# VRAJLAL MANILAL & CO. & ORS v. STATE OF MADHYA PRADESH & ORS

- **Citation:** [1970] 1 S.C.R. 400
- **Court:** Supreme Court of India
- **Decided:** 1969-04-25
- **Case number:** Civil Appeal No. 2262 of 1966
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vrajlal-manilal-co-ors-v-state-of-madhya-pradesh-ors-4788
- **Pages:** 13

## Headnote

VRAJLAL MANILAL & CO. & ORS.
v.
STATE OF MADHYA PRADESH & ORS.
April 25, 1969
[M, HIDAYATULLAH, C.J., J. M. SHl!LAT,
V. BHAllOAVAr
K. S. Hl!GDB AND A. N. GROVBI., 11.)
Madhya Pradesh
Ttndu, Pattu
(Vyapar Vinlyaman)
Adh/nJyam
(29 of 1964), s. 5(2) and r. 9 of Ruin made thereunder-State monopoly
In tradf--Rtstrktlon on transport-Whether integral part of monopO/'J'-
Ruaonab/eness of-I/ violate of Art.r. 19(1) cl (g) and 304.
The Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam,
1964 waa puoed for rcgulatins trade in tendu leaves in the public intereot
by crutins a State monopoly in that trade, that is, in the purcbue and
oale of tendu leaves.
Under 1. 5 (1) when the Act is brought into force
In an ana, no person, except the Government, ii. authorised oftlcer or
&jl!Dt in respect of the unit where the leaves arc gtown can purchase or
tramport them. Explanation I permits purchases from Government, it!
authorised officers and agents and s. 5(2) permits two categories of perIOOI to tramport the leaves, namely : (a) a grower, from one place to
another within the unit where they are grown; and (b) the purcbuer,
under Explanation I. either for manufacturing bidis within the State or
for their export outside the Slate. under a permit in accordance with ltt
terms and conditions.
Rule 9 of the I 965 Rules made under the Act
provides far the application to be made for a transport permit.
The appellants had several branches in different areas of the State.
Whenever they purchase the leaves they have to be moved to their warebouoes outside and from there to their branches and then, to the sattedars,
that is, independent contractors, who undertake to have bidis rolled through
matdoors to whom the satttdars distribute tobaceo and the tendu leaves
supplied by the appellants.
There were 6 to 7 thousand such sauedara
and the number of mazdoors employed by the sattedars was very Iarsc.
The appellants applied for and ob\ained permits authorising them to
transport the leaves purchased by them to their godowns situate oullide
the units. On June 4, 1965, tbe Divisional Forest Officer issued an order
which forbade altoaether movement of old leaves, that is, those which were
In atoct when the Rules came into force.
The order also provided that
permits illuea by the Foreat Department would be necessary for lrlDIPOrt
of the lea- from warehoules to branches, and from
these
to
the
'1lltld4rs, aod when the •tl.edars distributed leaves
to the
ma1.doori
employed by him.
On a reprnentation by the appellanta, pointina out
the di11leultiea involved in obtaining such permits the branch manaaen of
tho bldi manufaeturina firms were authorised to iuue tran9\>0rt permits to
the sattedan; but findina that the branch manascrs were 1asuing permits
for bulk tnnoport, the District Forest Ofllcer rcacinded the relaxation.
The appellants thereupon challenged the validity of •· 5 and r. 9 in the
ffiah Coutt as violating Art. 19(1 )(f) and (g) and Arts. 301 and 304
of the Constitution. The High Court dismissed the petition.
In appeal to this Court,
HELD: Whats. 5(2) and r. 9 are intended to require i• that a manufacturer must have a permit to move the leaves purch•sed by him from tho
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VllA.JLAL MANILAL V, M. P. STATE (She/at, J,)
401
Unit where he has purchased them to his warehouse outside, from there
to his branches and also when he transports then to his aattedars. But no
such permit is inteded to be necessary when the leaves are distributed for
the manufacture of bidis• by those sattedars to the mazdoors.
Such a
construction would make the restriction imposed !easonable within the
meaning or Arts. 19(1) (5) and (6) and Art. 304(b). [412A-C]
The Legislature thought that it was in the public interest to entrust
the entire trade to the State which would fix reasonable prices in consultation with an advisory committee and make it, at the same time, compulsory for the State to purchase the entire stock which would be offered for
sale at those

## Text

VRAJLAL MANILAL & CO. & ORS.
v.
STATE OF MADHYA PRADESH & ORS.
