NAGENDRA NAm MONDAL

v. mE STATE OF WEST BENGAL

January 13, 1972 [1. M. SHl!LAT AND H. R. KHANNA, JJ.]

West Beng4l Prevention of Violent A.ct/vlll., A.ct, 1910--Sectlon 3(2)(b)-A.cts prejudicial to the maintenonce of public. order-Tests for determining.

Practice and procedure-Habeas Corpus-Grounds not urged In th• petition, if can be urged.

The petitioner was detained under the West Bengal Prevention of Violent Activities Act, 1970. The grounds for detention staled that he, along with others, on two occasions, entered the premises of eduealiotial institutions, set fire to books, registers, furniture etc., placed bombs in the building and threatened the staff with death and thereby committed "milchief" disturbin~ "public order" within the meaning of S. 3(2)(b) of the Act. The petitioner's representation was received by the State Government on May 27, 1971. On June 7, 1971 the petitioner's case was placed before the Advisory Board. The State Govel'nment considered the representation and rejected it by its order dated July 1, 1971. On July 9, 1971 the Board reported that there was in its opinion sufficient cause for the

P'titioner's detention.

The petitioner sent his habeas corpus petition from jail in which he denied the allegations made ag<linst him. At the hearing of the petition, the counsel for the petitioner raised two additional grounds (i) that the grounds furnished to thll detenu did not constitute breach of public order, and therefore, the detention was illegal; and (li) that the delay in consld-M'ing the petitioner's representation was inordinate, iand ther.efore, was in violation of Artic!!e 22(5) of Con, titution.

Dismissing the petition,

HELD : (i) According to th;: Report of the Advisory Board, there was sufficient material justifying the order and in the absence of any definite material, it is not possible to. accept the vague allegations by the petitioner. [78 El

(ii) Ordinarily grounds which do not find any place in the petition would not be permitted to be raised before this Court. But since this was a habeas corpus petition and, furthermre, made by the petitioner from jail such grounds could be allowed to be raised. [78 Fl

(iii) The true distinction between the area of Jaw and order and public order is ode of degree of extent of the breach of the act in question upon society.

Any 'contravention of law always affects order, but before it could be said to affect 'public order' it must affect the community at large.

Acts similar in nature, but committed in different contexts and clrcum stances might affect the problem of Jaw and order and in another, the

breach of public order. Thll anaolgy of crimes against individuals and crimes against the public, though usdful to a limited extent, would not always be apt. [79 li-80 Bl .

Lohia v. State [1966] I S.C.R, 709, Pushkar Mukhtrl., v. West Bengal f,19691 2 S.C.R. 635: Arun Gho.h v. West Bengal [!9701 3 S.Gl.R. 288 and S. K. Sah• v. Commissioner of Police, Calcutta [19701 3 S.C.R. '360

rerred to.

(iv) The distinction drawn by Clause (b) of S. 3(2) is between caus ing fire to building of an educational institution simp/iciler arid CQ!Illllitting mischief of the same nature but such that it disturbs or is likely to B disturb the even tempo of the community in that particular locality. The object of the acts complained of. as vandalism, to disturb .pie working of the institution by burning its records and to create a scare so that neitl:\er the teaching staff, nor the pupils would , dare attend it for prosecution of studies. In these circumstances, the alleged acts did not merely constitute mischief under S. 425 of the Penal Code, but constituted such mischief which disturbed or was likely to disturb public order and, therefore, fell within the definition in Sectio~ 3(2)(b). [81 G, HJ C

(v) In the circumstances of the present case, it oannot be held that the delay w .. so inordinate as to affect the validity of the detention. No doubt, the delay in deciding the representation was 34 days, but most of it was due to the fact that the representation and the record remained w; th the Board. In a given case, Government may not be able to reach a proper conclusion within a sho'rt time especially, where another authority has passed the questioned order. {83 Pl !ayanarayan Sukul v.

West D.

Ben!!al fl9701 3 S.C.R. and Khalrul Haque v. West Bengal, writ petition aecided on September 10, 1969, referred to.

ORIGINAL JURISDICTION: Writ Petition No. 308 of 1971.

Under Article 32 of the Constitution of India for a writ in the nature of habeas corpus.

S. K. Dhingra for the petitioner.

P. K. Chatterjee, G. S. Chatterjee, for the respondent.

The Judgment of the Court was delivered by

Shelat, J.

On May 7, 1971, the District Magistrate, Jalpai F guri, in exetcise of power conferred upon him by s. 3 ( 3) of the West Bengal (Prevention of Violent Activities) Act, 1970 (Pre- 'sident's Act 19 of 1970) passed an order under sub-sec. 1 of that section directing the detenti0n of the petitioner.

The order recited that the District Magistrate was satisfied that it ha<! be come necessary to detain the petitioner ''with a view to prevent G ing him from acting in any manner prejudicial to the maintenance of public order".

On that very day, the District Magistrate reported to the State Government the fact of his having passed the said order.

In pursuance of that order, the petitioner was arrested on May 9, 1971 and was detained in jail.

The petitioner was furnished, as required by the Act, with the grounds ff for his detention at the time when his arrest was effected.

On May 17. 1971, the State Government approved the said order.

On the same day the State Government reported the fa9t of the

A passing of the said order and its approval to the Central Government.

The petitioner made his representation which he was entitled to make by ve of s. S(i). That was received by the State Government on May 27, 1971. On June 7, 1971, that is within 30 days from the date of detention, the petitioner's case was placed before the Advisory Board constitnted under s. 9 of

the Act.

The State Government considered that representation, but rejected it by its order dated July 1, 1971. On July 9, 1971, the Board reported that there was, in its opinion, sufficient cause for the petitioner's detention.

Thereupon, the State Government, by its order dated July 29, 1971, confirmed the detention order under s. 12.

The grounds for detention served on the petitioner stated that the. order was passed in view of his acting "in a manner prejudi cial to the maintenance of public order as evidenced by the particulars given below".

These particulars were :

"1. On 1-12-70 after midnight you along with other entered into the Headmaster's room of Moynaguri Higher Secondary School, Police Station Moynaguri, after breaking open the doors and set fire to books, registers, a typewriter, furnitnre etc. causing heavy loss to the school.

After completing the operation you placed a bomb in the school premises endangering the life of the teaching staff and the stndents.

2. On 5-4-1971 at about 10.30 hours you along with others forcibly entered into Moynaguri Higher Secondary School, Police Station Moynaguri and set fire to the office room and the Headmaster's room of the school with the help of kerosene oil causing damage to books, almirahs and other articles.

While committing the arson in the above school you also threatened the teaching staff and the -duftry of the school with death if they would dare to give you any resistasnce or divulge your name to any authority holding you responsible for the arson:·

G The grounds also informed the petitioner that he could make a representation to the State Government, that his case would be put up before the Board and that the Board would grant him a personal hearing, if he so desired.

The case of the detenu, as stated in the petition, was that he was at first arrested on suspicion Oil April 23, 1971 in connectioo H with G. R. Case No. 812 of 1971, but was released on bail as there was no evidence against him.

There was another case also being G.R. 2639 of 1970 in connectioo with the incident

78 SUPllBME COUll T llllPOll TS

(1972] 3 S.C.R.

referred to in ground No. 1 sot out above.

The detenu, however, A was not arrested in that connection.

The two G.R. Cases were started long before he was arrested on May 9, 1971 under the detention order dated May 7, 197 L He denied that he was connected or associated with the incidents mentioned Jn the said grounds, anJ said that the allegations made against him therein were false, baseless, motivated and vague, and that there was B absolutely no material upon the basis of which the order of detention could be made.

He also alleged that some rival parties, who were in league with the police had falsely involved him in the incidents referred to in the grounds and got the District Magistrate to issue the said detention order.

These allegations were denied in the counter-affidavit filed on behalf of the State Government, the assertion therein being that there was reliable C material before the District Magistrate relating to the illegal and anti-social activities prejudicial to the maintenance of public order, and that it was after careful examination of that material that the impugned order was passed.

The allegations made by the petitioner were, in our view, D vague and indefinite and not backed by any material or particulars, and therefore cannot be accepted.

Besides, the detenu's case was placed before the Advisory Board together with his representation and other relevant materials, and according to the report of the Board, there was sufficient ma, terial justifying the order. In the absence of any definite material before us, it is not E possible to accept the extremely vague allegations made by the petitioner.

But Mr. Dinghra, who appeared amicus curiae for the petitioner, raised two additional grounds.

Neither of them was, however, raised in the petition but since this was a habeas corpus petition, and fuvthermore, made by the petitioner from F jail, he was allowed to take them though ordinarily he would not have been permitted to do so as they did not find any place in the petition.

The two additional grounds were ( 1) that the grounds furnished to the detenu did not constitute breach of public order, and therefore, the detention did not fall under sub-ss. ( 1) and G

(3) of s. 3; and (2) that although the representation made by the detenu was received by the Govrnment on May 27, . 1971, it was not considered and disposed of till July 1, 1971, that the delay in doing so was inordinate and was in violation of Art. 22(5) of the Constitution, rendering the impugned order invalid.

H In regard to the .first contention, counsel urged that assuming that the allegations made in the grounds for detention were true, setting fire to an educational institution and destroying thereby its

A records might constitute an offence under the Penal Code, but did not constitute disturbance or breach of public order, which alone could warrant a detention order under the Act.

In support of this proposition, counsel referred to some of the decisions of

this Court.

The detention order, no doubt, mentioned that it was issued B with a view to prevent the detenu acting prejudicially to the maintenance of public order.

The contention raised by counsel, however, involves the question whether the acts alleged against the detenu constituted breach of public order or were such as would be prejudicial to its maintenance. As to what is meant by the expression, 'public order', Hidayatullah, J., (as he then C was) in Lohia v. State('), said that any contravention of law always affected order, but before it could be said to affect 'public order', it must affect the community or the public at large.

He considered three concepts, viz., "law and order'', "public order" and "the security of the state" generally used in preventive detention measures and suggested that to appreciate the scope and extent of each of them, one should imagine three concentric cir- D cles, the largest of them representing "law and order", the next representing "public order" and the smallest representing "the security of the state". An act might affect "law and order'', but not "public order", just as an aot might affect public order but not "the security of the state".

