Bhim Sen for R.S. Malik Mathra Das vs The State of Punjab

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Criminal Appeals Nos. 45 to 49 of 1951

Decision Date: 4 October 1951

Coram: Hiralal J. Kania, Mehr Chand Mahajan, N. Chandrasekhara Aiyar

In this case, the Supreme Court of India considered an appeal filed by Bhim Sen on behalf of R.S. Malik Mathra Das against the State of Punjab, with the Union of India intervening. The judgment was delivered on 4 October 1951. The matter was heard before a bench consisting of Chief Justice Hiralal J. Kania, Justice Mehr Chand Mahajan and Justice N. Chandrasekhara Aiyar. The appeal arose from judgments and orders dated 20 August 1951 issued by the High Court of Judicature at Simla in a series of criminal writ cases. The citation for the decision is reported as 1951 AIR 481 and 1952 SCR 19, with later references appearing in RF 1968 SC1303 (7,8) and R 1974 SC 183 (29). The statutory provision under consideration was section 3(1) of the Preventive Detention Act, 1950, which authorized detention for the purpose of preventing black-marketing. The case also involved the effect of the Advisory Boards created by the Preventive Detention (Amending) Act, 1951. The petitioners were represented by counsel for the appellants, while the respondent, the State of Punjab, was represented by counsel for the Advocate-General of Punjab. The Union of India was represented by the Attorney-General for India. The Court examined the legality of the detention orders issued under the Preventive Detention Act on the ground that the appellants were involved in black-marketing of cotton piece-goods.

The headnote of the judgment explained that an order of detention intended to prevent black-marketing cannot be deemed illegal merely because the grounds cited by the detaining authority refer only to the past conduct of the detained person. The Court observed that a history of past activities may give rise to a subjective conviction that detention is necessary to prevent future offences. Under the Preventive Detention Act, 1950, the test for a valid detention order is the subjective satisfaction of the detaining authority; the Court does not possess the power to assess whether the grounds presented are sufficient to generate that satisfaction. Furthermore, the establishment of Advisory Boards under the 1951 Amending Act did not render the matter justiciable, and even after the amendment the Court retained no authority to evaluate the adequacy of the grounds for detention. The judgment also recorded the procedural posture of the appeals, noting that criminal appeals numbered 45 to 49 of 1951 were before the Court, each arising from the High Court of East Punjab’s decisions. Counsel for the various appellants and the respondent were listed, and the Attorney-General for India appeared as intervenor in one of the appeals. The Court ultimately addressed the principal issue of whether the detentions were lawful under the statutory scheme, applying the principles outlined above.

In the matter before the Court, the appellants were alleged to have been involved in black-marketing of cotton piece-goods. The background of the case involved the formation of the Jullundur Wholesale Cloth Syndicate, which had been created to implement the distribution of cloth in accordance with the Government of Punjab Control (Cloth) Order that had been promulgated under the Essential Supplies Act. Certain individuals who possessed licences as wholesale dealers in cloth organized themselves into a corporate body, and through this corporation all cloth that was under the control of the Government was distributed throughout the district to the retailers who held the appropriate quotas. The Government had assigned specific quotas to each retailer and had issued orders directing that a definite number of bales be allotted to each retailer under the system of distribution control. The Notification dated 4 October 1950, issued by the Government of India, Department of Industries and Supplies, provided that if any retail licence holder failed to take delivery of the quota allotted to him, the wholesale syndicate was authorised to transfer the un-taken bales to another retail dealer. Throughout this arrangement the price at which the cloth could be sold, whether at the wholesale level or at the retail level, had been fixed by various Government orders. The syndicate, however, came under suspicion of engaging in black-market activities, and the District Magistrate of Jullundur had issued several warnings to the syndicate concerning its conduct.

On 7 June 1951, the District Organiser of Civil Supplies and Rationing in Jullundur issued an order addressed to the managing agents of the wholesale cloth corporation, Jullundur City. The order stated that the managing agents were strictly prohibited from disposing of any uplifted stock that remained under unexpired terms without first obtaining written permission from the Organiser. The order further directed that, from that date forward, such stock could not be sold to an individual retailer; instead, sale would be permitted only to associations of retailers. In the same communication it was observed that the letter conflicted with clause 5 of the Notification of 4 October 1950, which had granted the wholesale syndicate the freedom to sell uplifted cloth to any other retailer or to an association of retailers within the same district. It was additionally noted that the Cotton Cloth Control Order had been in force even before 1950. For a period, control over the distribution of cloth had been lifted while price control continued, and during that period it was alleged that the appellants and several others had sold cloth at rates exceeding those fixed by the Government. Even after both distribution and price were again placed under control, the manufacturing mills were permitted to sell a certain proportion of cloth, described as “free sale cloth,” at Government-fixed prices. The appellants, together with other persons, were alleged to have been involved in black-marketing of this free-sale cloth. Consequently, by an order dated 19 June 1951, the District Magistrate directed that the appellants be detained under section 3(2) of the Preventive Detention Act in order to prevent them from further engaging in the alleged activities.

