Transport permit controls under a state monopoly are valid only as reasonable, purposive limits on movement of tendu leaves.

Section 5 and Rule 9 were construed to require transport permits for movement of tendu leaves from the point of purchase through the warehouse and onwards to branches and sattedars, because the permit scheme was intended to prevent illicit transport and mixing of lawful and unlawful leaves. The requirement was not extended to further distribution by sattedars to mazdoors, as that would be impracticable and inconsistent with the statutory object. The transport restrictions were treated as ancillary to the State monopoly scheme and valid only to the extent they imposed reasonable control up to the stage of supply to sattedars; the broader challenge therefore succeeded only in part.

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Issues: (i) Whether Section 5 and Rule 9 required transport permits only up to the manufacturer's warehouse, or also for movement from the warehouse to branches and to sattedars, but not for distribution by sattedars to mazdoors. (ii) Whether the transport restrictions imposed by Section 5 and Rule 9 were constitutionally valid as part of the State monopoly scheme and as reasonable restrictions.

Issue (i): Whether Section 5 and Rule 9 required transport permits only up to the manufacturer's warehouse, or also for movement from the warehouse to branches and to sattedars, but not for distribution by sattedars to mazdoors.

Analysis: The statutory scheme was read in the light of the object of the Act, namely regulation of trade in tendu leaves through a State monopoly in purchase and sale. The permit provisions in Section 5(2)(b) and Rule 9, together with the prescribed forms, were intended to control movement of leaves after purchase so as to prevent illicit transport and mixing of lawfully acquired and contraband leaves. On that construction, the movement from the unit of purchase to the warehouse, then to branches and to sattedars, could be regulated by permits. However, requiring permits for the further distribution of comparatively small quantities by sattedars to innumerable mazdoors would be impracticable and inconsistent with the statutory object.

Conclusion: The permit requirement extended to movement up to the sattedars, but not to distribution by sattedars to mazdoors.

Issue (ii): Whether the transport restrictions imposed by Section 5 and Rule 9 were constitutionally valid as part of the State monopoly scheme and as reasonable restrictions.

Analysis: A monopoly in trade in tendu leaves could validly cover the core right of purchase and sale, but transport restrictions were not an integral or essential part of the monopoly itself. They were ancillary measures for effective enforcement and therefore had to satisfy the test of reasonableness under Articles 19(5) and 19(6), and the corresponding standard under Article 304(b). Applying the doctrine of constitutional validity and purposive construction, the Court balanced the necessity of control against the hardship to the bidi trade and held that a limited permit system up to the stage of supply to sattedars was reasonable, while the more burdensome requirement beyond that stage was not intended.

Conclusion: The restrictions were valid to the limited extent of regulating movement up to the sattedars, and the challenge to the statute and rules substantially failed.

Final Conclusion: The statutory scheme was upheld with a limited reading that preserved workable control over transport without extending the permit burden beyond what was reasonably necessary for the monopoly.

Ratio Decidendi: A transport-control provision supporting a State trade monopoly is not itself an essential part of the monopoly unless it is indispensable to the creation of the monopoly; where it is only ancillary, its scope must be confined by a reasonable and purposive construction consistent with constitutional guarantees.

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