w w w . L a w y e r S e r v i c e s . i n


Dalmia Cement (Bharat) Limited and Another v/s Union of India and Others

    Transfer Cases (C) No. 3 of 1989
    Decided On, 25 April 1996
    At, Supreme Court of India
    By, HON'BLE JUSTICE G. B. PATTANAIK
    By, HON'BLE JUSTICE K. RAMASWAMY AND HON'BLE JUSTICE S. SAGHIR AHMED
   


Judgment Text
K. RAMASWAMY, J.


In this bunch of cases the petitioners are manufacturers of cement, sugar and other commodities and plastic bags (for short 'HDPE'). The HDPE industries are a small-scale sector that secured loans from the banks. They allege that due to operation of the Jute Packaging Material (Compulsory Use in Packing Commodities) Act, 1987 (for short 'the Act') their industries are running into losses and many of them are compelled to close their business. The capital obtained from the nationalised banks has become bad debt. Repeal of the Act or gradually phasing out compulsory packing of the commodities with gunny bags would relieve hardships to them. The constitutionality of the Act and the Jute Packaging Material (Compulsory Use in Packing Commodities) Rules and Statutory Order No. 539(E) dated 29-5-1987 are impugned as ultra vires and mandatory direction to the respondents to forbear enforcement thereof in packing their finished products with jute bags etc., is sought for


2. We have had the advantage of hearing a galaxy of learned Senior Counsel with their forensic legal skills to assail the constitutionality of Sections 3 to 5 of the Act and the orders issued by the Central Government on the anvil of Articles 14, 19(1)(g) and 301 of the Constitution and their repudiation with equal vehemence by the counsel appearing for the respondents. The petitioners' fundamental premise is that their right to carry on trade and business guaranteed by Article 19(1)(g) and free flow of trade and commerce throughout the territory of India under Article 301 has been impeded by operation of the Act, the Rules and the orders issued by the Central Government. The restriction by way of compulsory packing of their finished products with gunny bags is an unreasonable restriction; further, it is not in the interests of general consumer public. The word 'general' qualifies the whole public; in other words, the restriction must be in the interest of the entire general public, namely, the consumers of diverse goods. It must not merely be a small section of the public, namely, the producer of jute. The restriction also must be for the advancement of, or to the benefit of the society as a whole. Packing with jute bags made compulsory irrespective of costs, suitability, availability, consumers' non-preference and hosts of other relevant factors, is arbitrary. Executive priority or preference to the jute sector at the cost of and in total disregard of the interests of other sectors like cement, sugar or alternative industry or general public would be unreasonable, arbitrary and a total prohibition. Therefore, the Act is illegal and void. No law should impose restriction for the benefit of a small section of the public at the detriment of an overwhelmingly large majority of the people. The Act intends to benefit only a small section of the society as is disclosed by the Statement of Objects and Reasons, namely, vague and indeterminate 4 million rural agricultural families and 2.5 lakh industrial workers in the jute industry in comparison with general consumers' community for whose benefit the Essential Commodities Act, 1955 and the orders issued thereunder was made for regulating the equitable distribution of the essential commodities at a reasonable price


3. The compulsion to pack cement, sugar and other essential commodities with jute bags, not only, as stated earlier, hampers free flow of trade and commerce but also escalates the cost of the essential commodities. Jute bags are unsuitable to particular commodity. Emphasis in this behalf is laid on cement. Packing cement with jute bags causes loss in weight during the course of handling in transit, recurring wastage of raw material like minerals and electricity, and loss to the consumers was repeatedly reiterated by the counsel. The wastage worked out, for the year 1987-88, is to the tune of approximately 3 million tonnes of limestone, a non-renewable natural resource, 240 million units of electrical energy and 0.5 million tonnes of coal which is another non-renewable natural resource of the country. The statistical data is only illustrative and not exhaustive. On the other hand, packing cement with HDPE prevents, apart from cost factors, loss of the essential commodities, pollution and health hazards to the workmen. The Act casts no corresponding obligation on jute manufacturers to supply gunny bags as per growing demand nor are they obligated to pass on the benefits to the growers of raw jute. The report of the High-Power Committee of 1992 would show that the growers are victims of exploitation at the hands of the manufacturers. They are not receiving any benefit from the Act


4. The Act does not provide any guidelines to protect the interests of the growers. On the other hand, compulsory packing of the commodities with jute bags in intended to benefit only jute mill owners who have already taken large sums of money by way of subsidy from the Central Government and modernised their mills. Yet jute bags are not available to the required demands, which would establish that they had diversified the jute products. No guidelines are provided to strike a balance between the interests of the jute sector and of the general consumers and producers of other commodities


5. The fact that the Government of India had issued orders permitting the petitioners to purchase second-hand gunny bags for packing the essential commodities is an admission that the required quantity of qualitative jute bags are not being produced. The study reports establish gradual decrease in the cultivation area of jute. The jute industry has diversified the manufacture of jute products in India which are exported abroad. The jute industry is importing raw jute from Bangladesh. The Act does not expressly intend to operate as permanent measure, and being a temporary enactment to tide over the business crisis in the jute industry, the Act is required to gradually phase out compulsory packing of the commodities with jute bags proportionately. The Committee appointed by the Central Government had recommended to the Central Government to phase out compulsory packing of the essential commodities with jute bags by the end of the Eighth Five Year Plan, namely, 1992-97. Instead of repealing the Act, by fresh orders, the Central Government has imposed hundred per cent use of gunny bags in sugar industry etc. No heed was paid by the Central Government to several representations made by the manufacturers, individually and collectively, through their associations. The High-Power Committee's report in para 6.3 has been repeatedly referred to and relied on by Shri G.L. Sanghi. It reads thus



