Ram Rakha and Company vs State of Himachal Pradesh and Others

R.S. Pathak, C.J.—The Petitioners in this writ petition carry on the business of the manufacture and sale of bricks. By virtue of the Himachal Pradesh Bricks (Control) Order, 1970, they can do so only under a licence granted to them. Admittedly they are carrying on business under such a licence. The Himachal Pradesh Bricks (Control) Order, 1970, has been made under the Himachal Pradesh Bricks (Control) Act, 1969. The validity of both measures is challenged by the Petitioners. The Petitioners also challenge an order, dated March 13, 1971, made by the District Magistrate, Kangra, fixing the price for the sale of bricks.

Up to the year 1969 the manufacture and supply of bricks was controlled under the East Punjab Control of Bricks Supplies Act, 1949, as applied to Himachal Pradesh. It was replaced by the Himachal Pradesh Bricks (Control) Act, 1969 (hereinafter referred to as "the impugned Act"). The impugned Act purports to regulate the manufacture, storage, distribution, transport, acquisition and disposal of bricks in Himachal Pradesh. Section 3 empowers the Government to make an order providing for regulation in such matters by licences, permits and otherwise. In the exercise of that power, the Government promulgated the Himachal Pradesh Bricks (Control) Order, 1970 (hereinafter referred to as the "impugned Control Order"). Paragraph 3 of the impugned Control Order prohibits the manufacture and sale of bricks without a licence. Paragraph 4 provides for the grant of a licence by the District Magistrate upon application made in that behalf and for its renewal thereafter. The District Magistrate is also empowered to refuse to grant or renew a licence and to cancel, suspend or revoke it. Paragraph 9 prohibits the sale or supply of bricks except against a permit issued by the Director of Civil Supplies or the District Magistrate. Paragraph 10 provides for the fixing of the market price at which bricks can be purchased or sold.

The first contention of the Petitioners is that the impugned Act is bad for want of legislative competence. The Government of Union Territories Act, 1963, made provision for a Legislative Assembly for the Union territory of Himachal Pradesh, and u/s 18 of the Act the Legislative Assembly was empowered to make laws with respect to any of the matters enumerated in the State List or the Concurrent List in the Seventh Schedule to the Constitution. The impugned Act was apparently made in the exercise of those legislative powers. The submission of the Petitioners is that because of the declaration by Parliament u/s 2 of the Industrial (Development and Regulation) Act, 1951, that it is expedient in the public interest that the Union should take under its control the industry specified in the First Schedule and as entry 34 of the Schedule, headed "Ceramics", includes under that head fire-bricks and tiles, the brick industry has been taken out of the purview of the State and Union territory legislatures and confined to Parliament''s legislative power. It is pointed out that entry 27 of the State List in the Seventh Schedule speaks of:

Production, supply and distribution of goods subject to the provisions of entry 33 of List III.

and entry 33 of List III reads:

Trade and commerce in, and the production, supply and distribution of-- (a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products....

Under Section 2 of the Act of 1951 mentioned above the power of the Legislative Assembly of Himachal Pradesh to legislate under entry 27 of the State List has been curtailed accordingly and, it is urged, it cannot legislate in respect of any industry which has been made the subject of the declaration by Parliament contemplated by entry 33 of the List III. It is contended that as the brick industry is the subject of such declaration, the Legislative Assembly of Himachal Pradesh was not competent to enact the impugned Act. Reliance has been placed on the The Hingir-rampur Coal Co. Ltd. and Others Vs. The State of Orissa and Others, , State of Orissa Vs. M.A. Tulloch and Co., and Baijnath Kadio Vs. State of Bihar and Others, In our opinion, this contention can be of no help to the Petitioners. It has not been shown that the Petitioners manufacture and sell fire-bricks and tiles. Therefore, no question arises of invoking the declaration made by Parliament u/s 2 of the Act of 1951.

It is next contended that the Legislative Assembly of Himachal Pradesh has no power to enact the impugned Act because by reason of Section 2(xi) of the Essential Commodities Act, 1955, all commodities have been brought within the purview of that Act, and if any Control Order in respect of bricks can be made at all it can only be under the provisions of the Essential Commodities Act. The contention is entirely without substance. Section 2(xi) of the Essential Commodities Act defines "essential commodity" as including "any other class of commodity which the Central Government may, by notification, order, declare to be an essential commodity for the purposes of this Act, being a commodity with respect to which Parliament has power to make laws by virtue of entry 33 in List III in the Seventh Schedule to the Constitution". It has not been established that the Central Government has issued any order declaring bricks to be an essential commodity for the purposes of the Essential Commodities Act. Nor have the Petitioners been able to show that the bricks in which they deal can be the subject of such an order. Section 2(xi) of the Essential Commodities Act refers to a commodity with respect to which Parliament has power to make laws by virtue of entry 33 in List III in the Seventh Schedule, that is to say, the product of an industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest. No such declaration in respect of bricks has been placed before us.

