Narendra Kumar And Others vs The Union Of India And Others

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

Court: Supreme Court of India

Case Number: Petition No. 85 of 1958

Decision Date: 3 December 1959

Coram: K.C. Das Gupta, Bhuvneshwar P. Sinha, Syed Jaffer Imam, J.L. Kapur, K.N. Wanchoo

In the matter titled Narendra Kumar and Others versus the Union of India and Others, the Supreme Court rendered its judgment on 3 December 1959. The decision was authored by Justice K C Das Gupta and was delivered by a five-judge bench comprising Justices K C Das Gupta, Bhuvneshwar P. Sinha, Syed Jaffer Imam, J L Kapur and K N Wanchoo. The case is reported in the 1960 All India Reporter at page 430, in the 1960 Supreme Court Reporter (Second Series) at page 375, and is cited in numerous subsequent Supreme Court reports spanning the years 1960 to 1992. The matters addressed in the case involved the constitutional validity of a statutory provision that placed a total restriction on the exercise of fundamental rights, specifically concerning the trade in imported copper. The legal provisions examined included Section 3 of the Essential Commodities Act, 1955, the Non-ferrous Metal Control Order, 1958 (clauses 3 and 4), and Articles 14, 19(1)(f), 19(1)(g), 19(5) and 19(6) of the Constitution of India.

The petitioners, who had entered into separate purchase contracts for copper with importers in Bombay and Calcutta before 3 April 1958, found that the Government of India, exercising its power under Section 3 of the Essential Commodities Act, issued the Non-ferrous Metal Control Order on 2 April 1958. Clause 3 of that Order prohibited any person from selling or purchasing any non-ferrous metal at a price exceeding the landed cost plus an addition of 321 percent. Clause 4 stipulated that acquisition of any non-ferrous metal could only be made under a permit issued by the Controller, according to principles that the Central Government might prescribe from time to time. No such principles had been published in the Gazette or placed before Parliament; however, a communication dated 18 April 1958 from the Deputy Secretary to the Government of India to the Chief Industrial Adviser outlined certain principles, allowing the Controller to issue permits only to selected manufacturers and not to dealers. On 14 April 1958 the petitioners applied for the necessary permits to take delivery of the copper covered by their contracts, but their applications were rejected. Consequently, the petitioners approached the Supreme Court under Article 32 of the Constitution, challenging the validity of the Order and the refusal to grant permits.

The petitioners invoked Article 32 of the Constitution of India to challenge the order that denied them a permit, and they put forward several contentions. First, they argued that the fixation of price under clause 3 of the Non-ferrous Metal Control Order, 1958, which had the effect of driving dealers out of the imported-copper business, together with clause 4 of the same Order read with the communication dated 18 April 1958, which completely eliminated dealers from the trade in imported copper, violated Articles 19(1)(f) and 19(1)(g) of the Constitution. They further submitted that such total elimination amounted to a prohibition on the exercise of the right to carry on trade or to acquire property, and that this went beyond a mere restriction and fell outside the protective clauses 5 and 6 of Article 19. Second, they contended that the principles specified in the communication of 18 April 1958 were discriminatory because they treated manufacturers differently from dealers, thereby infringing Article 14. Third, they maintained that those principles had no legal force because they were neither incorporated into the Non-ferrous Metal Control Order nor notified in the Official Gazette or laid before both Houses of Parliament in the manner prescribed by sub-sections (5) and (6) of section 3 of the Essential Commodities Act. The Court observed that the importers’ abuse of the practical monopoly that they enjoyed over the copper market had seriously affected the interests of the general public in India. Consequently, the impugned legislation, embodied in the Non-ferrous Metal Control Order and the subsequent specification of principles, was enacted to protect those public interests. The Court held that the term “restriction” in Articles 19(5) and 19(6) of the Constitution also encompasses cases of prohibition. It further explained that when a restriction reaches the point of total restraint of rights, the Court must exercise special care to ensure that the test of reasonableness is satisfied. This requires considering the facts and circumstances prevailing at the time the order was made, including the nature of the evil sought to be remedied, the ratio of harm inflicted on individual citizens by the proposed measure, the beneficial effect that could reasonably be expected for the general public, and whether the restraint imposed was more than necessary to protect public interest. In reaching this conclusion, the Court followed the authorities set out in Chintaman Rao v. State of Madhya Pradesh, [1950] S.C.R. 759; Cooverjee B. Bharucha v. Excise Commissioner and the Chief Commissioner, Ajmer and Others, [1954] S.C.R. 873; and Madhya Bharat Cotton Association Ltd. v. Union of India, A.I.R. 1954 S.C. 634. Finally, the Court observed that in the present case the evil to be remedied was the rise in prices that led to higher consumer-goods prices, wherein copper was a major ingredient; therefore, the fixation of a price and the system of permits for acquiring the material were deemed reasonable restrictions in the interest of the general public.

