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PETITIONER: BHIM SEN for R.S. MALIK MATHRA DAS

       Vs.

RESPONDENT: THE STATE OF PUNJABUNION OF INDIA--Intervener.PREM NATH for

DATE OF JUDGMENT: 04/10/1951

BENCH: KANIA, HIRALAL J. (CJ) BENCH: KANIA, HIRALAL J. (CJ) MAHAJAN, MEHR CHAND AIYAR, N. CHANDRASEKHARA

CITATION:  1951 AIR  481            1952 SCR   19  CITATOR INFO :  RF         1968 SC1303  (7,8)  R          1974 SC 183  (29)

ACT:    Preventive Detention Act (IV of 1950), s. 3  (1)--Preven- tive  detention  for black-marketing--Order  based  on  past activities--Validity --Power of Court to consider sufficien- cy  of grounds--Effect of establishment of  Advisory  Boards under Preventive Detention (Amending) Act, 1951.

HEADNOTE:     An order of detention to prevent black-marketing  cannot be held to be illegal merely because in the grounds for such detention  the detaining authority has referred only to  the past  activities  of the person detained,  inasmuch  as  in- stances  of  past activities may give rise to  a  subjective mental conviction that it is necessary to detain such person to  prevent  him from indulging in  black-marketing  in  the future.     Under  the Preventive Detention. Act, 1950, the test  as to  whether  an  order of detention should be  made  is  the subjective  satisfaction  of the  detaining  authority;  the Court has no power to consider whether the grounds  supplied by the authority are sufficient to give rise to such  satis- faction.   The  establishment of the Advisory Board  by  the Amending  Act of 1951 has not made the matter a  justiciable one, and even after the Amending Act the Court has no  power to consider whether the grounds supplied’ are sufficient for making an order of detention.

JUDGMENT:     CRIMINAL  APPELLATE  JURISDICTION: Criminal Appeals Nos. 45 to 49 of 1951.     Appeals from the judgments and orders dated 20th August, 1951, of the High Court of Judicature at     Simla  (Bhandari and Soni 33.) in Criminal  Writ  ’Cases Nos. 46 to 50 of 1951. Jai Gopal Sethi (R. L. Kohli and Sri Ramkumar, with him) for the appellants in Cr. Appeals Nos. 45 and 49.

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20 N.C. Chatterjoe (Hardyal Hardy and R.L. Kohli with him)  for the appellant in Cr. Appeal No. 46. Hardyal Hardy for the appellant in Cr. Appeal No. 48. S.M. S.M. Sikri, Advocate-General of the Punjab (N. S. Doabia. with him) for the respondent in all the appeals. M.C.  Setalvad,   Attorney-General for India (G.  N.  Joshi, with him) for the Intervener in Cr. Appeal No. 45.     1951. October 4. The Judgment of the Court was delivered by     KANIA  C.J.--These are five companion appeals  from  the judgments of the High Court of East Punjab and the principal point  argued before us is as to the legality of the  deten- tion of the appellants under the Preventive Detention Act on the  ground  that  they are engaged  in  black-marketing  in cotton piecegoods.     The  Jullundur Wholesale Cloth Syndicate was  formed  to work  out the distribution of cloth under the Government  of Punjab  Control  (Cloth) Order passed  under  the  Essential Supplies  Act.  Certain persons who held licences as  whole- sale  dealers in cloth formed themselves into a  corporation and  all cloth controlled by the Government was  distributed in  the district to the retail quota holders  through  them. The  Government allotted quotas to the retailers and  orders were  issued  by  the Government for  giving  each  retailer certain  bales  under  the distribution  control.   If  some of  the retail licence holders did not take delivery of  the quotas allotted to them under the Notification of the 4th of October, 1950, issued by the Government of India, Department of  Industries  and Supplies, it was, inter  alia,  provided that  the  wholesale  syndicate may give the  bales  not  so lifted  to another retail dealer. It may be noted  that  all along  the  price  for the cloth to be  sold  wholesale  and retail  had been fixed under Government orders.  The  Syndi- cate  was  suspected to be dealing in black market  and  had been  warned against its activities by the  District  Magis- trate of Jullundur several times.  On the 7th of June, 1951, 21 an  order was issued by the District Organiser,  Civil  Sup- plies  and Rationing, Jullundur, to the managing  agents  of the wholesale cloth corporation, Jullundur City,  intimating that they were strictly forbidden to dispose of any uplifted stock  against unexpired terms without his prior  permission in writing.  They were further directed that thenceforth  no such  stock  would be allowed to be sold  to  an  individual retailer,  but permission would be granted to sell the  same to  associations of retailers only. It was stated that  this letter was not in accordance with clause 5 of the  Notifica- tion of the Government of India dated the 4th October, 1950, which authorized the wholesale syndicate to be at liberty to sell uplifted cloth to any other retailer or an  association of  retail dealers of the same district. It may  be  further noted  that the Cotton Cloth Control Order was in  operation even prior to 1950.  For some time control on the  distribu- tion  of cloth was lifted but the price remained  under  the control  of  the Government.  During that time it  has  been alleged that the appellants and several others sold cloth at rates higher than those fixed by the Government.  Even  when the  distribution and price were both controlled, the  manu- facturing mills were allowed to sell at prices fixed by  the Government a certain percentage of cloth which was not taken by  the Government under its control. This was described  as free  sale cloth and it was alleged that the appellants  and several others were doing black-marketing in this free  sale cloth.

