State of Rajasthan v. Nath Mal and Mitha Mal

The question involved in this appeal relates to the constitutional validity of clause 25 of the Rajasthan Foodgrains Control Order, 1949, hereinafter called the Control Order, and arises in the following circumstances :- The respondents, who are grain merchants at Raniwara in Jodhpur Division, Rajasthan State, held licences for dealing in foodgrains. They held considerable stocks of bajra in the ordinary course of business but on October 7, 1950, their stocks were frozen by the Deputy Commissioner, Civil Supplies, Jodhpur, through the Sub- Divisional Officer. It is not disputed that the market price then prevailing was about Rs. 18 per maund. The State, however, requisitioned the stocks at the rate. of Rs. 9 per maund and sold them at Rs. 13-5-4 per maund. The respondents claimed that they had purchased the bajra at the prevailing market rate of Rs. 17 to Rs. 18 per maund. They filed a petition on January 23, 1951, for the issue of a writ under article 226 of the Constitution before the High Court of Rajasthan, contending that clause 25 of the Control Order was void under articles 14, 19 (1) (g) and 31 (2) of the Constitution. The High Court held that clause 25 was void inasmuch as it is a restriction upon the fundamental right of the respondents to carry on business under article 19 (1)(g) of the Constitution, that the restriction is not reasonable and is not saved by clause (6) of article 19. The High Court further held that clause 25 was also hit by article 31 (2) as fair compensation had not been fixed by the law for the acquisition of the foodgrains. As the grains had already been disposed of by the Government, the High Court holding that Rs. 17 a maund was fair compensation directed that the State of Rajasthan shall pay compensation at that rate. The State has preferred.the present appeal on a certificate granted by the High Court.

The impugned clause 25 is as follows:-

" 25. Notwithstanding anything contained in this Order, the Commissioner, the Director, the Deputy Commissioner, the Nazim, the Assistant Commissioner, the Sub-Divisional Officer, the Senior Officer of a jurisdictional Thikana, the enforcement officer 'or such other officer as may be authorized by the Commissioner in this behalf, may freeze any stocks of foodgrains held by any person, whether in his own behalf or not, and such person shall not dispose of any foodgrains out of the stock so freezed except with the permission of the said authority. Such stocks shall also be liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for purposes of Government procurement. "

It is not disputed that bajra is an essential commodity within the meaning of the Essential Supplies Act (No. XXIV of 1946). The question that arises for consideration is how far and in what respects clause 25 can be said to be void as violating Part III of the Constitution. The clause authorises the Commissioner and various other authorities mentioned therein and such other officers as may be authorised by the Commissioner to freeze any stock of foodgrains held by a person. It is true that the authority of the Commissioner to delegate his powers to any other officer at his discretion is expressed in somewhat wide terms but we need not decide that per se would be sufficient to invalidate the clause. Admittedly that :power has not been exercised in the. present case. Nor do we think that the power to freeze the stocks of foodgrains is arbitrary or based on no reasonable basis. It is not disputed that the clause does not state in express terms the circumstances in or the grounds on which the stocks may be freezed but it should be read along with section 3 of the Essential Supplies Act which lays down the policy for controlling the production,, supply and distribution of essential commodities. Section 3 in so far as it is material says:- " The Central Government, so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, may by order provide for regulating or prohibiting the production, supply and distribution thereof Sub-section (2) lays down:-

" Without prejudice to the generality of the powers conferred by sub-section (1) an order made thereunder may provide……………….

(a)…………………..

(b)…………………..

(c)…………………..

(d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity;

(e) for prohibiting the withholding from sale of any essential commodity ordinarily kept for sale; We are clear, therefore, that the freezing of stocks of foodgrains is reasonably related to the object which the Act was intended to achieve, namely, to secure the equitable distribution and availability at fair prices and to regulate transport, distribution, disposal and acquisition of an essential commodity such as foodgrains. We do not agree with the High Court that the first portion of clause 25 is void under article 19 (1) (g).

