Patna High Court
Badri Prasad Sah vs State Of Bihar And Ors. on 22 August, 1967
Equivalent citations: AIR1968PAT346, AIR 1968 PATNA 346, ILR 47 PAT 409
JUDGMENT Narasimham, C.J.
1. In this application under Article 226 of the Constitution the validity of the following order of the Deputy Commssioner of Dumka dated the 26th March 1966 (Annexure C) is under challenge : --
"To Shri Badri Prasad Sah and others Kanjo. P. O. Gamhriya Hat, S. P. Subject:-- Your petition dated 1st March, 1966 filed before the Deputy Commissioner. SP Dumka.
With reference to the petition noted above, the Deputy Commissioner has been pleased to order that the Mahajans are required to take foodgrains licence under the Bihar Foodgrains Dealers Licensing Order 1966. Please inform the other signatories of the petition.
Sd/- illegible.
District Supply Officer."
The petitioner is a registered money lender in Santhal Parganas carrying on the business of lending money and paddy in that district. The definition of a money-tender in the Bihar Money Lenders Act includes the lender of paddy also. Such money-lenders are known as Mahajans in that district and it is stated that these Mahajans used to lend paddy to agriculturists at the commencement of the cultivating season with a view to enable them to grow paddy and also for their own consumption. Soon after the harvest, the debtors used to repay the paddy loan together with interest (in paddy). Thus the Mahajans used to keep appreciable stock of paddy in their godown which is used again at the commencement of the next cultivating season in advancing paddy loan to agriculturists. It was stated in the petition that the entire stock of paddy with the petitioner was built up by the paddy loans returned with interest by the debtors, but this statement of fact was challenged in the counter-affidavit filed by the State of Bihar where it was alleged (see para 4) that part of the stock of paddy of the Mahajans consisted of paddy purchased at low price just after harvest for the purpose of re-selling at a high price at the commencement of the cultivating season. For the purpose of deciding the constitutional issues raised in this petition it is unnecessary to decide this disputed question of fact. It was contended by learned Counsel for the Government that even if the petitioner's statement be accepted as correct, the petitioner was bound to take out a licence under the provisions of the Bihar Foodgrains Dealers' Licensing Order, 1966. This is the sole point for consideration here.
2. The Essential Commodities Act (hereinafter referred to as the Act) was passed by the Parliament in 1955 mainly for the purpose of controlling the production, supply and distribution of, and trade and commerce in, certain commodities including foodstuffs. Section 3 of the Act conferred power on the Central Government to provide by order for regulating or prohibiting the production, supply and distribution of Essential and trade and commerce therein. This power was intended to bp utilised for the purpose of maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices. Sub-section (2) of Section 3 of the Act enumerated various matters which could be provided in that Order and Clause (d) of that sub-section is as follows:-- "for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption, of, any essential commodity"
3. In exercise of the powers conferred by Section 3 of the Act, the Government of Bihar, as the delegated authority of the Central Government made the Bihar Food-grains Dealers' Licensing Order. 1966 (hereinafter referred to as the Order) on the 7th January, 1966. The Order consists of twelve clauses. The scheme of the Order appears to be to require every wholesale dealer and retail dealer in food-stuffs to take out licence and to carry on his business in accordance with the terms and conditions of that licence. Clauses 4, 5, 6, 7, 8, 9, 10, 11 and 12 are in the nature of consequential and ancillary provisions, the main Clause being Clause 3. The form of the licence either for wholesale dealer or retail dealer as given in Forms B and C shows that the licenses should keep a register of daily accounts showing the stock on each day, the quantity received, the quantity delivered and the closing balance. Paragraph No. 7 of Form B requires the licensee not to withhold from-sale supply of foodgrains, or to charge excessive profit, There are other provisions which are meant to prevent huge accumulation of stocks by these dealers with a view to corner the market and push up the price. I may refer in particular to sub-para (v) of para 7 of the licence which says that a whole-sale dealer shall not keep in his stock any foodgrains in a quantity exceeding one thousand quintals continuously for a period exceeding one week. Similarly, the corresponding para relating to retail dealer's licence (Form C), namely, sub-para (v) of para 6 requires the retail licensee not to keep in his stock any foodgrains in a quantity exceeding one hundred quintals continuously for a period exceeding one week. Para 10 of the whole-sale dealer's licence and para 9 of the retail dealer's licence require the licensee to comply with any direction that may be given to him by the appropriate authority in regard to "purchase, sale and storage for sale of foodgrains" and other matters. Thus the scheme of the Order is apparent. By insisting on every wholesale dealer and retail dealer taking out an appropriate licence under the Act the authorities are enabled to control the storage, sale and purchase of foodgrains. Restrictions are put on the sale of foodgrains and storage of foodgrains by the dealers and their marginal profit is also fixed. They are also required to maintain a register showing daily accounts as regards the opening stock, quantities received, quantities delivered and the closing stock. In addition, they are required to comply with the directions that mav be given by appropriate authorities as regards purchase, sale and storage for sale of foodgrains. Stringent provisions are made for punishing those licensees who contravene the conditions of the licence. Apart from the penalty of cancellation of the licence and criminal prosecution, they incur the risk of their stock of foodgrains being confiscated under Clause (b) of Sub-section (i) of Section 7 of the parent Act. There can thus be no doubt that if the provisions of the Order are carefully enforced, it will be possible for the authorities to maintain a steady supply of food-grains in the open market and secure their equitable distribution and availability at fair prices. There can also be no doubt about the competence of the Parliament to pass the Act. It is derived from entry 33 (b) of List III of the Seventh Schedule which is as follows; "Trade and commerce in, and the production, supply and distribution of (b) foodstuffs, including edible oil-seeds and oils.
