http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 15  

PETITIONER: SYED AHMED AGA ETC.

       Vs.

RESPONDENT: STATE OF MYSORE & ANOTHER

DATE OF JUDGMENT02/05/1975

BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH KHANNA, HANS RAJ CHANDRACHUD, Y.V.

CITATION:  1975 AIR 1443            1975 SCR  473  1975 SCC  (2) 131

ACT: Constitution--Articles 19(1) (g), 304(b) & 32--Whether a  32 petition  maintainable  to  challenge  non--compliance  with proviso  to Article 304(b)--Mysore Silk Worm Seed  &  Cocoon (Regulation  of  Production,  Supply  &  Distribution)  Act. 1960--Amendments  whether  requires fresh  sanction  of  the President  under  Article  304(b)--Increase  in  quantum  of penalty whether amounts to additional restrictons--Nature of penalty.

HEADNOTE: The petitioners challenged the validity of ;amendments  made to   Mysore  Silk  Worm  Seed  and  Cocoon  (Regulation   of Production,  Supply  and  Distribution) Act,  1960,  on  the ground  that the amendments imposed additional  restrictions upon  the  rights of the petitioners to carry on  trade  and business   without  obtaining  the   Presidential   sanction required by proviso to Art. 304(b) of the Constitution. The   Principal  Act  had  received  the  sanction  of   the President.  The reasonableness of any restrictions either of the.  principal  Act  or  of the  amendments  has  not  been challenged.   It  is  not  disputed  that  the  Presidential sanction was not obtained for the amendments. The respondents contended- (1)No  petition under Article 32 of the  Constitution  can lie  to  challenge restrictions covered by  Article  304(b), since  the freedom of trade envisaged by Article  304(b)  is different from freedom of trade guaranteed by Art. 19(1) (g) (2)The  amendments did not impose additional  restrictions on  the petitioners’ right to carry on trade  and  business. Amendments  merely  introduced the restrictions  which  were contained in the principal Act and the statutory rules  made thereunder  and  therefore  did not  impose  any  additional restrictions. Section 12 of the principal Act reads as under :               "12.  Penalties-(1) Any person who contravenes               the  provisions  of section 3 or  4  shall  be               punishable  with fine which may extend to  one               hundred rupees.               (2)any    rearer   who   contravenes    the               provisions  of  section 6 or 7  or  any  other

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 15  

             provision  of this Act or any rule,  order  or               notification   made   thereunder,   shall   be               punishable with fine which may extend to fifty               rupees.               (3)Any  licensed  buyer  who  contravenes  the               provisions  of  sections 7 or 8 or  any  other               provision  of this Act or any rule,  order  or               notification   made   thereunder,   shall   be               punishable  with fine which may extend to  two               hundred and fifty rupees.               (4)Save  as  otherwise  provided  in   sub-               section  (1),  (2)  and (3),  any  person  who               contravenes any of the provisions of this  Act               or   of  any  rule.  order   or   notification               thereunder,  shall  be  punishable  with  fine               which  may  extend to two  hundred  and  fifty               rupees.               (5)(a) Without prejudice to any  punishment               under the preceding sub-sections the  Director               of  Sericulture in Mysore may, after giving  a               reasonable opportunity to the person concerned               to  be  heard, suspend or cancel  the  licence               granted  to any person for preparing  silkworm               seed  if  such person is  convicted  at  least               twice for an offence under this Act.               474               (b)Any  person aggrieved by the  suspension               or cancellation of a licence under clause  (a)               may appeal to the Government within such  time               as  may be prescribed and the decision of  the               Government  on such appeal shall be final  and               shall  not be called in question in any  Court               of Law".               Amendments to section 12 were made by  section               7  and  8 of the Amending  Act which  read  as               under :-               "7. Amendment of section 12.  In section 12 of               the principal Act,-               (1)in  sub-section (1), for the words  "one               hundred   rupees",  the  words  "two   hundred               rupees" shall be substituted;               (2)in  sub-section  (2),  for  the  words  and               figures "section 6 or 7 or any other provision               of this Act or any rule, order or notification               made thereunder, the words, figures,  brackets               and letter, "section 6" or clause (a) of  sub-               section   (1)   of   section   7"   shall   be                             substituted;               (3)after  sub-section  (2),  the  following               subsection shall be inserted. namely :-               "(2A)   Any   person   who   contravenes   the               provisions of clause (b) of sub-section (1) of               section  7 or sub-section (2) of that  section               shall  be punishable with  imprisonment  which               may extend to three months or with fine  which               may  extend  to five hundred  rupees  or  with               both" ;               (4)for   sub-section  (3),  the   following               subsection shall be substituted, namely :-               "(3) Any person who contravenes the provisions               of  section 8 shall   be punishable with  fine               which  may  extend to two  hundred  and  fifty               rupees"               (5)in   subsection  (4),  for  the   words,               brackets and figure,% "subsections (1). 2) and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 15  