Consequently, we hold that the Petitioners have failed to establish that the impugned Act is ultra vires.

The validity of the impugned Control Order is challenged on several grounds.

It is contended that Section 3 of the Act, under which the Control Order was made, provides that the Government, when making the Order, should be of opinion "that it is necessary or expedient so to do for maintaining or increasing the supply of bricks or for securing an equitable distribution and availability at fair prices", and it is pointed out that nowhere does the impugned Control Order state that those conditions were satisfied when the Order was made. It is said that no valid and honest opinion was formed when the Control Order was promulgated, that it was issued casually and mechanically and there were no existing circumstances which called for the Control Order. Reliance is placed on Hamdard Dawakhana v. The Union of India AIR 1965 S.C. 1169 , The Barium Chemicals Ltd. and Another Vs. The Company Law Board and Others, , Rohtas Industries Vs. S.D. Agarwal and Others, and Palaniswami Gounder v. State of Madras AIR 1970 Mad 343 , It seems to us that the law is well settled. As far back as The Swadeshi Cotton Mills Co. Limited Vs. The State of U.P. and Others, , the Supreme Court laid down that where the formation of an opinion was a condition precedent to the making of order under a statute, the burden lay upon the authority making the order to show that the condition precedent had been satisfied. If the order recited such satisfaction, the burden shifted to the party challenging the order to show that there was no such satisfaction. If the order did not contain such recital the authority which made the order could place material before the Court to prove that there was such satisfaction. It was observed:

The difference between a case where a general order contains a recital on the face of it and one where it does not contain such a recital is that in the latter case the burden is thrown on the authority making the order to satisfy the Court by other means that the conditions precedent were fulfilled, but in the former case the Court will presume the regularity of the order including the fulfilment of the conditions precedent; and then it will be for the party challenging the legality of the order to show that the recital was not correct and that the conditions precedent were not in fact complied with by the authority.

The cases on which the Petitioners rely only provide further illustrations of this legal proposition.

In the present case, the impugned Control Order discloses on the face of it that it has been made "in exercise of the powers conferred vide Section 3 of the Himachal Pradesh Bricks (Control) Act, 1969....". The Supreme Court held in Chinta Lingam and Others Vs. Government of India and Others, , where the Control Order recited that it was made u/s 3 of the Essential Commodities Act, that it was implicit in the recital that the Central Government had formed the requisite opinion within Sub-section (1) of that section. It was not necessary, it was observed, that the requisite opinion itself should be recited in the Central Order. Then, paragraph 5 of the return of Shri A.K. Goswami, Director of Food and Supplies, Himachal Pradesh avers that the impugned Control Order was passed because the State Government felt that the consumers should not be subject to exploitation by brick-kiln owners while at the same time brick-kiln owners should get a reasonable price for the bricks manufactured by them. It also appears from Annexure R-B to the supplementary affidavit of Shri Arvind Kaul, Deputy Secretary (Food and Supplies), Himachal Pradesh Government, that right from the stage when the Himachal Pradesh Bricks (Control) Bill, 1968, was submitted to the Council of Ministers for approval for introduction in the Legislative Assembly, it was contemplated that an order named the Himachal Pradesh Control of Bricks Supplies Order, 1968, would be promulgated throughout the State providing for power ''''to control the supply, distribution or consumption of bricks, to ensure regulation by licences, permits or otherwise, the storage, distribution, transport, acquisition, disposal, manufacture and consumption thereof and for controlling the prices at which the bricks may be sold or bought". Apparently, the passing of the Act and the promulgation of the Control Order were jointly considered as necessary measures required for that purpose. In order to promulgate the Control Order, and similar Orders in future, the Bill of 1968 was framed for enactment by the Legislative Assembly. The circumstances prevailing at the time, which are detailed in Annexure R-B, may be briefly set out. The limited production of bricks in the Sirmur and Kangra districts was insufficient to meet the total requirements of the people. The people in the other districts of Himachal Pradesh depended on the import of bricks from outside to meet their requirements. The levy of an import fee on such imports, it was felt, would adversely affect consumers and hamper construction work in the private as well as public sectors. As it had been decided to withdraw the Punjab Control of Bricks Supply Order, 1966, promulgated by the Punjab Government, which was then in force in the merged areas, there was an apprehension that the brick-kiln owners would exploit the situation and the price of bricks was bound to rise high in Himachal Pradesh. In the circumstances, consumers would prefer to import bricks from neighbouring States and in that event the brick-kiln industry in Himachal Pradesh was bound to suffer. It is evident that in order to meet that situation Section 3 of the Himachal Pradesh Bricks (Control) Act was enacted. The considerations respecting which the Government had to form an opinion before making a Control Order under that section were related to the needs of such a situation. It is clear that at the time of framing the Bill which matured into the Act, the Government clearly contemplated that measures of control would have to be taken, and that the Himachal Pradesh Bricks Control Order would need to be promulgated for that purpose. The Government was already of opinion that such a Control Order was necessary for maintaining or increasing the supply of bricks and for securing their equitable distribution and availability at fair prices. While no doubt the opinion appears to have existed towards the end of the 1968, even while the Bill was about to be introduced in the Legislative Assembly, there is material on the record to show that it continued to exist up to the very promulgation of the Control Order. Paragraph 2 of the supplementary affidavit of Shri Arvind Kaul states that the case for the enforcement of the Himachal Pradesh Bricks (Control) Order, 1970, was considered "from the bottom of the Secretariat authorities up to the level of the Lieutenant Governor, Himachal Pradesh including the Joint Secretary, Secretary, Deputy Minister, Civil Supplies, Minister, Civil Supplies, the Hon''ble the Chief Minister and the Hon''ble the Lt. Governor, who accorded his approval on 9-9-1970". The material on the record, in our opinion, indicates that the conditions mentioned in Section 3 of the Act were fulfilled when the impugned Control Order was passed.

