dedol-hf/india-case-legal-rag huggingface dataset:
dressed  a  letter to the appellants pointing out  that  the
extension  of  time had not been intimated  within  the  5th
working  day as provided in the contract and  therefore  the
contract  was  automatically cancelled. After  this  letter,
some  further correspondence followed between the  two  par-
ties,  and  finally a bill of difference  amounting  to  Rs.
4,116  was submitted by the appellants to  the  respondents,
who,  in their turn, denied their liability to pay the  sum.
The appellants thereupon claimed arbitration under clause 11
of the sold note and submitted the dispute between them  and
the  respondents to the Bengal Chamber of Commerce.  On  the
6th  February,  1947, the Tribunal of  Arbitration  made  an
award  to the effect that the due date of contract had  been
extended by mutual agreement up to the 31st July, 1946,  and
accordingly  the respondents should pay to the appellants  a
sum  of  Rs. 4,116 together with interest at the rate of  4%
per annum from the 10th August, 1946, until the date of  the
award.  A sum of Rs. 210 was also held to be payable by  the
respondents on account of costs. Nearly a year later, on the
19th  February,  1949, a petition was presented by  the  re-
spondents  under  the Indian Arbitration Act, 1940,  to  the
High  Court  at  Calcutta, in its  ordinary  original  civil
jurisdiction,  praying  inter  alia that the  award  may  be
adjudged to be without jurisdiction and void and not binding
on  the respondents, and that it may be set aside. The  main
point raised by the
796
respondents in the petition was that it was not open to  the
appellants  to invoke the arbitration clause, as the  Bengal
Jute Mill Company and not the appellants were the real party
to  the contract and the appellants had acted as  mere  bro-
kers.  The appellants asserted in reply that the  allegation
made by the respondents in regard to there being no  privity
between them and the appellants was wrong, and in  paragraph
16 of their affidavit they stated as follows :--
    "With  regard  to paragraph 7 of the  petition  I  crave
reference to the said contract for its true construction and
effect. I say as I have already stated that according to the
custom  or usage or practice of the trade the respondent  is
entitled  to charge brokerage and also to enforce the  terms
of the said contract."
    The case was heard by Sinha J., who dismissed the  peti-
tion  on the ground that the contract was  directly  between
the  respondents and the appellants.  The learned Judge also
observed that if the right of the appellants to enforce  the
contract depended upon the existence of custom it would have
been  necessary to take evidence and the  arbitrators  would
have  had jurisdiction to decide the question of the  exist-
ence of custom.
    The respondents being dissatisfied with the judgment  of
Sinha J., preferred an appeal, which was heard and  disposed
of  by a Division Bench of the High Court consisting of  the
learned Chief Justice and Chakravarthi J. The learned Judges
held that having regard to the fact that the appellants' own
contention  was that they had entered into the  contract  as
brokers and were entitled to enforce its terms by reason  of
the  usage or custom of the trade, it was not open to  Sinha
J. to treat them as principals, and the award was liable  to
be set aside on the ground that the arbitration tribunal had
no jurisdiction to make an award at the instance of a per-
son  who  was  not a principal party to  the  contract.  The
appellants thereafter having obtained a certificate from the
High Court under section 109 (c) of the Code of Civil Proce-
dure, preferred this appeal.
     797
    It seems to us that this appeal can be disposed of on  a
short  ground.  We have carefully read the affidavit   filed
on  behalf of the appellants in the trial court, and we  are
unable  to hold that their case was that they were not  par-
ties  to  the contract or that they had asked the  court  to
proceed  on the sole ground that they were entitled  to  en-
force  the contract by virtue of the custom or usage of  the
trade.   In our opinion, the position which was taken up  by
them may be summed up as follows :--
(1) They did not accept the allegations made by the respond-
ents that they were not parties to any arbitration agreement
with  the respondents.
(2)  They asked the Court to construe the contract  and  its
effect and asserted that they were entitled to enforce it.
(3) They also stated that they were entitled to enforce  the
contract according to the custom or usage of the trade.
