Dava Son Of Bhimji Gohil vs Joint Chief Controller Of Imports and Exports

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

Court: supreme-court

Case Number: Civil Appeal No. 226 of 1961

Decision Date: 16 April 1963

Coram: N. Rajagopala Ayyangar, Bhuvneshwar P. Sinha, J.R. Mudholkar

The case titled Dava Son of Bhimji Gohil versus Joint Chief Controller of Imports and Exports was decided by the Supreme Court of India on 16 April 1963. The judgment was authored by Justice N. Rajagopala Ayyangar and was delivered by a bench comprising Justices N. Rajagopala Ayyangar, Bhuvneshwar P. Sinha, and J. R. Mudholkar. The petitioner in the proceeding was Dava, the son of Bhimji Gohil, and the respondent was the Joint Chief Controller of Imports and Exports. The citation for the decision appears as 1962 AIR 1796 and 1963 SCR (2) 73, with additional references including R 1962 SC1810, R 1963 SC1470, and several later citations. The substantive statutory provisions examined concerned the Export Control regulations on manganese ore, specifically the notifications that directed export through particular channels, the constitutional validity of those measures, the role of the State Trading Corporation in creating a monopoly of export, and whether such measures infringed the fundamental right to carry on trade guaranteed under Articles 19(1)(g) and 19(6) of the Constitution of India. The judgment also referred to the Exports Control Order of 1958, the Imports and Exports (Control) Act of 1947 (section 3), and a notification dated 26 May 1958.

The factual backdrop revealed that domestic demand for manganese ore was minimal and that the ore was primarily extracted for export. Until 1956 the government had not imposed any restriction on the issuance of export licences, but beginning in May 1958 the Central Government introduced a policy statement covering the period from July 1938 to June 1959, which limited export quotas to established shippers and mine owners who had exported since 1953, as well as to the State Trading Corporation. Mine owners who lacked a prior export record, such as the appellant, were excluded from the scheme and were permitted to sell their ore only to the established shippers or the corporation, and only at prices that were not financially advantageous. Subsequent policy statements further entrenched the practice of channeling all manganese ore exports through the State Trading Corporation. Under section 3 of the Imports and Exports (Control) Act, 1947 the Central Government possessed the authority to make orders restricting or controlling the import and export of goods. Exercising this power, the Government issued the Exports Control Order, 1958, wherein clause 6(h) authorized the licensing authority to refuse a licence when it decided to canalise exports through special agencies or channels. The notification of 26 May 1958 was issued pursuant to clause 6(h). The appellants raised three principal contentions: first, that the denial of the ability to engage in export trade to a class of mine owners constituted an unreasonable restriction of the fundamental right secured by Article 19(1)(g); second, that clause 6(h) of the order exceeded the Central Government’s authority because section 3 allowed restrictions only on goods, not on the persons who might participate in export; and third, that the notification effecting canalisation of exports lay outside the scope of the “agency and channel” concept contemplated by clause 6(h).

In this case the Court, through the judgment of the Chief Justice and the learned judges, held that the restrictions and controls placed by the Central Government on the export of manganese ore were within the law and did not infringe the constitutional guarantee of freedom to trade under Article 19 (1) (g). The Court explained that the form of restriction which involved directing or “canalising” the trade was permissible because Section 3 of the Imports and Exports (Control) Act, 1947 authorised the Central Government to impose conditions on export transactions, and clause 6 (h) of the Export Control Order, 1958, fell within that legislative competence. The Court further clarified that the power to impose restrictions was not limited solely to the goods themselves but could also extend to the persons who participated in the export business. Directing exports through established shippers and mine‑owners was considered acceptable, and extending that direction to the State Trading Corporation, with a gradual increase in its role, was regarded as a reasonable limitation pursued in the public interest. The purpose of the restriction, the Court said, was to secure a steady supply of uniformly high‑quality manganese ore to overseas buyers, thereby maximising the country’s foreign‑exchange earnings. The Court identified the State Trading Corporation as a “special” agency or channel contemplated by clause 6 (h), because a special agency is one that is more capable of achieving the intended objective or can do so on a larger scale than ordinary agents. Although canalisation inevitably meant that some groups would be excluded, the Court held that if the canalisation was valid, the appellant could not successfully complain that he had been left out of the export trade.

Justice Subba Rao, however, expressed a contrary view concerning the notifications and policy statements that had effectively eliminated the appellant’s ability to trade. He argued that those administrative actions did not constitute a reasonable restriction on the fundamental right guaranteed by Article 19 (1) (g) and therefore violated that provision. According to his judgment, creating a monopoly or near‑monopoly in favour of the State Trading Corporation for the export of manganese ore could only be justified by a law that conformed with Article 19 (6) (ii), and not by mere administrative measures such as issuing notifications or policy statements. Justice Subba Rao nevertheless accepted that the authority granted by clause 6 (h) of the Export Control Order to canalise exports through special or specialised agencies fell within the power conferred on the Central Government by Section 3 of the Act. He also agreed that the State Trading Corporation qualified as a “special” agency within the meaning of clause 6 (h). Nonetheless, he emphasized that any canalisation must be carried out in a manner that allowed all persons engaged in the trade to participate in the export of the ore and that no individual or class should be wholly excluded from the opportunity to export.

The judgment related to Civil Appeal No. 226 of 1961, which was filed against the judgment and order dated 22 October 1959 passed by the Bombay High Court, Nagpur Bench, in a Special Civil Application numbered 63 of 1959. The appeal was presented by counsel on behalf of the appellant, while the Solicitor‑General of India, along with other legal representatives, appeared for the respondent side. The case was heard and decided by the Court, and the written decision set out the legal reasoning and conclusions concerning the constitutional validity of the export restrictions and the scope of the Central Government’s power under the Imports and Exports (Control) Act, 1947.