It may also be noted that Section 3 of the Act does not require that the opinion requisite therein should be formed for the first time only after the Act is passed. What is necessary is that the opinion should exist at the time when the Order u/s 3 is made. An opinion, formed before the Act is passed, which satisfies considerations intended to be included in the Act, is as valid as an opinion formed after the Act is passed, if the conditions on which it is based also continue. If those conditions continue to exist on the date when the Control Order is promulgated the requirements of the section can be said to be satisfied.

The next contention of the Petitioners is that Clauses 3 and 4 of the impugned Control Order contravene Article 19(1)(g) of the Constitution. Clause 3 provides:

Save as hereafter provided, no manufacturer or dealer shall manufacture or sell or offer to store for sale or have in his possession for the purposes of sale or for disposal in any other manner or deposit with or consign to any person for the purposes of sale or for storage for sale, bricks, except under and in accordance with the conditions of a licence granted under this Order....

Clause 4 provides for an application to the District Magistrate for the grant or renewal of a licence. The District Magistrate may grant the licence or renew it, as the case may be. He is also empowered to refuse to grant or renew the licence or having granted or renewed it to subsequently cancel, suspend or revoke it.

The Petitioners say that an arbitrary power has been conferred upon the District Magistrate, and that in the absence of any statutory conditions binding his discretion Clauses 3 and 4 amount to an unreasonable restriction on the fundamental right of the Petitioners to carry on their trade or business. In support of that contention the Petitioners have placed a number of cases before us and we shall now refer to them. Reliance was placed on Mohammed Faruk Vs. State of Madhya Pradesh and Others, where the Supreme Court observed:

Where the law providing for grant of a licence or a permit confers a discretion upon an administrative authority regulated by rules or principles expressed or implied, and exercisable in consonance with rules of natural justice, it will be presumed to impose a reasonable restriction. Where, however, power is entrusted to an administrative agency to grant or withhold a permit or licence in its uncontrolled discretion, the law ex facie infringes the fundamental right under Article 19(1).

