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DWARKA PRASAD LAXMI NARAIN V. STATE OF U. P. 1954 SCR 803

DWARKA PRASAD LAXMI NARAIN V. STATE OF U. P. 1954 SCR 803

 

FACTS

The petitioners were a firm of traders carrying on the business of retail sellers of coal at a coal depot held by them in the town of Kanpur. The District Magistrate of Kanpur as well as the District Supply Officer had been for a considerable time past issuing directives upon the petitioners as well as other coal depot holders of the town, imposing restrictions of various kinds upon the sale of coal, soft coke, etc.

  1. On 16th July, 1953, Respondent issued a declaration whereby he fixed the retail rates for the sale of soft coke, coal, etc. at precisely the same figures as they stood in the directive issued on 14th February, 1953. The result allegedly was that the selling prices were reduced so much that it was not possible for the coal traders to carry on their business at all.
  2. This is an application presented by the petitioners under Article 32 of the Constitution, complaining of infraction of their fundamental rights guaranteed under Article 14 and clauses (f) and (g) of Article 19(1) of the Constitution and praying for enforcement of the same by issue of writs in the nature of mandamus.
  3. Therefore, the case involved the UP Coal (Control) Order, 1953 issued under the Essential Supplies (Temporary Powers) Act, 1946. Clause 3(1) of the order required a licence for stocking, selling, storing or utilising coal which was challenged by the petitioner Dwarka Prasad.

 

ISSUE

Whether the Uttar Pradesh Coal Control Order is constitutionally valid or not?

 

PETITIONER’S CONTENTIONS

  1. These provisions impose unreasonable restrictions upon the right of the petitioners to carry on their trade and business conflict with their fundamental rights under Article 19(1)(g) of the Constitution and are hence void.
  2. The order of the 13th October, 1953, cancelling the petitioners’ license was challenged on the ground that the charges were vague and indefinite and that the order was made with the ulterior object of driving the petitioners out of the coal business altogether.
  3. It was further said that as a result of the cancellation order, the petitioners have been made incapable of disposing of the stocks already in their possession, though at the same time the holding of such stock after the cancellation of their license has become an offence under the Coal Control Order.
  4. The petitioner contended against clause 4(3) of the Control Order which relates to the granting and refusing of licenses. The licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any license under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer.
  1. As has been held by this court in Chintaman v. The State of Madhya Pradesh [1950 SCR 759], the phrase “reasonable restriction” connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public.

 

 

RATIONALE

  1. Coal is an essential commodity under the Essential Supplies (Temporary Powers) Act of 1946, and by virtue of the delegation of powers by the Central Government to the Provincial Government under Section 4 of the Act, the Uttar Pradesh Government was competent to make provisions, by notified order, for regulating the supply and distribution of coal. All that is necessary is that these provisions should not infringe the fundamental rights of the citizens guaranteed under Part III of the Constitution and if they impose restrictions upon the carrying on of trade or business, they must be reasonable restrictions imposed in the interests of the general public as laid down in Article 19(6) of the Constitution.
  2. A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable.
  3. Clause 3(1)(b) authorised the coal controller to exempt any person from the licensing provision. Clause 4(3) authorised the licensing authority to grant, refuse to grant, renew or refuse to renew, suspend, cancel, revoke or modify any licence for reasons to be recorded.
  4. The Court held Section 3(2)(b) to be invalid because the grounds on which an exemption could be granted were nowhere mentioned; the controller had been given an unrestricted power to make exemptions, and there was no check on them and no way to obtain redress if they acted arbitrarily or from improper motives. Clause 4 (3) was also held bad for it gave to the licensing authority an absolute power to grant, revoke, or suspend a licence. No rules were framed to guide their discretion and the matter was committed to the unrestrained will of a single individual. The requirement to record reasons was not an effective safeguard for no authority was appointed to examine the propriety of these reasons and revise or review the decision of the subordinate officer. The reasons required to be recorded were only for the subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person.

 

HELD

  • On the whole the Court was of the opinion that clauses (7) and (8) of the Control Order did not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners and consequently the declaration of the 16th of July, 1953, could not be held to be invalid. The result was that clause 4(3) of the Control Order as well as the cancellation of the petitioners’ license was to be held invalid and a writ in the nature of mandamus would issue against the respondents opposing parties preventing them from enforcing the cancellation order.

 

COMMENTARY

Dwarka Prasad v State of U P,112 is the first leading case which laid down the proposition that a law conferring arbitrary and unguided powers on the administrative authorities will be invalid under Article 19(1)(g). In Dwarka Prasad., the Coal (Control) Order had given power to the concerned authority to fix prices of coal. For this purpose, a detailed statutory formula was laid down which left only small scope for administrative discretion. The provision was accordingly upheld by the Supreme Court on the ground that the discretion under the formula was neither unfettered nor unlimited.