Dava Son of Bhimji Gohil versus Joint Chief Controller of Imports & Exports

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·'

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2 S.C.R. SUPREME COURT REPORTS

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73

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DAVA SON OF BHIMJI GOHIL

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v.

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JOINT CHIEF CONTROLLER OF IMPORTS & EXPORTS

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(B .. P. SINHA, C. J.,. K. SuBBA ltAo, N. RAJAGOPAI,.A AYYANGAR, J. R. MuDHOLKAR and T. L .. VENKATARAMA AIYAR, JJ.)

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, Export Control-Manganese Ore-Notifications canalising expo-rt and preventing new entrants from exporting-Oonsti~ tutionality of-State Trading Corporation-Monopoly of export creatd in favour of-!! infringes fundame.ntal right to carry on trade-Notification dated May 26, 1958-Exports Control Order, 1958-lmport and Exp6rts (Control) Aot, 194.7 (18 of 1947), s. 3-Constitution of India, Art.s.19 (1) (g) and 19 (6).

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There was little internal demand for manganese ore and it was extracted mainly for exporting out of India, TJlough previously there was no restriction on the grant of export licen' ces from 1956, the Central Government started controlling and restricting the export of manganese ore. On May 26, 1958, the Central Government issued a notification which contained the policy statemen.t for the period July 1958 to June 1959 under which export quotas were to be granted only to established shippers and mineowners who had exported from 1953 onwards and to the State Trading Corporation. Mine (\wner's, like the appellant who did not have an} export performance in the earlier years were excluded from the scheme. They could sell their ore only to the established shippers are to the Corpora· tion which they could do only at. unremunerative prices. By sub~equent policy statements the export was canalised entirely through the Corporation. Section 3 of the Imports and exports (Control) Act, 1947 empowered the Central Government to make orders restricting or controlling the imports and exports of goods. The Central Government made the Exports Control Order, 1958, cl. 6(h) of which empowered the Central Government and the licensing authority to refuse to grant a licence "if the licensing authority decides to canalisc exports through special or specilized agencies or channels". The Noti· fication of May 26, 1950, was issued under cl. 6(h). The appellants contended: (I) that the withholding of the right to engage in the export trade from a class of mineowners consti·tuted an unreasonable restriction on their fundamental right guaranteed under Art, 19(1)(g), (II} that cl. 6 (h) ofthe order was ultra virt! the Central Government as s. 3 of the Act

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	- •··•........ ' -- -:"k.. . ''/ 74 SUPR~~IECOURT REPORTS [1963] ·
196Z D(j,'!Ja''"ojBhimji Uohil v. JaitJt_Chi~!Con'roller •fImp•rls.IIExports_ · ·	.permittedittopfacrestrictionsonlyongood:!andnotonthe personswhomightparticipateintheexport,and(iii)thatthe notification bywhichcanalisationofexportswasaffected wa.. outsidethecontempiationof".agencyandchannelunder cl.6(h). . · . .• . • · Held(perSmha,C.J.,Ayyangar,MudholkarandA1yar, 'JJ.)thattherestrictionsandcontrol imposedontheexportof manganeseorebytheCentralGovernmentwerelegalanddid notoffendt._l9(1)(g).	'>-- ,. "'-
· - .	Therestriction_or_controlintheformofchannellingor canalisingthetradewasnotoutsidethelimitationswhich "'m:ghtbeimposedonexporttradingbys.3oftheActand consequentlycl.6 (h)oftheOrderpermittingcanalisationof exports waswithintherulemakingpow:roftheCetral Government. Thepowertoimposerestrictions wasnot confinedtogoodsbutextendedtopersons also.The.canalis·. ingoftheexportsthroughtheestablished shippersandmine- . ownerswasunobjectionable;canalisingthroughtheState TradingCorporationandtheprogressive increasethrough thecorporationwas areasonablerestrictionintheinterestsof· ·thegeneral public. Theobject·orthese restrictionsand controlwastoenable·aregularsupplyofuniformqualityof theore_to_theforei:;n buyerssoastoensuretheoptimum earningofforeign exchangebythecount!yandthiscould bestbeattainedwiththeCorporationasthemainagency engagedinthetrade:TheStateTradingCorporationwas a"special"agencyorchannelascontemplatedbyd.(h)and thecanalisingcouldbedonethroughit.Apedalagency isonewhichismorelikelytoachieve·theobject.thanother agenciesortoachieveitinalargermeasurethanothers. Canalisingncessarilyimpliedtheexciusionofsome groups, andifthecanalisingwasvalidtheappellantcouldnot complainthathehadbeenexcludedfro:r;ntheexporttrade. _Per_SubbaRao,J.-TheNotifitfonsandpolicystate• mentswhichdestroyedthetradeof·mineowners likethe appellantdidnotimposereasonable restrictionsontheir . fundamentalrightsand·violated.Art.19 (1)(g)..The creationof,amonopolyornearmonopolyortheexport.of man.,.aneseorein. favouroftheStateTradmgCorporauon couldonlybeachievedbyalawmadeinconformitywith· Art.19(6}(ii)andnotbyadministrativeactionlike issuing:- .ofnotificationsandpolicystatement. Thepowerconferred . ontheauthoritiesunderd.6(h)oftheOrdertocanalise .exportsthroughspecialorspecialised. agenciesorchannels· waswellwithinthepower conferredon-theCentralGovern· mentbys.3oftheAct.Further,theStateTradingCorpo.··· rationwa!!la"special"arencywithinthem;nin~rofcl.6(h).	.,t --·

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2 S.C.R. UPREME COURT REPORTS 7.) But the canalising had to be done in such manner that all 19GB persons engaged in the trade could participate in th export DGtJa srm of Bhimjt of the ore and no one was completely excluded. . Gohil CIVIL APPELLATlll JURISDICTION: Civil Appeal Join! CMefController •f Imports ~ Exports No. 226 of 1961. Appeal from the judgment and o~·der dated October 22,. I9.j9, of the Bombay Htgh Court (Nagpur Bench) at Nagpur in Special Civil Application No. 63 of 1959. A. S. Bobde, G. L. Sanghi and Ganpat Rai1 for the appellant. ' G. K.. Daphtary, Bolicitor-Genual of India, Bishan Narain and P. D. Menon, for the respondents. 1962. April 16. The Judgment of the Court was delivered by AYYANGAR, J.-Thi~ appeal comes before us by virtue of a certificate of fitness granted by the Nagpur Bench of the High Court of Bombay under Arts. 132(1) and l33(l)(c) of the Constitution. It' arises out of a petition filled by the appellant under Art. 226 of the Constitution bef?re the High Court of Bombay at N 1gpur impugning t.he constiw tutional validity of certain notifications and direct· ion~ issued under tbe I :nports and Ex: ports {Control} Act, 1947, and the Export Control· Ord~-r. 1958, fl'amod thereuuJor and substantially prM·ed tba.t tT1e Joint Chief Controller of Imilorts & Exports, Bombay impleadeu as the first respondent should be directed to con ~ider the application of the app· clln.nt for the grant of a licence to enable him to export certain manganese ore which he had won from his mines, without reference to the impugned notifications. This petition was dismissed by the learned Judges of the High Court who, howevN·, -"( granted the appellar1t is certificate which has enab\ led him to file this appeal.

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76 SUPREME OOURT REPORTS [1963]

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A few facts ar~ necessary to be stated to "'PPDoJv, 1rm of Bltimjc reciate the exact grievance of the petitioner and Goh.ti v. the grounds upon which the notifications etc. issued Joint CAi~,t Crmlroller h.v government are stated to contravene the Con- •! 111"' Ex;oru stibtion and in particular to infringe the freedom ~~arJ. granted to the appellant under Part III of the Constitution. The appellant is a lessee of certain manganese mines in two aroas of Madhya. Pradesh. The lea,es are stated to have been ant€d to him in t.he _years l953 for a period of 20 years each, with an option for renewal if the appellant so desired, under the Mineral ConcoSAion Rules 1949, for I , '. a like period. It is an admitted fAct that the in· ternal demand for manganese ore ~ India is very inconsiderable, eo that the ore i extracted mostly for the purpose of being xported out of India. Having regard to the date when thu appellant obtained the mining leases, he couli ,ot have won any appreciable quantity of the metal rluring 1953, nor, of course, could he have exported any quantity of the ore won by him in or prior to the year J 963. It is now noes~ary to set out the history of the restrictions on the export of manga"tese ore from 1953 up to tho date relevant to the petition to understand the points sought to be made on behalf of the appellant. Prior to 1953, i. e., at a time before tbt- appellant entered the managanese ore business, export of manganese ore was freely licensed, i. e., tho commodity was subject to no restriction a.s ragards export, nor wa111 any control exercised by government on the allotment of wagons for the movement of mangane:~e ore. As the export of the ore began to expand from that date, the Railways found themselves unable to meet the increased demand for wagons and were foroed to regulate the appellant of euch wagons. The government also took a hand in regulating the

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! S.C.R. SUPREME COURT REPORTS 77

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• - movement of wagons by evolving a. system of regia .. 196~ tration of shippers for whom prioritiy in the allot- Dat1a son nf Bhimji ment of wa.O'ons was ensured. It has to be a..Jded Gohil · that this re0gula.tion and conbrol over wagon allot- J nt C.'ti4 v ConlroUn ment a.nl wagon movement wa.s co-ordinated with 11j Imports th ExptJrt.s and corre]ated to certain changes which were elfeo- .i.yyongtz,. J. trd fo reg11lating the export of the commodity itself. 'Seotion 3 of the Imports and .Exports (Contl'oll Aot, 1947 (to be referred hereafter as the Aot) .) enacts : t ua. Powers to prohibit or restrict imports and e:x:ports--(1) The cntrA.l GnvP-rnment say, by under publisherl in tlH'· Official Gazette, make provisions for nrohi,.,iting-, restricting or otherwise ControlJin.g, in all cases or in specified classeR of cases, and subject to such exceptions if any, as may be · made by or under the order :- . { 1) the Import, export, carriae <loastwise or shipment as ships stores of goods of amy specified description.

