Case: Hamid Raza Vs. State of Madhya Pradesh

2. The petitioner carries on business as a manufacturer of bidis under the name and style of Hamid Raza Manufacturing Company Rewa. In the year 1953, the Vindhya Pradesh Tendu Leaves Act, 1953, was enacted and it came into force on May 19, 1954. In pursuance of a provision therefor the petitioner applied to the appropriate authority on January 19, 1955, for a licence. His application is Annexure A. On February 4, 1955, the Divisional Forest Officer, Rewa, declined to grant him a licence stating as the reason therefor as follows :"With reference to your above application I have to inform you that no licence for Tendu Patti, will be issued as the Tendu Patti of this division were auctioned."A week later the petitioner made a second application for licence. He also interviewed the Divisional Forest Officer and the Chief Conservator of Forest Vindhya Pradesh, Rewa. Though he heard nothing in reply to his application, it appears that he was informed orally that no licence would be granted to him.3. The petitioner thereupon applied to the Judicial Commissioner, Vindhya Pradesh Art. 226 of the Constitution requesting for writ or writs to compel the grant of licence to him. Before the Judicial Commissioner the authorities made an offer, and undertook, to grant to the petitioner a licence to purchase Tendu leaves from the contractors to whom the forest areas in Vindhya Pradesh had previously been auctioned. Though the petitioner did not accept this offer, the Judicial Commissioner considered it fair enough and in view of it he declined to issue a writ and dismissed the petition. As previously stated the Judicial Commissioner, Vindhya Pradesh, granted a certificate of fitness on which action was also taken, but the petitioner moved this Court under Art. 32 of the Constitution separately.As a result of the decision of the Judicial Commissioner, Vindhya Pradesh, the Government issued a licence to the petitioner in Form No. I prescribed under the rules. It is Annexure E However, in view of the contracts already given to contractors in the entire Vindhya Pradesh, the form was amended by the licensing authority to show that it was a licence for purchase from contractors in Vindhya Pradesh.

Court's reasoning:
The word prescribed was defined to mean prescribed by the rules framed under the Act. Section 17 gave the power to frame rules to the State Government and not to any other authority. The rules prescribed the Form in which the licences were top be granted and the From itself showed the conditions under which the licences operated. It would, therefore be plain that any condition not so included in the rules or the Form could not be imposed by any authority in Vindhya Pradesh. The fist of the amendment of the Form of the licence is to restrict the operation of the licence in a manner not contemplated either by the rules or the unamended Form.The scheme of the Act as well as the rules which we have analysed above clearly indicate that it was not contemplated that the Government or the licensing authorities would dispose of the leaves from trees standing on Jagir land or tenants holdings. If the State Government thought fit to do so, it manifestly enough went outside the Act and the rules. No doubt, having done so the Sate Government, finds itself in an unhappy position because a licencee, who is not a contractor, is free even under the Act and the rules to deal with Jagirdars and tenants in respect of leaves from trees belonging to them.The State Governments justification of the imposition of the condition in the licence does not rest upon anything that may be gathered from the Act and the Rules.11. The Form of the licence is prescribed and the conditions are also indicated by the rules. The authority to add a condition to the licence must be found either in the Act or the rules. The State Government was unable to point out any provision in the Act and the rules which enabled the licensing authorities to restrict the operation of the licence to purchases from contractors only. The addition therefore of this condition even though done with bona fide motives is not justifiable under the Act or the rules.In view of the fact that there is a clear disregard of the Act and the rules by the addition of an unwarranted clause to the licence and of the fact that the clause itself amounts to an unreasonable restriction upon the rights of the petitioner guaranteed under Part III, the inclusion of the words "from contractors in Vindhya Pradesh" in the licence must be declared to be both ultra vires and void.This case is governed by the principle laid down in Rashid Ahmed v. Municipal Board, Kairana, (1950) SCR 566 : (AIR 1950 SC 163 ), because the restriction imposed by the licence cannot be said to be reasonable within the meaning of Art. 19(6) of the Constitution.The effect of the addition of this condition is clear. The Act and the rules desired that there should be liberty to the licencees to purchase tendu leaves from Jagirdars and tenants. Their lands were not meant to be included in the contracts given to contractors. The contractors, it is admitted, are themselves Bidi manufacturers and by selling the right to collect tendu leaves from every tree in Vindhya Pradesh to them creates a monopoly in their favour to the exclusion of other licencees who must purchase leaves for their business at prices to be demanded by the contractors. Naturally enough the contractors would see to it that other rival traders do not obtain the leaves at prices which would enable them to compete in the manufacture of Bidis.In our opinion, therefore, the inclusion of an additional term in the licence would seriously affect and even destroy the business of manufacturers like the petitioner. The addition of such a condition is not justified by S. 3 (2) (c) as was claimed by the State, nor does R. 4 save it. That rule applies only to such trees as belong to Government.