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   By  an order passed by the District Magistrate  on  19th June,  1951,  he directed that the  appellants  be  detained under  section  3  (2) of the Preventive  Detention  Act  to prevent  them  from acting in a manner  prejudicial  to  the maintenance of supplies of cloth, essential to the  communi- ty.  On the 2nd July, 1951, the District Magistrate, Jullun- dur,  directed that the appellants be committed to  District Jail,  Jullundur, from the 2nd July until the  1st  October, 1951.   The  appellants  were  detained  accordingly.    The grounds for their detention were given to them on the  morn- ing of the 6th July.  The grounds set out the activities of 22 the appellants  as managing agents or partners in  different firms  or employees of the said firms or  corporations.   It was  stated  ,that they had been disposing of  most  of  the stocks  of cloth received for the Jullundur District in  the black market at exhorbitant rates from June, 1949, to  Octo- ber,  1950, during the period when control  on  distribution was  removed  and that even after the reimposition  of  that control  in October, 1950, they disposed of cloth which  has been  frozen under the directions of Director of Civil  Sup- plies in the short interval between the passing of the order and  its service on them.  The second ground was in  respect of  their  individual activities as members of the  firm  in which they were partners in disposing of stocks of cloth  in black  market at rates higher than the controlled  ones,  to various dealers, through agents. The particulars were speci- fied in Appendix ’A’.  They refer to the free sale cloth. In the-third ground it was alleged that’ by illegal means  they deprived  the  rightful claimants of the various  stocks  of cloth  with  a view to pass the same into  black  market  at exorbitant  rates. We do not think it necessary to  go  into greater  details  of  these grounds or refer  to  the  other grounds.     On the 9th of July, 1951, petitions under article 226 of the Constitution of India were filed in the East Punjab High Court asking for writs of habeas corpus against the State on the  ground that the detention of the appellants  under  the Preventive  Detention Act was illegal. The  District  Magis- trate  filed his affidavit in reply challenging the  allega- tion of mala fides and setting out in some detail  instances of  the activities of the appellants and contended  that  on the reports received by him he was satisfied that the deten- tion  of  the appellants was necessary.   Early  in  August, 1951, the executive authorities cancelled the licence of the appellants  as cloth dealers.  The High Court dismissed  the petitions and the petitioners have come on appeal to us.     Section  3 of the Preventive Detention Act,  1950,  pro- vides  that the Central Government or the  State  Government may, if satisfied with respect to any person that 23 with  a  view to preventing him from acting  in  any  manner prejudicial  to  the maintenance of  supplies  and  services essential to the community it is necessary so to do, make an order directing that such person be detained.  The power  to act in accordance with the terms of this provision was given by section 3 (2) to a District Magistrate.  Such  Magistrate however  was required to make a report to the State  Govern- ment to which he was subordinate about the order and also to send  the grounds on which the order had been made and  such other  particulars as, in his opinion, had a bearing on  the necessity of the order..     It is not disputed that an order under section 3 (2)  of the Preventive Detention Act to prevent black-marketing  can be  passed  by the District Magistrate.  On  behalf  of  the