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(b) the bringing into any port or place in India of goorls or any specified description intended to be taken out of India. without being reserved from the ship or conveyance in which they are being carried.

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(2) All goods is which any order under SIIbsect.ion (1) applies shall bA deemed to be goods of which the import or expnrt has been prohibited or restricted under seotion 19 of the Sea. Customs Act, 1878 (VIII of 1878) and all the provisions of that Act shall have ~ffect accordingly. except that section 183 thereof shaH have effect as if for the word 'shalr

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- 'ihere in the word 'ma.y' were substituted.

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J98t D11d sotr u/ n;u·,.Ji Oohil •• Jira' CM,Jr:orrcr~l/u oj lmptWrs d: Exporls A.1) Ull~~, J.

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78

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SUPREME COURT REPORTS [1963)

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(3) Notwithstanding anything contained in the aforesaid Act, the Cent-ral Govern. ment may, by order published in tbe Official Gazette, prohibit, restrict or im· pose ~onditions on the clearance, whet.her for hnme consumption or for shipment abroad of a.ny goods or class of goods imported into India." ·

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Under the powers conferred by this section the Cen· tral 1958 Government iseue (or shortly the Contro) Order), cl. 3 of· which the Exports Control Ordtr, ~· provided that "no person shall export any goods of the des('ription specified in Sch. I except under and in accordance with a licence granted by the Central GoverPment or by any officer specitied in Sch. II." Manganese and iron ore _were specifitd in the fin t schedule. Claase 6 of this or dcr seta mJt the grounds upon which the Central Government or the Chief Controller of Exports and. lm· porta may refuse to grant a licenoe or direct a licensing authority not to grant a lioence. In view of certain points urged before us it would be oonveni· ent to set out this clause in full :

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''6. Refusal of licence,-The Central Government or the Chief Controller of [mports and Exports ma.y rf'fuse to ~rant a license or direct any other licensing authority not to gr&.nt a licence :-

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(a) if the appHcation for the licence does not confers to any provision of this Order;

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(b) if such application contains any false, or fraudulent or misleading statt·ment;

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(c) if the applicant uses in suport. of the application any document wh1ch IS fale or fabricated or which has been tempered with;

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(d) if the applicant on any occasion has .._ tt>mpered with an export li~nce or has

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2 S.O.R. SUPREME COURT REPORTS 79 exported goods without a licence where 1962 it is necessary, or has been a party to Da~q son Q/ BJ.imji any corrupt or fraudulent practice in his Gohil .... commercial deallngs; .1 oint Chi'/ Controiltr oj I m/J01'1S &: Expo' Is

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(e) ifthe applioatictn for an export licence is defective and does not conform to the ApongarJ. prescribed rules;, t

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(f) if the applicant commits a breach of the Export Trade Control Regulations;

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{g) if the appellant is not eligible for a licence in accordance with the Export Trade Control Regulations;

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(h) if the licensing authority decides to ca.na-

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- li~e exports through special or specialized agencies or channels;

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(i) if the applicant is a partner in a partnership firm, or a director of a private limited co~pany, which is for the time being subject to any action under c1ause 8; -

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{j) if the applicant is a partnership firm or a private limited company, any partner or director whereof, as the case may be, is for the· time being subject to .any action under clause 8."

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The first restriction on tht'l export of maliga-

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nee and iron ore was imposed in June, 1956 when the Ministry of Commerce and Industry issued -a public notice on June 26, 1956, settin!.! out their policy as regards export during the half year July to December. 1956.. After reciting that the government were oonv_inoed tha.t the then existing trading mechanism as regard the export of ores was inade· quate to code with ·the developments which had t&ken place in tbe purchasing countries, it went on to add that persons who entered into contracts

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80 SUPREME OOURT REPORTS £1003)

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1961

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with foreign buyers bad been unable to fulfil their D;u •on of Bhimji commit-ments whirh had caused incovenienoo to Gohit foreign huyors and so undermined the latter's con· •• Join I Citl Cr ntrolltr fid(>nce in thf' capscity of this country to m!Lintain •f lmporiJ. &: Elfporl, an assured lint' of supply. In order, thert·fore, to overcome the obstacle in tho wa.:l' of tmg· menting foreign exchange earningi! from the t>xpert of thAse ores, the Government d~!clared that they would help in reorientating t.be trading jn ort's on more rational lines and that fur this purpnse they proposed to ca.nalise the export of ores in a. progrPsively increasing measure through the State Trading Corpora\ion whil'h would in its turn rely on the minin interests in the country and usc the AXisting trade mechanism to the oxtent prnctica.hlP.. For these reasons, thl·y announced that a. ref?ula.tion would take place of 1he t>xpert. of the~ ores d•ning the half yt•ar July· December, 1956 through thre~ classes of ex:por· ters:

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( 1) Established .shipper.<~ who would be granted r'l:p()rt quotas on the avf'!rage of the quantities exported during tho years 1953,' 1954 and 1955.

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.-;

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(2) M·ineowrz.ers ba.sf>d on a annual average of the quantity of ore on which. roya.lt.y was paid during the calender years 1953, 1954 and 1955, and

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(3) The State Trading Corporation which would be given a. quota on an ad lwc bagis. It iR onl.v necessa.ry to mention that the State Trading Corpo. ration which iR a. Corporation owned and rontrollf'd by the Union Government came i11to existf>nce by. registration under the Indian Companks Act in Ma.v, 1956. Rail transport facilitie~ co.extcnsive with the quota granted. were also a~sutcd for those to whom · quotaB were granted. There were clarifications .and un1mbstantia l varia1 ions of this Press Note to whiJh, however, it iE< not

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2 S.C.R. SUPREME COURT REPORTS 81

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necessary to refer as they are not material to the points now in controversy.

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It will be noticed that the control thu1 exercised and the restrictions th.us imposed, mineowners who had not t-ntered the field before 1953 were excluded from the grant of any export ·quota. By a public notice dated September 4, 1956, th~ Ministry of Commerce, however, announced that the case of these "newcomers" was receiving tbeir 1^{attention andthat an announcement-in that} rega.rd would be made in due course. ·

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1962 Dorus sort of Bltimji Gllil v. J oi'lt Chief OoJCtrlllr ofimports &l Ex;011s

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' The same policy 'and the same basis of allocation was continued for the next half year Janua.ry to June 1957. For the period July, 1957 to June, 1958, (the government having now started pursuing the policy of announcing their quotas for a year instead of for six months), a Press Note was issued on ·June 1, 1957. by which exporters and . mineowners wer~ allotted a quota equivalent to 60 per cent of their exports made in 1958 or 1956 to be selected by them. The quota thus released was made available for being allotted to the State Trading Corporation on an ad hoc basis and the Press Note added: ''The State Trading Corporation will be allotted. in adequate quota to enable them to maximise the exports of manganese: ore. The Corporation are being advised to seek: the co-operation of established trading and mining interest ·to make this effort a success,'. Here again, certain unsubstantial modifications were made by further Press Notes but to these we shall not refer.

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As regards the next period July 1958 to June 1959, the policy·deoieion of the government was.indica.ted by a Public notice issued, on May 26, 1958. In the course of this Press--statement the Gov":ernment of India stated that they had been keeping under constant review the working of the

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82 SUPH.EME OOURT REPORTS [1963J

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1161 policy announced by them under the Preas Notes to which we have already referred, and that they Dt1H ••~ of Bhimji Go/Iii had come to the conclusion that tho long-term v. interests of Indian Manganese ore would be better J(lilo' Chvf Conttolltr tJj lm;tnts &: Exlort; served if the export policy wero to discourage fragmentation of quotas and encourage bulk contract-ing, movement, and shipment of ores. A~ the same time, the Governmont expreased their keenness to maintain oontinuity in the export arrangements to the extent practicable. Having regard to these factors, they went on to state: ''(" 1

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''Government have decided that for the period July 1958 to Juno 1959, the export of manganese ore will be regulated as follows.

