Unguided licensing discretion in essential commodity control is unreasonable, while regulated coal price fixation was upheld.

A regulatory order controlling coal trade under the Uttar Pradesh Coal Control Order, 1953 was examined for compatibility with Article 19(1)(g). The licensing clause was treated as invalid because it conferred unguided and unreviewable discretion to grant, refuse, suspend, revoke or cancel licences, making the restriction unreasonable under Article 19(6). By contrast, the compulsory sale scheme and price fixation in clauses 7 and 8 with Schedule III were upheld, as the price formula, locality-based limits and profit margin were not shown to be arbitrary or discriminatory on the record.

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Issues: (i) Whether clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, conferring unrestricted power to grant, refuse, renew, suspend, revoke, cancel or modify licences, imposed an unreasonable restriction on the freedom of trade and business guaranteed by Article 19(1)(g) of the Constitution. (ii) Whether clauses 7 and 8 read with Schedule III of the Control Order, dealing with compulsory sale of coal and fixation of prices, were unreasonable or discriminatory so as to be unconstitutional.

Issue (i): Whether clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, conferring unrestricted power to grant, refuse, renew, suspend, revoke, cancel or modify licences, imposed an unreasonable restriction on the freedom of trade and business guaranteed by Article 19(1)(g) of the Constitution.

Analysis: A control order regulating an essential commodity may validly require licences and permit administrative discretion, but such discretion must be guided by rules or principles and must not be arbitrary. Clause 4(3) vested absolute power in the licensing authority and permitted delegation to any person chosen by the State Coal Controller, without prescribing any standards, safeguards, or effective appellate or revisional control. Recording reasons was held insufficient because no higher authority was provided to test their propriety. The provision therefore left the matter to uncontrolled executive will and failed the test of reasonableness under Article 19(6).

Conclusion: Clause 4(3) was held invalid as imposing an unreasonable restriction on the petitioners' fundamental right under Article 19(1)(g). The cancellation of the petitioners' licence made under that clause was consequently ineffective and unenforceable.

Issue (ii): Whether clauses 7 and 8 read with Schedule III of the Control Order, dealing with compulsory sale of coal and fixation of prices, were unreasonable or discriminatory so as to be unconstitutional.

Analysis: The price formula in Schedule III was examined item by item. The actual landed-cost components were accepted as proper, and the allowance for incidental charges and shortage of weight was not shown on the materials before the Court to be arbitrary or discriminatory. The discretion given to the licensing authority was limited by the Schedule itself through maxima and locality-based standards. The fixed profit margin was treated as a part of the regulatory scheme intended to secure equitable distribution of an essential commodity and was not shown to be excessive or destructive of trade. On the record, the challenged fixation of prices did not warrant judicial interference.

Conclusion: Clauses 7 and 8, including Schedule III and the declaration of prices made thereunder, were upheld as valid and not in violation of Article 19(1)(g).

Final Conclusion: The petition succeeded only to the extent that the licence-cancellation provision and the cancellation order were struck down, while the scheme regulating compulsory sale and price fixation of coal was sustained.

Ratio Decidendi: A regulatory order affecting trade in an essential commodity is valid only so far as the discretion it confers is controlled by intelligible standards and is not left to arbitrary executive will; where a licensing power is unguided and unreviewable, it is an unreasonable restriction under Article 19(6).

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