"The jute industry cannot be artificially propped up by this piece of legislation for an indefinite period in a liberalised economy when free market forces have come to operate. In any case, this legislative measure was only intended to provide support to the industry as an interim measure for a brief period during which the industry was expected to restructure and readjust its capacity linked to production of value-added diversified products for the domestic and international markets. The Committee is aware of the fact that the constitutional validity of the Jute Packaging Act is pending before the Supreme Court for a decision. Hence, without any prejudice to the outcome of the court proceedings, the Committee recommended that the provisions in the existing orders should be diluted gradually in two or three stages, and by 1994-95 it should be rescinded altogether." *


In addition, they relied on paragraphs 6.1, 2.9, 2.10, 6.24, 9.1 and 9.6


6. The Standing Advisory Committee constituted under Section 4 of the Act is not a representative committee nor the manufacturers find their representatives in the Committee. The HDPE is much cheaper than the gunny bags. The incidence of cost of the gunny bag being a component of the sale price of the essential commodity, needless burden would be passed on to the consumers. In this regard, the sugar industry pointed out that there is increase in the sugar factories and production of sugar over the years from 216 to 435 from 37.40 lakh tonnes to 146.35 lakh tonnes respectively. On the other hand, there is gradual decline in jute cultivated area from 11.03 hectares to 9.10 hectares. Consequently, import of jute from Bangladesh has been increased from 3.10 to 54 tonnes. It is, therefore, contended that it is no longer feasible to obtain sufficient quantity of 'A' class bags fit for packing sugar. The Act being a penal Act, the Rules made and the orders issued thereunder are, therefore, arbitrary offending Article 14


7. Interplay of the operational efficacy of the Act, the Rules and orders, on fundamental rights of the petitioners to carry on trade or business guaranteed by Articles 19(1), 14 and 301 of the Constitution would be better appreciated only if we have a grasp of their backdrop. India lives in villages. Agricultural economy is the bedrock for rural India. Property assures them social dignity and economic equality. Agriculture is the main source for economic sustenance and equality of status to the tillers of the soil who too have fundamental right to equality of status and of opportunity and right to livelihood. Agricultural operations are their prime source of livelihood and sustainers of the business and of urban population


8. Professor Harold Laski, an iconoclastic humanist, expressing his belief in Indian Independence and its socialist destiny stated in his "Congress Socialist" of 11-4-1936, thus



"Attainment of natural self-government to mean no more than the exchange of the control by British capitalism for that by Indian capitalism. Those who know the normal life of the poor... will realise enough that without economic security, liberty is not worth living." *


9. The Avadi Resolution of Congress envisaged to redeem the plight of the tiller of soil granting permanent tenures and conferment of title to the lands held under feudalistic social order. Karachi Resolution of 1931 assured that "political freedom must include real economic freedom of starving millions". The founding fathers of the Constitution, therefore, in the objective Resolution, speaking on behalf of, "We, the people of India", pledged on their behalf to accord justice - social, economic and political to all the citizens, equality of status and opportunity and dignity of person with stated liberties


10. In Kartar Singh v. State of Punjab a Constitution Bench of this Court to which one of us, K. Ramaswamy, J., was a member was to consider the interplay of life, liberty and equality. The evolution of the State from police State to a welfare State accepted democratic society to safeguard the life, liberty and equality of the citizens. The exercise of right to liberty is subject to special control, lest it would become anti-social or would undermine the security of the State. Indian democracy, product of rule of law, aims not only to protect the fundamental rights of its citizens but also to establish an egalitarian social order. An individual has to live within the social confines suppressing his unsocial and unbridled growth for reconciling individual liberty with social control. Liberty must be controlled in the interests of the society. The societal interest must never be overbearing to justify total deprivation of individual liberty. Liberty cannot stand alone. It must be paired with a companion virtue; liberty and morality; liberty and law; liberty and justice; liberty and common good; liberty and responsibility which are concomitants for orderly progress and social stability. Man being a rational individual has to live in harmony with the equal rights of others more differently for the attainment of antithetic desires. Liberty would not, therefore, be always an absolute licence but must arm itself within the confines of law. In that case, the question was whether TADA Act is constitutionally valid ? While declaring part of the Act as invalid, the above statement of law came to be laid therein. In Kesavananda Bharati v. State of Kerala 1973 Supp SCR 1] the Full Court had held that Preamble of the Constitution is an integral part of the Constitution. In S.R. Bommai v. Union of India the Preamble has been held to be the basic structure of the Constitution