April 25, 1969
[M, HIDAYATULLAH, C.J., J. M. SHl!LAT,
V. BHAllOAVAr
K. S. Hl!GDB AND A. N. GROVBI., 11.)
Madhya Pradesh
Ttndu, Pattu
(Vyapar Vinlyaman)
Adh/nJyam
(29 of 1964), s. 5(2) and r. 9 of Ruin made thereunder-State monopoly
In tradf--Rtstrktlon on transport-Whether integral part of monopO/'J'-
Ruaonab/eness of-I/ violate of Art.r. 19(1) cl (g) and 304.
The Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam,
1964 waa puoed for rcgulatins trade in tendu leaves in the public intereot
by crutins a State monopoly in that trade, that is, in the purcbue and
oale of tendu leaves.
Under 1. 5 (1) when the Act is brought into force
In an ana, no person, except the Government, ii. authorised oftlcer or
&jl!Dt in respect of the unit where the leaves arc gtown can purchase or
tramport them. Explanation I permits purchases from Government, it!
authorised officers and agents and s. 5(2) permits two categories of perIOOI to tramport the leaves, namely : (a) a grower, from one place to
another within the unit where they are grown; and (b) the purcbuer,
under Explanation I. either for manufacturing bidis within the State or
for their export outside the Slate. under a permit in accordance with ltt
terms and conditions.
Rule 9 of the I 965 Rules made under the Act
provides far the application to be made for a transport permit.
The appellants had several branches in different areas of the State.
Whenever they purchase the leaves they have to be moved to their warebouoes outside and from there to their branches and then, to the sattedars,
that is, independent contractors, who undertake to have bidis rolled through
matdoors to whom the satttdars distribute tobaceo and the tendu leaves
supplied by the appellants.
There were 6 to 7 thousand such sauedara
and the number of mazdoors employed by the sattedars was very Iarsc.
The appellants applied for and ob\ained permits authorising them to
transport the leaves purchased by them to their godowns situate oullide
the units. On June 4, 1965, tbe Divisional Forest Officer issued an order
which forbade altoaether movement of old leaves, that is, those which were
In atoct when the Rules came into force.
The order also provided that
permits illuea by the Foreat Department would be necessary for lrlDIPOrt
of the lea- from warehoules to branches, and from
these
to
the
'1lltld4rs, aod when the •tl.edars distributed leaves
to the
ma1.doori
employed by him.
On a reprnentation by the appellanta, pointina out
the di11leultiea involved in obtaining such permits the branch manaaen of
tho bldi manufaeturina firms were authorised to iuue tran9\>0rt permits to
the sattedan; but findina that the branch manascrs were 1asuing permits
for bulk tnnoport, the District Forest Ofllcer rcacinded the relaxation.
The appellants thereupon challenged the validity of •· 5 and r. 9 in the
ffiah Coutt as violating Art. 19(1 )(f) and (g) and Arts. 301 and 304
of the Constitution. The High Court dismissed the petition.
In appeal to this Court,
HELD: Whats. 5(2) and r. 9 are intended to require i• that a manufacturer must have a permit to move the leaves purch•sed by him from tho
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VllA.JLAL MANILAL V, M. P. STATE (She/at, J,)
401
Unit where he has purchased them to his warehouse outside, from there
to his branches and also when he transports then to his aattedars. But no
such permit is inteded to be necessary when the leaves are distributed for
the manufacture of bidis• by those sattedars to the mazdoors.
Such a
construction would make the restriction imposed !easonable within the
meaning or Arts. 19(1) (5) and (6) and Art. 304(b). [412A-C]
The Legislature thought that it was in the public interest to entrust
the entire trade to the State which would fix reasonable prices in consultation with an advisory committee and make it, at the same time, compulsory for the State to purchase the entire stock which would be offered for
sale at those pri..,s. Considering the object of the Act, it cannot be said
that such a monopoly was unreasonable. But transport of the leaves once
purchased or sold would not prime facie be an integral part of monopoly
m the trade and restrictions on such transport should be reasonable. It
may be that free movement of leaves even after they are sold would create
difliculty in effectively implementing the intended monopoly in the trade
or that such free movement would make checking of illegitimate trans""" -
tions in the leaves difficult and therefore some check on movement is
necessary. But, considering the extraordinary inconvenience which would
be caused to the manufacturer and balancing that with the mischief feared
by the State, when s. S was enacted, it could not have been intended that
the manufacturer should also obtain permits in respect of leaves distributed,
to the vast number of mczdoors for rolling the bidis, by the sattedars who
were themselves considerable in number. [410C; 411G)
In the view, the restrictions against free transport cannot be held
to be unreasonable except to the extent of its requiring a permit for distribution to the mazdows. ' The order cancelling the
concession
also
could not be challenged as an unreasonable restriction. [417D]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2262 of
1966.
Appeal from the judgment and order dated April 22, 1966 of
:he Madhya Pradesh High Court in Misc. Petition No. 439 of
1965.
