Essential commodity stock control upheld for freezing, but procurement-rate acquisition struck down for unfair compensation

Freezing essential commodity stocks under a control order was upheld as a reasonable restriction on trade because it was connected to the statutory scheme for equitable distribution and fair prices. The absence of express grounds for freezing did not, by itself, make the provision invalid. By contrast, the part authorising requisition or disposal of the frozen stocks at the Government procurement rate was struck down because it left compensation to executive discretion, allowed acquisition at an undefined or potentially unfair price, and imposed an unreasonable burden on traders, offending both the trade guarantee and the constitutional protection against deprivation without fair compensation.

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Issues: (i) Whether the first part of clause 25 of the Rajasthan Foodgrains Control Order, 1949, authorising freezing of foodgrains stocks, was a valid restriction on the right to carry on trade under Article 19(1)(g) of the Constitution; (ii) Whether the last part of clause 25, empowering requisition or disposal of the frozen stocks at the Government procurement rate, was void for violating Articles 19(1)(g) and 31(2) of the Constitution.

Issue (i): Whether the first part of clause 25 of the Rajasthan Foodgrains Control Order, 1949, authorising freezing of foodgrains stocks, was a valid restriction on the right to carry on trade under Article 19(1)(g) of the Constitution.

Analysis: The power to freeze stocks was read with the policy underlying section 3 of the Essential Supplies Act, 1946, which authorises regulation of production, supply, distribution, storage and disposal of essential commodities in order to secure equitable distribution and availability at fair prices. In that setting, freezing of foodgrains stocks was held to be reasonably related to the statutory object and not arbitrary. The absence of express grounds for freezing did not, by itself, invalidate the provision.

Conclusion: The first part of clause 25 was upheld and was not void under Article 19(1)(g).

Issue (ii): Whether the last part of clause 25, empowering requisition or disposal of the frozen stocks at the Government procurement rate, was void for violating Articles 19(1)(g) and 31(2) of the Constitution.

Analysis: The impugned words left the price entirely to executive discretion without fixing compensation or prescribing principles for its determination. This enabled requisition at a rate lower than the market or ceiling price and imposed a serious and unreasonable burden on traders, while permitting the Government to profit from the same stocks. The provision was therefore held to impose an unreasonable restriction on trade and, in addition, to offend Article 31(2) because it failed to provide fair compensation or the principles for determining it.

Conclusion: The last part of clause 25 was void as against the respondent.

Final Conclusion: The appeal failed because only the severable opening portion of clause 25 survived constitutional scrutiny, while the provision authorising requisition or disposal at the procurement rate was struck down as unconstitutional.

Ratio Decidendi: A control order that permits freezing of essential commodity stocks to secure equitable distribution and fair prices may be valid, but a provision authorising acquisition of those stocks at an undefined or arbitrarily fixed price without compensation principles is an unreasonable restriction on trade and violates the constitutional guarantee against deprivation without fair compensation.

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