D. Menon appeared for the respondents. The judgment was delivered on 16 April 1962 by Justice Ayyangar. The appeal before this Court was taken on a certificate of fitness that had been granted by the Nagpur Bench of the Bombay High Court pursuant to Articles 132(i) and 133(1)(c) of the Constitution. The appeal originated from a petition that the appellant had filed under Article 226 of the Constitution in the Bombay High Court at Nagpur. In that petition the appellant challenged the constitutional validity of certain notifications and directions that had been issued under the Imports and Exports (Control) Act, 1947 and under the Export Control Order, 1958 made thereunder. The appellant further prayed that the Joint Chief Controller of Imports and Exports, Bombay, who was impleaded as the first respondent, should be directed to consider his application for a licence that would enable him to export specific manganese ore obtained from his mines, and that this consideration should be made without reference to the impugned notifications. The learned Judges of the High Court dismissed the petition but nevertheless granted the appellant a certificate of fitness, which now permits him to bring the present appeal. To understand the precise grievance of the petitioner and the grounds on which he alleges that the government notifications contravene the Constitution, it is necessary to set out certain factual background, particularly the claim that those notifications infringe the fundamental freedoms guaranteed to him under Part III of the Constitution. The appellant is the lessee of manganese mines located in two separate areas of Madhya Pradesh. He was granted those mining leases in 1953 for a term of twenty years each, with a renewal option if he so desired, under the Mineral Concession Rules, 1949, for a comparable period. It is an admitted fact that the domestic demand for manganese ore in India is very small, so that the ore is principally extracted for export. Because the appellant obtained the leases only in 1953, he could not have produced any appreciable quantity of the metal during that year, nor could he have exported any ore that he might have mined before or in 1953. Consequently, the Court must trace the history of the export restrictions that were imposed on manganese ore from 1953 up to the date relevant to the petition in order to appreciate the appellant’s contentions. Prior to 1953, that is, before the appellant entered the manganese ore business, the export of manganese ore was freely licensed; the commodity was not subject to any export restriction, and the government did not exercise any control over the allocation of railway wagons for transporting the ore. When export of the ore began to increase after that date, the railways found themselves unable to meet the growing demand for wagons and were compelled to regulate the allocation of such wagons. The government also took steps to regulate the movement of wagons by establishing a system of registration for shippers, which gave certain shippers priority in wagon allotment, a measure that was coordinated with parallel changes affecting the regulation of the ore’s export.

The government also intervened in the regulation of wagon movements by establishing a system that required shippers to register, thereby granting them priority in the allocation of railway wagons. This system of registration was created to manage the limited availability of wagons for the transport of manganese ore. The control over wagon allocation was not an isolated measure; it was deliberately coordinated with parallel changes that were being introduced to regulate the export of manganese ore itself. Section 3 of the Imports and Exports (Control) Act, 1947—hereinafter referred to as the Act—empowered the Central Government to issue orders, published in the Official Gazette, that could prohibit, restrict, or otherwise control the import, export, coastwise carriage, or shipment of goods of any specified description. The section further provided that any goods to which such an order applied would be deemed to be goods whose import or export had been prohibited or restricted under section 19 of the Sea Customs Act, 1878, and that the provisions of that Act would apply, except that the word “shall” in section 183 would be read as “may”. Additionally, notwithstanding any other provision of the Act, the Central Government could, by Gazette order, impose conditions on the clearance of any goods or class of goods imported into India, whether for domestic consumption or for export.

Under the authority conferred by this section, the Central Government issued the Exports Control Order, 1958 (referred to as the Control Order). Clause 3 of the Control Order stipulated that no person was permitted to export any goods listed in Schedule I unless the export was carried out in accordance with a licence granted either by the Central Government or by an officer designated in Schedule II. Both manganese and iron ore were expressly listed in Schedule I. Clause 6 of the same Order set out the specific grounds on which the Central Government or the Chief Controller of Imports and Exports could refuse to grant a licence or direct any other licensing authority not to grant a licence. The clause reads in full as follows: “Refusal of licence.—The Central Government or the Chief Controller of Imports and Exports may refuse to grant a licence or direct any other licensing authority not to grant a licence (a) if the application for the licence does not conform to any provision of this Order; (b) if such application contains any false, fraudulent or misleading statement; (c) if the applicant uses in support of the application any document which is false or fabricated or which has been tampered with; (d) if the applicant on any occasion has tampered with an export licence or has exported goods without a licence where it is necessary, or has been a party to any corrupt or fraudulent practice in his commercial dealings; (e) if the application for an export licence is defective and does not conform to the prescribed rules; (f) if the applicant commits a breach of the Export Trade Control Regulations; (g) if the applicant is not eligible for a licence in accordance with the Export Trade Control Regulations; (h) if the licensing authority decides to canalise exports through special or specialised agencies or channels; (i) if the applicant is a partner in a partnership firm, or a director of a private limited company, which is for the time being subject to any action under clause 8; (j) if the applicant is a partnership firm or a private limited company, any partner or director whereof, as the case may be, is for the time being …”.

The order specifies that a licence may be refused or that a licensing authority may be directed not to grant a licence on any of several grounds. First, a licence may be denied if the application fails to comply with any provision of the order. Second, a licence may be refused where the application contains any false, fraudulent or misleading statement. Third, the use of any document that is false, fabricated or has been tampered with in support of the application is a ground for refusal. Fourth, the applicant may be barred if on any occasion the applicant has tampered with an export licence, has exported goods without a licence where one was required, or has been a party to any corrupt or fraudulent practice in commercial dealings. Fifth, a licence may be refused if the application is defective and does not conform to the prescribed rules. Sixth, a licence may be denied if the applicant commits a breach of the Export Trade Control Regulations. Seventh, the applicant may be ineligible for a licence under the Export Trade Control Regulations. Eighth, the licensing authority may decide to channel exports through special or specialised agencies or channels, and this decision may lead to refusal. Ninth, the applicant may be a partner in a partnership firm or a director of a private limited company that is, at that time, subject to any action under clause eight. Tenth, if the applicant is a partnership firm or a private limited company, any partner or director thereof who is, at that time, subject to any action under clause eight may also be a ground for refusal. The first restriction on the export of manganese and iron ore was introduced in June 1956 when the Ministry of Commerce and Industry issued a public notice dated 26 June 1956, outlining its policy for the half‑year July to December 1956. The notice explained that the Government believed the existing trading mechanism for ore exports was inadequate to cope with developments in purchasing countries. It observed that many exporters who had entered into contracts with foreign buyers were unable to fulfil their commitments, causing inconvenience to buyers and eroding their confidence in India’s ability to supply ore reliably. To overcome this obstacle and to increase foreign‑exchange earnings from ore exports, the Government declared its intention to re‑orient ore trading on more rational lines. For this purpose, it proposed to progressively channel ore exports through the State‑Trading Corporation, which would rely on domestic mining interests and utilise the existing trade mechanism as far as possible. Accordingly, the notice announced that a regulation would control ore exports for the half‑year July‑December 1956 through three classes of exporters: (1) established shippers who would receive export quotas based on the average quantities exported during 1953, 1954 and 1955; (2) mine owners who would receive quotas based on the annual average quantity of ore on which royalty was paid during the calendar years 1953, 1954 and 1955; and (3) the State‑Trading Corporation, which would be allocated a quota on an ad‑hoc basis. It is sufficient to note that these measures formed the basis of the early export control regime for manganese and iron ore.

