Kishan Chand Arora vs Commissioner Of Police, Calcutta on 9 December, 1960

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

Court: supreme-court

Case Number: Not extracted

Decision Date: 9 December, 1960

Coram: K.N. Wanchoo, Bhuvneshwar P. Sinha, J.L. Kapur, P.B. Gajendragadkar

In the matter of Kishan Chand Arora versus the Commissioner of Police, Calcutta, the Supreme Court of India rendered its judgment on nine December 1960. The opinion was authored by Justice K.N. Wanchoo, with Justices Bhuvneshwar P. Sinha, J.L. Kapur and P.B. Gajendragadkar forming the bench. The petitioner, Kishan Chand Arora, had applied for a licence to operate an eating house in Calcutta, but his application was refused by the Commissioner of Police under section 39 of the Calcutta Police Act, 1866. The petitioner challenged the constitutional validity of that provision, contending that it gave the Commissioner an arbitrary and unguided power to grant or refuse a licence without affording the applicant an opportunity to be heard, thereby amounting to an unreasonable restriction on his fundamental right to carry on a trade as guaranteed by Article 19(1)(g) of the Constitution of India. The Court observed that section 39 of the 1866 Act authorises the Commissioner, at his discretion and from time to time, to grant licences to keepers of houses or places of public resort and entertainment for which no licence under the Bengal Excise Act, 1909 is required, provided that he imposes certain conditions. Those conditions, as stipulated in the statute, require that each licence contain a clause ordered by the Commissioner, with the sanction of the State Government, aimed at securing the good behaviour of the keepers and preventing drunkenness and disorder among persons who frequent the premises. The Court held, speaking for a majority consisting of Justices Kapur, Gajendragadkar and Wanchoo, that in order to determine whether a provision from a pre‑Constitution statute satisfies the constitutional test set out in Article 19(1)(g) read together with Article 19(6), the impugned section must be read as a whole in a fair and reasonable manner. The provision should not be declared void merely because the considerations relevant to the constitutional articles are not immediately apparent from its language. The Court further clarified that the discretion conferred on the Commissioner by the first part of section 39 is not absolute; the two conditions mentioned in the second part are integral to the exercise of that discretion and therefore guide the Commissioner’s decision‑making even before a licence is granted. Consequently, the Court concluded that the discretion granted to the Commissioner is bounded by the statutory requirements of securing good behaviour and preventing drunkenness and disorder, and that the provision does not confer arbitrary or unchannelled power, nor does it constitute an unreasonable restriction on the petitioner’s fundamental right to carry on his trade under Article 19(1)(g).

The Court observed that the provision which implies that an applicant must possess actual and effective control over the premises where the eating house is kept is a necessary implication of the statute. Consequently, Section 39 of the Calcutta Police Act, 1866 does not grant the Commissioner an arbitrary or unregulated discretion that is free of any guiding criteria, and the section therefore does not impose an unreasonable restriction on the fundamental right to practice a trade under Article 19(i)(g) of the Constitution. The Court further stated that the earlier decision in Rustom Jamshed Irani v. Harley Kennedy, reported in 1901 I.L.R. 26 Bom. 386, was not applicable to the present question.

The judgment continued by noting that while procedural provisions of a statute are relevant to an assessment of its reasonableness, it cannot be declared as a blanket rule that the failure of a licensing law to provide a hearing or to give reasons for a refusal automatically amounts to an unreasonable restriction on a fundamental right. The Commissioner, when issuing an order under the section, performs an administrative function; although he must act reasonably, there is no statutory duty imposed on him to act in a judicial manner. In view of the context in which the impugned section appears in the Act and the specific circumstances of the case, the Court concluded that Section 39 could not be characterised as an unreasonable restriction. The Court relied upon the authorities State of Madras v. V. G. Row, [1952] S.C.R. 597; Nagendra Nath Bora v. The Commissioner of Hills Division and Appeals, Assam, [1958] S.C.R. 1240; Nakkuda Ali v. M. F. De S. Jayaratne, 1951 A.C. 66; and Express Newspapers (P.) Ltd. v. The Union of India, [1959] S.C.R. 12 to support this view. It was further observed that an applicant who believes that he has satisfied the three conditions and that the Commissioner has unreasonably rejected his application may seek redress under Article 226 of the Constitution.

Per Justice Subba Rao, it is well established that any restriction on fundamental rights must not be arbitrary, excessive, or beyond what is necessary for the public interest. Such restrictions are to be examined both substantively and procedurally, and an unfettered or unregulated power constitutes an unreasonable limitation. Even if a statute plainly states the legislative policy, that alone is insufficient unless the statute also provides a suitable mechanism for implementing the policy in accordance with the principles of natural justice. The Court explained that the mere fact that the challenged statute confers discretion on the State Government or a senior official does not, by itself, make the restriction unreasonable, and the distinction between an administrative and a judicial authority is of limited relevance, although discretion vested in an impartial judicial body may be more readily upheld. The Court again cited State of Madras v. V. G. Row, [1952] S.C.R. 597; Thakur Raghubir Singh v. Court of Wards, Ajmer, [1953] S.C.R. 1049; and M/s. Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh, [1954] S.C.R. 803, as authorities supporting this principle, and also referred to Babulal Chandra v. Chief Justice and Judges, High Court of Patna, A.I.R. 1954 S.C. 524.