The last portion of clause 25 to the effect that such stocks shall also be liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for purposes of Government procurement ", however stands on a different footing. The clause, as it is worded, leaves it entirely to the Government to requisition the stocks at any rate fixed by it and to dispose of such stocks at any rate in its discretion. This obviously vests an unrestrained authority to requisition the stocks of foodgrains at an arbitrary price. In contrast with this provision we may refer to clauses 23 and 24 of the Control Order. They are as follows:-

" 23. The Commissioner or the Director, and the Deputy Commissioner or the Senior Officer of a jurisdictional Thikana with the approval of the Director, may fix the ceiling prices at which foodgrains in any area to which this order applies shall be sold, and may from time to time vary such prices."

"24. The Commissioner, the Director, the Deputy Commissioner, the Nazim, the Assistant Commissioner, the Sub-Divisional Officer, or the Senior Officer of the jurisdictional Thikana as the case may be, may direct any person or persons in possession, whether on his own behalf or not of any foodgrains to sell such foodgrains or part thereof to any person or persons at any specified place and at such price as may be fixed under clause 23."

It appears from these clauses that while the authorities may fix the ceiling price at which foodgrains should be sold in the market by the dealers and may direct any person in possession of foodgrains to sell them to any other person at the price fixed under clause 23, there is no such limitation upon the power of the Government to acquire the stocks. In other words, it will be open to the Government to requisi-tion the stocks at a price lower than the ceiling price thus causing loss to the persons whose stocks are freezed while at the same time the Government is free to sell the same stocks at a higher price and make a profit. It is obvious that the dealer whose stocks are thus freezed will stand to lose considerably and will be unable to carry on his trade or business at the prevailing market price. No dealer will be prepared to buy foodgrains at the market price when he knows that he is exposed to the risk of his stocks being freezed any moment and the same being requisitioned at the procurement rate. The present is a typical case which illustrates how the business of a grain dealer can be paralyzed, for it is admitted that while the Government procurement rate was Rs. 9 a maund, the market rate was Rs. 17 or Rs. 18 per maund, with the result that the stock holder suffered nearly cent. per cent. lose, while the Government made a profit of Rs. 4-5-4 per maund on the stock requisitioned. We hold, therefore, that the last portion of clause 25 places an unreasonable restriction upon the carrying on of trade or business and is thus an infringement of the respondent's right under article 19(1)(g) of the Constitution and is, therefore, to that extent void. The same result follows if the impugned clause is examined in the light of article 31(2). The clause by vesting the power in the authority to acquire the stocks at any price fails to fix the amount of the compensation or ,specify the principles on which the compensation is to be determined. The clause leaves it entirely to the discretion of the executive authority to fix any compensation it likes. The High Court rightly held that the clause offended against article 31(2). For the foregoing reasons we hold that the last portion of clause 25 is void and dismiss the appeal with costs.

Appeal dismissed.

Agent for the appellant and for the intervener: R. H. Dhebar.

MUKHERJEA, J.