The Court observed that the State Trading Corporation, a corporation owned and controlled by the Union Government, had been created by registration under the Indian Companies Act in May 1956. In connection with the export quotas that were granted, the Government had also assured the availability of rail‑transport facilities that matched the quantity of the quota allotted to each beneficiary. The Court noted that a number of clarifications and minor variations to the original Press Note had been issued thereafter, but it held that these were not material to the issues presently contested. The Court further pointed out that the system of control and the restrictions imposed by the quota regime effectively excluded from any export quota those mine‑owners who had not been engaged in the manganese‑ore business before 1953. By way of a public notice dated 4 September 1956, the Ministry of Commerce had announced that the situation of these “newcomers” was being examined and that a further announcement would be made in due course. The Court recorded that the same policy, together with the same basis of allocation, was continued for the subsequent half‑year covering January to June 1957. For the period July 1957 to June 1958, the Government altered its approach by announcing quotas for a full year rather than for six months. Accordingly, a Press Note dated 1 June 1957 allotted to exporters and mine‑owners a quota equal to sixty per cent of the quantities they had exported in either 1956 or 1958, according to the selection made by them. The quota thus released was made available for allocation to the State Trading Corporation on an ad‑hoc basis, and the Press Note added that the Corporation would be allotted a sufficient quota to enable it to maximise manganese‑ore exports and was being advised to obtain the cooperation of established trading and mining interests so that the venture could succeed. The Court mentioned that subsequent Press Notes introduced certain immaterial modifications, but it declined to refer to those changes. Regarding the next period, July 1958 to June 1959, the Government’s policy decision was communicated through a public notice issued on 26 May 1958. In that notice the Government stated that it had been continuously reviewing the operation of the policy announced in the earlier Press Notes and had concluded that the long‑term interests of Indian manganese ore would be better served by discouraging the fragmentation of quotas and by encouraging bulk contracting, movement and shipment of the ore. At the same time, the Government expressed its desire to maintain continuity in the export arrangements as far as practicable. Consequently, the notice declared that for the period July 1958 to June 1959 the export of manganese ore would be regulated as follows: first, the established shippers, the mine‑owners, other exporters and the State Trading Corporation would each receive an allotment of quota equal to the quota that had applied for 1957‑58; second, firms and parties whose individual allotments were small were advised to form cooperative or limited companies.

When the writ petition that eventually led to this appeal was filed, the policy statement issued on 26 May 1958 was still operative. The appellant challenged the constitutional validity of the restrictions and controls imposed by that policy. The factual situation at that time could be summarized as follows. From July 1956 onward, the export of manganese ore had been subject to governmental control. This control was implemented through the allocation of export quotas to three distinct groups. The first group comprised the “established exporters,” meaning those exporters who had shipped manganese ore since 1953. The second group consisted of mine‑owners who had likewise exported ore during the same period and were therefore granted quotas based on their prior export performance. The third group was the State Trading Corporation, which received an export quota on an ad‑hoc basis to cover any remaining quantity of ore for which a foreign market could be found. Any trader or mine‑owner who lacked export performance in those earlier years – often referred to as “newcomers” – was excluded from the quota scheme. Although the government repeatedly announced in public statements that the situation of these newcomers would be reviewed, no such review was ever carried out. The appellant fell within this excluded category, was therefore ineligible for any export quota, and consequently could not export his ore. As a result, the ore that he mined had to be disposed of either in the domestic market or to the entities that received quotas. The domestic market was extremely restricted because the principal consumers of manganese ore in India were steel‑producing companies that owned their own mines and therefore sourced ore internally. When a domestic sale was not possible, the appellant was compelled to approach the established exporters or the State Trading Corporation. However, the export quotas allotted to the established exporters were being progressively reduced, leading to a corresponding decline in their demand for ore. Consequently, these exporters would only purchase ore at very low, unremunerative prices, forcing newcomers to offer similarly low terms if they wished to sell. The State Trading Corporation, on the other hand, obtained its quotas on an ad‑hoc basis sufficient to enable it to acquire the higher‑quality ore that could be sold to foreign buyers.

The appellant also alleged, relying on a circular issued by the State Trading Corporation on 20 April 1957, that the terms offered for the purchase of ore were inequitable because the corporation demanded an excessively large commission. It must be noted, however, that the State Trading Corporation was not named as a party to the writ petition before the High Court, nor was any relief sought on the basis of this allegation. The reference to the corporation’s circular was introduced solely to emphasize the hardship suffered by the appellant as a result of his exclusion from the export quota system. Although the State Trading Corporation is owned and controlled by the Central Government and functions as an instrument of governmental commercial policy, any improper or unfair action by it in the performance of its public duties would be subject to judicial control. Since the appellant did not claim any relief grounded on the alleged unfairness of the corporation’s terms, the court deemed it unnecessary to examine that point further. The appellant’s case therefore had to be decided based solely on the two admitted facts derived from the government’s policy statements: first, that mine‑owners classified as newcomers, lacking export performance in the specified basic years, were barred from direct participation in the export trade; and second, the consequent impact of that exclusion on the appellant’s ability to sell his mined ore.

The appellant relied on that material only to highlight the difficulty it suffered because persons who had not demonstrated export performance during the specified basic years were excluded from receiving an export quota that was allotted to mineowners. The State Trading Corporation, being owned and controlled by the Central Government, functions as an agency or instrument of the government for carrying out its commercial policy. If, while performing those governmental duties, the Corporation were to act in an improper or unfair way, it would be subject to judicial control. However, because the appellant did not claim any relief based on such a complaint, the Court found it unnecessary to pursue that issue or to examine its merits. The Court therefore decided that the appellant’s case must be assessed on the basis of two facts that were admitted and that stemmed from the Government’s policy statements set out earlier. First, mineowners who were “newcomers” – that is, those who did not have export performance in the designated basic years – were excluded from direct participation in the export trade. These newcomers also faced a practical problem because there was essentially no internal market for manganese ore where they could sell their product to other parties that had been given export facilities. Second, the only categories of persons to whom the newcomers could sell their ore were (a) established shippers and (b) the State Trading Corporation, a situation that had already been described in the earlier discussion of the market.

The matter placed before the appeal was whether denying this class of mineowners the right to engage directly in export trade amounted to an unreasonable restriction on their constitutional right to carry on business guaranteed by Article 19(1)(g) of the Constitution. At this point the Court noted that one issue lay beyond the scope of the controversy: the constitutional validity of section 3 of the Imports and Exports Control Act, 1947, which forms the ultimate source of the impugned notifications and executive actions, was conceded by the parties. The appellant’s counsel advanced two principal points. First, clause 6(b) of the Exports Control Order, 1958, was alleged to exceed the rule‑making authority granted under section 3 of the Imports and Exports Control Act, 1947. Second, even if clause 6(h) – which provides for the “canalising” of exports through special or specialised agencies or channels – were valid, the notifications that effected such canalisation were said to lie outside the contemplation of the “agency or channel” referred to in clause 6(h). Before proceeding further, the Court observed that the constitutional validity of clause 6(h) of the Export Control Order, 1953, had not been contested before it, as the controversy concerning that provision had already been resolved by the decision of this Court in Glass Chatons Importers and Users Association v. Union of India (1). The argument supporting the contention that clause 6(h) was beyond the scope of section 3 of the Act was briefly summarized as follows: section 3 of the Act, by its …