The Court observed that the requirement to obtain permits for acquiring the material was a reasonable restriction intended to protect the general public. It held that clauses three and four of the Non-ferrous Metal Control Order, 1958, likewise qualified as reasonable restrictions within the meaning of Articles 19(5) and 19(6) of the Constitution. The Court further found that the classification which separated dealers as one class from manufacturers as another bore a reasonable connection with the object of the legislation; consequently, the principles announced in the communication dated 18 April 1958 did not offend Article 14 of the Constitution. Regarding clause four of the Order, the Court stated that the clause could not operate unless the Central Government specified the necessary principles in the manner prescribed by sub-sections (5) and (6) of Section 3 of the Essential Commodities Act. Because those principles had not been published in the Gazette nor laid before both Houses of Parliament as required by the Act, clause four could not be enforced. The Court therefore declared that clause four, as it stood, was void until such time as the principles are published in accordance with the statutory requirement.

The judgment concerned an original jurisdiction petition numbered 85 of 1958, filed under Article 32 of the Constitution for the enforcement of fundamental rights guaranteed by Articles 14, 19(1)(f) and 19(1)(g). Counsel for the petitioners represented three individuals who were dealers in imported copper conducting business at Jagadhri in the State of Punjab. Counsel for the respondents, which included the Additional Solicitor-General of India, represented the Government. The petitioners had entered into purchase contracts with importers in Bombay and Calcutta on various dates prior to 3 April 1958. Before they could take delivery, the Government of India issued, on 2 April 1958, the Non-ferrous Metal Control Order, 1958, exercised under the powers conferred by Section 3 of the Essential Commodities Act (Act X of 1955). The Order defined “non-ferrous metal” to include imported copper, lead, tin and zinc in any form specified in its Schedule and expressly applied to imported copper. Clause three of the Order imposed price control: its first sub-clause prohibited any person from selling or offering to sell any non-ferrous metal at a price exceeding the landed cost by more than three and a half percent, and its second sub-clause forbade any person from purchasing such metal at a price higher than the permissible selling price.

The Order prohibited any person from offering to purchase non-ferrous metal from another at a price greater than the price at which the seller was authorized to sell under sub-clause (i). Clause 4 was intended to control the acquisition of non-ferrous metal by requiring a permit; it stated that no person could acquire or agree to acquire any non-ferrous metal except under a permit issued by the Controller in accordance with principles that the Central Government might specify from time to time. Clauses 5 and 6 made it mandatory for importers to notify the quantities of non-ferrous metal they imported and to keep certain books of account. Clause 7 granted the Controller authority to enter and search any premises, to inspect any book or document, and, in certain circumstances, to seize any non-ferrous metal. This Order was published in the Gazette of India on 2 April 1958. However, the Central Government did not publish any principles under clause 4 on that date or thereafter. Later, the Deputy Secretary to the Government of India sent a communication dated 18 April 1958 to the Chief Industrial Adviser, containing the following principles: (1) for scheduled industries under the Control of the Development Wing, the Controller would determine six-monthly requirements of actual users based on their 1956 production; (2) for small-scale industries, the Chief Controller of Imports and Exports, on the certificate of the State Directors of Industries, would inform the Controller of the quantities to which the units were entitled, and the Controller would make those quantities available from time to time; and (3) the Controller would normally release one month’s requirements at a time to consuming units, with permits valid for two months, although the Controller could issue larger quantities if heavy imports were reported. Consequently, on 2 April 1958, the situation was that no person could buy or sell imported copper at a price above the landed cost plus three and a half percent, and no person could acquire such copper except under a permit issued by the Controller. After the principles were set out in the 18 April communication, the Controller could issue permits only to certain manufacturers as indicated in paragraphs 1 and 2 of that letter, and could no longer issue permits to dealers.