Therefore, if the detention order

were to use the expression "maintenance of Jaw and order", that would be widening the scope of the detaining authority, if the statute concerned confined that power in relation to acts prejudicial to "the maintenance of public order".

A similar distinction was also drawn in Pushkar Mukherjee v. West Benga/( 2 ), where Ramaswami, J., observed that , the expression "public order" in s. 3 ( 1) of the Preventive Detention Act, 1950 did not take in every kind of infraction of law.

An assault by one on another in a house or even in a public street might create disorder but not public disorder, for the latter was one which affected the community or the public at large.

Therefore, a line of demarcation must be drawn between serious and aggravated forms of disorder which affect the community or injure the public interest and the relatively minor breaches of peace of a purely local significance which primarily injure specific individuals and only in a secondary sense public interest.

A mere disturbance of law and order leading to disorder was, thus, not necessarily sufficient for action ' under tho Preve.ntive Detention Act but a disturbance which would affect public order fell within the. scope of the Act.

But in Arun Ghosh v. West Bengal('), it was pointed out that the true distinction between the areas of "law and order" and

(I) [1966) I S.C.R. 709.

(2) (19691

2 S.C.R. 635.

(3) [1970]

3 S.C.R. 288.

"public order" was one of degree and extent of the reach of the A act in question upon society.

Acts similar in nature, but committed in different contexts and circumstances might cause different reactions; in one case it might affect the problem of the breach of law and order, and in another the breach of public order.

The analogy resorted to by Ramaswami, J., of crimes

agait !ndividuals and crimes against the public, though useful 8 to a !Im1ted extent, would not always be apt.

An assault by one individual upon another would affeot Jaw and order only and cause its breach.

A similar assault by a member of one community upon a leading individual of another community, though similar in quality, would differ in potentiality in the sense that it might cause reverberations which might affect the even tempo of the life of the community.

As the Court pointed out, "the act C by itself is not determinant of its own gravity.

In its quality it may not differ but in its potentiality it may be very different". At the same time, the power of detention having been permitted to the State under the Constitution as an exceptional power, its exercise had to be scrutinized with extreme care and could not be used as a convenient substitute for the normal processes of the D criminal law of the country. (cf. S. K. Saha v. Commissioner of Police, Calcutta(').]

These are all cases under the Preventive Detention Act, IV of 1950, which by s. 3 of it confers power of detention on specified grounds which include acts prejudicial to the maintenance E of public order.

The present Act likewise confers such power with a view to prevent a person from acting in any manner prejudicial to the security of the State or the maintenance of public order under its s. 3 (1).

Though the Act does not define the expression "public order", it does define the expression "acting in any manner prejudicial to the security of the State or the maintenance of public order".

That expression under the definition inter alia means "committing mischief within the meaning of s. 425 of the Indian Penal Code, by fire or any explosive substance on any property of Government or any local authority or any corporation owned or contr\)lled by Government or any University or other educational institution, or on any public building where the commission of such mischief disturbs or is likely to disturb public order .... " The definition itself thus draws a distinction between mischief by fire or explosive substance upon property of one of the specified categories and such mischief upon any such properties which disturbs or is likely to disturb public order.

The former, however reprehensible, would be taken care

of by the Penal Code, and it is only in respect of the latter that the drastic power of detention without trial conferred by the first H sub-section can be validly exercised.

But to the extent that the

(I) [1970] 3 S.C.R. 360.

I';. I'!. MOl'!DAL v. WEST BEl'!GAL (She/at, J.) 81

A expression "public order" is not defined here also, decisions under Aot IV of 1950 delineating the sphere of "public order" from those of "maintenance of law and order" and "the security of the State'.' would still be of utility.

The acts alleged against the petitioner in the grounds for detention are acts which fall under s. 3(2)(b), in that, they cons- B titute mischief by fire and by explosive substance on property of an educational institution.

But the question is whether these acts disturbed or were likely to disturb public order; in the words Of Hidayatullah, C.1., in Arun <Jhosh v. West Bengal('), disturb the even tempo of the life of the community of that specified locality.

The distinction drawn by cl. (b) of s. 3 (2) then is between c causing fire, for instance, to a building of an educational institution simpliciter, and committing mischief of the same nature but such that it disturbs or is likely to disturb the even tempo of the community in that particular locality.

The grounds set out two acts alleged against the petitioner.

The first, of December 1, 1970, was that the petitioner and some D others trespassed after midnight into the Headmaster's room in the Moynaguri Higher Secondary School and set fire to books. registers, furniture etc., and then placed a bomb in the school building thereby endangering the life of the teaching staff and the students attending the school.

The second, of April 5, 1970, was that the petitioner along with some others again trespassed into the same school and set fire to parts of it and then threatened the E members of its stall' with death if they offered resistance or disclosed his name to any authority.

The target of arson, (assuming the allegations to be true which we have to assume) was an educational institution and particularly the registers and other papers maintained by it. The object obviously was vandalism, to disrupt its working by burning 1 its records and to create a scare so that neither the teaching staff nor the pupils would dare attend it for prosecution of studies.

The parents dare not henceforth send their wards for fear that the school might be set on fire while they are in it.

The bomb was manifestly placed in the premises for creating that scare. It could not have been intended for any other purpose after the G records and furniture had been set on fire.

In these circumstances, the alleged acts did not merely constitute mischief under s. 425 of the Penal Code, but constituted such mischief which disturbed or was likely to disturb public order.

The acts in question, no doubt, would be acts similar to those committed by a perlOD. who resorts to arson, but in the circumstances were acts different in potentiality, and therefore, fell within the definition H in s. 3(2)(b). The first argument urged on behalf of the peti tionei' must, consequently, fail.

(I) [1970)3 S.C.R. 288.

The second argument related to the time taken by the State A Government in deciding the reprerentation sent by the petitioner from jail.

As aforesaid, it was received by Government on May 27, 1971, but was considered and rejected on July 1, 1971, that is to say. after a lapse of 34 days.

Like s. 7(i) of the Preventive Detention Act, IV of 1950, the present Act also provides by s. 8(1) that the detaining authority .shall provide to the detenu not B later than five days from the date of detention the grounds on which tile detention order has been made and shall afford him the earliest opportunity of making a representation against the order to the State Government.

In Ja, vanarayan Sukul v. West Bengal(') where also a point as to undue delay in the light of Art. 22(5) of the Constitution and s. 7 of the Preventive Detention Act, lV of 1950 was raised, Ray, J., speaking for the Court, laid down C four principles . These were :

1. that the appropriate authority is bound to give an opportunity to the detenu lei make a represention and to consider the representation as early as possible;

2. that such a consideration of the representation is entirely independent of any action by the Advisory Board including consideration by it of the detenu's represen tation;

3. that there should not be any delay in the matter of consideration, though no hard and fast rule can be laid down as regards the ttlne which can be taken in considering such a representation;

4 •. that the appropirate government has to exercise its opinion and judgment on the representation independent of that of the Advisory Board.

(cf. Khair11l Haque v. West Bengal('), which was applied in this case and where the distinctive features of the functions of the Government and the Board and their objects were discussed.) No doubt, Ray, J., at p. 232 of the report, said that the Government had to come to its decision on the representation before it seiit the detenu's case to the Bo!lfd. But, in that observation, he was not emphasising so much the point of time when the Government has to send the detenu's case including his representation to.the Board, but of the necessity of the Government considering and deciding the representation independently of and before the Boani'a decision, a point made in Khairul Haque's case(1). The delay in J.ayClrtllrayan' s case ( 1) was ol the month and twenty days, and was H

(2) Writ Petkion No. 246 of 1969, deed. on September 10, 19611.

A in the circumstances of that case held to be inordinate vitiating the detention .

The time gap between the receipt by Government of the tioner's representation aiid .the date of its decision was o~ 34 ys.

B The question is whether that gap can be treated as inordinate

delay going to the root of the validity of the detention or its continuation thereafter. The counter-affidavit filed on behalf of the Government, no doubt, did not contain any explanation. But that was because it answered only the allegations in the petition filed by the petitioner from jail, which had in it only general allegations. c such as the vagueness of the grounds of detention, mala {ides etc,.

and did not raise specifically any point on this aspect at all. The point as to delay was for the first time taken in the course of argu ments when the peition first came up for hearing before anothet Bench of this Court. At that time, counsel for the State produced the records of the case and notings from the records were actually read out before the Court in the hearing of the petitioner's counsel.

D That fact is not disputed before us and so also the fact that those

ICcords showed that on June 7. 1971 Government had sent tho files in connection with the petitioner's case and his representation to the Advisory Board. As soon as the representation was returned to it, Government considered it and rejected it but that was before the Board made its report and sent it to Government. But counsel E urged that this face may ex1>lain the lapse of time from the dato that the records were sent and the date when they were returned, but not the delay between May 27, 1971 and June 7, 1971 during which Government could have arrived at its decision. That argu ment has not m.uch force, because in a given case Government may not be able to reach a proper conclusion within a short time,

F especially, in a case where another authority, in this c'ase the District Magistrate, has passed the questioned order.

It might have to make inquiries as to the situation in the locality, the nature of and the circumstances ia which detention was found necessarV. the previous history of the person detained etc. Therefore, it is difficult.to agree with counsel that Government should have reached it.s onclusion during .the said j, eriod. No doubt, the delay in de- G c1dmg the representation was of 34 days, but part of it was due to . the fact that the representation and the record remained with the Board. In .these circumstances, it is difficult to say that there is a iust and proper analoinr between this case and that of Khairur Haque('), or Jayanarayan(1 ) or'lhat upon such analogy we should reach, the same conclusion which was reached in those cases. As H held m Jayanarayan's caH(1) there can be no liard and fast rut~

with regard to the time which Government can or should take,.

(I) W.P. No. 246 or 1969 deed. on Sept. 10, 1969.

(2) 1197013 s.c.R. 22s.

.and that each case must be decided on i\is own facts. In the cir- A cumstances of the present case we are unable to hold that the delay was so inordinate as to affect the validity of the petitioner's detention.

The petition fails and is dismissed.

S.N.

Petition dismissed .

