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

1. The petitioner has been doing business as an exporter of coir products to foreign countries for the last twenty years. On July 4, 1958, he applied to respondent 2, the Chairman, Coir Board, Ernakulam, requesting that he should be registered as an established exporter. This application was accompanied by an income-tax clearance certificate and attested copies of bills of lading. Respondent 2 declined to register the petitioner on the ground that his application was defective inasmuch as the requisite certificate regarding his financial status had not been produced and no evidence had been given to show that he had exported the minimum quantity required (500 Cwts.). The petitioner was told that unless he complied with the requirements asked for within seven days his application would be rejected without further notice. The petitioner found that he could not comply with the directions issued by respondent 2 and so it became impossible for the petitioner to get registration and licence applied for by him. That is why he filed the present petition under Art. 32 of the Constitution and prayed for the issue of a writ or order in the nature of mandamus to direct the second respondent to grant the petitioner registration and licence as applied for by him and to prohibit or restrain the said respondent from acting on, or implementing, the rules issued under the Coir Industry Act 1953 by issue of a writ of certiorari, prohibition or such other writ or order appropriate to protect his rights. The petitioner also prayed that "if found necessary" the said rules should be declared to be ultra vires the powers of the Central Government and invalid being in violation of the fundamental rights guaranteed by Arts, 14 and 19 of the Constitution. The Union of India has been impleaded as respondent 1 to the petition.

Court's reasoning:
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.