Case: B. Viswanathiah And Company And Ors Vs. State Of Karnataka And Ors

2. At the outset, it is necessary to clarify two important points. The first is that the validity of the Act abovementioned and certain notifications issued thereunder were challenged in Civil Appeal Nos. 450 and 451 of 1966 and 542 of 1964. These civil appeals were disposed of by a judgment of this Court dated January 6, 1967 in State of Mysore v. K. C. Hanumiah ( 1975 (2) SCC 131 : 1975 AIR(SC) 1443). By the said judgment this Court repelled the contentions then put forward. The validity of certain provisions of the impugned Act had then been challenged on the footing that the said provisions as well as the rules made and the notifications issued thereunder imposed unreasonable restrictions on the fundamental right of the petitioners to carry on trade or business under Articles 19(1)(g) of the Constitution. Again, the Mysore High Court in Mohammed Hussain v. State of Mysore (W.P. No. 45 of 1971) and this Court in Syed Ahmed Aga v. State of Mysore ( 1975 (2) SCC 131 : 1975 AIR(SC) 1443) were called upon to consider contentions as to the validity of certain amendments effected by Mysore Act 29 of 1969 to the impugned Act, in the light of the provisions of Articles 301 to 304 of the Constitution of India. The contentions were repelled with the result that the statutory regulations providing for protection to rearers by the establishment of regulated cocoon markets and forbidding the sale or purchase of silkworm cocoons except in such markets were held to be valid. The present challenge, however, is on different grounds. The contention now is that certain amendments effected to the impugned Act by Karnataka Act 33 of 1979 have to be struck down as the State legislature was not competent to enact the same. Thus, the contention now addressed is different from those which were considered by this Court on the earlier occasions. The second aspect which we wish to clarify at the outset is that, though several grounds were raised before the High Court as well as in the writ petitions, the argument before us was limited to a single contention. This was that the impugned provisions lack legislative competence after the enactment, by Parliament, of the Central Silk Boards Act (Act 61 of 1948), (hereinafter referred to as the Central Act) which contains a declaration contemplated under Entry 52 of List I in the Seventh Schedule to the Constitution of India. We shall be addressing ourselves only to this argument

Court's reasoning:
6. It will at once be seen that the point raise by the petitioners/appellants has been repelled by the High Court on the basis of a series of decisions of this Court regarding scope of Entry 52 of List I in the Seventh Schedule to the Constitution. The High Court has pointed out that when Entry 52 talks of control of industry it does not mean all aspects of the industry in question. An industry comprises of 3 important aspects(i) raw materials;(ii) the process of manufacture or production; and(ii) the distribution of the products of the industryLegislation in regard to raw materials would be permissible under Entry 27 of List II, notwithstanding a declaration of the industry under Entry 52 to be one within the purview of parliamentary legislation. The process of manufacture or production can be legislated on by State under Entry 24 of List II so long as the industry is not a controlled industry within the meaning of Entry 7 or Entry 52 of List I. So far as the third aspect viz. the distribution of the products of the industry are concerned, the State legislature would be quite competent to legislate thereto in regard thereto under Entry 27 of List II. However, when the industry is also a controlled industry legislation in regard to the products of the industry would be permissible by both the Central and the State legislatures by virtue of Entry 33 of List III. This in short is the decision of the High Court based, as already pointed out on a series of decision of this Court. Observations by this Court to a like effect in Calcutta Gas Co. (Proprietary) Ltd. v. State of W.B. 1962 (S3) SCR 1 : 1962 AIR(SC) 1044) may also be seen. We entirely agree with thisWe are of the opinion that it is unnecessary, for the purposes of the present case, to consider the contentions raised in the I.T.C. case 1985 Supp(SCC) 476). That was a case in which the State enactment was held to be competent by the High Court on the narrow ground that the Central legislation covered only Virginia tobacco and did not deal with the industry insofar as it related to other varieties of tobacco. On a consideration of the provision of the Act, this Court came to the conclusion that this interpretation of the Act was not correct and that the Central legislation did purport to regulate and control the entire tobacco industry. In the light of this conclusion that court declared the State law to be incompetent, having regard to the provisions of Entry 52 of List I and the declaration in the Indian Tobacco Act under that provision. In the present case, however, the matter is on a totally different footing. It is true that the Central Silk Board Act purports to control the raw silk industry in the territory of India. But, as pointed out by the High Court in the light of the earlier decisions of this Court therein referred to, the control of the industry vested in Parliament was only restricted to the aspect of production and manufacture of silk yarn or silk. It did not obviously take in the earlier stages of the industry, namely, the supply of raw materials. For instance, as already pointed out, even in regard to the silk industry, the reeling, production, development and distribution of silkworm seeds and cocoons was regulated by Act 5 of 1960. These items can be perhaps legitimately described as the raw materials of the silk industry. The control being vested in Parliament under Entry 52 of silk industry did not in view of the earlier rulings of this Court affect the control over these raw materials. That is perhaps the reason why the industry did not challenge the provisions of the 1959 Act, when it was originally enacted, on the ground that is now being put forward. The present legislation, as a result of the amendments, controls the supply and distribution of the goods produced by the industry. As rightly pointed out by the High Court this is the third aspect of the industry which falls outside the purview of the control postulated under Entry 52. In other words, though the production and manufacture of raw silk cannot be legislated upon by the State legislature in view of the provisions of the Central Act and the declaration in Section 2 thereof, that declaration and Entry 52 do not in any way limit the powers of the State legislature to legislate in respect of the goods produced by the silk industry. To interpret Entry 52 otherwise would render Entry 33 in List III of the Seventh Schedule to the Constitution otiose and meaningless. In this view of the matter the limitation contained in Entry 52 does not affect the validity of the present legislation. This is an aspect which was not touched upon and which did not arise in the Indian Tobacco case 1985 Supp(SCC) 476). There both the Central Act and the State Act purported to legislate in regard to the industry, namely, in regard to the production and manufacture of tobacco9. In view of our conclusion above, the State legislation would be quite valid unless it is repugnant to the provisions of a Central legislation on the subject. A perusal of the Central Act makes it clear that the pith and substance of the legislation is the constitution of a silk Board for research into the scientific technological and economic aspects of the industry. It does not have anything to do with the aspects covered by Entry 33 in List III. There is, therefore, no infirmity in the legislation under consideration