NAGENDRA NAm MONDAL

mE STATE OF WEST BENGAL

January 13, 1972

H. R. KHANNA, JJ.

S. 3(2)(b)

May 27, 1971

June 7, 1971

July 1, 1971

July 9, 1971

S. 3(2)

S. 425

Penal Code

Article 32

Constitution of India

S. K. Dhingra

P. K. Chatterjee

G. S. Chatterjee

Shelat

s. 3

Prevention of Violent Act

sec. 1

May 9, 1971

May 17. 1971

Central Government

s. 9

July 29, 1971

s. 12

Moynaguri Higher Secondary School

7, 197

Dinghra

s. 3

May 27, . 1971

Art. 22(5)

Penal Code

Hidayatullah

Ramaswami

s. 3

Preventive Detention Act, 1950

[1970]

3 S.C.R. 288

s. 3

s. 3

s. 425

Indian Penal Code

Penal Code

[1970] 3 S.C.R. 360

s. 3(2)(b)

s. 3

April 5, 1970

s. 425

Penal Code

s. 3(2)(b)

s. 7(i)

s. 8(1)

Art. 22(5)

s. 7

Ray

Khairul Haque

J.ayClrtllrayan

September 10, 19611

June 7. 1971

Khairur Haque

Jayanarayan

Sept. 10, 1969


ATIC INDUSTRIES LTD. ETC. ETC. v.

WORKMEN ETC. ETC. (Wilh Connec'.ied appeals)

March 14, 1972

[C. A. VAIDIALINGAM AND I. D. DUA, JJ.]

Indus.'Tial Dispute-Transport Allowance Award of Tribunal making

mptoyers liable to pay 15 pa se per day to entployee who had to tr vel more than five mile!:.' to place of work-Awa. d jutified-Tribun1l when may take into account principles of social justice and region-cum-1

indust.~.

The appellant companies cai'ried on the busines of manufac\!uring chemk:al in a vil:agr3.

There were disputes bet\\-een the companLs and t.Uir workmen regarding dearness allowance, trans; iort al owance '3Dd other demands.

In regard to transpdrt allowance the Tribunal in its award directed the employers to pay 1$ pabJ per day to workmen who lived more th'3.n five miles away from the place of work exo~:::>t on days when a workman was on leave.

In doing so the Tribunal took into ac .. count the fact that in tl".e same region a pharmaceut'cal company was paying transport allow:.lnce to its workmen.

The Tribunal rej.ec.ted the contention of the companie that it was not t1e ob igafon of an em ployer le provide transport facili cies for the wc:irkmen or to pay in whole or in part their transport expemes.

In appeal by special leave,

HELD : ( i) The principle that in " proper case the Industrial Tribunal can imp<Y.c new obligation on the employer in the interest of social justiee a'ld can also involve the parties in a new co., tract has bee'l ac:. cepted by this Court. There can be no doubt that an Jndmtrial Tribti .r h:i jurisdiction to make a propelr and reasonable order in an indJJs ..

Jrial dispute. [779 F; 780 Bl

(ii) Tu,, Tribunal was justified in having regard to the ]Jracti¢ ob ta"1ing_ in the region on the principle of regon-cum industry when considering the claim of the workmen for payme'1t of tra"'sport allowaice.

Tb.e foundation of the princi., Je of regioncum-industry is that as far as possible the1•! should be uniformity of conditions of service in com-oarable concerns in the indu try in the region as that thefe is no :m'iaJance in the conditions of rr.rvice between workmn in one 1!stablishment and those in the rest.

The. danger otherwise would be migrafon of labour to 'he one wt.ere th"'re are more rvonrable conditions from those where conditions are less favourable. (780 B-C; 781 A-Bl

(iii) When tbe Tribunal w:is fixing the wage scales and d,.rne-s al lowanCe it was aware that it had also to arljudi ate on a claim for .transport allowance.

Havin~ reg?rd to this claim it m11st h'lve fixr>..d the W"g~ sc<1Jes anrt dearness allowance.

Jn the scale of deafness allowance fiX"d by the Tribunal complete neutralisation ha~ "Ot beeri. awarded. The Tribunal had also proceeded on the basis that the \VOrkmen must bear, from and out 'of the wages earned by them, a part of trans'"'IOrt exrr, nses.

It w•< only when the Tribunal found tht te ext>en<e ; ncurred bv the workmen for transport was rather high that it had afforded some lelief.

AT!C INDUSTll!ES v. WORKMEN (V'aidialingam, J.) 771

A No material had been placed before this Court on behalf of the com panies concerned to how that in the prepafat.on of the cos~ of l1v ng inOOx in the arf3. concjerned transport expense can be taken int a ... ,...... n .

l/ol D-F; 777 GI

(iv) In the circumstances of the case it could not be stated that I.le award of th.e sum of 15 paise per day was in any man.ier tor aion .. ble 8 or arbitrary. The paynt had ':l!so beon hedipd in by the conJiiion ~. that the employer had to be satisfied that the workman was s:ay'ing at a piace five mile and over from the p'ace of work and that it n.id not be paid on days when the workman was either on earned leave or any type of leav~ authorised or- Otherwise. The Tri -iunal had also 'aken into account the financial capacity of the appellants and there was no flow in its reasoning. [782 F; 783 Al

C Ahmedabad Mill Owners' Associa•ion e'c, v. The Tedfo Labour Association, [19661 I S.C.R. 382; The Patna Electric Supoiy Co. Lt1.

Paino v. The Patna. Electrlc Supply Worker< Union, [19B] Supp'. 2, S.C.R. 761; Mohamed and Sons v.

Their Workmen,

[1968] 1 LL.I. 536, Remington Rand of Jnd'a Ltd. v. Workm•n, [1969] ( IY I

F.L.R. 46 and The New Maneck Chowk Spinning/ and W•aving Co, Ltd.

Ahmedabad and others v. The Textile Labour Association Ahmedabad,

D f19611 3 S.C.R. I, applied. .

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 742 of. 1968.

Appeal by special leave from the Award dated November 15, 1967 of tl!e Indus; trial Trib, unal, Gujarat In Reference (l.T.) No.

E 65 of 1966.

AND CIVIL APPEAL No. 809 OF 1968.

Appeal by special leave from the Award dated October 16, '1967 of the Industrial Tribunal, Gujarat in Reference (l.T.) No. r 60 of 1966.

AND

CIVIL APPEAL No. 2086 OF 1968.

Appeal by special leave from the Awards Part I & II dated G September 27, 1967 aiid Novembei 1$, 1967 of the Inchistri-1

Tribllllal, Gujaat in Reference (I.T.) No. 65 of 1966.

A •. K. Sen, V. B. Patel, I. N. Shroff and M. N. Shroff, for the appcJJant, (in C.A. No .. 742 of 1968).

M. C. Setalvad, V. B Patel and I. N. Shroff, for the appellant (in C.A. No. 809 Of 1968).

Nat/ml G. Phillinis, Janardmi Sharma and Indira lai Sing~. fllr Ike appellants (in C.A. No. 2086 of 1968) respolldenls (in C . .A.

. No. 742 of 1968) and respondent No. 1 (in C.A. No. 809 of 1968).

M. C. Setalvad, V. B. Patel, I. N. Shroff and M. N. Shroff, for respo'.ldent No. 1 (in C, A. No. 2086 of 1968).

The Judgment of the Court was delivered by

Vaidialingam, J.-Civil Appeal Nos. 742 and 2086 of 1968, by spcial leav~, arise out of the decision regardmg demand No. 4 under Award Part II, dated November 15, 1967 of the Industrial Tribunal, Gujarat, in Reference (IT) 65 of 1966.

As Alic Industries Ltd., and its workmen could not settle the various demands made by the latter, on the joint application of both, the Deputy Commissioner of Labour, Ahmedabad, by order dated February 19, 1966 referred for adjudication to the Industrial Tribunal, Gujarat, nine demands made by the workmen.

The

demands cover various matters and have been elaborately set out

in the Schedule annexed to the order of reference. It is enough to note that the demands covered revision of wage scales, dearness rulowance, shift allowance, vacation travelilng allowance, housing facilities etc. Demand No. 4, with which we are concerned was as follows :

"All workmen who make use of the S.T. Bus Service shall be paid Rs. 20/- j)er month as Bus Allowance and those workmen who come Cycling from places where S. T. Bus Service is not available shall be oaid Rs. 15 /- per month as Cycle Allowance and also those workmen who come by train shall be paid Rs. 10 /- per month as Train Allowance."

The Industrial Tribunal by its Award, Part I, dated Seotember 27, 1967 disnosed of demands Nos. I, 2, 3, 6 and 9. By iis Award, Part H, dated November 15, 1967, the Tribunal disposed of ch-n°nd Nns. 4. 5. 7 ancl 8. Jn resnect of demand No. 4, the Tribunal directed the Company (A tic Industries Ltd.) to pay an allowance of 15 paise per day to every employee who siavs at a distonr.e of five miles or more from villae Atul.

The Tribunal directed this payment to be made with effect from fanuarv I,

1968. The Tribunal further directed that the allowance need not be paid for days on which the wor1<man is on earTJed leove or any tvne of foave authorised or otherwise.

Atic Industries Ltd. has fil•d Civil Apneal No. 742 of 191'i8 challenqing the grat\t of this allowance to its workmen.

The workmen have filed Civil A'>n•al No. 20% of 1968 chollenqinrr the various m"tters covered bv the Award Parts I and. JI, reqarding warre scales, dearne<s

allowance etr.. in <O far•• the Aw.rel was """inst them. In narticular, regarding demand No. 4 they have claimed, in the appeal,

ATJC INDUSTRIES v. WORKMEN (Vaidialingam, !.) 773

that a higher allowance should have been granted by the Tribunal.

But this Court, by its order dated September 24, 1.968 has restricted the Special Leave only to the question of transport ailowance.

Therefore, the various other points raised by the workmen in their ar:ieal no longer survive. While the Company in its appeal No. 742 of 1968 wants the allowance granted under demand No. 4 to be set aside, the workmen, on the other hand, in their appeal No. 20~ 5 of 1968 require the aHowance to be enhanced.

Civil Appeal No. 809 of 1968 i> by special leave; and the appellant therein is Atul Products Ltd., which also is an industry located h Atul village.

Here again, on the joint application of the said Company and its workmen, nine demands were referred for adjudication to the Industrial Tribunal, Gujarat, by order dated June 30, 1966 of the Deputy Commissioner of Labour,.

Ahmedabad.

The demands related to dearness allowance, shift allowance, housing facilities, vacation travelling allowance etc.