A. K. Sen aJlld Rameshwar Nath, for the appellants.
. I. N. Shroff, tor the respondents.
Th.e Judgment of the Court was delivered by
·
Shelat, J.
This appeal under certillcate is directed against
the judgment ot the High Court of Madhya Pradesh dismissing the
writ petition filed by the appellants in that Court.
The appellants 1are a partnership firm carrying on the business
of manufacturing and selling bidis and purchase, stock, transport
and consume for that purpose considerable quantity of tendu
leaves.
In 1964, the State Legislature passed the Madhya Pradesh
Tendu Patta (Vyapar Viniyaman) Adhiniyam, 29 of 1964 (hereinafter referred to as the Act).
The Act received the President's
assent on November 23, 19Ji4 and was brought into force on November 28, 1964. The Act inter alia created a State monopoly in
402
SUPREME COURT REPORTS
(1970] I S.C.R.
the trade of tendu leaves and under s. 5 ( 1) thereof prohibited
anyone, excepting those mentioned therein, either to purchase or
tra.n&port tendu leavr.s.
Sub-s. 2 of s. 5, however, pennitted a
grower to traruport them within the unit where they grow and a
purchaser who has purchased them from the State Government,
its authorised officers and agents for manufacturing bidis or for
exporting outside the State to transport them outside such unit
under a permit and in 11ccordance with the terms lli!ld conditions
thereof.
By virtue oi s. 19 the State Government framed rules
called the Madhya Pradesh Tendu Patta
(Vyapar Viniyaman)
Niyamavali, 1965 (referred to hereinafter as the rules).
Rule 9
of the said rules provided for an application for a transport permit
in form M and the issuance of such pennit in form N.
The
appellants accordingly applied for and obtained permits authorising them 10 transport tendu leaves purchased by them from th-:
various forest unit~ to their godowns situate outside those units.
In the course of their business the appellants transport the said
leaves first from the said units to their warehouses, frDr.l there to
their branches and thereafter distribute them and tobacco to their
sattedars, who are independent cantractors, and who in their tum
distribute the said leaves and tobacco to various mazdoors living
in different villages for rolling the bidis. According to the practice of the appellants, the said sattedars enter into contracts with
them under which the appellants supply to them the said leaves
and the tobacco and the sattedars deliver to the appellants bidis
rolled by the mazdoors in proportion to the quantity of the leaves
and tobacco supplied to them.
On June 4. 1965, the Divisional
Forest Officer issued an order which forbade altogether movement
of old tendu leaves and as regards new leaves provided that their
movement from one village to another had to be covered by a
permit.
It also provided that permits would be oiecessary for bulk
transport from warehouses to branches and from there to sattedars,
and that such permits would be issued by range assistants and
range officers on receipt of applications therefor. The appellants
thereupon made a representation to the Divisional Forest Officer
mentioni.ng the several difficulties which would result from the said
order and the said officer, by his order dated June 8, 1965, in
partial modification of his said order, permitted branch managers
of bidi manufacturing finns themselves to issue transport permits
to sattedars.
Finding, however, that instead of distributing the
said leaves to the sattedars, the branch managers were issuing permits for bulk transport, the said officer on October 12, 1965 rescinded his order of June 8, 1965. The result was that the appellants were required to obtain permits for moving the tendu leaves
from their branch offices to the sattedars. The appellants thereafter filed the said writ petition i:n the High Court claiming that
nnder s. 5 and the said rules they were required to obtain permits
only when moving the leaves purchased by them from units where
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VRAJLAL MANll.AL v. M. P. STATE (Shelat, J.)
403
they were grown to their warehouses and that once they were so
moved to the warehouses there could be no restriction in their
further movement from the warehouses to their branches and from
there to their sattedars a;nd the mazdoors.
The appellants claim·
ed a writ in the nature of mandamus for setting aside the said
orders dated June 4, 1965 and October 12, 1965 and also for
striking down s. 5 if it was construed as prohibiting, except under
permit, movement of the said leaves from their warehouses to the
branches and from thence to the sattedars and the mazdoors. The
State Goveri!llllent, on the other hand, claimed that the restrictions
against transport of. the leaves were justified under s. 5 and the rules
and were valid.
The High Court held that on a proper construe·
tion of s. 5 ( 2 )(b) a permit was necessary for transport of the
leaves by a purchaser not only when he moved them from the
units where they were purchased to a place outside but also when
he moved them from one place to another outside the said u;nit,
that s. 5 ( 1), being a provision creating the State monopoly in the
trade of tendu leaves, was protected by the latter part of Art.
19( 6) of the Constitution, that the restriction imposed by s. 5 ( 1) .
on transport was valid and that sub-s. 2 being merely a relaxation
against tbe said prohibition was valid.