The Court observed that the wording of section 3 of the Imports and Export Control Act, together with its setting and surrounding context, allows the Central Government to place restrictions or controls only on goods that are the subject of export. The provision does not empower the Government to impose restrictions on the persons who are engaged in the export trade. In other words, a notification made under section 3 may lawfully specify the particular articles that are to be controlled, and it may also prescribe matters that necessarily flow from that specification, such as the quantities that may be exported, the quality standards that the exported goods must meet, and the destinations to which those goods may be sent. The Court stressed that the power to regulate cannot be extended beyond these parameters. A notification under section 3 therefore cannot include provisions that limit the number of exporters, that impose qualifications on persons who may export, or that otherwise restrict the persons who may participate in export trade. Moreover, even if a notification were to validly prescribe which persons may engage in export, such a notification would still lack authority to “canalise” or channel exporters in a manner that effectively creates a monopoly for a particular person or group, which is the effect of rule 6(h) of the Export Control Order 1958.

The Court noted that the contention was framed alternatively by referring to Article 19(6) of the Constitution. Article 19(1)(g) guarantees every citizen the right to carry on any occupation, trade or business, and clause (6) enumerates the kinds of restrictions that may constitutionally be imposed on that right. After the First Amendment, clause (6) reads in substance: “Nothing in sub‑clause (g) shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by sub‑clause (g), and, in particular, nothing in sub‑clause (g) shall affect the operation of any existing law in so far as it relates to, or prevents the State from making any law relating to, (i) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.” The Court held that the policy statements and directions issued to licensing authorities under the powers granted by rule 6(h) of the Export Control Order 1958 had resulted in a monopoly, or at least a near‑monopoly, in favour of the State Trading Corporation. The petitioners argued that, according to the language of Article 19(6)(ii), such a monopoly could be created only if the State enacted a law addressing the matters specified in that provision.

Neither the Export & Import Control Act, 1947 nor the notified order made thereunder—the Export Control Order, 1958—could be described as “a law relating to the carrying on by the State of any trade, business, industry or service.” Consequently, the Court could not justify or uphold the preferential treatment granted to the State Trading Corporation by referring to the amendment effected to element (16) by the Constitution (First Amendment) Act, 1961. This point was accepted. The remaining issue for consideration was whether the impugned provision could be sustained as a “reasonable restriction” on the rights conferred by sub‑clause (g) of Article 19(1) in the interest of the general public, that is, on the opening words of paragraph 1 of clause (6). As already observed, the constitutional validity of element 6(h)—to the extent that it permits canalising or channelling of export trade—was no longer in doubt, having been upheld in the Glass Chatons case (1). In these circumstances, the narrowly framed question was whether the restrictions and controls that might be made under section 3 would include a provision for canalising trade in any particular commodity. The Court held that a restriction or control in the form of channelling or canalising the trade was not outside the limitations that could be imposed on export trading by section 3. Accordingly, element 6(h), in its present form, fell within the rule‑making power conferred on the Central Government by section 3 of the Act.

The argument that restrictions or controls that could be imposed, or the control that might be exercised on exports by orders made under section 3, could not extend to persons who might be permitted to engage in the export trade was addressed. The Court noted that if the quantum of export of a commodity could be restricted, the control required to effect that restriction must necessarily extend to the persons engaged in or desirous of engaging in the export of that commodity. This principle was even more applicable where the restriction took the form of a total prohibition of exports of a commodity. Therefore, if the control or restriction could legally extend to the persons who are engaged in the trade, it logically followed that the restriction might take the form of classifying the persons who might participate in the trade and specifying the conditions under which each particular class might be permitted to do so. It was a matter of policy for the Government, having regard to the nature of the commodity and the circumstances attending its export trade, to determine the basis for such classification, to fix relative priorities and other criteria. When element 6(h) permitted “canalising” or the “channelling” of exports through selected agencies, it merely made provision for the classification into groups, which is one of the modes that the control under section 3 of the Act might assume.

The provision allowing exports to be carried out through selected agencies merely created a basis for classifying exporters into different groups, which represented one of the possible modes of control contemplated under clause 3 of the Act. The Court then examined whether the series of notifications issued by the government had: (1) confined the export of manganese ore to three distinct categories of persons—namely, established shippers, mine‑owners, and the State Trading Corporation—with the first two categories being allotted quotas that were calculated on the basis of their export performance during certain “basic years”; (2) progressively reduced the quotas of the established shippers and mine‑owners so that the remaining export business could be handled by the State Trading Corporation; and (3) as a necessary consequence of the foregoing, eliminated from the trade the class commonly known as “new‑comers,” a result that was permitted under element 6(h) of the Export Control Order, 1958. From these facts the Court identified two inter‑related grievances raised by the appellant. The first grievance concerned the quota granted to the established shippers and mine‑owners based on their export performance in a basic year. Counsel for the appellant did not present this as a serious complaint, observing that persons already engaged in the trade and a newcomer such as the appellant could not legitimately object to the continuation of facilities or licences for those already operating in the field. In the petition before the High Court the appellant argued that the designation of the basic years in the policy statement was arbitrary; the Court held that the government’s selection of a basic year defined as the three‑year period preceding the policy announcement, and the reliance on performance within that period, did not constitute unreasonable or arbitrary action. The second grievance targeted the inclusion of the State Trading Corporation among the exporters and the incremental increase in its quota on an ad‑hoc basis, without reference to any prior performance; counsel described this as creating a monopoly that the law did not permit. The Court therefore limited its analysis to the grounds upon which the successive notifications granting expanded export facilities to the State Trading Corporation were challenged. For clarity, the Court set out the respondent’s reasons for preferring the State Trading Corporation as the principal agency to channel the export trade in manganese ore. The necessity of export earnings for sustaining the national economy was undisputed, and the government’s task was to determine the most effective method of securing optimal earnings from manganese ore exports, recognizing that India did not possess a monopoly over the production of this ore.

