Jammu & Kashmir High Court
Ghulam Rasool Misger And Etc. vs The State And Ors. on 26 May, 1986
Equivalent citations: AIR1987J&K2, AIR 1987 JAMMU AND KASHMIR 2
ORDER M.L. Bhat, J.
1. These three writ petitions are decided by a common judgment because there is a common question of law and fact involved in all the three petitions.
2. Petitioners claim to be small scale industrial units registered as such by respondent No. 3 for manufacturing/ processing activity of copper utensils which is reflected by the registration certificates granted to them. After registration, petitioners are said to have installed machinery for production of various articles made out of copper. They are said to have obtained loan from the Jammu and Kashmir Bank for running their units. Ever since the installation of their plant and machinery, the petitioners are manufacturing various copper utensils details whereof are given in para 4 of the writ petition (writ petition No. 254/85). A circular is said to have been issued to the petitioners by respondent No. 3 on 22-2-1985 whereby they are directed not to manufacture the utensils, mentioned in the said order by machine, and in the event of any violation of the said order, they are told that their registration shall be liable to be cancelled. Director Industries and Commerce has by his letter dated 7-2-1985 asked the General Manager, District Industries Centre Srinagar to issue the follow up orders, which the respondent No. 3, General Manager District Industries Centre, Srinagar has issued. This letter and order seems to be based on some report which was prepared in respect of the complaint against Copper utensils Manufacturing units.
3. Petitioner's case is that the restriction on their right to conduct trade is violative of their fundamental rights as guaranteed to them under Article 19(g) of the Constitution of India. It is stated that respondents 2 & 3 have no right, authority or competence to impose restriction on the fundamental rights of the petitioners in respect of their trade which they are lawfully conducting. The said order is challenged on the anvil of guarantees contained in Article 14 of the Constitution and it is prayed that the said order be quashed as being ultra vires the Constitution.
4. An application was made by some unit holders for being arrayed as parties to this writ petition. That application was allowed at an interim stage and these unit holders were added as parties and on their behalf Shri K. N. Raina has appeared. The respondents as also the said unit holders who were permitted to be added, were directed to file replies to the writ petitions.
5. One Mr. Vijay Bakaya Commissioner/ Secretary to Govt. Industries and Commerce Department has filed his reply to the writ petitions. It is stated that none of the rights of the petitioners, muchless fundamental rights, are abridged by the Circular. The impugned circular is justified as a reasonable restriction placed by the respondents on the petitioners right of trade. It is submitted that the Executive has the competence to issue directions to regulate the trade and this regulation is consistent with the principles of 'Directive Principles of State Policy', which requires the State Govt. to preserve the Art and Craft of the State. It is stated that copper industry is a cottage industry of the State and symbolises ancient art and craft which was being obliterated by the machines. Therefore, it was necessary that manufacture of copper utensils be made by hand and not by machine. Its manufacturing by machine has the effect of causing disappearance of the ancient art and craft which the State has endeavoured to preserve. Carving on the copper utensils is possible only by hand and not by machine and after carving is engrafted on copper utensils, these are called 'KANDKARI UTENSILS'. This can be processed only by hand and if any mechanical process is employed for the manufacture of these utensils, that will damage the craft and the popularity of the craft in the internationl market. With a view to promote the craft and develop the industry and make it an attraction for the tourists who visit the State, it was necessary to promulgate the impugned circular. The craft has a historical background, therefore it needs to be preserved. In the registration certificates of the petitioners, respondent No. 2 has reserved the right to cancel the permission for misuse or any unauthorised diversion of the material as determined by the Directorate of Industries. Utensils manufactured by hand are manufactured by skilled artisans and they are very costly as compared to the utensils manufactured by the machine. Therefore, it is likely that in the process as a result of competition between the two, hand made utensils may get extinct, thereby the art and craft will be lost for ever as it would be replaced by machine made utensils which cannot represent that art and craft which the artisans have inherited through rich heritage. Petitioners are said not to be authorised to manufacture the copper utensils by mechanical process. It is said that the Govt. never intended and has not in fact granted permission to the petitioners to manufacture copper utensils by mechanical process. The petitioners are also accused of having committed some pilferage in the Sales-tax which has necessitated the issuance of the circular. The restrictions which are placed on the right of the petitioners are saved by Article 19(6) of the Constitution of India. Promissory estoppel set up by the petitioners is also denied.
