Ramdhandas And Another vs The State Of Punjab

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

Court: Supreme Court of India

Case Number: Writ Petition No. 164 01 1958

Decision Date: 10 April, 1961

Coram: N. Rajagopala Ayyangar, P.B. Gajendragadkar, A.K. Sarkar, K.N. Wanchoo, K.C. Das Gupta

In this matter, the Supreme Court of India heard the petition of Ramdhandas and another against the State of Punjab. The judgment was delivered on 10 April 1961. The case was reported under the citations 1961 AIR 1559 and 1962 S.C.R. (1) 852, and also appeared in the All India Law Reports 1962 SC 316 (36). The bench hearing the petition comprised Justice N. Rajagopala Ayyangar, Justice P. B. Gajendragadkar, Justice A. K. Sarkar, Justice K. N. Wanchoo, and Justice K. C. Das Gupta. The petition raised the constitutional validity of certain provisions of the Punjab Shops and Commercial Establishments Act, 1958 (Punjab Act 15 of 1958), specifically sections 4, 7, 9 and 10, which regulate the hours of work and the opening and closing times of commercial establishments. Section 7 of the Act stipulated that no person could be employed in any establishment for more than forty‑eight hours in a week or more than nine hours in a single day. Section 9 provided that, except as otherwise permitted by the Act, an establishment could not open earlier than ten o’clock in the morning nor close later than eight o’clock in the evening. The petitioners contended that, given the nature of their business, compliance with these restrictions would be impossible. They argued that their customers delivered goods to their godowns at all hours, and that communications by telephone and telegram arrived during both day and night, making it necessary for their premises to remain effectively open twenty‑four hours a day. Consequently, they claimed that the provisions of sections 7 and 9 imposed unreasonable restrictions on their fundamental right to carry on trade or business under Article 19(1)(g) of the Constitution of India.

The Court held that sections 7 and 9 of the Punjab Shops and Commercial Establishments Act, 1958 were intra vires the Constitution of India. In determining constitutional validity, the Court applied a test that examined whether the impugned provisions, which were enacted to secure better working conditions, prevent physical over‑strain, and provide reasonable leisure for workers in the public interest, amounted to unreasonable restrictions from the employer’s perspective or went beyond what was necessary to protect the worker. Applying this test, the Court concluded that the statutory limitation of a forty‑eight‑hour work week and the prescribed opening and closing times did not exceed the bounds of reasonableness. The provisions were deemed neither excessive nor arbitrary, and therefore did not constitute an infringement of the petitioners’ right under Article 19(1)(g). The judgment affirmed that the regulated hours and restrictions were a proper exercise of the State’s power to ensure employee welfare and public interest, and that the Act’s provisions remained constitutionally valid.

In this case, the Court observed that the provisions concerning the opening and closing hours of shops could not be said to exceed, by contemporary standards, what is required to protect the health and efficiency of an employee. The Court relied upon the earlier decision in Manohar Lal v. State of Punjab, reported in [1961] 2 S.C.R. 343, as authority for this proposition. The matter before the Court was a writ petition originally filed in the original jurisdiction under Writ Petition No. 164‑01‑1958, invoking article 32 of the Constitution of India for the enforcement of fundamental rights. Counsel for the petitioners, identified as N. C. Chatterjee and Naunit Lal, appeared on behalf of the petitioners, while counsel for the respondent, identified as N. S. Bindra and D. Gupta, represented the State. The petition was dated 10 April 1961, and the judgment was delivered by Justice Ayyangar.

The constitutional validity of the operative provisions of the Punjab Shops and Commercial Establishments Act, 1958 (hereinafter referred to as “the Act”) was the subject of challenge in the writ petition. The petitioners, two businessmen, sought relief from the Court on the ground that the Act imposed restrictions that interfered with the conduct of their trade. The petition set out the nature of the businesses carried on by the petitioners in order to demonstrate how the provisions of the Act might impede or restrict various types of commercial activity carried on in Punjab. The first petitioner disclosed that he operated a wholesale shop at Mandi Dabwali in Hissar District, dealing in the purchase and sale of grains and related goods. He explained that his customers delivered goods to his godowns in carts drawn by camels or bullocks, and that these deliveries arrived at all hours of the day and night. He further stated that, for the purpose of conducting purchases and sales, he received telephonic and telegram messages continuously, both during daylight and after dark. According to him, such circumstances made it necessary for his place of business to remain practically open for the full twenty‑four hours each day.