             3)", the words, bracket-,, figures and  letter               "subsections  (1), (2), (2A) and (3) shall  be               substituted".               "  8.  Insertion of new sections 12A and  12B-               After section 12     of the Principal Act, the               following  sections shall be inserted,  namely               :-               "  12A.   Abetment-Whoever abets  any  offence               punishable  under this Act shall  be  punished               with the punishment provided in this Act   for               such offence.               12B.   Certain offenses to  be  cognizable-The               offenses under sub-section (2A) of section  12               shall be cognizable". HELD  :  A  citizen is entitled to come to  Court  with  the allegation  that his fundamental right to carry on  business or trade is affected adversely by a provision which does not legally  exist.   The restrictions contemplated  by  Article 304(b)  may  be of a character different from those  of  .in individual citizen’s right to trade, but it cannot be denied that  their  impact  on individual’s  right  is  very  often direct. [477A-B] HELD  FURTHER: Stringent regulations were  already  existing under  the  principal Act and the rules  framed  thereunder. No  additional  restriction is imposed by the  Amending  Act 4(1).   Now  section  7(2)  merely  makes  evasion  of   the requirement  to conduct business in the cocoon market of  an area more difficult. [481C-D, 482-D] The  amendments  to  section  12  increase  the  quantum  of penalties.   But the increase in the penalties is  such,  in view  of the change of the value in money, as not to  amount to  an  appreciable increase in restriction  even  from  the point of view of a person who wants to break the restrictive laws.  Penalties are  475 really  part  of  the  procedure  for  the  enforcement   of restrictions.   They do not create new offenses.  They  only make  violation  of  whatever  restrictions  on  trade   and commerce  were there more onerous.  They, therefore,  cannot be  looked upon as Additional restrictions upon  freedom  of trade and commerce. [484B-D] HELD  FURTHER  : Amendments requiring some more  persons  to take  out licences who may not have been previously  covered by  provisions  relating to licences does not  constitute  a real   increase  in  restriction  upon  commerce.   If   the substance  of  the  statutory  rule  is  converted  into   a statutory  provision.  there  can  hardly  be  said  to   be additional  restrictions imposed by the amending Law.   What may  be a restriction of his choice, from the point of  view of  an  individual citizen engaged in a trade may not  be  a restriction on interstate or intrastate commerce viewed from the angle of the trade as a hole.  It is only an  additional restriction  from the special point of view of  Art.  304(b) which requires Presidential sanction. [487C-E] Petition dismissed.

JUDGMENT: ORIGINAL  JURISDICTION : Writ Petitions Nos. 137 and 203  of 1971. Petitions under Art. 32 of the Constitution of India. A.   K. Sen, K. R. Choudhuri and K. Rajendra Choudhary,  for the petitioner (In Petition No. 137).

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 15  

K.   K.  Chaudhuri  and  K.  Rajendra  Chowdhary,  for   the petitioner (In petition No. 203). F.   S.  Nariman, Additional-Solicitor General of India  and M. Veerappa, for the respondents (In petition No. 137). M. Veerappa, for respondents (In Petition No. 203). The Judgment of the Court was delivered by BEG, J. The two writ Petitions before us under Article 32 of the  Constitution  of  India  by  persons  carrying  on  the business  of silk worm cocoon rearing and reeling  challenge the  validity of various amendments of the  Mysore  Silkworm Seed  and  Cocoon  (Regulation  of  Production,  Supply  and Distribution) Mysore Act 5 of 1960 (hereinafter referred  to as  ’the  Principal Act’) by the Mysore  Silkworm  Seed  and Cocoon  (Regulation of Production, Supply and  Distribution) (Amendment)  Act, 1969 (hereinafter called as the  ’Amending Act’).   The  petitioners  alleged  that  their  fundamental rights guaranteed by Art. 19(1) (g) of the Constitution have been illegally interfered with by these amendments in so far as the amendments impose additional restrictions upon  these rights  without  having secured  the  Presidential  sanction required   by   the  proviso  to  Article  304(b)   of   the Constitution. Article 304 of the Constitution reads as follows :               "304.  Notwithstanding anything in Article 301               or article               303, the Legislature of a State may by law-               (a)   impose  on  goods  imported  from  other               States  or  the Union territories any  tax  to               which  similar goods manufactured or  produced               in that State are subject, so, however, as not               to discriminate between goods so imported               476               and goods so manufactured or produced ; and               (b)   impose  such reasonable restrictions  on               the freedom of trade, commerce or  intercourse               with  or within that State as may be  required               in the public interest :               Provided  that  no Bill or amendment  for  the               purposes of clause (b) shall be introduced  or               moved  in the Legislature of a  State  without               the previous sanction of the President". It  will  be  seen  that Article  301  of  the  Constitution provides  "Subject  to the other provisions  of  this  Part, trade, commerce and intercourse throughout the territory  of India  shall  be free".  Article 302 limits  the  powers  of Parliament to impose "restrictions on the freedom of  trade, commerce  or  intercourse between one State and  another  or within any part of the territory of India", to such restric- tions   "as  may  be  required  in  the  public   interest". Restrictions  falling  under Art. 304(b) must  not  only  be reasonable  but  are  expressly required  to  be  in  public interest.   It is in order to ensure that purposes  of  Art. 304(b) are satisfied that a bill in a State Legislature  has to  obtain  the previous sanction of the President.   It  is worth remembering that Art. 255 of the Constitution provides for a retrospective curing of the defect of want of previous sanction  by the president so that, where  this  requirement has  been overlooked before an enactment,.  public  interest may not suffer by any want of sanction. The  only question, on merits, which has been argued  before its  on.  behalf  of the petitioners is  :  Do  the  changes introduced  by  the Amending Act amount to  such  additional restrictions  as  to require the sanction of  the  President even though the Principal Act bad received such sanction  at the   appropriate   stage  ?  The  reasonableness   of   any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 15  