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(i) The es~a.blished shippers, the mineowner. exporters and the state Trading Corporation will be given &n allotment of quota for a quantity oqual to the quota. for 1957-52.

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(ii) Firms and parties whose individual allotments are small aro advisod to form Co·operative or limited companios. 11

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At the date when the writ petition out of whioh this appeal arises was filed, tho polioy.etatement of May 26, 1958, was in force and it was the validity of the restriction and control exeroised by it that waa challenged as unconstitutional in the petition filed by the appellant. The position at that date may be summarised as follows:

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(1) From and after July 1956 the export of manganese ore had been controlled or restricted.

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(2) The restriction had taken the form of allotment ~f quotas for export granted to: (a) established exporters, i.e., comprising the oategory or these who had exported from 1953 onwardfl, (b) mine-owners who had simiJar1y exported the ,..

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A -

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2 s.c.:R. SUPREME COURT REPORTS 83

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1962

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ore won by them with a similar limitation as to the year when they should have exported, and (c) The State Trading Corporation which was _granted an export quota on an ad hoc basis to cover every other quantity which could be exported and for which a foreign market could be found. Traders &nd mine·owners who had not any export performance to their credit in ear1ier years were excluded from the scheme and though the government were repeatedly stating in their public statements that the case of these persons termed "newcomers" would be considered, this had never been done. The appellant fell within the last category and was not eligible to apy export quota and therefore could not export. The result was that the ore won by him had either to be sold (a) in the internal market which, as stated earlier, was a very restricted one, tbis because the steel producing concerns which were the principal or practioalJy the only consumers of the ore in the country had their own mines from which the ore required by them was won~ and (b) in the absence of an internal market the mined ore had to be sold either to established shippers' or to the State Trading Corporation. In regard to established shippers, their quota of export was being progressively reduced, so that their demand for ore.· natura1ly shrank and unremunerative price had therefore to be offered by. the ''newcornersu to induce them to lmy. The only other . possible buyer was the . State Trading Corporation which was being granted quotas on an ad hoc basis sufficient .to enable it to get all the good ore which it might buy for whioh there might be a foreign buyer. In regard to the State Trading Corporation, there was an allegation made by the appellant, by reference to a. circular issued by the Corporation on April 20, 1957, that the terms offered for the purchase of ore were

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~ unfair to the sellers because of the excessively large ()OJDmission it demanded. It should; however, be

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s1n of Ef.i,, ji G•hll v. J oinl Chief Conlrelkr of Imports d:~Ex;ow

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84 SUPRElJE CUORT REPOR'l'S (1963]

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1962

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stated tha.t tho State Trading Corporation was not D, v, .- cf Bhimji implca.dc<.l a8 a party in the writ pet.ition in the Gohil High Court, nor any reliof sought on the ba.ais of J oir.t Chl, v. j Contr Hff that allegation. Tho circumstance was relied on of Jm~ts d: 1:.\po•ls mel'uly to emphasise the hardship caused to the appellant from the exclusion of those who had no expert performance in the years which were fixed a.a the basic years for the allotment of an export quota to mineownera. The State Trading Corpora· tion being owned and controlled by the Central Government is an agency or instrument of govern· ment for effectuating its commercial policy. If in the pt·rformance of its duties as such publio authority it acts in any improper or unfair manner it would be subject to the control of the Courts but as no relief basod on such a complaint was olaimed by the appeJlant, it is not necessary to pursue the point or examine its merits.

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The case of the appellant has to be judged on the basis of two admitted features resulting from the policy statements of Government we h~ve set out earlier : (1) That mineowuers who were "newcomers", i. e., not having export performance in certain basic years, were excluded from direct participation in the export trade, but these pe-rsons had, in view of the practical absence of an internal market for manganese ore to sell their gooda to others who had been granted facility for export. • (2) That the eat<>gory of persons to whom they could sell their ore were two (a) Established shippers, and (b) The State Trading Corporation, and with the nature of this market as already described.

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The question raised for consi(;lera.tion by the appeal is whether the withholding of the right to engage in export trade from this clasa of mineown· ers constitutes an unreasonable restriction on their right to carry on buBinoss guaranteed by Art. 19 (I) ,. {g) of the Constitution.

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2 s.c.R.. SUPREME COURT REPORTS 85

¶72

Pausing here we might put aside one matter

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which is beyond the pale of cont.roversy, and that is that the constitutional validity of A. 3 of the Imports .& Exports Control Act, 194,7, wl1ich forms as it were the ultimate root from whir.h tlw impugned notifications and executive actions spring is conceded. The points urged by learned. Counsel for the appellant were two : (1) Clause 6 (h) of Exports Control Order 1958, was beyond the rulemaking power under s. 3 of the Imports & Kx:port

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) Control Act, 1947, (2) Even if cJ. 6 (h) and the ''canalising" of exports through "special" or "specialised" ageneies or channels be valid, the notifications by which the canaJisation was effected are ~mtside the contemplation of the 'agency or channel' under cl. 6 (b).

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1962 D.JV4 ,·on Dj Bhimji Oohil v. Joint Chi1j Con troller of Tmj1orls & E;rpt.rP A_1yangt1rJ.

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Before proceeding further it is necessary to

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mention that. the constitutional validity of cl. 6 (h) of the Export Control Order 1953 was not disputed before us, the controversy in relation to it having

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·~ been conolndd by the decision by this Court i Glass Chaton.s Importers and Use1·8 A.ssom'ation v. Union of India (¹ ). The argument in support of the contention that. cJ. 6 (h) was beyond the terms of s. 3 of the Act was briefly this : Section 3 of the .Act by its language, its setting and context permits restrictions or controls only in rrgard to goods which are the subject-matter of export and does not permit restrictions being imposed on per·

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• sons engaged in the export trade. In other words, > the Central Government is enabled by a notified order under s. 3 of the Act (a) to specify the goods in respect of which the control or restriction is to be exercised, along with (b) a matter which this necessarily involves, viz., the quantjties that may

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'- \ be exported, ( c} the quality of the goods that might

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-- pass out of the country and (d) as regards the. destination to which they might be exported. But

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·~ the restrictions could not extend any further. An (1) A•l•R· 1961 S.C. 1Sl4,

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86 SUPREME OOURT REPORTS [19631

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19G2 order under s. 3 cannot make provisions restricting f>11112 s.TI •f Bflimji the persons who might pa.rticipte in export trade, - c;.,.,z restrict either their number or impose qualifications v. which they must satisfy before being permitted to J ,;"t Cili1/ c.,.trQI/tr •f 1m• I,.{: .f)(~rl< export. Be1ides, even if a notified order might -- validly prescribe the persons who might participate in tho export trade, still it did not authorise an order which would so canalise or channol the per· sons who might engage in tho export trade aq practicaJly to create a monopoly in favour of any ,/ particular person or group which is \vhat r. o (h) 'v has effected.

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The argument was put in a. slightly different fGrm by reference to the provisions of Art. 19 (6). Article 19 (I) (g), after guaranteeing to all citizen8 the right to carry on any occupation, trade or business, had gone on to provide in cl. (6) tho rest:ictions which may constitutionaJly be imposed on the right thus guaranteed, and tho clause as it now stands after the first Amendment of the Constitution reads, to quote the material words :

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"Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposea, or prevent the State from making any law imposing, in the interests of the ~E>neral public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of a.ny existing law in so far as it relates to, or prevent the State from making any law relating to,-

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(i} ---· ----

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(ii) the carrying on by the State, or by corporation owued or controlled by tho StatR., of any trade, bu.sinese, industry or service, whether to the exclusion, complete or partial, ~ of citizens or otherwise" •

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2 S.C.R. SUPREME COURT REPORTS 87

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The effect of the policy statements and directions 1962 to the licensing authorities issued by virtue of the

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: .. D'vo <On of Bhimji ' powers conferred by cl. 6 (h) of the Export Control Gohil Order, 1958 had resulted in the creation of a v. monopoly or a near monopoly in favour of of Joint Chief Oontrolld 1 mports &1 Exports the State Trading Corporation. It was urged that the creation of such a monopoly could: on the language of Art. 19 (6) (ii) be effected only by the ~tate making a law in relation

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J to the matters there set out. Neither the Export &

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, --J Import Control Act, 194 7 nor even the notified order made there under-The Export Control Order, 1958 could be said to be "a law relating to the carrying on by the :::lta.te of any trade, business, industry .or service,, and therefore the validity of the preferen. tial treatment granted to the Htate Trading Corporation could not be justified or upheld by reference to t}le amendment effected to cl. ( 16) by the Constitution (First Amendment) Act, 1961. So much could be accepted. But this, however, leaves for consideration the question whether the provision now impugned could not be sustained as "a reasona. ble restriction" on. the exercise of the rights conferr. ed by sub-cl. (g) of Art. 19 (l) in the interest of the general public i. ·a., on the opening words of para 1 of cl. (6). But as pointed out already~ the constitutional validity of cl. 6 (h) in so far as it permits the canalising or channelling of the export trade is no longer res integra. this having been upheld in the Glass.Ohatons case C). In the circumstances, the very narrow ques-

¶94

tion for consideration is whether the restrictions and conrol for which provision might be made by a. 3 would not include a provision for canalishig the trade in any particular commodity. We are clearly of the opinion thtt the restriction or control in 'the form of channelling or Canal ising the trade is

¶95

~ not outside the limitations wbic~ might be imposed OJl ~ ~) ",qt. t$61 s.c. 1514.