The second petitioner described himself as a small‑scale retailer who performed all the work in his shop personally, receiving assistance only from family members when needed. He also asserted that the goods he purchased were brought to his shop at any hour, and that he was required to receive messages throughout the entire day and night. In light of these facts, the petitioners requested that the Court examine the restrictions imposed by the challenged provisions of the Act and determine whether, on any of the grounds set out in the petition, such restrictions could be characterized as an unreasonable limitation on the constitutional right to carry on trade or business under article 19(6) of the Constitution.

In the petition, the respondents argued that the impugned provisions might be characterised as unreasonable restraints on the constitutional right to engage in trade or business, and therefore could not be justified under Article 19(6) of the Constitution, which formed the core of the grievance articulated in the petition. The Act under discussion received the President’s assent on 25 April 1958 and was subsequently published in the Punjab Gazette on 1 May 1958. Its preamble declares that the purpose of the legislation is to regulate the conditions of work and employment in shops and commercial establishments. The Act repealed and re‑enacted, with certain modifications, the Punjab Trade Employees Act, 1940; consequently, it was necessary to refer to that earlier enactment in the appropriate place.

Section 1(3) of the Act provides that the law shall come into force on a date to be appointed by the Government through a notification. By a notification issued under this provision, the Act was directed to become operative from 1 June 1958. However, the Act did not automatically apply to the whole of the Punjab State. Section 1(4) states that the legislation shall initially apply only to the areas specified in the Schedule annexed to the Act, but the Government may, by further notification, extend its operation to other areas on such dates as it may specify. The Schedule lists Mandi Dabwali, the locality where the petitioners conduct their business, as one of the areas in the district of Hissar that are covered by the Act.

The principal grievance of the petitioners appears to be that the law has not yet been brought into force in adjoining localities, and they contend that this uneven application places traders situated in the Scheduled areas at a disadvantage. The Court observed that such a disparity, while inconvenient, does not constitute a ground for a constitutional challenge, and the counsel for the petitioners therefore did not press the matter further, except to draw the Court’s attention to the fact.

Section 2(iv) defines a “commercial establishment” for the purposes of the Act as any premises in which any business, trade or profession is carried on for profit, omitting any unnecessary wording. Section 2(v) defines “day” as the period of twenty‑four hours beginning at midnight, again without superfluous language. The operative provisions that were contested in the petition are Sections 7 and 9, and it is helpful to set out their essential terms. Section 7 (Hours of employment) provides, in subsection (1), that subject to the provisions of the Act, no person shall be employed in the business of an establishment for more than forty‑eight hours in any one week and not more than nine hours in any one day. The remaining subsections of Section 7 were omitted for brevity. Section 9 (Opening and closing hours) stipulates that, unless otherwise provided by the Act, no establishment shall open earlier than ten o’clock in the morning nor close later than eight o’clock in the evening. It further provides that any customer who is already present in the establishment before the closing hour may be served for a period of fifteen minutes after that hour. The provision also allows the State Government, by order and with reasons recorded in writing, to permit an establishment attached to a factory to open at eight o’clock in the morning and close at six o’clock in the evening, and to fix other opening and closing hours for any class of establishments through notification in the official Gazette.

Section 9 provides that an establishment shall not open before ten o’clock in the morning or close later than eight o’clock in the evening. However, the provision adds that a customer who was present in the premises before the closing hour may be served for a period of fifteen minutes immediately after that hour. The provision further states that the State Government, by a written order that records the reasons for the order, may permit an establishment that is attached to a factory to open at eight o’clock in the morning and to close at six o’clock in the evening. In addition, the State Government may, by publishing a notification in the official Gazette, prescribe different opening and closing times for any particular establishment or for any class of establishments, specifying the period and the conditions on which such opening and closing hours may be fixed.

For completeness, the Court set out the terms of Section 10, which deals with the closing day. Sub‑section (1) provides that, unless the Act provides otherwise, every establishment must remain closed on every Sunday. The provision makes an exception for an establishment that is attached to a factory: the employer may substitute the closing day of the establishment so that it corresponds with the substituted closing day of the factory, on the same terms and conditions that are laid down for factories under the Factories Act, 1948. Sub‑section (2) requires the employer of an establishment to inform the prescribed authority, in the form prescribed by law, of the working hours and the interval periods for the employees within fifteen days of the date on which the establishment is registered. The same subsection further permits the employer to alter the working hours and the interval periods once in each quarter of the year, provided that the employer gives notice in the prescribed form to the prescribed authority at least fifteen days before the proposed change takes effect. Sub‑section (3) adds that, notwithstanding the requirement of sub‑section (1), the employer may open the establishment on a closing day if that day coincides with a festival, on the condition that the employees who are required to work on that day receive wages at twice the normal rate calculated on an hourly basis.