The Court referred to the decisions in Harishankar Bagla v. The State of Madhya Pradesh, [1955] 1 S.C.R. 380, Union of India v. Bhana Mal Gulzarimal Ltd., [1960] 2 S.C.R. 627 and Mineral Development Ltd. v. State of Bihar, [1960] 2 S.C.R. 609. After considering those authorities, the Court held that the literal wording of the challenged provision does not prescribe any policy that could reasonably regulate the discretion granted to the Commissioner. The expression “may” together with the phrase “at his discretion” in the first part of the provision, the Court observed, makes clear the Legislature’s intention to give the Commissioner an unrestricted authority. The second part of the provision merely describes the sort of conditions that may be inserted into a licence. However, the Court emphasized that the power to decide whether to grant a licence and the power to impose conditions on a licence are distinct matters. Even assuming that the two conditions mentioned in the second part could be read into the first, the discretion would remain arbitrary because the provision does not obligate the Commissioner to afford the applicant a reasonable opportunity to demonstrate compliance with the two prescribed tests, nor does it require the Commissioner to give reasons for refusal, and there is no avenue for appeal. Consequently, on both substantive and procedural grounds, the Court concluded that section 39 of the Act violates the petitioner’s fundamental right guaranteed under Article 19(1)(g) of the Constitution.

The petition was filed under Article 32 of the Constitution for the enforcement of fundamental rights, bearing the original jurisdiction reference Petition No. 22 of 1960. The petitioner was represented by counsel, while the respondents numbered one, two and three were each represented by separate counsel. The judgment dated 9 December 1960 was delivered by Justice Wanchoo, with separate judgments by Chief Justice Sinha and Justice Subba Rao. The petition challenged the constitutionality of section 39 of the Calcutta Police Act, No. IV of 1866, hereinafter referred to as “the Act.” For the purpose of the case, the Court set out the factual background. On 11 August 1954, the petitioner entered into an agreement with Haripada Bhowmick, who is identified as respondent No. 3, concerning an eating house called “Kalpatoru Cafeteria” situated at No. 2 Chowranghee Road, Calcutta. Under this agreement, the petitioner was appointed as contractor and was granted exclusive use and occupation of the eating house subject to certain terms and conditions. The Act required that a licence be obtained for operating an eating house. It emerged that the licence originally stood in the name of Bhowmick, and one of its conditions stipulated that the establishment could not be sub‑let without the permission of the Commissioner of Police, referred to as “the Commissioner.” At the time of the agreement, Bhowmick possessed a licence that was due to expire on 31 March 1955.

According to the agreement, the licence for the eating house was to remain in the name of Haripada Bhowmick while the petitioner was to operate the business as a contractor. After the agreement was executed, the petitioner began running the eating house, but he did not apply for a new licence before the existing licence, which was in Bhowmick’s name, expired on 31 March 1955. The petitioner finally submitted an application for a licence on 8 August 1955, but he made the application in Bhowmick’s name even though he had continued to manage the establishment after the original licence had expired. The application that was filed in Bhowmick’s name was rejected on 27 December 1956. In the intervening period, Bhowmick was prosecuted on 10 September 1955 for operating the eating house without a licence and was fined on 12 December 1955. Subsequently, on 7 September 1956, a notice was served on Bhowmick requiring him to show cause why his licence application should not be refused because he had failed to apply within the prescribed time and had violated the condition that the licence could not be sub‑let to the petitioner. After that notice, the petitioner submitted his own application for a licence in his own name on 21 September 1956. During this time a dispute arose between Bhowmick and the petitioner, and Bhowmick instituted a suit against the petitioner in October 1956. It is also relevant that, although the petitioner’s first application in his own name was filed on 21 September 1956, he had already been prosecuted in October 1955 for maintaining the eating house without a licence and was convicted in November 1955. The petitioner's application of 21 September 1956 was eventually rejected on 30 March 1958, yet he continued to operate the eating house without ever obtaining a licence. After the rejection, the petitioner approached the High Court under Article 226 of the Constitution, challenging both the constitutional validity of section 39 of the Calcutta Police Act and the Commissioner’s order refusing his licence. The High Court dismissed this petition on 7 August 1958. The petitioner then appealed to a Division Bench of the High Court, which delivered its judgment on 4 March 1959. The Division Bench upheld the constitutionality of section 39 and held that the Commissioner had considered extraneous matters in refusing the licence, making the refusal legally infirm. However, because the one‑year licence period prescribed by section 39 had expired in September 1957 and the judgment was rendered in March 1959, the Division Bench dismissed the appeal on the ground that the application could not be entertained after the licence period had elapsed. Following this dismissal, the petitioner filed another application with the Commissioner on 30 March 1959, seeking a licence for the period from 1 April 1959 to 31 March 1960, even though he continued to operate the eating house without a licence throughout this interval.

The petitioner had applied to the Commissioner for a licence covering the period from April 1 1959 to March 31 1960. During the entire interval he continued to operate his eating house without possessing a licence. The Commissioner deemed that application to be defective, and the petitioner filed a second application on May 14 1959. While these proceedings were pending, the petitioner lodged a writ petition in the High Court around May 8 1959 under Article 226 of the Constitution, seeking an order that would either compel the Commissioner to grant the licence or, alternatively, restrain the Commissioner from prosecuting him for operating an unlicensed eating house. It was noted that the petitioner had been subject to day‑to‑day prosecution since February 1956 under section 40 of the Act for the alleged continuance of an unlicensed establishment. The writ petition was withdrawn on May 13 1959 because the petitioner’s earlier application to the Commissioner dated March 30 had been found defective. Subsequently, on May 30 1959, the Commissioner rejected the petitioner’s licence request on the ground that the petitioner’s past conduct and present behaviour indicated a likelihood that he would not maintain good conduct and would be unable to prevent drunkenness or disorder among the patrons of the eating house. The petitioner complained that he had not been heard before the rejection order was issued. He then filed another writ petition on June 15 1959 under Article 226, challenging the May 30 rejection. On February 11 1960, the High Court permitted the petitioner to withdraw that petition, granting him liberty to re‑file if advised that such liberty was required. The petitioner subsequently filed the present application before this Court on February 15 1960.

