195{

Th• Rqja/unundry

EU.lri< SuHIJ Corpuration LJd.

Th• State •f

A.ndhr•.

DasJ.

[95{

F1brnary 11.

SUPREME COURT REPORTS [1954]

Province for any purpose connected with a matter with respect to which the Federal Legislature had powi;. to' make laws, require the Province to acquire the land on behalf and at the expense of the Federation. If power inhered in the Federal Legislature to make a law for the acquisition of any property for any purpose connected with a matter with respect to which it had power to make laws then section 127 would not have been necessary at all.

The absence of any entry empowering any Legislature to make laws with respect to cmnpulsory acquisition of a commercial or industrial undertaking and the provisions of section 127 to which reference has just been made make it abundantly clear that the contentions urged by the learned Advocate-General cannot possibly be sustained.

In our opinion, therefore, it must be held that the Madras Legislature had no legislative competency to enact the impugned law. This is sufficient to dispose of this appeal and it is not necessary to express any opinion on the other points raised in the court below.

The result, therefore, is that this appeal must be allowed with costs both in the High Court as well as in tJ1is court.

Appeal, allowed.

Agent for the appellant : M. S. K. Aiyangar.

Agent for the respondent : R. H. Dhebar.

Agent for the intervener : R.H. Dhebar.

THE STATE OF BIHAR v.

ABDUL MAJID

[MEHR CHAND MAHAJAN C. J., MUKlIEllJEA, S. R. DAs, VMAN BosE and GHULAM HASAN JJ.]

Civil servant-Wrongful dismissal-Suit for recovery of arl'ears of salary-Whether competent-Rule of English law-Civil servant-Holding office at the pleasure of Crotvn-Whether applic~ able in India.

Held, that the rule of English law that a civil servant cannot maintain a suit against the State or against the Crown for therecovery of arrears of salary does not prevail in India and it has been negatived by the provisions of the statute law in India.

Section 240 of the Government of India Act, 1935, places restrictions and limitations on the exercise of the pleasure of. the C1own and these restrictions must be given effect to.

They arc imperative and mandatory. Therefore whenever there is a breach of restrictions imposed by the statute by the Government or the Crown the matter is justiciable and the aggrieved party is entitled to suitable relief at the hands of the court.

Government servants are entitled to relief like any other person under the ordinary law, and that relief must be regulated by the Code of Civil Procedure.

Puniab Provina v. Pandit Tara Chand ([1947]

F.C.R. 89) approved.

High Commissioner for India and Pakistan v. l.M. Lall ([1948] L.R. 75 I.A. 225) distinguished.

CIVIL

APPELLATE JuRisDicTION : Civil Appeal No. 70 of 1952.

Appeal by special leave from the Judgment and Decree dated the 5th May, 1949, of the High Court of Judicature at Patna (Manohar Lall and Mahabir Prasad JJ.) in Appeal from Appellate Decree No. 2091 of 1946.

C. K. Daphtary, Solicitor-General for India ( G. N.

Joshi and Porns A. Mehta, with him) for the appellant.

S. P. Sinha (Numddin Ahmed, with him) for the respondent.

1954. February 11. The Judgment of the Court was delivered by MAHA JAN C.J.-This is an appeal by the State of Rihar against the judgment of the High Court of Judicature at Patna whereby the High Court passed a decree for arrears of salary of the respondent against the State from the 30th July, 1940, up to the <late of the institution of the suit.

The undisputed facts of the case are : That the respondent was appointed a Sub-Inspector of Police by the Inspector-General of Police, Bihar and Orissa, in January, 1920.

In the year 1937 departmental proceedings were taken against him and he was found guilty of .cowardice and of not preparing search lists and was punished by demotion for ten years. On appeal, the Deputy Inspector-General of Poli<:e held

T 114 State of

Bihar

Abdul Majid.

The Stale Dj

Bihar v.

Abdul Majid.

Mahajan C. J.

that the respondent was guilty of cowardice but acquitted him of the other charge. By an order dated the 23rd July, 1940, which was communicated to the respondent on the 29th of July, 1940, the Deputy Inspector-General of Police having found him guilty of cowardice made an order dismissing him from service.

Further appeals by the respondent to the Inspector-General of Police and to the Governor of Bihar were unsuccessful.

Aggrieved by the departmental action taken against him, the respondent filed the suit out of which this appeal arises in the court of additional subordinate judge against the State of Bihar for a declaration that the order of the Deputy Inspector-General of Police dismissing him from service was illegal and void and that he should be regarded as continuing in office. He also claimed a sum of Rs. 4,241 from 30th July, 1940, to the date of the suit on account of arrears of salary. The State contested the claim and pleaded that the plaintiff held his service at the pleasure of the Crown, and could not call in question the grounds or the reasons which led to his dismissal, and that in any case he had been reinstated in service from the 30th of July, 1940, and the order of dismissal therefore was no longer operative, and the suit had thus become infructuous.

The additional subordinate judge bv his judgment dated the 2nd February, 1945, dismissed the suit on the finding that the Government having reinstated the respondent he had no cause of action.

As regards the arrears of salary, it was held that the claim to it could only be made according to the pm- <:edure prescribed under rule 95 of section 4 of Chapter

IV of Bihar and Orissa Service Code. This decision was confirmed in appeal by the additional district judge.

On further appeal the High Court reversed these decisions and decreed the claim for arrears of salary in the sum of Rs. 3,099-12-0. It was held that rule 95 of the Bihar and Orissa Service Code had no application because the respondent had never been dismissed within the meaning of that rule. It was further held that the plaintiff was entitled to maintain the suit for arrears of pay in view of the decision

of the Federal Court in Tara Chand Pandit's case(')

the correctness of which was not affected by decisions of the Privy Council in cases of /. M. Lall(') and Suraj Narain Anand(').

The principal questions involved in this appeal are :

(1) Whether the High Court correctly held that rule 95 abovementioned had no application to the case ?

(2) Whether a suit for arrears of salary by a civil servant is competent in a civil court ?

Rule 95 of the Bihar and Orissa Service Code provides :

 Rule 95 "When the suspension of a Government servant as a penalty for misconduct is, upon reconsideration or appeal, held to have been unjustifiable or not wholly justifiable ; or when a Government servant who has been dismissed or removed, or suspended pending enquiry into alleged misconduct is reinstated ; the revising or appellate authority may grant to him for the period of his absence from duty

(a) if he is honourably acquitted, the full pay to which he would have been entitled if he had not been dismissed, removed or suspended and, by an order to be separately recorded, any allowance of which he was in receipt prior to his dismissal, removal or suspension ; or

(b) if otherwise, such proportion of such . pay and allowances as the revising or appellate authority may direct."

The provisions of this rule enable an appellate or re~ vising authority, when making an order of reinstatement to grant the reliefs mentioned in the rule.

Obviously these provisions have no application to the situation that arose in the present case. The respondent here was dismissed by the Deputy Inspector-General of Police, though he was appointed by the Inspector- General of Police. This was clearly contrary to the

(1) [1947] F c. R. 89.

(2) 75 I.A. 225.

(3) 75 I.A. 343

The Stat1 of Bihar v.

Abdul lvfajid.

Mahajan C. J.

!95t

The Stat, of

Bihar v.

Abdul Majid.

Mahq}art C. J.

prov1s10ns of section 240 (3) of the Government of India Act, 1935, which provides that no person shall be dismissed from the service of His Majesty by an authority subordinate to that by which he was appointed. But nevertheless the appeal preferred by him to the Inspector-General of Police was rejected and his petition to the Government of the State met with the same fate, so that he was never reinstated by the order of any revising or appellate authority.

It was only after the present suit was filed that the Government reinstated him. This was no proceeding in revision or appeal.

