
cannot but be held to be unreasonable. As has been
held by this court in Chintamon v. The State of Madhya
Pradesh('), the phrase
"reasonable
restriction"
connotes that the limitation imposed upon a person in
enjoyment of a right should not be arbitrary or of an
excessive nature beyond what is required in the interest
of
the
public.
Legislation,
which
arbitrarily
or
excessively invades the right, cannot be said to contain
the quality of reasonableness,
and unless it strikes a
proper bala•1ce between the freedom guaranteed under
(1) [1950] S. C.R. 759,
J954
Messrs, Dwarka
Prasad Laxmi
Narain
·"·
The State of
Uttar Pradesh anti
Two Others.
Mukherjea J.
1954
Messrs. Dwarka
Prasad Laxmi
Narain
v.
The Stale of
Uttar Pradesh and
Two Others.
Mukh"i•• J.
812
SUPREME COURT REPORTS
[1954)
article 19 ( 1) (g) and the social control permitted by
clause ( 6) of article 19, it must be held to be wanting in
reasonableness. It is
in the light of these
principles
that we would proceed to examine the provisions of
this Control Order, the validity of which has
been
impugned before us on behalf of the petitioners.
The provision contained in clause 3( 1) of the Order
that "no person shall
stock,
sell, store
for sale
m
otherwise utilise or dispose of coal except under a
licence granted under this Order" is quite unexceptional as
a general provision ; in fact,
that is
the
primary o':ject which the Control Order is intended to
serve.
There are two exceptions
engrafted
upon
this
general rule: the first is laid down in sub-clause (2) (a)
and to tl11t no objection has been or can be taken.
The Second exception, which is
embodied in subclause (2) (b) has been objected to by the learned
counsel appearing for the petitioners,. This exception
provides that nothing in clause 3 (1) shall apply to any
person or class of persons
exempted from any provision
of the above
sub-clause by the State Coal
Controller,
to the extent of such exemption. It will be seen
that
the Control Order nowhere indicates what the grounds
for exemjXion are,
nor have any rules been framed on
this point. An unrestricted power has been given to
the State Co:1trolkr to make exemptions, and even if
he acts arbitrarily or from improper motives, .there is
no check over it ancl
no way of obtaining redress.
Clause 3 (2) (b) of the Control Order seems to us, therefore, prim a facie
to be
unreasonable.
V.l e
agree,
however, with Mr. Umrigar that this portion of the
Control Order, even though bad, is severable from the
rest and we are not really concerned with the validity
or otherwise of this provision in the present case as no
action taken under it is the subject matter of any
complaint before us.
The more formidable objection has been taken on
bel11lf of the
petitioners against clause 4 (3)
of the
Co·ctrol.
Order which
relates
to
the
granting and
refusing of licences. The licensing authority has been
giv~n absolute power to grant or refuse to grant,
renew or refuse to renew, suspend, revoke, cancel or
S.C.R.
SUPREME COURT REi•Cmrs
813
modify any
licence
under this
Order and the only
thing he has to do is to record reasons for the action
he
takes. Not only so, the
power could be exercised
by any person to whom the State Coal Controller may
choose to delegate the same, and
the choice can be
made in favour of any and every person. It seems to
us that such provision
cannot be held to be reasonable.
No rules have been framed and no directions given on
these matters to regulate or guide the discretion of the
l,nsing officer.
Practically
the
Order
commits
to
'M'f1e unrestrained will of a single individual the power
\;.to grant, ·withhold or cancel licences in any way he
chooses and there is nothing in the Order which could
ensure a proper execution of the power or operate as a
check upon injustice that might result from improper
execution
of the same. Mr. Umrigar contends
that a
sufficient
safeguard
has
been
provided
against any
abuse of power by reason of the fact that the licensing
authority has got to record reasons for what he does.
This safeguard, in our opinion, is hardly effective ; for
there is no higher authority prescribed in the Order who
could examine the propriety of these reasons and revise
or review the decision of the subordinate officer. The
re:>sons, therefore, which are required to be recorded
are only for the personal or subjective satisfaction of
the licensing authority and not for furnishing any
remedy to the aggrieved person. It was pointed out
and with perfect propriety by Mr. Justice
Matthews
in the well-known American case of Yic!( Wo
v.
Hopkins('), that the action or non-action of officers
placed in such position may proceed from enmity or
prejudice,
from
partisan
zeal or animosity, from
favouritism and other improper influences and motives
which are
easy
of concealment and
difficult
to
be
detected and exposed, and consequently the injustice
capable of
being
wrought
under
cover
of
such
unrestricted
power becomes
apparent to every
man,
without the necessity of detailed investigation. In our
opinion, the provision of clause 4 (3) of the Uttar
Pradesh Coal Control Order must be held to be void as
imposing an unreasonable restriction upon the freedom
(1) 118 U. S .. 356 at 373.
