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"........If any such serious problem arises, it can always be set right by the competent Legislature or the appropriate Government taking needful remedial action in the light of Entry 33 of List III of the Seventh Schedule to the Constitution."

This observation does not mean that the State Legislature can enact a law ignoring the Entries of Lists II and III of Seventh Schedule to the Constitution. It is a common legislative practice to examine the legislative competence aspect before a bill is sought to be drafted for bringing in legislation. No files are shown to the court to indicate that this particular aspect was examined by the State law and Legislative Department and the concerned administrative department. In fact at the committee level there was a dissenting note. This legislation which is meant to provide monopoly trade in raw cashewnuts by the State to the exclusion of all others can only be brought under the purview of Entry 33 of List III which deals with trade and commerce in, and the production and supply and distribution of foodstuff, etc. It should be remembered that Entries 26 and 27 of List II are subject to the provisions of Entry 33 of List III. So this legislation can only be traced to Entry 33 of List III. If it is the legislation under Entry 33 of List III, and if it is to create a monopoly for the State alone trading in the commodity, then it has necessarily to conform to the strict provisions of Article 19(6)(ii), because it offends against Article 19(1) (g). It should be remembered that Article 19(1)(g) can be violated by a law imposing in the interest of the general public reasonable restrictions in the exercise of the right conferred by the said sub-clause and it will not prevent the State from making any law relating to monopoly trade by the State or by a corporation owned or controlled by the State. If we examine the provisions of the entire Act, though the preamble declares that it is an Act meant to provide State monopoly in trade in raw cashewnuts, that object is not achieved by the various other provisions of the Act. In fact the State is defined under Section 2(k) as the State of Kerala. So the monopoly should be for the State of Kerala. The Preamble does not contemplate monopoly of trade even by a State owned Corporation, much less, it does not contemplate trade by Agents or sub-agents. Section 3 imposes a total embargo on sale of raw cashewnuts within the State except to the Agent of the Government authorised by the Government by a notification in the gazette or a sub-agent. Under Section 4 a person including a grower is prohibited from having in his possession at any time raw cashewnuts in excess of 50 Kgs. Section 5 deals with price to be paid by the agent and sub-agent. He has to pay the price at the rate notified for the locality by the Government. An examination of the Act reveals that there are absolutely no provisions tb indicate procurement for the purposes of the State or monopoly trade by the State. There is also no provision anywhere indicating that any Government controlled or Govt. owned Corporation will be conducting the trade. The provisions only indicate that agents will be purchasing and then selling to cashew factories. After processing how cashew kernels are disposed of is not prescribed under the Act. If we see the entire gamut of the Act it looks as if this enactment is a device meant for the benefit of the cashew factory owners and the persons appointed as agents and sub-agents. Incidentally it may provide employment for the workers in the factories.

