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: Not extracted

Decision Date: 4 October 1951

Coram: Harilal Kania (C.J.), M.C. Mahajan, Chandrasekhara Aiyar

In this matter, counsel for R.S. Malik Mathra Das and other appellants versus the State of Punjab filed five companion appeals originating from the judgments of the High Court of East Punjab. The principal question presented to the Court was whether the detention of the appellants under the Preventive Detention Act was lawful, given the allegation that they were engaged in black-marketing of cotton piece-goods. The Court observed that the Jullundur Wholesale Cloth Syndicate had been created to administer the distribution of cloth in accordance with the Government of Punjab Control (Cloth) Order issued under the Essential Supplies Act. Certain individuals who possessed licences as wholesale dealers in cloth organized themselves as a corporation, and all cloth placed under governmental control was distributed within the district to the licensed retailers through this syndicate. The Government allocated specific quotas to each retailer and issued orders directing that each retailer receive a certain number of bales under the distribution control scheme. The Notification dated 4 October 1950, issued by the Department of Industries and Supplies, Government of India, provided that if any retail licence holder failed to take delivery of the quota allotted to him, the unlifted bales could, inter-alia, be transferred by the wholesale syndicate to another retail dealer. Throughout the period, the price at which cloth could be sold both wholesale and retail had been fixed by Government orders. The syndicate came under suspicion of participating in black-market activities, and the District Magistrate of Jullundur had warned the syndicate on several occasions about its conduct. On 7 June 1951, the District Organiser of Civil Supplies and Rationing, Jullundur, issued an order to the managing agents of the Jullundur City wholesale cloth corporation. The order expressly prohibited the agents from disposing of any unlifted stock on unexpired terms without prior written permission from the organiser. The agents were further instructed that, from that point forward, such stock could not be sold to an individual retailer; instead, permission could be granted only for sale to an association of retailers. The organiser’s letter also claimed that the directive was not consistent with clause 5 of the Notification dated 4 October 1950, which authorised the wholesale syndicate to sell unlifted cloth freely to any other retailer or to an association of retailers within the same district. The Court noted that the Cotton Cloth Control Order had been in force even before 1950. For a period, the control over the distribution of cloth was lifted, although the price of cloth continued to be regulated by the Government. During that time, it was alleged that the appellants and several other persons sold cloth at rates higher than those fixed by the Government, and even when

In the facts before the Court, the distribution and price of cloth were both subject to governmental control, yet the manufacturing mills were permitted to sell a certain percentage of cloth at prices fixed by the Government. This portion of cloth, which was not taken by the Government under its control, was described as “free sale cloth.” The authorities alleged that the appellants, together with several other persons, were engaged in black-marketing of this free-sale cloth. 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 acting in a manner prejudicial to the maintenance of essential cloth supplies. Subsequently, on 2 July 1951, the same District Magistrate ordered that the appellants be committed to the District Jail at Jullundur from 2 July until 1 October 1951, and the appellants were detained accordingly. The grounds for their detention were communicated to them on the morning of 6 July. The first ground outlined the appellants’ roles as managing agents, partners, or employees of various firms and corporations, stating that they had disposed of most of the cloth stocks received for the Jullundur District on the black market at “exorbitant” rates from June 1949 to October 1950, a period during which distribution control had been lifted. It was further alleged that even after the re-imposition of control in October 1950, the appellants continued to dispose of cloth that had been frozen under the direction of the Director of Civil Supplies during the short interval between the passing of the order and its service on them. The second ground related to their individual activities as members of a partnership, describing how they disposed of cloth stocks on the black market at rates higher than the controlled prices to various dealers through agents; the specific particulars were set out in Appendix A and referred to the free-sale cloth. The third ground alleged that, by illegal means, the appellants deprived rightful claimants of various cloth stocks with the intention of channeling those stocks into the black market at “exorbitant” rates. The Court noted that it was not necessary to elaborate further on these grounds 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 contention that the detention of the appellants under the Preventive Detention Act was unlawful. The District Magistrate responded with an affidavit in which he denied any mala fides, detailed instances of the appellants’ alleged activities, and asserted that the reports he had received satisfied him that the 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 subsequently appealed the decision to the present Court.