11. The Preamble of the Constitution is the epitome of the basic structure built in the Constitution guaranteeing justice - social, economic and political - equality of status and of opportunity with dignity of person and fraternity. To establish an egalitarian social order, the trinity, the Preamble, the Fundamental Rights in Part III and Directive Principles of State Policy (for short, 'Directives') in Chapter IV of the Constitution delineated the socio-economic justice. The word 'justice' envisioned in the Preamble is used in a broad spectrum to harmonise individual right with the general welfare of the society. The Constitution is the supreme law. The purpose of law is realisation of justice whose content and scope vary depending upon the prevailing social environment. Every social and economic change causes change in the law. In a democracy governed by rule of law, it is not possible to change the legal basis of socio-economic life of the community without bringing about any corresponding change in the law. In interpretation of the Constitution and the law, endeavour needs to be made to harmonise the individual interest with the paramount interest of the community keeping pace with the realities of ever-changing social and economic life of the community envisaged in the Constitution. Justice in the Preamble implies equality consistent with the competing demands between distributive justice with those of cumulative justice. Justice aims to promote the general well-being of the community as well as individual's excellence. The principal end of society is to protect the enjoyment of the rights of the individuals subject to social order, well-being and morality. Establishment of priorities of liberties is a political judgment


12. Law is the manifestation of principles of justice, equity and good conscience. Rule of law should establish a uniform pattern for harmonious existence in a society where every individual would exercise his rights to his best advantage to achieve excellence, subject to protective discrimination. The best advantage of one person could be the worst disadvantage to another. Law steps in to iron out such creases and ensures equality of protection to individuals as well as group liberties. Man's status is a creature of substantive as well as procedural law to which legal incidents would attach. Justice, equality and fraternity are trinity for social and economic equality. Law is the foundation on which the potential of the society stands. Law is an instrument for social change as also defender for social change. In Madhu Kishwar v. State of Bihar the question was whether the tribal women are entitled to equality in matters of succession with male members ? One of us (K. Ramaswamy, J.) has held that they are entitled to equality in matters of succession


13. Social justice is the comprehensive form to remove social imbalances by law harmonising the rival claims or the interests of different groups and/or sections in the social structure or individuals by means of which alone it would be possible to build up a welfare State. The ideal of economic justice is to make equality of status meaningful and life worth living at its best removing inequality of opportunity and of status - social, economic and political


14. The content, ambit and interplay of justice and social justice was elucidated in Consumer Education & Research Centre v. Union of India by a Bench of three Judges of this Court in paragraph 18 at page 67. The Court observed that the Constitution is the supreme law envisaging social justice as its arch to ensure life to everyone to be meaningful and livable with human dignity. Jurisprudence is the eye of law giving an insight into the environment of which it is the expression. It related the law to the spirit of the time and makes it richer. Law is the ultimate aim of every civilised society, as a key system in a given era, to meet the needs and demands of its time. Justice, according to law, comprehends social urge and commitment. Justice, liberty, equality and fraternity are supreme constitutional values to establish the egalitarian social, economic and political democracy. Social justice, equality and dignity of person are cornerstones of social democracy. Social justice consists of diverse principles essential for the orderly growth and development of personality of every citizen. Justice is the generic term and social justice is its facet, dynamic device to mitigate the sufferings of the disadvantaged and to eliminate handicaps so as to elevate them to the level of equality to live life with dignity of person. Social justice is not a simple or single idea of a society but is an essential part of complex social change to relieve the poor etc. from handicaps, penury, to ward them off from distress and to make their lives livable for greater good of the society at large. Social justice, therefor, gives substantial degree of social, economic and political equality, which is the constitutional right of every citizen. In paragraph 19, it is further elaborated that social justice is one of the disciplines of justice which relates to the society. What is due cannot be ascertained by an absolute standard which keeps changing depending upon the time, place and circumstances. The constitutional concern of social justice, as an elastic continuous process, is to transform and accord justice to all sections of the society by providing facilities and opportunities to remove handicaps and disabilities with which the poor etc. are languishing. It aims to secure dignity of their person. It is the duty of the State to accord justice to all members of the society in all facets of human activity. The concept of social justice embeds equality to flavour and enlivens the practical content of life. Social justice and equality are complementary to each other so that both should maintain their vitality. Rule of law, therefore, is a potent instrument of social justice to bring about equality in result. Article 1 of the Universal Declaration of Human Rights envisions that all human beings are born free and equal in dignity and rights and each should act towards one another in a spirit of brotherhood. In that case the question was whether right to social security is a fundamental right of workman ? To make the life of the workman worth living with health, it was held that right to health is a fundamental right and it is the duty of the State and the employer to provide facilities and opportunities for ensuring sustained good health and leisure to the workman as a facet of right to life under Article 21


15. In Valsamma Paul v. Cochin University 1996 (1) JT 57] a Bench of this Court has held that human rights are derived from the dignity and worth inherent in the human person. Human rights and fundamental freedoms have been reiterated in the Universal Declaration of Human Rights, Democracy, development and respect for human rights and the fundamental freedoms are interdependent and have mutual reinforcement. Article 29(2) of the Declaration of Human Rights provides that



"... in the exercise of this right and freedom, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of leading the just requirements of morality, public order and general welfare in a democratic society" *


