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AI Drafter ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the restrictions imposed on cotton hedge contracts under the Cotton Control Order, 1950 offended Article 19(1)(g) of the Constitution of India. (ii) Whether the exemption granted to the East India Cotton Association, Bombay, while denying a similar exemption to the petitioner amounted to discrimination under Article 14 of the Constitution of India.
Issue (i): Whether the restrictions imposed on cotton hedge contracts under the Cotton Control Order, 1950 offended Article 19(1)(g) of the Constitution of India.
Analysis: Cotton had been treated as an essential commodity under the Essential Supplies (Temporary Powers) Act, 1946. In that setting, regulation of cotton contracts, including temporary prohibition of normal trading and controlled permission for hedging, was within the State's regulatory power. Hedge contracts were recognised as economically important but also as requiring supervision to prevent speculation and instability. The restriction was therefore treated as a reasonable restriction on trade.
Conclusion: The restriction did not violate Article 19(1)(g) and was upheld against the challenge.
Issue (ii): Whether the exemption granted to the East India Cotton Association, Bombay, while denying a similar exemption to the petitioner amounted to discrimination under Article 14 of the Constitution of India.
Analysis: The East India Cotton Association had long-standing experience and established working conditions, whereas the petitioner was a recently incorporated association and its alleged continuity with an older body was not satisfactorily established in a manner showing equal footing. The merger with the earlier Ujjain body occurred only after the first impugned order and only shortly before the later orders, leaving insufficient basis to conclude that the Textile Commissioner acted unreasonably in withholding exemption. The two associations were therefore not similarly situated for Article 14 purposes.
Conclusion: The differential treatment did not amount to unconstitutional discrimination under Article 14.
Final Conclusion: The constitutional challenge failed, and the impugned orders were sustained, resulting in dismissal of the petition with costs.
Ratio Decidendi: Where a commodity is treated as essential, temporary regulatory restrictions on trading, including selective permissions for hedging, may be upheld as reasonable; and Article 14 is not violated unless the challenger shows comparable status and treatment on a substantially equal footing.
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