Demand No. 6 wW1 which we are concerned in this appeal was as follows :

"Company shall provide free transport facility to all workmen. Till such time free transport is made available every workmen shall be paid an allowance of Rs. 15/- per month."

The Industrial Tribunal, by its. Award Part I, disposed o! demand Nos. 1 to 4 and 7. By its Award Part II, dated October

16, 1967, the Tribunal disposed of demand Nos. 5, 6, 8 and 9.

The decision of the Tribunal under its Award Parts I and II in resoect of demand Nos. 1 to 5 and 7 to 9 is not the subject of consideration before us. In resoect of demand No. 6, the Trib1rnal rejected the demand rearding the Comnany b 0in~ made to nrovide free transport facilities.

However, the Tribunal directed the Com., anv to nay an allowance of 15 naise ner dav to everv employee who stays at a distance of five miles and above from village A•uL The said nayment was made effective from December 1,

1967. Here a2ain a llirection was 2iven that the Comna11v need not nay allowance to i's worl<:men who is either on earned leave or any tvne of leave authorised or o•herwi, e. The Co111,., anv de<ires in, thi, anneal to ]love the direction given by the Tribunal under this demand set aside.

From the facts stated above, it will be se 0 n that the common que, tio'l that ari, es fnr con'ierati<ln in all the'e three anne1ls rehtes to the claim of the workmen for navme"t of transoort allowanre t() enflhl~ them to ~O from thPif T'lll"e Of rec:ir1t1"P, to-thP: nlqcc Of WOT1<-, W~ Jl1RV fll~O t3tP that the fPferf"nrP,~ in both the l''lqf+CfS were made by the Deputy Commissioner of Labour, Ahmedahad,

as such a power had been delegated to him by the State Govern- A ment under s. 39 of the lndusmal Disputes Act, 1947 ..

Both Atic Industries Ltd. and Atul Products Ltd., are public limited compames.

They manufacture dyes and chemical and o.ther 1menhed, a, es. Both thJ compames were havmg tneir factories m village Atul.

The basis of the claim made by the workmen of bolh these Companies for payment of transport allowance B and the defence raised by the two concerns were substantially the same. ln support of its demand .the Union had stated that the majority of the workmen employd in the two Companies come from a distance of about five to ten miles .. As the factories are not situateJ in a place where labour force ii available easily, the majority of the workmen have to come from distant villages or c the town of Bulsar. The.re is no adequate transport reaching the site of the factories. The Stare Road Transport Corporation runs buses to reach the site of the factories, but the service is not regular or adequate. A workman has to incur a bus fare of 40 pai; e per trip from Bulsar to Atul and another 40 paise for the return journ:y. Therefore, each day a workman had to incur 80 paise as bus fare in going to village Atul from Bulsar and this was too much of an ex., ense which could not be borne by an employee from and out of his wages.

In the case of Atul Products, the demand was for a uniform allowance of Rs. 15/- per month, though in the case of Atic Industries Ltd., the demand was slightly different. The Union in this connection relied on the Award in the case of Cynamid India Ltd., which was a pharmaceutical industry in Atul region.

Both the Companies opposed the demands of the workmen on the ground that it is not the function or dutv of an employer to provide transport facilities for its workmen to come to their place of work. It was further pleaded that there is a good road from Bulsar to village Atul and the State Transport Service, which was running buses on the said route was easily available to all the workmen both for coming to vi!lage Atul and also for going bak home. In addition to t)le bus service, there was also a tram service which was available to the workmen. The Com1'anies further nleaded that most of the workmen employed in the two Com,, anies were Iivin11; in the nearby villaes and they ne.ver

doended upon ei•her the bus service or the train service. Even at the time when the workmen took ll" emnlovm 0 nt in the far.tories, thev should have known that thev will have to go •o their Plce of work at their own ex.,,, mes. On all the<; e grounds the claim of the workmen was resisted by both the Comnanies.

, It is seen that in re<'.)ect of Cynamid India: Ltd., .which was in the same region, though in the pharmaceutical mdustry, the

Tribunal had occasion to consider a claim made by its workmen for free transport facllites or for paymnt of fixed transport altowance at the rate of Rs. 15 /- per month. It is further seen that Cynamid lndla Ld., was already paymg 15 pahe per day for

evry wrokmen who was staying five miles and more from village Atul.

The workmen demanded that whole of the transp()rt expmses incurred by them, which was of 80 paise per day, must be paid.

This demand ws considered by the Tribunal in its Award published in State Gazette on September 3, 1966. In t)lis award, a copy of which has been placed before us, it is seen that the Tribunal has rejected the claim of the workmen for directing the Company concerned to provide free transport. But in respect of the further claim for increasing the transport allowance, the Tribunal has ultimately.increased the allowance from 15 pise to 3 7 paise per day to every employee who was staying at a distance of five miles and more from village Atul. The Tribunal has also granted an allowance of 12 paise per day to the workmen of Cynamid India Ltd., who were staying beyond three miles but less than five miles.

As we have mentioned earlier, the claim for transport allowance was made by the Unioµ mainly on the basis of the award of the Industrial Tribunal in the case of Cynamid India Ltd. Though the Tribunal did 11ot grant the enhanced allowance fixed by it in the case of Cynamid India Ltd. and also the further allowance granted therein to employees Staying beyond three miles but less than five miles, the Tribunal in the case of Atic Jndustries Ltd. and Alu! Products Ltd. has awarded only a sum of 15 paise per dav for those workmen who were staying five miles and more from village Atul.

In Civil Appeal No. 809 of 1968 Mr. M. C. Seta!vad, learned counsel for the appellant, apart from conte, ting the grant 0f transport allowance to the emnloyees on the ground that it is not the function of an employer to provide transnort facilities or to pay allowance for the same, has raised an objection to the jurisdiction of the Tribunal to give any such direction.

We have already referred to demand No. 6, which is the subject ef consideration in this apneal.

According to Mr. Se'alvad, the demand is to the effect that the Com,, any should provide free trans'10rt facilities to its workmen and till such facility is provided the wor1<men should be paid an allowance of. Rs. 15 /- per mon•h. The counsel further poin•ed out that in. this case the Tribunal has rejected the d0 mand of the workmen for provision for free transnort. Once this claim wa, reiected on the ground that •he emoloyee are no• entitled to be nrovided free tran<nori. no further question arose for consideration before the Tripunal.

According to Mr. Setalvad the claim for payment of an allowance of Rs. 15 /- per month is only for the interim period th3t will necessarily be ta\cen by the Com!:Jany to make arrangements for providing free transport, if the claim in that regard of the workmen had been accted. The latter part of the demand beipg only for an interim period, had to be straightaway rejected when ·once the main demand providing free transport made by the workmen was rejected. Therefore, it is the contention of Mr. Setalvad that the Tribunal's direction regarding payment of allowance under demand No. 6 is without jurisdiction.

The above contention of Mr. Setalvad has been controverted by Mr. Phadnis, learned counsel for the Union. According to the learned counsel, the demand is really in the alternative, namely, that the Company should be made to provide free transport facility. If this is not feasible, the Company should pay an allowance of Rs. 15/- per month.

The counsel has also drawn our attmtion to the reasons given by the Tribunal in the case of Cynamid India Ltd. for rejecting the claim for orovision of free transport.

The Tribunal has itself referred to those reasons in the present Award in resoect of both the Com-ianies. Therefore, even though the claim for provision for free transoort was rejected, the Tribunal had to deal with the alternative claim for payment of Rs. 15/- per month.

We are not inclined to accept the contention of Mr. Setalvad that the Tribunal had no jurisdiction to consider the quantum of trans'lort allowance to be oaid to the workmen when once it has rejected.the claim of •:he Union for provision of free transpcirt.

The cbim was a very t~U one, namely, that the Company should provide free transport facilities to all its workmen.

The latterpart of the demand should really be understood as an alternative claim if free transport is not provided by the Company. If the Company was wiiling to provide free transnort facilities, then there will be no question of any transport aliowance being paid to the workmen and the second par: of the deman:I may not arise for consideration. But it does not follow that when the claim for fre, transport facilities is rejected, the clim for transoort allowance no longer survives.

In our opinion, the proper way of looking at the demand is to treat the claim as one for provision of free

transort facility and in the alternative for payment of an allowance of Rs. 15/-per month. The claim for payment of allowance is not, as contended by Mr. Setalvad for an interim stae covering the period taken by the Company to make arrarigement' for providing transport facilities, when once it has been directed to the so by the Tribunal.

A The contention of Mr. Setalvad that the Tribunal had no jurisdiction to give direction for paying transport aliowance after rejecting the claim of the Union for the Company making provision for free transport, will have considerable force, if the Tribunal had rejected the claim for free transport on the ground that the employer is not under any circumstance liable to make any such B arrangement or bear transport expenses incurred by the workmen either in whole or in part. As we will show presently the ground on which the Tribunal rejected the claim of the Union that the employer should provide free transport was not on the ground that the employer is under no circumstance liable to provide the same, but because of the fact that a sound transport system existed c on the route and as such was conveniently available. to the workmen.

It will be pertinent to note the reasons given by the Tribunal in Cynamid India Ltd. for rejecting the claim of the workmen in that concern for making provision for free transport facilities. We are . referring to this aspect because the Tribunal in the case of Atul Products Ltd. has rejected the claim for free transport on the same ground as given by it in Cynamid India Ltd. The reason given by the Tribunal is that there whould be justification for a Company being made to provide free transport only if a sound public transport sytem did not exjst or was not conveniently available. The Tribunal has held that for going to village Atul from E Bulsar, public transport is available. It is on this ground that the Tribunal held that it will not be justified in conceding the demand for free transport. It may be mentioned that Cynamid India Ltd. was admittedly providing free transport for its supervisory staff and for that purpose it was maintaining a fleet of vehicles. But,

nevertheless, the Tribunal rejected the claim of . the workmen therein for provision being made for free transoort. It was represented by Mr. Phadnis, learned counsel for the union, that Atul Products Ltd. and Atic Industries Ltd. give a special conveyance allowanee to their sunervisory staff. But so far as this is concerned, the counsel also frankly admitted that no material in this regard

has been placed in the record of these appeals. Hence we leave that aspect out of consideration.