The concept of equality and equal protection of law guaranteed by Article 14 of the Constitution in its proper spectrum encompasses social and economic justice in a political democracy as its species to eliminate inequalities in status and to provide facilities and opportunities among the individual and groups of people to secure adequate means of livelihood which is the foundation for stability of political democracy


16. Social democracy means a way of life which recognises liberty, equality and fraternity as principles of life. They are the trinity. One cannot diverse one from the other. Without equality, liberty would produce supremacy of the few over the many. Equality without liberty would denude the individual of his initiative to improve excellence. Without fraternity, liberty and equality would not nature as their natural habitat. Social and economic justice is a constitutional right enshrined for the protection of the society. The right to socio-economic justice in the trinity, the Preamble, Fundamental Rights and Directives is to make the quality of life of the disadvantaged people meaningful. Equal protection in Article 14, therefore, requires affirmative action by the State to those unequals by providing facilities and opportunities. The question therein was whether right to reservation is available to women belonging by birth to forward sections of the society but married to a male member of a disadvantaged section of the society on a par with the persons from the caste to which reservation was provided ? In that context, the right to socio-economic justice, equality and fraternity was considered and the above law was laid down


17. Gandhiji, the Father of the Nation, on the eve of independence had stated that



"independence did not mean mere freedom from British Rule by breaking the bonds of slavery but it meant more than that. It meant justice to all citizens of India, irrespective of religion, caste, creed or language, each getting his legitimate due." *


The 42nd Amendment Act of the Constitution introduced, "secularism and socialism" in the Preamble which are implicit in the Directives and the Fundamental Rights read together. Social and economic justice in the context of our Indian Constitution must, therefore, be understood in a comprehensive sense to remove every inequality and to provide equal opportunity to all citizens in social as well as economic activities and in every part of life. Economic justice means the abolition of those economic conditions which ultimately result in the inequality of economic value between men. It means to establish a democratic way of life upon socio-economic structure of the society to make the rule of law dynamic


18. Article 14 of the Constitution is a shining star among the fundamental rights which guarantees equality to every citizen and equal protection of laws to all persons. Equality before law is a correlative to the concept of rule of law for all-round evaluation of healthy social order. Directives set forth social principles to eliminate inequalities in income, in status and opportunity and to provide facilities and opportunities to every citizen to make the fundamental rights meaningful and the life of every citizen worth living and at its best, with the dignity of person and fraternity, lest they remain empty vessels and teasing illusions to majority population


19. The Constitution adopted mixed economy and the planned development has become a constitutional scheme to realise egalitarian social order. The Second Five Year Plan envisaged that

"The patron of development and the structure of the socio-economic relation should be so planned that they result in appreciable increase in income and employment but also in greater equality in income and wealth." *


The Directives of the State Policy have delineated in broad spectrum socio-economic justice to all people



"The socialistic pattern of society is a more comprehensive expression of the approach. Economic polity and constitutional changes have to be planned in a manner that would ensure economic advance along democratic and egalitarian lines." *


20. In the Eighth Five Year Plan 1992-97, the Planning Commission, in its blueprint has stressed on agricultural economy and need for stepping up production in para 1.1.1 that agriculture and allied activities constitute the single largest contributor to the Gross Domestic Product (GDP), accounting for almost 33% of the total. They are vital to the national well-being as, besides providing the basic needs of the society and the raw materials for some of the important segments of Indian industry, they provide livelihood for almost two-thirds of the work force. The share of the agricultural products in the total export earnings, both in primary and processed forms, is very significant. In paragraph 1.2.7 Jute and Mesta, it is stated that the average production of jute and mesta in the Seventh Plan was 8.8 million bales. Inadequate availability of improved seeds and retting facilities are the main constraints to increasing the production of quality jute and mesta. Development of jute and mesta during the Seventh Plan was undertaken through a Special Jute Development Programme, funded by the Ministry of Textiles. Use of natural fibre as the packing material is on the revival trail and diverse jute products are now exported. The minimum support price policy to the farmers and the role of Jute Corporation of India (JCI) need to be reviewed for their effective operation. It is stated in para 1.11.1 that the Eighth Plan aims at consolidating the gains from the base built over the years in agricultural production sustaining the improvement in productivity and production. To meet the increasing demands of the growing population enlarging the income of the farmers and realising the country's potential by stepping up agricultural exports, effective steps are directed to be taken. In paragraph 1.11.7, it is stated that marketing infrastructure has to be further augmented and streamlined, especially in respect of perishable commodities. In the light of the technological advancement and gains, agricultural produce requires to promote diversification within and outside the country which will gain importance in the coming years. In paragraph 1.11.9, it is stated that the changes in the trade policies have vastly improved the prospects for realising the full potential of the country with its varied agro-climatic conditions from tropical to temperate regions, in producing commodities for export. Maximising the production of the traditional export commodities etc. requires to be stepped up on modern technologies and sustained efforts should be made in the coming years. In paragraph 1.11.11, it is stated that the promotion of initiatives outside the Government to further socio-economic development is of cardinal importance and is central to the strategy of the Eighth Plan. In paragraph 1.11.12, it is stated that many a programme and scheme will have to be continued from the previous plans, with necessary refinements or modifications to address themselves sharply to the problems for their overcome. A policy resolution in that behalf on agricultural policy was made in eloquent terms promising in para 11 that