It further held that the
restrictions on transport of tendu leaves before and after the sale
thereof by Government was an integral part of the trade monopoly
intP.nded to prevent surreptitious sales of tendu leaves by persons
other than Government, their officers and agents, that it was necessary to control the movement of the said leaves to prevent pur·
chasers from
surreptitiously purchasing and transportin~ them
under cover of leaves purchased from Government by mixm:; the
contraband with those lawfully purchased and that such ,:0:1trol
was basically and essentially necessary for creating the s&id monopoly. In the result, the High Court held that the said restrictions
with regard to purchase as also transport were valid and the challenge arainst s. 5 and the said rules was not sustainable.
Counsel for the appellants raised the following contentions : ·
( 1) thats. 5(2)(b) should be construed, though it is couched in
wide language, to mean that it prohibits without permit movement
of tendu leaves from the units where they are purchased to the
warehouses of the purchaser outside such units, that that restriction alone was necessary for effectively implementing the State's
monopoly in tendu leaves, and that once they were purchased aind
property in them had passed to the purchaser and the leaves were
brought to his warehouse there could no longer be any necessity
to restrict their movement from the stage of warehouping them to
the stage of their consumption in manufacturing the bidis; (2)
that neither s. S(2){b) nor the rules authorise restrictions on the
movemen~ of these leaves once they were brought under a permit
to the warehouse, and therefore, the order dated June 4, 1965
404
SUPREME COURT REPORTS
[ 1970] l S.C.R.
requiring the purchaser to obtain permits for transporting them
from his warehouse to his bra.i:-:h and from ther~ to the sartedars
and the mazdoors was ultra vires the section and the rules; ( 3)
that the restrictions as to transp.irt were ancillary to and were tor
the effective enforcement of the trade monopoly and not an essential or integral part of the scheme of that monopoly, that they
were, therefore, not protected by the latter part of Art. 19 ( 6),
or Art. 304(b), and have, therefore, to pass the test of reasonableness; and ( 4) that, if s. 5 were to be literally construed so
as to mean that it authorises the restriction on movement after the
leaves were warehoused requiring permits for their transport from
stage to stage until they reached the mazdoors, the entire system of
permits would become unworkable and the restrictions would have
to be held as unreasonable; that such a constructioq rendering s. 5
and the rules unconstitutional on the ground of being violative of
Art. 19(1)(f) and (g) and Arts. 301 and 304 could not have
been intended by the legislature.
Counsel for the State, on the
other hand, maintained that the language of s. 5 was clear and
unambiguous, that it forbade without permit transport at any
stage right upto the stage of manufacture of the bidis and that those
restrictions were the essential part ol the scheme of the State
monopoly a:nd therefore were protected by the latter part of Art.
19 ( 6); and further that even if they were not, they were reasonable
restrictions and therefore permissible.
In support of their rival contentions counsel drew our attention to the various forms provided in the rules as also to rule 4
of the new rules dated February 14, 1966 which repealed the
rules of 1965. We may, however, make it clear that the parties
in the presWlt appeal are governed by the rules of 1965, and
therefore, anything that we say here would not govern either the
construction or the effect of the new rules.
In examining the correctness of the contentions urged before
us the first task is to ascertain what exactly the legislature intqnded
to do while enacting s. 5.
The long title of the Act clearly says
that it was passed for regulating trade in tendu leaves in the public
interest by creating the State monopoly in that trade, that i~ to
say, in the purchase and sale of tendu leaves by the State alone
and not for creating a monopoly in their transport.
To that end
the Act empowers Government to divide the specified area or
areas to which the Act is applied into units and to appoint agents
for different units, and gives a monopoly to Government,
its
authorised officers and agents to purchase these leaves from the
growers at prices fixed by it and makes other provisions to achieve
the said object.
U~er s. 5 ( 1), from !be date when the Act is
brought into force in area or areas as may be notified, no person,
except the Government, its authorised officer or agent in respect
of the unit where these leaves are grown can purchase or transport
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VRAJLAL MANILAL v. M. P. STATE (Shelat, I.)
405
them.
Sub-s. l, thus, imposes a tc>tal ban against purchase, sale
and transport oi teiodu leaves except by the threi: categories of
persons mentioned therein. Under ss. 7, 8 and 9, the Government
has to fix the purchase price in consultation with an advisory com.
mittee appointed therefor and open ~epots w)!ere the growers ·
would sell their leaves to it or to its authorised officers or agents
at prices fixed as aforesaid.
