1954 (1) TMI 32 - SC - Indian Laws

Court voids clause giving licensing authority absolute power; cancels license deemed ineffective. Prices fixed valid.

Messrs. Dwarka Prasad Laxmi Versus The State Of Uttar Pradesh And Two

The court found clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, granting absolute power to the licensing authority to be void as it imposed ... - Issues Involved:1. Validity of Uttar Pradesh Coal Control Order, 1953.2. Validity of the declaration of prices made on July 16, 1953.3. Validity of the cancellation of the petitioners' license on October 13, 1953.Issue-wise Detailed Analysis:1. Validity of Uttar Pradesh Coal Control Order, 1953:The petitioners challenged the constitutional validity of the Uttar Pradesh Coal Control Order, 1953, arguing that its provisions vested 'unfettered and unguided discretion' in the licensing authority or the State Coal Controller. This arbitrary power, which included granting or revoking licenses and fixing prices, was argued to impose 'unreasonable restrictions' on the petitioners' right to carry on their trade, thus conflicting with their fundamental rights under Article 19(1)(g) of the Constitution.The court noted that while regulating the sale of essential commodities like coal through licensed vendors was reasonable, the mischief arose when the power conferred on officers was arbitrary and unregulated. The court emphasized that 'a law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable.' The court found clause 3(2)(b) of the Control Order, which allowed the State Coal Controller to exempt any person or class of persons from the provisions without any defined grounds, to be prima facie unreasonable. However, this clause was deemed severable and not directly relevant to the petitioners' case.The more significant objection was against clause 4(3) of the Control Order, which gave the licensing authority absolute power to grant, refuse, renew, suspend, revoke, or modify any license without any rules or guidelines to regulate this discretion. The court held that such provision 'cannot be held to be reasonable' and was void as it imposed an 'unreasonable restriction upon the freedom of trade and business guaranteed under Article 19(1)(g) of the Constitution.' Consequently, the cancellation of the petitioners' license under this clause was also deemed ineffective.2. Validity of the Declaration of Prices Made on July 16, 1953:The petitioners argued that the prices fixed by the declaration on July 16, 1953, were discriminatory and made in exercise of arbitrary power conferred by the Control Order. The court examined the formula given in Schedule III of the Control Order and found that the prices were calculated based on the landed costs of coke and coal up to the depot, with a profit of 10% added. The court did not find the formula unreasonable and noted that the discretion given to the licensing authority in fixing rates was not unlimited but had to be exercised with reference to local conditions.The petitioners claimed that the incidental charges allowed in Kanpur were significantly lower than those in other places like Lucknow, Aligarh, and Allahabad, leading to discrimination. However, the court found no supporting affidavit from someone familiar with the local conditions in these places and thus could not conclude that the rates fixed were discriminatory. The court emphasized that it could not substitute its determination for that of the licensing authority unless it was shown that the discretion was uncontrolled or unfair discrimination resulted from its exercise.3. Validity of the Cancellation of the Petitioners' License on October 13, 1953:The petitioners' license was canceled on charges of irregularities, including holding and financing other depots in different names and selling coal at more than the fixed rates. The court found the cancellation order invalid as it was made under clause 4(3) of the Control Order, which was already deemed void for being an unreasonable restriction on trade and business. Consequently, the court did not need to further examine whether the charges were vague or constituted proper grounds for cancellation.Conclusion:The court held clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, and the cancellation of the petitioners' license to be invalid. A writ of mandamus was issued against the respondents to prevent the enforcement of the cancellation order. The rest of the petitioners' prayers were disallowed, and no order as to costs was made. The petition was partly allowed.