In these circumstances the enabling provisions of rule 95 had no application whatsoever to the case of the plaintiff. What happened subsequently is a matter wholly outside the contemplation of the rule. After the institution of the suit, the Chief Secretary to the Government of Bihar realising the untenability of the Government's position wrote to the Inspector-General of Police that the order of dismissal should be treated as null and void and that the respondent should be reinstated.

Thus the reinstatement of the plaintiff the telegram of the 30th December, 1943, was not made at the instance of any of the authorities mentioned in the rule in exercise of their jurisdiction, appellate or revisional, but was made at the instance of the defendant in the suit who had realised that it was not possible to defend the order of dismissal. For the reasons given above we are of the opinion that the High Court was right in holding that rule 95 had no application to the facts and circumstances of this case and that the enabling provisions of this rule did not operate as a bar to the plaintiff's action.

The next contention of the learned Solicitor-General that a suit by a public servant against the State for recovery of arrears of salary cannot be maintained in a civil court is again, in our opinion, without substance. Vie think that the matter is covered by the decision of the Federal Court in Tara Chand Pandit's case(') with which we find ourselves in respectful agreement. In that case the learned Attorney-General had argued with great force all the points that were

It) ['9t7l F.C•R. 89.

urged in this appeal before us by the learned Solicitor-

General and were dealt with by the Federal Court in great detail. It was there held that the prerogative right of the Crown to dismiss its servants at will having been given statutory form in sub-section (1) of section 240 of the Government of India Act, 1935, it could only be exercised subject to the limitatiom imposed by the remaining sub-sections of that section and that it must follow as a necessary consequence that if any of those limitations was contravened the public servant concerned had a right to maintain an action against the Crown for appropriate relief and that there was no warrant for the proposition that that relief must be limited to a declaration and should not go beyond it. It was further held that even if apart from the prerogative of the Crown to terminate the service of any of its servant at will, the further prerogative could be invoked that no servant of the Crown could maintain an action against the Crown to recover arrears of pay even after the pay had been e:uned and had become due and that the prerogatives of the Crown had been preserved in the case of India by section 2 of the Constitution Act, it must be presumed that this further prerogative had been abandoned in the case of India by the provisions of the Code of Civil Procedure and that it was not possible to subscribe to the proposition that while a creditor of a servant of the Crown was entitled as of right to compel the Crown to pay to him a substantial portion of the salary of such servant in satisfaction of a decree obtained against him the servant himself had no such right. Mr. Justice Kania, as he then was, in a separate but concurring judgment, negatived the contention of the Attorney-General in these terms :

"The question whether the law in England and India is the same on this point should be further considered having regard particularly to the provisions found in the Civil Procedure Code. In this connection, section 60(1) and clauses (i) and (j) of the

proviso, and explanation (2) should be noted. Under section 60 all property belonging to the judgment debtor is liable to be attached.

In stating the

T 11' State if

ihttr

Abdul Majid.

Mahajan C.J.

!95f

The State of

Bihm

Abdul Maji4.

M1hajan C. J.

particulars of what may not be attached and sold,

exemption to a limited extent is given in respect of the salary of a public servant. These provisions of the Code of Civil Procedure were not noticed in Lucas v. Lucas and High Commissioner for India('), as the application was made in England and the Civil Procedure Code of 1908 did not apply there. The provisions of section 60 of the Civil Procedure Code give a right to the creditor to attach the salary of a servant of the Crown. There can be no dispute about that. If the contention of the appellant was accepted, the result will be that while the civil sgvant cannot recover the money in a suit against the Crown, his creditor can recover the same in execution of a decree against the civil servant.

This right of the creditor to receive money in that manner has been recognised in innumerable decisions of all High Courts. There were similar provisions in the Civil Procedure Code of 1882 also.

By reason of section 292 of the Constitution Act, the Code of Civil Procedure, 1908, continues in force, in spite of the repeal of the Government of India Act of 1915.

Could the Imperial Parliament in enacting section 240 and being deemed aware of the provisions of section 60 of the Civil Procedure Code, have thought it proper to give this privilege to a creditor, while denying it to the officer himself ? To hold so, the words of section 240 of the Constitution Act will have to be unduly and unnaturally strained. Moreover in explanation (2) of section 60 the word 'salary' is defined. In the proviso to section 60 clause (i) the word 'salary' is used as applicable to private employees and to Government servants also. The word 'salary' in respect of a private employee must mean an enforceable right to receive the periodical payments mentioned in the explanation. In that connection it is not used in the sense of a bounty.

It will therefore be improper to give the same word, when used with regard to a civil servant under the Crown a diffierent meaning in the same clause. It seems to me therefore that the Imperial Parliament has not accepted the principle that the Crown is not liable to pay its servant salary

(!) {1943) P. 68.

.,.

for the period he was in service, as applicable to British India or as forming part of the doctrine that service under the Crown is at His Majesty's pleasure." The learned Solicitor-General contended that the decision in Tara Chand Pandit's case('), was no longer good law and should be deemed to have been dissented from and overruled by the decision of their Lordships of the Privy Council in I. M. Lall's case( 2), and that in any event the view expressed in that decision should be preferred to the view expressed in Tara Chand Pandit's case. We are unable to uphold this contention. It seems that during the arguments in Lall's case attention of their Lordships was not drawn to the decision of the Federal Court in Tara Chand Pandit's case because the point was not directly involved therein. In that case no claim had been made by the plaintiff for arrears of his pay. The plaintiff had sued for a declaration simpliciter that the order of his removal from the office was illegal and that he was still a member of the Indian Civil Ser.vice. The High Court granted that declaration. The Federal Court, on appeal, substituted for the declaration made by the High Court a declaration that the plaintiff had been wrongfully dismissed. The case was remitted to the High Court with a direction to take such action as it thought necessary in regard to any application by the plaintiff for leave to amend the claim for recovery of damages. On appeal to the Privy Council the decree and the order made by the Federal Court was modified and their Lordships held that in their opinion the declaration should be varied so as to declare that the purported dismissal of the respondent _on the 10th August, 1940, was void and inoperative and the respondent remained a member of the Indian Civil Service at the date of the institution of the suit, 20th of June, 1942. The High Commissioner for India had also appealed against the order of the Federal Court remitting the .case to the High Court for amendment of the plaint. The plaintiff did not want to maintain the order of the Federal Court to remit, before the

(1) [1947] F.C.R. 89.

(2) 75 I.A. "5

14-95 S. C.I./59

Till State of Bihar. v Abdul Majid.

Mahajan C. J.

The State of Bihar v.

Abdul Majid.

Mahajan C.J.

Privy Council. He however urged that he was entitled to recover in the suit his arrears of pay from the date of the purported order of dismissal up to the date of action, though this was not one of the reliefs claimed bv him in the suit at all. This relief that was claimed by him before the Board was negatived by their Lordships on the ground that no action in tort could lie against the Crown and that such an action must either be based on contract or conferred by statute. Their Lordships approved of the judgment of Lord Blackburn in the Scottish case of Mulvenna v. The Admiralty( 1 ), in which that learned Judge laid down the rule in the following terms after reviewing various authorities :

"These authorities deal only with the power of the Crown to dismiss a public servant, b; it th.ey appear to me to establish. conclusively .certam important points. The first is that the terms of service of a public servant are subject to certain qualifications dictated by public policy, no matter to what service the servant may belong, whether it be naval, military or civil, and no matter what position he holds in the service, whether exalted or humble. It is enough that the serl>'ant is a public servant, and that public policy, no matter on what ground it is based, demands the qualification. The next is that these qualifications are to be implied in the engagement of a public servant, no matter whether they have been referred to when the engagement was made or not. If these conclusions are justified by the authorities to which I have referred, then it would seem to follow that the rule based on public policy which has been enforced against military servants of the Crown, and which prevents such servants suing the Crown for their pay on the assumption that their only claim is on the bounty of the Crown and not for a contractual debt, must equally apply . to every public servant.