restrictions, new or old, has not been challenged before us. All  that  is  urged is  that  the  additional  restrictions introduced  by  the Amending Act were bound  to  obtain  the previous   sanction  of  the  President  before   they   are introduced  in, the form of, a Bill in the Legislature of  a State because that is the Constitutional mandate. As  the  restrictions covered by Article 304(b) have  to  be those on "freedom of trade and commerce", which is a broader and  somewhat different concept than that of  an  individual citizen’s freedom to trade and carry on business, guaranteed by  Article  19(1)(g),  a  preliminary  objection  has  been raised,  on behalf of the State of Mysore, that no  petition under  Article 32 of the Constitution can lie  to  challenge such restrictions as they could not be on rights  guaranteed by  Article 19(1) (g).  Reliance was placed on  Ram  Chandra Pillai & Ors. v. State of Orissa & Ors., (1) where there  is an observation indicating that the petitioner under  Article 32  could not rely upon the guarantee of freedom  of  inter- State  or intra-State trade, embodied in Article 301 of  the Constitution. because it is not a fundamental (1)[1956] S.C.R. 28.  477 right conferred by Part III of the Constitution which can be enforced  by a petition under Article 32".  That was a  case relating to a pre-Constitution enactment so that Article 305 of the Constitution was held to provide a complete answer to the petitioners’ claim.  We do not think that the mere  fact that  the- legality of an enactment is challenged  for  non- compliance  with  the  proviso to  Article  304(b)  of  the, Constitution would take away the character or substance of a petitioner’s  claim when a citizen comes to Court  with  the allegation  that his fundamental right to carry on  business or trade is affected adversely by a provision which does not legally  exist.  No doubt the restrictions  contemplated  by Article 304(b) may be of a character different from those on an  individual  citizen’s rights to trade but it  cannot  be denied that their impact on individual rights is often  very direct.   The stage for considering the reasonableness of  a direct or indirect restriction of a fundamental right arises only  where  the restriction is otherwise  valid.   As  this Court  has  repeatedly  held,  restrictions  which  have  no authority or sanction of law to back them would, per se,  be bad  restrictions.   The  question of  reasonableness  of  a restriction  on  individual rights to carry on  trade  could only  arise where the purported law does not fail  on  other tests. Learned Counsel for the petitioners had relied upon the case of Himmatlal Harilal Mehta v. the State of Madhya Pradesh  & Ors.,(1)  where a reference was made to Mohd.  Yasin v.  The Town  Area Committee Jalalabad & Anr.(2 ) He also urged,  on the strength of District Collector of Hyderabad and Ors.  v. M/s.   Ibrahim  &  Co. etc., (3) that  Article  301  of  the Constitution  guarantees  not merely freedom  of  trade  and commerce  in  the  abstract.  In  other  words,  individuals affected  by the violation of the guarantees under  Articles 301  and  304  could also complain, at  the  same  time,  of infringement  of their right guaranteed under Article  19(1) (g)  of  the Constitution provided a breach  of  the  former involves violation of the latter also as it would ordinarily do. Therefore, we overrule the preliminary objection. The  State  of  Mysore  has tried to  justify  the  want  of Presidential sanction to amendments on the ground that  they do not impose additional restrictions but are covered by the objects  and the provisions of the Principal Act  which  had already   obtained   the  Presidential   sanction   at   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 15  

