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PETITIONER:

G.T.N. TEXTILES LTD. AND ANR. ETC. ETC.

Vs.

RESPONDENT:

ASSISTANT DIRECTORS, R.O.T. COMMR.AND ORS. ETC. ETC.

DATE OF JUDGMENT17/03/1993

BENCH:

KULDIP SINGH (J)

BENCH:

KULDIP SINGH (J)

KASLIWAL, N.M. (J)

CITATION:

1993 AIR 1596 1993 SCR (2) 403

1993 SCC (3) 438 JT 1993 (2) 416

1993 SCALE (2)123

ACT:

Essential Commodities Act, 1955:

Section 3--Textile Control Order, 1986--Clause 16 and

notification issued thereunder--Textile commissioner

prescribing manner of packing--Constitutional validity of.

Constitution of India, 1950:

Articles 14 and 19(1) (g)--Textile (Control) Order,

1986--Clause 16 and notification issued thereunder-Textile

Commissioner prescribing mode of packing yarn--Whether

violative of.

HEADNOTE:

Different varieties of cotton yarn were manufactured by the

appellant-Mills. Packing of the yarn was done in two forms,

viz. cone form which was used in powerloom and hosiery

industry and hank form which was exclusively consumed by the

handloom industry. For the cone form of packing the ring

frame cops were fed to the winding machines and for the hank

form of packing the cops were fed to the reeling machines.

The appellants were packing the yarn in cone form only.

Since they had not installed the reeling machines, they

could not pack the yarn in hank form.

In exercise of powers under S.3 of the Essential Commodities

Act, 1955, Textile (Control) Order, 1986 was issued by the

Government. Clause 16 of the said order gave power to the

Textile Commissioner to issue directions providing the

manner of packing of yarn in hanks, cones or in any other

form and in such proportion as he deemed necessary or ex-

pedient. It also laid down the complete guidelines for

exercise of the powers by the Textile Commissioner.

Exercising his powers under clause 16 of the 1986 Order, the

Textile Commissioner issued a notification on 293.90, which

was amended on 11.5.90 and 17.5.90. According to the

Notification every producer of yarn should pack in hank form

at least 50%

404

of the total yarn packed by him during each half-yearly

period for civil consumption.

The appellants challenged the constitutional validity of

clause 16 of the Textile (Control) Order, 1986 and the

Notification issued thereunder, by filing Writ Petitions

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before the High Court. The Writ Petitions were dismissed

and the appellant-Mills preferred the present appeals.

The appellants contended that an identical notification

dated 29.6.1979 issued under the Textile (Control) Order,

1948 was struck down by the High Court and the said judgment

having been upheld by this Court, the respondents were

bound by the same and the Textile Commissioner had no

authority to issue a fresh notification in similar terms;

and that the appellants could not be compelled to

manufacture something for which the appellants have not

installed necessary machinery and other super-structure. It

was further contended that the Notification was violative of

Articles 14 and 19(1)(g) of the Constitution of India.

Dismissing the appeals, this Court,

HELD: 1. The present notification under challenge has been

issued under Clause 16(1) of the Textile (Control) Order,

1986. Unlike Clause 21(5) of the 1948 Order, proviso to

Clause 16(1) of the 1986 Order provides complete

guidelines to the Textile Commissioner to issue the

directions envisaged thereunder. [409G-H]

Sri Rani Lakshmi G.S. & W. Mills Pvt. Ltd. & Others v.

Textile Commissioner, Bombay & Ors., AIR 1986 Madras 66,

distinguished.

2. In order to make available sufficient quantity of

hank yarn at reasonable price and also for the sustenance of

Handloom workers engaged in the largest cottage industry in

India, it became necessary to reserve hank yarn for Handloom

sector by making it obligatory on the part of the

manufacturers of yarn to pack a certain percentage of their

production packet for civil consumption in the form of

hanks. Thus the notification has been issued in the

interest of the general public and also for the larger

interest of the textile industry, and is not violative of

Art. 19(1)(g) of the Constitution of India. [411B-C]

3. Having accepted the condition regarding packing of yarn

in hank form, while taking the licence, under clause 4 of

the Industrial Licence, the

405

appellants cannot now turn round and say that they are not

bound by the same. [411F]

4. There is no violation of Art. 14 of the Constitution

since the notification has been made applicable uniformly to

all the producers of yarn. The appellants are required to

pack yarn in hank form in the proportion as provided in the

notification keeping in view the total yarn packed by the

mill concerned. In any case the grievance of the appellants

has been substantially mitigated by the press note dated May

11, 1990 issued by the Textile Commissioner, reinstituting

the erstwhile relaxation getting yarn obligation fulfilled

by transfer of surplus yarn packing of another producer, and

allowing a producer to get hank yarn reeled through another

producer having extra relying capacity. [411G-H; 412A]

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1334-43 of

1993.

