Rai Sahib Ram Jawaya Kapur And Ors. 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: 12 April, 1955

Coram: Vivian Bose, Mukherjea, C.J.

In this case the petition was filed under article 32 of the Constitution on 12 April 1955. The petitioners were six individuals who conducted the business of preparing, printing, publishing and selling school textbooks for various classes in Punjab, especially for primary and middle‑school pupils, under the trade name “Uttar Chand Kapur & Sons.” They alleged that the Education Department of the Punjab Government, invoking a policy described as the nationalisation of textbooks, had issued a series of notifications beginning in 1950 that regulated the printing, publication and sale of these textbooks. According to the petitioners, the effect of those notifications was to impose unreasonable restrictions on their commercial rights and to effectively drive them and other competing traders out of the textbook market. The petitioners further contended that the Constitution guarantees their right to engage in trade under article 19(1)(g), and that such a right cannot be curtailed merely by executive orders unless a proper law is enacted that complies with the limitation clause contained in article 19(6). On the basis of these contentions they sought writs of mandamus directing the Punjab Government to withdraw the notifications that were said to infringe their constitutional rights.

To understand the arguments presented by counsel for the parties, it was necessary to set out the factual background concerning the system of textbook selection that had been in operation in Punjab. All schools that were recognised by the State were required to follow the curriculum approved by the Education Department, and the use of textbooks that were prescribed or authorised by that Department was a prerequisite for a school to obtain or retain its recognised status. For many years before 1950 the Government followed a procedure commonly referred to as the “alternative method.” Under this system, publishers prepared books on the relevant subjects at their own expense and according to the principles laid down by the Education Department. The completed books were then submitted to the Department for approval. After a careful examination, the Department selected a number of books—typically three to ten or sometimes more—for each subject. These selected works were listed as alternative textbooks, and the head‑masters of individual schools were free to choose any one of the alternatives for use in their classrooms. The Government also fixed the price, size and contents of each textbook. Once these specifications were determined, the publishers were responsible for printing, publishing and selling the books to the pupils of the various schools in accordance with the choices made by the respective head‑masters.

According to the record, authors who were not themselves publishers were also permitted to submit their manuscripts for government approval. When any such manuscript received approval, the author was required to arrange for its publication, and in practice the author usually selected one of the existing publishing houses that were already engaged in the textbook trade to carry out the printing and distribution. This arrangement had been the prevailing practice since the year 1905. However, beginning in May 1950, the Government introduced material alterations to the system. By a series of resolutions adopted around that time, the entire territory of Punjab, as it existed within the Indian Union after the partition, was divided into three distinct zones. For certain subjects—such as agriculture, history, and social studies—the Government prepared and published the textbooks for all three zones without inviting any submissions from private publishers. For the remaining subjects, the Government continued to invite submissions from both publishers and authors, but it abandoned the earlier “alternative” method that allowed several books to be approved for the same subject. Instead, the Government selected a single textbook for each subject and each class within a particular zone. In addition, the Government instituted a royalty charge of five per cent on the sale price of every textbook that received its approval. Consequently, the Government effectively assumed a monopoly over the publication of textbooks in the subjects it directly produced, and, even for the other subjects, it retained a statutory royalty on the proceeds of sales.

A more radical set of changes was introduced in the year 1952 through a notification issued by the Education Department on 9 August 1952, and the petitioners mainly contested that notification. The 1952 notification omitted the word “publishers” entirely and invited only “authors and others” to submit books for governmental approval. Under the terms of the notification, any author or other person whose book was selected was required to sign an agreement prescribed by the Government. The principal provisions of that agreement stipulated that the copyright in the selected work would vest absolutely in the Government, while the author or other copyright holder would receive a royalty of five per cent on the sale of the textbook at the price listed in the official schedule. As a result, the entire process of publishing, printing, and selling the textbooks was placed exclusively in the hands of the Government, and private publishers were completely excluded from the business. The five‑per‑cent royalty, in substance, represented the price payable for the transfer of the copyright, and it was paid to the author or to any other person who, not being the author, owned the copyright and was legally competent to convey it to the Government. The petitioners filed a petition under article 32 of the Constitution seeking the withdrawal of the 1950 and 1952 notifications on the ground that those measures violated the fundamental rights guaranteed by the Constitution.