These two analogous appeals, which are between the same parties and involve the same points in dispute, are directed against a common judgment of a Division Bench of the Calcutta High Court dated the 12^th of August, 1948, by which the learned Judges affirmed, in appeal, the decision of the Subordinate Judge of Burdwan passed in two analogous proceedings under section 36 of the Bengal MoneyLenders Act. The facts material for our present purpose lie within a narrow compass and may be stated as follows: The principal respondents are certain idols, represented by their managing Shebait Ram Govinda Roy. The idols are the family deities of the Roys of Bonpash in the district of Burdwan, and the number of Shebaits being very large, there is a recognised usage in this family that the seniormost member amongst the descendants of the founder acts as the managing Shebait and it is he who manages the endowed properties and looks after the due performance of the worship of the idols. It is not disputed by the parties that it is within the competence of the managing Shebait to borrow money to meet the necessities of the idols and to execute such documents as may be necessary for that purpose. Admittedly Adwaita Charan Roy was the managing Shebait of the deities from 1926 to 1930 and as Shebait, he executed a Hatchita in favour of one Nanitosh Chakraborty some time in April, 1928, on the basis of which he received advances of money from time to time from the latter. The last entry in the Hatchita was made in March, 1929, and the total amount borrowed up to that date came up to Rs. 3,801. Adwaita died in March, 1930, and after his death, Satish Chandra Roy became the managing Shebait and continued to act as such till his death in 1940. There was an adjustment of accounts between Nanitosh, the creditor,in whose favour the Hatchita was executed, and Satish Chandra, the managing Shebait some time in October, 1931, and a sum of Rs. 5,068, having been found due to the creditor, Satish Chandra gave him a renewed Hatchita for that amount. It appears that while Adwaita was still the managing Shebait, a suit was instituted by some of his co- Shebaits to remove him from his office and pending the hearing of the suit, Ramjanaki Roy, another co-Shebait, was appointed a Receiver of the debutter property by the court. With the permission of the court, Ramjanaki borrowed from the same Nanitosh Chakraborty -three sums of money on three different promissory notes executed respectively on the 27^th September, 1929, 1^st October, 1929, and 14^th January, 1930. The suit was eventually dismissed for non-prosecution after Adwaita's death. Nanitosh died in 193 1, and in 1932) his two sons Aditya and Dhirendra, who figure as respondents 14 and 15 in these appeals, instituted two money suits against Satish Chnandra, the managing Shebait, in the Court of the Subordinate Judge, Burdwan, being Money Suits Nos. 261 and 262 of 1932, for recovery of the moneys due in respect of the Hatchita and the promissory notes mentioned aforesaid. Both the suits were decreed on the basis of a compromise dated the 23^rd July, 1933, and two consent decrees were passed, one for a sum of Rs. 5,800, and the other for Rs. 2,200, both payable in sixteen yearly instalments with a further stipulation that in default of payment of any one of the instalments, the whole or balance of the decretal amount would become due and payable in each. The instalments not having been paid in either of the cases both the decrees were put into execution. In Execution Cases Nos. 76 and 77 of 1936, arising out of Money Suits Nos. 261 and 262 of 1932, the properties mentioned in Schedule Ka in each case were put up to sale and they were purchased ostensibly by the two decreeholders Aditya and Dhiren. Three years later, Execution Cases Nos. 17 and 18 of 1939 were started again in connection with the said decrees and this time the properties specified in Schedule Kha were attached and put up to sale and they were also purchased by the Chakraborty decreeholders. Finally, in Execution Cases Nos. 163 of 1939 and 5 of 1940, the properties described in Schedule GA were sold and they were, knocked down to Srimati Oramba Sundari Dasi, who figures as the appellant in the appeals before us and who, it may be noted, is the wife of Aghore Nath Roy, a son of Adwaita, the former managing Shebait of the debutter estate. Subsequently, the decreeholders, who purchased Ka and Kha Schedule properties sold them by a registered Kobala to the said Oramba Sundari Dasi on the 26^th of July, 1940. The result, therefore, was that the properties described in the three Schedules came to vest in Oramba Sundari, the wife of Aghore Nath Roy. On the 28^th August, 1941, the deities represented by some of the Shebaits filed two applications under section 36 (6) (a) (ii) of the Bengal Money-Lenders Act praying for the reopening of the two compromise decrees mentioned aforesaid and the passing of. new installment decrees in accordance with the provisions of the Act. There were prayers also for restoration. to the deities of all the properties mentioned in Schedules, Ka, Kha and Ga which were purchased in execution of the decrees. The principal opposite parties to these proceedings were the Chakraborty decreeholders, Oramba Sundari, the ostensible purchaser, and Aghore Nath Roy, her husband.