The  principal dispute raised in this case was  whether  the
extension  of time for delivery was granted within the  time
limited in the contract.  That dispute is certainly  covered
by  the  arbitration clause.  The further dispute  that  the
brokers  (appellants)  were not parties to the  contract  in
their own right as principals but entered into the  contract
only  on  behalf of the Bengal Jute Mill  Company  does  not
appear  to  have been raised until the matter  went  to  the
arbitrators.  Assuming that at that stage it was open to the
respondents  to  raise such an objection,  after  the  other
dispute which clearly fell within the arbitration clause was
referred  to the arbitrators, this further dispute  is  also
one  which  turns upon the true interpretation of  the  con-
tract,  so  that the respondents must have recourse  to  the
contract  to establish their claim that the appellants  were
not bound as principals while the latter say that they were:
If  that is the position, such a dispute, the  determination
of  which turns  on the true construction  of the  contract,
would also seem to be a dispute, under or arising out of  or
concerning the contract.  In a
798
passage  quoted in Heyman v. Darwins Ltd.(1),  Lord  Dunedin
propounds the  test thus:--" If a party has to have recourse
to  the contract, that dispute is a dispute under  the  con-
tract  ".  Here, the respondents must have recourse  to  the
contract  to  establish  their case and therefore  it  is  a
dispute  falling within the arbitration clause.   The  error
into which the learned Judges of the appellate Bench of  the
High  Court  appear to have fallen was their  regarding  the
dispute raised by the respondent in respect of the  position
of  the  appellants under the contract as  having  the  same
consequence as a dispute as to the contract ever having been
entered into.
    If,  therefore, we come to the conclusion that both  the
disputes raised by the respondents fail within the scope  of
the arbitration clause, then there is an end of the  matter,
for the arbitrators would have jurisdiction to adjudicate on
the disputes, and we are not concerned with any error of law
or  fact committed by them or any omission on their part  to
consider any of the matters.  In this view, it would not  be
for  us to determine the true construction of  the  contract
and find out whether the respondents' contention is  correct
or not. Once the dispute is found to be within the scope  of
the arbitration clause, it is no part of the province of the
court to enter into the merits of the dispute.
    In  the  result,  we allow this appeal,  set  aside  the
judgment  of the appellate Bench of the High Court  and  re-
store the order of Sinha J.  The appellants will be entitled
to their costs throughout.
MAHAJAN J.--I agree with my brother Fazl Ali that  this
appeal be allowed with costs.
                         Appeal allowed.
     Agent for the appellants:  P.K. Chatterjee.
     Agent for the respondents: M.G. Poddar.
(1) [1942] A.C. 356,
799
PETITIONER:
CHINTAMAN RAO
        Vs.
RESPONDENT:
THE STATE OF MADHYA PRADESHRAM KRISHNAV.THE STATE OF MADHYA
DATE OF JUDGMENT:
08/11/1950
BENCH:
MAHAJAN, MEHR CHAND
BENCH:
MAHAJAN, MEHR CHAND
KANIA, HIRALAL J. (CJ)
MUKHERJEA, B.K.
DAS, SUDHI RANJAN
AIYAR, N. CHANDRASEKHARA
CITATION:
 1951 AIR  118            1950 SCR  759
 CITATOR INFO :
 E&D        1951 SC 318  (25)
 D          1952 SC  75  (16)
 F          1954 SC 224  (16)
F          1954 SC 229  (6)
 R          1956 SC 559  (4)
 F          1956 SC 676  (51)
 RF         1957 SC 620  (6)
 RF         1957 SC 628  (12,16,21)
 R          1957 SC 896  (14)
 R          1958 SC 578  (168)
 R          1959 SC 300  (5)
 R          1959 SC1124  (55A)
 R          1960 SC 430  (13,16)
 R          1960 SC 554  (28)
 F          1960 SC 633  (16)
 R          1961 SC 448  (9)
 R          1962 SC1621  (109)
 R          1963 SC 996  (5)
 R          1964 SC 416  (11)
R          1970 SC1157  (12)
 RF         1974 SC 366  (67)
 F          1978 SC 771  (14)
ACT:
    Central Provinces and Berar Regulation of Manufacture of
Bidis  (Agricultural  Purposes) Act(LXIV of  1948),  ss.  3,
4--Law  prohibiting  bidi  manufacture  during  agricultural
season--  Validity  --Restriction of  fundamental  right  to
carry    on    trade    or    business-Reasonableness     of
restrictions--Test of reasonableness--Jurisdiction of  court
to  consider whether restrictions are  reasonable--Constitu-
tion of India, 1950, Art. 19(1)(g), 19(6).