"Government will endeavour to create a positive trade or investment climate for agriculture on a par with industries to develop effective systems and to bestow similar benefits on agriculture as exists in industry. They issued and ensured that agriculturists are not subjected to the regulatory and tax collection machinery of the Government." *


21. Article 38 of the Constitution enjoins the State to strive to promote the welfare of the people by securing and protecting, as effectively as it may, the social order in which justice -social, economic and political - shall, inform all the institutions of the national life striving to minimise inequalities in income and endeavour to eliminate inequalities in status, facilities, opportunities amongst individuals and groups of people residing in different areas or engaged in different avocations. As stated earlier, agriculture is the mainstay of rural economy and empowerment of the agriculturists. Agriculture, therefore, is an industry. To the tiller of the soil, livelihood depends on the production and return of the agricultural produce and sustained agro-economic growth. The climatic conditions throughout Bharat are not uniform. They vary from tropical to moderate conditions. Tillers of the soil being in unorganised sector, their voice is scarcely heard and was not even remotely voiced in these cases. Their fundamental right to cultivation is as a part of right to livelihood. It is a bastion of economic and social justice envisaged in the Preamble and Article 38 of the Constitution. As stated earlier, the rights, liberties and privileges assured to every citizen are linked with corresponding concepts of duty, public order and morality. Therefore, the jural postulates form the foundation for the functioning of a just society. The fundamental rights ensured in Part III are, therefore, made subject to restrictions i.e., public purpose in Part IV Directives, public interest or public order in the interest of the general public. In enlivening the fundamental rights and the public purpose in the Directives, Parliament is the best Judge to decide what is good for the community, by whose suffrage it comes into existence and the majority political party assumes governance of the country. The Directive Principles are the fundamentals in their manifestos. Any digression is unconstitutional. The Constitution enjoins upon the Executive, Legislature and the Judiciary to balance the competing and conflicting claims involved in a dispute so as to harmonise the competing claims to establish an egalitarian social order. It is a settled law that the Fundamental Rights and the Directive Principles are the two wheels of the chariot; none of the two is less important than the other. Snap one, the other will lose its efficacy. Together, they constitute the conscience of the Constitution to bring about social revolution under rule of law. The Fundamental Rights and the Directives are, therefore, harmoniously interpreted to make the law a social engineer to provide flesh and blood to the dry bones of law. The Directives would serve the court as a beacon light to interpretation. Fundamental Rights are rightful means to the end, viz., social and economic justice provided in the Directives and the Preamble. The Fundamental Rights and the Directives establish the trinity of equality, liberty and fraternity in an egalitarian social order and prevent exploitation


22. Social justice, therefore, forms the basis or progressive stability in the society and human progress. Economic justice means abolishing such economic conditions which remove the inequality of economic value between man and man, concentration of wealth and means of production in the hands of a few and are detrimental to the vast. Law, therefore, must seek to serve as flexible instrument of socio-economic adjustment to bring about peaceful socio-economic revolution under rule of law. The Constitution, the fundamental supreme lex distributes the sovereign power between the Executive, the Legislature and the Judiciary. The three instrumentalities, within their play endeavour to elongate the constitutional basic structure built in the Preamble, Fundamental Rights and Directives, namely, establishment of an egalitarian social order in which every citizen receives equality of opportunity and of status, social and economic justice. The court, therefore, must strive to give harmonious interpretation to propel forward march and progress towards establishing an egalitarian social order


23. From this perspective, let us consider the constitutionality of the provisions of the Act. The Statement of Objects and Reasons and the Preamble of the Act, would, in unmistakable terms, indicate that it intends to provide livelihood to nearly 4 million rural agricultural families and 2.5 lakh industrial workers. The ancient agro-based jute industry occupied a significant position in our national economy, in particular in the economy of the North-Eastern region of the country. It is an agro-based and labour-intensive industry. It is also an export-oriented one and its raw material is based entirely on indigenous jute produced by the above agricultural families. Parliament avowedly intended to protect the interests of the persons involved in jute production; jute industry, therefore, requires protection


24. A balanced view of the developments in the national economy requires to be taken into consideration to protect the interests of the farmers who produce jute or any other agricultural produce and in the interests of agro-based industry of the country and workers who deliver finished products. With that objective in view, the Act was made for compulsory use of jute packaging material in the supply and distribution of certain commodities in the interest of production of raw jute and jute packaging material and the persons engaged in the production thereof for the matters connected therewith. Sections 3, 4 and 5 read thus


"3. (1) Notwithstanding anything contained in any other law for the time being in force, the Central Government may, if it is satisfied, after considering the recommendations made to it by the Standing Advisory Committee, that it is necessary so to do in the interests of production of raw jute and jute packaging material, and of persons engaged in the production thereof, by order published in the Official Gazette, direct, from time to time, that such commodity or class of commodities or such percentage thereof, as may be specified in the order, shall, on and from such date, as may be specified in the order, be packed for the purposes of its supply or distribution in such jute packaging material as may be specified in the order


