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Judgment
Venkatarama Aiyar, J.—These are petitions filed under Article 226 of the Constitution of India and raise the question whether the
notification, G. O. No. 139 (L. A.) issued by the Government of Madras on 31-1-1952 is valid. That notification is as follows:
In exercise of the powers conferred by Section 81, Sub-section (1) of the Madras Village Panchayats Act, 1950 (Madras Act 10 of 1950) His
Excellency the Governor of Madras hereby appoints the Official year 1952-53 as the year after the ''commencement of which, no person shall
continue to keep open a private market in any panchayat area within the jurisdiction of a panchayat.
The petitioners are owners of private markets in the districts of Malabar, North Arcot, Nellore, Tiru-chirapalli and Visakhapatnam. Some of these
markets are stated to have been in existence for more than a century. All of them had been run under annual licences granted under the Madras
Local Boards Act, 14 of 1920. The petitioners allege that when they applied for renewal of licence to hold the market for the year 1952-53 they
were informed by the Panchayat Board, which is the first respondent, that under the provisions of Section 81(1), Madras Village Panchayats Act
10 of 1950 and the notification dated 31-1-1952 issued under that section private markets could no longer be conducted and that no licence
would be granted for holding them. Their complaint is that Section 81 (1) of the Act and the notification in question issued thereunder deprived
them of their fundamental right to hold and enjoy their property and to carry on business and that they are therefore void as being repugnant to
Article 19(1)(f) and (g) of the Constitution. They accordingly pray that a Writ of Mandamus be issued directing the Panchayat Board to issue the
necessary licences for holding markets.
The relevant provisions of the Madras Village Panchayats Act 10 of 1950, hereinafter referred to as the Act, may now be noted: section 1(2)
enacts that the Act shall extend to the whole of the State of Madras except the city of Madras, the municipalities governed by the District
Municipalities Act 5 of 1920 and cantonments governed by tfie Cantonments Act of 1924. That is to say, it applies to the whole of the rural areas
of the State. u/s 1(3), the Act is to come into force on such date as may be appointed by notification. In accordance therewith it has been brought
into operation from 1-4-1951. Sections 80 to 86 of the Act relate to markets. Section 80 provides that the panchayat may open public markets
and levy one or more of the fees as are mentioned therein. Sections, 81 and 82 with which we are directly concerned in these petitions are as
follows: ""81(1) No person shall open a new private market after the commencement of this Act, or continue to keep open a private market, after
the commencement of such, year as the Government may, by notification appoint in this behalf.
Provided that nothing in this sub-section shall apply to any private market, existing on the date of the publication of the notification aforesaid, if the
income derived from such market after deducting therefrom the cost of collection and management and such other sums as may be prescribed, has
been, and continues to be utilised solely for educational, charitable and religious purposes.
(2) If any question arises as to whether any market falls within the scope of the proviso to Sub-section (1) or not, the Panchayat shall make a
reference thereon to the Government and their decision shall be final.
(3) In lieu of each of the private markets closed in pursuance of Sub-section (1), the panchayat shall provide a public market.
82(1) No person shall keep open a private market of the nature referred to in the proviso to Sub-section (1) of Section 81 unless he has obtained
a licence from the panchayat to do so. Such licence shall be renewed every year.
2(a) The Panchayat shall grant the licence applied for, subject to such conditions as it may think fit as to supervision and inspection, sanitation and
water supply, weights and measures to be used, rents and fees to be charged and such other matters as may be prescribed.
(b) The panchayat may modify the conditions of the licence to take effect from a specified date.
(c) The panchayat may at any time suspend or cancel any licence granted under Clause (a) for breach of the conditions thereof.
(d) Any person aggrieved by an order of the panchayat under Clause (a), (b) or (c) may appeal against such order to the Inspector who may, if lie
thinks fit, suspend the execution of the order pending the disposal of the appeal.
(a) Any person claiming to levy in a private market lawfully established prior to the coming into force of the Madras Local Boards Act, 1884,
fees of the nature specified in Section 80, Sub-section (2) shall apply to the Inspector for a certificate recognising his right in that behalf; and the
Inspector shall pass orders on such application after giving due notice to the panchayat and considering any representations made by it.