HEADNOTE:
    The  Central Provinces and Berar Regulation of  Manufac-
ture  of Bidis (Agricultural Purposes) Act, LXIV of 1948,  a
law which was in force at the commencement of the  Constitu-
tion of India, provided that" the Deputy Commissioner may by
notification fix  a period to be an agricultural season with
respect  to such villages as may be specified  therein"  and
that  "the  Deputy Commissioner may by general  order  which
shall  extend to such villages as he may  specify,  prohibit
the  manufacture of bidis during the  agricultural  season."
The  Act  provided further that" no person  residing  in  a,
village specified in such order shall during the agricultur-
al season engage himself in the manufacture of bidis, and no
manufacturer shall during the said season employ any  person
for  the manufacture of bidis."  An order was issued by  the
Deputy Commissioner under the provisions of the Act  forbid-
ding all persons residing in certain villages from  engaging
in  the manufacture of bidis during a. particular season.  A
manufacturer  of  bidis and an employee in  a  bidi  factory
residing  in one of the said villages applied under Art.  32
of  the Constitution for a writ  of mandamus  alleging  that
since  the  Act prohibited the petitioners  from  exercising
their fundamental right to carry on their trade or  business
which  was guaranteed to them by cl. (1) (g) of Art.  19  of
the Constitution, the Act was void:
    Held,  (i)  that the object of the statute,  namely,  to
provide  measures  for  the supply of  adequate  labour  for
agricultural  purposes  in bidi manufacturing areas  of  the
Province  could well have been achieved by  legislation  re-
straining  the  employment  of agricultural  labour  in  the
manufacture of bidis during the agriculrural season  without
prohibiting  altogether  the manufacture of bidis.   As  the
provisions of the Act had no reasonable relation
760
to  the  object  in view, the Act was  not  a  law  imposing
"reasonable  restrictions" within the meaning of cl. (6)  of
Art-19 and was   therefore void.
(ii)  The  law even to the extent that it could be  said  to
authorize the imposition of restrictions in regard to  agri-
cultural  labour  cannot  be held to be  valid  because  the
language employed was wide enough to cover restrictions both
within and without the limits of constitutionally  permissi-
ble  legislative action affecting the right, and so long  as
the possibility of its being applied for purposes not  sanc-
tioned  by the Constitution cannot be ruled out, it must  be
held to be wholly void.
     The  phrase "reasonable restriction" connotes that  the
limitation  imposed  on a person in enjoyment of  the  right
should  not be arbitrary or of an excessive  nature,  beyond
what  is required in the interests of the public.  The  word
"reasonable" implies intelligent care and deliberation, that
is, the choice of a course which reason dictates.   Legisla-
tion  which  arbitrarily or excessively  invades  the  right
cannot be said to contain the quality of reasonableness  and
unless  it  strikes  a proper balance  between  the  freedom
guarnteed in Art. 19 (1) (g) and the social control  permit-
ted by el. (6) of Art. 19, it must be held to be wanting  in
that quality.
      Held  also, that the determination by the  Legislature
of  what constitutes a reasonable restriction is  not  final
and  conclusive.  The Supreme Court has  power  to  consider
whether  the  restrictions imposed by the   Legislature  are
reasonable  within  the meaning of Art. 19, cl. (6)  and  to
declare the law void if in its opinion the restrictions  are
not reasonable.
JUDGMENT:
ORIGINAL JURISDICTION: Petitions Nos. 78 and 79
of 1950.
Application  under article 32 of the  Constitution  of
India for a writ of mandamus.
    G.N. Joshi, for the petitioners.
    S.M. Sikri, for the respondent.
  1950.  November 8.  The judgment 0 the Court
was  delivered by
       MAHAJAN J.--These two applications for enforcement of
the fundamental right guaranteed under article 19 (1) (g) of
the Constitution of India have been made by a proprietor and
an employee respectively of a bidi manufacturing concern  of
District  Sagar (State of Madhya Pradesh).  It is  contended
that the law in force in the State authorizing it to prohib-
it  the manufacture of bidis in certain  villages  including
the one
761
wherein  the  applicants  reside is  inconsistent  with  the
provisions  of  Part III of the Constitution and  is  conse-
quently void.
    The Central Provinces and  Berar Regulation of  Manufac-
ture  of Bidis (Agricultural  Purposes) Act, LXIV  of  1948,
was passed on 19th October 1948 and was the law in force  in
the State at the commencement of the Constitution.  Sections
3 and 4 of the Act are in these terms;-
    "  3. The Deputy Commissioner may by notification fix  a
period  to  be an agricultural season with respect  to  such
villages as may be specified therein.