In this case the Court recorded that the District Magistrate of Jullundur had, on 2 July 1951, ordered that the appellants be placed in the District Jail at Jullundur from that date until 1 October 1951, on the ground that they were acting in a manner prejudicial to the maintenance of cloth supplies essential to the community. The appellants were consequently detained. The magistrate provided the grounds for their detention on the morning of 6 July. Those grounds described the appellants as managing agents, partners or employees of various firms or corporations and alleged that they had disposed of most of the cloth stocks received for the Jullundur District in the black market at exorbitant rates during the period from June 1949 to October 1950, when control over distribution had been lifted. The magistrate further stated that even after the re-imposition of distribution control in October 1950, the appellants continued to dispose of cloth that had been frozen under the directions of the Director of Civil Supplies during the short interval between the issuance of the order and its service on them. The second ground concerned the individual activities of the appellants as partners in their firm, whereby they allegedly sold cloth stocks in the black market at rates higher than the controlled prices to various dealers through agents, with particulars set out in Appendix A, which referred to “free-sale” cloth. The third ground alleged that, by illegal means, the appellants deprived the rightful claimants of various cloth stocks with a view to channeling those stocks into the black market at exorbitant rates. The Court noted that it was unnecessary to examine the detailed content of these grounds further or to refer to any additional grounds. On 9 July 1951 petitions under article 226 of the Constitution were filed in the East Punjab High Court seeking writs of habeas corpus on the basis that the detention of the appellants under the Preventive Detention Act was unlawful. The District Magistrate responded with an affidavit challenging the allegation of mala-fides and detailing instances of the appellants’ activities, contending that, based on the reports he had received, he was satisfied that their detention was necessary. In early August 1951 the executive authorities cancelled the licences of the appellants as cloth dealers. The High Court dismissed the petitions, and the petitioners appealed to this Court. The Court then recited that section 3 of the Preventive Detention Act, 1950, empowers either the Central Government or a State Government, if satisfied that it is necessary to prevent a person from acting in a manner prejudicial to essential supplies and services for the community, to issue an order directing that person’s detention. The authority to act under this provision was conferred by the relevant statutory section.

Section 3 (2) empowers a District Magistrate to issue a preventive detention order. The Magistrate must submit a report to the State Government, which is his superior, detailing the order, the reasons on which the order was based, and any other particulars that, in his view, affect the necessity of the order. It is undisputed that a District Magistrate may issue an order under section 3 (2) of the Preventive Detention Act to prevent black-marketing. The appellants argued that the grounds for their detention refer only to activities that occurred before June 1951. The Court found that this reference cannot be objected to, because the satisfaction required by the statute was said to have arisen on the basis of those earlier activities. The appellants further contended that a loophole in the total control of distribution, sale and price of piece-goods in the district had been closed by an order of the District Organiser dated 7 June 1951. By that order, the syndicate or corporation could not sell any cloth without a written order from the District Organiser, and therefore, the appellants claimed, no black-marketing could occur after that date and the detention order was consequently unjustified. The appellants also argued that, since their licences had been cancelled, they were no longer able to deal in cloth, making the detention order more punitive than preventive. They maintained that the purpose of the Preventive Detention Act is to stop future wrongdoing and that it is beyond the Act’s scope to base an order on conduct that occurred before June 1951. The Court agreed with the High Court’s approach. The Court observed that past conduct is relevant for forming the subjective belief of the District Magistrate that the appellants might engage in prohibited activities. The grounds presented for detention are therefore pertinent, and determining whether those grounds are sufficient is not a matter for the Court to decide. The statute requires only the subjective satisfaction of the authority that issues the order. The contention that the 1951 Amending Act, by creating an Advisory Board with supervisory and overriding powers, makes the sufficiency of the grounds a justiciable issue was rejected as untenable. The satisfaction required for the initial order has always been governed by the Preventive Detention Act and rests with the authority making the order. Although the 1951 Amending Act establishes a supervisory body, it does not remove the discretion or the subjective test applicable to the original authority, and the creation of the Advisory Board does not alter that principle.

The Court observed that the Advisory Board does not possess the jurisdiction to examine whether the subjective satisfaction of the authority who issued the preventive detention order was correct. Consequently, the power to determine whether the appellants should be detained under the Preventive Detention Act, based on the grounds communicated to them, remains exclusively with the District Magistrate.

In the present matter, the appellants advanced two principal arguments. The first argument contended that the order issued by the District Organiser on 7 June 1951 had eliminated the only remaining loophole in the government-controlled scheme for the distribution and sale of cloth, thereby rendering any possibility of black-marketing by the appellants impossible. The Court was unable to accept this contention. It held that the order in question appeared to be merely an administrative directive and functioned as a warning. Moreover, the order was inconsistent with the provisions of clause 5 of the Central Government Order dated 4 October 1950. Even assuming the order’s existence, the Court noted that it did not achieve the effect claimed by the appellants. A substantial quantity of cloth, which manufacturers were authorized to distribute through channels outside government agencies, could still be procured and sold at prices considerably higher than those fixed by the Government, thereby preserving the opportunity for black-market transactions.