appropriate  stage.  Indeed, the amendments, it  was  urged, merely  gave  an  enacted  form  to  what  were   previously statutory  rules validly made under the authority  conferred by  Section 18 of the Principal Act.  This Section  provides as follows :               " 1 8. Power of Government to make rules. .  .               (1)   The  Government  may  subject   to   the               condition   of   previous   publication,    by               notification,  make  rule  to  carry  out  the               purposes of this Act.               (1)   [1954] S.C.R. 1122.               (2)   [1952] S.C.R. 572..               (3)   [1970] 3 S.C.R. 498.               478               (2)In  particular and without prejudice  to               the  generality of the foregoing  power,  such               rules may provide for-               (a)   the   duties  and  powers  of   officers               authorised  to enforce the provisions of  this               Act  and the manner of constitution of  market               committees  and the powers and duties of  such               committees;               (b)   the   qualifications  of   persons   who               produce  or prepare silkworm seed for  rearing               of   silkworms  and  other  persons  to   whom               licences under this Act may be granted;               (c)   the  grant of licences and the  imposing               of conditions in respect of the same and  fees               for the grant of such licence;               (d)   the sanitary and other conveniences that               should  be provided for at the production  and               distribution centers of silkworm seed ;               (e)   the grant of duplicate licences and  the               renewal of licences and fees for the same ;               (f)   appeals  from any order under this  Act,               the authority to which such appeals shall lie,               the  time within which such appeals should  be               made  and the procedure for dealing with  such               appeals ;               (g)   the  forms  of licences to  be  granted,               returns  to  be submitted and accounts  to  be               maintained under this Act;               (h)   the fee payable by the licensed buyer in               respect  of  cocoons purchased by him  in  the               cocoon market, such fee not exceeding two  per               cent of the purchase price;               (i)   the  particulars to be furnished by  any               person  of the occurrence of silkworm  disease               in silkworm or silkworm seed, and the steps to               be taken for the prevention or eradication  of               such disease;               (j)   generally regulating the procedure to be               followed in proceedings under this Act;               (k)   any other matter which may be prescribed               under this Act.                (3)All  rules made under this Act shall  he               laid  as  soon as may be after they  are  made               before  each  House of the  State  Legislature               while  it is in session for a total  period  of               thirty  days  which may be  comprised  in  one               session  of  in two or more  sessions  and  if               before  the expiry of the said period,  either               House  of  the  State  Legislature  makes  any               modification  in any rule or directs that  any               rule   shall  not  have  effect  and  if   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 15  

             modification or direction is agreed to                 479               by  the  other  House,  the  said  rule  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 rule." The  argument  before us on behalf of the State is  that  no amendments  falling beyond the purview of the Principal  Act and  the rules framed thereunder were made, and,  therefore, no fresh restrictions could be said to have been  introduced by  change  of  form or even ,of  some  substance  of  those restrictions  because they were all, in any due, within  the purposes  of  the Principal Act which had  already  received Presidential sanction. According  to  the State, the Principal Act  was  introduced principally with the object of improving and maintaining the quality  of silk which is manufactured and, in order  to  be able to do this, it was submitted, it was necessary to  keep a  record of all those who breed silkworms in the  State  of Mysore  so that a watch may be kept over the genetic  purity of  silkworms.  It was stated that there is no control  over pierced  cocoons  which  become  useless  for  purposes   of reeling.  Hence, "cocoon" is defined in the Act as a product of mulberry silkworms "either green or stifled, dried or  in any  other state or condition, but does not include  pierces cocoon".  Anyone wanting to use silk for purposes other than reeling could use pierced cocoons.  The "  cocoon market" is defined  in  Section 2(b) of the Principal Act as  a  market established  under  Section  10  which  provides  that   the Government may, for regulation and distribution of  silkworm seed,  by notification, specify the places at  which  cocoon markets,  market yards, and stores may be located,  fix  the sericultural areas to be served by each cocoon market  where silkworm  cocoon  produced by such areas may  be  sold,  and assign  zones  and markets in which any licensed  buyer  may carry  on his business.  It is also provided in  Section  10 that all transactions in the cocoon market shall be by  open auction on payment of cash, Silkworm are defined as mulberry silkworms.   Silkworms seeds are defined as cocoons  of  all kinds  (excluding  cross-breed cocoons) used or  reared  for purposes  of  production.  A rearer is a person  defined  as engaged in rearing silkworms for the production of  silkworm cocoons, whether for reproduction or reeling.  The  preamble of the Act shows that it is intended to consolidate the laws "providing  for the regulation, of the  production,  supply, and distribution of silkworm seed and cocoon in the State of Mysore it is urged on behalf of the State that the whole object  of this  machinery  of regulation and  control  of  production, supply,  and distribution of silkworm seed and  cocoons  was that, by ensuring the high standard of purity and quality of Mysore silk, to promote the business and trade of the Mysore State  in silk products, and, thereby, to contribute to  the growth  and  freer  flow  of trade.  It  is  stated  by  the petitioner-,  themselves  that  almost 7  per  cent  of  the population  of Mysore State is en-aged in various  processes connected with the 480 rearing  of silkworms and reeling of silk,and that over  two lakh  acres  of  land in Mysore  State  are  under  mulberry cultivation  and  mulberry  is  used  exclusively  to   feed silkworms.   The raising and maintenance of the  quality  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 15  

