Case: P. V. Sivarajan Vs. The Union Of India And Another

excludes or prohibits the application of the quantitative test in making rules for registration of exporters or for issuing licences for export trade. In fact the Act has deliberately left it to the rule-making authority to frame rules which it may regard as appropriate for export trade. In fact the Act has deliberately left it to the rule-making authority to frame rules which it may regard as appropriate for regulating the trade; and so it would be impossible to accept the argument that the rule-making authority was bound to prescribe the qualitative rather than the quantitative test. Besides, it does not appear that the report of the Committee on which Mr. Pai relied definitely indicated its partiality for the adoption of the qualitative test. Indeed App. XI to the said report would suggest that the Committee in fact was not averse to the adoption of a quantitative test; but even if the, Committee had expressly recommended the adoption of a qualitative not a quantitative test, it would be idle to suggest that the Coir Board was bound to accept the said recommendation or that the Central Government was not competent to make rules contrary to the recommendations of the Committee. The validity of the rules can be successfully challenged if it is shown that they are inconsistent with the provisions of the Act or that they have been made in excess of the powers conferred on the rule-making authority by S. 26 of the Act. In our opinion, no such infirmity has been established in respect of the impugned rules. 6. It is then contended that the relevant rules would ultimately tend to establish a monopoly in the export trade of coir commodities and would thereby extinguish the trade or business of small dealers like the petitioner. It is also contended that the application of the quantitative test discriminates between persons carrying on business on a large scale and those who carry on business on a small scale. That is how Arts. 19 and 14 and of the Constitution are invoked and the validity of the relevant rules is challenged on the ground that they violate the fundamental rights of the petitioner under the said Articles. We think there is no substance in this contention. 7. If it is conceded that the regulation of the coir industry is in the public interest, then it would be difficult to entertain the argument that the regulation or control must be introduced only on the basis of a qualitative test, it may well be that there are several difficulties in introducing and effectively enforcing the qualitative test. It is well known that granting permits or licences to export or import dealers on the basis of a quantitative test is not unknown in regard to export and import of essential commodities. It would obviously be for the rulemaking authority to decide which test would meet the requirements of public interest and what method would be most expedient in controlling the industry for the national good. Besides, even the adoption of a qualitative test may tend to extinguish the trade of those who do not satisfy the said test; but such a result cannot obviously be treated as contravening the fundamental rights under Art. 19. Control and regulation of any trade, though reasonable within the meaning of Art. 19, sub-Art- (6), may in some cases lead to hardship to some persons carrying on the said trade or business if they are unable to satisfy the requirements of the regulatory rules or provisions validly introduced; but once it is conceded that regulation of the trade and its control are justified in the public interest, it would not be open to a person who fails to satisfy the rules or regulations to invoke his fundamental right under Art. 19(g) and challenge the validity of the regulation or rule in question. In our opinion, therefore, the challenge to the validity of the rules on the ground of Art, 19 must fail. 8. The challenge to the validity of the said rules on the ground of Art. 14 must also fail, because the classification of traders made by Rr. 18 and 19 is clearly rational and is founded on an intelligible differentia distinguishing persons falling under one class from those falling under the other. It is also clear that the differentia had a rational relation to the object sought to be achieved by the Act.As we have already pointed, out, the export trade in coir commodities disclosed the existence of many malpractice which not only affected the volume of trade but also the reputation of Indian traders; and one of the main reasons which led to this unfortunate result was that exporters sometimes accepted orders far beyond their capacity and that inevitably led to non-fulfilment of contracts or to supply of inferior commodities. In order to remedy this position the trade had to be regulated and so the intending exporter was required to satisfy the test of the prescribed minimum capacity and to establish the prescribed minimum status before his application for registration is granted.In this connection it may also be relevant to point out that the rules seem to contemplate the granting of exemption from the operation of some of the relevant tests to cooperative societies; and that shows that the intention of the Legislature is to encourage small traders to form co-operative societies and carry, on export trade on behalf of such societies; and so it would not be possible to accept the argument that the impugned rules would lead to a monopoly in the trade. It is thus clear that the main object which the rules propose to achieve is to improve the anomalies and malpractice prevailing in the export trade of coir commodities and to put said trade on a firm and enduring basis in the interest of national economy. We, are, therefore, satisfied that the challenge to the impugned rules on the ground of infringement of Art. 14 of the Constitution must also fail.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]4. There is no doubt that coir and coir products play an important role in our natural economy. They are commodities which earn foreign exchange, the total value of our exports in these commodities being of the order of Rupees Ten Crores per year. was found that several malpractice had crept in the export trade of these commodities such as non-fulfilment of contracts, supplying goods of inferior qualities and cut-throat competition; and these in turn considerably affected the volume of the trade. That is why Parliament thought it necessary that the Union should take under its control the coir industry in order to regulate its export trade. It is with the object of developing the coir industry that the Coir Board has been established and the registration and licensing of exporters has been introduced. The petitioner does not dispute this position and makes no grievance or complaint against the relevant provisions in the ActIt is well known that granting permits or licences to export or import dealers on the basis of a quantitative test is not unknown in regard to export and import of essential commodities. It would obviously be for the rulemaking authority to decide which test would meet the requirements of public interest and what method would be most expedient in controlling the industry for the national good. Besides, even the adoption of a qualitative test may tend to extinguish the trade of those who do not satisfy the said test; but such a result cannot obviously be treated as contravening the fundamental rights under Art.. Control and regulation of any trade, though reasonable within the meaning of Art. 19, sub-Art- (6), may in some cases lead to hardship to some persons carrying on the said trade or business if they are unable to satisfy the requirements of the regulatory rules or provisions validly introduced; but once it is conceded that regulation of the trade and its control are justified in the public interest, it would not be open to a person who fails to satisfy the rules or regulations to invoke his fundamental right under Art. 19(g) and challenge the validity of the regulation or rule in question. In our opinion, therefore, the challenge to the validity of the rules on the ground of Art, 19 must fail8. The challenge to the validity of the said rules on the ground of Art. 14 must also fail, because the classification of traders made by Rr. 18 and 19 is clearly rational and is founded on an intelligible differentia distinguishing persons falling under one class from those falling under the other. It is also clear that the differentia had a rational relation to the object sought to be achieved by the Act.As we have already pointed, out, the export trade in coir commodities disclosed the existence of many malpractice which not only affected the volume of trade but also the reputation of Indian traders; and one of the main reasons which led to this unfortunate result was that exporters sometimes accepted orders far beyond their capacity and that inevitably led to non-fulfilment of contracts or to supply of inferior commodities. In order to remedy this position the trade had to be regulated and so the intending exporter was required to satisfy the test of the prescribed minimum capacity and to establish the prescribed minimum status before his application for registration is granted.In this connection it may also be relevant to point out that the rules seem to contemplate the granting of exemption from the operation of some of the relevant tests to cooperative societies; and that shows that the intention of the Legislature is to encourage small traders to form co-operative societies and carry, on export trade on behalf of such societies; and so it would not be possible to accept the argument that the impugned rules would lead to a monopoly in the trade. It is thus clear that the main object which the rules propose to achieve is to improve the anomalies and malpractice prevailing in the export trade of coir commodities and to put said trade on a firm and enduring basis in the interest of national economy. We, are, therefore, satisfied that the challenge to the impugned rules on the ground of infringement of Art. 14 of the Constitution must also fail.