Though s. 5 ( 1 ) clamps a ban
against purchase except by those mentioned therein, explanation 1
permits purchases from Government, its authorised officers and
agents and such purchases ·are deemed not to be in contravention
of the Act. Notwithstapding the ban against transport under
sub-s. 1, sub-s. 2 permits two categories of persons to transport
the said leaves: (a) a ~wer is allowed to move his leaves from
one place to ·another within the unit where they are grown, and
( b) a person who has purchased the leaves as aforesaid either
for manufacturing bidis within the State or for their export outside
the State is allowed to transport under a permit leaves so purchased from <>Qt of the unit where he has purchased in accordance
with the terms adld conditions thereof.
The first exception iunade
to enable the grower to sell his leaves to Government and the
second. is made to enable ilie purchaser to utilise the leaves .for
the two purposes for which he has purchased them.
Under the rules an exporter means a person who sells tendu
leaves to one having business outside the State or who exports
them for the manufacture by him of bidis outside the State.
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manufacturer of bidis includes a persqrl manufacturing them
through mazdoors by advancing to them these leaves or tobacco
or both.
Rules 4 and 6 provide for registration ol growers, manufacturers and exporters, and rule 7 provides for the sale of leaves
purchased under s. 5(1) by Government, its officers and agents.
Under rule 6 a manufacturer and a,n. exporter has to maintain
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accounts of his stock and submit periodical returns thereof in
form H and I showing amongst other things the balance of stockat the date when the last return was made the stock added and
the manner of its disposal iincluding the stock consumed, sold or
rendered useless and ®'troyed. Rule 8 provides for a certificate
of sale to be issued to the purchaser by Government, its authorised
officer and agent.
Undei rule 9 an application for a transport
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permit is to be made in form M aud the permit issued must be in
form N.
Form M provides for giving particulars such as the
quantity of leaves purchased, the UjD!it or units where they ar.e purchase~., the place or places where they are stored, the destination
to which they are to be transported and the place or places where
such transported leaves are to be stored.
Similar particulars are
H
to be mentioned in the permit as stated in form N.
These elaborate provisions in conjunction with the provisions
of s. 5 indicate the extreme jealousy of the draftsman not to lea~
Ll3Sup Cl/69-12
406
SUPREME COURT REPORTS
(1970] I S.C.R.
any loopholes in the oet-work of control enabling anyone to possess
these leaves by illegitimate acquisition or their being smuggled
out In violation of these provisic,ns from out of the units where
they are grown or from tho place where they are warehoused after
!heir purchase.
It is clear ~om s. 5(2)(b), the !111C6 and the
said forms that the intention underlying them all is to prohibit,
except under permit, the movemcint of leaves from the units where
they are purchased to any place outside either for storing them
or for their consumption in the manufacture of bidis or for
exporting them outside the State.
The elaborate treatment and
the clarity of the language of these provisions makes the argument, that they were intended to restrict only the movemeint from
the purchasing unit to the place of storage and that the leaves
would be free for subsequent movement impossible.
The first limb
of Mr. Sen's argument consequently cannot be upheld.
Such a constructiqa, however, raises the question as to the
constitutional sustainability of s. 5 and rule 9 which are the provisions seriously challenged before us.
An identical question challenging the validity of ss. 3 and 4 of the Orissa Kendu Leave
(Control and Trade) Act, 28 of 1961, an Act almost simi}ar in
terms to the one before us, and the scope of the amended clause
6 of Art. 19 came up before this Ceurt in Akadasi Padhan v. State
of Orissa(').
Dealing with cl. 6 of Art. 19 and its impact on
els. (f) and (g) of Art. 19(1) this Court laid down at page 707
cl the report as follows :
"In dealing with the question aoout the precise denotatiQll of the clause 'a law relating to', it is necessary
to bear in mind that this clause occurs in Art. 19 ( 6)
which is, in a se.nsi:, an exception to the main provision
of Art. !9(1)(g). Laws protected by Art. 19(6) are
regarded a! valid even though they impinge upon the
fundamental
right guaranteed under Art. 19(1)(g).
That is the effect of the scheme contained in Art. 19 (I )
read with clauses (2) to (6) of the said Article.
That
being so it would be unreasonable to place upon the
relevant clause an unduly wide and liberal
construction.
'A law relating to' a State monopoly cannot, in
the context, include all the provisiott~ contained in the
said law whether they have direct relation with the creation of the monopoly or not.
In our opinion, the said
expression should be construed to mean the law relating to the monopoly in its absolutely essential features.
If a law is passed creating a State monopoly, the Court
should enquire what are the provisions of the said law
(I) [1963] Supp. 2 S.C.R. 691.
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VRAJLAL MANILAL v. M. P. STATE (She/at, !.)