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appellants  it  is contended that in the grounds  for  their detention  reference  is made to their activities  prior  to June,  1951, only.  This cannot be considered  objectionable because having regard to those activities it is alleged that the  satisfaction required under the section had arisen.  It was  next argued that such loophole as existed in the  total control of distribution and’ sale and price of piecegoods in the  district was sealed by the order of the District  Orga- niser dated the 7th June, 1951. By virtue of that order  the syndicate or corporation could not sell any cloth without an express  order in writing from the District  Organiser,  and therefore there could be no black-marketing after that  date by any of the appellants and the order was therefore  unjus- tified.   It  was next contended that in any  event  now  as their  licences are cancelled they cannot deal in cloth  and the  order of detention now maintained against them is  more in  the nature of punishment than prevention. It was  argued that orders under the Preventive Detention Act were for  the purpose of preventing a person from acting in future in  the objectionable way contemplated by the Act and it was  beyond the  scope  of the Act to pass orders in  respect  of  their alleged activities anterior to June, 1951.     In  our  opinion the High Court  approached  the  matter quite correctly. Instances of past activities are relevant 24 to  be  considered in giving rise to the  subjective  mental conviction  of the District Magistrate that  the  appellants were  likely  to indulge in  objectionable  activities.  The grounds which were given for the detention are relevant  and the  question whether they are sufficient or not is not  for the decision of the Court. The Legislature has made only the subjective  satisfaction of the authority making  the  order essential for passing the order. The contention that because in the Amending Act of 1951 an Advisory Board is  constitut- ed,  which can supervise and override the decision taken  by the executive authority, and therefore the  question whether the grounds are sufficient to give rise to the  satisfaction has become a justifiable issue in Court, is clearly unsound. The  satisfaction  for making the initial order is  and  has always been under the Preventive Detention Act, that of  the authority  making  the order.  Because the Amending  Act  of 1951  establishes a supervisory authority,  that  discretion and subjective test is not taken away and by the  establish- ment of the Advisory Board, in our opinion, the Court is not given  the  jurisdiction to decide  whether  the  subjective decision of the authority making the order was right or not. Proceeding on the footing, therefore, that the  jurisdiction to  decide whether the appellants should  be detained  under the Preventive Detention Act on the grounds conveyed to  the appellants  is  of the District Magistrate. In  the  present cases,  two arguments were advanced on behalf of the  appel- lants. It was strenuously urged that by reason of the  order of  the District Organiser of the 7th June, 1951,  the  only loophole  which remained in the scheme of  distribution  and sale of cloth under control of the Government was sealed and it was impossible after that order to do any  blackmarketing by  any  of the appellants.  We are unable  to  accept  this contention. In the first place, this order appears to be  an administrative  order and is in the nature of a warning.  It is at variance with the provisions of clause 5 of the  Order of the Central Government of the 4th October, 1950. Moreover this  order does not bring about the result claimed for  it. A lot 25 of cloth which the manufacturers are permitted to distribute

