Case: Prag Ice and Oil Mills and Another Vs. Union of India

and inconvenience, but the ultimate savings in the cost of the finished product could more than balance that inconvenience. The argument of the petitioners really amounts to a rigid insistence that they are entitled to carry on their business as they please, mostly in a traditional manner, regardless of its impact on public interest. But, property rights are not absolute, and important as the right of property may be, the right of the public that such rights be regulated in common interest is of greater importance. These correlative rights, as observed in Lea Nebbia v. People of the State of New York(78 Lawyers Edition 940.), are always in collision: No exercise of the private right can be imagined which will not ever slight, affect the public; no exercise of the to regulate abridge his liberty or affect his property. But subject only to constitutional restraint the private right must yield to the public the words of Justice Roberts who delivered the opinion of in Leo Nebbia (supra): The Constitution does not se cure to any one liberty to conduct his business in such fashion as to inflict injury upon the, public at large, or upon any substantial group of the people. Price control, like any other for m of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty. 36. Counsel for the petitioners characterised the fixation of price in the instant case as a veiled transgression of power conferred by section 3 ( 1 of the Essential Commodities Act. In support of that submission the judgment of this Court in K. C. Gajapati Narayan Deo anti Others v. The State of Orissa([1954] S.C.R. 1.) was cited in which it was said that when a legislative power is defined by reference to purpose, legislation not directed to that purpose will be invalid. We are unable to appreciate how, if the Government has got the power to fix a fair price of an essential commodity, it can be said that they have under a pretext trespassed upon a field which does not properly belong to them. The power conferred by section 3(1) of the Essential Commodities Act is undoubtedly purposive. But it seems to us incontrovertible that the Price Control Order was promulgated by the Government in order to achieve the purpose set out in section 3(1) of the Act. The fact that a legislative remedy or an administrative order passed in exercise of a statutory power is effective to mitigate an evil may show that it has failed to achieve its purpose, highlighting thereby the paradox of reform. But, as observed in Joseph Beaubarnais v. People of the State of Illinois(96 Lawyers Edition 919.) , that is the price to be paid for the trail-and-error inherent in legislative efforts to dial with obstinate social issues. We are, therefore, unable to hold that by fixing a fair price for mustard oil, the Government has committed a veiled and subtle trespass upon private rights or upon a legislative field which is not open to them to occupy.To sum up, it seems to us impossible to accept the contention of the petitioners that the impugned Price Control Order is an act of hostile discrimination against them or that it violates their right to property or their right to do trade or business. The petitioners have taken us into the mutest details of the mechanism of their trade operations and they have attempted to demonstrate in relation thereto that a factor here or a factor there which ought to have been taken into account while fixing the price of mustard oil has been ignored. Dealing with a similar argument it was observed in Metropolis Theater Company v. City of Chicago(57 Lawyers Edition 730.) that to be able to. find fault with a law is not to demonstrate its invalidity. It may seem unjust and oppressive, yet be free from judicial interference. The problems of government are practical ones and may justify, if they do not require rough , accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not always discernible, the wisdom of any choice may be disputed or condemned. Mere errors of government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void. . . . 37. The Parliament having entrusted the fixation of prices to the expert judgment of the Government, it would be wrong for this Court, as was done by common consent in Premier Automobiles (supra) to examine each and every minute detail pertaining to the Governmental decision. The Government, as was said in Permian Basin Area Rate Cases, (supra) is entitled to make pragmatic adjustments which may be called for by particular circumstances and the price control can be declared unconstitutional only if it is patently arbitrary, discriminatory or demonstrably irrelevant to the policy which the legislature is free to adopt. The interest of the producer and the investor is only one of the variables in the constitutional calculus of reasonableness and Courts ought not to interfere so long as the exercise of Governmental power to fix fair prices is broadly within a zone of reasonableness. If we were to embark upon an examination of the desperate contentions raised before us on behalf of the contending parties we have no doubt that we shall have exceeded our narrow and circumscribed authority. Before closing, we would like to mention that the petitioners rushed to this Court too precipitately On the heels of the Price Control Order. Thereby they deprived themselves of an opportunity to show that in actual fact, the Order causes them irreparable prejudice. Instead, they were driven through their ill-thought haste to rely on speculative hypotheses in order to buttress their grievance that their right to property and the right to do trade was gone or was substantially affected.