6. Notification dated 22-8-1983 and SRO 436 is relied upon and it is submitted that on the basis of that SRO respondents have the effective control over the regulation of the business which they have in fact exercised. The reply given by the newly added parties through their representatives is brief. It is contended that there are two thousahd member units in the Cottage Industry and it involves livelihood and the very existence of thousands of craftsmen working in these units, it is in the public interest to give protection to the cottage industries against the individuals who are manufacturing copper utensils by machine. The individual interest has always to yield to the collective interest of a greater number of people. The restriction placed on the petitioners is justified under Article 19(6) of the Constitution.
It is submitted that to protect ancient craft and to sustain it against extinction by unhealthy competition, State has the power to impose the restrictions which restrictions are consistent with the directive principles of State policy. The petitioners are said to have no restriction if they also choose to make these utensils by hand. The impugned order protects the cottage industry and thousands of units. Therefore, it is in the interests of public good that such an order should be saved. Because of unhealthy competition between machine made and hand made utensils, it was the duty of the State to regulate the trade. The newly added parties have also referred to petitioners conduct about the sales tax evasion which was not exempted in their case.
7. In their rejoinder affidavit, the petitioners have reiterated their contentions raised in the writ petition and submitted that without legislative enactment, the executive has no power to restrict the fundamental rights of the petitioners. Whatever is said in the reply affidavit is denied.
8. Mr. Z.A. Shah appearing for the petitioners has raised the following contentions :
i. That the Circular issued by the Director or General Manager Industries is without jurisdiction as they have no authority to impose restrictions on the fundamental rights of the petitioners;
ii. Even if they are said to have jurisdiction to issue such a circular, the circular is bad because it is not traceable to any law or rule which is valid. According to him, there must be some law regulating the trade and thereafter any circular can be issued under that law. Without there being any law, respondents 2 & 3 have no authority to issue circulars.
iii. It is the State Govt. alone which can under its plenary executive powers issue executive orders in respect of regulation of trade. Director of Industries or any authority under him cannot be termed as State Govt. having the executive powers. Therefore any order issued by them which has the effect of restricting the trade is violative of petitioners fundamental rights.
iv. The State even under the Directive Principle of State policy has to develop the modern technique side by side and it cannot place absolute restriction on the use of machinery in regard to the manufacture of utensils;
v. It is the preservation of KANDKARI art and not the manufacture of utensils which is sought to be preserved. The machines do not deal with KANDKARI art. That can be preserved without placing restriction on the machinery;
vi. The restriction is said to be unguided and arbitrary and offends the guarantees under Article 14 of the Constitution.
9. It may be stated that under its executive powers State has competence to issue instructions in respect of the matters for which the legislature of the State has power to make the law. Therefore, if executive instructions issued by the State under its plenary powers remain within the bounds of law, these cannot be interfered with by any Court and cannot be said to be without jurisdiction. Therefore the only question about the executive orders which can be determined by the Court is whether the State has issued such orders within the bounds of its power and within the limits of law which are binding on the State also. If the State has transgressed its own powers while issuing the orders, these orders can be challenged under the provisions of the Constitution as being ultra vires the fundamental rights and as being repugnant to the provisions of the Constitution. This is one aspect of the matter. Other is, whether executive powers of the State can be performed by its functionaries and whether any instruction issued by them which has the effect of abridging the fundamental right can be said to be valid.
10. I would therefore consider in the first instance whether the circular impugned in the writ petitions could be issued without being traceable to any law and if it can be issued, who is competent to issue it.
11. State legislature undoubtedly has the power to make laws regulating the trade and to impose any reasonable restriction on the conduct of trade which restriction is justified on the anvil of conditions laid down in Article 19(6) of the Constitution of India. If a regulation by way of restriction or controlling a trade can be made through an enactment of legislature, it can equally be made by executive instructions because State has power to issue instructions in respect of everything for which the legislature can make laws. This power is inherent in the State and in its said power, it is competent to regulate the trade and control the trade provided it does not offend Article 19(g) and it is saved by Article 19(6) of the Constitution of India. The reasonableness or otherwise of the restriction or regulation placed on trade would depend on the nature of the trade and the restriction which is placed on it, the manner in which the restriction is placed, the authority who has placed the restriction and the purpose of the restriction, so on and so forth. There is no gain-saying that State under its executive powers can place restrictions on conduct of trade provided these restrictions are in the interest of State and in the interests of general public and are saved by Article 19(g) of the Constitution of India. The State's power in this regard is beyond challenge if it satisfied the requirements of Article 19(6) of the Constitution of India regard being had to the nature of the trade and nature of restrictions placed on it.