In this case the petitioners sought permits on 14 April 1958 under clause 4 of the Order so that they could receive copper that they had contracted for with various parties. Although no formal order appears to have been issued on those applications, it is not disputed that the applications were refused and that no permits were granted to the petitioners. The petitioners advanced two principal grounds of challenge. First, they contended that clause 4 of the Order, read together with the principles set out in the letter dated 18 April, infringed the constitutional right guaranteed to them as citizens of India by article 19(1)(f) to acquire property and article 19(1)(g) to carry on trade, and that these infringements were not saved by the provisions of article 19(5) and article 19(6); consequently they argued that the clause and the principles were void. Second, they asserted that fixing the maximum price at the landed cost plus 31 percent also curtailed the rights protected by articles 19(1)(f) and 19(1)(g), and that this price fixation likewise fell outside the protection of articles 19(5) and 19(6), rendering it void as well.

A further contention raised by the petitioners was that the principles, by treating manufacturers differently from dealers in copper, were discriminatory and thus violated the guarantee of equal protection of the laws under article 14 of the Constitution. Regarding the status of the principles specified in the 18 April letter, the petitioners argued that, because those principles form an integral part of the “Order” by which the Central Government is empowered to regulate the distribution and supply of essential commodities under section 3 of the Essential Commodities Act, they were required to be published in the Official Gazette in accordance with the fifth sub-section and laid before both Houses of Parliament pursuant to the sixth sub-section; they maintained that because those formalities had not been complied with, the principles possessed no legal force. Alternatively, the petitioners submitted that if the principles were not considered part of the Order, then any regulation effected through those principles would lie outside the scope of the Act, since section 3 authorises the Central Government to regulate or prohibit the production and supply of essential commodities only by means of an Order and not by any other mechanism.

The petitioners therefore prayed for the issuance of an appropriate writ, order, or direction. Their relief sought comprised (1) a prohibition on the respondents – the Union of India, the Chief Industrial Adviser to the Government of India, and the Development Officer of the Ministry of Industry – from enforcing clauses 3 and 4 of the Order; (2) a quashing of the Development Officer’s order rejecting the petitioners’ applications for permits, together with a direction to the second and third respondents to grant the permits; and (3) a directive that the respondents refrain from granting permits to any parties other than the petitioners with respect to the copper covered by the petitioners’ contracts with importers.

The petitioners sought three specific remedies. First, they asked that the respondents be restrained from enforcing clauses three and four of the order. Second, they requested that the order issued by the Development Officer, which had rejected the petitioners’ applications for permits, be set aside and that the second and third respondents be directed to grant the permits. Third, they asked that the respondents be prohibited from granting any permits to any parties other than the petitioners for copper that fell within the contracts the petitioners had with importers. The respondents opposed the petition. Their principal argument was that clauses three and four of the order, together with the “ principles” mentioned therein, constitute lawful regulations. According to the respondents, these regulations impose reasonable restrictions on the freedoms guaranteed by Articles 19(1)(f) and 19(1)(g) of the Constitution, and such restrictions are justified in the interest of the general public.