Now coming to the attack on behalf of the two Comoanies regarding the grant of transnort allowance, Mr. A. K. Sen and Mr. V. B. Patel, who followed him, urged, that the workmen when thev took uo em11loyment in the factories at village Atul knew full H well that they have to incur expenses for going to their place of

work. It wa, also noin•ed out that the derne's allowance had been revis•d by the Tribunal by its award Part I and that is sufficient to enable the workmen to meet the transport charges that

SUPREME COURT IU!PORTS [1972] l S.C.R.

they will have to incur for going to their place of work. In any

even~, it was urged, it is not the obligation of the employer to provide transport taciiites or to bear either in whole or in part the transport expenses of an employee incurred by him for going to his place of work.

On the other hand, Mr. Phadnis, learned counsel for the Union pointed out that ihe Tribunal has QOt accepted the entire clam; made by the Union, nor has it gran.~ transport allowance at the same rate given by it in the case of Cynamid India Ltd., The counsel pointed out that Atul Products Ltd. and Atic Industries Ltd. and Cynamid India Ltd. are all situated in village Atul.

Atic Industries Ltd. and Atul Products Ltd. are no doubt doing business in manufacturing dyes, whereas Cynamid India Ltd. is a pharmaceutical industry.

The employees working in the same region should have the same facilities and it is on this principle that the Tribunal has awarded transport a!lowane and that to a lesser degree than that prevailing in Cynamid India Ltd. The Tribunal itself has held that the workmen must share a part of the expenses and it is on that ground that though a workmen has to incur 80 paise per day, he has been granted only 15 paise per day.

Accordin~ to the learned counsel, the circumstances of the case also justify the said grant.

We are of the opinion that the grant of 15 paise per day as transport allowance to those employees staying live miles and beyond is justified in the circumstances of this case. The Tribunal itself has held that the Company must be satisfied that the workmen come from a place like Bulsar or places equally distant und no allowance need be paid on days when the workman is on earned leave or any type of leave authorised or otherwise.

On behalf of the Companies it was stated that in calculating the cost of living index, bus fare also is taken into account. No doubt in Ahmedabad Mill Owners' Association Etc. v. The Textile Labour Association,(1) it is stated that In the preparaiiail of the wst of livincr inucx, various items including lius fare ure taken into

accont. But it is to be noted that the observation in the said decision is that ucually the items mcnioned :hcr.::in inc!u<ling •he bus fore urc tal; c:i in•o a:couqt.

But Mr. Phac:!nis, roimeJ out by reference to the book "Cost of Living Incle' Numbe.r; in Ind'a'' a Mong; aph, published by the Lnbour Buronu, Mn!rsr; y of Lab-:iur, Gov::rnin-:nt of India that so far as /-\hn1cdab:.tJ is co; icerned, bus .far~ is r.ct ta!en into account in th•~ pre~"!ora.;.ion of cost of Jiving i:1d x. In contrast, he referr~<l us to the R<tnr:hi area w1'ere trave]ii'g cxc.•'lse is taken into a:cou1t in 'he p eparaion of cost of living index.

No material has been rbced

bfore us on behalf of the Companies concerned to show that in

(1) [1966] I S.C.R. 382.

Atl<: ~DUSTR!ES \I. WORKMEN (Vaidialingam, !.) 779

the preparation of the cost of living index m the area concerned trans,, on expense IS ta..cn mto account.

l'ne dec.s10ns m 1'he Patna Electric Supply Co., Ltd. Pama

v. 1'ne t'Wflu c..OClrtC ;:, upp1y workers' Umon\ 1) and Mohammea a/Id .JOflS v. l'netr Workmen(•) we.e rererreJ to us oy Mr. P •tel wn.:rern n has been he1d that proviu,115 or noushlg

accommodauon is qot tile dmy o! an e1npioyer amt u1at tne rcspons.oJ,.y ror the same is tnat of the uovernmem. ln our opm.on, a c.atlll wr providing housing accommodauon is totaJy

dilferent from a 1:1aim maoe ror tran.port allowance, 1n fact m

th~ presenc awaros, th~ Tnbunal has rejected the claim or the wor.:H\e,, 10r nousrng tacmues being providedby both the Companies. Similarly, the decision in l<em.ng1on Rand of India Lid.

v. workmen ( •) of this Court regarding lunch allowance does not also assist the Companies before us.

It was held in tM said decision that normally when the wage structure iS fair and dearness ailowance is paid to the workmen lm.:ed with the index of . cost of living, they must take care of the rise in the cost of living from time to time and therewre a company cannot be compelled to pay lunch allowance to all workmen.

In that decision, it wt!J be noted, that the lunch allowance was bing paid by the company _concerned .to workmen who had to go to distant places

and could not remm to the office during lunch oeriod. But the rate of allowance to such employees was raised by this Co<lft no douDt by consent of the Company.

But the extension of that allowance to other employees who had to work only in the factory or office premises was rejected. In this connection it was observed that the financial ability of an employer to ar the , dditfonal burden is not criterion. The principle that in a proper case the Industrial Tribunal can impose 1.ew obligation on the employer in the interest of social justice and can aiso. involve tht parties in a new contract has b;:en recognised by this Court in The Patna Electric Supply Co., Ltd. f'.atna v. The Pa; na Electric Supply. Workers' Union('), and The New Maneck Chowk Spinning and Weaving Co. Ltd. Ahmedabad and others v.

Te Textile Labour Associatio~. Ahmda?ad('). No doubt the said jurisdiction of the Tribunal is condi•ioned by l"e l.aws . and judicial pronouncements. In fois ccnec1ion the lullowm3 oo>ervation of Ludwig Teller in "Lab:im Disnutcs & L.:ollecuve Bargaining" (Volume I, page 536) is r.pposite :

"Industrial arbitration may involn the extension of an existin~ areement or the m~•'--in.~ o~ a new on'., or, in general, the creation of new ob1Ig1t1ons o'. md1lica•ion of old ones while commercial arb; trat10n

(i)[1959] Suool. 2 S.C.R. 761.

(') [1969] (19) F.L.R. 46.

(') [19681 TL.L.J. 536.

(') 119611 l S.C.R. I.

780 SUPRl!ME COURT REPORTS

(1972] 3 S.C.R.

generally concerns itself with interpretation of existing A obligations and disputes relating to existihg agreemenJ.s." . The ab~:>Ve observations have been quoted with approval by this Court m some of its earlier decisions. Therefore, there can be no doubt that an Industrial Tribunal has jurisdiction to make a proper nd easonable order in any, industrial dispute. It should be borne m mmd that the foundation of the principle of industrycum-region is that as far as possible there should be uniformity of conditions of service in comparable concerns in ihe industry in the region so that there is no imbalance in the conditions of a service between workmen in one establishment and those in the

rest.

The danger otherwise would be migration of labour to the c one where there are more favourable conditions from those where conditions are less favourable.

It is pertinent to note that though this Court in °1{emington Rand of India Ltd. v. Workmen(') declined to extend the benefit of lunch allowanee to employees who had no occasion to go for out door work, nevertheless it recognised in a limited measure the obligation of an employer to provide medical facilities for its workmen.

The demand for provision for medical facilities made by the workmen was contested by the Company therein on the ground that making provision for medical facilities is the responsibility of the Government and not of the employer.

Even on the basis that it is the obligation of the employer, it \\as further contended that medical expenses which a workman would ordinarily have to incur are looked after aµd taken into account when fair wages are settled. This Court accepted as correct the contention that the primary responsibility for providing medical facilities for citizens is that of the State. This Court also accepted the contention that while fixing fair wages, medical expenses which may have to. be ordinarily incurred by a workman will be taken into consideration. But on the basis that the expenses for medical facilities would have been taken into account in the fixation of wages only to a. ln_tlted extent artd as the tte can!lot discharge its full respons1b1hty in te mattei: of pro".1d1!1g.rn.ec1ic:U facilities, this Court held that a Tnbunal will have 1unsd1cuon m a proper case to .call un an emoloyr to shoulde~ a part of the.burden regardmg medical expenses mcurred by his v; orktnan in the in•erest of industrial harmony and good co-onerat1".e relations. We are emohasisin~.the said decision which reco.gmsed an emolover being maae to s)toulder a o.art of the burdn •.n respet of medical exoenses, as more or ls the same prmcmle will apply in the matter of an emoloyer bein~ asked to reimburse the workman at least to a limited exten~ regard!ng the transoort H expenses incurred by the latter for gomg to htS place of work.

(') [1969] (19) F.L.R. 46.

I••

We have already pointed out that in Atul village apart from the !WO C.ompani~. there is another ~Onern also.. Though Cynamtd India Ltd. 1s m the pharmaceutical mdustry, m our opinion the Tribunal was justified in having regard to the practice obtain'. ing in that region on the principle of region-cum-industry when considering the claim of the workmen for payment of transport 8 allowance. It is no doubt true that in the case of Cynamid India Ltd. that Company was already paying 15 paise per day to every one of its workmen as transport allowance and that amount has

been raised by the Tribunal to 37 paise per day.

It has also granted even to workmen living beyond three miles but less than five miles a sum of 12 paise per day. But the very fact that C Cynamid India Ltd. was paying even originally 15 paise per day was a relevant factor to be taken into account as the said industry was also in the same region and most of its employees were also coming from distant places like the workmen in the case of the two Companies before us.

It should also be remembered that the Tribunal, in the awards in question, was not considering an o isolated claim for payment of transport allowance. That demand was only one of the demands, which was being dealt with by the Tribunal along with various other demands such as revision of wage scales, dearness allowance etc. The Tribunal can certainly be expected to be aware of the fact, when it was fixing the wage scales and dearness allowance that it has also to adjudicate ori a E claim for transport allowance. Having due regard to this c'!aim, it must have fixed the wage scales and dearness allowance. We have gone through the scale of dearness allowance fixed under the two awards and it is to be seen that complete neutralisation has not been awarded. The Tribunal has also proceeded on the basis that the workmen must bear, from and out of the wages earned by them, a part of transport expenses. It is only when F the Tribunal found that the expense incurred by the workmen for transport was rather, very high and excessive that it has afforded some relief. If the entire body of workmen come from dist?nt places and they all have to incur heavy expenses for using tran~ port, the question may pertinently arise whether it is not a case for revision of wage scales or dearness allowance in such a man- G ner as to include also this item of expense. The Companies have provided some accommodation in the village itself for about 25 % of its workmen on a nominal rent. Some other are living near about the village itself and they have no necessity to spend any amount for transport. In resnect of these two categories of work111en, there cannot be a general rise in the wages paid to them. On the other hand, the case of workmen who come from H distant places, due to no fault of theirs, stands on di.fferent footing, It is not oossible for them to cover the entire distance walking and they have necessarily to use some transport for 4-L!06!Sup Cl/72

coming to their place of work.