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]But it makes no distinction whatsoever between any grants of powers and their exercise. Powers are granted or conferred so as to be exercised and not to be kept in cold storage for purpose s of some kind of display only as though they were exhibits in a show case not meant for actual use. The whole object of a protection conferred upon powers meant for actual use is to protect their use against attacks upon their validity based upon provisions of Part 111. If , his be the correct position, it would, quite naturally and logically, follow that their use is what is really protected.In practice, it is theexercise of power which is generally assailed and not the mere conferment of it which raises the somewhat different question of legislative competence. Indeed, the Ninth Schedule does not provide any protection at all against attacks based upon either the vice of excessive delegation or w ant of legislative compete defects which could be said to vitiate the grant of powers despite their place in the Ninth Schedule. But, questions of conflict with fundamental rights and of transgression of Legitimate or reasonable, limit.% upon their exercise arise when citizens complain of unreason. able impediments to the exercise of their fundamental rights. The distinction between protection to a mere grant of powers and to their exercise, therefore, seems specious in the context of the protection. It cannot explain why, if section 3 is protected by the Ninth Schedule. the exercise of power granted by it, which manifests itself. in control orders, is not protected. It would be so protected, if at all, not because the orders to be made in future, as such are protected, but because the power actually conferred and found in existence in section 3 is protected. The protection is given to a power which is specified and in existence which has to be used of certain purposes and not to what may be specified in futureIf orders passed under section 3 of the Act also get a protection it would be what may be described as a derivative protection so long as the orders are covered by section 3 of the Act. It is available only so long as and because the source of their authorityWe do not think that we need deal with American cases in price fixation such as Leo Nebbia v. People of the State of New York(291 U.S. (78 Law. En.) 502), where the guarantee of due process against capricious action was involved. in this country, such guarantees in regard to rights of property or to carry on industry or trade or business could only arise by reason of Articles 14 and 19 of the Constitution which it, excluded here because of the protection conferred upon section 3 of the Act by the 9th Schedule of the Constitution. I may, however, mention that in Permian Basin Area Rate cases (20 L. Ed. 2d. p. 312.), where the majority of learned judges of the U.S. Supreme Court laid down, inter alia, with regard to price fixation by a body of experts of Federal Power Commission required to proceed, that in order to over turn the Commissions judgment the petitioners must undertake the heavy burden of making a convincing showing that it is invalid, because it is unjust and unreasonable in its consequences. That was a case in which a Commission was charged with a duty to fix rates in accordance with certain principles after taking evidence and hearing parties effected. Nevertheless, the duty of the petitioners was held to extend to demonstrating the unreasonableness and injustice of the consequences. A fortiori, patent injustice and unreasonable injury to the interests of consumers must be shown if a measure of price control, in the nature of either legislative or purely administrative action, is assailed. So long as the action taken is not so patently unjust and unreasonable as to lead to the irresistible conclusion that it could not fall within section 3(1) of the Act it cannot be set aside or declared invalid. The test has to be that of consequences on objects sought by section 3 ( 1 ) of the Act. Judged by this test we think that the Order of 30th September, 1977, fell within the purview of section 3 of the Act and it has served , its purposes.For reasons given above, the order of dismissal of Writ Petitions already pass ed by us on 23rd November, 1977 is, in our opinion, fully justifiedThe argument that the Price Control Order offends against the right to property and the right to carry on trade or business requires for its appreciation and decision the awarene ss that by the 40th Amendment passed in 1976, the Essential Commodities Act was placed in the Ninth Schedule to the Constitution as item 