Provided that until such time as the Standing Advisory Committee is constituted under Section 4, the Central Government shall, before making any order under this sub-section, consider the matters specified in sub-section (2) of Section 4, and any order so made shall cease to operate at the expiration of three months from the date on which the Standing Advisory Committee makes its recommendations


(2) Every order made under sub-section (1) shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the order or both Houses agree that the order should not be made, the order shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that order


4. (1) The Central Government shall, with a view to determining the commodity or class of commodities or percentages thereof in respect of which jute packaging material shall be used in their packing, constitute a Standing Advisory Committee consisting of such persons as have, in the opinion of that Government, the necessary expertise to give advice in the matter


(2) The Standing Advisory Committee shall, after considering the following matters, indicate its recommendations to the Central Government, namely. -


(a) the existing level of usage of jute material;


(b) the quantity of raw jute available;


(c) the quantity of jute material available;


(d) the protection of interests of persons engaged in the jute industry and in the production of raw jute;


(e) the need for continued maintenance of jute industry;


(f) the quantity of commodities which, in its opinion, is likely to be required for packing in jute material;


(g) such other matters as the Standing Advisory Committee may think fit


5. Where an order has been made under Section 3 requiring any commodity, class of commodities or any percentage thereof to be packed in jute packaging material for their supply or distribution, such commodity, class of commodities or percentage thereof shall not, on and from the date specified in such order, be supplied or distributed unless the same is packed in accordance with that order


Provided that nothing in this section shall apply to the supply or distribution of any commodity, class of commodities or percentage thereof for a period of three months from the aforesaid date if immediately before that date such commodity, class of commodities or percentage, thereof were being packed in any material other than jute packaging material."


25. Sections 6 to 8 are machinery provisions. Sections 9 to 11 are penal provisions. Section 16 gives power to the Central Government, to exempt by notification published in the Official Gazette, any person or class of persons who supply or distribute any commodity or class of commodities from the operation of any order made under Section 3. The order should be laid under sub-section (2) before each House of Parliament as provided therein. The orders issued under Section 3 are subject to modification by Parliament. Section 17 gives rule-making power to the Central Government. Rules, namely, the Jute Packaging Materials (Compulsory Use in Packing Commodities) Rules, 1987 (for short, 'the Rules') were made. Rule 3 provides for constitution of the commodities


26. Sub-section (1) of Section 3, with a non obstante clause, excludes the operation of any other law for the time being in force and, regulates use of jute or jute packaging material in supply and distribution of certain commodities. It gives power to the Central Government, on being satisfied, on consideration of the recommendations made to it by the Standing Advisory Committee empowered to issue directions from time to time for use of the packing material. The primary purpose and object of such directions is to protect the interests of producer of raw jute and jute packaging material. The Central Government is enjoined to protect the interests of persons engaged in the production thereof. Such orders should be published in the Official Gazette. The orders need to be passed from time to time. From the date of such order specified therein, such commodity or class of commodities or such percentage thereof, as specified in the order, should be packed with jute packaging material specified in the order for the purpose of supply or distribution of such commodity or commodities. Under the proviso, until the Standing Advisory Committee is constituted under Section 4, the Central Government should consider, before making any order, the matters as specified in sub-section (2) of Section 4. The Central Government may make an order thereunder which shall cease to operate at the expiration of 3 months from the date of the recommendations of the Standing Advisory Committee


27. Every such order shall be laid before each House of Parliament while it is in session, for a period of 30 days. It would be open to Parliament to make any modifications to the order. Both the Houses of Parliament may also agree that such order should not be made. After making modifications, if any, such amended or modified order will be the operative order. Any action taken on the ongoing order, before modification, shall be without prejudice to the action already taken


28. Under sub-section (1) of Section 4, the Central Government should constitute a Standing Advisory Committee consisting of such persons as have, in its opinion, the necessary expertise to give advice in the matter with a view to determine the commodity or class of commodities or percentage thereof in respect of which jute packaging material shall be used in the packing. The Standing Advisory Committee, after considering the matters enumerated in clauses (a) to (g), would furnish its recommendations to the Government. Section 5 creates embargo on the supply and distribution of such specified commodity or class of commodities of any percentage thereof with reference to which an order under Section 3 came to be made. Rule 3 of the Rules carries out the purpose of Section 4 in establishment and constitution of the Standing Advisory Committees consisting of Chairman and members not exceeding 20, nominated by the Central Government for a term of three years. The date of the constitution of the Committee and of filling up of all the vacancies and the manner in which it is to be done is provided thereunder


29. It is true that though a committee was constituted by the Central Government, in addition to the Advisory Committee which recommended to the Government to abolish compulsory use of jute packaging material by 1997, the Government and the Advisory Committee did not consider it desirable to completely phase out compulsory use of jute packaging material. It issued directions for compulsory packing of the commodities with jute packaging material with varying percentage. In the case of sugar, 100% use of jute packaging material is insisted to be continued