Quite naturally, one can expect the workmen to choose only that type of transport which will cost them the minimum. Even if they choose the train service, which will be compartively cheaper, they will have to incur additional expense for coming to their place of work and return home.

, It must be noted that though the claim was for payment of 80 paise per day per worker to cover the entire cost of transport to and fro, the Tribunal has awarded only a moderate sum of 15 paise which was the amount that was being paid by .Cynanud India Ltd. originally.

In_ the case of Atul Products Ltd. as against the claim made for an allowance of Rs. 15 /- per month, for every workman, the Tribunal has allowed only 15 paise per day and that too op the days when the workman comes for duty.

Similarly, in the cace of Atic Industries Ltd. the demands were :

(a) Rs. 20/· per month to be paid to every workman using State Transport Bus Service; (b) Rs. 15/- per month to be paid to every workman coming by cycle from places where State Transport Bus Service was not available; and ( c) The workmen who come by train should be paid Rs. 10/- per month as train allowance. As against these varying demands, the Tribunal has only allowed 15 paise per day and that too on the days wijen the workman comes for work.

Thus it will be seen that even on the basis that a workman staying at a distance of five miles or more comes for work for 30 days in a month, the allowance he ge~ is only a sum of Rs. 4.50 p under the Award.

In the circumstances mentioned above, it cannot be stated that the award of the sum of 15 paise per day is in any manner unreasonable or arbitrary.

The payment has also been hedged in by the condition that the employer has to be satisfied that the workman is staying at a place five miles and over from Atul village and that it need not be paid on days when the workman is either on earned leave or any type of leave authorised or otherwise.

Therefore, We are satisfied that the direction given by the Tribunal under demand No. 4 in Civil Appeal No. 742 of 1968 and demand No. 6 in Civil Appeal No. 809 of 1968 is justified.

The Union in Civil Appeal No. 2086 of 1968 has asked for enhanced rate of transport allowance being given to the Cmployee in Atic Industries Ltd.

Its claim is that 80 paise has to be paid to every workman per day or in the alternative the allowance .must be, as directed by the Tribunal in Cynamid In<tia Ltd. All these aspects have been discussed by the Tribunal when it fixed the quantum in the case of Atic Industries Ltd. Though the Tribunal cannot impose any new obligation on an employer merely on the ground that the financial capacity of the employer is sound, nevertheless the Tribunal when imposing the new obligation has also

A to consider the capacity of the employer to bear the burden. In the case of Atic Industries Ltd. the Tribunal has held that it does not want to cast additional financial burden and that is why it has fixed the allowance at a very reduced scale. We see no error in this reasoning of the Tribunal and as such Civil Appeal No. 208 6 will have to be dismissed.

B In the result, the Awards of the Industrial Tribunal in respect of demand No. 4 in Civil Appeal No. 7 42 of 1968 and demand No. 6 in Civil Appeal No. 809 of 1968 are confirmed and both the appeals are dismissed.

Civil Appeal No. 2086 of 1968 is also dismissed.

Parties will bear their own costs in .all the C , appeals.

G.C.

Appeal dismissed:.

ATIC INDUSTRIES LTD. ETC. ETC

WORKMEN ETC. ETC

I. D. DUA, JJ.

K. Sen

V. B. Patel

I. N. Shroff

M. N. Shroff

M. C. Setalvad

V. B Patel

G. Phillinis

Janardmi Sharma

Indira lai Sing~.

M. C. Setalvad

V. B. Patel

I. N. Shroff

M. N. Shroff

Vaidialingam

Alic Industries Ltd.

Ahmedabad

Industrial Tribunal

Atul

Atic Industries Ltd.

September 24, 1.968

Atul Products Ltd.

Atul village

Industrial Tribunal, Gujarat

June 30, 1966

October

16, 1967

December 1,

1967

s. 39

Disputes Act, 1947

Atic Industries Ltd.

Atul Products Ltd.

Bulsar

Atul Products

Cynamid India Ltd.

Cynamid India: Ltd.

Cynamid lndla Ld

September 3, 1966

Atic Jndustries Ltd.

Alu! Products Ltd.

M. C. Seta!vad

Se'alvad

Setalvad

Phadnis

E Bulsar

A. K. Sen

Pama

Mohammea

Ludwig Teller

Cynamtd India Ltd.

C Cynamid India Ltd.

.Cynanud India Ltd.

Cynamid In<tia Ltd.


STATE OF ORISSA AND ORS.

HARINARAYAN JAISWAL AND ORS.

March 14, 1972

(l(. S. HEGDE AND P. JAGANMOHAN REDDY, JJ.]

Bihar and Orissa Excise Act, 1915 "" amended upto October 6; 1970, Ss. 22 and 29-Scope of--Order made under s. 29 giving power to

Governmen~ to accept or reject bid without assigning any retJSon-1/ violative of Arts. 14 and 19(1) (g)-Power of Government lo sell the privi'fege of selling country liquor by private negotiation-Scope of.-

The first respondellt was carrying on business of selling country liquor.

In exercise of the powers conferred by s. 29(2) of the Bihar and Orissa Excise Act, 1915, the appellant issued an Order and in pursuance of that Order a date was notified for selling by public auction the exclusive privilege of <oiling by retail,. country liqudr in 8 hops. The respon. dent was tl1' highest bidder but his bid was rejected because the Gov ernment was of the view that inadequate prices had been offered as a result of collusion between the bidders.

Thereafter, tenddrs were called for and the appellant accepted the tender in respect of one shop and rej!cted the others a• it was o.gain of the opinion that the price offered was inadquate. Thereafter, the remaining 7 shops were sold by private negotiation for substantially higher prices.

A writ petition filed by .the respondent in tho High Court was allowed mainly on the ground that the power confered on the Goveirnment by

cl. (vi) of the Order, that no sale sh"11 be deemed to be !Ina! unless confirmed by tho State who shall be at liberty to accept or rejjoct without assigning any reason, was an unguided power violative of Arts. 14 and 19(1) (g).

Allowing the apP''"l to this Court,

HELD : (I) Section 22 of tht Act confers power on thi: Govern ment to grant to any person on such cpnditions and for such period as it J11ay think fit the exclusive privilege of selling in retail country liquor; afld s. 29 empowers the Govemi:nent to accept payment in consijeration of the grant either by calling. teiiders or by auction or other- , vise as it may by general order direct.

The powers conf, erred on the State Governmen.t by ss. 22 and 29 are absolute.

The Government Cannot be said to have conferred on itself arbitmry power under cl. (vi) of its Order,/assed under s. 29(2), because, the power that the Government reserve for itself under th.at clause is nothing more than what was conferred on it by the Legislature under the sections. Since the validity of the sections was not challenged the validity of the Order could not also be challenged. [792 BFJ

(2) Even otherwise, one of the important purposes of selling the exclusive right to §ell liquor in wholesale or tail is to raise revenue; and excise revenue forms an important part of every State's reVenue.

The Government is a guardian of the finances of the Stale and is expected to protect its financial interests.

The fact that the prices fetched by the sale of the privilege to sell country liquor is an excise revenue does not change the nature of the right in the G<>Vemment.

Therefore, the

legislature has empowered the Government to se~ that there is no leakage in the revenue. It was for the Government to OOcide whether the price offered in an auction is a<k!quate and the conclusion readhed by ihe Government does not affect anyone's rights. [793 D-F; 794 F-0]

(3) Public auctions are held to get the best possible price and there is no completed contract till the bid is accepted.

There is, therefore, no basis for contending that the owner of the privileges who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered' is inadequate, and, it makes no difference that the Government was the seller. [.793 G-H; 794 AJ

( 4) If the Government is exclusive owner of the privileges, the respondent could not rely on Art. 14 and 19{1)(g), because; citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to Government, nor can there be any infringement of Aft. 14 if Oovernment tries to t the best available price for its valuable rights.

Further there is no inherent right in a citizen to sell intoxicating liquor by retail. [793 A; 794 A-Bl

Coverjee B. Bharucha v. The Excise Commissioner and the Chief Commissioner, Ajmer and Ors., .[1954] S.C.R. 873 and Union of India and O>S. v. M/s. Bhimsen Walaiti Ram, [I970] 2 S.C.R. 594, followed.

( 5) Assuming that the question of arbitrary or unguided power can be raised it should be remembered that the power to accept or reject the highest bid is given to the highest authority in the State, n=Iy, the Govel1lment, which is expee'/; ed to safuguard the finances of the State and it is not a case of delegated power but of pawer conferred by the Legislature.

While accepting or rejecting a bid Government is per forming an executive function and the correctness of its conclusion is not open to Judicial review where the power is not used for any colla teral purpose. [793 F; 794 C-El

( 6) The real conclusion of the Government was that the price fixed \.\'as inadequate and hence High Court erred in thinking that the Gov emment was bound to satisfy the Court that there was collusion between the bidders. [794 E-F] Barrium Chemicals Ltd. a11d Anr. v. Co1npany Law Board and Ors. [1966] Supp. S.C.R. 311 and Rohtas Industries Ltd. v. S. T.

Agarwal, [1969] I S.C.C. 325 referred to.

(1) The Government was not precluded, having had recourse to the auction method once, from either calling for tende'rs or selling by n"gotiations.

Once the Government declines to accept the highest bid or the tender price offered, the government was free to have recourse to other methcxls.

The power given to the Government to seU in such other manner as it thinks fit is a very wide and unrestricted power and inc]udes wit

1in it the power to sell the privilege by private negotiation.

[795 A-BJ

(8) The Government is not required by s. 29(2) (a) to make an order thal the privilege will be sold by private negoitation, since, it makes no sense to require Government to first make an .order that it is going to negotiate.

The section only s.ays that the State Government 'm-:iy by general or special order direct' and the direction contemplated is one to subordinate officials and not to itself. [795 D-F]

CNIL APPELLATE JURISDICTION: Civil Appeals Nos. 2024 _ and 2025 of 1972.

C. K. Daphtary, R. C. Misra, Advocate-General for the State A of Orissa, Santosh Chatterjee and G. S. Chatterjee, for the appellants (in both the appeals).