The petitioners argued, through counsel Mr Pathak, that their constitutional guarantees were being infringed. Their argument was presented in three distinct parts. First, they maintained that a State executive government has no legal authority to engage in any trade or business activity unless it possesses a specific legislative sanction, and therefore the Government’s policy of establishing a monopoly over the printing and publishing of school textbooks was wholly beyond its jurisdiction and illegal. Second, they contended that even if a State were permitted to create a monopoly, such a monopoly could only be established by a proper legislative enactment that satisfied the requirements of article 19(6) of the Constitution, rather than by an executive order. Third, they asserted that the Government was not authorized to deprive the petitioners of any interest in a business or undertaking—which constitutes property—without a valid law and without paying compensation, as mandated by article 31 of the Constitution. These three contentions formed the core of the petitioners’ challenge to the State actions.

The initial contention, as framed by Mr Pathak, essentially claimed that the State Government lacked any legal power to operate a textbook printing or selling business in competition with private firms unless the legislature had expressly authorized such activity. He did not argue that the functions of a modern State were limited to traditional roles such as tax collection, law enforcement, or defense against external threats; rather, he acknowledged that a modern State is expected to undertake all measures necessary for the social and economic welfare of its people. However, he emphasized that the Constitution clearly divides governmental functions into three categories—legislative, judicial, and executive—and that the executive’s role is confined to implementing laws passed by the legislature or supervising their enforcement. Accordingly, the legislature must first enact a measure, after which the executive may execute it. To support this view, counsel relied heavily on articles 73 and 162 of the Constitution and cited several Australian High Court decisions. Article 73 governs the executive powers of the Union, while article 162 performs the corresponding function for State executives; both provisions are analogous to sections 8 and 49 of the Government of India Act, 1935, and they delineate the distribution of executive authority between the Union and the States in a manner similar to the distribution of legislative powers.

In this case the Court examined the language of article 162 of the Constitution, which states: “Subject to the provisions of this Constitution, the executive power of a State shall extend to the matters with respect to which the Legislature of the State has power to make laws; provided that in any matter with respect to which the Legislature of a State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly conferred by this Constitution or by any law made by Parliament upon the Union or authorities thereof.” The Court observed that, under this provision, the executive authority of a State is empowered to act in respect of the subjects listed in List II of the Seventh Schedule. The same authority also reaches the Concurrent List, except where the Constitution itself or a law enacted by Parliament provides otherwise.

The Court then turned to article 73, which confers upon the Union the executive powers to act on matters for which Parliament may legislate, and also to exercise rights, authority, and jurisdiction that arise from any treaty or agreement entered into by the Government of India. A proviso attached to clause (1) of article 73 provides that, although executive authority over the Concurrent List is normally left to the States, Parliament may, in exceptional circumstances, extend Union executive power to those matters as well. The Court noted that neither article 162 nor article 73 defines the scope of the executive function or specifies which activities fall within it; their primary purpose is to delineate the distribution of executive power between the Union and the States.

Consequently, the Court rejected the argument advanced by Mr Pathak that executive action is permissible only after Parliament or a State Legislature has actually passed legislation on a particular item in their respective lists. The Court emphasized that the wording of article 162 makes clear that State executive power applies to any matter over which the State Legislature is competent to legislate, regardless of whether legislation on that matter has already been enacted. The same principle underlies article 73 concerning Union executive power. Accordingly, the constitutional provisions do not support Mr Pathak’s contention.

The Court further considered the Australian authorities cited by the learned counsel and found them of little assistance. In the first cited case, The Commonwealth and the Central Wool Committee v. The Colonial Combing, Spinning and Weaving Co. Ltd., 31 C.L.R. 421, the Commonwealth executive, during wartime, entered into various agreements with a company engaged in manufacturing and selling wool‑tops. These agreements fell into several categories. By one class of agreements, the Commonwealth gave the company permission to sell wool‑tops in return for a share of the profits (referred to as a “licence fee”). Another class required the company to act as an agent for the Commonwealth, manufacturing wool‑tops in exchange for an annual sum paid by the Commonwealth. The remaining agreements combined features of both types. The High Court’s Full Bench held that, apart from any authority conferred by an Act of Parliament or regulations made thereunder, the Commonwealth executive possessed no power to make or modify any of these agreements. The decision was grounded largely on the wording of section 61 of the Australian Constitution, which vests executive power in the Queen and is exercised by the Governor‑General.