On appeal to this Court, the contention centered on the operation of Section 3 of the Preventive Detention Act, 1950. That provision authorized the Central Government or a State Government, when satisfied that it was necessary to prevent a person from acting in a manner prejudicial to the maintenance of essential supplies and services, to issue an order directing the detention of such person. Sub-section (2) of the same section delegated the power to make such an order to a District Magistrate. The delegated Magistrate, however, was required to forward a report to the State Government to which he was subordinate, describing the order and setting out the grounds on which the order had been made, together with any other particulars that, in his opinion, affected the necessity of the order.

The parties did not dispute that a District Magistrate could issue an order under Section 3(2) of the Act in order to prevent black-marketing. Counsel for the appellants argued that the detention order referred only to the appellants’ activities that occurred before June 1951. They maintained that this reference could not be objected to, because those earlier activities were alleged to have generated the satisfaction required by the statutory provision. The appellants further contended that a loophole previously existing in the district’s total control over the distribution, sale and price of piecegods 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 authority from the District Organiser, and consequently no black-marketing could occur after that date. On this basis, the appellants claimed the detention order was unjustified. They also argued that, since their licences to deal in cloth had been cancelled, they were now unable to trade, making the detention order more punitive than preventive. Finally, they maintained that the purpose of the Preventive Detention Act was to prevent future wrongdoing, and that the Act could not be invoked to restrain persons for conduct that had occurred before June 1951.

The Court held that the High Court had approached the issue correctly. It observed that past activities are relevant because they may form the basis of the District Magistrate’s subjective conviction that the appellants are likely to engage in objectionable conduct in the future. The grounds set out for the detention were therefore pertinent, and the adequacy of those grounds was not a matter for judicial determination. The legislation required only that the authority making the order be subjectively satisfied that detention was necessary. Consequently, the argument that the 1951 Amending Act, which created an Advisory Board to supervise and potentially override the executive’s decision, rendered the sufficiency of the grounds a justiciable issue was rejected. The Court concluded that the jurisdiction to decide whether the appellants should be detained under the Act remained with the District Magistrate, and that the court was not empowered to review the magistrate’s subjective satisfaction.

In this case the Court observed that the proposition that the executive decision to detain the appellants could be reviewed by a court because the adequacy of the grounds for detention had become a justiciable issue was unsound. The satisfaction required for issuing the initial detention order has always been that of the authority empowered under the Preventive Detention Act. Although the Amending Act of 1951 created an Advisory Board to supervise the exercise of power, that statutory development did not remove the discretion or the subjective test that the detaining authority must satisfy. Consequently, the Court held that it does not possess jurisdiction to examine whether the subjective satisfaction of the authority was correctly formed. The power to decide whether the appellants ought to be detained on the basis of the grounds communicated to them therefore remains with the District Magistrate. The appellants advanced two principal arguments. First, they contended that the order issued by the District Organiser on 7 June 1951 had closed the only remaining loophole in the government-controlled scheme for the distribution and sale of cloth, rendering any further black-market activity by them impossible. The Court was unable to accept this contention. It noted that the order in question was essentially an administrative warning and conflicted with clause 5 of the Central Government Order dated 4 October 1950. Moreover, the order did not achieve the effect claimed by the appellants, because manufacturers could still channel cloth through persons outside government agencies and sell it at rates higher than those fixed by the Government, thereby continuing the possibility of black-market transactions. The second argument put forward by the appellants was that the cancellation of their licences barred them from dealing in textile cloth, eliminating any risk of involvement in the black market. The Court rejected this argument as well, observing that licences are commonly obtained in the names of nominees and that the three appellants, although without licences in Jullundur District, could possess or obtain licences in other districts. The fact that their licences were cancelled only a month after the detention order was passed did not demonstrate that they could not engage in black-market activities. To illustrate the factual backdrop, the Court referred to a portion of an affidavit filed by the District Magistrate of Jullundur on 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, and that any cloth not paid for and taken by the owners’ nominees would revert to the mills. This statement underscored the continued availability of cloth for potential illicit trade despite the appellants’ arguments.