From the Judgments and Orders dated 29.10.1991 of the Andhra

Pradesh High Court in W.P. Nos. 9133, 8920, 8074, 7932 and

11119/90 8113/91 (dt. 31.10.91), 8201/90, 8987/91 (dt.

30.10.91), 9165 & 7656 of 1990

K.K. Venugopal,C.S. Vaidyanathan, Vijayanarayana and Ms.

Vijayalakshmi Menon for the Appellants.

K. Swamy and Ms. A. Subhashini for the Respondents.

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The Judgment of the Court was delivered by

KULDIP SINGH, J. Special leave granted in all the petitions.

The appellants-petitioners challenged the constitutional

validity of Clause 16 of the Textile (Control) Order, 1986

[the 1986 Order] and the notification, issued thereunder,

dated March 29, 1990 as amended on May 11, 1990 and May 17,

1990 (the notification) by the Textile Commissioner before

the Andhra Pradesh High Court by way of writ petitions under

Article 226 of the Constitution of India. The High Court by

its judgment dated October 29, 1991 dismissed the writ

petitions. These appeals by way of special leave are

against the judgment of the High Court

The appellants are the Spinning and Weaving Mills in the

State of Andhra Pradesh. The cotton yarn manufactured by

the mills is of different

406

varieties. It is classified on the basis of counts. Yarn

with 1 to 40 counts is coarse, 40 to 60 medium, between 60

and 100 fine and anything above 100 counts is described as

very fine. There are two methods of packing the yarn. One

is the cone form packing which is used in power-loom and

hosiery industry. The other is hank form packing which is

exclusively consumed by the handloom industry. Spinning and

packing are the two stages of manufacturing yarn. Raw-

cotton has to pass through the process of blow-room,

carding, drawing, simplex and finally the ring frame to

complete the process of spinning. The process of packing

starts thereafter. For the cone form packing the ring frame

cops are fed to the winding machines and for the hank form

packing the cops are fed to the reeling machines. According

to the appellants they are packing the yarn in cone form.

They have not installed the reeling machines and as such it

is not possible for them to pack the yarn in hank form.

The 1986 Order was issued by the Government of India in

exercise of its powers under section 3 of the Essential

Commodities Act, 1955. Clause 16 of the 1986 Order is as

under :-

"16 (1) The Textile Commissioner, may from

time to time, issue directions in writing to

any manufacturer or class of manufacturers or

manufacturers generally, regarding,

(a) the clauses or specifications of cloth

or yarn which each manufacturer or class of

manufacturers of or manufacturers generally

shall or shall not manufacture;

(b) the maximum or minimum quantities of

cloth or yarn which such manufacture or class

of manufacturers or manufacturers generally

shall manufacture during such period as may be

specified in the Order;

(c) the maximum price ex-factory, wholesale

or retail at which any class or specification

of cloth or yarn may be sold; or

(d) the principles on which and the manner

in which such maximum prices may be determined

by a manufacturer; and

(e) the manner of packing of yarn in hanks,

cones or in

407

any other form and in such proportion as he

may consider necessary or expedient:

Provided that in issuing any direction under

this clause, the Textile Commissioner shall

have regard to:

(i) the demand for cloth or yarn;

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(ii) the needs of the general public;

(iii)the special requirements of the industry

for such cloth or yarn;

(iv) the capacity of the manufacturer or

class of manufacturers or manufacturers

generally, to manufacture or pack different

descriptions or specifications of cloth or

yarn; and

(v) the necessity to make available to the

general public cloth of mass consumption.

(2) While issuing any direction under sub-

clause (1), the Textile Commissioner may also

provide that such direction shall be with

reference to the quantity of cloth or yarn

packed by the manufacturer or class of

manufacturers or manufacturers generally

during the period specified in the direction.

(3) Every manufacturer, or class of

manufacturers or manufacturers generally, to

whom a direction has been issued shall comply

with it.