It also follows that this qualification must be read, as an implied condition, into every contract between the Crown and a public servant, with the effect that, in terms of their contract, they have no right. to their remuneration which can be

(•) [1926] s. c. 842 .

enforced in a civil court of justice, and that their only remedy under their contract lies 'in an appeal of an official or political kind'."

The observations made in M ulvenna v. The Admiralty('), which is a Scottish case, could not have been made if in the law of that country there were provisions similar to the provisions made in various sections of the Code of Civil Procedure referred to by the Federal Court in Tara Chand Pandit's case('). It was further urged that the same view was taken by

Pilcher J. in Lucas v. Lucas and the High Commissioner for India (8). There the question for consideration was whether the sterling overseas pay of an Indian civil servant was a debt owing and accruing within the meaning of rule 1 of Order XL V of the Rules of the Supreme Court and which could be attached in satisfaction of an order for the payment of alimony. The real point for decision in that case was whether the whole or any portion of the salary of a member of the Indian Civil Service was liable to attachment in England in satisfaction of the judgment debt.

It appears that the attention of the learned Judge was not invited to the provisions of section 60 and other relevant provisions of the Code of Civil Procedure and the learned Judge applied the dictum of Lord Blackburn in Mulvenna v. The Admiralty( 1 ), to the case of a civil servant from India. As the application was made in England and the Civil Procedure Code did not apply there, the provisions of the Code were not noticed in that case. We are therefore of the opinion that the rule laid down by their Lordships of the Privy Council in I. M. Lall's case('), without a consideration of the provisions of the Code of Civil Procedure relevant to the inquiry and without a consideration of the reasoning of the Federal Court in Tara Chand Pandit's case('), cannot be treated, particularly because the matter was not directly involved in the suit, as the final word on the subject.

We are in no way bound by the decision given either in Tara Chand Pandif'.s case(' ), or by the

(!) [r926] S. C. 842.

(3) [r943] P. 68.

<>) [r947] F.C.R. 89.

(4) 75 I.A. 205.

Thi Stat1 ef

Bihar v.

Abdul Mqjid.

Mahajan G'. ].

T1" State of

Bihar

Abdul Majid.

Mahajan C. J.

decision given by the Privy Council in I. M. Lairs

case( 1 ). But on a consideration of the reasons given in the two judgments we think that the rule of English law that a civil servant cannot maintain a suit against the State or against the Crown for the recovery of arrears of salary does not prevail in this country and that it has been negatived by the provisions of the statute law in India.

Reliance was also placed by the learned Solicitor- General on the decision of the Federal Court in Suraj Narain Anand v. North West Frontier Province(2).

In that case Suraj Narain having been appointed a Sul>- Inspector of Police posted in the North West Frontier Province by the Inspector-General of Police of the Province was subsequently dismissed by the Deputy Inspector-General of Police. Failing to get relief by departmental proceedings he instituted a suit in the Court of the Senior Subordinate Judge, Peshawar. The subordinate judge dismissed the suit as being unsustainable. This decision was upheld by the Court of the Judicial Commissioner. The Federal Court held that the Courts below were not justified in dismissing the suit, that the plaintiff was at least entitled to a dedaration that the order of dismissal passed against him was void. That court accordingly set aside the decree of the Judicial Commissioner and remitted the case with a declaration that there shall be substituted for the decree appealed against a declaration in the terms above stated, with such further directions as the circumstances of the case may require in the light of the observations of their judgment. The Province appealed to the Privy Council against the decision of the Federal Court.

It was held by the Board in the first instance allowing the appeal of the North West Frontier Province and reversing the decision of the Federal Court of India, that the North West Frontier Province Police Rules, 1937, had become operative in 1938 at some date before April 25, 1938, when the respondent was dismissed, and that rule 16 ( 1) was a valid rule made under the authority conferred on the

(I) 75 I.A. 225.

(2) [1941] F.C.R. 37.

appellant by section 243 of the Government of India Act, 1935, and that the respondent's suit was rightly dismissed, but subsequently on the petition of the respondent asking the Board to reconsider their decision -0n the ground that it had been ascertained that the

Police Rules of 1937 were in fact printed and published Qn April 29, 1938, that was, four days after the date Qf his dismissal, the Board heard the appeal further, when the respondent's allegation was admitted and, applying the reasoning in their previously delivered judgment, the Board reversed their former decision .and affirmed the judgment of the Federal Court which had held that the respondent's dismissal was void and inoperative.

During the arguments before the Privy <Council reference was made to section . 60 of the Code

Qf Civil Procedure and to the decision of the Federal 'Court in Tara Chand Pandit's case('), and it was also noticed that following on the remit of the case to the Judicial Commissioner by the order of the Federal Court, dated December 4, 1941, the respondent had Obtained a decree for payment of Rs. 2,283 against the .appellant in respect of arrears of pay from the date of dismissal to the institution of the suit. When the appeal came before the Board for further hearing their Lordships on the 6th August, 1948, caused a letter to be addressed to the solicitor representing the appellant, informing him that their Lordships now proposed humbly to advise His Majesty that the appeal should be dismissed, and stating that the order as to costs would not be varied. The letter pointed out that if this :advice were tendered, and if His Majesty were pleased to accept it, the effect would be that the declaratory judgment of the Federal Court would stand. Finally, the letter referred to the award of Rs. 2,283 to the respondent by the Court of the Judicial Commissioner which, according to a submission made by the appel- 1ant's counsel, was open to challenge, and inquired whether the appellant wished to have an opportunity •of satisfying their Lordships that the point was open, and of being heard on it. By their Lordships' direcition a copy of this letter was sent to the respondent. ·

.(1) [1947] F.C.R. 89.

Tiu Slat< of Bika, v.

Abdul Maiid.

Mahajan C. J.

Tht Stat1 of

Bihar

Abdul Majid.

Mahajan C. ].

An intimation was received by the Privy Council that the appellant did not wish to offer any further arguments on the case. The respondent also did not desire an opportunity of arguing that he should now be awarded arrears of pay from the date of the institution of the suit onwards. In these circumstances the Board refused to deal further with the matter and advised His Majesty that the declaratory judgment of the Federal Court be restored and proceeded to observe that it would be open to the respondent to pursue any remedy which flows from that declaratory judgment in an appropriate court. Their Lordships concluded the judgment with the following observations :-

"Their Lordships must not be understood, however, as expressing an opinion that the respondent was entitled as of right to recover the sum of Rs. 2,283 which was awarded to him, or that he has any claim to

a further sum in respect of arrears of pay. It is unnecessary, owing to the very proper attitude of theappellant, to express any view as to the former question, and the latter question does not arise in this appeal which is from the decision of the Federal Court.

If that decision is affirmed the respondent who did not himself enter an appeal, cannot now ask for anything more."

It is thus clear that in express terms in this decision their Lordships declined to give any opinion on the question whether the respondent was entitled as of right to recover arrears of pay awarded to him by the Judicial Commissioner, in spite of the circumstance that their attention had been drawn to the decision of the Federal Court in Tara Chand Pandit's case( 1 ) •.

This decision therefore cannot be said to support the view contended for by the learned Solicitor-General.

On the other hand, it must be assumed that in spite of their decision in I. M. Lall's case('), their Lordships in this case, the judgment in which was delivered subsequent to the decision in /. M. La/l's case('), on November 4, 1948, did not reaffirm the propositioru

(I) [1947] F.C.R. 89.

(2) 75 I.A. 225.

laid down in that case but prferred to express no

opi~1ion on the point.

It was suggested that the true view to take is that when the statute says that the office is to be held at pleasure, it means "at pleasure'', and no rules or regulations can alter or modify that ; nor can section 60 of the Code of Civil Procedure, enacted by a subordinate legislature be used to construe an Act of a superior legislature.

It was further suggested that some meaning must be given to the words "holds office during His Majesty's pleasure" as these words cannot be ignored and that they bear the meaning given to them by the Privy Council in I. M. Lall's case (1 ).