;954
Messrs. Dwarka
Prasad Laxmi
Nttrain
v.
The State of
Uttar Pradesh and
Two Others.
1954
MeJ,· rs. Dwark4
Pro rad Laxmi
Narain
v.
T:.e State of
Uttar Pradesh and
T:vo Other1.
Mukherj•a ].
$14
SUPREME COURT REPORTS
[1954j
of trade and business guaranteed under article
19 ( 1)
(g) of the Constitution and not coming within the
protection afforded by clause ( 6) of the article.
As this provision forms an integral part of the entire
structure of the Uttar Pradesh Coal Control Order, the
order cannot operate properly unless the provision of
clause 4 (3) is brought in conformity with the constitutional requirements indicated above. The licence of
the
petitioners
having
been
cancelled
in pursuance
with the above clause of the Control Order, Sit•
cancellation itself should be held to be ineffective
an~.,,'
it is not necessary for us to enquire further whether or
not the grounds upon which the licensing authority
purported to act were vague or idefinite or could
constitute proper grounds for cancellation.
The two other clauses of the Control Order to which
exception has been taken on behalf of the petitioners
are clauses (7) and (8). Clause (7) empowers the State
Coal Controller to direct, by written order, any person
holding stock of coal to sell the whole or any part of
the stock to such person or class of persons and on
such terms and prices as may be determined in accordance with the provision of clause (8). Clause 8 (1)
provides that no licensee in Form 'B' shall sell o; agree
to sell coal at a price exceeding the price to be declared
by
the licensing authority in accordance with the
formula given
in Schedule III. With regard to both
these clauses, the contention of the petitioners' counsel,
in substance,
is that the formula for
determining the
price, as laid down in
Schedule
Ill, is per se unreasonable as it is made dependent on the exercise of an
unfettered and uncontrolled discretion by the licensing
authority.
An unfair determination
of the
price
by
the licensing authority, it is argued, would be totally
destructive of the business of the coal traders and the
grievance of the petitioners is that that is exactly what
has been done by the declaration of prices made on the
16th of July, 1953.
We have examined the formula given in Schedule Ill
to the Control Order with some care and on the materials that have been actually placed before us, we are
•
S.C.R.
SUPREME COURT REPORTS
815
not in a position to say that the formula is unreasonable. The prices, as
said already, are calculated on
the basis of the landed costs of coke and coal up to
the depot, to which a profit of 10 per cent is added.
The landed costs comprise seven items in all which are
enumerated in Schedule III. With regard to items !,
..
2, 3, 4 and (j of the Schedule the actual costs are taken
into account and to that no objection can possibly be
taken. The entire dispute is with regard to incidental
.-.
cjxl!fges specified in item 5 and the allowance for
" ~hortage which forms item 7.
So far as incidental
charges are concerned, the Schedule allows a maximum
of Rs. 8-8-0 per ton to be determined by the licensing
authority
according
to
local
conditions.
The rates
undoubtedly vary according to local conditions and
some amount of discretion must have to be left in such
cases to the local authorities. The discretion given to
the licensing authority in fixing these rates is, however,
not an unlimited discretion, but has
got to be
exercised with reference to the condition prevalent in
the locality with which the local officers must be
presumed to be familiar. The grievance of the petitioners is that in the declaration of 16th of July, 1953,
the licensing authority allowed incidental
ch~rges 011ly
at the rate of Rs. 4-12-0 per ton and that is grossly
unfair.
It is pointed out that at Lucknow,
Aligarh,
Allahabad and other places much higher rates were
allowed, though the local conditions of these places are
almost identical ; and there has been consequently a
discrimination in this respect which makes the declaration void altogether. The
statements
that
have
'1
•'
I.
been made by the petitioners in this connection are
not supported by any affidavit of any person who is
familiar with the local conditions in the other places
and on the materials that we have got here we are
unable to say that the rates fixed
by the licensing
authority of Kanpur are really discriminatory. It is
certain! y not open to us to substitute our own determination in the matter of fixing the prices for that
of the
licensing authority and provided we are satisfied
that
the discretion that has been vested in a public officer
Js
not an uncontrolled
discretion an@ no
unfair
1954
Messrs. Dwarka
PraJad Laxmi
Narain
v.
1 he State of
Uttar Pradesh and
Two Others.
Mukhtrjea J.
!954
i-r1.t,.srs. Dwuta
Prasasd L12xmi
Narain
v.