M. C. Setalvad and Vinoo Bhagat, for respondent No. 1 (in C.A. No. 2024 of 1971).

Vinoo Bhagat, for respondent No. I (in C.A. No. 2025 of 8

1971).

The Judgment oi the Court was delivered by

Hegde, J. These appeals by certificate raise common questions of law for decision.

The questions of law arising for decision c can be more conveniently brought out if the material facts are first set out.

It is sufficient, if we refer to the facts in Civil Appeal No. 2024 of 1971.

.The 1st respondent in Civil Appeal No. 2024 of 1971 is carrying on the business of selling country liquor. In pursuance of the order made by the State of Orissa, the Excise Commissioner notified D on January 8, 1971 that the exclusive privilege of selling by retail the country liquor in the eight specified shops in the Cuttack Dis trict for the period from April 1, 1971 to March 31, 1972'will be sold by public auction on February 15, 1971 and on the following days.

The auction was accordingly held oil the notified day. The 1st respondent was the highest bidder for those eight shops. His E bids were provisionally accepted by the Collector su1Jject to confir. mation by the Government.

The Government rejected those bids being of the view that inadequate price had been offered as a result of collusion between the bidders. It ordered the Excise Commissioner to call for tenders in respect of those shops. .After the tenders were duly received, the Government accepted the tender in respect of one shop and rejected the other tenders as it was again F of the opinion that the price offered was inadequate.

Thereafter it sold the seven shops by negotiating with some of the tendeters.

The price ultimately' fetched was substantially more than that offered either at !he auction or as per tenders.

Thereafter the 1st respondent moved the High Court of Orissa G under Art. 226 of the Constitution for a direction to the Govern ment to confirm his bids and cause the necessary licences to be issued to him.

Various pleas were taken in support of the relief asked for. Such of them that were pressed before us . will be referred to later.

The Government resisted that application. 'l1le High Court came to the conclusion that the Government had no power to refuse to confirm the bids of the highest bidders except H

on good grounds and the ground that had commended itself to the Government for refusing to confirm the bids were irrelevant. It

A also opined that the absolute power conferred on the Government to confirm or refuse to confirm the highest bids with.out giving any reason was an unguided power and consequently violative of Arts. 14 and 19 ( 1 ) ( g) of the Constitution. The High Court was further of the opinion that monetary considerations were irrelevant for deciding the question whether the highest bid should be confirmed JI or not.

Aggrieved by that decision, the State of Orissa has come up in appeal.

Before proceeding to pronounce on the co.ntentions advanced at the hearing, it is convenient to set out the relevant provisions of law as well as the orders passed by the Government under s. 29 C of the Bihar a.nd Orissa Excise Act, 1915 (as amended upto October 6, 1970) (to be hereinafter referred to as the Act). The preamble to the Act reads :

"Whereas it is expedient to amend and re-enact the law in the Province of Bihar and Orissa relating to the import, export, transport, manufacture, possession, a.nd sale of certain kinds o{ liquor and intoxicating drugs;

And whereas the previous sanction of the Governor.

General has been obtained, under section 5 of the Indian Councils Act, 1892, to the passing of this Act;

It is hereby enacted as follows : "

Section 22 deals with the grant of exclusive priviJege of manufacture and sale of country liquor or intoxicating drugs.

To the extent it is material for our present purpose, it reads :

"The State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege-

(a) (b) (c) (d)

( e) of manufacturing and supplying wholesale and selling retail, any country liquor or intoxicating drug within any specified local area :

Provided that public notice shall be given of the intention to grant any such exclusive privilege, and that a.ny objections made by any person residin~ within the area affected shall be .considered before an exclusive

privilege is granted."

Sub-s. (2) says : ''No grantee of any privilege under sub-s. ( 1) shall exercise the same unless or until he has received a license in that behalf from the Collector or the Excise Commissioner."

Section 29 deals with payment for grant of exclusive privilege.

It reads :

" (I) Instead of or in addition to, any duty leviable under this Act, the State Government may accept payment of a sum in consideration of the grant of any exclusive privilege under section 22.

(2) The sum payable under sul:i;-s. (1) shall be determined as follows :

(a) by calling tenders or by auction or otherwise as the State Government may, by general or special order direct; a.nd

(b) by such authority and subject to such control as may be specified in such order." Excise revenue is defined in s. 2(9) :

" "Excise-revenue" means revenue derived or derivable from any duty, fee, tax, payment other than a fine imposed by a Criminal Court or confiscation imposed or ordered under this Act or any other law for the time being in force relating fo liquor or intoxicating drugs 11Ild includes any payment to be made to the State Government under s. 29."

In exercise of the powers conferred by s. 29(2) of the Act, the State Government issued an order on January 6, 1971 directing that any sum payable under the aforesaid section for grant of the exclusive privilege of manufacturing and selling 1:fy retail of country liquor shall, unless otherwise directed by the State Government, in any particular case or cases for any reason, be determined by auction to be held in accordance with the procedure specified below :

" ( i) the dates and centres for the auction shall be fixed and notified by the Excise Commissioner with the prior approval of Government and the Collector shall then issue notice for auction and give wide publicity to the same in such manner as he considers necessary, 15 days before the date fixed for commencement of the auction;

(ii) the auction shall determine tlie amount of monthly consideration money and shall ordinarily

be conducted by tbe Collector and in his absence by tbe Additional District Magistrate; Provided that tbe State Government may depute an officer from head-quarters to aid and advise the officer conducting such sales;

(iii) the officer conc4icting the auction may satisfy himself as to the solvency of any bidder and may not allow a person of doubtful solvency or a person to whom grant of a licence for retail sale of any intoxicant is prohibited under Orissa Excise Rules, 1965 to offer bids in the auction;

(iv) the officer conducting tbe auction shall be at liberty to close the auction if he is satisfied that tbere has not been sufficient or fair compeiition in which case he may publicly adjourn the auction to a specified hour on the followtng day or on some other convenient day to be notified by him in the auction hall;

( v) the highest bid in an auction shall ordinarily be accepted provisionally by tbe Collector subject to confirmation 1:fy the State Government and in case where the officer conducting the auction refuses to accept the highest bid a's offered, he' shall record the reasons for such non-acceptance and shall repori forthwith tbe same to the Excise Commissioner for further action after receipt of advances from the highest bidder;

(vi) when any bid in an auction for an exclusive privilege or privileges is provisionally accepted by the Collector, the bidder shall deposii two months' consideration money as an advance deposit which will bie refunded in case the provisional acceptance is not confirmed by the State Government.

No sale shall be deemed to be final unless confirmed by the State Government who !!l\all be at liberty to accept or reject any bid without assigning any reason therefor;

(vii) no licence for any exclusive privilege shall be granted until acceptance of the bid is confirmed by the State Government;

(viii) when any bid in an auction for any exclusive privilege is provisionally accepted but the advance deposit is not paid, the exclusive privilege shalf

be put to reauction as soon as possible at the A risk and loss of the defaulter;

(ix) all bids in an auction shall be offered by the bidder in person or by his agent legally authorised for the purpose."

As mentioned earlier in pursuauice of the above order the B Collector held an auction in respect oi the shops mentioned ei:rlier.

The highest bidder had made the necessary deposits.

But the Government did not accept his bids.

On March 7, 1971, the Gover.nment issued the following order :

"Whereas for' determining the s'ums payable for the grant of exclusive privilege of manufacturing and selling by retail of country liquor auction had been held in the district of Cuttack in accordauice with the procedure laid down in the order of the Government of Orissa in the Excise Department No. S.R.O. 12/71, dated the 6th January 1971;

Whereas due to collusive bids among the bidders at the said auction it is not possible to determine the said sums in the aforesaid manner;

Now, therefore, in exercise oi the powers confered by sub-section (2) of Section 29 of the Bihar and Orissa Excise Act, 1915 (Bihar and Orissa Act 2 of 1915) read .with the Order No. S.R.0. 12/71, dated the 6th January, 1971, the State Government do hereby direct that the procedure for determining the aforesaid sum in respect of the gra, nt of exclusive privilege of manufacturing and selling by retail of country liquor in the local areas specified in the Schules I for the year 1971-72 shall be as laid down in' Sehedule Ir hereof-

SCHEDULE I

SCHEDULE II

1. The sum payable under sub-section (1) of Section 29 of the said Act for grant of exclusive privilege of manufacturing and selling by retail of country liquor in the aforesaid local areas shall be determined by the -:Excise Canunissioner by cailing tenders which may be

for individual local area or for lots of such area as the Excise Commissioner may consider proper;

2. Tender notice shall be issued by the Excise Com missioner and published in the Notice Board of his office the Cuttack Collectorate and the offices of Sub Divisional Officers in that district and shall also be widely published in such manner as the Excise Commissioner considers necessary.

3. The tender notice shall, among other things, mention that it is open to the State Government not to accept any tender or to order for calling fresh tenders or otherwise for such reason as they deem proper in the public interest;

4 to 8:

9. The Excise Commissioner shall prepare a list of all the tenders received and submit the list with his recommendations of any particular tender with sufficient reasons alongwith the tender papers to the State Govern . ment for approval.

The tenderers whos~ tenders have been recommended for acceptance shall deposit two month's consideration money as an advance deposit which will be refunded in case their tenders are not approved by Government.

10. "

As mentioned earlier, the Government accepted the tender in respect of only one shop and sold the exclusive privilege to sell country liquor in other shops by negotiation.

Before us the writ petitioners did not challenge the validity of any of the provisions in the Act; possibly in their own interest.

They are not interested in raising any contention which might vitiate the auctions held.

The contentions urged on behalf of the writ petitioners have to be examined in the background that the provisions of. the Act are not contended to be invalid.

One of the contentions taken on behalf o[ the writ petitioners was that the power retained b!y the Government "to accept or to reject any bid without assigninJ!: any reason therefor" in cl. ( 6) of the order made by/1he Government on January 6, 1971 in exercise of its powers under s. 29(2) of the Act was an arbitrary power and therefore it is violative ol Arts. 14 and 19(1 )( g). This contention lras been upheld by the High Court. It was urged on behalf of the writ petitioners that they have a fundamental right to carry on trade or business in country liquor.