407
which are basically and essentially necessary for creating the State mqnopoly. It is only those essential and
basic provisions which are protected by the latter part
of Art. 19(6). Lf thiereare other provisions made by
the Act which are subsidiary; incidental or helpful to
the operation of the monopoly, they do not fall under
the said part and their validity must be judged under the
first part of Art. 19 ( 6). In other words, the effect of
the amendment made in Art. 19 ( 6) is to protect the law
relating to the creation of maμDpoly and that means
that it is only the provisions of the law which are inte-
" grally and esse11-tially connected with the creation of the
monopoly that are ·protected. The rest of the provisions which may be incidental do not fall under " the
latter part ol Art. 19 ( 6) and would iirtevitably have to
satisfy the test of the first part of Art. 19 ( 6)."
In that case ss. 3 and 4 of the Orissa Act! were challenged on the
ground that the monopolistic rights to purchase kendu leaves under
s. 3 and the ri~ht to fix purchase price of those leaves conferred
by the two .secuons. · impinged upon the right of the petitioners there
under Art. 19(1).(f) and (g) and that the restrictions imposedi"
by" them were unreasonable and were not saved either under cl. 5
or cl. 6 of Art. 19. The Court held that whereas the exclusive ·
right of purchase cooferred by_ s. 3 was an essential part cit the
trade monopoly which could vaiidly be created under the latter
part of cl. o and was therefore beyond the challenge of reasonableness of restrictiqnts which it imposed, the exclusive right to fix
th.e prices conferred by s. 4 was not, though it may be that such a
power was necessary to effectually enforce the trade monopoly
under s. 3.
Therefore, though the latter did not have to pass the
test of reasonableness, the former had to under cl. 5 and the first
part ol cl. 6, as it imposed a restriction not only on the right
under cl. (g) but alse UID(ier cl. (f). However, on examining the
right of the State to fix the prices, the Court came to the conclusion that the restriction imposed by s. 4 on the growers of Kendu
leaves was not only In their own interest but also reasonable and
rejected the challenge of unconstitutionality of both ss .. 3 aind 4.
A; already stated, the challenge to s. 3, which provided the exclusive right to" purchase and transport was confined only to the
exclusive right of the! State to purchase kendu leaves. No question
was raised regarding the exclusive right of transPort under s. 3.
which prohibited others, save the State, its authonsed officers and
agents, from tr8i!lSj)Orting the leaves from one place to another, and
therefore, the Court did not express any opinion a.~ regards that
part of s. 3. That question, therefore, is not concluded by that
decision and is open for determination.
SUPREME COUltT JtEPOltTS
( 1970] I S.C.lt.
The impugned s. 5 raises in relation to the problem of transport two questiQIIS : (I) whether the restrictions are an integral
part of the trade monopoly it seeks to create, and therefore, free
lrom any challenge as to their reasonableness under the latter part
of Art. 19 ( 6), and ( 2) as regards its interpretation and scope.
It may be rccallcd that in the Orissa case the Court declined to
treat s. 4 of that Act which conferred the exclusive right to fix the
prices on the State as an integral 8j[ld organic part of the trade
monopoly in Kendu leaves but treated it only as effectively abet-
. ting its implemen.tation.
Can an embargo on transport by anyone,
save those menuc,icd in els. (a), (b) and (c) of s. 5(1) and
the manufacturers of bidis and exporters of these leaves under the
permit, be regarded as an integral and organic part of the trade
~nopoly in them, i.e., a m?nopoly in purchas~ng and selling them
m such area or areas to which the Act is applied ? It may be as
stated in the State's counter-affidavit that the trade monopoly
can be effectively implemented only if the movement.of the leaves
is checked and regulated by confining the right of freo movement
to the State and its agents and under permits to the manufacturers
of iildis and the exporters and that if lree movemqat were allowed
there would be loopholes which would suffer illegitimate acquisi-
:tions and sales in leaves smuggled through the areas where they
grow, raising also difficulties in checking the stocks· legitimately
purchased from Government. If a person were to purchase a
quantity of leaves and is allowed to move it freely from the unit
where it is purchased to his warehouse outside that unit and from
there to other points, it might be easy for such a purchaser to
effect illegitimate sales 8IDd purchases and yet show at the same
time the correct stock when checked by the authorities.
It may
also be that without the restrictions of movement it would become
difficult, if not impossible, to identify the stock of a manufacturer
or an exporter when checked in his warehouse as the one which
he had purchased from Government. All this may be true, but is
the prohibition or regulation of transport en integral or esseptial
part of the monopoly without which the monopoly which the Act
seeks to create cannot come into being?
The long title of the Act recites that the Act was enacted for
regulating "the !rade in tendu leaves" by creating a State monopoly
in such trade. Trade in tendu leaves would consist of dealing in
those leaves, i.e., their purchase and sale.
Transport of the leaves
once purchased or sold would not prima facie be an organic
or integral part of dealing in those leaves.