19. I shall now briefly deal with the provisions of the Act, the validity of which is under challenge. It may be remembered that Act 14 of 1981 never received the assent of the President and the Amending Acts of 1983 and 1988 also did not receive the assent of the President and the Ordinances preceding these Acts were promulgated without the prior instructions of the President. The Bills relating to these Acts were introduced without obtaining the previous sanction of the President under Article 304. As can be seen from the Preamble of the Act, it is pre-dominently declared that the Act is to provide for the trade in Cashewnuts by the State to the exclusion of all others by the procurement and sale thereof at fair price. Thus the declared objective is to create monopoly of trade for the State to the exclusion of all others. But when we see the provisions of the Act, we find that the provisions of the Act do not create a monopoly of trade in raw cashewnut for the State. Section 3 lays down that no person shall sell any raw cashewnut within the State except to the agent of the Government authorised by them in this behalf by notification in the Gazette or to a sub-agent. It also mentions that no person other than a co-operative society shall be authorised as the agent under Sub-section (1). It also states that no person other than the agent or a sub-agent shall purchase any raw cashewnut within the State. From this section we find that a total embargo is imposed against sale of raw cashewnut to anybody other than an agent or sub-agent. There is nothing to indicate that the agents are appointed on behalf of the State or that they are appointed for the State. The Act only mentions 'authorised' by the Government. It also gives power to the authorised agent to appoint co-operative societies as sub-agents. Under Section 4 no person other than an agent or a sub-agent shall have in his possession raw cashewnuts in excess of quantity of 50 Kgs. A cultivator is not entitled to be in possession at any time of raw cashewnuts in excess of quantity of 50 Kgs., whatever may be the yield of his crop on each day. The main attack of the petitioners is against this provision. Under Section 5 when raw cashewnuts are tendered to the agent or sub agent by or on behalf of a cultivator, the agent or sub agent shall pay the price thereof at the rate notified for the locality by the Government. It should be remembered that for notifying the price, the grower or cultivator has absolutely no say in the matter. No guidelines are fixed for determining the process of fixing the price. It should be remembered under the Kerala Land Reforms Act, an agriculturist as a family unit is entitled to hold 20 acres of land. An acre of cashew garden will have 70 trees as per the scientific method and usually 100 plants. The yield per tree will be about 10 Kgs. Cashew is a seasonal crop for one or one and half months and the peak period is only for 15 days. In the peak period, the yield will be three or four quintals per day. So by virtue of Section 4 and the limits prescribed in it every honest cultivator of cashew crop runs the risk of being prosecuted and punished for his having in his custody at a time more than 50 Kgs. of raw cashew nuts. It should also be remembered that he cannot transport small quantities of 50 Kgs. of raw cashew nuts for sale. A cultivator can only transport his crop after he accumulates the crop to a reasonable extent. Transporting it to the agent or sub agent every 50 Kgs. is not economically viable. Originally under Section 5 an agent or a sub agent shall not refuse to purchase any raw cashewnut tendered to him by or on behalf of a cultivator But the position was totally altered by the Amendment Act, 1988 by which a proviso is added to the effect that the agent or sub agent may refuse to purchase raw cashewnuts tendered for sale which do not conform to such quality or standard as may be prescribed. It is asserted on behalf of the petitioners that till now no rules have been prescribed regarding the quality or standard for the purpose of rejection or acceptance. Sec. 5 also speaks of price to be notified. The cultivator has no choice. In 1994 the prices are notified. But in 1993 the prices are not notified. According to the argument of the learned Advocate General, the prices are notified after consulting the unions of workers. This makes things still worse. A grower or cultivator is ignored and the factory owner and the trade union workers are given the upper hand. The Act does not contemplate any scientific exercise for notifying the prices, nor does it contemplate any methodology or any committee for doing this work. The trade union workers and the cashew factory owners are/ capable of influencing the authorities and get the prices fixed to their advantage and to the deteriment of the cultivator or grower. There are no guidelines for fixing the prices. This is totally arbitrary.

21. Under Section 10 an agent or a sub agent shall not process or convert or sell except in accordance with the provisins of Section 11. Under Section 11 the agent or sub agent shall sell all the stock of raw cashewnuts purchased by him to cashew factories in the State. Under Section 13, the price to be paid by occupier of the cashew factory for the raw cashewnuts sold to him is decided by the Government. The processing of raw cashew nuts cannot be done anywhere else except in the cashew factory.

36. The decision of the Supreme Court in Akadasi v. State of Orissa, AIR 1963 SC 1047 is a decision which is relied upon by the learned Advocate General in support of his argument that it is open to the Government to carry on the monopoly trade through agents. A full reading of the judgment clearly indicates that if a law is passed creating a State monopoly, the Court should inquire what are the provisions of the said law which are basically and essentially necessary for creating the State monopoly. It is only those essential and basic provisions which are protected by the latter part of Article 19(6). If there are other provisions made by the Act which are subsidiary, incidental or helpful to the operation of the monopoly, they do not fall under the said part and their validity must be judged under the first part of Article 19(6). The Court also pointed out that when the State carried on any trade, business or industry, it must be inevitably carry it on either departmentally or through its officers appointed in that behalf. In the very nature of things, the State as such, cannot function without the help of its servants or employees and that inevitably introduces the concept of agency in a narrow and limited sense. Just as the State can appoint a public officer to carry on the trade on its behalf, so can it appoint an agent to carry on the trade on its behalf. Normally and ordinarily, the trade should be carried on departmentally or with the assistance of public servants appointed in that behalf. But there may be some trades or business in which it would be inexpedient to undertake the work of trade or business departmentally or with the assistance of State servants. In such cases, it would be open to the State to employ the services of agents, provided the agents work on behalf of the State and not for themselves. The Court further pointed out that the agency which can ultimately be allowed under Article 19(6)(ii) is agency in the strict and narrow sense of the term; it includes only agents who can be said to carry on the monopoly at every stage on behalf of the State for its benefit and not for their own benefit at all. In the present case the agents appointed or the sub agents appointed by the agents are doing the business in raw cashewnuts. They are not doing it on behalf of the State and for the benefit of the State. The profit earned by the agents or sub agents does not go to the State. The so-called State monopoly mentioned in the Preamble is a myth. A reading of the Act clearly discloses that the intendment of the Act seems to be to benefit the cashew factory owners, and the agents appointed to purchase the raw cashewnuts. It looks as if it is an Act meant to stifle and harass the cashew cultivator or grower. The learned Advocate General's argument that monopoly can be carried through agents under the impugned Act is not acceptable.