In the present application, the petitioner’s principal contention was that section 39 of the Act vested the Commissioner with unfettered and undefined powers to grant or refuse licences, without any statutory criteria to guide the exercise of that discretion. He argued that the Act provided no opportunity for a licence applicant to be heard, either orally or in writing, before a decision was made, and that this absence rendered the Commissioner’s powers arbitrary. Accordingly, the petitioner claimed that the provision amounted to an unreasonable restriction on his fundamental right to carry on the trade of an eating‑house keeper. In addition to challenging the constitutionality of section 39, the petitioner alleged that the Commissioner’s order was made in bad faith and should be set aside on that basis. Although the petition contained other grounds, those issues had not been pressed before the Court and were therefore considered unnecessary to address. The primary question for determination was whether section 39 of the Act constituted a reasonable restriction within the meaning of Article 19(6) of the Constitution as it relates to the fundamental right to practice any profession, or to carry on any occupation, trade or business.

In this case the Court examined whether section 39 of the Bengal Licensing Act represented a reasonable restriction within the meaning of Article 19(6) upon the fundamental right guaranteed by Article 19(1)(g) to practise a profession or to carry on any occupation, trade or business. Section 39 reads as follows: “The Commissioner of Police may, at his discretion, from time to time, grant licences to the keepers of such houses or places of public resort and entertainment as aforesaid for which no licence as is specified in the Bengal Excise Act, 1909, is required, upon such conditions to be inserted in every such licence as he, with the sanction of the said State Government from time to time shall order, for securing the good behaviour of the keepers of the said houses or places of public resort or entertainment, and the prevention of drunkenness and disorder among the persons frequenting or using the same; and the said licences may be granted by the said Commissioner for any time not exceeding one year.” Counsel for the petitioner argued that the language of section 39 confers an absolute discretion on the Commissioner, untrammelled by any considerations, and that the Act contains no provision anywhere to guide the exercise of that discretion in granting licences. Accordingly, the counsel maintained that the power vested in the Commissioner is arbitrary and unguided, and therefore must be struck down because it cannot constitute a reasonable restriction on the constitutional right to carry on trade. The Court acknowledged that if a statutory provision allowed the Commissioner to grant or refuse a licence without any criteria, such a provision would indeed amount to an unreasonable restriction on the freedom to trade. Consequently, the Court needed to determine whether any guidance exists either within section 39 itself or elsewhere in the Act to regulate the Commissioner’s discretionary power. In doing so, the Court noted that the Act was enacted in 1866, a period when the concept of fundamental rights did not exist, and therefore it could not be expected to display the same precise drafting standards typical of statutes passed after January 26, 1950. The Court also observed that the 1866 Act superseded two earlier statutes, namely Act XIII of 1856 and Act XLVIII of 1860. The latter Act, in its sections II and 12, dealt with licences for eating houses, although the wording differed. Section 11 of the 1860 Act mandated that no eating house in the towns of Calcutta, Madras or Bombay could be kept without a licence and prescribed a penalty for contravention. Section 12 then required the Commissioner, from time to time, to grant licences to keepers of such houses on conditions intended to secure the keepers’ good behaviour and to prevent drunkenness and disorder among patrons. The language of section 39, however, is

The provision differed because it stated that the Commissioner could, at his discretion, grant licences from time to time. The Bombay High Court, in the case of Rustom J Irani v H Kennedy (1) (1901) I.L.R. 26 Bom. 396, had interpreted the 1860 Act to mean that the Commissioner possessed no discretion to refuse a licence when the applicant was willing to meet the conditions imposed by the law. In contrast, section 39 of the Calcutta legislation altered the earlier wording by expressly granting the Commissioner discretion in the grant of licences. Consequently, the Court examined whether the term “discretion” introduced by section 39 denoted an absolute and unqualified discretion that would amount to an unreasonable restriction on a citizen’s fundamental right to engage in the trade of keeping an eating house. It was already observed that, unlike many statutes enacted after 26 January 1950, the provision did not specify that the Commissioner must grant a licence based on particular considerations. The petitioner argued that the first part of section 39 vested the Commissioner with absolute power to either grant or deny a licence at his whim, while the second part merely allowed the imposition of conditions if the Commissioner chose to grant a licence. The Court, however, held that when evaluating a law enacted in 1866 for conformity with Articles 19(1)(g) and 19(6) of the Constitution, the entire section must be read as a whole to determine whether any guidance is provided to the Commissioner in exercising his licensing authority, or whether his power is wholly arbitrary. If a fair reading reveals such guidance, the provision should not be struck down merely because its language does not explicitly disclose the considerations contemplated by Articles 19(1)(g) and 19(6), which the 1866 legislature could not have anticipated. Therefore, the inquiry is whether a pre‑Constitution Act can be reasonably interpreted as containing guidance on licensing. If it can, the provision remains valid; if, on a fair and reasonable construction, the provision offers no guidance and leaves the Commissioner with unfettered, arbitrary discretion, it must be invalidated. The section undeniably confers upon the Commissioner the power to grant licences at his discretion, but those words, by themselves, do not

