Canalisation of exports upheld as valid control power and reasonable trade restriction under the Constitution.

Section 3 of the Imports and Exports (Control) Act, 1947 was construed broadly to authorise the Central Government to control exports by canalising trade through selected agencies or channels, including special or specialised agencies chosen for the object of the control. The majority also held that export policy and notifications restricting manganese ore exports to selected classes and routing trade through the State Trading Corporation did not amount to an unreasonable restriction under Article 19(1)(g), as the scheme rested on rational classification and served the general public interest. A dissent considered the canalisation scheme to be an unreasonable and monopoly-like restraint lacking fair rules and apportionment.

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Issues: (i) Whether Section 3 of the Imports and Exports (Control) Act, 1947 empowered the Central Government to frame a control order providing for canalisation of exports through special or specialised agencies or channels. (ii) Whether the export policy and notifications, which confined manganese ore exports to selected classes and progressively routed the trade through the State Trading Corporation, imposed an unreasonable restriction on the right to carry on trade under Article 19(1)(g) of the Constitution of India.

Issue (i): Whether Section 3 of the Imports and Exports (Control) Act, 1947 empowered the Central Government to frame a control order providing for canalisation of exports through special or specialised agencies or channels.

Analysis: Section 3 was construed broadly as conferring power to prohibit, restrict, or otherwise control exports. That power was held wide enough to include regulation by canalisation, because control of export trade may legitimately operate through classification of exporters, fixation of priorities, and selection of agencies through which the trade is channelled. The phrase used in Clause 6(h) was not confined to agencies with prior expertise, but extended to agencies selected with reference to the object of the control.

Conclusion: The provision was held to be within the rule-making power under Section 3 of the Imports and Exports (Control) Act, 1947.

Issue (ii): Whether the export policy and notifications, which confined manganese ore exports to selected classes and progressively routed the trade through the State Trading Corporation, imposed an unreasonable restriction on the right to carry on trade under Article 19(1)(g) of the Constitution of India.

Analysis: The majority held that canalisation of exports was not unconstitutional per se and that prior experience in the trade furnished a rational basis for classification. The State Trading Corporation was treated as a special agency for the purpose of securing continuity, quality, and adequate export earnings. On that view, exclusion of new-comers from direct export did not violate any enforceable legal right. The majority further held that the restrictions were justified as reasonable in the interests of the general public.

Conclusion: The export control scheme was held to be a valid and reasonable restriction under Article 19(1)(g) read with Article 19(6) of the Constitution of India.

Final Conclusion: The majority upheld the legal validity of the export-control framework and found no enforceable constitutional right in favour of the appellant to compel grant of an export licence outside that scheme.

Ratio Decidendi: A statutory power to control exports may validly include canalisation through selected agencies, and a trade restriction based on rational classification and imposed in the interests of the general public is not invalid merely because it excludes new entrants from direct export.

Concurring Opinion: None material.

Dissenting Opinion: Subba Rao, J. held that the canalisation scheme, as implemented, virtually created a monopoly in favour of the State Trading Corporation without definite rules, stability, or fair apportionment, and therefore operated as an unreasonable restriction on the appellant's trade. On that view, the petitioner's grievance was substantial, though the appeal was ultimately dismissed as infructuous because the licence period had expired.

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