    4.  (1)  The Deputy Commissioner may, by  general  order
which  shall  extend  to such villages as  he  may  specify,
prohibit  the manufacture of bidis during  the  agricultural
season.
    (2)  No person residing in a village specified  in  such
order shall during the agricultural season engage himself in
the  manufacture of bidis, and no manufacturer shall  during
the  said  season employ any person for the  manufacture  of
bidis."
    On the 13th June 1950 an order was issued by the  Deputy
Commissioner  of Sagar under the provisions of the Act  for-
bidding all persons residing in certain villages from engag-
ing  in  the manufacture of bidis.  On the  19th  June  1950
these  two  petitions  were presented to  this  Court  under
article  32 of the Constitution challenging the validity  of
the  order  as it prejudicially  affected  the  petitioners'
right  of  freedom of occupation and  business.  During  the
pendency of the petitions the season mentioned in the  order
of  the 13th June ran out.  A fresh order  for the   ensuing
agricultural season--8th October to 18th November  1950--was
issued on 29th September 1950 in the same terms. This  order
was also  challenged in a supplementary petition.
Article 19 (1) (g) runs as follows :--
    "All  citizens  shall  have the right  to  practise  any
profession,  or to carry on any occupation, trade  or  busi-
ness."
762
    The  article guarantees freedom of occupation and  busi-
ness. The freedom guaranteed herein is, however, subject  to
the  limitations imposed by clause (6) of article  19.  That
clause is in these terms :--
"Nothing  in  sub-clause (g) of the  said  clause  shall
affect  the  operation of any existing law in so far  as  it
imposes, or prevent the State from making any law  imposing,
in the interests of the general public, reasonable  restric-
tions  on  the exercise of the right conferred by  the  said
sub-clause,  and,  in particular, nothing in the  said  sub-
clause shall affect the operation of any existing law in  so
far as it prescribes or empowers any authority to prescribe,
or  prevent  the State from making any  law  prescribing  or
empowering  any authority to prescribe, the professional  or
technical  qualifications necessary for practising any  pro-
fession or carrying on any occupation, trade or business."
    The  point  for consideration in these  applications  is
whether  the  Central Provinces and Berar Act LXIV  of  1948
comes within the ambit of this saving clause or is in excess
of its provisions.  The learned counsel for the  petitioners
contends  that the impugned Act does not  impose  reasonable
restrictions on the exercise of the fundamental right in the
interests of the general public but totally negatives it. In
order to judge the validity of this contention it is  neces-
sary to examine the impugned Act and some of its provisions.
In  the preamble to the Act, it is stated that it  has  been
enacted  to  provide  measures for the  supply  of  adequate
labour  for  agricultural  purposes  in  bidi  manufacturing
areas.   Sections  3 and 4 cited above  empower  the  Deputy
Commissioner to prohibit the manufacture of bidis during the
agricultural  season.  The  contravention of  any  of  these
provisions  is made punishable by section 7 of the Act,  the
penalty  being imprisonment for a term which may  extend  to
six months or with fine or with both. It was enacted to help
in the grow more food campaign and for the purpose of bring-
ing under the plough considerable areas of fallow land.
     The question for decision is whether the statute  under
the guise of protecting public interests arbitrarily
     763
interferes  with private business and  imposes  unreasonable
and  unnecessarily   restrictive  regulations  upon   lawful
occupation; in other words, whether the total prohibition of
carrying on the business of manufacture of bidis within  the
agricultural  season amounts to a reasonable restriction  on
the  fundamental rights mentioned in article 19 (1)  (g)  of
the Constitution. Unless it is shown that there is a reason-
able relation of the provisions of the Act to the purpose in
view, the right of freedom of occupation and business cannot
be curtailed by it.
    The  phrase "reasonable restriction" connotes  that  the
limitation  imposed  on a person in enjoyment of  the  right
should  not be arbitrary or of an excessive  nature,  beyond
what  is required in the interests of the public.  The  word
"reasonable" implies intelligent care and deliberation, that
is,  the choice of a course which reason dictates.  Legisla-
tion  which  arbitrarily or excessively  invades  the  right
cannot be said to contain the quality of reasonableness  and
unless  it  strikes  a proper balance  between  the  freedom
guaranteed  in  article 19 (1) (g) and  the  social  control
permitted by clause (6) of article 19, it must be held to be
wanting in that quality.