(b) Any person aggrieved by an order of the Inspector refusing to grant a certificate under Clause (a) may, within six months from the date of such
order, institute a suit to establish the right claimed by him, and subject to the result of such suit, the Inspector''s order shall be final.
(4) When a licence granted under Sub-section (2) does not permit the levy of any fees, it shall be granted free of charge; but when such permission
is given, a fee not exceeding 15 per cent. of the gross Income of the owner from the market in the preceding year shall be charged by the
panchayat for such licence.
(5) The panchayat or any officer duly authorised by it may close a market which is unlicensed or the licence for which has been suspended or
cancelled, or which is held or kept open contrary to the provisions of this Act."" The dominant provision is Section 81(1) which prohibits both
opening of new private market after the commencement of the Act and the continuance of existing private markets alter the issue of the notification
under this section. We are not concerned in these petitions with any new markets opened or sought to be opened after 1-4-1951 when the Act
came into force.
The question which actually arises for determination in these petitions is about the validity of the prohibition contained in Section 81 (1) and in
the notification issued thereunder against the continuance of private markets which had been in existence prior to the date of the Act. There is also
a further, question raised as regards markets which had been in existence before the coming into force of the Madras Local Boards Act 5 of 1384.
That question is whether having regard to Section 82(3) of the Act these markets are outside the operation of Section 81(1). For a correct
appreciation of the position it is necessary to refer to the prior legislation on the subject of private markets in the State of Madras.
Before the enactment of the Madras Local Boards Act 5 of 1884 there was no law requiring that licence should be taken for holding private
markets. Such a provision was for the first time enacted by the Madras Act 6 of 1900 which introduced Sections 117-A to 1I7-J in the Local
Boards Act providing ''inter alia'' for the regulation of private markets. Section 117(E)(1) required that a licence should be obtained from the Taluk
Board for opening a new market or for continuing to use a private market. Section 117-E(3) provides that
the taluk board, as regards private markets lawfully established at the coming into operation of this Act shall, and as regards all other private
markets may, at its discretion, grant any licence applied for under this section.
Thus the Act made a distinction between private markets which had been in existence prior to the coming into force of Act 5 of 1884 and those
which were opened subsequent to that date.
The next piece of legislation relating to this matter is Madras Local Boards Act, 14 of 1920. Section 171(1) of the Act provides that )
no person shall open a new private market or continue to keep open a private market unless he obtains from the panehayat a licence to do so.
Section 171(3) enacts that
the panchayat shall, as regards private markets already lawfully established, and may at its discretion, as regards new private markets, grant the
licence applied for.
Whether it is a new market or not is, in the context, to be determined not with reference to the date of the Act but the date of the application, so
that when once a licence is issued for a new market it is thereafter a question of renewal to which it will be entitled u/s 171(3) as a market ""already
lawfully established."" Section 172 enacts special provisions with reference to markets which had been in existence prior to the enactment of the
Madras Local Boards Act, 5 of 1884. Any person claiming to levy fees in such markets Ss to apply to the District Board for a certificate
recognising his right in this behalf, Section 172(1): The District Board is to grant or refuse the certificate after notice to the panchayat and after
taking into consideration any representations which it might make; Section 172 (2): When a certificate is granted by the District Board u/s 172(3),
the panchayat is to issue a licence in terms thereof allowing the person to levy the fees mentioned in such a certificate: Section 172 (3).
Any person aggrieved by an order of the District Board u/s 172 may within six months from the date of the order institute a suit to establish the
right claimed: Section 173. Thus under the provisions of this Act private markets might be classed under three categories: Firstly there were the
markets established prior to Act 5 of 1884, and the owners of those markets had special rights which were protected u/s 172; secondly there
were markets which were established subsequent to that Act; and the owners of those markets were entitled to licences as a matter of right u/s
171(3); thirdly there were new markets and the grant of licences therefore was a matter of discretion with the panchayat. Now coming to the
present Act which has replaced the Madras Local Boards Act, 14 of 1920, the following changes might be noted. While the panehayat had a
discretion u/s 171(3) of Act 14 of 1920 to grant a licence for new markets, there is no such discretion u/s 81(1) of the present Act, the opening of
a new private market being totally prohibited. As regards private markets, which had been in existence prior to Act 5 of 18S4, While Section 172
of Act 14 of 1920 gave a right to the party to establish his right to levy fees before the District Board or ultimately before the Court, Section 82(3)
of the present Act preserves that right the only modification in the law being that instead of the District Board, it is the Inspector that is in the first
instance to decide on the right, the right of the party to resort to court being left untouched. With reference to private markets which came into
existence subsequent to the Act 5 of 1884, while Section 171(3) of Act 14 of 1920 gave a right to the owner to get a licence that right is
altogether taken away u/s 81(1) of the Act.