In this case the Court observed that India did not possess a monopoly over the production of manganese ore, and therefore the international price of the ore depended on global market forces. The Court noted that the ore was primarily used by steel manufacturers to produce steel, and that foreign purchasers – many of whom, in certain countries, conducted external trade through State agencies – demanded a steady supply of ore of consistent quality. The Court recorded that during the early period, when trade in the commodity was unrestricted and unregulated, there were complaints that the ore delivered did not conform to the sample specifications, and that even traders who endeavoured to maintain high quality suffered as a result. In response to these problems, the Government intervened in 1956 by imposing export restrictions and by providing foreign buyers with guarantees of a regular supply through the system of controls that the Government administered within the country. The Court pointed out that these historical facts were not contested by the parties. Against this backdrop, the Court explained that any restriction placed on persons entitled to engage in trade would inevitably deny participation to those who failed to meet the stipulated criteria, and that such denial became more pronounced when the restriction involved the canalisation of trade in a particular commodity, because canalisation inherently excludes certain groups. The Court further held that if section 3 of the relevant Act authorized a rule to canalise export trade in a commodity and such canalisation was constitutionally valid, then a trader could not maintain a legally sustainable complaint merely because he was excluded from the pool of eligible participants. The Court distinguished the question of whether the canalisation was carried out properly – that is, whether the selection of groups was no worse than the exclusion of others – from the mere fact of exclusion, noting that an improper selection could raise a discrimination issue. The Court clarified that the appellant had not alleged that established shippers and mine owners who had been allotted quotas, together with the State Trading Corporation, were wrongly included in the group entitled to export. Rather, the Court observed that there existed a rational and appropriate classification between experienced exporters and newcomers lacking such experience. The Court also mentioned that in other commodities, newcomers with experience in different branches of trade had sometimes been granted quotas, depending on the particular circumstances of each trade, and that no argument had been advanced that prior export experience was not a valuable qualification for receiving a quota or a preferential quota in the export trade of the commodity under consideration.

In this case the Court observed that the notifications regarding the export trade of the specific commodity allowed for the grant of a quota, including a preferential quota, to persons who possessed prior experience in that trade. The Court noted that if the notifications had limited participation in the entire export trade solely to those with such prior experience, then the objections raised by the learned counsel for the appellant would not have been legally tenable. The Court explained that under those circumstances the appellant would inevitably have been excluded, but the appellant could not claim that his exclusion was illegal, because the exclusion was a necessary result of the policy of channeling exports through persons already experienced in the field. The Court identified the appellant’s real grievance as the preference given to the State Trading Corporation, which also had prior experience in the export trade, in being selected as the agency to channel exports, while the appellant and others like him, who had won the ore to be exported, were left out. The Court acknowledged that if prior experience were the sole criterion for differentiation, the preference for the State Trading Corporation over the appellant and members of his class might appear unjustified. However, the Court emphasized that prior experience is not the only factor that must be considered. The Court recalled that it had earlier set out the reasons on which the Government chose the State Trading Corporation as the agency for carrying out the export trade. On the basis of those reasons, the Court found no impropriety in that choice. Moreover, the Court observed that the overarching objective of the export trade is to earn foreign exchange to the maximum possible extent, and that this objective, with its long‑range character for the country’s exports, could be most effectively achieved by designating the State Trading Corporation as the principal agency. Consequently, the Court concluded that the argument advanced by the learned counsel for the appellant—that the selection of the State Trading Corporation and the ad hoc granting of quotas to it were beyond the powers conferred on the licensing authorities by clause 6(h) of the Export Control Order, or otherwise infirm—lacked any substantive basis. The Court also addressed another point raised by the appellant. Clause 6(h) permits licensing authorities to channel exports “through special or specialised agencies, or channels.” The appellant argued that the State Trading Corporation was neither a special nor a specialised agency or channel, and therefore its selection fell outside the scope of clause 6(h). The Court rejected this contention. It held that the term “specialised” does not require an agency to be an expert possessing a type of prior experience unavailable to others, and that the word “special” should not be interpreted narrowly to mean only an agency with exclusive expertise. While the Court stopped short of defining a special agency as merely a designated one, it indicated that the term could be understood in a broader sense.

The Court explained that the term ‘special’ should be interpreted to mean an agency chosen because of the purpose for which the channeling or canalising is intended. In other words, an agency is ‘special’ if, considering the objective of the canalising, it is more likely than other agencies to achieve that objective or to achieve it to a greater extent. Accordingly, the Court expressed no hesitation in holding that the State Trading Corporation could be regarded as a ‘special’ agency or channel for enabling the country to maintain continuous trade in the commodity. The purpose, as identified, was to ensure exports in adequate quantity and of proper quality, thereby fostering the continuity of trade. In those circumstances, the removal of the class to which the appellant belongs—newcomers without any previous export experience during the basic year—was the result of applying a permitted method of control under clause 6(h). Such a restriction was a type of limitation that the government was legally competent to impose pursuant to clause 6(h). For other commodities, newcomers have sometimes been allotted a quota, a decision that naturally depends on the nature of the trade, the export market, and other factors within the government’s discretion. The Court noted that the Government did not hold that manganese‑ore export trade was so restricted that newcomers could never be permitted to trade. Several policy statements, issued from time to time, conveyed an assurance that allocation of quotas to newcomers was under consideration. Because manganese ore has a limited internal market, denying any group or individual the right to export would effectively force them to sell to those already granted such facilities. Appellants, like the petitioner, were raised hopes of relief, and the disappointment of those hopes prompted the petition for judicial relief. Although the Court considered that the appellant possessed no legal right to the specific relief sought, it recognized that his grievance was genuine. The Court indicated that it was for the Government to determine how the interests of this class should be protected and made worthwhile. Such protection would enable them to contribute to expanding, fostering, and augmenting export trade in this valuable commodity. Turning to the legal points raised, the Court found it clear that section 3 of the Import and Export Control Act, 1947 is a valid enactment. The Court also held that clause 6(h) of the Export Control Order falls within the Central Government’s rule‑making power and is constitutionally valid.

In reaching its decision, the Court observed that the Constitution provides no basis for finding that any legally enforceable right of the appellant had been infringed in a manner that would permit judicial redress under article 226. Consequently, the Court held that it was unnecessary to examine the appellant’s primary request for a writ of mandamus directing the licensing authority to consider his application for an export licence that was supposed to be valid for the half‑year in force at the time the petition was filed. The Court noted that the relevant half‑year had long since elapsed, and therefore neither the High Court on the original petition nor this Court on the present appeal could grant any relief concerning that licence. While the Court acknowledged that, in some situations, a person in the appellant’s position might be entitled to a declaration regarding the validity of the restrictions that continue to operate beyond the period of the licence, it found that such a question did not arise for consideration. This is because the Court had already concluded that the trade restrictions and controls imposed were lawful and were justified by the Import and Export Control Act, 1947 and the rules made thereunder. Accordingly, the appeal was dismissed, and no order as to costs was made.