(4) Where, on an application made by any

manufacturer or class or manufacturers or

otherwise the Textile Commissioner is

satisfied that any direction issued by him

under this clause causes undue hardship or

difficulty to any such manufacturer or class

of manufacturers, he may, by order and for

reasons, to be recorded in writing, direct

that the direction shall not apply, or shall

apply subject to such modification as may be

specified in the order to such manufacturer or

class of manufacturers."

408

In exercise of the powers under Clause 16 of the 1986 Order

the Textile Commissioner issued the notification. The

operative part of the notification is re-produced hereunder

:-

"2. Every producer of yarn shall pack yarn for

civil consumption in hank form in each half-

yearly period commencing from April-September,

1990, period and in every subsequent half

yearly period in proportion of not less than

fifty percent of total yarn packed by him

during each half-yearly period for civil

consumption:

Provided that not less than eighty percent of

the yarn required to be packed in hank form

shall be of counts 40s and below in regard to

category 1 at Annexure-I to this Notification

:

Provided further that the obligation to pack

hank yarn pertaining to a particular half-

yearly period can be fulfilled before the end

of the month succeeding such period to which

the obligation pertains."

At this stage we may briefly notice the earlier litigation

which ended with the judgment of the Madras High Court in

Sri Rani Lakshmi G.S. & W. Mills Pvt. Ltd. & Others v.

Textile Commissioner, Bombay & Ors., AIR 1986 Madras 66. In

Rani Lakshmi Mills' case the constitutional validity of

Clause 21(5) of the cotton textile (Control) Order, 1948

[1948 Order] and the notification dated June 29, 1979 issued

thereunder were challenged. The said Notification was in

similar terms as the notification before us in these

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appeals. Clause 21(5) of the 1948 Order was as under :-

"(5) The Textile Commissioner may, by General

or Special Order, direct any manufacturer or

class of manufacturers to pack yarn in hanks,

cones or in any other form and in such

proportion as he may consider necessary or ex-

pedient: and thereupon such manufacturers or

class of manufacturers shall be bound to

comply with such directions".

It was argued before the Madras High Court that Clause 21(5)

of the 1948 Order did not provide any guidelines for the

exercise of power by the

409

Textile Commissioner and as such was arbitrary and violative

of Article 14 of the Constitution of India. The High Court

accepted the argument and struce down Clause 21(5) of the

1948 Order on the following reasoning

"A bare reading of the provision of clause

21(5) would therefore show that the proviso

under that clause gives completely

uncontrolled and uncanalized power which can

only be described as an arbitrary power

depending upon what he considers is necessary

or expedient."

Special leave petitions 12569-92/84 against the judgment of

the Madras High Court were dismissed by this Court on

February 21, 1991.

Because of the judgment of the Madras High Court in Rani

Lakshmi Mills case the 1948 Order was repealed and the 1986

Order was promulgated. Clause 16(1) of the 1986 Order gives

power to the Textile Commissioner to issue directions

providing the manner of packing of yarn in hanks, cones or

in any other form and in such proportion as he may consider

necessary or expedient. Proviso to Clause 16(1) lays down

complete guidelines for the exercise of power by the Textile

Commissioner.

Relying upon Rani Lakshmi Mills' case the learned counsel

for the appellants have contended that identical

notification having been struck down by the Madras High

Court and the judgment upheld by this Court, the respondents

are bound by the same and the Textile Commissioner had no

authority to issue fresh notification in similar terms. In

any case according to the learned counsel the impugned

notification is liable to be struck down on the same

grounds. We do not agree with the learned counsel. The

notification struck down by the Madras High Court was issued

under Clause 21(5) of the 1948 Order. The High Court held

Clause 21(5) of the 1948 Order unconstitutional and as a

consequence struck down the notification dated June 29,

1979. The present notification has been issued under Clause

16(1) of the 1986 Order. Unlike Clause 21(5) of the 1948

Order proviso to Clause 16(1)- of the 1986 Order provides

complete guidelines to the Textile Commissioner to issue the

directions envisaged thereunder. As such the ground of

attack which was available to the petitioners before the

Madras High Court is not available to the appellants before

us. We, therefore, reject the contention based on the

judgment of the Madras High Court in Rani Lakshmi Mills'

case.

410

Mr. Venogopal and Mr. Vaidyanathan learned counsel for the

appellants have then contended that the appellants do not

manufacture hank yarn. The contention is that the

respondents cannot compel the appellants to manufacture

something for which the appellants have not installed the

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necessary machinery and other superstructure. The

notification according to the learned counsel infracts their

fundamental right under Article 19(1)(g) of the Constitution

of India. We see no force in the contention. The Textile

Industry in this country is the second largest industry,

next to agriculture, providing employment to millions of

people. This industry is accounting for 20% of the total

industrial output. The appellant-mills are part of the

textile industry in the State of Andhra Pradesh. The

respondents, in their written statement before the High

Court, have elaborately explained the spinning and the

packing processes undertaken by the appellant-mills.