30. The question, therefore, is whether directions issued by the Central Government for the compulsory packing of the commodities with jute packaging material, (in respect of sugar 100% use of the gunny bags and at varying percentage for other commodities) is unconstitutional ? As stated earlier, the Act aims to accord socio-economic justice to the tillers of the soil by protecting the cultivation of raw jute and employment of the workmen engaged in the jute manufacturing industry. Jute is being produced and manufactured in North-Eastern States, West Bengal and Andhra Pradesh etc. as mentioned in the affidavit. A reading of the debates on the floor of Parliament on the Bill, does establish, cutting across the party lines, that all the members have spoken in favour of directing compulsory use of jute packaging material (gunny bags) for supply and distribution of the commodities. As stated earlier, the object of the benign measure primarily is to protect the interests of growers of agricultural produce, who cultivate raw jute. Incidentally, the manufacturers and the workmen get benefit therefrom. Agricultural economy accords to the grower socio-economic justice to provide dignity of person, equality of opportunity to have his produce used in industry, etc. Agriculture is treated as industry on a par with any other industry. The State should provide, by legislative or executive measure, all facilities and opportunities to get them due price for their products and have them marked for use in industry. The orders passed by the Central Government are made subject to parliamentary control and subject to modification by both Houses


31. Equally, the competing right to carry on trade or business guaranteed to a citizen or person is also to be protected. In the clash of competing rights of socio-economic justice of the producers of the agricultural commodities and of the individual right of a citizen to carry on trade or business, the latter yield place to the paramount social right. However, as rightly pointed out by the counsel, a balanced view has to be struck by the Central Government in directing use of jute packaging material at the percentage of the jute bags to be used for compulsory packing of the commodities which is subject to parliamentary control and approval. Parliament is the spokesman of the people where the need is felt most acute. When the orders passed under Section 3 are subject to modification by Parliament, Parliament preserved to itself a great salutary control over executive exercise of power under Section 3(1). It is such a valuable public protection and safeguard kept with Parliament itself. Parliament would be the best judge to discuss in each House as to what extent competing interests of the agricultural industry and the industry involved in commercial products need to be protected and would guide the Central Government appropriately by resolution or otherwise. When Parliament debates on the subject, it focuses its attention on all its constituents and it would be open to debate on the subject by participants from all the members of Parliament and political parties and of shades of opinion. Parliament is entitled to direct the Central Government to place on the floor of each House the necessary factual material for discussion. They are the best judges to direct the Central Government to act on their advice in a particular way, based on the existing factual material. Parliament is empowered to overrule the order of the Central Government under Section 3(1) by disapproval


32. It is a question of fact, to be considered in each case, as to what percentage is required to be used; it is primarily for the Central Government to decide as executive policy. The Central Government is guided by the material placed before it and the advice tendered to it by the Standing Advisory Committee constituted under Section 4 of the Act. It depends upon the availability of jute and its products in the market, the quantum of raw jute produced by the agriculturists, its demand in the market and its capability for diversification into other industries for ancillary use of the jute material and hosts of other factors enter into the decision-making process. The exercise is required to be undertaken from time to time. The Act, the Rules and the material placed before it by the Committee and the advice tendered by the expert body form the basis. The decision taken and directions issued cannot be said to smack of arbitrariness. Guidelines are available under the Act and the Rules made in this behalf. They are parliamentary control. Paramount public interest is to provide economic security and equality and justice to the producers of raw jute and the workers engaged in manufacturing jute packaging material


33. In Shri Sitaram Sugar Co. Ltd. v. Union of India [ 1990 (3) SCC 233] the question arose whether fixation of price for sugar under Section 3(3-C) of the Essential Commodities Act, 1955 was an administrative or legislative function and whether the court could interfere in fixation of price thereof ? A Constitution Bench of this Court had held that price fixation is a legislative function. In paragraph 57, it was held that judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the "feel of the expert" by its own views. When the legislature acts within the sphere of its authority and delegates power to its agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness. In all such cases, judicial enquiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are sustainable at law of the land. Judicial function in respect of such matters is exhausted when the court finds rational basis to the conclusion reached by the authority. In the matters of policy and planning, it is for the Central Government to decide whether it should adopt one or the other system of control in the best economic interest of the sugar industry and the general public grouping sugar factories on geographical-cum-agro-economic factors to determine the price. It was held that the fixation of price of sugar was not amenable to judicial review


34. In R.K. Garg v. Union of India when Special Bearer Bonds (Immunities and Exemptions) Act, 1981 was challenged in this Court under Article 32 of the Constitution, this Court per majority, had held that legislation particularly in economic matters, is essentially empiric and it is based on experimentation. There may be crudities, inequities and even possibilities of abuse but on that account alone, it cannot be struck down as invalid. These can always be remedied by the legislature by passing amendments. The court must, therefore, adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities. Laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom to speak or practise any religion. There is always a presumption in favour of the constitutionality of the Act. Burden is on the petitioner to show that there has been a clear transgression of constitutional principles. The legislature understands and correctly appreciates the needs of its own people; its laws are directed to problems made manifest by experience and its discrimination is based on adequate grounds. In adjudging, the court may take into consideration common knowledge, matters of common report, the history of the time and may assume every state of affairs which can be conceived of as existing at the time of legislation. The Act was made and held to be valid


35. In Morey v. Doud 354 US 457 : 1 L Ed 2d 1485 (1957)] in dissenting judgment, Frankfurter, J. held that in the utilities, tax, economic regulation cases judicial self-restraint, if not judicial deference to legislative judgment was emphasised. The court is always to remember that Parliament has affirmative responsibility to solve problems that were felt most acute. In economic measure, the court while claiming the constitutionality of a legislation must defer to legislative judgment