silk  was,  it was submitted, both in the interests  of  the trade insilk products and in public interest. In orderto  carry out the purposes of the  Principal  Act, Sections 3 to 9 had,even before its amendments, laid down as follows               "3.   Regulation  of  production,   etc.,   of               silkworm  seed .... No person  shall  produce,               prepare,  store, transport, sell or  otherwise               distribute or dispose of silkworm seed, except               under  and  in accordance with the  terms  and               conditions  of  a licence granted  under  this               Act.               4.    Regulation of rearing .... (1) No person               shall rear silkworms from silkworm seed  other               than silkworm seed obtained from a person  who               holds a licence under this Act.               (2)The  Government may by notification  direct               that  in any specified area no silkworm  other               than  silkworm  of  specified  race  shall  be               reared and that such silkworm shall be  reared               from  silkworm  seed obtained  from  specified               sources.   On the issue of such  notification,               no  person shall rear in such  specified  area               any other race of silkworm or obtain  silkworm               seed from any other source.               5.    Regulation  of  possession  of  silkworm               seed .... No person shall be in possession  of               silkworm seed unless-               (a)   he is a rearer; or               (b)   he  holds a licence granted  under  this               Act; or               (c)   he  is  authorised  in  writing  by  the               prescribed officer to possess silkworm seed.               6.    Regulation   of  disposal  of   silkworm               cocoons.-No  rearer shall dispose of or  agree               to dispose of or in pursuance of an  agreement               entered   into,  make  delivery  of   silkworm               cocoons for reeling or for reproduction except               to persons holding a licence under this Act.               7.    Regulation   of  sale  or  purchase   of               silkworm cocoons for reeling.  In any area  in                             which a cocoon market is established u nder this               Act,  no rearer shall sell or agree  to  sell,               and no licensed buyer shall purchase or  agree               to  purchase  silkworm cocoons,  for  reeling,               except  in such cocoon market, and  except  in               accordance  with such conditions and  in  such               manner as may be prescribed.               8.    Regulation  of reeling.-No person  shall               carry  on  the business  of  reeling  silkworm               cocoons  unless  he holds  a  licence  granted               under this Act.                481               9.    Application  for  licence.-Every  person               who desires to obtain a licence under this Act               shall  make  an application to  the  Licensing               Authority in such form as may be prescribed."               We   find  that,  as  regards  regulation   of               rearing,  Section  4(1)  is  reframed  by  the               Amending Act, so that now it reads as follows               No  person  shall  engage in  the  rearing  of               silkworms  for  the  production  of   silkworm               cocoons  except under and in  accordance  with               the terms and conditions of a licence  granted

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 15  

             under this Act". On  behalf of the State, it is pointed out that the  amended Section 4(1) does not amplify the restrictions which had  to be  read with Section 3 of the Principal Act set  out  above and  the detailed provisions of Rules 3, 4, and 5 read  with definitions  given.   After going through these  rules,  the validity of which was not challenged, we are satisfied  that no additional restriction is imposed by the Amending Section 4(1). We  may  here indicate the already stringent  regulation  or restrictions existing under the Principal Act and the  rules framed  thereunder  which were not  challenged.   Rule  3(1) contained  a  prohibition against rearing silkworms  by  any person from silkworm seed other than silkworm seed  obtained from a seed preparer licensed under these rules.  Rule  3(2) imposed a duty upon a person who obtains silkworm seed  from a  licensed seed preparers to preserve the bill and the  egg sheets  issued by the licensed seed preparer in  respect  of the  silkworm seed supplied by such seed preparers so  that, when so required by an officer, it could be produced  before him.    Rule  4(1)  prescribed  the  application  form   for licensing to be filled in and submitted by Rearers and  seed preparers.   Rule  5  provided  for  the  grant  of  various licences  after satisfying the licensing authorities of  the qualifications  of  the  applicant.   It  also  enable   the licensing  authority to refuse licenses to limit the  number of seed preparers in an area.  The reason for the refusal of the  grant of the licence by the licensing authority had  to be  communicated to the unsuccessful applicant.   Buying  of cocoons for reeling had to be licensed.  Section 8 read with Rule  5(b)  lays  down that no person could  carry  on  "the business  of  reeling silkworm cocoons" without  a  license. Section   6,  set  out  above,  prohibited   disposals   and deliveries  of silkworm cocoons for reeling and  for  repro- duction  except to persons holding licences under  the  Act. Section  7 prohibited, in cocoon market areas, the rears  of silkworm  cocoons  from  selling or  agreeing  to  sell  and licensed  buyers  from purchasing or  agreeing  to  purchase silkworm  cocoon for reeling except in the cocoon market  of the area.  It is difficult for us to see bow the mere change of  wording in Section 4(1) of the Act had really  amplified or increased the restrictions already there. Section  4  of  the Amending Act amends  Section  6  of  the Principal  Act  by  omitting words :  "for  reeling  or  for reproduction." Section 5 of the Amending Act says 482               5.    "Substitution of new section for section               7.For  section  7 of the  Principal  Act,  the               following section shall be substituted, namely               -               "7. Regulation of sale or purchase of silkworm               cocoons for reeling. (1) In any area in  which               a  cocoon  market is  established  under  this               Act,-               (a)   no rearer shall sell or agree to sell  ;               and               (b)   no  person  shall purchase or  agree  to               purchase,  silkworm  cocoons  except  in  such               cocoon  market and except in  accordance  with               such  conditions and in such manner as may  be               prescribed.               (2)After a cocoon market is established for               any  area,  no  person shall  except  in  such               cocoon market, use or permit the use or assist               in  the use of, any building, room, tent,  en-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 15  