The allegations in the applications, in substance, were that the Chakrabortys were mere benamidars for Aghore Nath Roy, who was the real lender and the real decreeholder in both these suits. It was alleged that Aghore Nath Roy purchased these properties in the benami of the decreeholders in two out of the three execution proceedings and in the benami of his wife Oramba Sundari in the third. The subsequent Kobala executed by the Chakrabortys in favour of Oramba . Sundari was also asserted to be a fictitious conveyance made in favour of Aghore Nath Roy in the name of his wife. In these circumstances, the judgment-debtors prayed that they were entitled to have the two compromise decrees reopened and on the passing of new instalment decrees to have the properties, which were in possession of the real decreeholder, restored to the deities in terms of section 36(2)(c) of the Bengal Money-Lenders Act. The trial judge decided in favour of the judgment-debtors and granted their prayers in both the applications. Orders were made for reopening of the decrees and making of fresh decrees in their places in accordance with the provisions of the Bengal Money-Lenders Act. Direction was also given for restoration of the properties mentioned in Schedules Ka, Kha and Ga to the deities under the provision of section 36(2)(c). Against this decision, Oramba Sundari took two appeals to the High Court of Calcutta and the learned Judges, who heard the appeals, affirmed the decision of the court below and dismissed both the appeals. Oramba Sundari has now come up in appeal to this court on the strength of a certificate given by the High Court under sections 109 (a) and 110 of the Civil Procedure Code.

Mr. Chatterjee who appeared in support of the appeals, has not challenged before us the findings of fact concurrently arrived at by the courts below, viz.,that the appellant Oramba Sundari was a mere benamidar for her husband Aghore in respect of the purchase of Ga Schedule properties in court sale, and also that the Kobala executed by the Chakrabortys in her favour on July 26, 1940, was a fictitious transaction. The point, which he has pressed for our consideration, is that in a proceeding under section 36 of the Bengal Money-Lenders Act, it is not open to the court to go behind the decree and launch an enquiry as to whether the decreeholders on record were in fact benamidars for another person. In other words, the contention is that, even if Aghore was proved to have advanced the money upon which the Chakrabortys obtained the decrees, in reopening the decrees and in working out the rights of the parties in accordance with the provisions of the Bengal Money-Lenders Act the court could treat the Chakrabortys alone as the decreeholders. For a proper determination of this point, it is necessary to examine the scope of section 36 of the Bengal Money-Lenders Act and the reliefs which the Court is competent to grant in terms of that section.

Section, 36 of the Bengal Money-Lenders Act sets out the various powers which the court can exercise, if it has reason to believe that the exercise of one or more of the powers will give relief to the borrower as contemplated by the Act; and one of the powers, which is mentioned in clause (a) of sub-section (1) of the section is to reopen any transaction and take an account between the parties. The drafting of section 36 is indeed obscure and somewhat clumsy, but it is clear, as the Privy Council (1) has pointed out, that the power of reopening a transaction, as contemplated by the section, extends to reopening of decrees as well. Sub-section (2) of section 36 contains detailed provisions as to what the court may or may not do when a decree is reopened. It cannot be disputed that the court reopens a decree under section 36(2) only for the purpose and so far as it is necessary to give relief to the borrower in the manner provided for in the Act, namely, to release him from all liability for interest -in excess of the limits prescribed by section 30 of the Act. A new decree is passed only for the purpose of substituting the method of accounting sanctioned by the Act for the calculations upon which the original decree was passed and to give an opportunity to the judgment-debtor to pay the decretal dues thus ascertained by instalments. But save and except for these, the old decree as well as the adjudications made thereunder are not wiped out and the parties are not relegated to their rights and liabilities under the original cause of action (2). How the rights of the parties are to be adjusted and worked out when a decree hat; been reopened has been dealt with exhaustively in the several clauses of section 36 (2) of the Bengal Money- Lenders Act, and an examination of these clauses makes it clear to our minds that an enquiry as to whether the decree-holder was in fact a benamidar for another person in respect of the decree, does not come within the purview of these provisions. Clause (a) of section 36(2) empowers the court to pass a new decree in accordance with the provisions of the Act. Obviously, this new decree is to be passed in favour of the original decreeholder and only the calculations upon which the old (1) Vide Renula v. Manmatha, 72 I.A. 156.

