Supreme Court Upholds Validity of State Acts Restricting Sheera and Molasses Production

The Supreme Court upheld the constitutional validity and legislative competence of the U.P. Sheera Niyantran Adhiniyam, 1964, and the Bihar Molasses (Control) Act, 1947, finding the restrictions imposed by the State Governments reasonable and in line with economic policy considerations. The court dismissed the appeals challenging the Acts, emphasizing the need for latitude in economic policy formulation.

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Issues Involved:
1. Constitutional validity of the U.P. Sheera Niyantran Adhiniyam, 1964.
2. Legislative competence of the State Legislature to enact the U.P. Sheera Niyantran Adhiniyam, 1964.
3. Reasonableness of restrictions imposed under Article 19(1)(g) and Article 301 of the Constitution.
4. Similar issues regarding the Bihar Molasses (Control) Act, 1947.

Summary:

1. Constitutional Validity of the U.P. Sheera Niyantran Adhiniyam, 1964:
The appellants challenged the constitutional validity of the U.P. Sheera Niyantran Adhiniyam, 1964, which received the President's assent on 17th Oct. 1964. The challenge arose due to orders passed by the Controller of Molasses/Excise Commissioner, U.P. u/s 8 of the Act and Rule 22, dated 13th August 1983, 22nd October 1993, and 1st January 1994. These orders required sugar factories to sell molasses at state-prescribed prices, impacting the freedom of trade under Article 19(1)(g) and Article 301.

2. Legislative Competence of the State Legislature:
The appellants argued that the U.P. Legislature lacked competence to enact the U.P. Sheera Niyantran Adhiniyam, 1964, as the sugar industry is under the Union Government's control per the Industries (Development and Regulation) Act, 1951, and Entry 25 of the First Schedule. The court examined the relevant entries in the Seventh Schedule of the Constitution and applied the principle of harmonious construction to reconcile Entries 24, 26, and 27 of List II with Entry 33 of List III and Entry 52 of List I. The court concluded that Section 18G of the Industries (Development and Regulation) Act, 1951, falls under Entry 33 of List III, allowing concurrent legislative competence for the State Legislature.

3. Reasonableness of Restrictions:
The court addressed the contention that the notifications dated 13.8.1993, 22.10.1993, and 1.1.1994 imposed unreasonable restrictions on the right to trade under Article 19(1)(g) and violated Article 301. The State Government argued that the control over molasses was essential for the development of sugar, alcohol, and chemical industries in U.P., and the policy of partial decontrol was based on economic considerations. The court found the State's policy reasonable, emphasizing the need for latitude in economic policy formulation and upheld the U.P. Sheera Niyantran Adhiniyam, 1964, and the notifications.

4. Bihar Molasses (Control) Act, 1947:
Similar issues were raised regarding the Bihar Molasses (Control) Act, 1947. The Bihar State Legislature had enacted the Act with the Governor General's assent, and it continued to operate even after the Central Government's Molasses Control Order, 1961, was rescinded. The Bihar Legislature enacted the Bihar Amending Act 1 of 1964, making the Act permanent. The court dismissed the appeals challenging the Bihar Molasses (Control) Act, 1947, for the same reasons as in the U.P. case, upholding the State's legislative competence and the reasonableness of the restrictions.

Conclusion:
The Supreme Court upheld the constitutional validity and legislative competence of the U.P. Sheera Niyantran Adhiniyam, 1964, and the Bihar Molasses (Control) Act, 1947, dismissing the appeals with costs. The court found the restrictions imposed by the State Governments to be reasonable and in line with economic policy considerations.

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