Equivalent citations: 1973 AIR 106, 1973 SCR (2) 757 Petitioner: Bennett Coleman & Co. & Ors. Respondent: Union of India & Ors. Date of Judgement: 30/10/1972 Bench: Sikri, S.M. (Cj), Ray, A.N., Reddy, P. Jaganmohan, Mathew, Kuttyil Kurien, Beg, M. Hameedullah
Facts of the Case
The petitioners were media conglomerates involved in the publication of newspapers. They challenged the restrictions on the import of newsprint under Import Control Order 1955 and on the manner in which this is used by newspapers under the Newsprint Order 1962. Further, the Newsprint Policy of 1972-73 placed further restrictions based on four features: first, no new newspapers may be started by establishments owning more than two newspapers if at least one of which is a daily; second, the total number of pages may not exceed ten; third, the increase in number of pages may not be more than 20% for newspapers that are under ten pages; and, finally, no-interchangeability of newsprint may permitted between different newspapers of the same establishment or between different editions of the same paper. Therefore, the petitioners were not allowed to make adjustments in circulation, etc., under these newsprint policies even within the quota limit. This was challenged for violation of Article 19(1)(a) of the Indian Constitution.
The respondents argued that the petitions were not maintainable because companies do not enjoy fundamental rights, which are available only to natural persons. Further, the respondents argued that Article 358—the Constitution’s provision for “emergency powers”—barred any challenge on grounds of fundamental rights. They also proposed a subject-matter test of restriction rather than an “effects test.” Accordingly, the restrictions were valid because they regulated the commercial operations of newspapers in order to prevent monopolies, by which any effect on freedom of expression was incidental. Finally, they asserted that the question of whether newsprint import must be increased was a question of policy that could not be challenge on any grounds except “mala fide.”
- Whether the petitioners being companies could invoke fundamental rights?
- Whether Art. 358 of the Constitution was a bar to any challenge by the petitioners on violations of fundamental rights?
- Whether the restriction on newsprint import under the 1955 Order was violative of Art. 19(1) (a) of the Constitution?
- Whether the newsprint Policy fell within clause 5(1) of the Import, Control Order 1955 and was valid?
- Whether clauses 3 and 3A of clause 3 of the 1962 Newsprint Order were violative of Arts. 19(1) (a) and 14 of the Constitution?
- Whether Remarks V, VII(a), VII(c), VIII, and X of the Newsprint Policy for 1972-73 were violative of Arts. 19(1) (a) and 14 of the Constitution because of the following objectionable features
On merits, the Court noted that freedom of the press was an essential element of Article 19(1)(a) and the absence of an express mention of such freedoms as a special category was irrelevant. Free press was to be regarded as an essential element of freedom of expression in general. The Court also observed that shortage of newsprint could be tackled by fixing the quotas. However, direct interference in terms of page limits and other such regulation was not justified. The page limit meant that the newspapers would either lose economic viability due to reduction in advertisements or be forced to reduce news content. This would limit freedom of expression because, in the first case, circulation would drop due to increased costs, and, in the second, there were quantitative restrictions on content.
The Court observed that freedom of the press had both quantitative and qualitative elements and, therefore, the quantitative controls constituted restrictions on freedom of expression. Since they were not justified on the basis of shortage of newsprint, they could not be considered to be reasonable restrictions. The Court held that the Newsprint Policy of 1972-73 was unconstitutional. However, the Newsprint Order and Import Control Order were considered not to be the source of these restrictions and were not struck down.
J.Beg, in a concurrence, observed that the Newsprint Policy of 1972-73 was outside the scope of the Import Control Order, which provided only for fixing of quotas and no further interference. Therefore, the question of whether the restrictions were reasonable did not arise, as the government action had no legal basis in the first place.
J.Mathew, in a dissent, observed that there was no direct regulation of content and that a restriction on number of pages did not mean an abridgment of freedom of expression. He reasoned that the control of newsprint and regulating its distribution was necessary to ensure that it was efficiently utilized. Insofar as it made newsprint utilization efficient and prevented monopoly by a few newspapers, the policy expanded rather than abridged freedom of speech and expression. He disagreed with the majority judgment and held that the policy was not unconstitutional.
J.Ray delivered the opinion of the court. As a preliminary question, the Supreme Court observed that the petitions were maintainable. The fact that the petitioners were companies was not a bar to award relief for violation of the rights of shareholders and editorial staff (who were also petitioners). Further, the bar under Article 358 did not apply to laws passed before the proclamation of emergency, and, therefore, the newsprint policy could be challenged as a continuation of the previous year’s policy and relevant orders.
While acting under Section 398 and section 402 of the companies act of 1956, the court has ample jurisdiction and very wide powers to pass such orders and give directions as it thinks fit to achieve the object and same will not be violative of section 255.
It was not so great an argument by the counsel of the government to say that since companies are not individual citizens hence they cannot invoke fundamental rights. After all companies are formed by individuals. Either the counsel has not taken the “doctrine of lifting the corporate veil” in to account or is in an assumption that it is applied only on cases where individuals (foreign or Indian) commit mistakes using the identity of company as a veil. Actually, it works both ways.
Our motive should be one, should not use corporate veil to achieve malafide objectives or someone should not use it to claim that he is doing a particular act for the company not to the individuals. The court cited Express Newspapers (Private) Ltd. & Anr. v. The Union of India & Ors. and Sakal Papers Ltd. & Ors. v. The Union of India as reference and said that in these cases, the court observed that all the petitioners in those cases like shareholders, editors, deputy editors and readers etc., were all Indian citizens. Now the question that arises is whether in cases where one of the shareholders is not an Indian or is a correspondent of a foreign press in India or a head of its bureau in India, what stand the court will take is an important question. What is indeed unfathomable is the restriction of common ownership unit from starting a new newspaper periodical or a new edition or remark X which is also violative of article 19(1)(a).
The court did not find it necessary to express an opinion on clause 3(3A) of the control order.
It seems that the intention of the govt. was to have less restriction on papers of vernacular languages. It may be because it might have felt threatened by the English papers.
1986 AIR 872, 1985 SCR Suppl. (3) 382.
1962 AIR 305, 1962 SCR (3) 842.