One of the main points for decision in these petitions is whether private markets which were in existence before Act 5 of 1884 are within the
prohibition enacted in Section 81(1) of the Act. It will be noticed that the only exception contained in that section is in favour of markets whose net
income is utilised for educational, charitable and religious purposes or to put it compendiously ""charity markets"". Section 82 (1) provides for the
issue of a licence for those markets and Section 82 (2) contains regulations relating thereto. The question is, what is the position under the present
Act, of private markets established prior to Act 5 of 1884? The contention on behalf of the State is that as it is not within the exception provided in
Section 81(1) it is within the prohibition enacted therein.
A reference to the previous legislation on the subject shows that it has always been the policy of the Legislature to treat those markets on a special
footing. That was so u/s 117 (E) (3) of Act 5 of 1884. u/s 172 of the Act 14 of 1920 a special machinery was provided for determination of these
rights by the District Board and ultimately by the courts; the power of the panehayat being limited to carrying out the decision of the Board. The
object of Section 82(3) was clearly to recognise the special position occupied by private markets which had been in existence prior to Act 5 of
1884 under the previous laws. It is a re-enactment of the provisions of Section 172 of Act 14 of 1920 with this modification that the Inspector is
substituted in the place of the District Board. It is true that while Section 172(3) provides expressly for the grant of a licence by the panchayat in
accordance with the certificate of the District Board there is nothing corresponding to it in Section 82 and that it could not have been the'' intention
of the Legislature that markets should be continued to be held without being regulated by any licence.
But the omission to insert a provision corresponding to Section 172(3) of Act 14 of 1920 in the pasent Act seems to be due to inadvertence and
being a formal matter it cannot be held to affect substantive rights. The provision in Section 82(3) that when a person claimed a right to levy fees in
private markets established prior to Act 5 of 1884 the Inspector could issue a certificate recognising that night after notice to the panchayat and
considering any representation made by it implies that the panchayat must issue a licence in accordance with the decision of the Inspector or the
court u/s 82(3)(b). Any other construction would render Section 82(3) wholly nugatory. Reading, therefore, Sections 81(1) and 82(3) together the
result may thus be sated:
Under the proviso to Section 81(1) charity markets are not to be closed but are to be run under licences to be issued u/s 82(1) and (2).
Private markets established prior to Act 5 of 1884 are governed by the provisions of Section 82(3) and on the principle that a special provision
takes precedence over a general provision it prevails as against Section 81(1).
All other private markets are to be closed u/s 81(1). In this view, it must be held that the owners of private markets which had been established
prior to Act 5 of 1884 are entitled to the benefit of Section 82(3) and that the notices issued by the panchayat board u/s 81(1) prohibiting the use
of those markets are illegal. (6) It appears from the affidavits filed in support of the above petitions that the market in W. P. No. 171 of 1952 was
opened in 1901 and that in W. P. No. 233 of 1952 in 1932 and that ail the ether markets were in existence prior to the Act 5 of 1884. The
question that remains to be decid-id is whether, with reference to the markets in W. P. No. 171 of 1952 and 233 of 1952, Section 81(1) and the
notification issued thereunder are opposed to Article 19(1)(f) and (g) of the Constitution and are, therefore, void. The contention of the petitioners
is that the right to hold a market is property for the purpose of Article 19(1)(f) and that is also business falling under Article 19(1)(g), and that
Section 81(1) is illegal as it deprives the petitioners of those rights. It was observed by this Court in -- P.P. Kutti Keya and Others Vs. The State
of Madras and Others, that a right to hold a market is not something distinct from the right to hold property or to carry on business and must be
Judged by the principles applicable to those rights.