             closure, vehicle, vessel or place in such area               for  the sale or purchase of silkworm  cocoons               or  in  any  manner aid or abet  the  sale  or               purchase of silkworm cocoons". Here  also  we  are  unable to find  any  substance  in  the grievance  that there has been any significant  increase  in restrictions.  The new Section 7(2) merely makes evasion  of the requirement to conduct business in the cocoon market  of an area more difficult. The  only amendments complained of are those in  Section  12 which, in the Principal Act, read as follows :-               "12.     Penalties.-(1)   Any    person    who               contravenes the provisions of Section 3- or  4               shall be punishable with fine which may extend               to one hundred rupees.               (2)Any    rearer   who   contravenes    the               provisions  of  Section 6 or 7  or  any  other               provision  of this Act or any rule,  order  or               notification   made   thereunder,   shall   be               punishable with fine which may extend to fifty               rupees.               (3)Any  licensed buyer who contravenes  the               provisions  of  Section 7 or 8  or  any  other                             provision  of  this Act or any rule, order  or               notification made thereunder, shall be punish-               able with fine which may extend to two hundred               and fifty rupees.               (4)Save  as  otherwise  provided  in   sub-               section  (1),  (2)  and (3),  any  person  who               contravenes any of the provisions of this  Act               or   of  any  rule,  order   or   notification               thereunder,  shall  be  punishable  with  fine               which  may  extend to two  hundred  and  fifty               rupees.               (5)(a)  Without  prejudice to  any  punishment               under the preceding sub-sections, the Director               of  Sericulture in Mysore may, after giving  a               reasonable opportunity to the person concerned               to  be  heard, suspend or cancel  the  licence               granted to any person for rearing               483               silkworm  seed if such person is convicted  at               least twice for an offence under this Act.                (b)  Any  person aggrieved by the  suspension               or cancellation of a licence under clause  (a)               may appeal to the Government within such  time               as  may be prescribed and the decision of  the               Government  on such appeal shall be final  and               shall  not be called in question in any  Court               of law".               Section 7 of the Amending Act lays down               "7. Amendment of Section 12.  In Section 12 of               the Principle Act,-               (1)in  subsection (1), for the word,,  "one               hundred   rupees".  the  words  "two   hundred               rupees" shall be substituted               (2)in  sub-section (2), for the  words  and               figures "section 6 or 7 or any other provision               of this Act or any rule, order or notification               made thereunder", the words, figures, brackets               and letter.  "section 6 or clause (a) of  sub-               section   (1)   of   section   7"   shall   be               substituted;               (3)after  sub-section  (2),  the  following

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 15  

             sub-section  shall be inserted,  namely  (’-A)               All  Person who contravenes the provisions  of               clause (b) of sub-section (1) of section 7  or               sub-section (2) of   that  section  shall   be               punishable with imprisonment which may  extend               to three months or with fine which may  extend               to five hundred rupees or with both"               (4)for sub-section (3), the following  sub-               section shall be substituted, namely :-               "(3) Any person who contravenes the provisions               of  section  8 shall be punishable  with  fine                             which  may  extend  to two  hundred  a nd  fifty               rupees"               (5)in  sub-section  (4),  for  the   words,               brackets  and figures "sub-sections  (1),  (2)               and  (3)",  the words  brackets,  figures  and               letter  "sub-sections  ( 1), (2), (2A)  and  3               shall be substituted",.               Section 8 of the Amending Act provides as               S.    Insertion   of  new  section   12A   and               12B.--After  Section 12 of the Principal  Act,               the  following  sections  shall  be  inserted,               namely :-               12A.   Abetment.-Whoever  abets  any   offence               punishable  under this Act shall  be  punished               with  the punishment provided in this Act  for               such offence.               484               12B.   Certain offenses to be  cognizable.-The               offenses under sub-section (2A) of section  12               shall be cognizable". It  was contended that the increase in the penalties  would, in  any event, be additional restrictions.  Learned  Counsel for  the State replied that penalties are  merely  sanctions provided  for enforcing restrictions and are not  additional restrictions  on freedom of trade or commerce.  It  is  true that,  even  without a change in the  nature  of  violations punished, those who contravene the provisions of the Act are subjected to somewhat severer punishment.  But, the increase in the penalties is such, in view of the change in the value of  money,  as not to amount to an appreciable  increase  in restriction even from    the  point of view of a person  who wants  to break the restrictive laws.  Penalties are  really part  of the procedure for the enforcement of  restrictions. They  do not create new offenses.  They only make  violation of  whatever restrictions on trade and commerce  were  there more  onerous.  We therefore, doubt very much  whether  they could really be looked upon as additional restrictions  upon freedom of trade    and commerce. We may now refer to the cases cited by learned Counsel.   In Atiabari Tea Co. Ltd.  V. the State of Assam & Ors.,(1) this Court held the Assam Taxation (on goods carried by Roads and Inland  Waterways)  Act,  1954, to be void  for  not  having secured the Presidential sanction under the proviso to  Art. 304(b) before it was introduced in the form of a bill in the State Legislature.  In the case before us, the Principal Act had  the sanction of the President and enables orders to  be passed  which had the force of law enabling restrictions  to be imposed by rules covered by the purposes of the Act.   We have  already cited Section 18 of the Principal Act to  show the  amplitude  of  the  rule making  power  which  bad  the required Presidential sanction.  And, we have found that the amendments before us only varied the form of restrictiveness without  appreciably adding to its content.  This case  has,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 15  