¶96

SUPREME COURT REPORTS [1963] 88

¶97

1962 export trading by 8• _3 ad ha t consequenly cl. 6(h) in its present form Is wtthm the rule-makmg power n.vos•n of Bimji conferred on the Central Government .bY: B. 3 of the a~~·l Act. The argument that the restr.ICtxon~ which Joint CsrJControll<r ld be imposed or the control WhiCh m1gbt be _of ImpiJTls &: Exports_ COU exercised on exports by or ed rs J?a. d e un d er s. 3 of A):l~"t"' , the Act could not extend to restnctwns on persons who might be permitted to (>Dgage ·in the export trade has only to be st?-ted. If the quantm of the . export in a comrood1ty could be restncted, the control that would effectuate this must necessarily extend to the persons engage<;! in or . desirous of eno-agin(J' in the export of that commodtty and this wo"'uld _a0 fortiori_ be so, if the restriction ta.kes the form of a prohibition of exports in a commodity altogether. If thert'>fore the control or restriction could legally extend to the persons who are engaged in the trade; it would appear to follow as a. logical step that the restriction might take the form of classifying tho persons who might particip· ate in the trade- and the conditions aubjoct to which any particular class might be permitted to do so. It would be a. matter o( policy for the Government to determine, having regard to the nature of.the commodity and tho ciroumsta.uces attendinl7 the export trade in it, to lay down the basis -fo~ the clasaification botweocn groups and fix: their relative priorities eto. When cl. 6(h) permits "ca.na.lisinl7" or th~ ··hannelling" of exports through se leotd agencies 1t d_oos ~ot ~o more than make provision for the clastHficatwn mto groups eto. which but one of the ~o des which the ''control" under s. 3 of the Act mtght assume.

¶98

'

¶99

_ Th.e nex.t point to bo considered is whether the . . ohficatwns li!IIUocl. by which ( 1) tho export trading m maugn.neso oro l!i confined to three o-roups of !1e;sons ungagt:d irt tho trade, viz., (a) etablished ~ppers, _(b) mme-owners, and (o) the tate Trading rr>rat.iou, tho two former being allotted 'ro

¶100

2 S.C.R. SUPREME COURT REPORTS 89

¶101

based upon the export effected by them during -- J96Z certain basic years, (2) th-:; progressive reduction in DiJDtl son of B~Jim

¶102

.; the quota of groups (a) & (b) with a view to enable Gohil tha available export business to be handled by the v. Joint Chi,f ConU'olln

¶103

State Trading Corporation, and (3) as a necessary 4 Imports rh &fmts result of the above t·he elimination frcm the export trade of the class k1iown in t.he trade as unew- dyy1111gar J. comets" was permitted under cl. 6(h) of the export Control ·Order, 1958. It would be seen from the above that there are two grievances of the appellant which are inter-related: (1) The first consists in the complaint regarding the quota allowed to the established shippers and mineowners who had an export performance during a basic year. J..Rarned Counsel however, did not put this forward as any serious grievance because persons falling within those already in the trade and the appellant who wants to come into the export trade could not legitimately ·object to those already in it being

¶104

t . allowed facilities 0r licences for effecting exports. ~. In his petition before the High Court the appellant rajsed a complaint that the basic years fixed in the policy-statement were arbitrary but the fixation of any year must be so, and if the Government fixed as a basic year, a period three years before the announcement of the policy, i.e., took into account performance within a period of three years before that date, we do not see · any uureasonableness or arbitrariness about it. (2) It waR in regard to the inclusion of the State Trading Corporation among those entitled to export and tho increasing quota given to it on an ad hoc basis without reference to any antecedent performance that the main attack wa.s directed and it was this that learned Counsel stated alllounted to a monopoly which was not countenanced hy the law. It will therefore be sufficient for us to confine attention to the grounds upon which the successive notifications which afforded

¶105

~ increasing facilities to the StatP. Trading Corpora... tion for export were challenged.

¶106

00 SUP!tEME OOURT REPORTS [1963]

¶107

1962 Pau11ing herr. it would be convenient if wo set D•4 son ,f Bhimji out tho reasons why acoordin;s to the respondent Gohil the State Trading Corporation was preferred as a. Joi"t Clti<f Y. ('.(lllltoller principal agen0y for oanalising tho export trade in of lntporls 1ft E-rJ-h this commodity. The vital ncessity of export earnins for sustaining nationa.l economy not being a matter of controvel'sy, the question whieh tho government bad to consider was how beat to ensure the optimum earning from exports of manganese ore. India has no monopoly in the production of this ore , ' .. and cousequently the pric" of th~ commodity ·in the foreign market is dependent on world-wide factors. Having regard to ·the usc to which the ore is capable of being put, viz., by steel factories in the production of steel, tho foreign buyers, (and in this one factor to be taken into account is that in several forei~ countries external trade is conducted through Sta.te agencies), are insistent that there shall be a regular supply of ore of uniform quality. There had been complaints in ear1y years, when the trade in the commodity was unrcetrictcd and not under any control, that the quality of the ore supplied was not according to sample, with the result t.hat even the trade of those who took pains to maintain their quality of supplies suffered. It was in these oiroumstances that govern· ment stepped in 19.56 by. imposing restrictions and by assuring the foreign buyers of a regular supply through the mechanism of the controls exercised in this country. These facta were not disputed.

¶108

It is with this baJkground that the challenge to the validity of the notification ha.a to be considered and answered. The imposition of any reatriction on those entitled to engage in a.ny trae would necessarily mean that those who do not conform t<> the critrio. laid down would be dcniod the right to participate in that trade; and this would t bo a fortiori so if tho restriction takeR thf\ form of &

¶109

2 S.C.R. SUPREME OOURT REPORTS 91

¶110

cana.li!!Jing of the trade in a commodity, for canalis· ing necessarily implies the exclusion of some groups. If therefore s. 3 of the Act permits a rule to be made for oanalising export · trade' in a commodity and such canalising is not unconstitutional, it would necessarily follow that a person cannot have a. legally sustainable complaint that he is eliminated from among the groups entitled to participate in the trade. The question whether the canalising has beeuproper1y done in the sense that the groups selected are no better than the groups eliminated

¶111

·poses a very different problem, and if that were made out a question of discrimination might conoeiv· ably arise. We should, however, hasten to point

¶112

"out that it is not the case of the appellant that the established shippers and the mineowners to whom quotas have been allotted in addition to the State Trading Corporation have been improperly included in the group of persons entitled to participate in the .export trade, and that apart, there is a rational and very proper classification between those who have experience in the trade and the newcomers who do not possess these experience. In other commodities concerned in export or import, newcomers i.e.~ those with no previous experience in the export line but who have experience in other branches of the trade, have been allotted quotas, though this should depend upon the circumstances of each trade. It has not been suggested that previous experience in the export trade would not be a valuable qualification for the grant to a person or .group of a quotaJ and even a preferential quota in the export trade in the commodity with which we are now concerned. It would thus appear that if the notifications had confined the entire export trade to those with previous experienc, no legal objection could have been taken .to the notifications on 'the arguments addressed to us by learned

¶113

--\ Counsel for the appellant. In such a state of circumstances the appellant would ha.ve been exoluded but

¶114

ll~l

¶115

D1JtJt1 son of Bhimji Goliil V, I Joi11l CM4 Ctndrolltr oflmpr~tls ~ Exporll A»•nc~~rJ.

¶116

92 SUPREME OOURT REPORTS [1963]

¶117

1962 he could not still oompl"in that he w"s illegally DavD sr.rt ~! Bhimji eliminated because this exclusion was necessary

¶118

Gohil consequence of channelling or canalising of the .I oi..t CA;.J v. Contr~/n exports through persoru~ with previous experience of lmpnls tf: EJ:potts in the fielrl.