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through persons outside the Government agencies can still be secured and sold at exhorbitant rates, i.e., at rates higher than those fixed by the Government.  The second argument was that  as  the licences of the appellants are  now  cancelled they cannot deal in textile cloth at all and therefore there can  be no apprehension of their indulging in  black  market activities.  We  are  unable to accept  this  argument  also because it is common knowledge that licences can be obtained in  the name of nominees. Again while these people  may  not have  their licences in Jullundur District they may have  or may  obtain licences in other districts. From the fact  that their  licences have been cancelled a month after the  order of  detention  was passed we are unable to hold that  it  is impossible  on that ground for the appellants to indulge  in black market activities. In this connection an extract  from the further affidavit of the District Magistrate of  Jullun- dur  dated  1st August, 1951, may be usefully  noticed.   He stated:     "There  have  been  orders for the  release  of  certain stocks  of  cloth in respect of other mills,  as  free  sale cloth  after the 9th June, 1951.  Any quantity of cloth  not paid  for and lifted by the owners’ nominees will revert  to the  Mills for free sale: vide letter No. CYC-2/ SLM,  dated the  31st May, 1951, from the Textile Commissioner,  Bombay, to  all selected Mills in Bombay and Ahmedabad.  This  cloth can be purchased by any wholesale dealer of cloth of  India, without any restriction. Not only this, free sale cloth  can be  transported from one district to another without a  per- mit: vide Memo No. 28894-CS (C) 50/48791, dated 2nd January, 1951,  from the Joint Director, Civil Supplies,  and  Under- Secretary  to Government Punjab to the  District  Organiser, Civil  Supplies  and Rationing, Ludhiana.  Again  free  sale cloth is also procurable from individual firms who conspired to  make  profit by black marketing.  The  only  information which  is supplied by a purchaser of wholesale cloth to  the District Magistrate is as to what quantity of such cloth has been imported 4 26 into  the district. According to the report of the  District Organiser  no such cloth was imported into Jullundur by  the corporation but there are reasons to believe that the Corpo- ration  had been making their purchases in free  sale  cloth from  the Mills and using those bales to make up  the  defi- ciency in the bales of quota cloth of superior quality which they  used  to dispose of in the black market  in  collusion with the Mills. Besides, the firm Rattan Chand Mathra  Dass, as  would be evident from the attached lists signed  by  the District Organiser, had been dealing in free sale cloth  and had also been importing cloth as Reserve of Kangra and  also Provincial  Reserve. Most of this quota also found  its  way into the black market.  Similarly the firm Madan Gopal  Nand Lall  and Company had been dealing in free sale cloth  on  a large  scale.  It would be evident from the  attached  list. Santi  Sarup, the Secretary of the Corporation, is  believed to  be a partner in the firm Hari Chand Bindra Ban and  this firm also had been dealing in free sale cloth. The free sale cloth  acquired  by them used to be invariably sold  in  the black  market as reported by the District Organiser  in  his Memo  No. 6306/6734-M/CT/Do. 7  dated 1st August,  1950,  in reply  to my Memo. No. nil dated 30th July, 1951.  There  is absolutely  no  bar  for the  wholesale  cloth  corporation, Jullundur, to its getting free sale cloth from the Mills  or other  wholesale dealers nor is there any bar for the  firms Rattan Chand Mathra Dass and Madan Gopal Nand Lal and Co. to

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the acquiring of free sale cloth."     It was next argued on behalf of the appellants that  the only  order of detention made against them was the order  of the  2nd July and that did not refer to any section  of  the Preventive Detention Act and did not suggest that there  was any  satisfaction of the detaining authority. It was  argued that  no order of the 19th of June was ever shown to any  of the appellants or served on them and therefore their  deten- tion  was illegal. It should be pointed out that these  con- tentionsare  raised  in the affidavits not of  the  detained persons,  but of their relations.  Their affidavits  do  not show that they have any personal knowledge. The affidavits 27 on this point are based only on their belief and information and the source of the information is not even disclosed.  As against this, there is the affidavit of the District  Magis- trate which expressly states that the terms of the Order  of the  19th of June were fully explained to each of the  dete- nus.   The  petitions for the writs of  habeas  corpus  were filed within a week after the service of the detention order and  we do not think there is any reason to doubt  the  cor- rectness  of the statements of the District Magistrate.   In our opinion this ground of attack on the order of  detention has no substance and the detention cannot be held illegal on that ground.  The judgment of the High Court was attacked on these  grounds and as we are unable to accept any  of  these contentions the appeals must fail.     One  of the appellants is the secretary of one  corpora- tion  and  another  is a salesman and clerk in  one  of  the firms.  On  their behalf it was urged that  they  could  not indulge in black market activities. We are unable to  accept this contention in view of what is stated in the  affidavits of the District Magistrate.  It is there pointed out that in addition to being a secretary or a clerk and in those capac- ities actively participating in the black market  activities of their principals, they were themselves indulging in black market  activities  in cloth.  If these and other  facts  in respect  of the appellants are disputed the matter  will  be considered by the Advisory Board.  The question of the truth of  those statements however is not within the  jurisdiction of  this Court to decide.  As all the grounds urged  against the  judgment of the High Court fail, all the  five  appeals are dismissed.                                Appeals dismissed.     Agent for the appellants in all the appeals: R.S.  Naru- la.     Agent for the respondent and Intervener: P.A. Mehta. 28