The Court observed that the wording of the provision does not automatically give the Commissioner the authority to act arbitrarily, to grant licences at his own whim, and to refuse them for personal reasons. The provision further required that a licence be issued only upon satisfaction of certain conditions, and those conditions were intended to achieve two specific objectives: firstly, to secure the good behaviour of the keepers of the houses or places of public resort and entertainment, and secondly, to prevent drunkenness and disorder among the persons who frequent or use those places. Implicit in the provision was the understanding that a licence could be granted only to a person who is the keeper of an eating house. The Court rejected a reading of the provision that would make the Commissioner’s discretion absolute, with the imposition of conditions for the two stated objectives only after an absolute discretion in favour of granting a licence had been exercised. There was, in the Court’s view, no unfairness or unreasonableness in interpreting the provision to require the Commissioner to be satisfied on three points: that the applicant is the keeper of an eating house, meaning that he actually and effectively controls and possesses the premises; that the keeper is a person of good behaviour, so that the eating house does not become a refuge for criminals or disreputable individuals; and that the keeper is in a position to prevent drunkenness and disorder among the patrons of the establishment.

The Court noted that the provision is part of the Police Act, whose purpose is to maintain law and order, and therefore it was logical that the two objects to be secured when granting licences were the keeper’s good behaviour and the prevention of drunkenness and disorder among those who frequent the eating house. Consequently, section 39 was read as directing the Commissioner to use his discretion to determine whether the applicant actually and effectively controls the premises where the eating house is to be kept and therefore qualifies as its keeper. The Commissioner must also be satisfied that the keeper is a person of good behaviour and that he is capable of preventing drunkenness and disorder in the eating house. If the Commissioner is satisfied on these three matters, the provision, in the Court’s opinion, contemplates that the discretion will be exercised in favour of granting a licence. The Court could not accept a situation where, despite the Commissioner being satisfied that the applicant has effective control of the premises, is of good behaviour, and can prevent drunkenness and disorder, the Commissioner nonetheless refuses the licence. The discretion given to the Commissioner is therefore limited to satisfying himself on these three criteria before deciding to grant or refuse a licence.

In the Court’s view, when the Commissioner is satisfied on the three matters described in the statute—namely that the applicant actually controls the premises, that the applicant is of good conduct, and that the applicant can prevent drunkenness and disorder—he must grant the licence. Conversely, if the Commissioner is not satisfied on any one of those matters, he must exercise his discretion by refusing the licence. The Court observed that the conditions to be inserted in the licence exist solely to enable the two objects specified in the section to be carried out, and consequently those conditions will necessarily be detailed so as to achieve those objects. The Court held that, in its opinion, those two objects together with the clear implication in the provision that the applicant must have actual and effective control and possession of the place where the eating house is to be kept, constitute the criteria that guide the Commissioner’s discretion in granting or refusing a licence. The Court rejected the petitioner’s counsel’s suggestion that the two parts of section 39 should be read separately, as if one part had no bearing on the other. Reading the provisions together, the Court found it fair and reasonable to conclude that the Commissioner’s discretion is governed by the two objects mentioned in the statute and by the necessary implication that the applicant must be in actual and effective control of the premises. Accordingly, the contention that section 39 confers an arbitrary, un‑channelled power without any criteria was dismissed, and the provision could not be said to impose an unreasonable restriction on the right to conduct trade. The Court noted that it was further urged that the statute provides no opportunity for an oral or written hearing for the applicant, nor does it require the Commissioner to state reasons for refusal. On that basis, it was argued that the absence of a hearing provision and of a requirement to give reasons rendered the provision unconstitutional as an unreasonable restriction on a fundamental right. The Court referred to State of Madras v V G Row, which observed that both substantive and procedural aspects of a law restricting a fundamental right must be examined for reasonableness, and that no single abstract standard applies to all statutes. While the Court accepted that procedural features of a statute are relevant to its reasonableness, it also affirmed that no universal principle can govern every case and that each statute must be examined in its own particular context.

In this case the Court noted that the licensing provision does not contain any clause obliging the authorities to hold a hearing for a person who applies for a licence, nor does it require the Commissioner to give reasons when he refuses a licence; however, the Court declined to formulate a sweeping rule that every licensing statute lacking a hearing provision and a reason‑giving requirement must be declared an unreasonable restriction of a fundamental right. No earlier decision was found that articulated such a universal proposition, and consequently the Court felt bound to examine the specific section in its own context to determine whether the absence of a hearing requirement and the lack of a duty to state reasons render the provision unconstitutional.

The Court explained that the provision under scrutiny is part of the Police Act, a statute that primarily governs matters of law and order, and that the two objects mentioned in the section are intended to further the same purpose. The discretionary power is vested in a senior police officer, a position from which one would expect decisions to be taken reasonably. The statute contains no avenue for appeal and creates no legal dispute—or lis—between the applicant and the Commissioner; the exercise of the discretion rests on the Commissioner’s subjective satisfaction that the applicant fulfills the three conditions previously set out. Although the decision, whether to grant or to deny a licence, inevitably affects the fundamental right of the applicant to carry on trade, the Court characterized the decision as an administrative order, referring to Nagendra Nath Bora v. The Commissioner of Hills Division and Appeals, Assam (1). While the Commissioner is expected to act reasonably, the statute does not impose a duty on him to act in a judicial manner. The Court further relied on Nakkuda Ali v. M. F. De S. Jayaratne (2), where the Privy Council observed that it is entirely possible to act reasonably without necessarily adopting a judicial process, and that it would be an excessive stretch to claim that a person who must act reasonably must follow a procedure akin to a judicial hearing.