¶119

The real grievance of the appellant was that in preference to him and those liko him, who win the ore to be exported, the State Trading Corporation which bad 110 previous experience of the export trade should have been sc]ccted as the agency for canalising exports. There is no doubt that if the only teat of differentiation was previous experience, the preference of the State Trading Corporation to the appellant and the othors of the class to which he bJlong:!, might not b(\ justified, but that is not ' the Hole test by which the matter has to be judged. We have set out earlier the grounds upon which choice of the State Trading Corporation as the agency for effecting tho export trade was determined by the government and we consider that for those reasont> there was nothing improper in the choice, but that .on the ot.her baud the object of the . export trade, viz., the earning of foreign ~change to the maximum with benefit of a long range charact-er for exports from this country could be expected to be attained with the ~tate Trading •. Corporation as the main agency engaged in the trade. We do not therefore consider that there is any substance in the argument of the learofld Counsel for the appellant that the choice of the State Trading Corporation and tho granting to it if quotas on an ad hoc basis was either beyond the powers conferred upon tho li<'ensing authorities under cl. 6th) of the Export Control Order or was otherwise open to objection.

¶120

.,

¶121

There was one other matter that was urged in this connection to which itisncceBSary to refcr.lJlause 6(h) t>oablcs the lirensing authorities to canftliae exports

¶122

2 S.C.R. SUPREME OOTTRT RFPORTS 93

¶123

1 'through special or specialised agencies or channels". I It was urged that the State Trading Corporation D411<J stm •f Bhimji was neither a special nor specialised agency or chan- Go'M/ v. nel and that on that ground the choice of the cor- J oine Clli,f Controlllr porition was outside 6 (b). We are wholly unable of lmj#ls ell E'4JMtt to accept this argument. Whatever the term AJ)'GII94T J . ''specialised" might mean, the word "special" can not bear the construction that it must he an expert agency in that line, in the sense that it possesses a type of previous experience which cannot be claimed by others. Without going so far aa to say that a special agency or channel might mean merely a designated agency, it would be proper to construe the word as meaning, an agency selected having in view the purpose for which the channeling or c.Jl.nalising has to take place. In other words, an agency would be ·'special' if having reard to the purpose for which the canaliing takes place it is more likely to achieve that objective than other agencies or achieve it in a larger measure than oth<lrs. In that sense we have no hesitation in holding that the State Trading Corporation might be a ''special" agency or a channel for the purpose of enabling the country to maintain and foster the continuity of its. trade in the commodity by ensuring exports in adequate quantity and of proper quality.

¶124

J In this state of circumstances the e1imination

¶125

of the claas to which the appellant belongs, viz., newcomers who had no previous experience of t.he export trade during the basic yE~ar or earlier was the result of enforcing a permitted method of control and a type of restriction which it was legally competent to be imposod under 6 (h). In the case of other commodities, · rrnewcomers'' have been granted a quota. That however naturally depended upon the ntt.ture of the trade, the nature of the

¶126

- export market and other factors which it is the ._., province of government to t a.ke into account. Having s~tOO this leJ(al position. we would hasten to

¶127

.94 SUPREME OOURT REPORTS [1963)

¶128

1961	addthatitwasnottheviewoftheGovernment	#"_
Dot1•1011ofBbimji Conil ...	thattheexporttradeinmanganese ore wa8 such thatnewcomers couldneverbepermittedintothat
_JoiraJr,;tfc .._r,,u~ _of1m,.'"_d;EqntJ	tradeis clear fromtheseveral policy-statements themselvesinwhich, fromtimetotime-,theycon· veyedanassurancethatthoallotmentofquotas tothe''newcomers" wasunderconsideration.In thecaseofa commodity like manganese ore for 1Vhichthereisnotmuchofaninternalmarketthe denialofa.righttoanygrouporwe aha)] add,to anyindividualtoexportwouldineffectaffecthim adversely forcing himtoselltoothers whohave been given such a facility. Persons liketheapp- ellantwere being fedonhopesofsome reliefto themanditwas a casenotmerelyofhopedeferrep makingtheheartsick,butofdashedhopesthat ledtheappellantto approachtheCourt for relief. Thoughwe considerthatthoappellanthMnolegal righttothereliefthathesought, his grievanceis genuinel).DditwouldbefortheGovernmentto consider howbesttheinterestofthiscl888should beprotectedanditismadeworththeirwhileto wintheore soastoexpand,fosterandaugment theexporttradein this valuablecommodity.	..

¶129

Reverting to the legal points raised in tho appeal, it appears clear to us that on the premisos (1) that s. 3 of the Import & Export Control Act, 1947 ie a valid piece of legislation, (2) that ol. 6 (h) of the Export Control Order is within the rule" making power of the Central Government and is oonstitutional, there is no escape from the conclusion that no lega.Hy enforoea.ble right of the appellant has been violated for which he could seek redress under Art. 226 of the Constitution.

¶130

In this viow it is unnecessary to consider whether the appellant having prayed primarily for the issue of a writ of marulamU8 to direct the - licensing authorities to consider his application for

¶131

2 S.C.R. SUPREM~ COURT REPORTS 95

¶132

an export licence for the half year current at the 1962 date of the petition uwithout reference to the terms Dov/J sora of Bhiraji of the impugned notifications and policy statement" Gohil .. ,and that half year· having long ago gone by, he Joiral ChieJConttMI" could be granted any relief by the High Court on of Imports tl! &priJ his petition or by this Court on his appeal. It is possible that in such circumftances a person situated like the appellant might be entitled to a declaration as regards the validity of the restrictions imposed which continue to be ·in force even beyond the half year or year to which the licence relates. It is however unnecessary to pronounce upon this question which does not really arise for consideration in view of the conclut~ion that we have reached that the restriotions and control to which the trade has been subjected are legal and justified by the Act and the Rules framed there under. The result is that the appeal fails and is dismissed. There will, however, be no order ·as to costs. SuBBA RAo, J.,-This appeal by certificate is Subba Rfi()J, directed against the judgment of a division Bench of the High Court of Judicature for Bombay, Nagpur Bench, dismi~~ing the application filed by the appeJJant under Art. 226 of the Constitution praying for the issue of an appropriate writ directing the first reflpondent to grant an export licence jn his favour . . The facts giving rise to this appeal may be briefly stated: 'lhe appellant is the lessee of manganese mines situated in the State of Madhya Pradesh. . He carries on the business of mining and selling the ore raised therefrom. There is practically no internal market for manganese, and most . of the manganese produced in India is exported to -· ___. foreign countries. The internal trade in regard to manganese ore being neg1igible, it may be ignored

¶133

96 SUPREl\·IE COURT REPORTS (1963]

¶134

1962 for the purpose of this case. Till about the middle of 195:;, minors, including the appellant, were free Da1a son 1 Bltimj, Go/til to deal with foreign buyers for exporting their pro- Join• OhitfConlr/1, v. ducts and to sell them at thir sipingfl to exporters oflryort.l ct Exts or to carry them to any port by obtaining necessary wagon allotmen1s from the railways. But from May 1956, the Governmr>nt of In~ia issued various notifications progressively restricting tho export quotas available to the shippers and mine-owners, culminating in a stage when direct export by mine· { owners and shippers was stopped and the entire trade canalized through the State 'J rading Corporation originally formed by the Government as a. private company under the India Companies Act, 1956 and subsequently made into a public company. We shall later on consider in detail tho particulars of the said process. On December 1, H•58, the appellant filed an application before the Joint Chief Controllel' of Imports and Kxports, the first respondent herein, for granting to him an export quota. and licence for export of manganese ore under cl.(4) of the Exports (Control) lirder, 1958, (hereinafter called the Order), and also for the movement of the ore from the railway sidings to Bombay port. The first respondent, by hia reply dated DecE-mber 17, 1958, refused to comply with the said request on the ground that export of manganese ore outside India was on.ly allowed by established shippers and established mine-owners according to the ''existing'' orders of the Government. Aggrieved by the said order, the appellant filed the said writ petition before the High Court of Bombay, but that was diemis8ed. Henoe the present appeal. The Joint Chief Contr()ller of Imports a.nd Kxports is made the first respondent and the Union of Ind(a., the second respondent to the appeal.