According to the respondents it is not correct that the

appellants are being forced to manufacture something which

they are not manufacturing already. The five stages of

spinning (blow room, carding, drawing, simplex and ring

frame) are common and only thereafter the ring frame cops

are either packed in hank form or in cone form. The respon-

dents have given cogent reasons for issuing the impugned

notification. We may briefly state the same.

The textile industry consists of three sectors namely, Mill-

Sector, Powerloom Sector and Handloom Sector. The primary

product in the industry is yarn. It is produced only by the

Mill-sector. The Powerloom and Handloom Sectors manufacture

fabrics and they depend upon the Mill--Sector for yarn. The

yarn is packed in two forms namely, cone form and hank form.

The cone form is consumed entirely by the Powerloom Sector

and the hank form by the Handloom Sector. The handloom

industry is the largest cottage industry in India. Nearly

one third of the country's requirement of cloth is met by

this Sector. As per the National Handloom Census, 1987-88

there were 3.9 million handlooms spread all over the country

out of which three million were engaged in production of

cotton cloth. The Handloom-Sector provided direct

employment to 8.4 million during 198889 and indirect

employment to millions of people. The production target for

Handloom Sector for the Seventh Plan was 4600 million mts.

In order to achieve the said production target a minimum of

460 million kgs. of hank was required. The employment

generated in the three sectors during the year 1988 was

84.22, 50.95 and 11.81 lakh persons in Handloom Sector,

Powerloom Sector and Mill-Sector respectively. The

production of cloth

411

for Handloom Sector during the Eighth Plan has been targeted

at 7000 million mts. out of which cotton cloth is 5610

million mts. In order to achieve this target 561 million

kgs. of hank yarn is required. Against the said requirement

only 355 million kgs. of cotton yarn is being packed in hank

form. According to the respondents there is a big gap

between the demand and supply. This causes scarcity of yarn

in the market and results in spiralling of prices. It

further results in unemployment in Handloom Sector. In

order to make available sufficient quality of hank yarn at

reasonable prices and also for the sustenance of Handloom

workers, it became necessary to reserve hank yarn for

Handloom Sector by making it obligatory on the part of the

manufacturers of yarn to pack a certain percentage of their

production packet for civil consumption in the form of

hanks.

We are satisfied that impugned notification has been issued

in the interest of the general public and also for the

larger interest of the textile industry.

It is not disputed that under Clause 4 of the Industrial

Licence granted to the appellants one of the conditions is

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as under :-

"the packing of yarn in hank form and count

wise production shall be in accordance with

the policy in force and the directions issued

by the Textile Commissioner in this regard

from time to time."

The appellants, having accepted the above condition while

taking the licence, cannot now turn round and say that they

are not bound by the same.

Mr. Vaidhyanathan further contended that under the impugned

notification unequals have been treated as equals.

According to him different mills have installed different

machinery and have different equipments. The contention is

that the impugned notification is violative of Article 14 as

it has been made uniformly-applicable to mills which do not

have the same capacity to produce hank yarn. We see no

force in the contention. The impugned notification has been

made applicable uniformly to all the producers of yearn.

The appellants are required to pack yarn in hank form in the

proportion as provided in the notification keeping in view

the total yarn packed by the mill concerned. In any case

the grievance of

412

the appellants has been substantially mitigated by the press

note dated May 11, 1990 issued by the Textile Commissioner,

Bombay. The relevant part is re-produced hereunder :-

"2. The Government have now reinstituted the

erstwhile relaxation of getting hank yarn

obligation fulfilled by transfer of surplus

hank yarn packing of another producer.

Secondly, the Government have also allowed a

producer to get Hank yarn reeled through

another producer having extra relying capacity

with the permission of the Central Excise

Authorities and with the arrangements through

the State Handloom Corporations and Apex.

Handloom Cooperative Organisations in the

areas having concentration of handloom

weavers."

We, see no ground to interfere with the judgment of the High

Court. We, therefore, dismiss the appeals with costs. We

assess the costs as Rs. 5000 to be paid by each of the

appellants.

G.N. Appeals dismissed.

413