The Court then considered the principle of audi alteram partem, noting that the obligation to hear the other side applies only to judicial or quasi‑judicial proceedings, as explained in Express Newspapers (P.) Ltd. v. The Union of India (1). Accordingly, the Court concluded that the lack of a mandatory hearing before the Commissioner decides to grant or refuse a licence does not, in the facts of this case, constitute an unreasonable restriction on the fundamental right to trade. For the same reason, the Court held that the failure to communicate the reasons for refusal does not render the licensing provision unconstitutional, because the applicant is already aware that the law requires the Commissioner to consider the three conditions that have been previously described.

In the present case, the Court explained that a person who believes he satisfies the three statutory conditions for a licence and thinks that the Commissioner has acted unreasonably in refusing the licence is not left without a remedy. Such a person may approach the High Court under article 226 of the Constitution and seek an order directing the Commissioner to disclose the reasons for the refusal before the Court. If the Court finds that the reasons offered are extraneous or unrelated to the three matters specified in section 39, it may direct the Commissioner to make a decision that falls within the limits of section 39. The Court therefore held that, given the facts of this case and the context in which section 39 operates, the mere lack of a statutory provision for a pre‑licence hearing or for communicating the reasons for refusal to the applicant does not render section 39 unconstitutional as an unreasonable restriction on a fundamental right. Consequently, the challenge to the constitutionality of section 39 was required to fail. Turning to the question of malice, the Court observed that the petitioner did not allege that the Commissioner harboured personal animus against him or that he favoured any other applicant, such as Bhowmick. The petitioner’s ground 41 merely asserted that the reasons recorded in the Commissioner’s order dated 30 May 1959 were incorrect and that the Commissioner was irritated because the petitioner had approached the High Court by way of a writ. The Court found that these allegations did not constitute sufficient grounds to conclude that the Commissioner’s order of 30 May 1959 was passed with malice. Accordingly, the petition was dismissed with costs.

The Court then summarised the factual backdrop. The petitioner had applied to the Commissioner of Police, Calcutta, for a licence that would permit him to operate an eating house known as “Kalpatoru Cafeteria.” By an order dated 30 May 1959, the Commissioner rejected the petitioner’s licence application on two grounds. First, the Commissioner was not satisfied that, based on the petitioner’s antecedents and recent conduct, it would be reasonable to expect the petitioner to maintain good behaviour. Second, the Commissioner doubted that the petitioner could prevent drunkenness or disorder among the patrons of the eating house. The rejection was made under section 39 of the Calcutta Police Act, 1866. The central issue for adjudication was whether section 39 of that Act was constitutionally valid. For reference, section 39 states: “The Commissioner of Police may, at his discretion, from time to time, grant licences to the keepers of such houses or places of public resort and entertainment as aforesaid for which no licence as is specified in the Bengal Excise Act, 1909, is required, upon such conditions, to be inserted in …” The Court proceeded to examine the validity of this provision.

The provision authorized the Commissioner, with the sanction of the State Government, to order conditions on every licence that he might grant, the purpose of which was to secure the good behaviour of the keepers of houses or places of public resort or entertainment and to prevent drunkenness and disorder among the persons who frequented or used such places; the licences could be granted for a period not exceeding one year. Counsel for the petitioner argued that, under Article 19 (1) (g) of the Constitution, the petitioner possessed a fundamental right to carry on the business of an eating house and that the requirements imposed by section 39 of the Act placed an unreasonable restriction on the exercise of that right, rendering the section void. Before examining the specific wording of the section, the Court found it useful to recall the principles governing reasonable restrictions on a fundamental right. The concept of reasonableness had been clearly articulated by Chief Justice Patanjali Sastri in State of Madras v V G Row, where he explained that the test of reasonableness must be applied to each statute that is challenged and that no abstract or general standard can be prescribed for all cases. He emphasized that the nature of the right alleged to be infringed, the purpose underlying the restriction, the extent and urgency of the evil sought to be remedied, the disproportionality of the measure, and the prevailing conditions at the time must all influence the judicial assessment. The Court then referred to the earlier decision concerning the constitutional validity of section 15 (2) (b) of the Indian Criminal Law Amendment Act, 1908, which had been challenged on the ground that it fell outside the permissible restrictions listed in Article 19 (4). In that case the State Government’s power to declare an association unlawful depended on its subjective satisfaction of certain objective factors, while the Act also provided for an enquiry before an advisory board and a subsequent review by the Government based on that enquiry. The Court was asked to determine whether that restriction satisfied the test set out in Article 19 (4). Chief Justice Patanjali Sastri rejected the contention, observing that a formula based on the Government’s subjective satisfaction, even when supplemented by an advisory board to review the material, could be regarded as reasonable only in very exceptional circumstances, within the narrowest limits, and could not be given general judicial approval as a pattern of reasonable restrictions on fundamental rights. The learned Chief Justice also criticised the procedural aspect of the impugned provision, noting that it failed to contain a requirement for personal service on the association, thereby depriving its members of an opportunity to make representations.

The judgment observed that the impugned provisions failed to give the affected persons any reasonable opportunity to make their representations. In contrast with section 39 of the principal Act, the provisions introduced by the Criminal Law Amendment Act placed a considerably tighter grip on the discretionary powers exercised by the Government. Despite the stricter controls, the Court nonetheless declared those provisions invalid. An argument was advanced that the earlier decision could be distinguished because it dealt with the fundamental right of freedom of speech, whereas the present case concerned the freedom to carry on business. The Court rejected that contention, holding that the freedom to engage in trade and commerce is itself a core fundamental right guaranteed by the Constitution and therefore entitled to the same protection.