4. The definitions of retail dealer and wholesale dealer in Sub-clauses (b) and (d) of Clause 2 of the Order are as follows:-
"(b) 'Retail dealer' means a person (including a rice/flour miller) engaged in the business of purchase, sale or storage for purpose other than personal consumption of one or more of the foodgrains in any quantity not exceeding one hundred quintals at any one time.
(d) 'Wholesale dealer' means a person (including a rice/flour miller) engaged in the business of purchase, sale or storage for purpose other than personal consumption of one or more of the foodgrains in a quantity exceeding one hundred quintals at any one time and includes any person doing so on behalf of another as a commission agent or arhatia or otherwise."
It will be noticed that a person engaged in the business of merely storing food-stuffs for purposes other than personal consumption is also defined as a dealer, even though he may not be engaged in the business of purchase or sale of such foodstuffs. The definition does not restrict the dealer to one who carries on his business of storage for sale as was usually found in the previous Control Orders. A paddy Lending Mahajan in Santhal Parganas who merely stores paddy returned to him with interest by his debtors for the purpose of carrying on the paddy lending business and lending the same paddy to the cultivators later on will come within the definition of "dealer" as given in Sub-clauses (b) and (d) of Clause 2 of the Order because admittedly paddy is not stored by him for his personal consumption. Such a dealer will be required to take out a wholesale licence or retail licence according to the quantity of paddy stored by him as required by Clause 3 of the Order. T may quote Clause 3 in full :--
"3. Licensing of wholesale and retail dealers -
(1) No person shall carry on business as a wholesale dealer or retail dealer except under and in accordance with the terms and conditions of a licence issued in this behalf by the licensing authority, (2) For the purpose of this Clause, any person other than a bona fide consumer or an agriculturist, who stores any foodgrains in any quantity shall, unless the contrary is proved, be deemed to store the foodgrains for the purpose of sale."
If the definition of dealer as given in Sub-clauses (b) and (d) of Clause 2 be held to be applicable in construing the same expression occurring in Sub-clause (1) of Clause 3, it is obvious that the paddy Mahajans of Santal Parganas including the petitioner must take out a proper licence under the Order and act in accordance with the terms and conditions of the same.
5. Mr. Basudeva Prasad for the petitioner, however, contended that notwithstanding the wide language used in the definition Clauses, it must be held as a matter of construction that for the purpose of Clause 3 those dealers who carry on the business of purchase, sale or storage for sale alone were required to take out a licence and those persons who carry on the business of storage for the purpose of paddy lending and not for sale were not required to take out such a licence. He urged that the strict application of the definition Clause of "dealer" for the purpose of construing the expression occurring in Clause 3 will ba repugnant to the subject or context. In support of his argument he relied on Sub- Clause (2) of Clause 3 which says that any one other than a bona fide consumer or an agriculturist, who stores any foodgrains in any quantity shall, unless the contrary is proved, be deemed to store the foodgrains for the purpose of sale. It will be noticed that in Sub-clause (2) of Clause 3 the opening words are "For the purpose of this clause" which would ordinarily mean for the purpose of taking out a licence under Clause 3. According to Mr. Basudeva Prasad, therefore, excluding those dealers who carry on the business of purchase or sale of food-grains those dealers who carry on the business of storage of foodgrains will not come within the purpose of Clause 3 unless the storage is also for the purpose of sale ; otherwise according to him the deeming provision of sub-clause (2) of Clause 3 will be wholly redundant. In support of this argument he invited our attention to para 10 of the wholesale dealers licence (form B) and para 9 of the retail dealers licence (Form C) which refer to the power of the appropriate authority to give directions in regard to purchase, sale and storage for sale only. He urged that if storage for purpose other than sale (excluding of course for the purpose of personal consumption) was also intended to be within the scope of Clause 3 of the Order, the special conditions of the licence would not be limited to giving directions in regard to storage for sale only. He also invited our attention to form D which after referring to foodgrains purchased and sold in paras 2 and 3 classifies in para 4 the stock sold and unsold. According to him, the whole scheme of the Order was to provide for controlling the business of storing for sale only and not controlling and regulating the business of storage not for sale.