The appeal, presented by certificate, challenged the judgment of a division bench of the High Court of Judicature at Bombay, Nagpur Bench, which had dismissed the appellant’s application under article 226 seeking an appropriate writ directing the first respondent to grant him an export licence. The appellant was identified as the lessee of manganese mines located in the State of Madhya Pradesh, and he engaged in the business of mining and selling the ore produced from those mines. The Court observed that there was virtually no domestic market for manganese in India; consequently, the overwhelming majority of manganese ore produced in the country was exported abroad, and any internal trade in the ore was negligible for the purposes of this case. Up to the middle of 1956, miners, including the appellant, were free to negotiate directly with foreign buyers, to sell their ore at railway sidings to exporters, or to transport the ore to any port after obtaining the necessary wagon allocations from the railways. However, beginning in May 1956, the Government of India issued a series of notifications that progressively limited the export quotas available to shippers and mine owners. These measures ultimately led to the cessation of direct exports by mine owners and shippers, with the entire trade being routed through the State Trading Corporation, an entity originally created as a private company under the Companies Act, 1956 and later converted into a public company. The Court indicated that the particulars of this process would be examined in detail later. It noted that on 1 December 1958 the appellant submitted an application relevant to the matters now under consideration.

The appellant submitted an application to the Joint Chief Controller of Imports and Exports, who is identified as the first respondent, seeking an export quota and a licence permitting the export of manganese ore under clause 4 of the Exports (Control) Orders 1958 (hereinafter “the Order”). The application also requested permission to move the ore from railway sidings to the port of Bombay. On 17 December 1958 the first respondent replied that the request could not be granted because, according to the Government’s existing orders, export of manganese ore from India was permitted only to “established shippers” and “established mine‑owners.” Feeling aggrieved by this refusal, the appellant filed a writ petition under Article 226 of the Constitution in the High Court of Bombay; that petition was dismissed, leading to the present appeal. In the appeal the Joint Chief Controller of Imports and Exports is named as the first respondent and the Union of India as the second respondent. The appellant’s counsel argued that, pursuant to Article 19(1)(g) of the Constitution, the appellant possessed a fundamental right to engage in the business of producing, selling, and exporting manganese ore, either directly or through exporters. The counsel contended that successive policy statements issued by the Government, which formed the basis for rejecting the appellant’s application, unduly hampered the commercial activities of miners such as the appellant, particularly those newly entering the field of direct export. The appellant’s counsel further asserted that clause 6 of the Order, under which those policy statements were issued and which empowered the Central Government, via the Chief Controller of Imports and Exports, to channel exports through “special or specialised agencies or channels,” exceeded the authority granted by section 3 of the Imports and Exports (Control) Act 1947 (the “Act”). According to the appellant, the Act does not confer upon the Central Government the power to appropriate such authority for itself or to vest it in others. Even assuming the validity of clause 6(h) of the Order, the appellant argued, the provision merely seeks to equalise exports through specialised agencies—essentially experts in export trade—and cannot be used to divert the export business to the State Trading Corporation. The counsel emphasized that the State Trading Corporation lacks any comparative advantage or greater experience in export operations than private exporters. Consequently, the appellant maintained that the effect of the policy statements was to create a monopoly in the manganese export market favouring the State Trading Corporation and other qualified exporters, eventually concentrating the advantage solely with the Corporation. This monopolistic arrangement, the appellant claimed, failed to protect the interests of miners like himself, because no appropriate quotas or safeguards were established. As a result, miners were forced either to cease their business altogether or to become dependent on others who could dictate terms and might choose not to purchase their ore.

In this case, the Court observed that imposing an unreasonable restriction on miners such as the appellant, by limiting their ability to continue mining and selling manganese ore, infringed their right to conduct their business. Counsel representing the respondents argued that the petition filed by the appellant under article 226 of the Constitution ought to be dismissed because it had become futile; the licence for which the appellant had applied pertained to the year 1959, and that year had already elapsed. The same counsel also sought to uphold the order issued by the first respondent, contending that clause (6) of the Order had been validly promulgated and that the government‑sanctioned scheme for implementing the policy was authorised not only by clause 6(h) of the Order but also by the fact that the restriction placed on the petitioner’s fundamental right was reasonable.

The Court identified the initial issue as whether clause 6(h) of the Order was beyond the powers granted by the Act. To address this, the Court examined the relevant statutory provisions. The material portion of section 3 of the Act provides: “Powers to prohibit or restrict imports and exports – (1) The Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling, in all cases of specified classes of goods, and subject to such exceptions if any, as may be made by or under the order: (a) the import, export, carriage coastwise or shipment as ships’ stores of goods of any specified description …”. Clause (6) of the Order states: “Refusal of licence – The Central Government or the Chief Controller of Imports and Exports may refuse to grant a licence or direct any other licensing authority not to grant a licence … (h) if the licensing authority decides to canalise exports and the distribution thereof through special or specialised agencies or channels.”

The Court noted that the Order had been issued pursuant to the powers conferred by sections 3 and 4‑A of the Act. The respondents contended that section 3 did not empower the Central Government to issue an order that conferred on itself or another authority the power to canalise exports through specialised agencies or channels. The Court rejected that argument, observing that section 3 expressly enables the Central Government to make provisions for prohibiting, restricting or otherwise controlling the export of goods in all cases or in specified classes of cases. The language of the provision is broad, and it is not tenable to claim that the act of canalising exports through specialised agencies or channels falls outside the scope of those words. The Court explained that such canalisation constitutes a method of controlling export.

Further, the respondents argued that the operation of section 3 was limited solely to the point of exportation and did not authorize the Government to regulate internal trade as a means of controlling exports. The Court found that view to represent an unduly narrow construction of the statutory wording. While acknowledging that the Central Government could not interfere with internal trade merely under the colour of export regulation, the Court affirmed that the power to prohibit, restrict or control the export of goods inherently includes the authority to adopt measures intimately connected with the regulation of export trade. Consequently, the restrictions imposed by clause 6(h) of the Order were within the legislative competence of the Central Government.

The Court observed that although the statutory provision expressly deals with regulating export, the authority to prohibit, restrict or control the export of goods necessarily includes, by implication, all measures closely connected with the regulation of export trade. The Court explained that limiting that authority solely to the point of export would frustrate the purpose of the Act, whose primary aim is to assist the national economy by promoting exports and achieving a favourable balance of trade. To accomplish this aim, the Court said, the government must develop a system capable of selecting commodities that the country can spare or wishes to exchange for more essential foreign goods, identifying appropriate foreign markets, and taking steps to build a reputation for Indian products through quality standards, timely deliveries and honest dealings. The system must also be able to prevent hardship by allocating quotas on equitable principles, fixing reasonable rates for goods and performing similar duties. The Court emphasized that such objectives cannot be met if the Central Government’s control is confined only to the moment of exportation; regulation may need to begin much earlier, even at the stage of production in extreme cases. The Court noted that in each case it is a factual determination whether the Government’s control is a genuine regulation of export trade or a colourable attempt to control internal trade under the pretense of export regulation. Accordingly, the Court held that the power conferred by section 3 of the Act is not limited to authorities under rule 6(h) of the Order to channel exports through special or specialized agencies, and that such canalisation falls well within the scope of the Central Government’s authority. The Court then addressed another argument raised by counsel for the appellant, which characterized “special or specialized agencies or channels” as merely export agencies or channels. Citing dictionary definitions, the Court explained that “special” means “for a particular purpose” and “specialise” means “set apart for a particular purpose,” and that these terms do not necessarily imply that the agency must possess expert qualifications. While the government may be expected to choose agencies well‑versed in the export of particular commodities to achieve optimal results, the wording of the clause does not impose such qualifications. Consequently, the Court stated that it was unnecessary to opine on whether the State Trading Corporation is better positioned or more qualified than experienced manganese‑ore exporters, because the selection of the agency remains an exclusive prerogative of the Government. Finally, the Court noted that the appellant contended that the scheme, as progressively unfolded through policy statements, infringed the appellant’s fundamental right under Article 10(1)(g) of the Constitution.