The Court referred to the precedent set in Thakur Raghubir Singh v. Court of Wards, Ajmer (1) to illustrate the principle. That case examined the reasonableness of section 112 of the Ajmer Tenancy and Land Records Act (XLII of 1950), which provided that if a landlord habitually infringed a tenant’s rights under the Act, the landlord would, notwithstanding the provisions of section 7 of the Ajmer Government Wards Regulation (1 of 1888), be deemed a “landlord who is disqualified to manage his own property” within the meaning of section 6 of the Regulation, and his property could be placed under the superintendence of the Court of Wards. The determination of whether a landlord habitually infringed the tenant’s rights was left entirely to the Court of Wards. The Supreme Court held that section 112 was void because it imposed an unreasonable restriction on the property right; the restriction rendered the enjoyment of the right dependent on the unfettered discretion of the executive. Mahajan, J., then speaking, observed that a law which deprives a person of possession of his property for an indefinite period solely on the subjective determination of an executive officer cannot be described as reasonable, for it entirely negates the fundamental right by making its enjoyment hinge on the whims of the executive, leaving the affected citizen without any remedy in a civil court. Although section 112 articulated an objective test—“a landlord habitually infringing the rights of tenants under that Act”—and thus appeared to provide some policy framework for the Court of Wards’ discretion, the Court still struck it down because the discretion was not properly channelled and no effective procedural mechanism was prescribed to address the grievance of an aggrieved party. The Court further noted that the position of the Commissioner of Police cannot be regarded as superior to that of the Court of Wards, nor does the taking over of the management of an estate affect a more extensive right than preventing a person from pursuing his business. The decision in Messrs. Dwarka Prasad Laxmi Narain v. State of Uttar Pradesh (1) was also cited, which dealt with clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, where the licensing authority was vested with absolute power to grant or refuse licenses, a power the Court found to be unreasonable in relation to the freedom of trade and business guaranteed under Article 19(1)(g) of the Constitution.

In the matter involving the Uttar Punjab Coal Control Order of 1953, the order authorised the State Coal Controller to grant, renew, suspend, revoke, cancel or modify any licence under the order, and required the Controller merely to record the reasons for any action taken. The order also permitted the Controller to delegate this authority to any other officer. The Supreme Court held that the order was void because it imposed unreasonable restrictions on the freedom of trade and business guaranteed by article 19(1)(g) of the Constitution and it did not fall within the protection of clause (6) of that article. Justice Mukherjea, who then sat on the bench, observed that the power to grant or withhold licences or to fix prices necessarily had to be vested in certain public officers or bodies, and that such officers must be given some discretion. However, the Court warned that a problem arose when the power conferred was an arbitrary power that was not regulated by any rule or principle and was left entirely to the discretion of particular persons, allowing them to act without any check or control by a higher authority.

The Court then turned to several decisions that had been cited by counsel for the Commissioner in support of the validity of the impugned provisions. In Babul Chandra v. Chief Justice and Judges of the High Court of Patna, the Court had held that the proviso to sub‑section (1) of section 9 of the Indian Bar Councils Act was not void as an unreasonable restriction on the freedom to practise a profession, trade or calling. The proviso expressly states that the rules “shall not limit or in any way affect the power of the High Court to refuse admission to any person at its discretion”. Under section 8 of the same Act, a person was not entitled as a matter of right to practise in any High Court unless his name was entered in the roll of advocates maintained under the Act. Section 9 authorised the Bar Council to frame rules, with the sanction of the High Court, to regulate the admission of persons as advocates, while the proviso preserved the overriding power of the High Court to refuse admission in its discretion. It had been contended that the High Court was given an unfettered and uncontrolled discretion, which was unreasonable. The Supreme Court answered that no authority could be better suited than the High Court in the State to exercise such discretion. The decision rested on three considerations: first, that no person possessed a right as of law to practise; second, that the discretion to refuse admission was vested in the highest judicial body of the State; and third, that the power of discretion implicitly required the High Court to give notice before rejecting an application. On the basis of these points, the Court concluded that the restrictions imposed by the proviso to section 9(1) were reasonable.

On the basis of the earlier reasoning, the Court affirmed that the limitations introduced by the proviso to section 9(1) of the Bar Councils Act were reasonable. The Court further observed that the decision in Harishankar Bagla v. State of Madhya Pradesh does not establish a different principle. In that case the Court examined clause 3 of the Cotton Textile (Control of Movement) Order, 1948, which had been issued by the Central Government under section 3 of the Essential Supplies (Temporary Powers) Act, 1946. The order required any citizen who wished to move cotton textiles that he had purchased to obtain a permit from the Textile Commissioner. The petitioners argued that this permit requirement imposed an unreasonable restriction on the rights guaranteed by sub‑clauses (f) and (g) of Article 19(1) of the Constitution. The Court rejected that contention and upheld the legality of the provision. Speaking for the Court, Mahajan, C. J., set out four reasons supporting this conclusion: first, the Essential Supplies (Temporary Powers) Act had been enacted during an emergency period when it was necessary to control the production, supply and distribution of commodities essential to community life; second, clause 3 of the Control Order did not take away a citizen’s right to dispose of or transport his purchased cotton textiles but merely required him to obtain a permit from the Textile Commissioner for such transport; third, allowing unrestricted transport of essential commodities by rail or other conveyances could seriously disrupt the public supply of those commodities; and fourth, the policy underlying the Order was clearly expressed in its provisions and guided the discretion exercised by the Textile Commissioner. Considering these points, the Court maintained the validity of the Order. The Court noted that this decision bears no analogy to the provisions of section 39 of the Bar Councils Act that were under consideration.