In England, the right to hold a market is a franchise which could be granted either by the Crown as part of the Royal prerogative. Vide Halsbury''s
Laws of England, Vol. 6, page 580, paragraph 740, or by an Act of Parliament. When the market is an ancient one the presumption of a lost grant
could be made. The precise meaning of the term market is thus stated in Halsbury''s Laws of England, Vol. 22, page 44, paragraph 58:
Though strictly applicable to the right itself, the term is often applied to the concourse of buyers and sellers or to the market-place or to the time of
holding the market; a gathering of buyers and sellers though held at regular intervals in a fix-ed place, if it is not held by virtue of a franchise or
under statutory authority is not in law a market.
The grant conferred on the grantee an exclusive right to hold the market and being a monopoly entitled him to exclude all others from holding
markets in that area. But that was never the law in this country. The right to hold a market has been considered, under the Indian Law, as an
incident of ownership of the land over which the market is held. In -- ''Rakhal Das Addy v. Durga Sunduri Dasi'', 17 Cal 458 (B) where the
question was as to the validity of a grant by the Government of land over which a market or ''hat'', being held on specified days, it was held that it
was not a grant of the rights to collect tolls in which case it would be void, but a grant of land the income from the ''hat'' being taken into account
for determining the value of the land. In -- ''Hemchandra Roy v. Kristochandra'', AIR 1920 Cal 255 (C) it was observed that under the law in this
country there was no such right as a right to hold market as under the English law and that it was only an incident of the ownership oE the land and
a mode of its enjoyment.
In --''Surendranarain Singh v. Bhai Lal Thakur'', 22 Cal 752 (D) it was held that a ''hat'' is a benefit arising out ot land and was, therefore,
Immovable property as defined in Section 2(5) of the General Clauses Act and that a lease thereof could be made only by a registered instrument
u/s 107 of the Transfer of Property Act. In -- ''Fuzlur Rahman v. Krishna Prasad'', 29 Cal 614 (E), it was held that the ''hat'' which consisted in the
collecting of tolls or rents was not Immovable property for the purpose of Section 9 of the Specific Relief Act and a suit to recover possession of
that right was not maintainable under that section.
In -- ''Golam Mohiuddin Hossetn v. Parbati'', 36 Cal 665 (P) it was held that rents and profits derivable from a ''hat'' could be validly mortgaged.
In -- AIR 1931 110 (Oudh) it was held following -- AIR 1920 Cal 255 (C)'', that a right to hold a market was an incident of the ownership of the
land and that it was a right in Immovable property. The nature of this right came in for elaborate consideration by a Bencli of the Calcutta High
Court in -- ''Province of Bengal v. Sm. Hingul Kumari Law'', AIR 1948 Cal 217 (H). While Biswas J. was of the opinion that the right to hold a
market was land, vide p. 220, Das J. was of a different view. He observed:
The right to hold a ''hat'' is, therefore, in its origin an ordinary incident of the ownership of the land and initially the owner of the land has the right
to hold a ''hat'' on his land. But this right may be transferred to another person. This right to hold a ''hat'' may be transferred along with the land or
without the land. In other words, the owner of the land may transfer the land or some interest in the land carrying with it the right to hold a ''hat'' or
he may only transfer the right to hold a ''hat'' without transferring any interest in the land on which the ''hat'' is to be held.
Thus, the owner may grant a lease of his land and authorise the lessee to hold a ''hat'' thereon, as was the case in -- Secy. of State Vs. Sati Prasad
Garga and Others, and the other case to which I shall refer in detail hereafter or he may give only a bare licence to hold a ''hat'' without giving the
licencee any interest in the land on which the ''hat'' is to be held as was done in the Full Bench case in --''Secy, of State v. Karuna Kanta'', 35 Cal
82 (J).
Such a bare licensee when he holds the ''hat'' is the owner of the ''hat'' just, as much as the owner or the lessee of the land who holds a ''hat'' on his
land is the owner of such ''hat''. Although originally the right to hold a ''hat'' is an incident of ownership of the land, yet the right may be severed
from the ownership of the land and transferred to another person without transferring to him any interest, in the land. The owner of the ''hat'' is,
therefore, not necessarily the owner of the land or owner of any interest in the land for he may have only a bare licence to hold a ''hat'' without any
interest in the ''hat'' site.