While maintaining this principal contention, the respondents also argued that the petitioners had not challenged the validity of the Essential Commodities Act and had expressly acknowledged that the Central Government possesses the authority to issue an order under section 3 of that Act. Consequently, the respondents submitted that the Court could not examine whether the law enacted by the Government—namely, the non-ferrous metal control order and the principles specified in clause 4—violates any fundamental rights guaranteed by the Constitution. Their position was that, once it is established that the Government is empowered by a valid statute to regulate or prohibit the production, supply, distribution, and trade of an essential commodity, such power may be exercised whenever the Government is of the opinion that it is necessary or expedient for maintaining or increasing the supply of the commodity, for ensuring its equitable distribution, or for making it available at fair prices. Under this view, a governmental order may be challenged only if it exceeds the authority granted by section 3 or if it is made in bad faith. No allegation of bad faith was raised, and the respondents asked the Court to proceed on the assumption that the Central Government honestly believed that it was necessary and expedient to issue an order regulating and prohibiting the import, supply, distribution, and trade of copper. They argued that, provided the order does not go beyond the scope of the statutory provisions, it must be upheld, and any question of infringement of constitutional fundamental rights is irrelevant. The respondents characterized the opposite argument as extravagant and deserving of rejection. They further observed that if there were any reason to think that section 3 conferred on the Central Government a power that conflicted with the Constitution—specifically, a power that would violate any constitutional fundamental right—such a conflict would by itself render section 3 void for being ultra vires the Constitution. However, in the present case no challenge has been made to the constitutionality of section 3, and it is therefore presumed that the powers conferred by that section do not contravene the Constitution or empower the Central Government to act in a manner prohibited by the Constitution. It is, they concluded, fair and proper to presume that, when Parliament enacted the Essential Commodities Act, it could not have intended to grant a power that would be inconsistent with constitutional guarantees.

In this case the Court observed that the language employed in section three of the Act, namely “may by order provide for regulating or prohibiting the production, supply and distribution thereof, and trade and commerce in,” was not intended to confer a power that could operate contrary to the Constitution. The absence of the words “in accordance with the provisions of the articles of the Constitution” was held to be immaterial, because such words are implied in every statutory provision made after the Constitution became effective. Accordingly, the Court explained that when section three authorises regulation or prohibition of the production, supply and distribution of any essential commodity, that authority is limited to measures that do not infringe any fundamental rights guaranteed by the Constitution of India.

The Court further noted that, even though no allegation of bad faith on the part of the Government was made, it was necessary to examine whether the subordinate legislation issued by the Central Government, which curtailed rights under article 19(1)(f) and 19(1)(g), fell within the protective clauses of article 19(5) and article 19(6). On a plain reading, clause four of the Order, together with the principles set out in the letter dated 18 April, effectively removed all dealers from the trade in imported copper. Independently of clause four, the fixation of a selling price at three and one-half per cent above the landed cost also forced dealers out of the imported-copper business. The Union of India, in paragraph eleven of its counter-affidavit, explained that the additional three and one-half per cent was intended to allow importers to earn a profit margin, which meant that this price would become the minimum at which the importers could sell.

Consequently, any dealer would have to purchase copper from the importer at the landed cost plus three and one-half per cent, and the dealer would be prohibited from charging the customer any amount above that same sum. The Court therefore concluded that, from that point forward, the actual consumer of the commodity would have to obtain it directly from the importer, and the distribution channel involving the dealer would disappear. In order to determine whether this complete exclusion of dealers from the imported-copper trade was permissible under the saving provisions of article 19(5) and article 19(6), the Court first had to decide whether such an exclusion amounted merely to a restriction on the rights guaranteed by article 19(1)(f) and article 19(1)(g) or whether it went beyond the notion of a restriction and amounted to a prohibition.

In this matter the petitioners argued that a complete prohibition on the exercise of a right is distinct from a mere restriction on that right, and that when the Constitution speaks of laws imposing reasonable restrictions on the exercise of rights, it does not protect laws that altogether prohibit the exercise of any such right. Accordingly, the petitioners maintained that the total elimination of the dealer, which would amount to a prohibition of any exercise of the right to carry on trade or to acquire property, must fall outside the protective provisions of clauses five and six of Article 19.