The Court then turned to the decision in Union of India v. Bhana Mal Gulzarimal Ltd., which dealt with the validity of clause 11B of the Iron and Steel (Control of Production and Distribution) Order, 1941. The judgment, reported in [1955] 1 S.C.R. 380 and [1960] 2 S.C.R. 627, 641, examined clause 11B in light of the provisions of that Order and the Essential Supplies (Temporary Powers) Act, 1946. The Court held that the legislature had plainly set out its policy and that clause 11B specified the objective it intended to achieve. Justice Gajendragadkar, delivering the judgment of the Court, observed that “reading clause 11B by itself we do not see how it would be possible to hold that the said clause is violative of Article 19. In fact, if sections 3 and 4 are valid and clause 11B does nothing more than prescribe conditions for the exercise of the delegate’s authority which are consistent with section 3, it is only the actual price structure fixed by the Controller which in a given case can be successfully challenged as violative of Article 19.” On the basis of this reasoning, the Court concluded that the Union of India decision does not provide any analogous principle applicable to the provisions of section 39 of the Bar Councils Act that were being examined.

The learned Judge examined the price structure that had been fixed by the notification and noted that the respondents had not mounted a serious challenge to the validity of that notification with respect to its price provisions. In addition, the Judge observed that the evidence did not demonstrate that the notification had a detrimental impact on a large class of dealers taken collectively. Consequently, the judgment did not provide any assistance to the respondents. Likewise, the decision of this Court in the case of Mineral Development Ltd. v. State of Bihar (1) offered no benefit to the respondents. In that case the constitutional validity of section 25(1) of the Bihar Mica Act (10 of 1948) was contested on the ground that it infringed the petitioners’ fundamental right to carry on trade and business under Article 19(1)(f) and (g) of the Constitution. Section 25(1)(c) of the Act granted the State Government the discretion to cancel a licence, but that discretion was limited by two important conditions: (i) the failure to comply with the Act or its rules had to be a repeated, not a sporadic, failure, meaning the offender had to be persistently non‑compliant; and (ii) before cancelling the licence, the State Government was required to give the licence holder a reasonable opportunity to show cause why the licence should not be withdrawn (see 1960 2 S.C.R. 609, 619). While upholding the validity of the provision, this Court remarked that the power conferred on the State Government was intended solely to achieve the purpose of the Act, namely the enforcement of its provisions in the public interest, and that the power must be exercised on objective criteria and in conformity with the principles of natural justice. The Court therefore held that section 25(1)(c) did not impose an unreasonable restriction on the petitioners’ fundamental rights under Article 19(1)(f) and (g). This decision, far from supporting the respondents, in fact runs contrary to the position they advocated. From the foregoing discussion the Court summarized several propositions: a fundamental right to engage in business may be regulated by the State only through legislation that imposes reasonable restrictions in the public interest; any restriction on a fundamental right must not be arbitrary, excessive, or beyond what is necessary for the public interest; the reasonableness of a restriction must be examined both substantively and procedurally; an uncontrolled and unchanneled power given to an officer constitutes an unreasonable restriction on the right; even when a legislative policy is clearly expressed in a statute, the statute must also provide an appropriate mechanism for implementing that policy in accordance with natural‑justice principles; and finally, the question of whether a restriction is reasonable is a justiciable issue that the Court must decide, guided by the considerations articulated by Chief Justice Patanjali Sastri in State of Madras v. V. G. Row (1).

In examining the whole set of relevant circumstances, the Court was prepared to consider that the power to decide was placed in the hands of a State Government or a senior officer, but it held that this fact was of only minor importance. The reason for this view was that the fundamental right to conduct a business is protected against the action of the State, and “the State” is defined to include not only the Union and State governments but also Parliament, the legislatures and all local or other authorities that exist within the territory of India. The Court further observed that the difference between an administrative authority and a judicial authority does not carry much weight when the question is whether a restriction on a fundamental right is reasonable, although it may be slightly easier for a Court to uphold a restriction when the matter has been entrusted to an impartial judicial body rather than to an executive one.

With these principles in mind, the Court turned to the provisions of the Act that were being challenged. The relevant section had been reproduced earlier. The first part of that section gave the Commissioner a completely free and unqualified discretion to grant a licence. By its very nature, a discretionary power to issue a licence also includes the power to refuse it. The word “may” was described as an enabling term that, in ordinary usage, means “permissible”. When this term is combined with the phrase “at his discretion”, it clearly shows the legislature’s intention to give the Commissioner an unrestricted freedom to act according to his own judgment and conscience. If the provision stopped at that point, the Commissioner’s power would be uncontrolled and without any channel to guide it.

The second part of the section dealt with the conditions that could be imposed in the licence. Those conditions were intended to secure the good behaviour of keepers of public resorts and to prevent drunkenness and disorder among the people who frequented or used such places. The Court noted that these conditions must have the sanction of the State Government, and therefore this part of the provision aimed to ensure that business was conducted in a peaceful and orderly manner. The provision was expressed in clear and unambiguous language, and there was no dispute that its plain terms did not make the licence conditions a part of the exercise of discretion itself.