Reference is also made to larakechand Ralanchand v. Union of India AIR 1970 S.C. 1153, where the Supreme Court has discussed the scope of Article 19. It is also pointed out that in Pannalal Binjraj v. Union of India AIR 1957 S.C. 1997 , the Supreme Court has observed that the presumption that public officials will discharge their duties honestly and in accordance with the law cannot be stretched too far and be carried to the extent of always upholding the validity of the exercise of the power. In Narendra Kumar and Others Vs. The Union of India (UOI) and Others, , the Supreme-Court struck down Clause 4 of the Non-ferrous Metals Control Order, 1958 on the ground that the requisite principles had not been mentioned in the impugned Order nor had it been notified or laid before both Houses of Parliament as required by the Essential Commodities Act under which the Order was made. The Supreme Court held the Control Order to contravene Articles 19(1)(f) and 19(1)(g) of the Constitution. In R.M. Seshadri Vs. The District Magistrate, Tanjore and Another, , the Supreme Court held a condition of a cinematograph licence invalid which required the licensee to exhibit at each performance one or more approved films of such length and for such length of time as the Government, by general or special order, directed. An approved film was a cinematograph film approved for the purpose of such exhibition by the Government. The Supreme Court found that it was in the complete discretion of the Government to require the licensee to show approved films of such unreasonable length as could exhaust the whole of the time or the major portion of it intended for the commercial films notified for exhibition, and this could result in the licensee being driven to a loss or to a total extinction of the business itself. The Supreme Court noted that the condition of the licence did not lay down that the approved films must be of an educational or instructional character for the purpose of social or public welfare. Accordingly, it held the condition in the licence requiring the exhibition of an approved film to amount to an unreasonable restriction on the fundamental right of the licensee guaranteed under Article 19(1)(g). In LaLa Hari Chand Sarda Vs. Mizo District Council and Another, , reference was made by the Petitioners to the observations of the Supreme Court that restrictions imposed on the exercise of the fundamental right of carrying on business should not be arbitrary or unreasonable, that they should be required in the interest of the general public, and that an uncontrolled and un-canalised power conferred on the authority would be an unreasonable restriction on such right. It was pointed out that even if a legislative policy may be expressed in the statute it must provide a suitable machinery for implementing that policy in such a manner that such implementation does not result in undue or excessive hardship and arbitrariness. Our attention was also drawn to certain observations of the Supreme Court in Dwarka Prasad Laxmi Narain Vs. The State of Uttar Pradesh and Others, against the grant of arbitrary power under a Control Order relating to an essential commodity, where the power was unregulated by any rule or principle and it was left entirely to the discretion of the authority to do anything it liked without any check or control by any higher authority. Such legislation, it was laid down, could be reasonable only if a proper balance was struck between the freedom guaranteed by Article 19(1)(g) and the social control permitted by Article 19(6). The Supreme Court found that the licensing authority in that case had been given absolute power in respect of licences and that the power could be exercised by any person to whom the State Coal Controller chose to delegate it. No rules had been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer. It was a case where the order committed to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chose and there was nothing in the Order which could ensure the proper execution of the power or operate as a check upon injustice that might result from an improper execution of the same. The Supreme Court emphasised that the mere requirement in that Order that the licensing authority had to record its reasons for the order made by it was not an effective safeguard because there was no higher authority prescribed in the order who could examine the propriety of those reasons and review the action of the subordinate officer. Reliance is also placed on Ulwar Singh Vs. State, , where a learned single Judge of the Allahabad High Court held Clause 3(2) of the U.P. Bricks Control Order, 1956 to be discriminatory and therefore offending Article 14 of the Constitution. Clause 3(2) prohibited the burning of bricks with firewood or any other kind of fuel without the permission of the District Magistrate. The learned Judge found that the District Magistrate had an uncontrolled discretion in the matter and he was not required, when refusing" permission, to record his reasons in writing. He also noticed that although the order passed by the District Magistrate could be reviewed by the State Government it was not obligatory on the State Government to give its reasons in writing for refusing permission for burning bricks. The learned Judge also observed that the U.P. Control of Supplies (Temporary Powers) Act, 1947 under which the impugned Control Order had been made did not disclose either in its preamble or in Section 3 thereof what exactly was the result which the legislature was seeking to achieve by enacting that Act. He held the Control Order invalid because it did not indicate its underlying object and it did not lay down the principles for the guidance of the District Magistrate in the matter of granting permission under Clause 3(2). The Petitioner also referred to the following-observations of the Supreme Court in Rustom Cavasjee Cooper Vs. Union of India (UOI),

Under the Constitution, protection against impairment of the guarantee of fundamental rights is determined by the nature of the right, the interest of the aggrieved party and the degree of harm resulting from the State action. Impairment of the right of the individual, and not the object of the State in taking the impugned action, is the measure of protection. To concentrate merely on power of the State and the object of the State action in exercising that power is therefore to ignore the true intent of the Constitution. In this Court, there is, however, a body of authority that the nature and extent of the protection of the fundamental rights is measured not by the operation of the State action upon the rights of the individual, but by its object. Thereby the constitutional scheme which makes the guaranteed rights subject to the permissible restrictions within their allotted fields fundamental got blurred and gave impetus to a theory that certain Articles of the Constitution enact a code dealing exclusively with matters dealt with therein, and the protection which an aggrieved person may claim is circumscribed by the object of the State action.

Reliance was also placed on R. Balakrishnan v. State of Madras AIR 1952 Mad 196, to show that the exercise of a fundamental right cannot be made to depend on the discretion of an administrative authority.

The Petitioners also urge that the burden lies on the Respondents to show that the limitations imposed on the fundamental right guaranteed by Article 19(1)(g) fall within the scope of Article 19(6). Reference is made in this behalf to Saghir Ahmad Vs. The State of U.P. and Others, Hamdard Dawakhana and Another, Kalipada Deb and Another, Lakshman Shripati Itpure @ Lakshman Shripati Impore and A.B. Choudhri and Another Vs. The Union of India (UOI) and Others, , Khyerbari Tea Co. Ltd. and Another Vs. The State of Assam, and Virajlal Manilal and Co. and Others Vs. State of Madhya Pradesh and Others,

We shall now examine the impugned provisions of the Control Order to determine whether they offend the law laid down in the aforesaid eases.