In the first of the Australian cases cited, the Commonwealth Government entered into several agreements with a company that manufactured and sold wool‑tops during the war. Under one category of agreements, the Government gave its consent for the company to sell wool‑tops in exchange for a portion of the profits, which the parties described as a licence fee. Another category required the company to operate as the Government’s agent in manufacturing wool‑tops, for which the company would receive an annual sum from the Commonwealth. The remaining agreements were hybrids of these two forms. A Full Bench of the High Court held that, absent any authority granted by an Act of Parliament or by regulations made under such an Act, the Commonwealth’s executive had no power to create or amend any of these agreements. The Court’s reasoning rested principally on section 61 of the Australian Constitution, which provides that the executive power of the Commonwealth is vested in the Queen, exercised by the Governor‑General as her representative, and extends only to the execution and maintenance of the Constitution and the laws of the Commonwealth. In addition, while section 2 permits the King to assign further functions to the Governor‑General, the case showed that no such assignment was alleged or proved. Consequently, because the agreements were not directly authorised by Parliament or any statute and did not relate to the execution and maintenance of the Constitution, they were declared void. Justice Isacs, delivering a detailed judgment, examined the two types of agreements. He concluded that the agreements obliging the company to pay the Government for consent effectively imposed a tax and were void without parliamentary authority. Likewise, the agreements that bound the Government to pay the company for manufacturing wool‑tops represented an appropriation of public revenue, and, lacking legislative sanction, were also void. The Court then observed that none of these principles could be applied to the present Indian case, since our Constitution contains no provision analogous to section 61 of the Australian Constitution, and there has been no imposition of a tax or licence fee by the Government. Moreover, the alleged appropriation of public funds for the textbook business in question appears to have been authorised by proper Appropriation Acts passed by the legislature.

The factory also supplied uniforms to other Commonwealth departments and to employees of various public utility services. The Governor‑General regarded these peacetime activities as essential to the efficient defence of the Commonwealth because keeping the trained workforce intact would enable the factory to meet wartime demands if the need arose. A question was then posed as to whether the factory’s peacetime operations were authorized under the Defence Act. The majority of the Court answered affirmatively. Justice Starke, however, delivered a dissenting opinion that Mr Pathak mainly relied upon. In his dissent, the learned judge emphasized section 61 of the Constitution Act, which provides that the Commonwealth’s executive power extends to the maintenance of the Constitution and the laws of the Commonwealth. He held that no provision of the Constitution or any Commonwealth law empowered the Commonwealth to establish and maintain clothing factories for purposes other than Commonwealth purposes. He further observed that, whether that view is correct or not, it depends upon the particular facts of the Australian case and the specific wording of section 61 of the Australian Act, and therefore it does not illuminate the issue that must be decided in the present case.

A question very similar to the present one was considered by a Full Bench of the Allahabad High Court in Motilal v. The Government of the State of Uttar Pradesh. The matter before the Court was whether a State Government possessed constitutional authority to operate a bus service in the absence of a legislative enactment expressly authorising such activity. The Judges expressed differing views. Chief Justice Malik held that, in a written Constitution such as ours, executive power may include powers that are expressly granted, implied, ancillary, or inherent, and that it must encompass all powers necessary to realise the aims and objects of the Constitution. He said that executive power therefore means more than merely executing statutes. According to the Chief Justice, the State has a right to hold and manage its own property and to engage in any trade or business that a private citizen may pursue, provided that such activity does not infringe upon the rights of others or violate any law. Consequently, the operation of a transport business was not per se outside the State’s executive authority. Justice Sapru held that the power to run a Government bus service was incidental to the power to acquire property, a power expressly conferred by article 298 of the Constitution. Justices Mootham and Wanchoo, delivering a common judgment, were also of the opinion that a specific legislative enactment was unnecessary for a State Government to operate a bus service. In their view, such an act would be