6. There is undoubtedly some force in the contention of Mr Basudeva Prasad and the drafting of the Order leaves much to be desired. If storage for purposes other than sale was also intended to be included within the scope of Clause 3 of the Order, it is not clear why the deemine provision in sub-clause (2) of Clause 3 was limited to storage for the purpose of sale only. Then again, it is not clear why in paras 10 and 9 of the licenca described in forms B and C respectively power was not given to issue directions as regards storage for purpose other than sale. It is also strange that in form D while describing various classes of stock in the possession of a dealer there was no column to describe the stock of paddy stored but not intended for sale. But notwithstanding these unsatisfactory features, on a strict construction of Clause 3 of the Order and the definitions as given in Sub-clauses (b) and (d) of Clause 2, Mr. Basudeva Prasad's contention cannot be accepted The business of a dealer as envisaged in the Order may be classified under four heads : (1) business of purchase. (2) business of sale, (3) business of storage for sale and (4) business of storage for purposes other than sale and other than personal consumption. All these businesses have been included in the wide definitions given in Sub-clauses (b) and (d) of Clause 2 and sub- Clause (1) of Clause 3. It is true that where there is storage for the purpose of sale, the dealer incurs an additional liability inasmuch as the appropriate authority can give him directions as regards storage for that purpose. But where a dealer carried on the business of storing not for the purpose of sale, the authority may not have power to issue directions also. But para 7 of the whole-sale dealer's licence and para 6 of the retail dealer's licence impose certain conditions which he will have to fulfil. If he is B wholesale dealer, he cannot keep more than one thousand quintals continuously 'or a period exceeding one week, and, similarly, if he is a retail dealer, he cannot keep in Ms stock any foodgrains of quantity exceeding 100 quintals continuously for a period exceeding one week. By these two conditions in the licence huge accumulation of stock by these classes of dealers is prevented so that steady and continuous flow of foodgrains into the open market is ensured and concerning and other methods of pushing up prices is effectively checked. The primary purpose of the Act and the Order is to ensure equitable distribution of foodgrains and their availability at fair prices and for that purpose even storage otherwise than for the purpose of sale may have to be controlled by insisting on the taking out of a licence and preventing heavy accumulation of stock. This view does not in any way render nugatory the provisions of Sub-clause (2) of Clause 3 of the order. The deeming provision of that sub-clause applies only where foodgrains are stored for the purpose of sale. Where a person is found to have storied large quantity of foodgrains. he is given an opportunity to prove that they were stored not for the purpose of sale. If he succeeds in proving this fact he may escape the liability of obeying the instructions that may be given from time to time by the appropriate authority provided in para 10 of Form B and para 9 of Form C and his only liability will be not to keep more than the specified quantity of foodstuffs continuously for a period exceeding one week. It is true that in Form D there is no express column to deal with stock that was not stored for the purpose of sale. But the absence of such a column in Form D cannot justify unduly restricting the scope of Clause 3 of the Order to storage for sale only when the definition Clause is wide enough to include storage for purposes other than sale also.
7. I shall now take up the constitutional question urged by Mr. Basudeva Prasad. According to him if storage of paddy by a paddy lender is intended to be regulated by the provisions of the Act and the order, such statutory provisions will conflict with the provisions of the Bihar Money Lenders Act under which also a paddy lender is required to take a registration certificate. According to Mr. Basudeva Prasad in pith and substance such a provision will amount to legislation in respect of "money lending and money-lenders" which is exclusively a State subject under Entry 30 of List II. He further urged that inasmuch as the Bihar Money Lenders Act authorised the storage of paddy for the purpose of lending, the provision of the Act and the Order should be so construed as not to affect storage for that purpose: otherwise the provisions of the Order should be held to be unconstitutional in so far as they purport to regulate storage of foodgrains for the purpose of lending only. This argument though somewhat ingenious, is I think, clearly untenable. There is no doubt about the exclusive jurisdiction of the State Legislature to legislate in respect of money lending and money lenders. Similarly, there is no doubt about the jurisdiction of the Parliament to legislate in respect of production, supply and distribution of food-stuffs (Entry 33 of List III). If in pith and substance, therefore, the impugned provisions are held to be made for the supply and distribution of foodstuffs, they cannot be held to be unconstitutional merely because there is an incidental encroachment on the right of a money lender. This is made clear by the opening words "Notwithstanding anything in Clause (3)" occurring in Clause (2) of Article 246 of the Constitution. In Prafulla Kumar Mukheriee v. Bank of Commerce Ltd., Khulna, ATR 1947 PC 60. followed in A. S Krishna v State of Madras, (AIR 1967 S.C 297) this constitutional position has been clarified There is bound to be some overlapping as regards legislative fields and the question for consideration would be whether in pith and substance the impugned provisions are within the legislative competence of the Parliament If so, merely because incidentally they trench in topics within the competency of the State Legislature, they will not be unconstitutional. Entry 33 of list III is wide enough to include supply and distribution of foodstuffs including their storage by all classes of persons including paddy lenders. Hence the impugned provisions of the order must be held to relate in pith and substance to Entry 33 of List III. It is true that by insisting on such paddy lenders taking out a licence under the Order and not keeping continuously for more than a week a specified quantity of paddy as required under the licence their business as paddy lenders may be affected. To that extent it must be held to be a mere incidental trenching on the subject of money-lending and money-lenders. Moreover, Section 6 of the Act expressly says that an order made under Section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than that Act.