In our judgment, these suggestions are based on a misconception of the scope of this expression. The expression concerns itself with the tenure of office of the civil servant and it is not implicit in it that a civil servant serves the Crown ex grati or that his salary is in the nature of a bounty. It has again no relation or connection with the question whether an action can be filed to recover arrears of salary against the Crown.

The origin of the two rules is different and they operate on two different fields.

The rule that a civil servant holds office at the pleasure of the Crown has its origin in the latin phrase "durante bene placito" ("during pleasure") meaning that the tenure of office of a civil servant, except where it is otherwise provided by statute, can be terminated at any time without cause assigned. The true scope and effect of this expression is that even if a special contract has been made with the civil servant the Crown is not bound thereby. In other words, civil servants are liable to dismissal without notice and there is no right of action for wrongful dismissal, that is, that they cannot claim damages for premature termination of their services. fSee Fraser's Constitutional Law, page 126; Chalmer's Constitntional Law:

page 186; Shenton v. Smit!i (2 ) ; Dunn v. T!ie Queen( 3 ) }.

This rule of English law has not been fully adopted in section 240.

Section 240 itself places restrictions

(r) 75 l.A. 225.

(2) [r895] A.G. 229, 234.

(3) [r896] I Q.B. rr6.

The State of Bihar v.

Abdul Majid.

Mahajan C. ].

The State of Bihar v.

Abdul Majid.

Mahajan C. J.

and limitations on the exercise of that pleasure and those restrictions must be given effect to. They are imperative and mandatory.

It follows therefore that whenever there is a breach of restrictions imposed by the statute by the Government or the Crown the matter is justiciable and the party aggrieved is entitled to suitable relief at the hands of the court. As pointed out earlier in this judgment, there is no warrant for the proposition that the relief must be limited to the declaration and cannot go beyond it. To the extent that the rule that Government servants hold office during pleasure has been departed from by the statute, the Government servants are entitled to relief like any other person under the ordinary law, and that relief therefore must be regulated by the Code of Civil Procedure.

Section 292 of the Government of India Act, 1935, provides that the law in force in British India immediately before the commencement of the Act shall continue in force until altered, repealed or amended by a competent legislature. Sections 100 to 104 of the Government of India Act, 1935, confer legislative powers on the different legislatures in the country.

Item 4 of the concurrent list in the Seventh Schedule reads thus : "Civil Procedure, and all matters included in the Code of Civil Procedure, at the date of the passing of this Act." It is clear therefore that the Indian Legislatures were conferred by the Government of India Act, 1935, power to regulate the procedure in regard to actions against the Crown and to make provision for reliefs that could be granted in such actions. 'These provisions of the Government of India Act, 1935, stand by themselves independently of what is contained in section 240, and therefore no question arises that section 60 of the Code of Civil Procedure which has the sanction of the Government of India Act, 1935, itself is in status lower than the rule laid <lown in section 240.

The rules of English law that the Crown cannot be sued by a civil servant for money or salary or for compensation has its origin in the feudal theory that the Crown cannot be sued by its vassals or subjects in its

own courts .. From this theory the common law lawyers in England deduced two rules, namely,

(1) that the King can do no wrong, and (2) that as a matter of procedure no action can lie in the King's courts against the Crown. (See Ridge's Constitutional Law, eighth edition, page 295, and Fraser's Constitutional Law, page 164). The subject, in this situation, could only proceed by way of a petition of right which required the previous permission of the Crown. Permission w.as given by a fiat justitia issued by the Crown. It was not in practice refused to a petitioner who had any shadow of a claim, so that probably the disadvantages of this form of procedure were more theoretical that substantial. Petitions of right and various other special forms of English procedure applicable exclusively to actions by and against the Crown were abolished by the Crown Proceedings Act, 1947, which provides that in future claims against the Crown might be enforced as of right and without the fiat of His Majesty, and that they should be enforceable by ordinary procedure in accordance with the rules of the High Court or the County Court as the case might be. Arrears of salary were being actually recovered by the procedure of petition of right in England. [See Bush v. R. (')]. There the judgment resulted in favour of the suppliant. The

claim was in respect of the amount of salary due to him as Master of the Court of Queen's Bench in Ireland. (Robertson's Civil Proceedings by or against the Crown, page 338).

In India, from the earliest times, the mode of procedure to proceed against the Crown has been laid down in the Code of Civil Procedure and the procedure of , petition of right was never adopted in this country, and the same seems to have been the rule in Australia and other Colonies. Section 56 of the Judiciary Act, 1903, relating to the Commonwealth of Australia provides :

"Any person making any claim against the Commonwealth, whether in contract or in tort, may in respect of the claim bring a suit against the

(1) [1869] Times News, May 29,

Thi State of

Bihar

Abdul Majid.

Mahajan C. J.

The State of

Bihar

v. .Abdul Majid.

Mahajan C. J.

Commonwealth in the High Court or in the Supreme Court of the State in which the claim arose."

Under the New South Wales Act, 39 Viet.

No. 38, the Government of the Colony is liable to be sued in an action of tort as well as in contract. Section 65 of the Government of India Act, 1858, conferred the right of suit against the Government. It provided that "all persons and bodies politic shall and

may have and take the same suits, remedies and proceedings legal and equitable, against the Secretary of State in Council of India as they could have done against the said company" (the East India Company).

This was replaced by section 32 of the Government of India Act, 1915. Sub-section (2) of that section ran as follows :- shall have the same remedies "Every person against the Secretary have had against the Government of India been passed."

of State in Council as he might East India Company if the Act, 1858, and this Act had not

This was replaced by section 176(1) of the Government of India Act, 1935, which substantially reproduced these provisions. From these provisions it is clear that the Crown in India was liable to be sued in respect of acts, which in England could be enforced only by a petition of right. As regards torts of its servants in exercise of sovereign powers, the compan; y was not, and the Crown in India was not, liable unless the act had been ordered or ratified by it. Be that as it may, that rule has no application to the case of arrears of salary earned by a public servant for the period that he was actually in office. The present claim is not based on tort but is based on quantum merttit or contract and the court is entitled to give _relief to him.

The Code of Civil Procedure from 1859 right up to 1908 has prescribed the procedure for all kinds of suits and section 60 and the provision of Order XXI substantially stand the same as they were in 1859 and those provisions have received recognition in all the Government of India Acts that have been passed since the year 1858.

The salary of its civil servants in the

hands of the Crown has been made subject to the writ of civil court. It can be seized in execution of a decree attached. It is thus difficult to see on what grounds the claim that the Crown cannot be sued for arrears of salary directly by the civil servant, though his creditor can take it, can be based or substained.

What could be claimed in England by a petition of right can be claimed in this country by ordinary process.

For the reasons given above we are of the opinion that this appeal is without force and we accordingly dismiss it with costs.

Appeal dismissed.

Agent for the appellant : & H. D/zebar.

Agent for the respondent : S. P. Varma.

MESSRS. DW ARKA PRASAD LAXMI NARAIN

ti.

THE STATE OF UTTAR PRADESH AND

TWO OTHERS.

[MEHR CHAND MAHAJAN c. J., MUKHERJEA, VIVIAN BosE, GHULAM HAsAN and JAGANNADHADAS JJ.]

Constitution of India, Arts. 19(1) (g), 19 (6)-Clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, tuhether ultra vires the Constitution.

A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities must be held to be un~ reasonable.

Under

cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority has been given absolute power , 1 to grant or refuse to grant, rener or refuse to enew, suspend, revoke, cancel or modify any licence under this Order and the only thing he has to do is to record reasons for the action he takes.

Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. Such provisions cannot be held to be reasonable :

Held, therefore that the provision of cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, must be held to be void as

The State of Bihar v.

Abdul Majid.

Mahajan C. ].