¶135

The argument of lf".arned counsel for the ap. pellant may he summarized thus: C nder Art.lll( l)f¥) .. of the Constitution the appellant had a right to

¶136

2 S.C.R. SUPREME COURT REPORTS 97

¶137

carry on his business of producing and selling man· 1292 ganese ore and exporting it to foreign countries .,._ Davll tor• of Bhimii_

¶138

either directly or through exporters. The policy Gohil statements issued by the Govermnent from time to '. Joint Chief Conlrol/e r

¶139

time, on the basis of which his application was of Imports ch E"porlJ rejected, crippled the trade of the miners like the appellants, who . were newcomers in the field of Subba Ra• J, direct export. Clause (6) of the Order, whereunder the said policy statements were · issued and which

¶140

) empowered the Central Government of the Chief Controller <?f Imports and Exports to canalize exports through special or speoialiE!ed agencies or channels, is ultra vire.<; inasmuch as s. 3 of the Imports and Exports (Control) Act, 194 7 (XVIII of 1947), hereinafter caJled the Act, whereunder the said order was made, does not empower the Central Gover.nment to t:tke fot' itf.lelf or ·confer on others such a power. Even if cl. 6(h) of the· Order was valid, the said order empowers only canalizing exports through special or specialized agencies, that

¶141

~ is, through experts in the line of export business, and it cannot be relied upon to. canalize the business· through the State Trading Corporation, which is in no way better than the businessmen in that lin0 and whioh indeed has not get any experience in the business of export compared to other experieJl~ed

¶142

' I exportt)rs. In a.ny view, the ultimate effect of tne policy statements is to create a monopoly in the

¶143

-r export trade in manganese in favour of the .State . Trading Corporation and other qualified exporters, and later on solely in favour of the said Corpora. tion, with<?ut at the same time safeguarding the interests of miners like the appellant by fixing appropriate quotas or otherwise: with the result, they are compelled either not to do the business at

¶144

"'all Ol' put themselves at the mercy of others, who are in a position to dictate terms and who may or

¶145

~ not buy the ore from them. The implementation of the policy to the detriment of miners like the appellant is a.n unreasonable restri'Jtion on their

¶146

,

¶147

os· SUPREME OOURT REPOR~ (l~JQ]

¶148

1HZ right to carry on their buainees in mining and selling manga.neee ore. Dd'Da 1m1 1 Bhimji Gohil v. Learned oounscl for the respondents conndecl .Joint Clauj C<mtroll•r that the petition filed by tho appellant under Pj Imporfl &1 &ports Art. 2:W of the Constitution should be dismissed on Subb11~J. the ground that it ha.R become infruotuous, as the year for which the licence was asked, namely, 1959, had run out. The learned counsel also sought to support the order made by the first respondent on \ ground that cl.( 6) of the Order was validly made and that the schemo of implementation or the policy adumberatcd by the Government was not only sanctioned by cl. 6(h) of the Order, but the restriction imposed on the fundamental right of the petitioner was also a reasonable one.

¶149

The first question is whether cl. 6(h) of the Order was 'ldtra vires the Act. The relevant provisions may be noticed. The meterial part of s. 3 of the Act reads; .-J.

¶150

"Powers to prohibit or restrict import8 and export.s.-

¶151

(1) The Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise c:ontrolling, in all cases of specified ola.s8CI of case~, and subject to such exceptions if any, as may be maclo by or under the order:-

¶152

(a.) the import, export, carriage coastwise or shipment aa ships stores of goods of any specified description. X X X X .. of tl" tl" : Order reads: "Refusal of licence.- The Central Govern~ mentor the Chief Controller of Imports and

¶153

Clause (6) of tl" tl" : Order reads:

¶154

	2S.C.R. SUPRBIECOURT REPORTS 99
	Exportsmayrefusetogranta licenceordirect anyotherlicensingauthoritynottogranta licences:-	198 DavasonofBhimji Gohil
	X X X X J X X (h)ifthelicensingauthoritydecidedto canalize exportsandthedistributionthereof through specialorspeciaJized agenciesor channels.	v. JointChieJControlltr ,fImports&l_ExptJriiJ_
) · •r., I r <br>'·, "<• ~	TheOrder wasmadeinexerciseofthepowers con- ferredbyss.3and4-Aofthe.Act.Itis contended that.s.JdoesnotempowertheCentralGovernment toissueanorder conferring onitselforanothera powertocanalizeexportsthrough specialorspeci- alized agenciesorchannels. Thereisnoforcein this argument. Section3oftheActempowersthe CentralGovernmenttomake provisions for prohibi- biting, restrictingorotherwise controllinginall· oasesorinspecified classesofcasestheexportof goods. The power conferredisverywideanditjs notpossibletoholdthatcanalizing exports through specialorspecialized agenciesorchannelsisnot comprehended bythesaid words. · Canalizingex- portllthroughspecialized agencies or channelsis one wayofcontrollingexport.Itis conte 1dedthat theincidenceofthesection is onlyatthepoin~of exportationandthatthesaid section does ·not authorizetheconferment ofapowertoregulate internaltradewith a viewtocontrol exports.This isputtingaverynarrow construction ontheword- ingofsection3oftheAct.ItistruethattheCent- ralGovernmentcannotinterfere withinternaltrade underthe' colourofregulating export,butthepower toprohibit, restrict or control exportsofgoods carrieswithit,byimplication, the powertodoall things intimately connected with the regulationof t.'tXport trade.Ifthepowerwas confined011lyto theexportpoint,itwould defeatthepurposeofthe Act. · The main objectofregulating exporttrade is to assist the national economy. This

¶155

100 SUPKEME COURT REPORTS (1963]

¶156

Jf6B object can be achieved only by devising ways and means to promote export and to seoure D•Pt1. son Gohil of Bhimji favourable balance of trade. A machinery will have "· to be evolved to Stlect the goods which the country of J oiI ntpo•h fll Clluf ~ Con,ro/1,. Ezputls oa.n spare or may prefer to exchange for more essential foreign good.a, to find suitable foreign S!lbbt &to J. markets for them and to take necessary steps to establish a reputation for Iudian goods by securing qualitative standards, prompt deliveries and hon68t dealings, and to prevent avoidable hardships by allottwg quotas to busine:Smen or equitable priucipleB, to fix reasonable rates for their goods and to discharge aimila.r other duties. This C.'t-nnot be achievod if th control of the Central Gover;:nment ili confined only to the exportation point. The regulation of the export trade may have to commenoo even at an earlier stage ; in extrome cases even at the stage of production. It is question of fact in eMh case whether the control exercised by the Contra! Government is only to regulate export trade or is a coloura.ble exercise of controlling the iaternal trade under the guiBc of regulating export trade. l therefore, hold that the power conferred under s. 3 of the Act cannot be conferred on the authorities concerned under cl. 6(h) of the Order to canalize exports through special or specialized agenoiea or oha.nnols is well within the aoope of the power conferred on the Central Government.

¶157

In this context another arguments of learned counsel for the appo1lant may conveniently be dispose of. It is said that the specia.l or specialized agencies or channels mean export agencies or obannels. The dictionary menning of the word "special" is 'for a partioular purpose'' and "specialise" is "set apart for a ptnticular purpose." The said words do not necessarily convey the idea that the agency created for a special purpose should be experts in the lino with certn.in qualifications. • While tho Gov<.'rmucn may be c.xpectod to scleot

¶158

2 S.C.R. SUPREME OOURT REPORTS IOL

¶159

suitable agency well versed in export trade of parti- 1962 cular commodities for achitw.ing maximum results, Dava sMI of B h imji

¶160

the wording of the clause does not impose any such Gohil ' qualifications. Iu this view, it is not necessary to v. Joint Chi1j Controlk

¶161

express my opinion on the question whether the (/!Imports&: E ~F'' State Trading Corporation is in a better position .or is ~ more qualified one than the experienced expor- StJ6ba RaoJ. ters in the line of export of manganese ore, for the selection of the agency is within the exclusive pro-

¶162

) vince of the Government . . Even so, it is contended that the scheme, as

¶163

progreesively unfurled by the Government in the shape of policy statements, infringes the fundamen· tal right of the appellant and persons similarly situated under Art. 10( l)(g) of the Constitution. To apppreciate this argument it is necessary to notice briefly the various policy statements issued by · the Central Government-to aecertain the impact of the said statements on the business of the appE"lla.nt. The first statement is found in the Press NotEdated June 26, 1956, issued by the Ministry of Commerce and Iudustry, New Delhi. Before the issue. of the Press Note the miners who produced manganese ore could enter into contracts with foreign buyers and export their goods subject to the export control rules. By this Press Note the Government introduced a change in it.s policy. The follow-

¶164

r ing reason are given for changing the \ policy : ( 1) The existing trading mat:lbanism i is quite ~nadequate to cope with the develop· menta that took place in certain countries in the matter of purchase of ores. and their effect on Indiap foreign trade. (2) The pre-occupation of Contol authorities with the equitable distribution of available wagon space amongst mining and trading interests has made it virtually impossible for the limited resources to be used to the maximum ad-

¶165

-..4 va.ntage or for economical arrangements to be maqe· for_. tqe transportation of ores and for their

¶166

102 SUPREME OOURT REPORTS [1963]

¶167

J!JJ handling at the ports. ( 3) The trading interests + l>atlfl ~~ of Rltimji entcrd into large contracts and some of them were .. Gt~h•l not able to fulfil them. (4) The mining industry did '· not have an adequn.to ~:cope for development on J •int Chuf Control/, •J lm,o·ts lie E.vorts sounri lines. For the foregoing reasons, the Govern- Subh Rot J. ment propounded the following new policy :

¶168

Subh Rot J.

¶169

•'Government have therefore come to the conclusion that it would be necessary for them to play a. more positive role to overcome the obstacles in the way of augmenting foreign exchange earnings from tho export of ores. It has accordingly been decided that Government should help in reorientating the trading in ores on more rat.iona.l lines and with this object in view they propose to canalise the export of ores in a progresHively increasing measure through the State Trading Corporation and wiJl, in fulfilling its responsibility, rely mainly on tho mining interests in the country and use the existing trading mechanism to tho extent practicable. At the same time, limited opportunities are proposed to be provided to mining and trading interests for direct participation in the export trade within the limits of the board policy that may be laid down by the Government of India in this beh'llf."