In this case, the Court observed that a activity falls within the executive power of a State when it is not an act that the Constitution has expressly assigned to another authority or body, when it does not conflict with any existing law, and when it does not infringe upon the legal rights of any member of the public. The dissenting opinion of Justice Agarwala was noted; he argued that the State Government lacks authority to operate a bus service unless a specific legislative enactment expressly authorises such action. While the Court recognised that Justice Agarwala’s view supports the position advanced by counsel for Mr Pathak, it described that view as unduly narrow and untenable. The Court further stated that it may not be possible to craft an exhaustive definition of the term “executive function.” Generally, executive power is understood to comprise those governmental functions that remain after the legislative and judicial functions have been delineated. Although the Indian Constitution does not embrace a rigid doctrine of separation of powers, it does differentiate the roles of the various branches of government sufficiently to preclude any one organ from assuming functions that fundamentally belong to another. The executive may exercise powers of departmental or subordinate legislation when such powers have been delegated by the legislature, and, where expressly empowered, it may also perform limited judicial functions. Nevertheless, the executive may never act in contravention of the Constitution or any other law, a principle made clear by article 154. The Court emphasized, however, that this provision does not imply that a pre‑existing law must always be in place before the executive can perform its duties, nor does it restrict the executive’s powers solely to the execution of statutes. The Court explained that the limits of executive action under the Constitution can be readily discerned by examining the constitutional design of the executive itself. Although the Constitution is federal in character, it adopts the British parliamentary model, whereby the executive bears primary responsibility for formulating government policy and converting that policy into law, subject to the condition that it retains the confidence of the legislative branch. Consequently, executive functions encompass both the determination of policy and its implementation, including the initiation of legislation, maintenance of public order, promotion of social and economic welfare, direction of foreign affairs, and overall supervision of the State’s general administration. In India, as in England, the executive operates under legislative control, and the Court proceeded to consider the precise manner in which such legislative control is exercised under article 53(1).

Article 75 of the Constitution provides that although executive power of the Union is formally vested in the President, a Council of Ministers headed by the Prime Minister must aid and advise the President in exercising his functions. Consequently, the President acts as the constitutional head of the executive, while the real executive authority resides with the Ministers collectively known as the Cabinet. The same constitutional scheme applies to the governments of the States, where the Governor or, where relevant, the Rajpramukh occupies the formal headship of the State executive, but the actual executive business is carried out by the respective State Council of Ministers. Thus the Indian Constitution adopts a parliamentary executive model similar to that of England, wherein the council of Ministers, being members of the legislature, functions as a link that fastens the legislative component of the State to its executive component. Because the Cabinet normally commands a majority in the legislature, it effectively controls both legislative and executive functions, and the ministers, bound by collective responsibility, are the ones who formulate the most important policy questions. In this arrangement the Cabinet, by virtue of its majority, becomes the decisive body that determines government policy and ensures its implementation through coordinated action of the ministries.

When a State Ministry or the executive government formulates a policy that involves the initiation of a particular trade or business, the question arises whether a specific law must be enacted to legalise such commercial activity before it can be undertaken. It cannot be said that specific legislation is always a prerequisite for the commencement of such trade, because the necessity depends on the nature of the activity and the source of funding involved. If the proposed trade or business requires expenditure of public funds, then Parliament must authorise that expenditure either directly or under the authority conferred by an existing statute. In practice, the sums necessary for carrying out the business are incorporated into the annual financial statement that the Ministry must lay before the House or Houses of the Legislature, as required by article 202 of the Constitution. Expenditure items not charged on the consolidated fund are presented to the legislature as demands for grants. Under article 203, the legislature may assent to the demand, refuse it, or assent with a reduction in the amount. Once a demand for grant has been sanctioned, an Appropriation Bill is introduced so that the required monies may be appropriated out of the State’s consolidated fund, in accordance with article 204. When the Appropriation Bill is passed and becomes an Appropriation Act, the expenditure incurred under the headings covered by that Act is deemed to be properly authorised by law, as provided by article 266(3) of the Constitution. It may be, as Mr.