Clause 3 provides that a manufacturer or dealer must have a licence before he can manufacture or sell bricks. It is a provision regulating the carrying on of the business. Clause 4 confers power on the District Magistrate in the matter of granting and renewing licences, and cancelling, suspending or revoking them after grant or renewal. Does Clause 4 confer arbitrary powers? The application for a licence or for its renewal has to be made to the District Magistrate under Clause 4 and he has power to grant it or refuse it. The impugned Control Order has been made u/s 3 of the Himachal Pradesh Bricks (Control) Act, 1969. The reasons for promulgating the Control Order arc clearly controlled by the preamble of Section 3. The Control Order was made for maintaining or increasing the supply of bricks and for securing their equitable distribution and availability at fair prices. Those considerations constitute the raison d''etre of the Control Order and therefore define its object and purpose. The purpose and object underlying the Control Order inform the policy to be pursued in implementing its provisions. In the circumstances, it cannot be said that the powers conferred by the Control Order arc uncanalised, uncontrolled and arbitrary. The relevant authority must exercise its discretion in conformity with that policy so that the Control Order may be properly implemented and its object achieved. As regards the powers relating to licensing specifically, there are indications in the Control Order itself canalising the direction which those powers must take. Clause 4(ii) contemplates the issue of general or special instructions notified by the State Government from time to time in this behalf. The State Government which promulgated the Control Order with a definite object in view is the appropriate authority to formulate such guidelines from time to time in order to ensure the effective implementation of the policy underlying the Control Order. Then, Clause 4(ii) also requires that when granting order renewing the licence, it must be considered whether the site of the kiln is not detrimental to the health of the general public or to the crops, gardens or nurseries in close proximity thereto. No one can reasonably raise objection to that consideration. The consideration is relevant to the public health and public interest and embodies an ecological need now commonly recognised. It seems to us that the licensing power of the District Magistrate is sufficiently controlled and guided and cannot be described as an arbitrary power.

The next question is whether the impugned Control Order contains adequate machinery controlling the proper exercise of the licensing power and safeguarding against its arbitrary use. Clause 4 contains four important requirements. The first is that the licensing power should be exercised by the District Magistrate. The District Magistrate is a responsible officer. In Chinta Lingam v. The Government of India AIR 1971 S.C. 464 the Supreme Court when considering the validity of the Control Orders issued u/s 3(2) of the Essential Commodities Act, 1955 referred to the District Collector and the Deputy Commissioner of Civil Supplies, on whom the power to issue permits had been conferred under the Control Orders, as officers who could not "but be regarded as fairly high in rank who are expected to discharge their duties in a responsible and reasonable manner". The Supreme Court in this regard referred to its observations in Pannalal Binjraj (supra) that when power was vested not in any minor official but in high ranking authority, its discriminatory exercise or abuse could not be easily assumed. It is true that by the definition contained in Clause 2(c) of the impugned Control Order the expression "District Magistrate" refers not merely to the District Magistrate, the District Food Controller, the District Food and Supplies Officer but also to "any other officer appointed by the State Government". It is urged by the Petitioners that even a petty official may be appointed and he may be wholly ill-equipped for discharging the functions and responsibilities conferred by the Control Order. The submission is without force. Clause 2(c) refers to an officer appointed by the State Government. When the appointment has to be made by the State Government, that is to say, at the highest governmental level, the officer appointed will generally be suited for the functions and responsibilities entrusted to him.

The second important requirement is that before a District Magistrate refuses to grant or renew or cancel or suspend or revoke any licence, he is obliged under Clause 4 to afford an opportunity to the Applicant or licensee to show cause why an order to that effect should not be made. That enables the version of the person directly affected to be placed before the District Magistrate The order then made by the District Magistrate will be the result of an appraisal of both sides of the case, the administrative on the one and the Applicant''s or licensee''s on the other. A quasi-judicial proceeding is contemplated here, and the possibility of arbitrariness is thus greatly excluded.

The third important requirement is that the District Magistrate must record his reasons in writing when making an order against the Applicant or licensee. This is another attribute of a quasi-judicial order, and has now been commonly accepted as a protection against the arbitrary exercise of power. It was this consideration which Subha Rao, J. had in mind in Madhya Pradesh Industries Ltd. Vs. Union of India and Others (UOI), , when he observed:

The least a tribunal can do is to disclose its mind. The compulsion of disclosure guarantees consideration. The condition to give reasons introduces clarity and excludes or at any rate minimizes arbitrariness; it gives satisfaction to the party against whom the order is made; and it also enables an appellate or supervisory Court to keep the tribunals within bounds. A reasoned order is a desirable condition of judicial disposal. If tribunals can make orders without giving reasons, the said power in the hands of unscrupulous or dishonest officers may turn out to be a potent weapon for abuse of power. But if reasons for an order are to be given, it will be an effective restraint on such abuse, as the order, if it discloses extraneous or irrelevant considerations, will be subject to judicial scrutiny and correction.

