Case: Laxmi Khandsari Etc. Etc Vs. State Of U.P. &amp; Ors

1. Inspired by the objective of removingshortage of sugar and for the purpose of enhancing sugar production in order to achieve an equable distribution of the commodity so as to make it available to consumers at reasonable rates and thereby relieving the sugar famine, the Cane Commissioner, Government of Uttar Pradesh by virtue of a notification dated October 9, 1980, acting under Clause 8 of the(Control) Order, 1966 (hereinafter referred to as the Control Order) directed that no power crusader, with certain exceptions, of a khandsari unit or any agent of such owner in the reserved area of a mill could be worked until December 1, 1980. The exact contents of the notification may be extracted thus :Lucknow, Thursday, October 9, 1980 :In exercise of the powers under Clause 8 of the Sugar cane (Control) Order, 1966 read with the Central Government, Ministry of Food Agriculture, Community Development and cooperation (Department of Foods), Government of India Order No. GSR 122/Ess. Com.dated July 16, 1966, I, Bhola Nath Tiwari, Cane Commissioner, Uttar Pradesh hereby direct that no owner of power crusher (other than those vertical powers crushers which manufacture Gur or Rab from sugar cane grown on their own fields) or a Khandsari Unit or any agent of such owner shall in any reserved area, of any Sugar Mill work the power crusher, or the Khandsari Unit prior to December 1, 1980 during the yearOrderBhola Nath TiwariCane CommissionerUttar Pradesh3. The Control Order was passed by the Central Government in exercise of the powers conferred on it by Section 3 ofthe Essential Commodities Act, 1955 (hereinafter referred to as the Act of 1955). In order to understand the contentions raised by the parties it may be necessary to analyse the prominent features of the above notification with reference to the situation it was intended to meet.

Reasoning: the onus is not he State to prove or justify that the restraint or restrictions imposed on the fundamental rights under clauses (2) to (6) of the Article are reasonable. In the instant case, weWe, therefore, fully agree with the contention advanced by the petitioners that where there is a clear violation of Article 19(10(g), the State has to justify by acceptable evidence, inevitable consequences or sufficient materials that the restriction, whether partial or complete, is in public interest and contains the quality of reasonableness. This proposition has not been disputed by the counsel for the respondents, who have, however, submitted that from the circumstances and materials produced by them the onus of proving that the restrictions are in public interest and are reasonable has been amply discharged by them.It is abundantly clear that fundamental rights enshrined in Part III of the Constitution are neither absolute nor unlimited but are subject to reasonable restrictions which may be imposed by the State in public interest under clauses (2) to (6) of Article 19. As to what are reasonable restrictions would naturally depend on the nature and circumstances of the case, the character of the statute, the object which it seeks to serve, the existing circumstances, the extent of the evil sought to be remedied as also the nature of restraint or restriction placed on the rights of the citizen. It is difficult to lay down any hard and fast rule of universal application but this Court has consistently held that in imposing such restrictions the State must adopt an objective standard amounting to a social control by restricting the rights of the citizens where the necessities of the situation demand. It is manifest that the adopting the social control one of the primary considerations which should weigh with the court is that as the directive principles contained in the Constitution aim at the establishment of an egalitarian society so as to bring about a welfare State within the framework of the Constitution, these principles also should be kept in mind in judging the question as to whether or not the restrictions are reasonable. If the restrictions imposed appear to be consistent with the directive principles of State policy they would have to be upheld as the same would be in public interest and manifestly reasonable.It is true that one of the important considerations which must weigh with the court in determining the reasonableness of a restriction is that is should not contravene the directive principles contained in Part IV of the Constitution which undoubtedly has a direct bearing on the question as held by this Court in the cases of Saghir Ahmad v. State of U. P. and State of Bombay v. F. N.In the light of the principles enunciated and the decisions discussed above, we now proceed to examine the facts and circumstances placed before us by the Union of India to prove that the restrictions imposed under the impugned notification contain the quality of reasonableness and are not violative of Article 19(1) (g). The main pleas of the State of Uttar Pradesh which have been adopted by the Union of India, are to be found in Paragraphs 6 to 11 of the counter-affidavit filed by the respondents in Writ Petitions 5565-5567 of 1980. The respondents have taken the stand that there has been a very steep rise in the prices of sugar which is doubtless an essential commodity. It has further been alleged that one of the major factors responsible for the present rise in the prices of sugar is that there is a sharp rise in demand for