125. One of the main contentions of the Union Government in answer to the petitioners challenge to the constitutionality of the Price Control Order is that since the Act, by reason of its being placed in the Ninth Schedule, is immune from attack on the ground that its provisions violate the fundamental rights guaranteed by Part III of the Constitution, the Price Control Order which is but a creature of the Act must enjoy the same immunity. This contention has found favour with the learned Chief Justice, Shri M. H. Beg but, with respect, we are unable to share his view.Article 3 1 A of the Constitution saves laws which provide for matters mentioned in clauses (a) to (e) thereof from a challenge under articles 14, 19 or 31 notwithstanding anything contained in article 13 of the Constitution. Article 31A which w as introduced by the Constitution (First Amendment) Act, 1951, validates certain Acts and Regulations providing that without prejudice to the generality of the provisions contained in Article 31A, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of Part III. On a plain reading of this article it seems to us impossible to accept that the protective umbrella of the Ninth Schedule takes in its ever widening wings not only the Acts and Regulations specified therein but also Orders and Notifications issued under those Acts and Regulations. Article 31B constitutes a grave encroachment on fundamental rights and doubtless as it may seem that it is inspired by a radiant social philosophy, it must be construed as strictly as on e may, for the simple reason that the guarantee of fundamental rights cannot be permitted to be diluted by implications and inferences. An express provision of the Constitution which prescribes the extent to which a challenge to the constitutionality of a law is excluded, must be construed as demarcating the farthest limit of exclusion. Considering the nature of ther which article 31B deals with, there is, in our opinion, no justification for extending b y judicial interpretation the frontiers of the field which is declared by that article to be immune from challenge on the ground of violation or abridgement of fundamental rights. The article affords protection to Acts and Regulations specified in the Ninth Schedule. Therefore, whenever a challenge to the constitutionality of a provision of law on the ground that it violates any of the fundamental rights conferred by Part III is sought to be repelled by the State on the plea that the law is placed in the Ninth Schedule, the narrow question to which one must address oneself is whether the impugned law is specified in that Schedule. If it is, the provisions of article 31B would be attracted and the challenge would fail without any further inquiry. On the other hand, if the law is not specified in the Ninth Schedule, the validity of the challenge has to be examined in order to determine whether the provisions thereof invade in any manner any of the fundamental r ights conferred by Part III. It is then no answer to say that though the particular law, as for example a Control Order, is not specified in the Ninth Schedule, the parent Act under which the Order is issued is specified in that Schedule.The Mustard Oil (Price Control) Order, 1977, was passed under section 3 of the Essential Commodities Act, 1955, which by the relevant part of itsempowers the Central Government to provide by an order for regulating or prohibiting the production, supply and distribution of an essential commodity or trade and commerce therein, if it is of the opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securinge distribution and availability at a fair price. Since the Act of 1955 has been placed in the Ninth Schedule, none of its provisions, including of course section 3(1), is open to attack on the ground that it ever was or is inconsistent with or takes away or abridges any of the rights conferred by any provision of Part III of the Constitution. But that is the farthest that the immunity offered by article 31B can go. In other words, speaking of a provision directly in point, s. 3(1) of the Act of 1955 is not open to challenge on the ground, to take a relevant instance, that it violates the guarantee contained in article 19 (1) (f) or 19 (1) (g) of the Constitution. But there is no justification for extending the protection of that immunity to an Order passed under section 3 of the Act like the Mustard Oil (Price Control) Order. Extending the benefit of the protection afforded by article 31B to any action taken under an Act or Regulation which is specified in the Ninth Schedule, appears to us to be an unwarranted extension of the provisions contained in article 31B, neither justified by its language nor by the policy or principle underlying it. When a particular Act or Regulation is placed in the Ninth Schedule, the Parliament may be assumed to have applied its mind to the provisions of the particular Act or Regulation and to the desirability, propriety or necessity of placing it in the Ninth Schedule in order to obviate a possible challenge to its provisions on the ground that they offend against the provisions of Part III. Such an assumption