therefore, no application to the situation before us. The  Automobile Transport (Rajasthan) Ltd.  V. the State  of Rajasthan & Ors. (2), was relied upon by both sides for  the distinction  between  mere " regulation" and  a  restriction contemplated by Article 304(b) of the Constitution.  It  was held here that taxation of Motor Vehicles was a compensatory measure incidental to transport by Motor Vehicles which  did not infringe the guarantee of freedom of trade and  commerce conferred  by Art. 301 of the Constitution.  The  effect  of such  taxation was held to be too remote in its effect  upon freedom   of  trade  and  commerce  to  be   a   restriction contemplated  by it.  Subba  Rao., J., who agreed  with  the conclusions  of three other learned Judges of this Court  so as  to  form a majority said that the nature and  extent  of taxation would have to be carefully scrutinized to determine whether  it amounted to mere regulation or restriction.   He observed (at p. 557) (1)  [1961] 1 S.C.R. 809. (2)  [1963] I S.C.R. 471.  485 .lm15 "Of  all the doctrines evolved, in my view, the doctrine  of ’direct  and  immediate effect’ on the freedom  would  be  A reasonable  solvent  to the difficult situation  that  might arise  under our Constitution.  If a law, whatever may  have been  its source, directly and immediately affects the  free movement  of  trade,  it would be restriction  on  the  said freedom". Subba Rao, J ., summarised the whole law by formulating  the following propositions (at p. 564-565) :               "(1)  Art.  301  declares  a  right  of   free               movement of trade without any obstructions  by               way of barriers, interState, or intra-State or               other impediments operating as such  barriers.               (2)  The said freedom is not impeded, but,  on               the  other  hand,  promoted,  by   regulations               creating  conditions for the free movement  of               trade, such as, police regulations,  provision               for services, maintenance of roads,  provision               for aerodromes, Wharfs, etc., with or  without               compensation (3) Parliament may by law  impose               restrictions  on  such freedom in  the  public               interest  ;  and the said law can be  made  by               virtue  of  any entry  with  respect  where-of               Parliament  has power to make a law.  (4)  The               State  also,  in exercise of  its  legislative               power,   may  impose   similar   restrictions,               subject  to  the two conditions laid  down  in               Art.   304(b)  and  subject  to  the   proviso               mentioned therein. (5) Neither Parliament  nor               the  State Legislature can make a  law  giving               preference to one State over another or making               discrimination between one State and  another,               by   virtue  of  any  entry  in   the   Lists,               infringing  the said freedom. (6) This ban  is               lifted  in  the  ease of  Parliament  for  the               purpose of dealing with situations arising out               of  scarcity  of  goods in  any  part  of  the               territory  of India and also in the case of  a               State  under  Article 304(b), subject  to  the               conditions  mentioned  therein.  And  (7)  the                             State  can impose a non-discriminatory   tax  on               goods imported from other States or the  Union               territory to which similar goods  manufactured

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 15  

             or produced in that State ’are subject". In Khyerbari Tea Co. Ltd. & Anr.  V. The State of Assam, (1) the  Assam Taxation (on goods carried by Road or  on  Inland Water ways) Act (Assam Act X of 1961), was held to be valid. It  was  pointed  out  here  by  Gajendragadkar,  J.,  that, whereas,   the  ratio  of  the  majority  decision  in   the Automobile  Transport  (Rajasthan)  case  (supra)  was  that compensatory  taxation  would be outside Article  301,  and, therefore,  of  Article  304(b)  of  the  Constitution,   in Atiabari  Tea Co’s case (supra), the Court had  adopted  the view  that the compensatory character of a tax may be  taken into account in deciding whether it was a restrictionunder Article 304(b) which was, reasonable and in public interest.In Khyerbari Tea Co’s case (supra), the Court proceeding on the assumption  that  the tax was not  compensatory  upheld  its validity,  presumably because it was  considered  reasonable and  in public interest as a restriction.  No such  question of reasonableness of any restriction imposed by the Amending Act before us (1)  [1941] 5 S.C.R. 975. 486 has been raised by the petitioners.  But, if the position of even  taxation,  from the point of  view  of  "restrictions" contemplated by Article 304(b) of the Constitution could  be doubtful  and  depended  upon  its  nature  and  extent  and purpose,  we  think that there could be no doubt  that  some additional licensing, at nominal fees charged presumably  to defray the expenses of carrying out the objects of the  Act, could  not be held to be anything more  than"regulation"  in the cases before us. The  question  of  regulatory  character  or  otherwise   of amending  provisions  has  arisen  only  in  the  course  of discussion  of  the  question whether  any  new  provisions, possibly  resulting in requiring some more persons  to  take out  licenses, who may not have been previously  covered  by provisions  relating to licensing, would be a  "restriction" as  contemplated by Aritcle 304(b).  The learned  Additional Solicitor  General  has contended that  such  licensing,  is necessary even for simply maintaining A record of those  who carry  on  various activities in connection  with  the  silk production  industry  and  business  so  that  their  purely business  and industrial activities may be watched  and  the quality and reputation of this industry and trade of  Mysore may  be  maintained.  Such "regulation",  it  is  contended, ultimately contributes to greater flow and freedom of trade, even if it involves some inconvenience to those who have  to take out license which, according to rules,. were granted to all  those found qualified.  We find considerable weight  in these  arguments.   In any case, we are not  satisfied  that there has been a real increase in restriction upon  commerce in  silkworms and cocoons by the provisions of the  Amending Act  which  mostly cover what was already laid down  by  the statutory  rules.   If the substance of statutory  rules  is converted  into statutory provisions there could  hardly  be said  to be an addition even in "regulation" imposed by  the amending law. Learned  Counsel  for the petitioner cited Hughes  and  Vale Proprietary  Ltd.  v. State of New South Wales &  Ors.  (1), where provisions of the State Transport (Co-ordination) Act, of  the State of New South Wales, requiring applications  to be made for licences, which may be granted or refused by  an official in the exercise of an uncontrolled discretion,  and of  all provisions consequential thereto, in so far as  they were sought to be applied to public Motor Vehicles operating in  the course of or for the purposes of inter-State  trade,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 15  