As was pointed out by one of us (Pathak C.J.) in Haji Manzoor Ahmed and Another Vs. State of U.P. and Others, , the necessity for disclosing the reasons for a quasi-judicial order rests broadly on two grounds, one is the need to guard against arbitrariness on the part of the authority making the order and the other is the need to ensure an effective judicial scrutiny of the order. The latter aspect was considered in depth by the Supreme Court in Bharat Raja Vs. The Union of India (UOI) and Others, , See also Travancore Rayon Ltd. Vs. Union of India (UOI), , It is an aspect which assumes material relevance here because of the provision for appeal and revision in the Control Order, to which we shall advert presently.

The fourth important requirement is that an order made by the District Magistrate against an Applicant or licensee under Clause 4(iii) must be limited to the grounds specifically mentioned in that provision.

The "control" machinery, safeguarding against the arbitrary exercise of power, includes Clause 21 of the Control Order. Clause 21 provides for an appeal to the Director of Civil Supplies, Himachal Pradesh from an order passed by the District Magistrate under the Control Order. The order of the Director itself is open to revision by the State Government. Therefore, an order made by the District Magistrate under Clause 4 is subject to the appellate scrutiny of the Director and the Director''s order in turn can be revised by the State Government. The procedure laid down constitutes an effective check against arbitrariness.

In our opinion, the provisions of Clauses 3 and 4 of the impugned Control Order do not confer any arbitrary power or permit the arbitrary use of the power conferred. They impose a reasonable restriction on the fundamental rights of the Petitioners, and do not offend against the principles laid down in the cases relied upon by the Petitioners. The challenge to their validity must fail.

The Petitioners then challenge the validity of clause 9 of the Control Order. Clause 9 provides:

No person shall purchase or sell or offer to sell or supply any bricks save against a permit issued by the Director or the District Magistrate and subject to all the conditions laid in such permit.

It seems to us that as in the case of the licensing power conferred by Clause 4, so also in the case of the power to issue permits conferred by clause 9, sufficient guide lines and limiting control on the exercise of that power is afforded by the policy underlying the promulgation of the Control Order and the object with which it has been made. We may recall that a challenge similar to the one now made by the Petitioners was repelled by the Supreme Court in Chinta Lingam (supra), which was concerned with the power to issue permits conferred on the District Collector and the Deputy Commissioner of Civil Supplies. In clause 9 before us the power has been conferred upon the District Magistrate and the Director of Civil Supplies. In Chinta Lingam (supra) also reliance was placed by the Petitioners on Dwarka Prasad Laxmi Narain (supra), and that case was distinguished by the Supreme Court as one turning on its own facts. We, therefore, reject the contention that Clause 9 of the Control Order is invalid.

It is further urged that no permit under Clause 9 of the Control Order can be issued in favour of the Government as the Government is not a "person" within the contemplation of that clause. It is not necessary to express any opinion on this point as there is no clear allegation in the writ petition that such permits have been issued.

The Petitioners then challenge the validity of Clause 10 of the Control Order. Clause 10 prohibits the purchase and sale of bricks at a price higher than that fixed by the District Magistrate. It is urged that no principle has been specified for fixing the prices and the trade depends upon the mercy of the Respondents. That submission is patently without force, because Clause 10 it self requires that the price must be fixed keeping in view the several factors enumerated therein. They are: (i) the cost of coal, (ii) railway freight of coal, (iii) loading and unloading charges, (iv) transport charges of coal from the railway station to the kiln, (v) expenses incurred in moulding of kutcha bricks, (vi) expenses incurred on making available sand, water and earth for moulding bricks, (vii) expenses on loading and unloading bricks from the kiln and for stacking in the premises of the kiln, (viii) Mistri and labour charges on firing the kilns, (ix) maintenance of temporary labour huts, chimneys and other brick-kiln equipment, (x) cost of firewood for ignition coal and (xi) Munshi and Chowkidara expenses. It is then urged that Clause 10 has failed to specify all the relevant factors which properly go into the determination of the price of bricks. Those other factors include the increase in railway freight of coal, which is proportionate to the distance from the colliery, the cost of sand, brick earth and lease money which is inversely proportionate to the distance from the city and the road, damage due to the vagaries of nature, for example rainfall, and it is said that these factors differ from kiln to kiln. There are other factors the Petitioners say, which should also have been taken into account such as capital invested, interest on borrowing and a reasonable margin of profit. It seems to us that upon a true construction of Clause 10 the factors specifically mentioned in the clause for fixing the price of bricks cannot be taken to be exhaustive. It is open to the District Magistrate to take into account all factors, including those not specifically mentioned in Clause 10, which may be relevant to the determination of a proper price, that is to say, a price which is reasonable for both purchaser and consumer. The entire object in framing Clause 10 is to prevent the exploitation of the consumer by the sale of bricks at unreasonably high prices in a market where the demand is far greater than the supply, while at the same time ensuring to the manufacturer and dealer a reasonable margin of profit. In Diwan Sugar and General Mills (Private) Ltd. and Others Vs. The Union of India, , the Supreme Court upheld the validity of Clause 5 of the Sugar (Control) Order, 1958, made u/s 3 of the Essential Commodities Act, 1955. The clause provided for the fixing of the price of sugar sold by the manufacturer. The Supreme Court observed that the ambit of the power to fix the price of sugar was determined by the factors mentioned in that behalf in Clause 5. They were (i) price or minimum price fixed for sugarcane, (ii) manufacturing cost, (iii) taxes, (iv) reasonable margin of profit for purchaser and/or trade, and (v) any incidental charges. It is true that not all the factors considered by the Supreme Court in that case are included in Clause 10 of the Control Order before us. For example, no provision has been made for taking into account taxes and a reasonable margin of profit for the seller. But, as we have observed above, the factors set out in Clause 10 do not exhaust the matters which the District Magistrate may consider when fixing the price. There can be no doubt that the price fixed by him must assure a reasonable margin of profit to the seller. The Petitioner rely on New Castle Breweries v. The King L.R. (20) 1 Q.B.D. 854, but we do not think that Clause 10 is inconsistent with what has been laid down there. Reliance is also placed on Dwarka Prasad (supra). We do not see how that case helps the Petitioners on this point. There, the Supreme Court upheld the validity of the provision for fixing the price of coal. It rejected the contention that the formula laid down in the Schedule to the Control Order was unreasonable.