The Stale of
Utto.r Pradesh and
Two Othtrs.
Mukl"1i•• J.
816
SUPREME COURT REPORTS
[1954]
discrimination has resulted from the exercise of it, we
cannot possibly <trike down as illegal any order or
declaration made by such officer.
The same reasons apply, in our opinion, to the
seventh item of Schedule III which relates
to allowances for shortage of weight. Here also the Control
Order specifies a maximum and the
determination of
"'
the allowance in particular cases has been left to the
discretion
of
the
licensing
authority.
We
are
not
satisfied from the materials placed before us that "tl14 _
,.,-'
provision
is
unfair or
discriminatory.
The formula..J
allows a profit of 10 per cent upon the cost items with
Ihe exception of iftem Nu. 5 which relates to incidental
charges. \Ve do not know why this item has been
omitted and Mr. Umrigar, appearing for
the
respondents, could not suggest any possible reason for it. But
even then, the result of. this omission would only be to
lower the margin of profit
a little below
10 per
cent
and nothing
more. If the other traders in the locality
are willing to carry on business in coal with that
amount of profit, as is stated on the affidavits of the
respondents, such fixation of profit would undoubtedly
be in tbe interests of the public and cannot be held to
be unreasonable. The counsel for the petitioners is not
right in his contention that the Control Order has only
fixed the maximum pro5t at 10 per cent and has left
it to the discretion of the licensing authority to reduce
it in any way he likes. Schedule III fixes the profit at '
10 per cent . upon the landed costs with the exception
of item No. 5 and as this is ·not the maximum, it
would have to be
allowed
in all
cases
and under
clause 8 (1), the 'B' licensees are to sell their stocks of
coal according to the prices fixed under Schedule Ill.
Clause 8 (2) indeed is not very clearly worded, but we
think that all that it provides is to impose a disability
upon all holders of coal stocks to charge prices exceeding the hnded costs and a profit upon the same not
above
10 per cent as
may be determined by the
licensing authority. The determination spoken of here
must be in accordance with what is laid down in
Schedule III anc\ that, as has been said above, does
specify a fixed rate and not a maximum and does not
•
•
S.C.R.
SUPREME COURT REPORTS
817
allow the licensing authority to make any reduction he
likes. On the whole we are of the opinion that clauses (7)
and (8) of the Control Order do not impose unreasonable
restrictions upon the freedom of trade enjoyed by the
petitioners and consequently the declaration of the
16th of Juiy,
1953, cannot be held to be invalid. The
result is that, in our opinion, clause 4(3) of the Control
Order as well as tbe cancellation of the petitioners'
licence should be held to be invalid and a writ in the
nature of mandamus would issue against the respondents opposite parties preventing them from enforcing
the cancellation order. The rest of the prayers of the
petitioners arc
disallowed.
\Ve make
no order
as
to costs.
Petition partly allot11ed.
Agent for the petitioners : Ga11pat Rai.
Agent for the respondents : C. P. Lal.
CHA TTURBHUJ VITHALDAS JASANI
v.
MORESHW AR P ARASHRAM AND OTHERS.
[MuKHERJEA,
V1v1""
BosE and
BHAGWATI
JJ. /
Represellfation of t!1c People Act (XLlll of 1951), s. 7(d)-A
firm entering into co11trac1s with Central Govern1ne11t for supply of
goods-A candidate seeking election for Parlianient, a partner of the
said firm on
the crucial
dates-Disqualificatio11-Co11stitution
of
India, art. 299(1)-Indian Contract Act (IX of 1872) s. 230(3)-
Contract ivith Gover111nent not in proper forn1-TVhether voidRatification-Contract for supply of goods-Subsists
till fully discharged by both sides-And payn1ent. 1nade-Person of Scheduled
Caste Mahar convertt'd to 1\fahanubhava Pa11th-FVhether convert..,·
caste statu.i altered.
A contract for the supply of goods does not tenninate \Vhcn
the
goods arc
supplied, it
continues into
being till pay1ncnt is
made and the contract is fully discharged by performance on both
sides.
O'Carroll v. Hastingt ([1905] 2 LR. 590) and
Satyendrakumal'
})as v. Chairn1an of the Municipal Com1nissioners of Dacca (I.L.R .
58 Cal. 180) relieJ upon.
The firm Moolji Sicka and Company of
was a partner had _ entered into
contracts
which the candidate
\Vith
the
Central
1954
.. i\.ftssrs. Dwarka
Prasad Laxmi
Narain
v.
The State of
Uttw Pradesh and
Two Others.
Mukhtrjea J.
1954
February 15.