The counsel for the petitioners, Mr Chatterji, argued that given the nature of the petitioners’ business, which had been described earlier, the petitioners could not continue to operate in the manner they had been doing unless the Act allowed the first petitioner to work without being subject to the limitation on weekly and daily hours of work imposed by Section 7(1), and unless both petitioners could disregard the opening and closing hour restrictions imposed by Section 9. Before proceeding to examine the constitutional validity of these restrictions, the Court observed that the Act contemplates three possible categories of establishments. The first category comprises those establishments for which, in the public interest and in view of the service rendered to the community, the normal hours of work should not be subject to the restrictions of Sections 9 or 10. The second category includes establishments that do not require complete freedom from the restrictions but where a mere adjustment of the hours specified in Section 9 would be sufficient. The third category covers establishments for which neither the nature of the trade nor the general public interest would be impaired if the establishment adjusted its operations to conform with the requirements of the Act.

In this case the Court explained that the establishments falling within the ambit of the Act could be divided into three distinct groups. The first group comprised establishments for which there was no requirement of complete freedom from the statutory restrictions, but for which a simple adjustment of the hours of operation as specified in section 9 of the Act would be sufficient. The second group consisted of establishments where neither the requirements of the particular trade nor the interest of the general public would be adversely affected if the establishment modified its operations to conform with the provisions of the Act. The third group addressed those establishments for which the trade requirements and the public interest would not suffer even if the establishment fully complied with the Act. The Court noted that the first group was specifically dealt with by section 4 of the Punjab Shops and Establishments Act, which reads in full: “4. Provisions of sections 9 and 10 not applicable to certain establishments.‑Nothing in sections 9 and 10 shall apply to‑ (a) clubs, hotels, boarding houses, stalls and refreshment rooms at the railway stations; (b) shops of barbers and hair‑dressers; (c) shops dealing mainly in meat, fish, poultry, eggs, dairy produce (except ghee), bread, confectionery, sweets, chocolates, ice, ice‑cream, cooked food, fruit, flowers, vegetables or green fodder; (d) shops dealing mainly in medicines or medical or surgical requisites or appliances and establishments for the treatment or care of the sick, infirm, destitute or mentally unfit; (e) shops dealing in articles required for funerals, burials or cremations; (f) shops dealing in pans (betel leaves), biris or cigarettes, or liquid refreshments sold retail for consumption on the premises; (g) shops dealing in newspapers or periodicals, editing and despatching sections of the newspaper offices and offices of the news agencies; (h) cinemas, theatres and other places of public entertainment; (i) establishments for the retail sale of petrol and petroleum products used for transport; (j) shops in regimental institutes, garrison shops and troop canteens in cantonments; (k) tanneries; (l) retail trade carried on at an exhibition or show, if such retail trade is subsidiary or ancillary only to the main purpose of the exhibition or show; (m) oil mills not registered under the Factories Act, 1948; (n) brick and lime kilns; (o) commercial establishments engaged in the manufacture of bronze and brass utensils so far as it is confined to the process of melting in furnaces; and (p) saltpetre refineries.”

The Court further observed that, in addition to the statutory list, the State Government had issued a notification dated 1 June 1958 which exempted certain other classes of establishments from the operation of sections 9 and 10. The notification enumerated: (1) establishments dealing in the retail sale of Phullian, Murmura, sugar‑coated grams and Reoris; (2) commercial colleges of shorthand and type‑writing (as recorded in Punjab Government notification No. 6567‑S‑Lab‑58/1737‑RA, dated 1 June 1958); and (3) all booking offices of the Transport (as recorded in Punjab Government notification No. 6147/5815‑C‑Lab‑58/1741‑RA, dated 1 June 1958). The Court then turned to the second category of cases, which were those covered by the second and third provisos to section 9 of the Act. It explained that the third proviso had been operationalised by a notification issued at the same time the Act came into force. The notification began with the following words: “The following categories of establishments in the State of Punjab shall not open earlier than eight o’clock in the morning or close later than six o’clock in the evening during the period from….”