were held to be invalid for a contravention of Section 92 of the   Constitution  of  Commonwealth  of  Australia.    This section,  as  we know, provides that  "trade,  commerce  and inter-course,  among  States whether by  means  of  internal carriage  or  motor navigation shall  be  absolutely  free". Here,  the Privy Council discussed a large number, of  cases which  had a bearing on the interpretation of Section 92  of the  Australian  Constitution,  including  Commonwealth   of Australia v. Bank of New South Wales (2) case, where it  was observed at page 31 1)               "  Every case must be judged on its own  facts               and in its               own  setting of time and circumstances and  it               may be that               (1)   [1955] A.C. 241. [1950] A.C. 235,311.               487               in  regard to some economic activities and  at               some stage of. social development it might  be               maintained  that  prohibition with a  view  to               State  monopoly  was the  only  practical  and               reasonable  manner  of  regulation,  and  that               interstate  trade,  commerce  and  intercourse               thus prohibited and thus monopolized  remained               Absolutely free".               The  Privy Council after quoting this  passage               said               "As  to  the passage in the  judgment  of  the               Board in the Bank case upon which counsel  for               the  respondents  particularly  relied,  their               Lordships     accept-without     qualification               everything  that was said by the Board in  the               Bank  case,  but  they are not  aware  of  any               circumstances in the present case giving  rise               to   the   situation  contemplated   in   that               passage". Thus,  even  if we were to apply the test of  regulation  to distinguish  it from restriction which may be  deduced  from Hughes’  case (supra) it will be seen that a decision on  it depends  upon  the  circumstances  to  which  a  legislative measure is meant to apply and its consequences.  In the case before us, the amendments did not, in our opinion, go beyond a  regulation which was fully authorised by the language  of the  provisions of the Principal Act.  Even  any  Additional licensing  involved  did not go beyond the  purview  of  the provisions  of  the Principal Act and by  the  rules  framed thereunder.   The mere change in form, from statutory  rules to  statutory  provisions,  could  hardly  constitute   even additional  "regulation".   It is only an  additional  "res- triction"  from the special point of view of Article  304(b) which requires Presidential sanction. Although, a petition under Article 32 alleging  infringement of the fundamental right guaranteed under Article 19(1)  (g) of the Constitution would lie, yet, it has to be  remembered that  it  cannot  be allowed  until  such  an  infringement, falling outside Article 19(6) of the Constitution, has  been established.   Now,  as we have mentioned  earlier,  learned Counsel  for the petitioners stated that no  question  about reasonableness  of any restriction was being raised by  them before  us.   They rested their case solely on the  want  of Presidential   sanction  to  Additional  "restrictions"   on freedom  of business, trade, and commerce which are not,  as we  have  indicated  earlier,  to be  equated  with  a  mere reduction of the area of freedom of choice of those who  arc engaged  or who want to engage in a business or trade.   The passage cited in Hughes’ case (supra), from the Bank of  New

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 15  

South Wales case (supra) makes that clear.  In other  words, an allegedly additional restriction on trade and commerce is to  be judged from a broader and more general angle  of  the freedom  of a, particular trade.  What may be a  restriction of  his  choice,  from the point of view  of  an  individual citizen  engaged  in a trade, may not be  a  restriction  on interstate or intra-State commerce viewed from the angle  of the trade as a whole.  Even if we could not, as we did  not, find  any additional restrictions on the silkworm  and  silk production  business  and industry in  the  amendments,  the petitioners could show that they were unduly hampered by the impugned amendments from carrying on their business 10 SC/75-32 488 or   trade  by  some  unreasonable  restrictions  on   their fundamental rights as individuals engaged in silk production industry  or  business.  But, if that was  their  grievance, they had to demonstrate an unreasonableness of  restrictions upon  their activities falling outside Article 19(6)  before they  could  succeed.  They have not even  attempted  to  do that.   It is evident that they could not do so because  the licensing  fees  for various activities to  be  licensed  is quite  nominal  and they have not been denied  any  licences they wanted. Consequently, we dismiss these petitions with costs. C.M.P.  No. 1929 of 1975 (in Writ Petition No. 137 of  1971) is also dismissed as not pressed. Petitions dismissed P.H.P. 489