What was being argued, however, was that the conditions laid down in the provision set out a precise policy that was meant to guide the Commissioner’s discretion in deciding whether to grant or refuse a licence. The Court identified several objections to this interpretation. First, to read the provision in that way would amount to rewriting the statute; if the legislature had intended to guide the discretion by providing objective criteria, it would have done so in explicit terms and would not have left the matter to the Commissioner’s absolute discretion. Second, if the two conditions were regarded as controlling the Commissioner’s discretion, the Commissioner would be unable to act beyond those two conditions, which would dramatically curtail the scope of his discretion. The Court explained that under such a limitation the Commissioner could refuse a licence only when he was satisfied that the applicant could not be relied upon to comply with those conditions, even if there were many other relevant reasons for refusing a licence. Third, if the conditions were merely illustrative and not exhaustive, the provision would still suffer from the same flaw because the Commissioner could still refuse a licence for any other reason. Fourth, a discretion based on an anticipatory breach of the conditions would be as arbitrary as one based on absolute discretion, especially for new applicants, because it would often have to be exercised on the basis of untested rumours or gossip that might be false. Finally, the Court warned that by searching for an undisclosed policy hidden within the wording of the statute, the Court would be creating an excuse to revive an otherwise invalid law and would be encouraging the making of such statutes in the future.

In this case the Court explained that the Commissioner could refuse a licence only when he was convinced that the applicant could not be relied upon to obey the prescribed conditions; if the Commissioner held that conviction, he was nevertheless unable to refuse a licence even though there might exist many other proper and relevant reasons for doing so. The Court further observed that if the two conditions were not intended to be exhaustive but merely illustrative, the statute would still suffer from the same defect because it would continue to permit the Commissioner to deny a licence on any other ground whatsoever. Moreover, the Court warned that a discretion based on an anticipated breach of the conditions would be as arbitrary as an absolute discretion, especially in the case of new applicants, since the decision would often have to be made on the basis of conjecture, rumor or unverified information that might be false or at least untested. The Court also cautioned that by seeking an undisclosed policy hidden within the language of the statute, the Court would not only be providing an excuse to revive an invalid law, but would also be encouraging authorities to enact rules that infringe fundamental rights. To illustrate the proper distinction between the power to grant a licence and the power to impose conditions, the Court referred to sections 47 and 48(3) of the Motor Vehicles Act, 1939 (IV of 1939). Section 47 obliges the Regional Transport Authority, when considering an application for a stage‑carriage permit, to take into account the matters listed in that provision, while section 48(3) authorises the Authority to attach to the permit the conditions specified in that subsection. The former provision governs the discretion of the Authority in issuing the permit, whereas the latter describes the nature of the conditions that may be imposed. Although these provisions cannot be directly used to interpret section 39 of the Act, the Court cited them to demonstrate the legislative practice in similar matters and to emphasize that the scope of the discretion to issue a licence is distinct from the power to impose conditions on that licence. Consequently, on a genuine construction of the plain wording of section 39, the Court could not find any policy capable of adequately directing the Commissioner’s discretion. Even if the two conditions were read into the first part of section 39, the exercise of the so‑called guided discretion would remain manifestly arbitrary. The Court noted that it was unnecessary to reach a definitive conclusion on whether the discretion was judicial or executive, because regardless of its character, it must be examined in terms of the reasonableness of the restrictions placed on a person’s right to conduct a business. Thus, a citizen of India seeking to earn a livelihood by operating an extensive eating‑house business must be able to obtain the necessary licence, and any denial of that licence must be subject to a reasonable test rather than an unconstrained or speculative assessment.

A citizen who wished to earn his livelihood by operating an eating house was required to apply to the Commissioner for a licence, because without such a licence he could not legally conduct the business and any unauthorised operation would expose him to prosecution. The Commissioner was empowered to refuse the application on two specified grounds. First, the Commissioner could decide that, on the basis of the applicant’s antecedents and present conduct, it would be unreasonable to expect the applicant to maintain good behaviour. Second, the Commissioner could conclude that he was not satisfied that the applicant would be able to prevent drunkenness and disorder among the persons who frequented or used the eating house. The order of refusal was issued without affording the applicant any opportunity to demonstrate that he satisfied either of the tests prescribed by section 39 of the Act. Moreover, the Commissioner was under no legal obligation to provide reasons for his refusal, and even where reasons were supplied, the statute contained no mechanism by which the order could be revoked or vacated. Section 39 likewise imposed no duty on the Commissioner to grant the applicant a reasonable chance to clear his character, to rebut any unsubstantiated allegations, or to prove that he met both of the statutory tests. The provision also failed to provide for an appeal of the Commissioner’s decision to any appropriate authority. The suggestion that the authority might be a senior police officer whose discretion could be relied upon was rejected for two reasons. First, the Constitution guarantees a fundamental right against the State and other authorities, and such a guarantee cannot be superseded by reliance on an officer’s status. Second, the rank of an officer does not constitute an absolute safeguard against the abuse of power; fundamental rights cannot be made to depend solely on the presumed fairness or integrity of state officials, although such considerations may form a minor element in assessing the reasonableness of a restriction. Consequently, the exercise of the power under section 39 was found to suffer from a statutory defect because it was not channelled through an appropriate procedural machinery. The judgment therefore held without hesitation that section 39 of the Act infringed the petitioner’s fundamental right under article 19(1)(g) of the Constitution, both substantively and procedurally. The next issue was whether a writ of mandamus could be issued against the Commissioner. The Commissioner had, in fact, initiated criminal proceedings against the petitioner for failing to obtain a licence as required by section 39. Since the section was declared constitutionally void, the judgment ordered that a mandamus be issued directing the Commissioner of Police, Calcutta, not to pursue any further proceedings against the petitioner for the absence of a licence under the void provision. Accordingly, following the majority opinion, the petition was dismissed with costs.