It is something extraneous to dealing in those leaves, something which takes place
after the purchase or the sale thereof is completed and property in
them has passed from the dealer to the purchaser and therefore
does not form part of the trade in that commodity.
That being
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VRAJLAL MANILAL v. M. P. STATE (She/at, !.)
409
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so, the restrictions on their transport contained in s. 5 cannot be
held to be the integl'lll. part of _the trade monopoly but as ancillary
or incidental thereto, made for its effective enforcement. If that
be so, it affects the right of the purchaser under Art. 19(l)(f) to
i.
hold 81Ild to dispose of the goods he has acquired, a right which is
not co-related, as the right under cl. (g) is, with the monopoly
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which the section seeks to create. It foMows, therefore, that such
a provision would have to pass the test of reasonableness under
cl. 5 and the first part of cl. 6 of Art. 19. That would also be
the position in respect of Art. 304(b). But since the requirement
of these provisions is . the same the yardstick of reasonableness
would be common to all these cases. It is well recognised that
c
wnen an enactment is found to infringe any of the fundamental
'
tights guaranteed under Art. 19(1), it must be held to be invalid
.
~s those who support it can brin~ it uincter the protective
provisions of cl. S or cl. 6 of that Article.
To do so, the burden
is on those who seek th!lt protection and not on the citizen to show
that the restrictive;enactment is invalid. (cf. Saghir Ahmad v. The
D
State of U.P.(' )" and Khyerbari Tea Co. Ltd. v. The State of
Assam(').
'.:;_~ • '
That leads us to the next question as to the scope of the embargo qn movement imposed by s. 5. If read literally, sub-s. 1
~aces a total ban on any and every person against transporting the
E
aves, except those only mentioned .in-G!s-. (a), (b) and (c) therein.
•Sub-s. 2 also, if read Jiterally, would mean that an excepti<m is
made only i\n1he. case of (a) a ~wer who can move his leaves
freely but within the unit where
ey 1).ave grown, and (b) a purchaser who has purchased the leaves for manufacturing bidis
within the State or for their export outside the State, but under
a permit and in accordance with its terms and conditions .. SecF
tion 5 read thus, therefore, would mean that except for these two
categories of persons, no one can apply for a permit to move the
leaves from one place to another as if the legislature intended that
thet:;es must remllin where they are when purchased.
Does
i$ ·
· that a person who purchases these leaves for purposes
other than manufacture of bidis or export cannot move them even
G from the unit where he has purchased to his place of residence
or business ? Tbat WOllld appear to be so because the provisiqns
for a permit apply only to the manufacturer of bidis and the
exporter and to no other purchaser. That manifestly could not
have been the intention of the legislature, for, the leaves being
perishable, they are liable to get destroyed if their movement is
H
totally forbidden.
Quite apart from this consideration, a mere
literaly or mechanical CODStruction would not be appropriate where
(1) (19'5) I S.C,R. M.
(2) [1964] S S.C.R.975, 1003.
410
SUPREME COURT REPORTS
[1970) I S.C.R.
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 construcLon
have to be kept in mind ; (I) that courts generally lean towards
the constitutionality of a legislative measi.ce impugned before t:1c:m
upon the presumption that a legislature would
not delibe1 a.d;.
flout a constitutional safeguard or right, and (2) that while ..:onstruing such an enactment the court must examine the object :i..'!J
the purpose of the impugned Act, the miscnief it seeks to proven:
and ascertain from such factors its true scope and meaning.
The
object of the Act clearly was to regulate trade in tendu leaves 'r.
the public interest and for that e,nd to create a State monopo11
so that the purchasers ol these leaves may not exploit the need
and th~ poverty of small growers and pay the least possible price.
The legislature thought that it was in the public interest to entrust
the entire trade to the State who would fix reasonable prices in
consultation with an advisory committee and make at the sarr.e
time compulsory for the State to purchase the entire stock which
the growers would offer for sale at those prices.
Cqnsidcring rhe
object of the Act, it cannot be conceived that upon the assump·
tion that such a monopoly was in the public interest the exclusive
right of the State to purchase and sell these leaves is unreasonable.
But the question as regards their transport is far from
easy of solution.
It may be that free movement of leaves even
after they are sold to merchants wouid
create difficulties
in
effectively impl~menting the intended monopoly in their trade or
that such free movement would make checking of illegitimate
transactions in the leaves difficult.
But then it is difficult to conceive of a monopoly in this particular commodity, as in others,
without a,ny likely loopholes whatsoever.
Can the State, therefore,
to plug all such loopholes pass a measure which, according to the
appellants, imposes unreasonable restrictions and which result< in
stultifying thei; business ?
There is a strong school of thought
which believes that monistic tendencies in economics spell stagnation and that pluralism is as much desirable in economics as in
politics and other fields of life.