cannot, in the very nature of things, be made in the case of an Order issued by the Government under an Act or regulation which is placed in the Ninth Schedule. The fundamental rights will be eroded of their significant content if by judicial interpretation a constitutional immunity is extended to Orders the validity of which the Parliament at least theoretically, has had no opportunity to apply its mind. Such an extension takes for granted the supposition that the authorities on whom Dower is conferred to take appropriate action under a statute will act both within the framework of the statute and within the permissible constitutional limitations, a supposition which past experience does not justify and to some extent falsifies. In fact, the upholding of laws by the application of the theory of derivative immunity is foreign t o the scheme of our constitution and accordingly orders and Notifications issued under Acts and Regulations which are specified in the Ninth Schedule must meet the challenge that they offend against the provisions of Part III of the Constitution. The immunity enjoyed by the parent Act by reason of its being placed in the Ninth Schedule cannot proprio vigore be extended to an offspring of the Act like a Price Control Order issued under the authority of the Act. it is therefore open to the petitioners to invoke the writ jurisdiction of this Court for determination of the question whether the provisions of the Price Control Order violate articles 14, 19 (1) (f) and 19 (1) (g) of the Constitution. The learned Solicitor General relies, justifiably, on two decisions of this Court in Vasantlal Maganbhai Sanjanwala v. The State of Bombay and Others([1961] 1 S.C.R. 341.) and Latafat Ali Khan and Ors. v. The State of U.P.([1971] Supp. S.C.R. 719.), in support of his argument that the Price Control Order must receive the protection of the Ninth Schedule to the same extent as the Essential Commodities Act under which that order was issued and which has been placed in the Ninth Schedule. In Vasantlal Maganbhai([1961] 1 S.C.R. 341.), the vires of section 6(2) of the Bombay. Tenancy and Agricultural Lands Act, 1948, was challenged on the ground that it suffered from the vice of excessive delegation. In exercise of the power con feared by section 6(2), the State Government had issued a Notification fixing the maximum rent payable by tenants of lands situated in the areas specified in the schedule appended to the Notification. The validity of that Notification was challenged on the ground. that it offended against Article 31 of the Constitution. The first contention was rejected by the majority which held that section 6(2) did not suffer from excessive delegation. On the second question it was held by the Court that since the Bombay Tenancy Act was placed in the Ninth Schedule, the Notification which was issued under section 6(2) of that Act could not be challenged on the ground that it violated article 31. Subba Rao J., who was in minority, did not consider the latter point regarding the validity of the Notification issued under section 6(2) because he took the view that section 6(2) suffered from the vice of excessive delegation and was therefore unconstitutional. This decision undoubtedly lends support to the contention of the Union Government that if an Act or Regulation is specified in the Ninth Schedule, any order or notification issued under it would equally be entitled to the protection of that Schedule. We are, however, of the opinion, respectfully, that the decision in Vasantlal Maganbhai (supra) does not reflect the true legal position which, according to us, is that the immunity enjoyed by an Act placed in the Ninth Schedule cannot be extended to an order or notification issued under it. The decision of. the Court appears to have been influenced largely by the consideration that the only argument advanced against the validity of the notification was that in substance it amended the provisions of section 6(1) and was therefore a fresh legislation to which article 31B could not apply. The Court rejected that argument and held that if section 6(2) was Valid, the exercise of the power validly conferred on the Provincial Government could not be treated as a fresh legislation.The decision in Latafat Ali Khan (supra) contains no reasons beyond the bare statement thatif a statutory rule is within the powers conferred by a section of a statute protected by Art. 3 1 B, it is difficult to say that the rule must further be scrutinised under arts. 14, 19, etc.This discussion will not be complete without reference to the decision of a Constitution Bench of this Court in Shree Meenakshi Mills Ltd. v. Union of India([1974] 2 S.C.R.398.). The question which arose in that case was as regards the validity of a notification fixing fair prices of cotton yarn. It was contended on behalf of the petitioners therein that the price fixed was arbitrary because the fluctuation in the price of cotton was not taken into consideration, the price of raw materials, the liability for wages and the necessity for ensuring reasonable profit to the trader were not taken into account; and above everything else, the