¶170

Pui'8Uant to the said policy, the Press Note infor. med the trading public that it had been decided to regulate the export of iron and manganese orea during the half-year July-December 1956 through established shippers, mine-owners and the State Trading Corporation and that export quotas would be granted on the following basis :

¶171

"4 I

¶172

(i) Established Shippers will be gi.-en export quotas on the annual averago of the quantities actually exported during the .. three ('.a.lenda.r years, 1953, i954 and 1955.

¶173

2 S.C.R. SUPR-E:ME COURT REPORTS 103

¶174

(ii) Mine owners will be given export quotas .. on the ll.nnual average of the quantities ' of ores on which royalty was actual1y paid (excluding quantities supplieil for domestic consumption) during the three calender years, 1953, 1954, L~5f5. Mine owners whose mining leases had expired on 3·Ist December 1955 and have not been renewed thereafter, will not be eligible.

¶175

· ) ' )

¶176

(iii) State Trading Corporation wi11 be given quotas on an ad hoc basis.

¶177

1962 Da !Ja tor~ of JJIIimji GolriJ v. J .-il!i Cbi4 COIIIT~IIIr q/ Impot ,_. " &pw u -- I Sllbh RtJDJ.

¶178

It was also stated that the quotas would be valid for rail transport facilities only on the section which had been used by the shipper in the past and that the quota-holders wopld not be permitted to move on each section more than the quantity moved by them during any of the three years 1953, 1954, 1955. Through the subsequent l'ress Notes issued from time to time, the policy stated in the first statement was implemented by gradually elbilinating the shippers other than the State Tra· ding Corporation. The High Court has considered all the subsequEnt Press Notes in detail and has accurately and succinctly sumarized t he various steps taken by the Government to achieve its object. In the circumstances, it would be unnecessary . to oonsider them again in detail. The High Court narrated t.he said steps as follows : (I) To begin with, the Manganese trade was controlled by a system of licensing of Export Quotas. · (2) Press Notes dated July 14, 1956, July 30, 1956, August 6, 1956, September 4, . .... . 196'6, and June 1, 1957 show that the quotar granted to shippers and mineowners were with one exception progressively reduced for e~b ~ocessive period.

¶179

104 SUPREME OOURT REPORTS [1963]

¶180

191t (3) Until the fifth statement dated Sep- MQIIO Jon of Bl,i'Tiji tember 4, 1956 was made, the case of mineGutl v. owners who had no previous shipment to their Jai11t Chtf Conlrollt' cn·rlit was not within the contemplation or of Imports ~ ExptJ Government policy. In that statement GoSuba RQo J Vtlrnment announced that it was considering their <:ase but at no later stage does it appear that their oaso was specifically provided for until the St.ate Trading Corporation took over.

¶181

{4) During the period covered by the .. 7th statement, the State Trading Corporation was introduced into the picture and fre-ely competed with private interests. During this period small quota holders were advised to form co-operatives or companies and were discouraged.

¶182

(5) Form the date of the 8th statement, viz., March 12~ 1959, it iil clear that the full freedom of private trading as before was vir- /" tun lly stopped be(' a use all orders were to be ucanalized" through the State Trading Corporation. The terms und conditions on which "canalization'' could take place were onerous and difficult of fulfilment by individual small interests. The State Trading Corporation itself laid down certain t-erms.

¶183

(6) There were no restrictions on the ~ activities of the State Trading Corporation and it.s quota. was unlimited.

¶184

(7) The policy was put into effect with the aid of the licensing aut horitiea appointed under the Imports and Exports (Control) Act and Order ; that port authorities a.nd by controlling the allooa.tion or railway wagons.

¶185

It is clear from the aforeS~~.id summary of the ~ various notifications that the policy deol em in

¶186

2 S.C.R. SUPREME OOURT REPORTS 105

¶187

the first statement was gradually implemented- 1962 first by confining the issue of quotas and licences DtJva 11111 of B/&imJi J only to recognized exporters and the State · Trading Go"lfil Corporation, and later on virtuaHy conferring a v. • joint Chi1j Contf'•Jl, monopoly on the Sate 'rrading CorpQration. It ofJmpurtl &: }j];cports would also be noticed that though the Government Subb~tRao J. stated in the earlier Press Notes that it· was consi· dering the case of mine-ownera who had no previous shipment to their credit, during the prescribed period no attempt was made to provide forthem. The result was that mine-owners, who had no previous shipment tG their credit, like the petitioner. could not move manganese ore outside·their mines for export, for they could ot sell xcopt to the established shippers and the State Trading Corporation till March 12, 1959, and thereafter only to the said Corporation. In the anxiety of the Government to push up export trade. in manganese ore, persons who were not in the field of export trade during the prescribed period were totally ignored, with the result t.hat their industry and business were crippled. Learned counsel for the responden contends that the appellant filed the application for licence on December 11, 1958, for the grant of export not only to the State Trading Corporation but also to other established shippers, mineowners and exporters, and that, therefore, j the: appellant could not have much difficulty in sel1,ing the manganese produced by him either to the one or to the other. Apart from the validity of this argument, which we will immediately con· aider, it is not clear from the petition that the export licence asked for was for a period· before the issue of the 8th statement dated March 12, 1959. The previous period would expire on June .l., 1959, and the 8th statement issued on March 12, 1959, provided for the period between July 1959 and 1960 during whioh period the Sttate Trading -..1 Corporation had obtained a virtual monopoly in export trade ~ manganese. It wu more likely

¶188

f' li I· l 196Z Da11Gson•JBhimji Gohil · Joint ChufCJntrolJe, oflmports&:Exports · ..- Soob4BaoJ. i : - . - . · .--	.106 SUPREME COURT REPORTS [1963] thatthelicenceandthequotaasked forrelated.to theyear195~)·60.This should also be clear from h_r_ h d · b .t e.1actthat-t e application was is posedofy thefrstrespondent only .by.h_is'order ..dated _December 17, 1958. Be1tasItmay, I·shall --osiderthe_argumentalternatively.· Theargu _mentbaseduponthealleged existenceofa free .marketwhereinthepetitionercould 'sell'his manganese ·__ore-torecognizedexportersisnotonly unrealisticbutalsounfairtothepetitioner.What asthemarketwhereinthepetitionercouldsellhs . manganese oreforreasonable prices?Admittedlyhe couldnotsellintheinternalmarket,fortherewas , practicallynosuch m-arket. Noneofthereco- . gnizedexporters~eitherthe·established shippers ortheState-Trading· Corporation, was boundto purchase .anyquotafrom _the petitioner or-:_the miners .in_the-position .of.the- petitioner. _ . The recognizedexporterswere in a positiontodictate termsandevimtoignoresomeof-themineowners. _In short,anartificialmarketwas created forthe . mine-owners liketheappellant-whereinthey..-could sellthemanganse ;oreonlyto"established ship· .pers,·iftheywantedtheoreand· for a price .dictatedbythem. ~heso-calledmarketwas fur- 'thercircumscribedand. liinitedtoone' purchaser,·. .namely,theState_ Trading Corporation,after ' March 1959. .Theappellant-complainsthat.he . could riot sell hismanganeseorebecauseorthe said restrictionson_sale ·and;.export. In.P,is . petition,theappellantalleged thu&: · .-. ...,..- I ·. ·,_HThe State··TradingCorporation,under. .thecolourofimpugned Notices,hasbeen ..dictating_itsown priceandhasbeenthusin · effect demandingevery-exorpita'nt commis- sion .fortho' purposeofgiving facilities-of'- exportingthepetitioner's oreout.ofthe ·unlimitedquotaallotedtoit.The. respond- ~JltNe-.l.isthuspenton :u.ttin.:.tbt'..	. - · ..- l , -

¶189

2 S.O.R. SUPREME OOUR'f REPOR'I'S 107

¶190

1961

¶191

petitioner in heavy losses by forcing him to sell 1961 his ore to the Corporation at lesser price. Dav., nn of B~imii The petitioner has now at hand 200 tons of Gohil manganese ore lying at his mined or sidings v. Joint Chuj C011lnll/l' and valued .at ab3ut Rs.20,000/- which is of lmjltn'ts d: &porls just being wasted as will be clear from the circular dated 20-4-1957 issued by the Cor-poration to the_ various mine-owners.

¶192

If the petitioner is not allowed to export his ore he would be stck piling. about 50 _) tons of ore per month valued at Its. 10,000/without any outlet or rolling of the capital which he bas already invested as also the running cost including the wage bill of about Rs.4000/- per month. If on the other hand the petitioner has to close his mines for want of sale of the ore he will have to pay a \ compensation running .into several ' thousands of rupees to the workmen under the Industrial laws. Besides, he may be threatened under the Mineral Concession RuleR, 1949 for c:tneelJation of his lease for having a stopped working of his areas. The petitioner there fore submits that an impossible situation has been created by the respondent No. 1 by issue of various Notices referred to above."