The Court noted that counsel for the petitioner, Pathak, argued that Appropriation Acts could not replace specific legislative enactments and that such Acts merely authorized expenditures out of the consolidated funds for the particular fiscal years in which they were enacted, without providing any broader authority for the conduct of trade or business. He relied on article 266(3) of the Constitution, which provides that no money shall be drawn from the consolidated fund of India or a State except in accordance with law and for the purposes and in the manner prescribed by the Constitution. The Court observed that the term “law” in that provision expressly embraces Appropriation Acts. While acknowledging that Appropriation Acts do not directly furnish legislative sanction for the underlying commercial activities, the Court explained that, so long as those activities are pursued in accordance with a policy formulated by the executive government and enjoy the tacit support of the legislative majority, no valid objection can be raised on the ground that specific legislative enactment is absent. The only permissible objections, the Court held, could relate to the use of public funds for carrying out the trade or business, and in that respect the Appropriation Acts provide a full answer.

The Court further explained that specific legislation becomes necessary only when the government requires powers beyond those it already possesses under ordinary law to conduct a particular trade or business. In circumstances where the government must encroach upon private rights to enable its commercial operations, a dedicated statute authorising such intrusion must be enacted. Turning to the facts of the present matter, the Court observed that it was undisputed that the entire cost of printing and publishing textbooks for recognised schools in Punjab had been estimated, presented in the annual financial statement, and that the corresponding demand for grants under various heads had been approved by the State Legislature, with the requisite Appropriation Acts subsequently passed. For the purpose of carrying out this activity, the government did not need any additional powers; it could meet all requirements by entering into contracts with authors and other parties, a power expressly conferred on the government by article 298 of the Constitution. Consequently, the Court could not agree with Pathak’s assertion that the government’s undertaking of textbook printing and publishing lay beyond its competence in the absence of a specific legislative sanction. The Court cautioned, however, that such academic discussions were insufficient on their own to resolve the petitioners’ case. It reiterated that the executive is bound not only by ordinary law but also by constitutional provisions, and that even the legislature cannot override the fundamental rights guaranteed by the written Constitution. Accordingly, even if executive actions were deemed to have legislative backing, they could still be declared void if they infringed any fundamental right of the petitioners.

The Court observed that even when an executive action is formally authorised by the legislature, it may still be declared void and inoperative if it contravenes any of the fundamental rights guaranteed to the petitioners under Part III of the Constitution. Conversely, the Court explained that if an executive act is illegal in the sense that it lacks lawful authority but does not infringe any fundamental right of the petitioners, the petitioners would have no locus standi to invoke article 32 of the Constitution, although they might be able to seek relief under other statutes if different categories of rights were affected. Accordingly, the Court framed the principal issue for determination as follows: which, if any, of the petitioners’ fundamental rights have been breached by the notifications and other executive measures taken by the Punjab Government in pursuit of its policy of nationalising school textbooks?

The petitioners contended that they possessed a fundamental right protected by article 19(1)(g) of the Constitution, which expressly guarantees every person the freedom to practise any trade or business. Their specific trade consists of printing and publishing books for sale, a category that includes the textbooks employed in primary and middle‑class schools throughout Punjab. The Court noted that, as a general rule, it is the prerogative of school authorities to prescribe the textbooks that students must use, and when such textbooks are commercially available, pupils are free to purchase them from any vendor of their choice. The Court further clarified that the Constitution does not confer upon publishers any fundamental right that obligates school authorities to designate any of their printed works as prescribed textbooks, nor does it guarantee that once a book has been accepted as a textbook it cannot later be withdrawn or replaced.

Turning to schools that enjoy formal recognition by the Government, the Court explained that the position of publishers becomes yet more constrained. Recognised schools benefit from a variety of governmental aids, including grants for maintenance, equipment, furniture, scholarships and other support, and the students of such schools are permitted to sit for final examinations at a reduced fee compared with students attending non‑recognised institutions. The Court observed that the school code stipulates one of the essential conditions for obtaining governmental recognition is that the school must adopt only those textbooks that have been prescribed or otherwise authorised by the Government. Consequently, in the context of recognised schools – the very schools that form the subject matter of the present dispute – the choice of textbooks rests wholly with the Government, which alone determines the method of selection.