January 11.

section 127

section 127

Madras Legislature

M. S. K. Aiyangar

R. H. Dhebar

R.H. Dhebar

THE STATE OF BIHAR

ABDUL MAJID

MUKlIEllJEA

S. R. DAs

VMAN BosE

GHULAM HASAN

India

Section 240

Government of India Act, 1935

the Code of Civil Procedure

[1947]

F.C.R. 89

L.R. 75 I.A. 225

CIVIL

APPELLATE JuRisDicTION

High Court of Judicature at Patna

Manohar Lall

Mahabir Prasad

C. K. Daphtary

G. N.

Joshi

Porns A. Mehta

S. P. Sinha

Numddin Ahmed

MAHA JAN

State of Rihar

30th July, 1940

Bihar

Orissa

Mahajan

State of Bihar

30th of July, 1940

2nd February, 1945

section 4

IV of Bihar and Orissa Service Code

Tara Chand Pandit

M. Lall

Suraj Narain Anand

section 240

Government of India Act, 1935

Government of Bihar

30th December, 1943

section 240

Government of India Act, 1935

section 2

the Code of Civil Procedure

Kania

England

section 60(1)

section 60

Abdul Majid

State of

Bihm

Abdul Maji4

the Code of Civil Procedure

England and the Civil Procedure Code

section 60

section 292

Code of Civil Procedure, 1908

section 240

section 60

section 240

section 60

section 60

I. M. Lall

Lall

10th August, 1940

20th of June, 1942

High Commissioner for India

[1947] F.C.R. 89

Blackburn

the Code of Civil Procedure

Pilcher

Order XL V of the Rules

Supreme Court

section 60

the Code of Civil Procedure

the Code of Civil Procedure

Tara Chand Pandif'.s

Abdul Mqjid

State of

Bihar

Suraj Narain

North West Frontier Province

Federal Court of India

April 25, 1938

[1941] F.C.R. 37

section 243

Government of India Act, 1935

April 29, 1938

December 4, 1941

6th August, 1948

[1947] F.C.R. 89

Tiu Slat< of Bika

Abdul Maiid

November 4, 1948

[1947] F.C.R. 89

section 60

the Code of Civil Procedure

Fraser

Chalmer

section 240

Section 240

the Code of Civil Procedure

Section 292

Government of India Act, 1935

Sections 100 to 104

Government of India Act, 1935

Seventh Schedule

the Code of Civil Procedure

section 240

section 60

section 240

Ridge

Ireland

Robertson

the Code of Civil Procedure

Australia

Section 56

Judiciary Act, 1903

State of

Bihar

.Abdul Majid

Government of the Colony

Section 65

Government of India Act, 1858

Council of India

East India Company

section 32

Government of India Act, 1915

Government of India

section 176(1)

Government of India Act, 1935

Code of Civil Procedure from 1859

section 60

S. P. Varma

ARKA PRASAD LAXMI NARAIN

STATE OF UTTAR PRADESH

MUKHERJEA

VIVIAN BosE

GHULAM HAsAN

JAGANNADHADAS

Constitution of India

Arts. 19(1)

Clause 4(3)

cl. 4(3)

cl. 4(3)


S.C.R.

SUPREME COURT REPORTS 803

hands of the Crown has been made subject to the writ of civil court. It can be seized in execution of a decree attached. It is thus difficult to see on what grounds the claim that the Crown cannot be sued for arrears of salary directly by the civil servant, though his creditor can take it, can be based or substained.

What could be claimed in England by a petition of right can be claimed in this country by ordinary process.

For the reasons given above we are of the opinion that this appeal is without force and we accordingly dismiss it with costs.

Appeal dismissed.

Agent for the appellant : & H. D/zebar.

Agent for the respondent : S. P. Varma.

MESSRS. DW ARKA PRASAD LAXMI NARAIN

ti.

THE STATE OF UTTAR PRADESH AND

TWO OTHERS.

[MEHR CHAND MAHAJAN c. J., MUKHERJEA, VIVIAN BosE, GHULAM HAsAN and JAGANNADHADAS JJ.]

Constitution of India, Arts. 19(1) (g), 19 (6)-Clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, tuhether ultra vires the Constitution.

A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities must be held to be un~ reasonable.

Under

cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority has been given absolute power , 1 to grant or refuse to grant, rener or refuse to enew, suspend, revoke, cancel or modify any licence under this Order and the only thing he has to do is to record reasons for the action he takes.

Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. Such provisions cannot be held to be reasonable :

Held, therefore that the provision of cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, must be held to be void as

The State of Bihar v.

Abdul Majid.

Mahajan C. ].

January 11.

Messrs. Dwarka

Prasad Laxmi

Narain

The il°late of Ultar Pradesh and

Two Others.

imposing an unreasonable restriction upon the freedom of trade and business guaranteed under art. 19 (I ) (g) of the Constitution and not coming within the protection afforded by cl. ( 6) of the ; i, rticle.

Yick Wo v. Hopkins (118 U.S. 356 at 373) referred to.

ORIGINAL JuRismcnoN : Petition No. 326 of 1953.

Original Petition under article 32 of the Constitution of India.

S. C. Isaacs (S. K. Kapur, with him) for the petitioners.

H. /. U mri gar for the respondents.

1954. January 11. The 'Judgment of the Court was delivered by

MuKHERJEA J .-This is an application presented by the petitioners under article 32 of the Constitution, complaining of infraction of their fundamental rights guaranteed under article 14 and clauses (f) and (g) of article 19 ( 1) of the Constitution and praying for enforcement of the same by issue of writs in the nature of mandamus.

To appreciate the contentions that have been raised on behalf of the petitioners, it would be necessary to give a short narrative of the material facts.

The petitioners are a firm of traders who had, prior to the cancellation of their licence, been carrying on the business of retail sellers of coal at a coal depot held by them in the town of Kanpur.

It is said that the District Magistrate of Kanpur as well as the District Supply Officer, who figure respectively as respondents Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time upon the petitioners as well as other coal depot holders of the town, imposing restrictions of various kinds upon the sale of coal, soft coke, etc. It is stated that . prior to the 14th of February, 1953, the prices that were fixed by the District Officers left the coal dealers a margin of 20 per cent porfit upon the sale of soft coke and 15 per cent profit on the sales of hard coke and steam coal, . such profits being allowed on the landed costs of the goods up to the depot. The landed costs

comprised several items and besides ex-colliery price, the middleman's commission and the railway freight, there were incidental expenses of various kin\ls including labour duty, loading and unloading charges, cartage and stacking expenses. After making a total of these cost elements, an allowance was given for shortage of weight at the rate of 5 mds. and odd seers per ton in the case of soft coke and 3 mds. and odd seers in the case of hard coke and steam coal, and it was on the basis of the net weight thus arrived at that the price was calculated. On the 14th of February, 1953, the District Supply Officer issued a directive reducing the selling prices of coke, coal, etc., much below the existing rates.

This reduction was effected in a three-fold manner. In the first place, the allowance for shortage of weight was made much less than before ; second! y, a sum of Rs. 4-12-0 only was allowed for all the incidental expenses, and thirdly, the margin of profit was cut down to 10 per cent. On the 22nd of May, 1953, a representative petition was filed by seven colliery depot holders of Kanpur including the present petitioners challenging the validity of the executive order, dated the 14th of February, 1953, mentioned above inter alia on the ground that it infringed the fundamental rights of the petitioners under articles 14 and 19 of the Constitution.

There was an application for ad interim .stay in connection with this petition which came up for hearing before the learned Vacation Judge of this court on the 1st of July,

1953. On that day an undertaking was given by the State of Uttar Pradesh to the effect that they would withdraw the order of the 14th February, '.1953, and apparently the consideration that weighed with the State in giving this undertaking was that it was a purely executive order without any legislative sanction behind it. The order of the 14th February was in fact withdrawn, but on the 10th of July, 1953, the State of Uttar Pradesh promulgated. by a notification an order intituled "The Uttar Pradesh Coal Control Order, 1953" purporting to act in exercise of the powers conferred upon it by _section 3(2) of the Essential Supplies Act, 1946, read with the notified order of the Government of India issued under

Messrs. Dwarka

Prasad Laxmi

Narain v.