The petitioners further cited certain observations made by Chief Justice Kania and Justice S. R. Das in Gopalan’s Case. At page 106 of the report, Chief Justice Kania, after observing that “deprivation of personal liberty has not the same meaning as restriction of free movement in the territory of India,” stated: “Therefore Article 19(5) cannot apply to a substantive law depriving a citizen of personal liberty. I am unable to accept the contention that the word ‘deprivation’ includes within its scope ‘restriction’ when interpreting Article 21.” Justice Das, at page 301 of the report, said: “Clause (5) of Article 19 qualifies sub-clause (d) of clause (1) which should therefore be read in the light of clause (5). The last mentioned clause permits the State to impose reasonable restrictions on the exercise of the right of free movement throughout the territory of India as explained above. Imposition of reasonable restrictions clearly implies that the right of free movement is not entirely destroyed but that parts of the right remain.”

The Court noted, however, that those observations were made in the specific context of a conflict between Article 19(5) and Article 21 and were not intended to provide a general rule on the distinction between prohibition and restriction.

The Court then referred to the earlier decision in Chintaman Rao v. State of Madhya Pradesh, which examined the constitutionality of the Central Provinces and Berar Regulation of Manufacture of Bidis (Agricultural Purposes) Act. Justice Mahajan, delivering the judgment, observed that the central issue was whether the total prohibition of manufacturing bidis during the agricultural season constituted a reasonable restriction on the fundamental right guaranteed under Article 19(1)(g). He concluded that the impugned law did not fall within the saving provisions of Article 19(6) because the test of reasonableness was not satisfied, and not because a “prohibition” per se went beyond a “restriction.” At page 764 of the report, the learned judge explained: “The effect of the provisions of the Act, however, has no reasonable relation to the object in view but is so drastic in scope that it goes much in excess of that object. Not only are…”

The Court observed that the statutory provisions went beyond what was required for the case and that the wording used barred a bidi manufacturer from employing any person in his business, regardless of where that person lived. In effect, a bidi manufacturer residing in the area could not bring in labour from neighboring parts of the district, from the province, or from outside the province. The Court described such a blanket prohibition as arbitrary because it bore no connection to the purpose that the legislation intended to achieve, and therefore it could not be considered a reasonable limitation on the right to practice a trade. The law was invalidated not merely because it was a prohibition, but because the restriction it imposed was unreasonable. The Court noted that earlier decisions, such as Saghir Ahmad’s Case and Chamarbaugwala’s Case, had raised the question of whether a prohibition could be regarded as a restriction within clause 6, but those judgments had left the issue unresolved. In Cooverjee’s Case, the Court extended clause 6 of article 19 to a statute that effectively prohibited many citizens from exercising their right to trade. Mahajan, J., delivering that judgment, explained that assessing the reasonableness of a restriction required consideration of the nature of the business and the conditions prevailing in that trade, recognizing that these factors vary between different trades and that no universal rule could be applied. He added that the State possessed the authority to prohibit trades that were illegal, immoral, or harmful to public health and welfare, such as dealing in dangerous goods or trafficking in women, and that such prohibitions were legitimate because they were not mere regulations but necessary safeguards. The nature of the business, therefore, was a crucial element in determining the reasonableness of any restriction. In Madhya Bharat Cotton Association Ltd., the Court examined the constitutionality of an order that effectively barred a large group of traders from conducting ordinary forward-contract trading. Bose, J., delivering that opinion, held that because cotton was an essential commodity for the community, it was reasonable for the State to impose restrictions that, under certain circumstances, might amount to a total prohibition of normal trading for a period of time. The Court concluded that in the three cases—Chintaman Rao’s, Cooverjee’s, and Madhya Bharat Cotton Association Ltd.—the central issue was whether the interference with the fundamental right was reasonable in the interest of the general public, treating prohibition merely as a form of restriction.