consumption of sugar whereas its production has slumped to a very low level. In order to illustrate the point it has been averred that the demand of sugar in the country has increased to over 60 lakh tonnes whereas production of the commodity in the proceeding year (1979-80) was only about 39.5 lakh tonnes. In order to meet the demand, the Central Government had to import for the first time after several years 2 lakh tonnes of sugar at a cost of about one hundred crores of rupees. One reason for the shortfall in production during 1979-80 was the poor availability of cane to the sugar factories. This is turn resulted from the works drought conditions faced by our country particularly in the State of Uttar Pradesh which is one of the main suppliers of sugar-cane. Yet another cause of the shortage was that the sugar famine led to the large-scale diversion of cane to gur and khandsari manufacturers. The counter-affidavit then proceeds to give a chart of the production of sugar by the crushers and theis no reliable evidence to rebut the aforesaid facts detailed in the counter-affidavit of theargument is, no doubt, attractive but we are not sure if and when these harsher terms are imposed on the petitioners, it would be possible for them to run the aforesaid impositions. At any rate, since the impugned notification has expired the government will certainly consider the desirability of a reappraisal of the situation after taking into account this aspect of the matter. It was further pointed out by the Union of India that only 39 sugar-mills are in the private sector and ensuring actual availability of sugar-cane at reasonable rates to the sugar-mills was the prime consideration which formed the basis of the impugned notification in conformity with the object of the Act of 1955 and the Control Order so as to maintain a fair price for the general public. Learning a lesson from the performs of the sugar market in the proceeding year, the government thought it more desirable to channelise the production (sic) of sugar-cane so that the interests of neither the sugar-mill owners nor of the khandsari units nor those of the cane growers suffered.After a careful consideration of the arguments and documents produced by both the parties we are satisfied that the restriction imposed by the impugned notification in stopping the crushers for the period October 10 to December 1, 1980 is in public interest and bears a reasonable nexus to the object which is sought to be achieved, namely, to reduce shortage of sugar and ensure a more equitable distribution of this commodity.We are of the opinion that this argument of Mr. Gupta is sound and must prevail. The Additional Advocate General, U. P. sought to draw several distinctions between a vertical power crusher and a horizontal one, namely, (1) a vertical power crusher can crush 1500 quintals of sugar-cane per month whereas a horizontal one crushes 5600 quintals of the commodity in the same period; (2) vertical power crushers are non-commercial and fall within the category of cottage industry whereas horizontal power crushers are included in the category of small scale industry; (3) vertical power crushers run by their owners themselves and draw supplies from sugar-cane growers and (4) vertical power crushers do not require any licence. So far as the last part of the argument of the Additional Advocate General of U. P. the vertical power crushers do not require a licence is concerned, it is factually wrong because all such crushers require a licence by virtue of the Orders passed by the Central Government under Section 3 of the Act of 1955. Regarding the other distinctive features the mere ipse dixit of deponent Gupta who has sworn an affidavit, there is absolutely no documentary evidence to support the features pointed out or relied upon by the Additional Advocate General. In these circumstances it has not been proved to our satisfaction that there is any real distinction between a vertical and a horizontal power crusher, and we regard both as falling in the same class. The notification by exempting vertical power crushers and prohibiting horizontal power crusher is clearly discriminatory and the discrimination is not justified by any rational nexus between the prohibition and the object sought to be achieved.Having regard therefore to the facts and circumstances proved in this case it cannot be said that either the control Order for the impugned notification is against the tenor and spirit of Section 3. On the other hand it is manifestly clear from the circumstances disclosed above that it is in pursuance of the aim and object for which Section 3 was enshrined in the Act of 1955 that the Control Order and the notification were promulgated. The contention of the learned counsel for the petitioner on this score is accordingly overruled.Thus, on an overall consideration of the various aspects of the matter we are fully satisfied that applying the well-established tests of reasonableness, the impugned notification cannot be said to contain the quality of unreasonableness but is per se fair and reasonable and fully satisfies the conditions laid down by this Court in determining whether or not a restriction is reasonable.Secondly, could it not be possible for the government to allow the crushers to function by regulating the working hours or to fix a quota of sugar-cane to be delivered to the mills and the crushers in the ratio of 60 : 40 or 70 : 30 as may be advised by the experts and