Clause  (6) in the concluding  paragraph  particularizes
certain  instances  of the nature of the  restrictions  that
were  in the mind of the constitution-makers and which  have
the  quality of reasonableness.  They afford a guide to  the
interpretation of the clause and illustrate the extent   and
nature of the  restrictions  which according to the  statute
could  be imposed  on the freedom guaranteed in clause  (g).
The statute in substance  and  effect  suspends   altogether
the  right mentioned in article 19 (1) (g) during the  agri-
cultural  seasons and  such suspension  may  lead   to  such
dislocation  of the industry as to prove its ultimate  ruin.
The  object  of the statute is to provide measures  for  the
supply of adequate labour for agricultural purposes in  bidi
manufacturing  areas  of the Province and it could  well  be
achieved by legislation restraining the employment of  agri-
cultural labour in the manufacture
764
of  bidis during the agricultural season.  Even in point  of
time  a restriction may well have been reasonable  if     it
amounted  to a regulation of the hours of work in the  busi-
ness.  Such legislation though it would limit the field  for
recruiting persons for the manufacture of bidis and regulate
the  hours  of the working of the industry, would  not  have
amounted to a complete stoppage of the business of  manufac-
ture  and  might well have been within the ambit  of  clause
(6).  The effect of the provisions of the Act, however,  has
no  reasonable  relation  to the object in view  but  is  so
drastic in scope that it goes much in excess of that object.
Not only are the provisions of the statute in excess of  the
requirements of the case but the language employed prohibits
a  manufacturer  of bidis from employing any  person  m  his
business,  no matter wherever that person may  be  residing.
In  other  words, a manufacturer of bidis residing  in  this
area  cannot import labour from neighbouring places  in  the
district  or province or from outside the province.  Such  a
prohibition  on  the face of it is of  an  arbitrary  nature
inasmuch  as  it has no relation whatsoever  to  the  object
which the legislation seeks to achieve and as such cannot be
said  to be a reasonable restriction on the exercise of  the
right.   Further the statute seeks to prohibit  all  persons
residing  in the notified villages during  the  agricultural
season from engaging themselves in the manufacture of bidis.
It  cannot be denied that there would be a number of  infirm
and  disabled persons, a number of children, old  women  and
petty shop keepers residing in these villages who are  inca-
pable  of  being  used for agricultural  labour.   All  such
persons  are prohibited by law from engaging  themselves  in
the  manufacture  of bidis; and are thus being  deprived  of
earning their livelihood. It is a matter of common knowledge
that there are certain classes of persons residing in  every
village who do not engage in agricultural operations.   They
and  their  womenfolk and children in  their  leisure  hours
supplement  their  income  by engaging  themselves  in  bidi
business.   There seems no reason for prohibiting them  from
carrying on this occupation,  The statute as
    765
it  stands,  not only compels those who can  be  engaged  in
agricultural  work from not taking to other avocations,  but
it also prohibits persons who have no connection or relation
to agricultural operations from engaging in the business  of
bidi making and thus earning their livelihood.  These provi-
sions  of  the statute, in our opinion, cannot  be  said  to
amount to reasonable restrictions on the right of the appli-
cants  and that being so, the statute is not  in  conformity
with  the provisions of Part III of the  Constitution.   The
law  even to the extent that it could be said  to  authorize
the  imposition  of restrictions in regard  to  agricultural
labour cannot be held valid because the language employed is
wide  enough to cover restrictions both within  and  without
the  limits  of  constitutionally  permissible   legislative
action  affecting the right.  So long as the possibility  of
its being applied for purposes not sanctioned by the Consti-
tution  cannot  be ruled out, it must be held to  be  wholly
void.
Mr. Sikri for the Government of Madhya Pradesh  contends
that the legislature of Madhya Pradesh was the proper  judge
of  the  reasonableness of the restrictions imposed  by  the
statute,  that  that legislature alone knew  the  conditions
prevailing in the State and it alone could say what kind  of
legislation  could effectively achieve the end in  view  and
would help in the grow more food campaign and would help for
bringing in fallow land under the plough and that this Court
sitting  at this great distance could not judge by  its  own
yardstick of reason whether the restrictions imposed in  the
circumstances  of  the  case were reasonable  or  not.  This
argument  runs counter to the clear provisions of the   Con-
stitution.   The  determination by the legislature  of  what
constitutes a reasonable restriction is not final or conclu-