In this case, the Court examined whether the interference with a fundamental right was reasonable in the interests of the general public. The Court stated that if the interference satisfied the test of reasonableness, the law would be valid; conversely, if the test were not satisfied, the law would be invalid. The Court observed that in the cases discussed, prohibition was treated merely as a form of restriction. The Court warned that any interpretation treating prohibition as something other than a restriction would defeat the Constitution’s intention. The Court noted that Article 19(1) confers on citizens several rights in its seven sub-clauses. Immediately thereafter, Articles 2 to 6 provide safeguards to keep social regulation free from unreasonable impediments. The Court explained that the purpose of the State is to promote the welfare of its members through suitable legislation and administration. If the conferment of the seven rights were to halt legislation in the wide fields where those rights operate, the very purpose of the State would be frustrated. However, the Constitution contains saving provisions, primarily in Article 13, to prevent such a result. The Court elaborated that Articles 2 to 6 allow the making of new laws and the continuation of existing laws in the domains of the seven rights, wherever such laws are necessary for the general welfare. The Court listed the specific saved restrictions: Clause 2 protects restrictions on rights under sub-clause (a) when they are in the interest of the security of the State or other matters mentioned therein; Clause 3 protects restrictions on rights under sub-clause (b) when they are in the interest of public order; Clauses 4, 5 and 6 protect restrictions on rights under sub-clauses (c) to (g) when they are in the interest of the general public, with Clause 5 also covering restrictions on rights under sub-clause (d) and restrictions for the protection of the interests of any scheduled tribe. The Court cited authorities such as (1) [1950] S.C.R. 759, (2) [1954] 873, 879, and (3) A.I.R. 1954 S.C. 634. The Court observed that without these saving provisions, such laws would be void under Article 13, which provides that any pre-existing law inconsistent with the provisions of Part III shall, to the extent of the inconsistency, be void, and that the State shall not make any law that takes away or abridges the rights conferred by that Part. The saving provisions were therefore intended to remedy the hardship that would otherwise result from the strict operation of Article 13.

In interpreting the phrase “reasonable restrictions” that appears in clause (2) of the provision concerning the exercise of a fundamental right, the Court emphasized that it must be read in the light of Article 13. Article 13 declares that any law inconsistent with the provisions of Part III of the Constitution, or any law that takes away or abridges the rights guaranteed by that part, shall be void to the extent of such inconsistency. The Court observed that the framers of the Constitution must have intended the word “restriction” to be broad enough to accommodate laws that are inconsistent with Article 19(1) or that take away the rights conferred by that article, provided that such inconsistency or deprivation is reasonable in the interests listed in the clause. Consequently, the Court concluded that the Constitution’s drafters deliberately meant that “restriction” also covers a complete “prohibition” of a fundamental right. Therefore, the argument that a law that entirely prohibits the exercise of a fundamental right can never be saved by the Constitution could not be accepted. However, the Court also recognised that when a restriction rises to the level of a prohibition, as in the present matter, the Court must exercise heightened caution to ensure that the restriction satisfies the test of reasonableness. The greater the extent of the restriction, the more rigorous the judicial scrutiny must be. In applying the reasonableness test, the Court must examine the factual background that led to the order, assess the nature of the evil the law sought to remedy, weigh the harm that the proposed measure would cause to individual citizens against the beneficial effect that is reasonably expected to accrue to the public, and determine whether the restraint imposed exceeds what is necessary for the general public’s interest.

The factual situation concerning the copper trade at the end of March 1958, just two days before the challenged order was issued, was clearly established. Copper was a vital raw material for Indian industry, required for manufacturing a wide range of consumer goods, sheets, and other articles that served as inputs for numerous other sectors. This essential character of copper had never been contested. Domestic production of copper was extremely limited and could not meet the normal requirements of industry, forcing the sector to rely heavily on imports for many years. Because of its importance, copper had long been placed on the Open General List, allowing free import without restriction. When the country’s foreign-exchange reserves began to deteriorate, the government decided that conserving foreign exchange was a paramount national interest. Accordingly, copper was removed from the Open General List effective 1 July 1957, and a licensing regime was introduced, making it mandatory to obtain a licence before importing copper. During the period from July to September 1957, licences were granted both to established copper importers and to actual users who were not previously established importers. This licensing policy set the stage for the subsequent developments that were examined by the Court.