In order to evaluate the appellant’s contention, the Court first examined the series of policy statements issued by the Central Government to determine how those statements affected the appellant’s commercial activities. The initial statement was contained in a Press Note dated 26 June 1956, which was released by the Ministry of Commerce and Industry in New Delhi. Prior to the issuance of this Press Note, miners who produced manganese ore were permitted to enter into contracts with foreign purchasers and to export their product, provided that they complied with the prevailing export control regulations. The Press Note signalled a shift in governmental policy, and the Government set out four principal reasons for this alteration. First, it observed that the existing trading mechanism was insufficient to address developments occurring in certain countries regarding the purchase of ores and the consequent impact on India’s foreign trade. Second, it noted that the Control authorities were pre‑occupied with ensuring an equitable distribution of limited wagon space among mining and trading interests, a situation that made it practically impossible to maximise the use of scarce resources or to arrange economical transportation of ores and their handling at ports. Third, the Government pointed out that trading interests had entered into large contracts, some of which they were unable to fulfil. Fourth, it asserted that the mining sector did not have an adequate scope for development on sound lines.

On the basis of these considerations, the Government articulated a new policy aimed at playing a more active role in overcoming the obstacles to increasing foreign‑exchange earnings from ore exports. The Press Note stated that the Government intended to re‑orient the trading of ores along more rational lines and, to that end, proposed to channel the export of ores progressively through the State Trading Corporation. In fulfilling this responsibility, the Government said it would rely primarily on domestic mining interests and would utilise the existing trading mechanism to the extent practicable. The Policy also allowed limited opportunities for mining and trading interests to participate directly in the export trade, subject to board policies that the Government might prescribe.

Following this policy declaration, the Press Note informed the trading community that, for the half‑year covering July to December 1956, the export of iron and manganese ores would be regulated through established shippers, mine owners, and the State Trading Corporation. The Note specified that export quotas would be allocated on three different bases. Established shippers would receive quotas based on the annual average of quantities actually exported during the three calendar years 1953, 1954 and 1955. Mine owners would be allotted quotas based on the annual average of the quantities of ore on which royalty had been paid, excluding amounts supplied for domestic consumption, for the same three‑year period; mine owners whose leases had expired on 31 December 1955 and had not been renewed would be ineligible. The State Trading Corporation would be granted quotas on an ad‑hoc basis. Additionally, the quotas were to be valid only for rail‑transport facilities on the routes previously used by the respective shippers, and quota‑holders would not be allowed to move more material on any section than they had moved during any of the three years 1953, 1954 or 1955.

In this case the Court recorded that the export quotas for manganese ore were allocated according to three categories. First, mine owners whose mining leases had expired on 31 December 1955 and had not been renewed were excluded from receiving any quota. Second, the State Trading Corporation was to receive quotas on an ad hoc basis. Third, each quota was limited to rail‑transport facilities on the railway sections that the shipper had previously used, and no quota‑holder was permitted to move on any section more than the quantity that shipper had moved on that section during any one of the years 1953, 1954 or 1955. The Court further noted that, through a series of later Press Notes, the government gradually eliminated all shippers except the State Trading Corporation. The High Court had examined every Press Note in detail and had prepared a concise summary of the steps taken by the government to achieve its objective, so the Supreme Court found it unnecessary to repeat that detailed analysis.

The Court then set out the High Court’s summary of the successive steps. Initially, the manganese trade was controlled by a system of licensing export quotas. Press Notes dated 14 July 1956, 30 July 1956, 6 August 1956, 4 September 1956 and 1 June 1957 showed that, with one exception, the quotas granted to shippers and mine owners were reduced progressively for each successive period. Until the fifth statement of 4 September 1956, the government’s policy did not contemplate mine owners who had no previous shipments; although the government announced that it was considering their case, no specific provision was made for them until the State Trading Corporation assumed the role. The seventh statement introduced the State Trading Corporation, which was allowed to compete freely with private interests; during that period small quota‑holders were encouraged to form cooperatives or companies and were otherwise discouraged. From the eighth statement dated 12 March 1959, private trading was effectively halted because all orders were required to be channeled through the State Trading Corporation under onerous terms that were difficult for small operators to satisfy. The State Trading Corporation faced no restrictions on its activities and its quota was unlimited. Finally, the policy was enforced with the assistance of licensing authorities appointed under the Imports and Exports (Control) Act and Order, as well as port authorities and by controlling the allocation of railway wagons. The Court concluded that the policy outlined in the initial statement was gradually implemented, first by limiting the issue of quotas and licences to recognized exporters and the State Trading Corporation, and subsequently by creating a near‑monopoly for the latter.

In the facts before the Court, the State Trading Corporation had effectively been granted a monopoly over the export of manganese ore. Earlier press notes indicated that the Government was examining the situation of mine‑owners who had no prior export shipments, but during the period prescribed for the policy no steps were taken to accommodate them. Consequently, mine‑owners such as the petitioner, who lacked any previous export record, were unable to move manganese ore from their mines for export because they could sell only to the established shippers and, after 12 March 1959, solely to the State Trading Corporation. The Government’s eagerness to increase manganese‑ore exports led it to ignore persons who were not already engaged in export trade during the stipulated period, and this omission effectively crippled the petitioner's business and the industry of similar mine‑owners.

Respondents’ counsel argued that the petitioner had applied for an export licence on 11 December 1958, seeking permission to sell not only to the State Trading Corporation but also to other recognised exporters, mine‑owners and shippers, and therefore should not have encountered difficulties in finding a buyer for his manganese. The Court noted that the petition did not specify whether the licence sought covered a period before the issuance of the eighth statement dated 12 March 1959. The earlier licensing period ended on 1 June 1959, and the eighth statement, issued on 12 March 1959, dealt with the interval from July 1959 to 1960, a period during which the State Trading Corporation had obtained a virtual monopoly in manganese‑ore export. It appeared more probable that the licence and quota requested pertained to the financial year 1959‑60, a view supported by the fact that the first respondent disposed of the application by order dated 17 December 1958. Even assuming the licence covered the earlier period, the Court found the contention that a free market existed for the petitioner to sell his ore to recognised exporters to be unrealistic and unfair. There was effectively no internal market for manganese ore, and none of the recognised exporters, whether established shippers or the State Trading Corporation, was obligated to purchase any quota from the petitioner or similar mine‑owners. Those exporters were in a position to dictate terms and could even disregard certain mine‑owners altogether. In essence, an artificial market had been created in which mine‑owners like the petitioner could sell their manganese ore only to the established shippers, and after March 1959, only to the State Trading Corporation, at prices determined by those entities.