12. The State cannot exercise its inherent power arbitrarily and in such a manner which would be unjust discriminatory and unfair. Even acting under its plenary powers State is to be fair and fairness in action cannot be dispensed with by the State also. That would mean, it has to act without bias and arbitrariness and without discrimination. If any action even if taken in the interests of trade is unfair, biased, mala fide or unreasonable, same shall have to be struck down for it would be violative of guarantees contained in Article 14 of the Constitution which seeks for every citizen equality of law and equal protection of law. The concept is based on rule of law which ensures fairness in action and said action being free from arbitrariness. These are the broad guidelines as to how the State can issue instructions regulating or restricting any practice or profession or trade.
13. The impugned regulation is not issued by the State. It is issued by the respondent No. 3 under the instructions of respondent No. 4. The Commissioner/Secretary to the Govt. Industries Department has justified the action, but he has not said anything as to whether respondents 2 & 3 had the competence to issue such a regulation. If they have no competence, then obviously the regulation is to be held without jurisdiction. On this point there was a great deal of debate. Mr. Z. A. Shah contending that respondents 2 & 3 had no jurisdiction to issue the impugned circular which, in his opinion have curtailed the rights of the petitioners to conduct business, on the other hand Mr. Zahoor and Mr. Raina submitting that they have a right to regulate the business because if it permitted the petitioners to conduct the business, its mode of conduct also can be guided by them.
14. If the business is permitted to be conducted or registered by respondents 2 & 3, of course they have a right to regulate the business which is to be done under their permission. Granting registration or permission to the petitioners would within its fold include right and competence in the person who has granted that permission to regulate and supervise the business. Therefore, any regulation which would aim at regulating or controlling the business can be issued by a person who has initially granted the permission to conduct the business. But such an authority cannot violate the guarantees under Art, 19(g) of the Constitution, unless it is shown that restriction is reasonable. So the question which is to be determined, while considering the respective submissions of the learned counsel for the parties, will be, whether the regulation/circular issued by respondent No. 2 is merely a regulation regulating the trade as contended by respondents, or it is a restriction on the fundamental rights of the petitioners to conduct the business. The respondents in the present case have stated that it is a reasonable restriction. Therefore, the burden will be on them to bring it within the purview of Article 19(6) of the Constitution. This question, therefore, would need an indepth examination.
15. In the State of Madras v. V. G. Row, AIR 1952 SC 196 test was laid down by the Supreme Court in respect of reasonableness of restriction. It is the nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, scales of values as also philosophy of Judges would play an important role. In this authority, the Govt. order had declared an association which was known as People's Education Society as unlawful within the meaning of Indian Criminal Law Amendment Act of 1908. The society was held to have interfered with the administration of the law and the maintenance of law, therefore the said order was passed. The order was held to be violative of Article 19 and declared ultra vires by the Madras High Court which was upheld by the Supreme Court.
16. In Naraindas Indurkya v. State of Madhya Pradesh, AIR 1974 SC 1232 the State had prescribed text book for schools under its executive powers which power was challenged, but the Supreme Court held that power was vested in the State to regulate the school education and the said power of issuing executive instructions was not arbitrary in any manner. The executive instructions issued by the State in this authority was held to have not infringed the right of any one, therefore on consideration it was held to be valid.
17. In Bennett Coleman and Co. Ltd. v. Union of India, AIR 1973 SC 106, the majority view was that liberty of the press is an essential part of the freedom of speech and expression guaranteed by Article 19(1). Therefore any restriction on the circulation of papers or on the propagation and free circulation of Publication will be a restriction on the fundamental rights. All Executive Actions which operate to the prejudice of any person may be justified provided it is brought within the exception under which the State can impose restriction on any right.
18. Kharak Singh v. State of U.P., AIR 1963 SC 1295 was an authority about the life and personal liberty of an individual whose rights were restricted by the U.P. Government. Under the regulation which was held to have no statutory force, petitioners movement therein was restricted which came to be criticized by the Supreme Court.
19. In Rai Sahib Ram Jawaya Kapur v. State of Punjab, AIR 1955 SC 549, if was held that power of executive Government to carry on trade or business without specific legislation such course is not violative of any of the articles of Constitution. The Government, was held entitled to formulate policy for transaction of any business and this was said on the anvil of Articles 162, 73 and 53 of the Constitution of India. The State Govt. had taken selection, printing and publishing of school text books. Previously the Govt. used to invite publishers to submit their books for approval and after selection leave printing and publishing to same publishers. The private publishers alleged infringement of their rights under Article 19(1)(g). The Supreme Court dismissing the petition held that all persons have a right to carry on any trade or business but the method of publication of books in the present case did not amount to any infringement of rights because the right of publication in respect of other books was not taken away. Only the State had approved for publication, the books which were prescribed for the school education. Thus it could not be considered to be an infringement of fundamental rights.