¶193

j These facts are·not denied. Can this result, which practica.lly destroyed the trade of the petitioner, be described as a reasonable restriction on his fundamental right? Under the colour of canalizing exports through specialized agencies or channels, the Government conferred virtually a monopoly on a public corporation, crippling in the process the business of mine-owners like the petitioner. Such an unjust position cannot be brushed aside on a. simple allegation that they ca.n export through the C'?._rpoation. There may be some justification for this, If the Corporation, after March 1959, and, l>erore that, the establi:Jhed ~~porters, were bouoq

¶194

108 SUPREME OOURT REPORTS [1063]

¶195

1961 DartJstm_tfBJ.imji Oohil v. J_oinlC/J_ilj011fttrolltr ojlm'''&.-_ J-;.•po•lr Su66o_RaoJ ._	tosomequotafromthemine-ownerslikethe a.ppolla.ut.. Thelivelihoodofa penoncannotbe madetodepend upnnthepa88ing moodsofan offioorofaStatecorporation, however well-inten- tioned hemaybeinthedischargeofhis duties. Theschmeofchannellingofexportsthroughan agency or agencies could crtainlybedovetailed withthatofequitableapportionmentofquotas amongst porsons producing ordoingbusiness in manganese orowithoutanydt!trimenttotheobject ofpromotingexporttrado. Anyschemeofcan· allza.tionofoxport8throughspecializedagencies muMtbeovornedbydfinit.crules whereunder provhtiouilimadegivingstabilityanduara.ntcoof fairtreatmentinordinarytimesaswolJaaintimes ofemergency. Forinsmcca.ppropriatf:l rules could be fmmoclfixingquotaqforcanhmine-owner theexpectedtotalquantityofexport, having rogard to th.: qualityandthequantityofmanganese produced.Itmayalso bo no(;essa.ry toappointan expertbody undl'r tho sa.id rulesnotonlytoadviso iheStut(•infixingthequotabutalofor fixing reasonablepriceA,having regardt.otherelevant cirt:umsta.ncrs.Perhaps,manyothermethodsmay beevoh•t->dtoachievethesa.id result.Itisforthe Govt:rnment a.nd thoexpertstodoso.ButwhatI emphasize is thatmatters shallnot be keptin& va6ueuncertainty intheminds of, personsaffoctodby the said scheme, buttheGovernmentshouhl evolvedefiniteprinci- ples by making rules,ofcourse providing for omorgencieaandchangoof<'ircumatanoes.Ishould nothe understood tohavetieddownthebandaof ther...cntralGovernmentbytho said observatinnA, foritialefttoittomakeappropriaterules inthe lightofthesaidobservations.	...

¶196

At this stage, another contention of learned counsel for the appellant may be noticed. He argues that, unl688 a law is made by the State for carrying on the business by a corporation, owned

¶197

2 s.c.n. StlPREME OOUR'! REPORTS 109

¶198

!

¶199

or controlled by the State, to the exclusion, complete or partial of citiz~ns, a virtual monopoly brought about by a,dministrative action under the colour of a power to canalize the trade in . a particular commodity through specified channels must necessarilv be a.n unreasona;ble restriction on the right of a.'' citizen to carry on his business in that commodity. In support of this contention reliance is place.d upon Art. J 9( 6) of the Constitution, as amended by the Constitution (First Amendment) Act, 1951, t.he material part of which ) reads:

¶200

1962

¶201

Daoa son of Bllimji G()hil v. Joint CMefControlJ" of Imports~ EqrJf'tl SubbaRaoJ.

¶202

"Nothing in sub-clause {g) of the said clause shall affect the operation of any t~xist ing law in so fat· as it impo11ea,¹ or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause, shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,-

¶203

(i) ............ ' . . . . . . .. . . . . . . . . ~ ........ "' ........ .

¶204

.)

¶205

(ii) the ca.rrying on by the State, or by & ·corporation, owned or controlled by the State~ of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise."

¶206

The amended article does not proprio vigore confer any power on the Stat_~ to create monopoJiea by admini8trative action. But, it is only says that if a valid law is made conferring a power on the State to carry on trade or business to the exclu'sion, complete or partial, of citizens, such a law will not -..: infringe the fundamental right. guaranteed under

¶207

	llo SUPREME COURT REPORTS [l003J
Jl/61 D•"•JMI11/Bhimji (Jhtl v, _J_tinl_CilitjC.UHur_ uflmptlrlsd#&~~ St~bb.t_R.t1J,_	Art.19(l)(g)oftheConstitution.Itdoesnotalso say, asle-a.rndcounst>lfot•tho appt•llanta.r,gue11, that.unlessurh alnw i~:madf•,everyinterference bytheStatewitht.hetradeofa citizen in exercise ofapowN und£'r1wmeotherJawwould neceBSarily bean unreasonable restrictioll: such an interference willnothavetheprotection oftheamended provi- sionoftho Constitution,butmustbejudgedbythe standardprovide-d bythefirstpartofArt. 19(6);it would be valid,ifitwas a reasonable restriction on theexereise- ofthepetitioner's fundamentalright madeinthe intorestofthe genPra.lpublic.The decisionofthisCmut in_Saghir Ahmad_v.The State ofU.P.(1)doesnotrt>allyhdpthe appeUant. There, this Court_W&B_ consideringthquestion whether theU.P.RoadTransportAot(IIof1951) violatedthefundamental rightsofprivate citizens guaranteed under Art.19 ( 1)(g)oftheConstitution, andwas protectedbycl.(6)ofArt.19. The ques- tionfellto beconsidered onthe basisofthearticle, aeitstoodbeforeitwas amendedbytheConstitu- tion(FirstAmendment) Act,1951. ,ThisCourt heldthatitdidoffendthefundamental right.In thatcontext, this Court made the followingobser- vations: "Itiaquitetruethatifthepresentstatute waspa.MedaftertheC'omingintoforceofthe new clause in article19l6)oftheConstitution, thequestionofreasonableneBS wouldnothave risenatallandthe appellant'sca.seon this point,atanyrate, would have been unargu- able. These are however considerations which cannota.ft'ectourdecisionin the present case, theamendmentoftl:m"Constitution, which oomc later, cannot be invokedtovalidatean earlier legislation whichmustbereardedaa unconstitutional whenitwas pas&ed.' (1)(l9S5) 1S.CR. 707, 727.	. ... -: ·.

¶208

SUPREME OOURr REPORTs 111

¶209

2 S.C.~.

¶210

I do not see how these observations help the appellant. They only state the obvious, ne.mely, that if the're was a law within the meaning of the amended article, no question of infringing -the fundamental right would arise. There is no force in this ,argument. This question anyhow does not affect my decision, as I have come to the conclusion that the Press Notes issued by the Government dearly infringed the fundamental right of the petitioner.

¶211

1961

¶212

Dava srm o( Bltimji Goliil '. Joint C!Ji1j Contro/u' of Imports 46 Eytttt Sub• BaoJ•

¶213

But, in view of the fact that the period for which licence was asked had run out, the application in respect thereof has become infructuous and, therefore has to be dismissed. In the result, the appeal is dismissed, but, in the circumstances· of this case, without costs.

¶214

STATE OF WEST BENGAL

¶215

v.

¶216

1962 .4pril 16.

¶217

S. K. GHOSH

¶218

(H. P. SINHA, c. J., P. B. GAJENDRAGADKAR, K. N. WANCHOO, N. RAJAGOPALA AYYANGAR and T. L. VENKATARAMA AIYAR, JJ.,)

¶219

: _Attached Property, Dispasal of-Termination of Ot<imiMl Proeeeding for scheduled offence-Order of District Judge-- V ali· dity-Forfeiture, if a_ p~nalty-Oriminal _Law_ Amendm~nt I _Ordinance; 1944(38 of 1944), ss. 13(3), 12(1)3.-0riminal Law_ > Amendme11t Ordinance, 1943 (29 oj 1943), a3 amended by O,.iminal Law (1!143 Amendment) Amending 0, dinance, 1946{ 12 of 1945), s.10---0onstitution of India, Art. 20(1)-Indlan Penal Oode, 1860(Act 56 of 1860), 86. 120B, 409, 53.

¶220

The respondent, who was the Chief Refugee Administrator of Burma R.fugee Organisatjon from November, 1942, to August 25, 1944, was tried under ss. 120B and 409 of the Indian Penal Code by the Second Special Tribunal, functioning under the Criminal I.aw Ordinance No. 29 of 1943 as amended by Criminal Law (1943 Amendment) Amending Ordinance No. 12 ef 1945. On an application made ou

Dava Son of Bhimji Gohil v. Joint Chief Controller of Imports & Exports

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Dava Son of Bhimji Gohil v. Joint Chief Controller of Imports & Exports

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