It has been urged that the price fixed under the Control Order is lower than the cost itself of manufacturing and selling bricks. We have examined the material on the record before us and we find it wholly inadequate for arriving at that conclusion. The Petitioners have not indicated anywhere their manufacturing costs and marketing costs. We may note that the impugned order dated April 13, 1971 made by the District Magistrate fixing the price of bricks shows that different prices have been fixed for different areas and that those prices are exclusive of sales tax, octroi and terminal tax. An extra margin in the price is allowed where the transport charges are greater because the kilns are situated at long distances from the rail heads open for coal. It is apparent from this that the District Magistrate applied his mind when fixing the price and did not act arbitrarily.

It is contended that there is no corrective machinery in case the price fixed by the District Magistrate is unreasonable. As to that it is possible to say that the order fixing the price is amenable to appeal to the Director under Clause 21(1) and the order of the Director is open to revision by the State Government under Clause 21(2). In any event, there is nothing to prevent the manufacturers or dealers from placing their case before the District Magistrate and demonstrating that the price fixed is wholly uneconomic. The impugned order dated April 13, 1971 has taken into account that different prices must be fixed for kilns located in different areas. It is open to any manufacturer or dealer to place before the District Magistrate facts and circumstances justifying an upward revision of the price. The Petitioners have referred to the rise in the price of coal and the consequent decision of the neighbouring State to allow an increase in the price fixed for bricks on that account. There is nothing to preclude a similar decision by the District Magistrate under the impugned Control Order if the manufacturers and dealers can make out a proper case. The learned Advocate-General informs us that the District Magistrate, Kangra, upon being moved in that behalf by the dealers, has recently enhanced the price of bricks by Rs. 15 per thousand bricks.

It is pointed out by the Petitioners that, in the Essential Commodities Act, Section 3(3A) provides for a fresh determination of the price in certain circumstances and, it is said, a similar provision should have been included in Clause 10. Section 3(3A) provides for the fixation of price where it is necessary for the purpose of controlling the rise in prices or for preventing hoarding of any food-stuff. Similarly, it is pointed out, Section 18(G)(3) of the Industries (Development and Regulation) Act, 1951 sets out the principles for fixing the price for the sale of an article controlled u/s 18(G)(1). From the mere omission of such a provision in the Act and the Control Order before us we are unable to infer that the price cannot be adequately fixed under the impugned Control Order.

The Petitioners have placed before us the observations of Lord Hodson and Lord Upjohn in Padfield v. Minister of Agriculture (1968) 1. AER 604, referred to in Rohtas Industries Ltd. (supra). These observations are concerned with the manner in which a discretionary power conferred upon executive authority should be exercised where a statute granting such power does not expressly limit or define the extent of the discretion conferred and does not require the authority to give reasons for declining to exercise that power. It was laid down that a person invested with such discretion must direct himself properly in law and call his own attention to matters which he is bound to consider, and to exclude from consideration matters irrelevant to the matter he is to consider. In our opinion, the impugned Control Order does not violate the principles laid down in that case. Reference is also made to certain observations in Anisminic Ltd. v. Foreign Compensation Commission (1969)1. AER 208 , which have been considered by the Supreme Court in Union of India (UOI) Vs. Tarachand Gupta and Bros, , Two other cases also cited are Rv. Paddington Evaluation Officers ex-parte Peachey Property Ltd. 1965 (2) AER 836, 842, and Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation 1947 (2) AER 686, Apparently those cases have been placed before us merely to demonstrate the scope of our jurisdiction under Article 226 of the Constitution.