to insist that on the crushers and the mills should pay a uniform price to the cane growers? The counsel for the petitioners have brought to our notice a disturbing element in the entire case which is that in the past although the sugar-cane growers supplied sugar-cane on condition of payment to them of the support price fixed by the government yet the mills did not pay the price to the cane growers for a long time with the result that arrears accumulate running into lakhs of rupees. It would indeed be extremely desirable for the government to take steps to see that payment of the price of the quantity of the cane supplied to the mills or the crushers is paid against delivery or at any rate, within a reasonable time therefore so as to provide a strong incentive to the farmers to increase their production and earn substantial profits by supplying the sugar-cane to mills or crushers during the crushing season (October to May).88. Lastly, it was represented to us by the petitioners that the crushers are used for the twin purpose of production of khandsari sugar and gur, rab, etc., but as the crushers are sealed by the officers of the government, the owners are not in a position to produce even gur or rab on the production of which not only no ban has been imposed by the impugned notification but the same has been completely exempted from the purview of the notification. Thus, it was asserted the at the owners of crushers who want to switch over to production of gur, or rab, because of the ban imposed by the government on the production of khandsari may be allowed to do so. The Attorney General, however, pointed out that if this course is adopted it will be difficult to detect as to how many crushers are producing khandsari sugar in the garbs of gur or rab. Wherever any step for banning production is taken, the government has to evolve some procedure to detect the defaulters and with the resource at in command, we cannot understand why a special staff cannot be appointed ton a temporary basis for looking after the compliance of the order by the crushers and making surprise checks periodically. Another method to prevent the abuse of the privilege of production of gur or rab by producing khandsari in a clandestine fashion may be to insert a condition in the licences of the manufactures of khandsari sugar that if they produce khandsari during the period of the ban their licences would be cancelled.It is not disputed that sugar was being produced in the State of U. P. by thethrough hydraulic process and by the power crushers drew their raw material, namely,from the sugar cane growers. In order to facilitate production by themost of whom were controlled by the state, a reserved area of the fields growingwas fixed throughout the State. The notification applied only to the reserved areas of a mill and not to any other areas. In other words, any area which fell outside the reserved area was not affected by the notification and the power crushers situated in that area could still manufacture khandsari by the open pan process. Thus, it would be seen that the ban imposed by the notification was confined only to a particular area in the State of U. P.4. Secondly, the notification limited the ban to work power crushers only to a short period of one month and a half i. e., from October 9, 1980 to December 1, 1980. Thirdly (and it has also not been disputed) the owners of power crushers of khandsari units, who are the petitioners in these cases, had taken out regular licenses under the U. P. Khandsari Sugar Manufacturers Licensing Order of 1967 (hereinafter referred to as the Licensing Order). It, therefore, logically follows that the power crushers owned or worked by the petitioners were governed by the conditions of the licenses under which they were working the crushers. Forthly, what was prohibited by the notification was only the manufacture of khandsari while the production of gur or rab fromA large number of documents in the nature of affidavits,report and books have been filed by the counsel for both the parties in support of their respective contentions. We might also mention here that the notification has since spent its force and, in fact, was not carried into effect because immediately after it was issued the present writ petitions were filed in this Court and the petitioners obtained stay of the operation of the notification from this Court. Thehowever, insisted that the matter should be finally decided so that if the Central Government wants to take any steps of this kind in future, it may be aware of the correct constitutional or legal position. The petitioners also insisted that the constitutional and legal questions involved in these cases may be decided even though our decision may be more or less of an academic value.On the contention according to which the impugned notification is violative of Article 19(1) (g), it may be necessary to dwell in some detail. It is no doubt well settled that where a citizen complains of the violation of fundamental rights contained in(g) of clause (1) of Article 19 or for that matter in any of(a) to (g) thereof,the onus is not he State to prove or justify that the restraint or restrictions imposed on the fundamental rights under clauses (2) to (6) of the Article are reasonable. In the instant case, weare mainly concerned with(4), (5) and (6) of Article 19. As far back as 1955 this Court in Saghir Ahmad v. State of U. P. made this position very clear and observed as follows :