The Stale of Uttar Pradesh aM

Two Others.

Mukhtrjea ] .. •

Mtssrs. Dwarka

PraJad Laxmi

Narain

The State of Uttar Pradesh and Two Others.

Mukh•r.J'a J.

section 4 of the Act. As the constitutionality of this Coal Control Order is the main object of attack by the petitioners in the present proceeding, it would be convenient to set out the material provisions of the order in respect of which the controversy between the parties primarily centers :

"THE UTTAR PRADESH COAL CoNTROL

ORDER, 1953.

2. In this Order unless there is anything repugnant in the subject or context

(a) "Coal" includes coke but does not include cinder and ashes.

( c) "The Licensing Authority" means the District Magistrate of the District or any other officer authorised by him to perform his functions under this Order and includes the District Supply Officer of the district. ( d) "Licensee" means a person holding a licence under the provisions of this Order in Form 'A' or in Form 'B'.

3. (1) No person shall stock, sell, store for sale or utilise coal for burning bricks or shall otherwise dispose of coal in this State except under a licence in Form 'A' or 'B' granted under this Order or in accordance with the provisions of this Order.

(2) Nothing contained in sub-clause (1)-

(a) Shall in so far as it relates to taking out a licence for stocking or storing coal for their own consumption, apply to the stocks held by persons or undertakings obtaining coal on permits of the District Magistrate or the State Coal Controller for their own consumption.

(b) Shall apply to any person or class of persons exempted from any provision of the above sub-dame by the State Coal Controller, to the extent of their exemption.

4. (1) Every application for licence under this Order shall be made in the form given in Schedule I appended to this Order. ·

(2) A licence granted under this Order shall be in Form 'A' or Form 'B' appended to this Order and the holder of a licence granted under this Order shall comply with any directions that may be issued to him by the Licensing Authority in regard to the purchase, sale, storage or distribution of coal.

(3) The Licensing Authority may grant, refuse to grant, renew or refuse to renew a licence and may suspend, cancel, revoke or modify any licence or any terms thereof granted by him under the Order for reasons to be recorded. Provided that every power which is under this Order exercisable by the Licensing Authority shall also be exercisable by the State Coal Controller or any person authorised by him in this behalf.

7. The State Coal Controller may by written order likewise require any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provisions of clause (8).

8. (1) No licensee in Form 'B' and no person acting on his behalf shall sell, agree to sell or offer for sale, coal at a price exceeding the price to be declared by the Licensing Authority in accordance with the formula given in Schedule III.

(2) A licensee in Form 'A' or any other person holding stock of coal or any other person acting for or on behalf of such licensees or person transferring or disposing of such stocks to any person in accordance with clause 6 or clause 7 shall not charge for the coal a price exceeding the landed cost, plus incidental and handling charges, plus an amount not exceeding 10

per cent of the landed cost as may be determined by the Licensing Authority or the State Coal Controller.

Explanations :-( 1) Landed cost means the excolliery price of the coal plus the L.D.C.C. and Bihar Sales tax plus middleman's commission actually paid and railway freight.

Messrs. Dwarlca

Prasad Laxmi

Narain v.

The Staie of Uttar Pradesh and

Two Others.

MukherJea. J.

Mems. Dwarka

Prasad Laxmi

Narain

The State of Uttar Pradesh and

Two Othtrs.

MukMrjea J.

(2) Incidental and handling charges mean the cost of unloading from wagons, transporting to stacking site, unloading at the stacking site, plus godown rent, plus choukidari cliarges, if any, not exceeding Rs. 8-8-0 per ton as may be determined by the Licensing Authority or the State Coal Controller according to local conditions.

11. The District Magistrate shall within a week of the commencement of this Order prepare and publish in a local paper a list of persons carrying on the business of sale of coal in his district and upon the publication of the list, the persons included therein will be deemed for purposes of this Order to be licensee until three months next following the publication of the list in Form A or B as may be specified.

12. If any person contravenes any of the provisions of this Order, or the conditions of licence granted thereunder, he shall be punishable under section 7 of the Essential Supplies (Temporary Powers) Act, 1946, with imprisonment for a term which may extend to three years or with fine or with both and without prejudice to any other punishment to which he may be liable ........ "

Schedule III referred to in the Order is as follows :

SCHEDULE III.

(Formula for declaration of prices of soft coke/hard coke/steam coal).

Ex-colliery Price

L.D.C.C. and Bihar Sales tax 3.

Middleman's commission

Railway freight 5.

Incidental and handling charges including

(i) Unloading from wagons.

(ii) Transport upto premises of stacking

(iii) Unloading and stacking at the premises or depot.

Actuals.

Actuals.

Actuallv paid subject to the maximum'Iaid down under clause 6 of the Government of India

Colliery Control Order, 1g45.

Actuals.

Maximum of Rs. 8-8-o per ton aa

may be determined by the Licensing Authority according to local conditions, provided that at places which are" extraordinarily distant from the railway head a higher rate may be a_llowed by the Licensing Autho rity.

(iv) Godown rent and chaukidari

charges, if any

(v) \.Yeigl1ing charg, s, if any.

Local taxes Octroi, etc.

Shortage

Profit

Actuals.

1\1ot exceding ~~! maunds per ton in the case of soft coke and 2~ maunds in the case of hard coke and stf'am coal as mav be determin..:d by the Licensing Authority.

At 10 per cent on total items 1 to 6

abov;: except item No. 5.

It is said that on the 16th of July, 1953, the respondmt No. 2 issued a declaration whereby he fixed

the retail rates for the sale of soft coke, coal, etc. at precisely the same figures as they stood in the directive issued on the 14th of February, 1953. The result, according . to the petitioners, was that the selling prices were reduced so much that it was not possible for the coal traders to carry on their business at all. In accordance with the provision of clause 11 of the Control Order set out above, the petitioners' name appeared in the lis\ of B licence holders and they did apply for a licence in the proper form as required by clause (4). The licence, it is said, was prepared, though not actually delivered over to the petitioners.

By a letter dated the 3rd of October, 1953, the Area Rationing Officer, Kanpur,. accused t11e petitioners of committing a number of irregularities in connection with the carrying on of the coal depot. The charges mainly were that there were two other depots held and financed by the petitioners themselves in the names of different persons and that the petitioners had entered into agreements for sale of coal at more than the fixed rates. The petitio'.1ers submitted an explanation which was not .considered to be satisfactorv and bv an order elated the 13t:1 of October, 1953; the District Supply Officer, Kanpur, cancelled the petitioners' licence.

In the present petition the petitioners have challenged the valiclitv of the Coal Control Order of the 10th of July, 1953, the declaration of prices made on the 16th of July following and also the order cancelling tf1e eti tioners' licence on the 13th of October, 1953. 15-95 s. c. I./59

MeJsrr. Dworka

Prasad Laxmi

, h'Orain

Tht State of Uttar PradeJh atid

Two Others.

MuAherjea J.

l954

Messrs. Dwarka Prasad Laxmi

}larairi

"· The Stale of Uttar Pradesh and

Tw1 Others.