The precise nature of the right which a transferee of the right to hold a market has where he does not hold any interest in the land does not arise
for consideration or determination in these petitions as all of them are owners of lands on which the markets are held. In -- ''Ellammal v. Emperor'',
AIR 1928 Mad 164 (K), the facts were that one Ellammal who was the owner of a private market which had been in existence prior to the Act
was refused a licence on the ground that the panchayat considered it undesirable that the market should be kept open at that, place. It was held by
Jackson and Tiruvenkatachariar JJ. that she was entitled to a licence u/s 171(3) of the Local Boards Act. Jackson J. observed:
A private market is a private property and an Act to consolidate the law relating to local boards could hardly be an act of confiscation. At the
same time it is clearly within the Board''s competence to see that such property is enjoyed without detriment to public health.
Thiruvenkatachariar J. observed
It is no doubt within the province of the Board to close any private market if, in their opinion, it ought not to be continued in the interests of public
health; but in such cases they have to do one of two things. They may give a notice to the owner u/s 176 to carry out such works as may be
considered necessary for rendering a private market a suitable one, or they should acquire the owner''s rights in the private market under the Land
Acquisition Act u/s 380. Otherwise it would be, as observed by my learned brother, confiscating private rights without compensation which
intention cannot be imputed to the Legislature.
Section 180 referred to above is as follows:
A Panchayat may acquire the rights of any person to hold a private market in any place and to levy fees therein. The acquisition shall be made
under the Land Acquisition Act, 1894, and such rights shall be deemed to be land for the purposes of this Act.
On payment by the panchayat of the compensation awarded under the said Act in respect of such property and any other charges incurred in
acquiring it, the rights of such person to hold a private market and to levy fees therein shall vest in the panchayat.
Similar provisions for acquiring the right to hold private markets & to levy fees therein are to be found in Section 308-A of the City Municipal
Act and Section 267-A of the District Municipalities Act. Thus it will be seen that the decisions and legislation have all proceeded on the footing
that the right to hold a market is an incident of the ownership of the property on which it is held, that it is capable of being transferred and inherited
and of being acquired under the Land Acquisition Act, and is itself, at any rate in the hands of the owner, Immovable property.
The question is whether this is property for the purposes of Article 19(1)(f). There is no definition of property in the Constitution and the
Question has accordingly, to be decided on well established juristic principles. There is considerable authority that the word property includes not
merely tangible property but also incorporeal rights.
In -- ''Minister of State for the Army v. Dalziel'', 68 CLR 261 (1), it was held that the ""exclusive right to use certain vacant land on which the
claimant had erected a car park station with the permission of the owner was property for the purpose of placitum 31 of Section 51 of the
Australian Constitution."" In -- Dwarkadas Shrinivas Vs. The Sholapur Spg. and Wvg. Co. Ltd. and Others, , the opinion was expressed that
property for the purpose of Articles 19 and 31 of the Constitution might include incorporeal rights.
In -- Kidangazhi Manakkal Narayanan Nambudiripad and Others Vs. State of Madras and Another, , this Court held that the office of
hereditary trusteeship was property within the meaning of Article 19(1)(f). We must accordingly hold that the right to hold a market is property
within the meaning of Article 19(1)(f).
It is argued for the petitioners Chat on this finding Section 81(1) and the notification issued thereunder must be held to be unconstitutional as
invading the right of the petitioners to hold property and the decisions in -- Thakur Raghubir Singh Vs. Court of Wards, Ajmer and Another, and -
-Pennsylvania Coal Co. v. Mahon'', (1922) 67 Law Ed. 322 (P), were cited ES supporting this position. In Thakur Raghubir Singh Vs. Court of
Wards, Ajmer and Another, '', the point for determination was whether Section 112 of the Ajmer Tenancy and Land Records Act, 42 of 1950
providing for the taking over of the estates of landlords who ""habitually infringed the rights of tenants"" was in violation of Article 19(1)(f) of the
Constitution and whether it could be upheld as a reasonable restriction under Article 19(5).
It was held that the effect of the provision was to deprive the owner of his rights to possession and management of his estate and it was, therefore,
repugnant to Article 19(1)(f) and that it could not be held to be reasonable, because the decision whether landlords habitually infringed the rights of
tenants was left to be determined by the executive and the provision was essentially penal in character in that it deprived the owner of his
fundamental right of enjoyment of the estate. This decision does not have much of a bearing on the point now under discussion.