The Petitioners also urge that in an economy where the price of commodities such as coal is constantly rising and the cost of labour is increasing there should have been included a provision in the nature of an escalation clause in the Control Order or in the price order made under Clause 10 of it. Reference is made to the observations of the Supreme Court in Premier Automobiles Ltd. v. Union of India Writ Petition Nos. 327,330, 331, 486, 487 of 1969 decided on Nov. 24, 1971, In our opinion when it is open to the District Magistrate to fix the price for the purchase and sale of bricks from time to time the mere omission to include such a provision docs not vitiate the order. The District Magistrate can, and we have no reason to doubt that he will, upon a proper case being made out in that behalf by the manufacturers or dealers, revise the price fixed by him where the price already fixed does not remain reasonable any longer. It is mentioned in paragraph 8(b) of the return filed by the Respondents that the District Magistrate observes a formula while fixing the price of bricks, and he is free to increase or decrease the price taking into account the price fluctuations of coal.

Accordingly, we reject the contention of the Petitioners that Clause 10 of the Control Order and the order dated April 13, 1971 of the District Magistrate are invalid.

The next contention of the Petitioners is that Clause 16 of the Control Order infringed the fundamental rights of the Petitioners under Article 19(1)(f) and 19(1)(g) of the Constitution. Clause 16 confers the powers of entry, inspection and seizure on the Director of Civil Supplies, the District Magistrate and any other person duly authorised by them in that behalf or an Inspector, Food and Supplies. The power has been conferred, as Clause 16 expressly states, with a view to securing compliance with the Control Order. The conferment of such powers is not uncommon. They are intended to prevent the circumvention or violation of Control Orders. They are also commonly included in taxation statutes, for example in the Income Tax Acts and the Sales Tax Acts. The validity of such a provision in the Madras General Sales Tax Act, 1959 was upheld by the Supreme Court in The Commissioner of Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., , We have carefully perused Clause 16 of the Control Order and we are unable to hold that the powers conferred thereunder are excessive or arbitrary. It will be noted that Section 6 of the Act provides for the application of the provisions of Section 102 and 103 of the Code of Criminal Procedure, 1898 relating to search and seizure to every search and seizure made under the Control Order. We reject the contention that Clause 16 infringes the fundamental rights of the Petitioners.

The Petitioners also urge that Clause 20 of the Control Order, which requires a manufacturer or dealer to deposit a security amounting to Rs. 500 when so required by the District Magistrate, infringes their fundamental rights under Article 19(1)(f) and Article 19(1)(g). The contention is without substance. The power given to the District Magistrate to call for such security has been conferred with the object of deterring the manufacturer or dealer from committing a contravention of the Control Order or the conditions of the licence. The object is related to the effective operation of the Control Order and the achievement of the object embodied in it. A similar provision was upheld by the Mysore High Court in Manjashelty v. The State of Mysore AIR 1972 Mys. 138, In our opinion, Clause 20 does not impose an unreasonable restriction on the fundamental rights of the Petitioners guaranteed by Article 19(1)(f) and Article 19(1)(g).

It is also contended that the impugned Control Order-violates Article 31 of the Constitution inasmuch as the Respondents are enabled by the Control Order to compulsorily acquire the entire stock of bricks of a manufacturer or dealer without authority of law and the "control" price fixed by the District Magistrate does not amount to compensation. The contention is completely misconceived. The Control Order does not provide for the compulsory acquisition of bricks by the State, and no question arises of Article 31 coming into play.

Towards the end, the Petitioners urge that Section 3 of the Himachal Pradesh Bricks (Control) Act, 1969 delegates essential legislative power to the Government and is therefore ultra vires. In all its essential respects, the impugned Act is similar to the Essential Supplies (Temporary Powers) Act, 1947 and the Essential Commodities Act, 1955. A similar contention in respect of Section 3 of the aforesaid Act of 1947 was repelled by the Supreme Court in Union of India (UOI) and Others and State of Delhi (Now Delhi Administration) and Others Vs. BhanaMal GulzariMal Ltd. and Others, , and in respect of Section 3(2)(d) of the aforesaid Act of 1955 it was repelled in Chinta Lingam (supra). We have already mentioned earlier that the policy underlying the Act and its object are clearly discernible, and the considerations mentioned in the preamble of Section 3 of the Act provide sufficient guidelines canalizing the exercise of the power conferred thereunder on the Government. When the power so conferred is controlled in its essential aspects by the Act itself there is no scope for holding that Section 3 delegates essential legislative power.

While concluding, we may note that although a ground has also been taken in the writ petition with reference to Article 301 of the Constitution, no submission in that regard has been actually made before us on behalf of the Petitioners.

The petition fails and is dismissed with costs which we assess at Rs. 250.