The market that had previously existed was further narrowed after March 1959 so that the only permitted purchaser of manganese ore was the State Trading Corporation. The appellant complained that, because of these restrictions on sale and export, he was unable to find any market for his manganese ore. In the petition he asserted that the State Trading Corporation, invoking the impugned notices, was setting its own price and effectively demanding a commission from every exporter in order to provide facilities for exporting the petitioner’s ore under an unlimited quota that the corporation itself controlled. He further claimed that Respondent No 1 was deliberately causing heavy losses by forcing him to sell his ore to the corporation at a reduced price. The petitioner stated that he presently possessed about two hundred tons of manganese ore stored at his mines and sidings, valued at roughly Rs 20,000, which was being wasted, as shown by a circular dated 20‑April‑1957 issued by the corporation to various mine‑owners. He warned that, if he were not permitted to export the ore, he would be forced to accumulate approximately fifty tons each month, valued at US 10,000, without any outlet, while also bearing the continuing costs of his operation, including a wage bill of about Rs 4,000 per month. He added that, should he be compelled to shut down his mines because of the lack of sales, he would have to pay compensation of several thousand rupees to his workmen under industrial legislation, and he might also face cancellation of his lease under the Mineral Concession Rules, 1949, for ceasing work on his leased areas. Accordingly, the petitioner submitted that the respondent had created an impossible situation by issuing the various notices mentioned above. These factual allegations were not contested. The Court then asked whether a result that effectively destroyed the petitioner’s trade could be characterised as a reasonable restriction on his fundamental right. It observed that, under the pretext of channeling exports through specialised agencies, the Government had virtually granted a monopoly to a public corporation, thereby crippling the business of mine‑owners such as the petitioner. Such an inequitable position could not be dismissed merely on the ground that exporters could use the corporation. The Court noted that a possible justification might exist if, after March 1959, the corporation—and before that, the established exporters—had been bound to allocate a specific quota to mine‑owners like the appellant. Nevertheless, the Court held that a person’s livelihood should not be left to the fluctuating whims of an officer of a State corporation, however well‑meaning, and that any scheme for channeling exports through agencies could be aligned with an equitable apportionment of quotas among manganese producers without undermining the objective of promoting export trade. Any system of export channelisation through specialised agencies, therefore, must be governed by clear and fair rules.

In this case the Court observed that the scheme of channeling exports must be governed by clear and definite rules that provide stability and guarantee fair treatment both in ordinary circumstances and during emergencies. The Court suggested that appropriate rules could be framed to fix quotas for each mine‑owner, taking into account the expected total quantity of export as well as the quality and quantity of manganese produced by each owner. The Court further indicated that it might be necessary to appoint an expert body under those rules, not only to advise the State in determining the appropriate quota for each mine‑owner but also to assist in fixing reasonable prices, considering the relevant circumstances. The Court recognized that many other methods could be devised to achieve the same objective, and that it is for the Government and the appointed experts to develop those methods. However, the Court emphasized that the matters affecting persons subject to the scheme must not remain in vague uncertainty. Instead, the Government should create definite principles by issuing rules that also provide for variations in emergencies and changes of circumstances. The Court clarified that these observations were not intended to unduly restrict the Central Government; rather, the Government retained discretion to formulate appropriate rules in light of the observations made by the Court. At this stage the Court noted an additional contention raised by counsel for the appellant. The appellant argued that, unless a specific law is enacted by the State authorizing a corporation owned or controlled by the State to conduct business to the exclusion, wholly or partially, of citizens, a virtual monopoly created by administrative action under the guise of a power to channel trade in a particular commodity through designated channels would necessarily constitute an unreasonable restriction on a citizen’s right to carry on business in that commodity. In support of this argument the appellant relied upon Article 19(6) of the Constitution, as amended by the Constitution (First Amendment) Act, 1951. The relevant portion of the amendment reads: “Nothing in sub‑clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub‑clause, and, in particular, nothing in the said sub‑clause shall affect the operation of any existing law in so far as it relates to, or prevents the State from making any law relating to – (i)… (ii) the carrying on by the State, or by a corporation, owned or controlled by the State, of any trade, business, industry or service – whether to the exclusion, complete or partial, of citizens or otherwise.” The Court held that the amended article does not, in itself, confer a power on the State to create monopolies through administrative action. Rather, the amendment merely states that if a valid law is enacted granting the State the authority to conduct trade or business to the exclusion, wholly or partially, of citizens, such a law would not infringe the fundamental right guaranteed under Article 19(1)(g).

The Court observed that the Constitution does not say, as the appellant’s counsel contended, that any State interference with a citizen’s trade exercised under a different law would automatically amount to an unreasonable restriction unless a specific law conferring such power had been enacted. Accordingly, such interference would not enjoy the protection of the amended constitutional provision; rather, it would have to be assessed according to the standard set out in the first part of Article 19(6). Under that standard, the interference would be valid only if it constituted a reasonable restriction on the exercise of the petitioner’s fundamental right and was made in the interest of the general public. The Court then turned to the decision in Saghir Ahmad v. The State U.P. (1) and noted that it did not aid the appellant. In that earlier case the Court examined whether the Uttar Pradesh Road Transport Act (11 of 1951) violated the fundamental rights of private citizens guaranteed under Article 19(1)(g) and whether it was protected by clause (6) of Article 19. The question was considered on the basis of the article as it existed before the Constitution (First Amendment) Act 1951, and the Court held that the Act did offend the fundamental right. The Court further observed that, had the statute been passed after the amendment introduced the new clause in Article 19(6), the issue of reasonableness would not have arisen and the appellant’s case on that point would have been unarguable. However, those considerations could not influence the present decision, because an amendment that came later could not be used to validate an earlier piece of legislation that must be regarded as unconstitutional at the time it was enacted. The Court stated that these observations did not assist the appellant, as they merely reiterated the obvious proposition that if a law fell within the meaning of the amended article, no question of infringing the fundamental right would arise, and that argument carried no weight. This issue did not affect the Court’s ultimate conclusion that the Press Notes issued by the Government clearly infringed the petitioner’s fundamental right. Nevertheless, since the period for which the licence had been sought had expired, the application became infructuous and therefore had to be dismissed. Consequently, the appeal was dismissed, but, in the circumstances of the case, no costs were awarded.