8. If the contrary view as urged by Mr. Basudeva Prasad is accepted, in the district of Santal Parganas where paddy lending is carried on a very extensive scale by Mahajans, the supply and distribution of foodstuffs would be very much handicapped. The entire paddy of the district would be cornered by these Mahajans soon after harvest thereby pushing up the price of foodstuffs and they will be released for sale at the time of very high prices during the cultivating season. An interpretation of the impugned provisions which will have the effect or rendering infructuous the power conferred on the Parliament and through it on the Central Government by Entry 33 of List III read with Section 3 of the Act should be avoided.
9. It was, however, urged relying on Annexure A that in the registration certificate of the petitioner the maximum amount up to which the petitioner was permitted to transact money lending business was Rupees 3,000/- (or its paddy equivalent) and that consequently so long as the maximum amount for which paddy lending business can be carried by Mahajans in Santal Parganas is fixed in the registration certificate, there can be no apprehension of these Mahajans collecting all the paddy in the district and cornering the stock and thereby adversely affecting the distribution of foodstuffs or their availability at fair prices. This argument however, will not bear close scrutiny. The maximum amount required to be specified in the registration certificate of a money lender is solely for the purpose of estimating the registration fee payable (see Rule 4 of the Rules made under Section 27 of the Bihar Money Lenders Act). There is no bar to a money lender carrying on business for a larger amount provided he pays the necessary registration fee. Thus, if the money lending business is for Rs. 10,000/-and over, the fee payable is Rs. 25/- After paying such a fee the money-lender can always increase the maximum amount up to which he intends carrying on business. As admitted by the petitioner, the Adivasi agriculturists of Santal Parganas are dependent on these Mahajans from whom they take loans of paddy in the cultivating season and return them after harvest with interest.
Hence if there is no other statutory provision there will be no difficulty . in these Mahajans taking registration certificate for larger amounts under the provisions of the Money Lenders Act and accumulating huge stock of paddy. In my opinion, therefore, the mere mention of the maximum amount in the registration certificate is of no assistance whatsoever in discussing the legal and constitutional questions involved in this petition.
10. I should further point out that neither the Money Lenders Act nor the rules made there under give any guarantee to the registered money lender to the effect that his capital (which may consist either of cash or of paddy) shall be immune from any other statutory provision. That Act and the rules made thereunder merely regulate the carrying on of money lending business by requiring such money-lenders to take out registration certificate and imposing certain disabilities on them as regards interest payable etc. No express right is conferred on the money lender to carry on the business without being in any way affected by any other statutory provisions. The right of a moneylender to carry on business is the same as, the right of every citizen to carry on his business guaranteed by Article 19 (1) (g) of the Constitution. The right can be restricted by laws made in the interest of general public under Clause (6) of Article 19. The impugned Act and the impugned Order must be held to impose reasonable restrictions in the interest of the general public because it cannot be seriously urged that the maintenance of service and supply essential for the life of the community such as foodstuffs and their availability at fair prices are not in the interests of the general public. Hence so long as legislative competence of the Parliament under item 33 of List III is there and the restrictions imposed are reasonable in the interest of the general public, the provisions of the Order cannot be held to be unconstitutional and they cannot be so construed as not to be applicable to the capital in the hands of a moneylender if on a strict construction such a money lending business comes within the scope of the definition Clause of the Order.
11. For these reasons, I see no constitutional infirmity in construing Clause 3 of the Order as including those dealers who merely carry on the business of storing food-grains though not for sale but for purposes other than personal consumption. The application is accordingly dismissed, but both parties will bear their own costs.