industry was not ensured a reasonable return on its investment. These contentions were rejected by this Court on the ground that, just as the industry cannot complain of rise and fall of prices due to, economic factors in an open market, it cannot similarly complain of some increase in or reduction of prices as a result of a notification issued under section 3(1) of the Essential Commodities Act because, such increase or reduction is also based on economic factors. Dealing with the contention that a reasonable profit must be assured to the manufacturers, the Court held that ensuring a fair price to the consumer was the dominant object and purpose of the Essential Commodities Act and that object would be completely lost sight of, if the producers profit was kept in theRay C.J., speaking for the Court, observed:In determining the reasonableness of a restriction imposed by law in the field of industry, trade or commerce, it has to be remembered that the mere fact that some of those who are engaged in these are alleging loss after the imposition of law will not render the law unreasonable. By its very nature, industry or trade or commerce goes through periods of prosperity and adversity on account of economic and sometimes social and political factors. In a , largely free economy when controls have to be introduced to ensure availability of consumer goods like foodstuff, cloth and the like at a fair price, it is an impracticable proposition to require the Government to go through the exercise like that of a Commission to fix the pricesAnother passage from the judgment of the learned Chief Justice which has an important bearing on the instant case is to the following effect:When available stocks go underground and the Government has to step in to control distribution and availability in public interest, fixing of price can, therefore, be only empirical. Market prices at a time when the goods did not go underground and were freely available, the general rise in prices, the capacity of the consumer specially in case of consumer goods likeetc. the amount of loss which the industry is able to absorb after having made huge profits in prosperous years, all these enter into the calculation of a fair price in an emergency created by artificial shortagesOn this aspect of the matter, the Court cited with approval a passage from an American decision, Secretary of Agriculture v. Central Reig Refining Company(94Law Ed. 381.) to the effect that Courts of Law cannot be converted into tribunals for relief from the crudities and inequities of complicated experimental economic legislation.Counsel for the petitioners relied upon the decisions in Panipat(A.T.R. 1973 S.C. 536.) and Anakapalle Cooperative Agricultural and Indus trial Society Ltd. v. Union of India(A.T.R. 1973 S.C. 734.) in support of their contention that fixation. of a price without ensuring a reasonable return to the producers or dealers is unconstitutional. The infirmity of this argument, as pointed out in Meenakshi Mills v. Union of India, (supra) is that these two decisions turn on the language of section 3(3c) of the Essential Commodities Act under which it is statutorily obligatory to ensure to the industry a reasonable return on the capital employed in the business of manufacturing sugar. These decisions can, therefore, have no application to cases of price fixation under section 3 (1) read with section 3 (2) (c) of the Act. Cases failing unders 3A, 3B and 3C of section 3 of t hat Act belong to a different category altogetherIt is customary in price fixation cases to cite thed decision in Premier Automobiles Ltd. &Anr. etc. v. Union of India([1972] 2 S.C.R. 526.) which concerned the fixation of price of motor cars. It is time that it was realized that the decision constitutes. no precedent in matters of price fixation and was rendered for reasons peculiar to the particular case. At page 535 of the Report Grover J., who spoke for the Court, stated at the outset of the judgment: Counsel for all the parties and the learned Attorney General are agreed that irrespective of the technical or legal points that may be involved, we should base our judgment on examination of correct and rational principles and should direct deviation from the report of the Commission which was an expert body presided over by a former judge of a High Court only when it is shown that there has been a departure from, established principles or the conclusions of the Commission are shown to be demonstrably wrong or erroneous. By an agreement of parties the Court was thus converted into a Tribunal for considering every minute detail relating to price fixation of motor cars. Secondly, as regards the escalation clause, the Court recorded at page 543 that it was not disputed on behalf of the Government, and the Attorney General accepted the position, that a proper method should be. Thirdly, it is clear from page 544 of the Report that the Learned Attorney General also agreed that amust be al lowed to the manufacturers on their investment. The decision thus proceeded partly on an agreement between the parties and partly on concessions made at the Bar. That is the reason why the judgment