20. In P.P. Enterprises v. Union of India, (1982) 2 SCC 33 : (AIR 1982 SC 1016). Sugar (Control) Order of 1966 regulating storage of sugar was held valid and it was held to come within the purview of Article 19(6) of the Constitution of India. As it had imposed reasonable restriction. Reasonable restriction was held to impose on a person in enjoyment of that right, a restriction which was in the interests of public. Freedom of trade or profession was permitted to be controlled by, in given cases, by Article 19(6) which in the opinion of the Supreme Court would be a social control. With a view to prevent hoarding and black marketing in Sugar, State Govt. had issued instructions to dealers restricting their right to keep sugar in excess of the quantity specified in the order. It was held to be regulatory and not prohibitory because the State would not permit the traders to indulge in blackmarketing and hoarding of sugar.
21. Pathumma v. State of Kerala, (1978) 2 SCC 1 : (AIR 1978 SC 771). In this authority the awareness of the growing requirements of society, the increasing needs of the nation, the burning problems of the day and the complex issues facing the people, which the legislature through beneficial legislation, seeks to solve was commented and the Courts in its attempt to protect the fundamental rights were cautioned to strike a balance between the fundamental rights and the larger and broader insterests of society. On this principle Kerala Agriculturists (Debt Relief) Act, 1970 and the restrictions imposed by the Act were held to be reasonable within Article 19(5) and it was held that they do not violate Article 19(1)(f). The legislation was framed to save the agriculturists from the exploitation of the money lenders. Therefore it was held to be valid on the principle of Directive Principle of State Policy also.
22. Manick Chand v. Union of India, AIR 1984 SC 1249, is an authority wherein the restrictions placed in the Gold Control Act under Section 16(7) requiring a licensed dealer or refiner to declare gold was held to be valid and not violative of Articles 14 and 19. The restriction was by an authority of law, therefore, valid.
23. From the aforesaid authorities it would be manifestly clear that the right to trade can be regulated but it cannot be prohibited, if it is lawful and does not offend any law or rule framed by the State. In the present case the manufacturing of copper utensils is a lawful business. Therefore, it can be regulated and respondents 2 & 3 have the power to regulate the same. Regulation of the trade is not necessarily restricting the trade. But in the guise of regulation an authority has no power to prohibit or restrict the trade which citizen has right to conduct. In the present case the circular has prohibited the petitioners to manufacture copper utensils on the machine and it has threatened them with cancellation of their licence in this regard. This would not be a regulation of trade which the petitioners are conducting, but this would be a prohibition and restriction which is violative of Article 19(1)(g). Under that Article citizens of India have been guaranteed right to practice any profession, or to carry on any occupation, trade or business. This provision is to be read with Article 19(6) which in the words of the Supreme Court contains a provision empowering the State to have a social control over this right. So any restriction imposed on the said right must be in the interests of general public and reasonable. So the respondents are obliged to prove that requirements of Article 19(6) are proved by the Circular which is impugned in the writ petition. The circular does not speak of any public interest or does not mention as to why a prohibition is placed on the rights of the petitioners to conduct business. That is sought to be proved by the affidavit of the Secretary/Commissioner Industries. The order and letter on which the said order is based do not suggest even remotely that public interest was taken into consideration by respondents 2 & 3 while imposing the restrictions. The restrictions are placed because it appears some complaints were received against the Copper utensil manufacturing units. As to who were the complainants, what was the nature of the complaint and why such complaints were taken into consideration without hearing the petitioners is not spelled out. However, even without receiving complaints as indicated, respondents 2 & 3 could regulate the trade but under the power to regulate the trade, they could not issue an order of banning the petitioners from manufacturing copper utensils on machine and in the event of their failure to follow the instructions, threaten them of cancelling their registration.