Muk lerjea 1,

The constitutional validity of the littar Pradesh Coal Control Order has been assailed before us substantially on the ground that its provisions vest an unfettered and unguided discretion in the licensing authority or tl1e State Coal Controller in the matter of granting or revoking licenses, in fixing prices of coal and imposing conditions upon the traders ; and these arbitrary powers cannot only be exercised by the officers themselves but may be delegated at their option to any person they like. It is argued t'.lat these provisions imposing as they do unreasonable rt strictions upon the right of the petitioners to carry on their trade and business conflict with their fundamental rights under article 19 ( 1) (g) of the Constitution and are hence void. With regard to the order oated the 16th of July, 1953, by which the prices of coke, coal, etc. were fixed, it is pointed out that it was not only made in exercise of the arbitrary pow.er onferred upon the licensing authority by the Coal Control Order, but the prices as fixed, are palpably discriminatory as would appear from comparing them with the prices fixed under the very same Control Order in other places within the State of Uttar Pra( esh like Allahabad, Lucknow and Aligarh. The order of the 13th October, 1953, cancelling the petitioners' licence is challenged on the ground that the charges made against the petitioners were vague and indefinite and '.hat the order was mde with the ulterior object of driving the petitioners out of the coal business altogether. It is said further that as a resuit of the cancellation order, the petitioners have bern made incapable of disposing of the stocks already in their possession, though at the same time the holding of such stock after the cancellation of their licwce has become an offence under the Coal Control Order.

It is not disputed before us that coal is an essential commodity under the Essential Supplies (Temporary Powers) Act of 1946, and by virtue of the delegation of powers by the Central Government to the Provincial Government under section 4 of the Act, t1ie Uttar Pradeslf Government was competent to make proviiohs, by notified order, for regulating the supply and

distribution of coal in such a way as they considered proper with a view to secure the objects as specified in section 3 of the Act. All that is necessary is that these proYisions should not infringe the fundamental rights of the citizens guaranteed under Part III of the Constitution and if they impose restrictions upon the carrying on of trade or business, they must be reasonable restrictions imposed in the interests of the general public as laid down in article 19 ( 6) of the Constitution.

Nobody can dispute that for ensuring equitable distribution of commodities considered essential to the community and their availability at fair prices, it is quite a reasonable thing to regulate sale of these commodities through licensed vendors to whom quotas are allotted in specified quantities and who are not permitted to sell them beyond the prices that are fixed by the con trolling authorities. The power of granting or withholding licences or of fixing the prices of the goods would necessarily have to be vested in certain public officers or bodies and they would certainly have to be left with some amount of discretion in these matters. So far no exception can be taken ; but the mischief a.rises when the power conferred on such officers is an arbitrary power unregulated by any rule or principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority. A law or order, which .confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable. As has been held by this court in Chintamon v. The State of Madhya Pradesh('), the phrase "reasonable restriction" connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public.

Legislation, which arbitrarily or excessively invades the right, cannot be said to contain the quality of reasonableness, and unless it strikes a proper bala•1ce between the freedom guaranteed under

(1) [1950] S. C.R. 759,

J954

Messrs, Dwarka Prasad Laxmi

Narain

"· The State of Uttar Pradesh anti

Two Others.

Mukherjea J.

Messrs. Dwarka Prasad Laxmi

Narain

The Stale of Uttar Pradesh and Two Others.

Mukh"i•• J.

article 19 ( 1) (g) and the social control permitted by clause ( 6) of article 19, it must be held to be wanting in reasonableness. It is in the light of these principles that we would proceed to examine the provisions of this Control Order, the validity of which has been impugned before us on behalf of the petitioners.

The provision contained in clause 3( 1) of the Order that "no person shall stock, sell, store for sale m otherwise utilise or dispose of coal except under a licence granted under this Order" is quite unexceptional as a general provision ; in fact, that is the primary o':ject which the Control Order is intended to serve.

There are two exceptions engrafted upon this general rule: the first is laid down in sub-clause (2) (a) and to tl11t no objection has been or can be taken.

The Second exception, which is embodied in subclause (2) (b) has been objected to by the learned counsel appearing for the petitioners,. This exception provides that nothing in clause 3 (1) shall apply to any person or class of persons exempted from any provision of the above sub-clause by the State Coal Controller, to the extent of such exemption. It will be seen that the Control Order nowhere indicates what the grounds for exemjXion are, nor have any rules been framed on this point. An unrestricted power has been given to the State Co:1trolkr to make exemptions, and even if he acts arbitrarily or from improper motives, .there is no check over it ancl no way of obtaining redress.

Clause 3 (2) (b) of the Control Order seems to us, therefore, prim a facie to be unreasonable.

V.l e agree, however, with Mr. Umrigar that this portion of the Control Order, even though bad, is severable from the rest and we are not really concerned with the validity or otherwise of this provision in the present case as no action taken under it is the subject matter of any complaint before us.

The more formidable objection has been taken on bel11lf of the petitioners against clause 4 (3) of the Coctrol.

Order which relates to the granting and refusing of licences. The licensing authority has been

givn absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or

S.C.R.

SUPREME COURT REi•Cmrs 813

modify any licence under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. It seems to us that such provision cannot be held to be reasonable.

No rules have been framed and no directions given on these matters to regulate or guide the discretion of the l, nsing officer.

Practically the Order commits to 'M'f1e unrestrained will of a single individual the power

\;.to grant, withhold or cancel licences in any way he

chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same. Mr. Umrigar contends that a sufficient safeguard has been provided against any abuse of power by reason of the fact that the licensing authority has got to record reasons for what he does.

This safeguard, in our opinion, is hardly effective ; for there is no higher authority prescribed in the Order who could examine the propriety of these reasons and revise or review the decision of the subordinate officer. The

re:>sons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person. It was pointed out and with perfect propriety by Mr. Justice Matthews in the well-known American case of Yic!( Wo v.

Hopkins('), that the action or non-action of officers placed in such position may proceed from enmity or prejudice, from partisan zeal or animosity, from favouritism and other improper influences and motives which are easy of concealment and difficult to be detected and exposed, and consequently the injustice capable of being wrought under cover of such unrestricted power becomes apparent to every man, without the necessity of detailed investigation. In our opinion, the provision of clause 4 (3) of the Uttar Pradesh Coal Control Order must be held to be void as imposing an unreasonable restriction upon the freedom

(1) 118 U. S .. 356 at 373.

;954

Messrs. Dwarka

Prasad Laxmi

Nttrain

The State of Uttar Pradesh and

Two Others.

MeJ,· rs. Dwark4

Pro rad Laxmi

Narain

T:.e State of Uttar Pradesh and

T:vo Other1.

Mukherj•a ].

of trade and business guaranteed under article 19 ( 1)

(g) of the Constitution and not coming within the protection afforded by clause ( 6) of the article.

As this provision forms an integral part of the entire structure of the Uttar Pradesh Coal Control Order, the order cannot operate properly unless the provision of clause 4 (3) is brought in conformity with the constitutional requirements indicated above. The licence of the petitioners having been cancelled in pursuance with the above clause of the Control Order, Sit• cancellation itself should be held to be ineffective an~.,,' it is not necessary for us to enquire further whether or not the grounds upon which the licensing authority purported to act were vague or idefinite or could constitute proper grounds for cancellation.

The two other clauses of the Control Order to which exception has been taken on behalf of the petitioners are clauses (7) and (8). Clause (7) empowers the State Coal Controller to direct, by written order, any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provision of clause (8). Clause 8 (1) provides that no licensee in Form 'B' shall sell o; agree

to sell coal at a price exceeding the price to be declared by the licensing authority in accordance with the formula given in Schedule III. With regard to both these clauses, the contention of the petitioners' counsel, in substance, is that the formula for determining the price, as laid down in Schedule Ill, is per se unreasonable as it is made dependent on the exercise of an unfettered and uncontrolled discretion by the licensing authority.

An unfair determination of the price by the licensing authority, it is argued, would be totally destructive of the business of the coal traders and the grievance of the petitioners is that that is exactly what has been done by the declaration of prices made on the 16th of July, 1953.

We have examined the formula given in Schedule Ill to the Control Order with some care and on the materials that have been actually placed before us, we are

not in a position to say that the formula is unreasonable. The prices, as said already, are calculated on the basis of the landed costs of coke and coal up to the depot, to which a profit of 10 per cent is added.