in Premier Automobiles (supra) cannot be treated as a precedent and cannot afford any appreciable assistance in the decision of price fixation cases.The contention that the Price Control Order is arbitrary because it is not limited in point of time is without any merit. In the very nature of things, orders passed under section 3(1) read with section 3(2) of the Essential Commodities Act are designed primarily to meet urgent situations which require prompt and timely attention. If a price control order brings about an improvement in the supply position or if during the period that such an order is in operation there is a fall in prices so at to bring an essential commodity within the reach of the ordinary consumer, the order shall have lost its justification and would in all probability be withdrawn. That in fact is what has happened in the instant case. It appears that the supply position having improved, or, so at any rate seems to be the assessment of the situation by the Government , the order has been recently withdrawnIn support of that submission the judgment of this Court in K. C. Gajapati Narayan Deo anti Others v. The State of Orissa([1954] S.C.R. 1.) was cited in which it was said that when a legislative power is defined by reference to purpose, legislation not directed to that purpose will be invalid. We are unable to appreciate how, if the Government has got the power to fix a fair price of an essential commodity, it can be said that they have under a pretext trespassed upon a field which does not properly belong to them. The power conferred by section 3(1) of the Essential Commodities Act is undoubtedly purposive. But it seems to us incontrovertible that the Price Control Order was promulgated by the Government in order to achieve the purpose set out in section 3(1) of the Act. The fact that a legislative remedy or an administrative order passed in exercise of a statutory power is effective to mitigate an evil may show that it has failed to achieve its purpose, highlighting thereby the paradox of reform. But, as observed in Joseph Beaubarnais v. People of the State of Illinois(96 Lawyers Edition 919.) , that is the price to be paid for ther inherent in legislative efforts to dial with obstinate social issues. We are, therefore, unable to hold that by fixing a fair price for mustard oil, the Government has committed a veiled and subtle trespass upon private rights or upon a legislative field which is not open to them to occupy.To sum up, it seems to us impossible to accept the contention of the petitioners that the impugned Price Control Order is an act of hostile discrimination against them or that it violates their right to property or their right to do trade or business. The petitioners have taken us into the mutest details of the mechanism of their trade operations and they have attempted to demonstrate in relation thereto that a factor here or a factor there which ought to have been taken into account while fixing the price of mustard oil has been ignored. Dealing with a similar argument it was observed in Metropolis Theater Company v. City of Chicago(57 Lawyers Edition 730.) that to be able to. find fault with a law is not to demonstrate its invalidityIt may seem unjust and oppressive, yet be free from judicial interference. The problems of government are practical ones and may justify, if they do not require rough , accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not always discernible, the wisdom of any choice may be disputed or condemned. Mere errors of government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void. . . .The Parliament having entrusted the fixation of prices to the expert judgment of the Government, it would be wrong for this Court, as was done by common consent in Premier Automobiles (supra) to examine each and every minute detail pertaining to the Governmental decision. The Government, as was said in Permian Basin Area Rate Cases, (supra) is entitled to make pragmatic adjustments which may be called for by particular circumstances and the price control can be declared unconstitutional only if it is patently arbitrary, discriminatory or demonstrably irrelevant to the policy which the legislature is free to adopt. The interest of the producer and the investor is only one of the variables in the constitutional calculus of reasonableness and Courts ought not to interfere so long as the exercise of Governmental power to fix fair prices is broadly within a zone of reasonableness. If we were to embark upon an examination of the desperate contentions raised before us on behalf of the contending parties we have no doubt that we shall have exceeded our narrow and circumscribed authority. Before closing, we would like to mention that the petitioners rushed to this Court too precipitately On the heels of the Price Control Order. Thereby they deprived themselves of an opportunity to show that in actual fact, the Order causes them irreparable prejudice. Instead, they were driven through theirt haste to rely on speculative hypotheses in order to buttress their grievance that their right to property and the right to do trade was gone or was substantially affected.