During the period from October 1957 to March 1958 the government granted licences for the import of copper only to those importers who were already established in the trade. Whatever the intention behind excluding actual users from obtaining licences, the outcome proved to be disastrous. Because a small group of importers held a practical monopoly over the imported copper, they were able to dictate terms to the purchasers. By March 1958 the domestic price of copper in India had risen to Rs 3,477 per ton, while the prevailing international price stood at Rs 2,221 per ton. It was not contested that the abuse of this monopoly by the importers seriously harmed the interests of the general public in India. Equally undisputed was the observation that the legislation known as the Non-ferrous Metal Control Order, together with the subsequent specification of principles, was enacted in an honest attempt to protect those public interests.

The first evil that the law sought to remedy was the sharp increase in price, which inevitably would have been reflected in the higher cost of consumer goods that required copper as a major component. Consequently, an order controlling the price of copper appeared to be the obvious initial measure to combat this problem. However, experience demonstrated that price control on its own could not be made effective unless a subsidiary step was also taken. That subsidiary step involved introducing a system of permits so that the persons acquiring copper could be identified. The permit system would also help ensure that the raw material was allocated to those industries where it was most needed and would be distributed among various industries in different parts of the country, thereby securing the greatest possible benefit to the public.

Clause 3 of the Order fixed a price for copper, while clause 4 introduced the permit system for its acquisition. Some fixation of price, being essential to keep prices within reasonable limits, therefore constituted a reasonable restriction in the interests of the general public. Yet the Court considered whether it was necessary for the price to be fixed in such a way that the dealer was eliminated completely, as had occurred in the present case. The introduction of a permit system was clearly necessary for public welfare, but the necessity of specifying principles that would drive the dealer out of business required careful scrutiny. The injury inflicted on the dealer by such total elimination was substantial, and despite the presumption of constitutionality that attaches to every law, the Court felt obliged to examine with special care statutes that resulted in a complete restraint of rights conferred by the Constitution. It was accepted as an axiom that the profits earned by a middleman increase the price of goods that consumers must pay. It was also noted that it would be entirely wrong to think that the middleman earned his profits for nothing, and that one must remember that

It was observed that a middleman creates a distribution channel between producers and consumers, thereby removing the need for producers to store goods for extended periods and eliminating the risk associated with such storage. The middleman also spares consumers the inconvenience and cost of travelling to distant producers. Nevertheless, the middleman must recover the interest on the capital he invests, a reasonable remuneration for managing the business, and compensation for the risks he bears – what economists describe as the “entrepreneur’s risk.” These recoveries often amount to a substantial sum. Consequently, modern policy makers have attempted to restrict the activities of middlemen and to replace them, as far as possible, with cooperative sale societies of producers and cooperative purchase societies of consumers. While acknowledging that the middleman provides valuable services, the Court noted that the public interest would be better served if those services could be obtained at a price lower than the middleman would normally charge. The Court explained that if the middleman were eliminated because price were fixed at landed cost plus three and a half percent, manufacturers that require copper as a raw material would have to deal directly with importers. This would cause some inconvenience, but the Court reasoned that the reduction in the cost of acquiring copper would more than offset that inconvenience. Moreover, the lower raw-material cost would likely be reflected in reduced prices for consumer goods that contain copper, thereby benefiting the general public. On this basis, the Court held that clause three of the Order, even though it results in the removal of the dealer from the trade, constitutes a reasonable restriction in the interest of the public. The Court also found that clause four, read together with the principles specified in it, must be regarded as a reasonable restriction for the same reason. The petitioners argued that the principles were discriminatory, treating manufacturers differently from dealers and thus infringing article fourteen of the Constitution. The Court observed that the law indeed creates two separate classes – some manufacturers are eligible for permits while dealers are not – and that this distinction bears a reasonable connection to the purpose of the legislation. Accordingly, the contention that the specification of the principles violates article fourteen was rejected. Although clause three of the Order falls clearly within the authority of the Act, the Court noted a difficulty concerning whether clause four, together with the principles, is within the Act. The Court explained that had the principles been incorporated in the Order itself, or had they been notified in the Official Gazette and laid before both Houses of Parliament as required by sub-sections (5) and (6) of section three of the Act, the regulation under clause four would have been valid. Since the principles were neither included in the Order nor notified or placed before Parliament in the prescribed manner, the regulation based on those principles does not constitute an order under section three of the Act. Consequently, it lies outside the Act’s protection and does not benefit from the saving provisions of clauses five and six of article nineteen of the Constitution. Without the principles, clause four cannot operate effectively, because the permit system it seeks to create can function only if permits are issued in accordance with the stipulated principles.