(2) Vide Bank of Commerce Ltd. v. Amulya Krishna Babu Roy Chowdhury [1944] F.C.R. 126.

decree was based would be changed by substituting the statutory method of accounting in place of what rested upon the contract between the parties. Clauses (b) and (C) contemplate cases where properties have been sold in execution of the original decree. If the purchaser is the decreeholder, himself and he is in possession of the property when the decree is reopened, it is incumbent upon the court to order restoration of these properties to the judgment-debtor under clause (c). If, on the other hand, the properties had been acquired by strangers either by purchase at the execution sale or from the decreeholder purchaser, their interests would be protected if they have acquired these rights bona fide as contemplated by clause (b). Under clause (d), the court has to order the payment of the decretal amount in such instalments as it thinks proper, and clause (e) further imposes a duty on the court to give a direction in such cases that if there is default in the payment of any one of the instalments, the properties restored to the judgment-debtor under clause (e) would be put back into the possession of the decreeholder. It is quite true that the object of restoring possession of the properties sold in execution of the decree to the judgment-debtor is to enable the latter to pay off the decretal dues, but it is to be remembered that the sale itself is not annulled, and in case of default in payment of any of the instalments, the properties are returned to the decreeholder purchaser. We agree that if the purchaser is a mere benamidar for the decreeholder, clause (b), subsection (2) of the section would not afford protection to him in any way. He could not be regarded as a person other than the decreeholder acquiring rights bona fide as contemplated by that clause. For-the purpose of giving effect to clauses (b) and (c), therefore, the court has not only the right but is under a duty to make an enquiry as to whether the ostensible purchaser at the execution sale, or the person who purports to have acquired an interest therein under a subsequent transfer from the decreeholder purchaser, has bonafide acquired such rights within the meaning of clause (b). But we do not agree with the learned Judges of the High Court that in making a new decree under clause (a) of section 36(2) and giving the judgment-debtor consequential relief under clause (c) of the sub-section, the court can at all enter into the question as to whether the decreeholder on record is himself a benamidar for another person in respect of the decree. Such enquiry, it seems to us, is altogether outside the purview of the different clauses of section 36(2) of the Bengal Money- Lenders Act. These provisions do not recognise any other decreeholder than the one in whose favour the original decree was passed. It is between him and the judgment-debtor that the rights are to be adjusted in accordance with the provisions of the Act; to him would the instalments have to be paid under the new decree, and he alone would be compelled to restore the properties which he had purchased in execution proceedings. None but the decreeholder on record can give a valid discharge or record satisfaction of the decree. This being the position, it is altogether immaterial, in our opinion, that it was Aghore, the husband of the appellant, who, really advanced the money upon which the decrees were obtained. We must treat the Chakrabortys and the Chakrabortys alone as the decreeholders and see to what extent the provisions of the Act could be applied against them in the circumstances of the present case. So far as the properties described in Schedules Ka and Kha are concerned, it is not disputed that they were purchased by the decreeholders themselves. No price was actually paid by the decreeholders, but the sale proceeds were set off against the decretal dues. The decreeholders, therefore, must be deemed to be the purchasers of these properties within the meaning of clause (c) of section 36(2); and as the subsequent conveyance of these properties in favour of Oramba Sundari, the appellant, has been held by both the courts below to be a fictitious transaction, we must hold that Oramba Sundari did not bona fide acquire any right which could be protected under clause (b) of section 36(2). With regard to these properties, therefore, the order for restoration of possession made by both the courts below should stand. As regards Ga Schedule properties, however, Oramba Sundari was the purchaser at the execution sale and whether or not the money for such purchase was paid by her husband becomes immaterial. This was not the property purchased by the decreeholders and there is no proof of the decreeholders being in possession of the same either by themselves or through Oramba Sundari. In these circumstances, clause (e) of section 36(2) cannot be attracted in favour of judgment-debtors so far as this property is concerned and the possession of it must remain with the appellant. We, therefore, allow the appeal in part and set aside the order for restoration of possession made by the courts below in respect to the Ga Schedule property. The rest of the decision of the High Court will stand. We make no order as to costs of these appeals.

Appeal partly allowed.