36. In Peerless General Finance & Investment Co. Ltd. v. Reserve Bank of India one of us, K. Ramaswamy, J., in a separate but concurrent judgment held in paragraph 69 that it is well-settled law that the court is not a tribunal from the crudities and inequalities of complicated experimental economic legislation. The discretion in evolving economic measurers rests with the policy-makers and not with the judiciary. Indian social order is beset with social and economic inequalities and of status, and in our socialist, secular, democratic, republic, inequality is an anathema to social and economic justice. The Reserve Bank of India Act, 1934 assigned the power to the Reserve Bank of India to regulate monetary system and the experimentation of the economic legislation can best be left to the executive unless it is found to be unrealistic or manifestly arbitrary. Even if a law is found to

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be wanting on trial, it is better that its defects are demonstrated and removed by amendment than that law being aborted by judicial fiat. Such an assertion of judicial power deflects responsibilities from those on whom a democratic society ultimately rests. The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority. In that case, the directions issued by the Reserve Bank of India for regulating the money circulation were held valid 37. In City of New Orleans v. Nancy Dukes 427 US 297 : 49 L Ed 2d 511] (L Ed 2d at p. 518) the dissenting view of Frankfurter, J. was upheld and the Court had stated that "Morey was the only case in the last half century to invalidate a wholly economic regulation solely on equal protection and now we are satisfied that the decision was erroneous." 38. In Charles Roberts & Co. Ltd. v. British Railways Board the Chancery Division had held that, in general, Judges are not qualified to the said questions of economic policy and such questions by their nature are not justiciable. But, in England, judicial review of parliamentary enactment was not available. That decision may not be of much assistance 39. Robert Jackson J. in H.P. Hood & Sons v. Dumond (1949) had stated that our system is that every farmer and every craftsman shall be encouraged to produce by the certainly that he will have free access to every market in the nation, that no home embargo will withhold his exports and that no foreign State will by customs, duties or regulation exclude them (vide : The Encyclopedia of American Constitution on the chapter Economic Analysis and the Constitution at p. 597). At p. 598, it is stated that "since 1937, the Court has consistently declined to invalidate economic legislation on substantive due process grounds and has stubbornly refused to subject such legislation to even minimal review". Economic analysis is an acquired taste; courts should not insist that legislature be educated in basic economic concepts let alone that they keep abreast of the current literature on externalities and public goods. Most economist would acknowledge that a legislature may properly choose to sacrifice economic efficiency in order to achieve some desired distribution of wealth among societal groups. Even if a private conduct is economically acceptable, a legislature could properly conclude that the conduct is interpersonally unfair in the particular way, it enables to cause harm to people 40. It would, thus, be clear that the court is not well equipped to adjudge crudities and inequities emerging from economic legislation. The legislature is empowered to experiment on economic legislation in its attempt to remove inequalities in income or status or to provide facilities and opportunities to improve economic status or provide social and economic justice to the society or a particular discernible segment of society or to remove the defect where the legislature felt most acute. There is always presumption in favour of constitutionality. The legislature appreciates the needs of the people and directs the laws to the problems made manifest by experience and discrimination is based on adequate grounds. The court does not supplant the feel and experiment of the expert by its own views. Court in deference to legislative judgment, imposes self-restraint to adjudge on crudities and experiment but concern on core constitutionality 41. Another serious contention of the petitioners is that the Act is a class legislation intended to benefit a small sector to jute producers or the producers of raw jute or their workmen while the total impact on the consumers at large or right to trade or business in another commodity is disproportionately large, therefore, the Act is ultra vires is devoid of substance. In the agro-based economy of India agricultural crops are cultivated in different States based on climatic and soil conditions and water resources. The diversity is so vast that no comparison would be possible in terms of population. In the entire South India, paddy cultivation is the primary economy while in Kerala spices and in Andhra Pradesh, Karnataka and Tamil Nadu sugarcane, tobacco, pulses, cotton and other commercial commodities would supplement paddy cultivation. In Gujarat and Maharashtra commercial crops would supplement the paddy cultivation. In coastal Andhra Pradesh, jute also is cultivated as a second crop. In other areas in south-eastern region, as is evident, apart from agriculture, jute also is the main agricultural product. In Uttar Pradesh, sugarcane gets intensive cultivation apart from paddy and wheat. In Gangetic plateau, apart from agriculture, intensive sugarcane cultivation is the special feature. In Punjab and Haryana, wheat and paddy are the main cultivations. In Rajasthan, bajra, pulses etc. are cultivated. Throughout rural India, people live upon agro-based economy. None of the agricultural produce is common throughout the country but cultivation of agricultural produce is the sole resource of the rural population as majority is compared to urban population in the country. It is settled law that a class legislation based on geographical features is constitutionally valid. Article 38(a) itself recognises this diversity and directs to evolve policies suited to that class of region. It is, therefore, clear that raw agriculture produce is an input of finished product for commercial purposes and its regulation, by the Acts or Rules or orders, cannot be assailed as ultra vires the legislature on the basis of the p3.
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