From 1 May to 31 August each year, the State Government issued a notification that exempted three classes of establishments from the requirement to open no earlier than eight o’clock in the morning and to close no later than six o’clock in the evening. The first class comprised establishments engaged in the timber trade, the manufacture of furniture, the production of tents, the supply of furniture or tents on hire, as well as cycles and their repair, painting or dyeing activities. The second class included all establishments, except tailoring shops, that could be described as “workshops” or other places where articles were produced, adapted or manufactured for the purpose of use, transport or sale. The third class consisted of establishments that dealt in agricultural produce brought for sale by the producers themselves. This exemption was recorded in Notification No. 6567 S‑Lab‑58/1735‑RA dated 1 June 1958.

Any establishment that did not fall within the ambit of Section 4 of the Act and that was not covered by any notification issued under the provisos to Section 9 was required to organise its business operations in compliance with the statutory requirements. It was against this background of specific exemptions and the flexibility provided by the legislation for particular types of business that the petitioners raised a constitutional challenge. The petitioners contended that the impugned provisions unreasonably restricted their fundamental right to “carry on their trade or business.” The Court observed that the regulation of labour contracts to improve working conditions represented a matter of human relationship and social control aimed at advancing the community. The public and social interest in the health and efficiency of workers, the Court noted, was beyond dispute in contemporary times. The Court further held that the Constitution of India did not guarantee a fundamental right analogous to Article 1, Section 10(1) of the United States Constitution, which protects against impairment of contractual obligations. Consequently, the test for constitutional validity was whether the provision, enacted to prevent physical over‑strain of workers and to provide better working conditions, regulated hours, and reasonable leisure, was unreasonable from an employer’s perspective. The Court explained that the inquiry required asking whether the restrictions were necessary or went beyond what was reasonably needed to protect the worker.

Applying this test, the Court found that neither the statutory limitation of a forty‑eight‑hour work week nor the specification of opening and closing hours exceeded what modern standards considered necessary to safeguard the health and efficiency of employees. The Court added that the concept of what is necessary for labour welfare is not fixed or static; it evolves as the social conscience develops over time. Moreover, the Court referred to its previous decision in Manohar Lal v. State of Punjab, delivered on 11 November 1960, which had concluded against the petitioners on a similar point of unreasonableness. In that earlier case, the impugned provision was Section 7 of the Punjab Trade Employees Act, 1940, which mandated that shops and establishments covered by the Act remain closed for one day each week. The earlier judgment reinforced the principle that restrictions aimed at protecting workers’ health and welfare, even if they limited business freedom, could be constitutionally valid when they were reasonable and necessary.

The Court explained that the provision which had been repealed and then re‑enacted with certain modifications required that shops and establishments to which it applied remain closed for one day each week, a requirement corresponding to section 10 of the Act of 1958. The appellant before this Court was a small trader who did not employ any person; instead, like the second petitioner, he and members of his family personally performed all the duties necessary for the operation of his shop. Relying on the fact that he worked without employees, the appellant challenged the validity of the provision because it restricted his freedom to conduct his business on all seven days of the week. In rejecting these objections, the Court quoted its earlier reasoning: “The ratio of the legislation is social interest in the health of the worker who forms an essential part of the community and in whose welfare, therefore, the community is vitally interested. It is in the light of this purpose that the provisions of the Act have to be scrutinized….” The Court noted that the learned judges of the High Court had based their decision on the view that the terms of the impugned section could be justified because they were designed to protect the health and welfare of the shop‑owner himself, an interest that also belongs to the public at large. The Court held that a restriction imposed to achieve this purpose would, in its opinion, be saved by Article 19(6). Furthermore, the Court observed that the constitutionality of the provision could also be sustained on the ground that it sought to prevent evasion of statutes specifically intended to protect employed work‑men. It was pointed out that acts which are innocent in themselves may be prohibited and that such restrictions would be reasonable if they were necessary to secure the efficient enforcement of valid provisions; the citation for this principle was noted as (1) [1961] 2 S.C.R. 343. The Court added that allowing a reasonable margin to ensure effective enforcement does not render a otherwise valid law unconstitutional on the ground of unreasonableness. These observations, in the Court’s view, clearly applied to the present case and were sufficient to uphold the validity of the provisions that were challenged. Consequently, the petition was dismissed, costs were awarded, and the petition was formally dismissed.