In (1922) 67 Law Ed. 322 (P), the question was about the validity of a statute called the Roller Act, .1921, which prohibited the mining of
anthracite coal in such a manner as to cause subsidence of any superstructure used as a dwelling house. The plaintiff had obtained in 1878 an
assignment of the surface, on which there stood a house, and the deed of assignment expressly reserved the right of the grantor to remove sub-soil
coal. The action was to restrain the owner from extracting coal on the ground that it was in contravention of the Koller Act. It was held by the
Supreme Court of United States that the Statute in question deprived the owner of his right to use the coal and amounted to taking of property
without due process of law. Holmes J. observed
The general rule at least is that while property may be regulated to a certain extent, if the regulation goes too far it will be recognised as a taking.
This decision again is not of much assistance as under American jurisprudence ""Taking property"" means not merely acquisition of property by the
State but any action of the Legislature or the Executive which amounts to interference with the rights of the owner to enjoy his property.
But apart from all authorities, when once it is held that the right to hold a market is property for purposes of Article 19(1)(f) it must follow that
any law which takes away that right must bs held to be obnoxious to it. Such a law can-not be upheld under Article 19(5) as that contemplates
regulation of the exercise of the right and not a total prohibition of it. There is authority for holding that a complete prohibition might be upheld if it is
an emergency measure of a temporary character, vide the decision in -- '' Santhanakrishna Odayar Vs. Vaithilingam and Others, . There is also
authority that even a total destruction of property might be sustained if that is in the interests of the public. A well-known illustration of this principle
is furnished by the decision in -- ''Miller v. Schoene'', (1927) 72 Law Ed 568 (I) cited at the bar.
There the State authorities acting under powers conferred by the Cedar Bust Act, 1914, ordered the destruction of ornamental cedar trees on the
ground that they infected apple orchards in the vicinity. The owner of the trees complained that the Act was unconstitutional as it resulted in taking
property without payment of compensation. It was held that the legislation was justified as a proper exercise of the police power of the State. The
law is thus stated in Rottschaefer''s Hand Book of American Constitutional Law:
The power to regulate may take the form of an absolute prohibition of any transactions or businesses if there exists a reasonable basis for the
Legislature''s view that such a measure is necessary for effectively preventing what it is free to regard as evil.
The legislation in question cannot be upheld on any of these grounds. The effect of Section 81(1) is not to regulate the exercise of the right to hold
market, but to extinguish it, the prohibition is permanent and cannot be defended as a temporary measure of an emergency character; nor can it be
suggested that the holding of private markets is a public evil calling for its extinction.
It was argued by the learned Advocate General that u/s 31(3) of the Act the Government is under a duty to provide a public market in the
place of markets closed u/s 81(1), that the policy u/s 81(1) was to vest the running of markets in public bodies as they would be in a better
position to provide for sanitation and convenience than private owners; that to permit also private markets to be run side by side with public
markets would lead to unhealthy competition and that it is the public that will ultimately suffer therefrom and that it would be reasonable to close
private markets where public markets have been established. He also referred to Article 40 of the Constitution which enacts:
that the State shall take steps to organise village panchayats and endow them with such powers and authority as may be necessary to enable them
to function as units of self-Government"".
and to Section 51 (b) of the Act authorising the panchayat to make provision for the opening and maintenance of public markets and contended
that the closure of private markets should be regard ed as a step in that direction. That, however, is not the position on the facts. The Act does not
enact that first a market be established and then private markets be closed. What it does is to reverse the order, direct closing down of the private
markets as a result, of a notification u/s 81(1) and then provide for the establishment in future of public markets. Whatever the position if the
panchayat established a public market and then proceeded to impose restrictions on the holding of private markets, on the facts presented in these
petitions it cannot be doubted that to close down a private market as a result of the notification issued u/s 81(1) is to deprive the petitioners of their
right to property and that must be held to be repugnant to Article 19(1)(f) of the Constitution and therefore void.
It was also contended for the petitioners that in directing closure of the markets u/s 81(1) and the notification dated 31-1-1952 issued
thereunder, the panchayat has prevented the petitioners from carrying on business and that is in violation of the rights protected under Article 19(1)
(g). If the right to hold a market is an incident of ownership of land and is in the nature of a right to lease the same, it can only be considered as a
mode of its enjoyment and not as business. It is possible that when that right is transferred apart from and independently of the land on which it has
to be exercised it might be regarded as business in the hands of the transferee and in that view the impugned provision and the notification would
be hit by Article 19(1)(g).