The Court described the procedure that had hitherto been followed under the existing system. The Government would issue invitations to publishers and authors, requesting them to submit their books for scrutiny and approval by the Education Department. Once the Department completed its examination and the Government made its selection, it would fix the physical dimensions, the content specifications and the pricing of the approved books. Thereafter, the responsibility for actually printing, publishing and offering the books for sale to the pupils was left to the respective publishers or authors. Under this arrangement, the only right that publishers such as the petitioners possessed was the right to submit their works for inspection and possible approval; they did not have any enforceable right to compel the Government to accept any particular book as a prescribed textbook.

Under the procedure then in force, after the government approved a book, the responsibility for printing, publishing and making the book available for purchase to schoolchildren rested with the publisher or author. While this system operated, the only entitlement that a publisher – such as the petitioners – possessed was the ability to submit the book for the government's inspection and possible approval. The publisher could not compel the government to adopt any particular book as a prescribed text. Consequently, the most that could be said about the publisher’s interest was that there existed a mere chance or prospect that the government might approve one or more of its books as school textbooks. Such chances are ordinary features of commercial activity and are not protected by any fundamental right. A trader, for example, may be fortunate enough to secure a market for his goods, but if that market later disappears because customers choose not to purchase his products, the trader cannot claim a fundamental right to retain those customers indefinitely. Thus, on the one hand, the publishers possessed only a probabilistic prospect of having their books sanctioned, while on the other hand the government retained an unquestionable authority to select textbooks by any method it deemed appropriate. Moreover, if the government, after granting approval, elected to acquire the copyright in the approved books from their authors – provided the authors were willing to transfer those rights on stipulated terms – the court saw no infringement of the publishers’ right to conduct their trade or business. No restriction was placed on the publishers’ freedom to print and publish any works they wished or to offer them for sale. The only limitation was that they did not possess a guaranteed right for their works to be accepted as textbooks. Accordingly, it was irrelevant to the publishers whether the government chose to approve textbooks submitted by other individuals who were prepared to sell their copyrights, or whether it engaged authors directly to prepare textbooks that the government would then print and publish itself.

The court could not accept the argument presented by Mr Pathak that the government, while exercising its undisputed power of approval, could not impose a condition unrelated to the purpose of that approval. The court found no way in which the petitioners’ position was enhanced by the government’s actions. Whether the government’s conduct was praised or condemned by the legislature or by public opinion did not constitute a violation of the fundamental right guaranteed by article 19(1)(g) of the Constitution. Consequently, the court concluded that the petitioners did not possess any fundamental right that had been infringed by the government’s actions, and therefore the petition could not succeed. The petition was dismissed with costs.

The Court observed that, because the petitioners had no protected right under article 19(1)(g) of the Constitution, the remaining two arguments raised by counsel were unnecessary to examine. The Court explained that, without a constitutional guarantee of freedom of trade, the issue of whether the Government might create a monopoly without a specific statute under article 19(6) became irrelevant to the case. The Court further noted that a mere possibility of obtaining certain customers did not constitute a property right or an interest in a business for the purposes of article 31(2) of the Constitution. Consequently, the Court held that no claim for compensation could arise from any alleged deprivation of such a non‑existent right. Having reached these conclusions, the Court ordered the petition to be dismissed and directed that the petitioners bear the costs of the proceedings.

The Court then turned to the eight petitions numbered 71 to 77 and 85 of 1955, which were presented before the Chief Justice. These petitions were filed under article 32 of the Constitution and presented exactly the same questions that had been considered in Petition No. 652 of 1954, which the Court had already decided. In each of the new petitions, the applicants described themselves as printers, publishers and vendors of school textbooks in Punjab, and they alleged that the State of Punjab’s notifications issued under its policy of textbook nationalisation violated their fundamental right to trade under article 19(1)(g). The counsel for the applicants relied wholly on the arguments previously advanced by counsel in Petition 652 of 1954, and no new or additional contentions were introduced by any of the parties. Because the factual and legal positions were identical, the Court held that the earlier decision in Petition 652 of 1954 applied to these eight petitions as well. Accordingly, the Court dismissed all of the petitions, but it declined to make any order as to costs in these matters.