Dwarka Prasad Laxmi Narain vs. State of Uttar Pradesh and Ors.

Dwarka Prasad Laxmi Narain vs. State of Uttar Pradesh and Ors.
In the Supreme Court of India
1954 AIR 224, 1954 SCR 803
Petitioner
Dwarka Prasad Laxmi Narain
Respondent
State of Uttar Pradesh and Ors.
Date of Judgement

11 January 1954
Bench
Justice M.C. Mahajan (C.J.); Justice B. Jagannadhadas; Justice B.K. Mukherjea; Justice Ghulam Hasan; Justice Vivian Bose

Background

This case deals with the constitutional validity of The Uttar Pradesh Coal Control Order, 1953 passed by the legislature of the state for the regulation of sale, storage, granting of a license for selling, of the coal within the boundaries of the state of Uttar Pradesh. The aforesaid order has been challenged on the grounds of being violative of Article 14, Article 19(1) (f) and Article 19(1) (g) of the Constitution of India.

Facts of the Case

The present writ petition is filed before this court under Article 32 of the Constitution of India challenging the constitutional validity of The Uttar Pradesh Coal Control Order 1953 on the grounds of it being violative of Article 14 and Article 19 of the Constitution of India.

The Petitioners had a business of selling coal in the city of Kanpur. District Magistrate and the District Supply Officer for the city of Kanpur who are the Respondents in the present case, have from time to time, and through directives tried to impose restrictions of various kinds on the sale and deposit of coal in the city. On 14 February 1953, they fixed the price of coal at such a price that is left only a 20 percent profit margin for the coal retailers. On 22 May 1953, the said executive order was challenged by the Petitioners before the Vacation Judge of the High Court of the grounds of being violative of their Fundamental Rights. The learned Judge granted a stay on the executive order on the ground that they had no legislative backing.

Subsequently, the state of Uttar Pradesh promulgated by notification and order titled “The Uttar Pradesh Coal Control Order 1953” which in a way gave legislative backing to the aforesaid executive order. Thereupon on 16 July 1953, the respondent again issued a declaration fixing the price of coal exactly at the same price as they were set before. Thereafter on 3 October 1953, the Area Ration Officer Kanpur, through a letter, accused the petitioner of committing various irregularities in connection with coal depot, and subsequently, on 13 October 1953, the District Magistrate canceled the license of the petitioners based on those accusations. The present writ petition before this court challenges the constitutional validity of the coal control order and the cancellation of the license of the Petitioner.

Statutes and Provisions discussed

  • Right to Equality under Article 14 of the Indian Constitution.
  • Freedom of Trade and Commerce under Article 19[1] (g) of the Indian Constitution.
  • Furthermore, provisions of “The Uttar Pradesh Coal Control Order 1953” have also been discussed in the present case.

Issues

1. Whether ‘The Uttar Pradesh Coal Control Order 1953’ is violative of Article 14 and Article 19[1](g) of the Constitution of India?

2. Whether the act of canceling of the Petitioner’s license by the District Magistrate of Kanpur is valid?

Arguments Advanced:

Arguments on behalf of the Petitioner:

The Petitioner contended that Clause 4(3) of ‘the order’ gives unguided and unfettered power to the State Coal Controller in the matter of granting and revoking the license, regulating the sale price of the coal and imposing other restrictions on the traders, which in turn will lead to the arbitrary use of power by the executive authority hence being anthesis to Article 14.

It was also argued by the petitioners that the order dated 16 July 1953 is utterly discriminatory as it makes unreasonable discrimination between the prices set for the city of Kanpur and the prices set for other cities in the state of Uttar Pradesh.

Further, it imposes an unreasonable restriction on the petitioner’s right to carry on his trade or business hence being violative of his fundamental right under Article 19(1)(g).

On the second issue, the Petitioner contended that the charges framed against him, on the basis of which his license to sell coal has been canceled, are vague and indefinite and have been made with the intention of driving him out of the coal business. 

Arguments on behalf of the Respondents:

The counsel appearing on behalf of the respondent argued that even though some part of the impugned order may be violative of the Fundamental Rights, they being severable do not render the legislation as a whole void.  

The Respondents also argued that ‘the Order’ provides sufficient safeguard against abuse of power by the concerned executive authority by reason of the fact that the licensing authority has got record reason for what he does.

Judgment

The Court held ‘the Order’ to be violative of Article 19(1)(g) of the Indian Constitution as well as violative of Article 14 of the Indian Constitution. However, the determination of prices by the concerned executive authority was held to be within his power limits and at this point, it was held to be valid.

Ratio Decidendi:

This Court held that although the state legislature of Uttar Pradesh is competent to make the said order but the same has to stand the test of Part III of the Indian Constitution. If the Order does not satisfy this test the same will be liable to be struck down. If by virtue of some legislative order any Executive Authority is vested with the power to regulate any trade or business, the power must not be uncontrolled and arbitrary or else it would be violative of the right granted to the citizens by Article 19(1)(g) of the Indian Constitution. The court made reference to the case of Chintaman Rao and Others v. State of Madhya Pradesh,[i] on this point.

The court further held that although the power to grant and issue license has to be delegated to some executive authority, but his discretion should be regulated by some reasonable procedure to be provided by the said order. If the said discretion is left to be exercised by the authority without laying down any proper procedure, it is bound to suffer from the vice of personal biases, zeal or animosity which would be violative of Article 14 and in turn violate the Freedom to carry on any Trade or Business of a citizen of India. The Court in this regard made reference to the case of Yick Wo v. Hopkins[ii].

The Court held that Clause 3(1) of ‘the Order’ gives unrestricted power to the State Controller. The court held this to be violative of Article 14 as well as Article 19(1)(g) of the Constitution.

Further Clause 4(3) of ‘the Order’ gives unregulated and unfettered power to the executive authority in the matter of granting and revoking the license for the sale of coal. This was also held to be violative of Article 14 as well as Article 19(1)(g) of the Constitution. These two clauses not being severable render the whole ‘Order’ to be void.  

However, the court held that as far as fixing of the selling price of coal is concerned the same has to be left to some discretion of the executive authority as regulation depends upon the condition prevalent in a particular area and the same may vary from place to place. Hence the order dated 16 July 1953 was held to be non- discriminatory.

Conclusion:

Equality is an antithesis to arbitrariness. Any Act made by the legislature or an executive order granting unregulated and unfettered discretion to the executive authority is violative of Article 14. If any Act or Order regulates or imposes the restriction of the citizen’s right to carry on any Trade of Business the same has to be within the ambit of Article 19(6) of the Indian Constitution and hence, liable to be struck down.   

Edited by Parul Soni

Approved & Published – Sakshi Raje

Reference

[i] Chintaman Rao and Others v. State of Madhya Pradesh, (1951 AIR 118).

[ii] Yick Wo v. Hopkins (118 U.S 356 at 373).

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I am Aditi Mishra, a first year student pursuing B.A.LLB (Hons.) from Hidayatullah National Law University, Raipur. I am capable of working in fast-paced environment and of meeting strict deadlines, being a Law student my interest lies in Constitutional Law , Penal Laws and Public International Law. In my free times I indulge myself in cooking and baking, apart from this my interest also lies in debating and reading fictions. At last, I am able to work independently and as part of a team and can make valuable contributions to any legal team.