The second argument submitted by the appellants was that, since their licences had now been cancelled, they could no longer deal in textile cloth and thus there was no longer any apprehension that they might engage in black-market activities. The Court rejected this argument as well. It emphasized that it is widely known that licences can be obtained in the names of nominees, allowing individuals to continue dealing in cloth despite the cancellation of the original licences. Furthermore, even if the appellants did not possess licences in Jullundur District, they could obtain licences in other districts. The fact that the licences were cancelled only a month after the detention order had been passed did not, in the Court’s view, preclude the possibility that the appellants might still indulge in black-market activities.

To illustrate its findings, the Court referred to an extract from a further affidavit filed by the District Magistrate of Jullundur dated 1 August 1951. In that affidavit, the magistrate stated that orders had been issued for the release of certain stocks of cloth from other mills as “free-sale” cloth after 9 June 1951. Any quantity of cloth that had not been paid for and that was lifted by the owners’ nominees would revert to the mills for free sale, as per a letter dated 31 May 1951 from the Textile Commissioner, Bombay, addressed to selected mills in Bombay and Ahmedabad. The magistrate further noted that this free-sale cloth could be purchased by any wholesale dealer in India without any restriction, and that it could be transported from one district to another without a permit, according to a memorandum dated 2 January 1951 issued by the Joint Director, Civil Supplies, and the Under-Secretary to the Government of Punjab. This evidence supported the Court’s conclusion that the avenues for black-market activities remained open despite the appellants’ arguments.

In this case the District Organiser of Civil Supplies and Rationing, Ludhiana, reported that free-sale cloth could be obtained from individual firms that colluded to profit through black-marketing, and that the only information supplied by a wholesale cloth purchaser to the District Magistrate concerned the quantity of cloth imported into the district. The Organiser’s report indicated that no such cloth had been imported into Jullundur by the corporation, yet there were reasons to believe that the corporation had purchased free-sale cloth from the mills and used those bales to supplement a shortage of quota cloth of superior quality, which it then disposed of in the black market in cooperation with the mills. The firm of Rattan Chand Mathra Dass, as shown by the attached lists signed by the District Organiser, dealt in free-sale cloth and also imported cloth designated as Reserve of Kangra and Provincial Reserve, most of which subsequently entered the black market. Similarly, the firm Madan Gopal Nand Lall and Company had been engaged in large-scale dealings in free-sale cloth, a fact evident from the attached list. The Secretary of the corporation, Santi Sarup, was believed to be a partner in the firm Hari Chand Bindra Ban, which also dealt in free-sale cloth, and the cloth obtained by these firms was invariably sold on the black market, as reported by the District Organiser in Memo No. 6306/6734-M/CT/Do. 7 dated 1 August 1950, in response to a memorandum dated 30 July 1951. There was no legal prohibition preventing the wholesale cloth corporation of Jullundur from acquiring free-sale cloth from the mills or other wholesale dealers, nor was there any bar on the firms Rattan Chand Mathra Dass and Madan Gopal Nand Lall and Co. acquiring such cloth. The appellants contended that the only detention order made against them was the one dated 2 July, which did not refer to any section of the Preventive Detention Act and did not demonstrate satisfaction by the detaining authority, and that the order of 19 June had never been shown to or served upon them, rendering their detention illegal. These contentions were raised in affidavits of the detained persons’ relatives, which did not establish personal knowledge and were based solely on belief and undisclosed sources. In contrast, the District Magistrate’s affidavit expressly stated that the terms of the 19 June order had been fully explained to each detainee, undermining the appellants’ claim of illegal detention.

In this case the District Magistrate had explained the terms of the detention order to each of the detained persons. The petitions for habeas corpus were filed within a week after the detention order had been served. The Court found no reason to doubt the accuracy of the Magistrate’s statements, and therefore concluded that the contention that the detention order was flawed could not be sustained. Accordingly, the Court held that the ground raised against the order of detention had no substance and that the detention could not be declared illegal on that basis.

The High Court’s judgment had been attacked on the same grounds, but the Court was unable to accept any of those arguments. Consequently, the appeals were required to fail. One appellant was described as the secretary of a corporation, while another appellant was described as a salesman and clerk employed by a firm. It had been submitted on their behalf that they could not have taken part in black-market activities. The Court could not accept that submission after considering the affidavits of the District Magistrate. Those affidavits indicated that, in addition to performing their duties as secretary or clerk, the appellants had actively participated in the black-market trade of cloth on behalf of their principals, and that they themselves had also been engaged in those illegal activities.

The Court noted that if any of the facts concerning the appellants were disputed, the matter would be referred to the Advisory Board for determination. However, the Court also stated that it did not have jurisdiction to decide the truth of the statements made in the affidavits. Since every ground raised against the High Court’s judgment was found to be untenable, the Court dismissed all five appeals. The appellant was represented by counsel R.S. Naru la, and the respondent and intervenor were represented by counsel P.A. Mehta.