In the judgment, the Court explained that if the principles referred to in clause 4 had been set out in the Order itself or had been published in the Official Gazette and placed before both Houses of Parliament in the manner required by sub-sections (5) and (6) of section 3 of the Essential Commodities Act, then the regulation contained in clause 4 would have been a valid exercise of the power conferred by that Act. The Court observed, however, that the principles were neither incorporated in the Order nor were they notified in the Gazette or laid before Parliament as prescribed by the same sub-sections. Consequently, the Court held that the regulation which relied on those unwritten principles could not be characterised as an order made under section 3 of the Act; instead, it existed wholly outside the scope of the Act and therefore did not enjoy the protection of the saving clauses contained in clauses 5 and 6 of Article 19 of the Constitution.

The Court further noted that without the specified principles, clause 4 of the Order could not operate effectively. The system of permits that clause 4 was intended to establish could be brought into existence only if permits could be issued, and permits could be issued only in accordance with the principles laid down by the Central Government. The Court rejected any construction that the phrase “may specify” in clause 4 allowed the Controller, in the absence of any principles, to issue permits based on his own judgment or discretion. The language of clause 4, the Court said, compelled the conclusion that no permit could be issued unless the Central Government had first specified the principles.

Accordingly, the Court warned that enforcing the provision that no person could acquire or agree to acquire copper except under a permit would, in the absence of legally specified principles, result in a complete cessation of the copper trade. This cessation would affect not only dealers but every transaction involving imported copper. The Court found that such a total stoppage could not be viewed as a reasonable restriction in the interest of the general public.

From these observations, the Court concluded that as long as the principles remained unspecified by the Central Government through an Order that was notified in the Gazette and placed before both Houses of Parliament in accordance with sub-sections (5) and (6) of section 3, the regulation embodied in clause 4 could not fall within the protective ambit of Articles 19(5) and 19(6) of the Constitution. Consequently, the regulation was void to the extent that it infringed the rights guaranteed by Articles 19(1)(f) and 19(1)(g). The Court emphasized that the only requirement to render clause 4 effective was the specification of some principles, followed by their notification in the Gazette and their laying before Parliament. The Court also stated that, when circumstances changed, it might become necessary to prescribe new principles, and that such new principles would likewise need to be Gazette-notified and laid before the Houses of Parliament to have legal effect.

In the Court's view, a principle that is intended to have legal effect must be specified by the Government, subsequently notified in the Official Gazette, and finally laid before both Houses of Parliament. As long as no new principle has been brought into operation by following that procedure, the last set of principles that had been so specified, notified in the Gazette and laid before Parliament continue to remain in force. The Court observed, however, that the principles referred to in the letter dated 18 April had never been published in the Gazette nor laid before the Houses of Parliament, and that no other principles appear to have been specified either before or after that date. Consequently, clause four of the Non-ferrous Metal Control Order, as it presently stands, could not be sustained and was declared void. Because of that declaration, the petitioners were entitled to relief limited to the striking down of clause four of the order. Accordingly, the Court directed that an order be issued restraining the respondents from enforcing clause four of the Non-ferrous Metal Control Order until such time as the required principles are published in the Official Gazette and laid before both Houses of Parliament in accordance with sub-section (5) and sub-section (6) of section 3 of the Essential Commodities Act. The Court further observed that the petition succeeded in part and failed in part, and therefore each party was ordered to bear its own costs. The petition was thus partially allowed.