That right can

be regulated only by imposing reasonable restrictions in the interest o_f the general pupli~. Restrictions imposed by the order in quesl!on cannot be considered as reasonable restrictions in the interest of the general pubilic.

It was further urged that the power ; etained by the Government to accept or to reject the highest bid without assignin, g any reason is an unguided power and hence it is violative of Art. 14.

These contentions were accepted by the High Court.

To us, none of these contentions appear to be well founded.

As seen earlier s. 22 of the Act confers power oo the Government to grant to any person on such conditions and for such period as it may think fit the exclusive privilege of selling in retail any country liquor.

Section 29 empowers the Government to accept payment of a sum in consideration for the grant of any exclusive privilege under s. 22 either by calling tenders or by auction or otherwise as it may by general or special order direct.

The powers conferred on the State Government by s. 22 and s. 29 are absolute powers.

As seen earlier, the validity of those provisions has not been challenged before us.

Under s. 29(2) the Government had power to dispese of any of the exclusive privileges mentioned in s. 22 either by calling for tenders or by auction or otherwise as it may by general or special order direct.

That ing the amplitude of the power of the Govermnent, we tail to see how the Government can be said to have conferred on itself arbitrary power under clause (6) of its order made on January 6, 1971, when it pmvided that :

"No sale shall be deemed to be final unless confirmed by the State Government who shall be at liberty to accept or reject any bid without assigning any reason therefor."

The power that the government reserved for itself under that clause is nothing more than what was conferred on it by the legislature under s. 22 and s. 29 of the Act.

It is not possible to challenge the validity of the order made without challenging the validity of s. 29 itself.

It is true that this Court has ruled that the right to trade in intoxicating drugs is also a right to carry on any trade or business within the meaning of Art,, L9(1)(g)-see Krishna Kumar Narula

v. Jammu Kashmir State and ors(').

At the same time, it was held by this Court ln Cooverjee B. Bharucha v. The Excise Commissioner and the Chief Commissioner, Ajmer and ors.(') that for determining reasonable restrictions within the meaning of Art. 19(6) of the Constitution on the riht given under cl. 19(1)(g~, regard must !::¢ had to the nature of the business and the conditions prevailing in a particular trade; State has power to prohibit trades which are illegal or immoral or injurious to the health and

(I) [1967] 3 S.C.R. 50. (2)

[1954] S.C.R. 873.

ORISSA v. HAR! NARAYAN (Hegde, J.) 793

welfare of the public and there is no i.nherent right in a citizen to sell intoxicating liquors by retail.

In that .case the court held that the provisions in ti\e Excise Regulation I of 1915 purporting to regulate trade in liquor in all its different spheres are not invalid. It was fuvther held in that case that the charge of licence fee by public auction is more in the nature of a tax than a licence fee though it is described as a licence fee.

One .of the purposes of the Regulation is to raise revenue.

Revenue is collected by the grant of contracts to carry on trade in liquor and these contracts are sold by auction.

The grantee is given a licence on payment of the auction price. The Regulation specially authorises this.

The decision in Lala Harichand Sarda v. Mizo District Council and anr. (1) relied on by the writ petitioner does not bear on the point under consideration. It deals with power to gra.nt or refuse to grant licence to trade in some ordinary commodity under Lushai Hill Distt. Regulation.

Even apart from the power conferred on the Government under ss. 22 and 29, we fail to see how the power retained by the Government under cl. (6) of its order dated"' January 6, 1971 can be considered as unconstitutional.

As held by this Court in Cooverjee Bharucha's case (supra), one of the important purpose of selling the exclusive right to sell liquor in wholesale or. retail is to raise revenue.

Excise revenue forms an important part of every State's revenue.

The Gove11IlUlen~ is the guardian bf the finances of the State. . It is expected to protect the financial interest of the' State.

Hence quite naturally, the legislature has empowered the Government to see that there is no leakage in its revenue.

It is for the Government to decide whether the price offered in an auction sale is adequate. ~While accepting or rejecting a bid, it is merely performing an executive function.

The correctness of its conclusion is lllOt open to judicial review.

We fail to see how the plea of contravention of Art. 19(1) (g) or Art. 14 can arise in these cases.

The Government's power to sell the exclusive privileges set out in s. 22 was not denie4. It was also not d1spu , , . .. s cou~ ¥ sold y public aucfion.

Public auctions are held to get the est poss1 le price.

Once these as ectS are recognised, there a ars to be no basis for conten mg t at t e owner o e pnv1 eges Ill question w o had offered to sell them cannot decline to accept the highest bid if be thinks that the price offered is inadequate.

There is no concluded contract till the bid is accepted.

Before there was a concluded contract, it was open to the bidders to "'.ithdraw the_ir bids-see Union of India and ors. v.

M/s. Bh1msen Wa(aitl Ram('). By merely giving bids, the bid~rs had not acquired any vested rights.

The fact that the Government was the seller

(1} [1967] l S.C.R. 1012.

does not change the legal position once its exclusive right to deal with those privileges is conceded.

If the Government is the exclusive owner of those privileges, reliance on Art. 19( I )(g) or Art. 14 becomes irrelevant.

Citi:ziens cannot have any fundan:iental right. to trade or carry on business in the properties or nghts bfelongmg to the Govemment, nor can there be any infringement of Art. 14, if the Government tries to get the best available price for its valuable rights.

The' High Court was wholly wron" in thinng that purpose of ss. 22 and 29 o{ the Act was not t~ raise revenue. Raising revenue as held by this Court .jn Cooverjee Bharucha's case (supra) was one of the important purposes of such provisions.

The fact that the price fetched by the sale of Country liquor is an excise revenue does not change the nature of the right.

The sale in question is but a mode of raising revenue.

Assuming that the question of arbitrary or unguided power can arise in a case of this nature, it should not be forgotten that the power to accept or reject the highest bid is given to the highest authority in the State i.e. the Government which is expected to safeguard the finances of the State.

Such a power cannot be considered as an arbitrary power.

If that p.ower is exercised for any collateral purposes, the exercise of the power will be struck down. It may also be remembered that herein we are not dealing with a delegated power t with a power conferred by the legislature.

The High Court erroneously thought that the Government was bound to satisfy the Court that there was collusion between the bidders.

The High Court was not sitting on appeal against the order made by the Government.

The inference of the 9overnment that there was a collusion among the bidders may be right or wrong.

But that was not open to judicial review so long as it is not proved that it was a make-believe one.

The real opinion formed by the Government was that the price fetched was not adequate.

That conclusion is taken on the basis of Government expectations.

The conclusion reached by the Government dces not affect any one's rights.

Hence, in our opinion the High Court misapplied the ratio of the decision of this Court in Barium Chemicals Ltd. and anr. v. Company Law Board and ors.(') and Rohtas Industries Ltd. v. S. T. Agarwal(').

 It was next urged that having had recourse to the auction method once, the Government was precluded from either calling for tenders or to sell by negotiation.

The High Court has. accepted that contention.

We are unable to agree with the High Court in its conclusion.

Nei, ther the provisions of the Act nor the order issued by the Government lend any support to such a conclusion.

(I) [1966] Supp. S.C.R. 311.

(2) [1969] t s.c.c. 325.

OR!SSA v. HARi NARAYAN (Hegde, J.) 795

A Once the Government declines to accept the highest d, the auction held became useless.

Similar is the effect when the Government refused to accept the highest tender.

That left the Government free to have recourse to other methods.

The power given to the Government by the Act to sell the exdusive privilege in such other manner as it thinks fit is a very wide power.

That B power is unrestricted.

It undoubtedly includes the power to sell the privileges in question by private negotiation.

It was urged that before adopting the method of selling the privileges by private negotiation.

The Government is required by s. 29(2) (a) to make an order that the privileges in question will c be sold by private negotiation.

The Government has failed to make such an order.

Hence the sales effected are invalid. We are unable to accept these contentions. ln the cases of public auctions or, .in the case of calling for tenders, orders from the Government directing its subordinates to notify or hold the auctions or call for tenclers is understandable.

Public auctions as well as calling for tenders are done by subordinate officials.

D Further due publicity is necessary in adoptin~ those methods. To require the Government to make an order that it is going to sell one or more of the privileges in question biy negotiating with some one is to make a mockery oi the law. If the Government can enter into negotiation with any person, as we think it ca.n, it makes no sense to require it to first make an order that it is going to E negotiate with that person.

We must understand a provision of law reasonably.

Section 29(2)(a) does not speak of any order.

It says that "the State Government may by general or special order

direct".

The direction contemplated by that provision is a direction to subordinate officials.

It is meaningless to say that the Government should direct itself.

F In the result these appeals are allowed and the writ petitions dismissed.

No costs.

V.P.S.

Appeals al/owed ..

STATE OF ORISSA AND ORS

HARINARAYAN JAISWAL AND ORS

l(. S. HEGDE

P. JAGANMOHAN REDDY, JJ.

Bihar and Orissa Excise Act, 1915

Ss. 22 and 29

s. 29

Arts. 14 and 19(1)

s. 29(2)

Bihar and Orissa Excise Act, 1915

Arts. 14 and 19(1)

Section 22

s. 29

ss. 22 and 29

s. 29(2)

Art. 14 and 19

s. 29(2)

CNIL

R. C. Misra

Santosh Chatterjee

G. S. Chatterjee

M. C. Setalvad

Vinoo Bhagat

Hegde

State of Orissa

January 8, 1971

February 15, 1971

High Court of Orissa G

Art. 226

Arts. 14 and 19

s. 29

Orissa Excise Act, 1915

October 6, 1970

Orissa

section 5

Indian Councils Act, 1892

Section 22

Section 29

section 22

s. 2(9)

s. 29

s. 29(2)

January 6, 1971

Orissa Excise Rules, 1965

March 7, 1971

Cuttack

Government of Orissa

6th January 1971

Section 29

Bihar and Orissa Excise Act, 1915

Bihar and Orissa Act

Section 29

s. 29(2)

Arts. 14 and 19(1 )( g)

Art. 14

s. 22

Section 29

s. 22

s. 22

s. 29

s. 29(2)

s. 22

s. 22

s. 29

s. 29

Art. 19(6)

[1967] 3 S.C.R. 50

ss. 22 and 29

Cooverjee Bharucha

Art. 19(1)

Art. 14

s. 22

Art. 19( I )(g)

Art. 14

Art. 14

ss. 22 and 29

s. 29(2)

Section 29(2)(a)