That may or may not be correct,
but take the present case as an illustration.
According to the
appellants, they manufacture as many as 1 ! crores of bidis a day.
They have established a net-work of branches in several areas of
the State.
Wherever they purchase the leaves they have to be
moved to their warehouses outside and from there to their branches
and then to the ,attedars who undertake to have
bidis rolled
through mazdoors to whom they in tum distn"bute tobacco and
these ]eaves supplied to them by the appellants.
Even according
to the Divisional Forest Officer there were as many as 6 or 7 thousand sattedars in Saugor district alone with whom manufacturers
of bidis had c:mtracts as mentioned above
The number of maz·
doors whom these sattedars employ fof rolling bidis would certainly
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VRAJLAL MANILAL v. M. P. STATE (She/at, J.)
411
be considerable.
We were told that practically every household
in villages scattered from one another engages itself in bidi-rolling
labour.
It is also conceivable that in some of the households
not only the adults but the ~ors also would be engaged in this
work. If the movement of leaves from stage to stage were to be
so regulated as to require permits at each stage it is not difficult
to imagine that considerable inconvenience to all engaged in the
business of manufacturing bidis would inevitably ensue.
The
correspondence on record shows that at one time even the Divisional Forest Officer was of the view that it would be impossible
for the staff under him to cope with the work of issuing permits at
each stage of the movement of the leaves and theref<:)re permitted
the branch managers of the appellants to issue permits whe;n leaves
were moved from their branches to the sattedars.
That relaxation was, however, cancelled as in his view the branch managers
began to move the leaves in bulk contrary to his intention in
granti,ng that relaxation.
' 1
In spite, however, of the inconvenience which such :a system
might result in, there can, at the same time be little doubt, and
even Mr. Sen agreed, that sonie kind of check on movement is
necessary1 for, without it the monopoly created by the Act would
not effec!Ively flljllction. In our view a permit system which regulates the movement ol leaves purchased by a manufacturer @f bic'is
from the unit where they are purchased to his warehouse, then
to the branches and to the sattedars cannot upto that stage be
regarded as unreasonable in the light of the object of the Act, the
economic conditions prevailing in the State llllla the mischief wliich
it seeks to cure.
At the same time to expect the manufacturer to
get_ permits issued to his sattedars for distribution by t¥m to the
innumerable rnazdoors of comparatively small quantities of these
leaves would be not only unreasonable but frustrating.
The
various chec.lcs imposed under the rules on the maarufacturer by
way of his having to maintain stock registers, submit periodical
returns, the right of inspection of the authorities etc. are sufficient
to reasonably check transactions contrary to the Act. But, considering the extraordfuary incqnvenience which would be caused to
the manufacturer and balancing that with the mischief feared by
the State, we think that when s. 5 was enacted the legislature
could not have intended, that the manufacturer should also obtain
permits in respect of th~ leaves distributed to the vast number of
mazdoors for rol!ilng the bidis by the sattedars who are themselves
considerable in number.
Though, therefore, s. 5 is couched in
apparently wide language, the very object of the Act. as disclosed
in its Jong title, contains inherent limitations ag:iinst an absolute
or a!ti"Strictly regulated a ban as it would at first reading of the
section appear.
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SUPREME COUltT llBPORTS
[ 1970] 1 S.C.R.
In our view, readings. 5(2) along with rule 9 of the said rules,
what they are intended to require is that a manufacturer must
have a permit to move the leaves purchased by him from the
unit or units where he has purchased them to his warehouse outside and from there to his branches and also when he transports
them to his sattedafs.
But, DO such permit was intended to be
necessary wht;n the leaves arc distributed for the manufacture of
bidis by these sattedars to the mazdoors whom he employs.
A
construc•;on so limited in its sweep is commendable as it is consistent with the object of the Acu and is also in harmony with
els. 5 and 6 of Art. 19(1) and cl. (b) of Art. 304.
Regarding the ban against movement of old leaves contamed in the
order dated June 4, 1965, there can be no difficulty as it is conceded that .,Jd leaves in the context mean those which were in
stock when these rules came into force and not the balapcc of
leaves left unconsumed from year to year.
So construed, the
restrictions against free transport cannot be held to be unreason·
able and the validity of s. 5 and rule 9 as also the order of June
4, 1965, except to the exte;n\ of its requiring a permit for distribution to the mazdoors, cannot be successfully challenged.
SO
far as the order dated October 12, 1965 is concerned, it was a
mere cancellation of a concession and such cancellation cannot
be challenged as a restriction, much
less as a:n
unreasonable
restriction.
In the result, subject to the obscrvatio~ hereinabove made,
the appeal is dismissed, but in the circumstances of the case we
make no order as to costs.
Y.P.
Appeal dismissed.
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