The landed costs comprise seven items in all which are enumerated in Schedule III. With regard to items !, .. 2, 3, 4 and (j of the Schedule the actual costs are taken into account and to that no objection can possibly be taken. The entire dispute is with regard to incidental .-. cjxl!fges specified in item 5 and the allowance for " hortage which forms item 7.

So far as incidental charges are concerned, the Schedule allows a maximum of Rs. 8-8-0 per ton to be determined by the licensing authority according to local conditions.

The rates undoubtedly vary according to local conditions and some amount of discretion must have to be left in such cases to the local authorities. The discretion given to the licensing authority in fixing these rates is, however, not an unlimited discretion, but has got to be exercised with reference to the condition prevalent in the locality with which the local officers must be presumed to be familiar. The grievance of the petitioners is that in the declaration of 16th of July, 1953, the licensing authority allowed incidental chrges 011ly at the rate of Rs. 4-12-0 per ton and that is grossly unfair.

It is pointed out that at Lucknow, Aligarh, Allahabad and other places much higher rates were allowed, though the local conditions of these places are almost identical ; and there has been consequently a discrimination in this respect which makes the declaration void altogether. The statements that have

'1 •' I.

been made by the petitioners in this connection are not supported by any affidavit of any person who is familiar with the local conditions in the other places

and on the materials that we have got here we are unable to say that the rates fixed by the licensing authority of Kanpur are really discriminatory. It is certain! y not open to us to substitute our own determination in the matter of fixing the prices for that of the licensing authority and provided we are satisfied that the discretion that has been vested in a public officer Js not an uncontrolled discretion an@ no unfair

Messrs. Dwarka

PraJad Laxmi

Narain v. 1 he State of Uttar Pradesh and Two Others.

Mukhtrjea J.

!954

i-r1.t,.srs. Dwuta

Prasasd L12xmi

Narain

The Stale of Utto.r Pradesh and

Two Othtrs.

Mukl"1i•• J.

discrimination has resulted from the exercise of it, we cannot possibly <trike down as illegal any order or declaration made by such officer.

The same reasons apply, in our opinion, to the seventh item of Schedule III which relates to allowances for shortage of weight. Here also the Control Order specifies a maximum and the determination of "' the allowance in particular cases has been left to the discretion of the licensing authority.

We are not satisfied from the materials placed before us that "tl14 _ ,.,-' provision is unfair or discriminatory.

The formula..J allows a profit of 10 per cent upon the cost items with Ihe exception of iftem Nu. 5 which relates to incidental charges. \Ve do not know why this item has been omitted and Mr. Umrigar, appearing for the respondents, could not suggest any possible reason for it. But even then, the result of. this omission would only be to lower the margin of profit a little below 10 per cent and nothing more. If the other traders in the locality are willing to carry on business in coal with that amount of profit, as is stated on the affidavits of the respondents, such fixation of profit would undoubtedly be in tbe interests of the public and cannot be held to be unreasonable. The counsel for the petitioners is not right in his contention that the Control Order has only fixed the maximum pro5t at 10 per cent and has left it to the discretion of the licensing authority to reduce it in any way he likes. Schedule III fixes the profit at ' 10 per cent . upon the landed costs with the exception of item No. 5 and as this is not the maximum, it would have to be allowed in all cases and under clause 8 (1), the 'B' licensees are to sell their stocks of coal according to the prices fixed under Schedule Ill.

Clause 8 (2) indeed is not very clearly worded, but we think that all that it provides is to impose a disability upon all holders of coal stocks to charge prices exceeding the hnded costs and a profit upon the same not above 10 per cent as may be determined by the licensing authority. The determination spoken of here must be in accordance with what is laid down in Schedule III anc\ that, as has been said above, does specify a fixed rate and not a maximum and does not

allow the licensing authority to make any reduction he likes. On the whole we are of the opinion that clauses (7) and (8) of the Control Order do not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners and consequently the declaration of the 16th of Juiy, 1953, cannot be held to be invalid. The result is that, in our opinion, clause 4(3) of the Control Order as well as tbe cancellation of the petitioners' licence should be held to be invalid and a writ in the nature of mandamus would issue against the respondents opposite parties preventing them from enforcing the cancellation order. The rest of the prayers of the petitioners arc disallowed. \Ve make no order as to costs.

Petition partly allot11ed.

Agent for the petitioners : Ga11pat Rai.

Agent for the respondents : C. P. Lal.

CHA TTURBHUJ VITHALDAS JASANI v.

MORESHW AR P ARASHRAM AND OTHERS.

[MuKHERJEA, V1v1"" BosE and

BHAGWATI

JJ. /

Represellfation of t!1c People Act (XLlll of 1951), s. 7(d)-A firm entering into co11trac1s with Central Govern1ne11t for supply of goods-A candidate seeking election for Parlianient, a partner of the said firm on the crucial dates-Disqualificatio11-Co11stitution of India, art. 299(1)-Indian Contract Act (IX of 1872) s. 230(3)- Contract ivith Gover111nent not in proper forn1-TVhether void- Ratification-Contract for supply of goods-Subsists till fully discharged by both sides-And payn1ent. 1nade-Person of Scheduled

Caste Mahar convertt'd to 1\fahanubhava Pa11th-FVhether convert..,· caste statu.i altered.

A contract for the supply of goods does not tenninate \Vhcn the goods arc supplied, it continues into being till pay1ncnt is made and the contract is fully discharged by performance on both sides.

O'Carroll v. Hastingt ([1905] 2 LR. 590) and Satyendrakumal' })as v. Chairn1an of the Municipal Com1nissioners of Dacca (I.L.R . 58 Cal. 180) relieJ upon.

The firm Moolji Sicka and Company of was a partner had _ entered into contracts which the candidate \Vith the Central

.. i\.ftssrs. Dwarka

Prasad Laxmi Narain v.

The State of Uttw Pradesh and

Two Others.

Mukhtrjea J.

February 15.

England

S. P. Varma

DW ARKA PRASAD LAXMI NARAIN

MEHR CHAND MAHAJAN

MUKHERJEA

VIVIAN BosE

GHULAM HAsAN

JAGANNADHADAS JJ.

Constitution of India

Arts. 19(1)

Clause 4(3)

cl. 4(3)

cl. 4(3)

art. 19

S. 356

article 32

Constitution of India

S. C. Isaacs

S. K. Kapur

MuKHERJEA

article 32

article 14

article 19

Kanpur

District Magistrate of Kanpur

14th of February, 1953

22nd of May, 1953

articles 14 and 19

1st of July,

1953

State of Uttar Pradesh

14th February, '

10th of July, 1953

section 3(2)

Essential Supplies Act, 1946

Stale of Uttar Pradesh

State of Uttar Pradesh

J'a

section 4

Schedule I

Schedule III

clause 6

clause 7

Dwarlca

Prasad Laxmi

Staie of Uttar Pradesh

MukherJea

MukMrjea

section 7

Schedule III

clause 6

Act

16th of July, 1953

clause 11

3rd of October, 1953

13t:1 of October, 1953

State of Uttar PradeJh atid

MuAherjea

Dwarka Prasad Laxmi

article 19

Allahabad

Lucknow

Aligarh

13th October, 1953

Central Government

section 4

Uttar Pradeslf Government

section 3

article 19

Mukherjea

Mukh"i••

article 19

article 19

clause 3( 1)

clause 3

Clause 3

Umrigar

clause 4

Matthews

clause 4

article 19

clause 4

Clause 8

Schedule III

Schedule I

Schedule I

Schedule III

Dwarka

Stale of Utto.r Pradesh

Schedule III

Schedule III

clause 8

Schedule I

Clause 8

Schedule III

16th of Juiy, 1953

clause 4(3)

Ga11pat Rai

C. P. Lal

BHAGWATI

s. 7(d)

art. 299(1)

Indian Contract Act

s. 230(3)

Moolji Sicka and Company

Mukhtrjea