In this matter, the Court examined a letter numbered CYC-2/SLM dated 31 May 1951, which was issued by the Textile Commissioner of Bombay and addressed to all selected mills in Bombay and Ahmedabad. The letter stated that the cloth referred to as “free sale” could be bought by any wholesale dealer of cloth in India without any restriction. The Court further noted a memorandum numbered 288894-CS (C) 50/48791, dated 2 January 1951, from the Joint Director of Civil Supplies and the Under-Secretary to the Government of Punjab to the District Organiser of Civil Supplies and Rationing in Ludhiana. That memorandum declared that free-sale cloth could be transported from one district to another without requiring a permit. The Court observed that free-sale cloth could also be obtained from individual firms that were alleged to have conspired to profit through black-marketing. According to the Court, the only information that a purchaser of wholesale cloth was required to give to the District Magistrate concerned the quantity of such cloth that had been brought into the district. The report of the District Organiser indicated that no such cloth had been imported into Jullundur by the corporation; however, the Court found reasons to believe that the corporation had purchased free-sale cloth from the mills and had used those bales to compensate for a shortfall in the quota of superior-quality cloth, which it then disposed of on the black market in collusion with the mills. The Court also referred to the firm Rattam Chand Mathra Dass, which, as shown by lists signed by the District Organiser, had been dealing in free-sale cloth and had imported cloth as Reserve of Kangra and as Provincial Reserve, much of which reportedly entered the black market. In a similar manner, the firm Madan Gopal Nand Lal and Company was found to have dealt on a large scale in free-sale cloth, as evidenced by the attached list. The Court further noted that Santi Sarup, the Secretary of the corporation, was believed to be a partner in the firm Hari Chand Bindra Ban, which also dealt in free-sale cloth. The free-sale cloth acquired by these entities was, according to the District Organiser’s memorandum No. 6306/6734-M/CT/Do. 7 dated 1 August 1950, invariably sold in the black market. The Court emphasized that there was no legal impediment preventing the wholesale cloth corporation of Jullundur from obtaining free-sale cloth from the mills or from other wholesale dealers, nor was there any restriction on the firms Rattam Chand Mathra Dass and Madan Gopal Nand Lal and Co. from acquiring free-sale cloth. The appellants then argued that the sole detention order against them was the one dated 2 July, which did not reference any provision of the Preventive Detention Act and did not indicate that the detaining authority had satisfied any statutory requirement. They further contended that the order of 19 June had never been shown to, nor served upon, any of the appellants, and consequently claimed that their detention was unlawful. The Court recorded this argument and prepared to consider its merit.

The Court noted that the allegations were presented in affidavits filed by relatives of the detained individuals rather than by the detainees themselves. These affidavits did not demonstrate that the deponents possessed any direct or personal knowledge of the matters on which they testified. Consequently, the affidavits relied solely upon the deponents’ beliefs and information, and the source of such information was not identified in the documents. In contrast, the affidavit submitted by the District Magistrate expressly stated that the terms of the detention order dated 19 June were thoroughly explained to each of the detainees. The petitions for writs of habeas corpus were filed within one week after the detention order had been served, and the Court saw no reason to doubt the correctness of the Magistrate’s statements. Accordingly, the Court held that the challenge to the detention order on the basis of lack of personal knowledge was without merit and could not render the detention illegal. The High Court’s judgment had been attacked on these same grounds, but because the Court could not accept any of the contentions, the appeals were required to fail. One appellant held the position of secretary in a corporation, while another served as a salesman and clerk in one of the firms involved. Counsel for the appellants argued that, owing to those positions, they could not have participated in black-market activities. The Court was unable to accept that argument given the statements contained in the District Magistrate’s affidavit. The affidavit indicated that, besides performing their official duties, the appellants actively took part in the cloth black-market operations of their principals and also engaged personally in such trade. If any of these facts concerning the appellants remain disputed, the matter is to be referred to the Advisory Board for further consideration. The Court, however, clarified that determining the truth of those statements fell outside its jurisdiction. Since every ground raised against the High Court’s decision was rejected, the Court dismissed all five appeals, and consequently the appeals were dismissed.