The answer of the learned Advocate General to this argument was that the first amendment conferred on the State power to carry on business to
the exclusion of citizens and that the prohibition against the petitioners holding private markets would be valid under that provision. It will be
noticed that the first amendment came into force on 18-6-1951 whereas the impugned Act received the assent of the President on 15-7-1950 and
became law on 1-4-1951. On behalf of the petitioners Mr. K. V. Venkatasubramania Iyer contended that the amendment could not have
retrospective operation and that the validity of the impugned Act should be judged as on the date when it came into force and that on that footing it
must be held to be void as being repugnant to Article 19(i)(g). He also laid considerable stress on the difference in the language in the amendment
of Arts. 19(2) and 19(6).
With reference to Clause 2 the amendment enacts that ""It shall be deemed always to have been enacted in the following form""; whereas the
amendment of clause 6 merely provides that nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or
prevent the state from making any law relating to, carrying on by the State of any trade, business, industry or service. It is argued that while the
amendment to Clause 2 is in terms retrospective, the amendment to clause 6 is studiedly otherwise.
As against this it was argued by the learned Advocate General that the subject matter of the impugned Act was always within the legislative
competence of the state; that its invalidity arose by reason of its infringing Article 19(1)(g); that when once the restriction placed by that provision
was removed there was nothing to prevent the law operating of its own force; that the correct view to take of the matter was not to hold that the
Act was still born as being repugnant to Article 19(1)(g) and that it was, therefore, incapable of coming to life thereafter; but that it was
unenforceable so long as the prohibition under the Constitution stood and that when once that prohibition ceased to operate there was no legal
impediment to its enforcement. The contention is that the validity of a statute which is within the legislative competence of the State should be
determined as on the date on which it is sought to be enforced and not on the date when it is enacted.
In support of this contention the decision in ''Wilkerson v. Rahrer'', (1890) 35 Law Ed. 572 (S), was relied on. In that case the facts were that
in 1889 the state of Kansas passed a law prohibiting the sale of intoxicating liquor in the State. That law would be unconstitutional as regards
Imported liquor as contravening commerce clause. In 1890 the Congress itself passed a law that any intoxicating liquor imported into the State
should be subject to the laws of that State. The question that arose for determination was whether liquor imported prior to 1890 but sold thereafter
was hit by the provisions of 1889 Act. The contention was that the importation of liquor was prior to the Congress legislation and was, there love,
legal, that the statute of Kansas which was bad when it was passed had not been re-enacted after the Congress passed the law of 1890 and that
the import and sale in question would not therefore be hit by the 1889 law. In repelling this contention the court observed:
This is not the case of a law enacted in the unauthorised exercise of a power exclusively confided to Congress but of a law which it was
competent for the State to pass but which could not operate upon Articles occupying a certain situation until the passage of the Act of Congress.
That Act in terms removed the obstacle & we perceive no adequate ground for adjudging that a re-enactment of the State law was required before
it could have the effect upon imported which it had always had upon domestic property.
Reference was also made to Cooley on Constitutional Law (8th Edn. pages 338 to 340) and Hall''s cases at page 51 and to the observations
of Subba Rao J. in ''W. P. No. 568 of 1952 (Mad) (T)''. We are in agreement with this contention and hold that the material point of time at which
the question whether a law is in contravention of the rights guaranteed under Part III of the Constitution should be determined is when it is sought
to be enforced. But then the further question is whether the panchayat could be held to be ""state"" for purpose of Article 19(6). Article 12 defines
State"" as including all local or other authorities within the territory of India or under the control of the Government of India. There was some
controversy before us as to whether the panchayat could be held to be ""State"" as defined in Article 12 but as the question has not been fully argued
before us we do not desire to express any opinion on it, as the petitioners are entitled to succeed in the view, taken by us that Section 81(1) and
the notification issued thereunder are repugnant to Article 19(1)(f) as an unconstitutional interference with the petitioners'' right to property.
In the result there will be an order directing the panchayats in Question to dispose of all the applications of the petitioners for licences to run
markets on the merits. The parties will bear their own costs.