24. In the counter it has been stated that in order to preserve KANDKARI carving on the copper utensils, it was necessary to impose the ban on machine made utensils. This is sought to be justified on Section 17 of the Constitution of Jammu and Kashmir. Section 17 of the Constitution of Jammu and Kashmir reads as under : --
"17. State to take certain steps for promoting crafts and cottage industries. The State shall in order to rehabitate, guide and promote the renowned crafts and cottage industries of the State, initiate and execute well considered programmes for refining and modernising techniques and modes of production, including the employment of cheap power so that unnecessary drudgery and toil of the workers are eliminated and the artistic value of the products enhanced, while the fullest scope is provided for the encouragement and development of individual talent and initiative."
Directive principles contained in Part IV of the Indian Constitution are not applicable to State of Jammu and Kashmir. However, State of Jammu and Kashmir has framed its own policy of directive principle.
Section 17 (supra) prescribes that State can take steps for promoting crafts and cottage Industries. It has at the same time to make programme for refining and modernising the techniques and modes of production. The policy appears to be that while encouraging the Cottage Industries and Craft and while promoting the same, State has side by side to take steps to modernise the techniques and modes of production. The section does not exclude the use of machinery in any craft or cottage industry absolutely. In fact it lays stress on the technical development also. Therefore manufacturing of utensils on machine would not be violative of Section 17 of the Constitution of Jammu and Kashmir. Moreover that is not the reason given by the respondents 2 & 3 for issuing the prohibition to the petitioners. The impugned circular which cannot be termed as a regulation for regulating the trade is sweeping in nature and arbitrary in content. It issues prohibition without assigning the reasons as to why the prohibition was required to be imposed. If the prohibition was with a view to regulate the trade, one would probably uphold it, but without giving the reasons, object and purpose, respondent No. 2 seems to have acted in an arbitrary manner and without authority of law. The view which I have taken is that the impugned circular is prohibition on trade which is guaranteed to the petitio.ner under Article 19(1)(g). The right could be restricted or prohibited if the respondents had shown that the restriction was imposed under Article 19(6) of the Constitution. That would be that it was in the interests of general public. No material is placed on the record by the respondents to indicate that what public interest would be served by imposing the prohibition. Merely stating in the affidavit that there are number of artisans who are likely to be affected by machine made tools, is not enough, unless data in detail is given indicating the number of artisans engaged in the hand made utensils, the number of artisans not engaged in manufacturing of machine made utensils and all other relevant conditions. Nothing has been placed before this Court by the respondents in the counter. If the respondents want to justify the circular on the anvil of Article 19(6) of the Constitution of India, they were bound to disclose the material to this Court justifying their action. It was all the more necessary because the impugned circular does not give any reasons for imposing prohibition on the petitioners in respect of manufacturing of utensils on machine. The restriction which is imposed by the respondents 2 & 3 by the impugned circular is therefore without authority and is rendered unconstitutional besides being arbitrary, it does not lay down the purpose for which it was issued.
25. Mr. K. N. Raina has submitted that individual good is to be always subordinated to collective good. He has in the affidavit stated that there are two thousand craftsman engaged in the trade, but it is not stated in what manner these craftsman have suffered by the petitioners' installation of machinery for purposes of manufacturing of copper utensils. It is admitted that the petitioners do not engraft carving on the copper utensils. That cannot be done by the machine. If that cannot be done by the machine, the right of the artisans is not shown to have been violated by the installation of machine and by machine made utensils.
26. However, I do not intend to say that the State cannot by a valid legislation or by a valid order impose restrictions on the petitioners to manufacture the utensils on machine, but there must be reasons for that and those reasons must be covered by Article 19(6) and they must be spelled out from the order and from the policy which the State will evolve in this regard. Respondents 2 & 3 without evolving the policy and without mentioning even the public interest which they had in mind, have by a sweeping order imposed prohibition on the petitioners in respect of manufacturing of utensils.
27. Right to grant registration for manufacturing of utensils would not empower respondents 2 & 3 to make an arbitrary order prohibiting the manufacturing of utensils on machine. They could make a report to the executive and the executive could strictly in accordance with Article 19(6) regulate the trade by imposing restriction on it provided that would appear in the interests of public and appear reasonable. The circular which is impugned in this writ petition is neither shown to be in the public interest in the counter nor reasonable. Therefore the circular impugned in the writ petition is liable to be struck down.
28. In the view which I have taken, the other points, which Mr. Z. A. Shah has formulated during his submission need not be answered.
29. Respondent No. 1 is at liberty to impose any restriction on the trade provided it conforms to the guarantees contained in Article 19(6) of the Constitution of India. Since the impugned circular is violative of Article 19(1)(g) and Article 19(6) also, therefore, it cannot be sustained.
30. In the result, the writ petitions are allowed. There will be no order as to costs.