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PETITIONER:

STATE OF M.P. & ORS.

Vs.

RESPONDENT:

M/S. CHHOTABHAI JETHABHAI PATEL & CO. &

DATE OF JUDGMENT10/12/1971

BENCH:

MITTER, G.K.

BENCH:

MITTER, G.K.

SIKRI, S.M. (CJ)

SHELAT, J.M.

DUA, I.D.

KHANNA, HANS RAJ

CITATION:

1972 AIR 971 1972 SCR (2) 838

1972 SCC (1) 209

ACT:

Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam,

1964 Section 5-Whether restrictions on transport of tendu

leaves imported from outside the State is violative of Part

XIII of the Constitution.

HEADNOTE:

The respondent, a partnership firm of which the second

respondent was a partner, carried on business as

manufacturers of bidis at various places in the State of

Madhya Pradesh. Being unable to secure sufficient tendu

leaves locally, the firm took leases for the collection of

such leaves in Bihar & Maharashtra. They actually imported

tendu leaves under two railway consignments from Bihar.

They informed the Divisional Forest Officer about the same

and asked permission for transport of the leaves and to

utilise them in their factories. By letter, the D.F.O.

informed the respondents that the leaves must not be moved

for bidi manufacture until permission is given. Respondents

obeyed the order; but in spite of that, the Sub-divisional

Forest Officer seized two quantities of such leaves and

filed a complaint alleging contravention of s. 5 of Madhya

Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964.

The respondent filed a petition under Art. 226 of the

Constitution for a writ of certiorari quashing the

complaint. The contention of the respondents was that the

Act did not prohibit import of tendu leaves from outside

nor- was there any restriction on a manufacturer to consume

the same for the manufacture of bidis or the Rules made

under the Act did not regulate the transport of the tendu

leaves imported from outside.

The State however, contended that transport of tendu leaves

whether grown locally or imported from outside was

completely prohibited under s. 5 of the Act, except by a

license-holder in terms of a permit issued. S.5(1) provides

that no person other than the State Government or an Officer

of the State Government etc. shall purchase or transport

tendu leaves. Further, the Act did not prohibit import of

tendu leaves and so the Act is not violative of Arts. 31,

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301 and 304 of the Constitution and the control of movement

of tendu leaves after their import was in no way repugnant

to Arts. 301 and 304 of the Constitution. The State

contended that unless the State had the power to check the

purchase of tendu leaves from outside the State and to

restrict the transport thereof within the State, the

monopoly of State trading in tendu leaves would not be

effective. The High Court rejected these contentions of the

State and hence the appeal. Dismissing the appeal,

HELD : (1) All the relevant provisions of the Act and the

rules made thereunder show that the legislature intended

that everybody growing leaves within the State should offer

the same to it to its agents in different units for sale and

the State was bound to purchase every single lot of usable

tendu leaves. Prima facie trade in tendu leaves could

consist of dealing in those leaves, i.e., their purchase and

sale but transport 'of the leaves once purchased or sold

would not prima facie be an organic or integral part of

dealing in those leaves. [842 D]

839

Vrajlal Manilal v. M.P. State [1970] 1 S.C.R. 400, followed.

(ii) In the present case, the transport of tendu leaves

purchased outside but consigned to places within the State

to be used for the manufacture of bidis is not integrally

connected with the State monopoly as envisaged in the Act.

The Act ought not to be construed so as to ban import of

tendu leaves from outside the State or restrict their

movement once they are within the State unless clear

language was used in that behalf. [844 C]

Akadasi Padhan v. State of Orissa, [1963] Supp. 2 S.C.R.

691, referred to.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 684 of 1968.

Y. S. Dharmadhikari, Advocate-General for the State of

Madhya Pradesh and 1. N. Shroff, for the appellants.

M. C. Setalvad, Rameshwar Nath and S. K. Dholakia, for

respondent No. 1.

The Judgment of the Court was delivered by

Mitter, J. This is an appeal from a judgment of the Madhya

Pradesh High Court quashing the proceedings initiated on the

complaint filed by the Divisional Forest Officer, Saugor in

the Court of the Magistrate of the First Class Saugor for

imposition of a penalty on the respondents.

The matter arises thus. Chhotahhai Jethabhai Patel, a

partnership firm of which the second respondent, Jhaverbhai

Bhulabhai Patel is a partner, carried on business on a

fairly large scale as manufacturers of bidis at various

places in the State of Madhya Pradesh including Saugor.

Being unable to secure sufficient quantities of tendu leaves

grown in the forest units in the State, the firm took leases

for the collection of such leaves in the States of Bihar

Maharashtra. They actually imported tendu leaves under two

railway consignments from Bihar to Saugor. They informed

the Divisional Forest Officer about the same and asked for

permission for transport of the leaves and to utilise the

said leaves for manufacture of bidis in their factories.

By letter dated July 27, 1965 the said Forest Officer

intimated the firm that the imported leaves were not to be

moved for bidi manufacture until permission was accorded for

so doing. The respondents' grievance was that

notwithstanding the above communication and in spite of the

fact that they had not moved the imported leaves from their

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godowns, the Sub Divisional Forest Officer Saugor seized two

quantities of such leaves of 9007 bags imported from Garwah

Road, Bihar and 256 bags of tendu leaves imported from

Bindoumaganj, Bihar and followed the same up by filing a

complaint alleging contravention of s. 5 of the Madhya

Pradesh Tendu Patta Wyapar Viniyaman)

84 0

Adhiniyam, 1964, hereinafter referred to as the Act. The

respondents filed a petition under Art. 226 of the

Constitution before the High Court for the issue of a writ

of certiorari quashing the complaint. The contention of the

respondents (importers of the leaves) before the High Court

was that the Act did not prohibit the import of tendu leaves

from places outside the State nor was there any restriction

on a manufacturer importing such leaves with the express

object of consumption of the same, in his factory for the

manufacture of bidis and in any event the Act or the Rules

made thereunder did not purport to regulate the transport of

tendu leaves imported from places outside the State.

On behalf of the State it was contended that transport of

tendu leaves whether grown in the State or outside the State

was completely prohibited by s. 5(2) of the Act and

regulation and control of transport of such imported leaves

was necessary for the successful working of the State

monopoly in the trade of tendu leaves envisaged by the Act.

Further the Act did not prohibit the import of tendu leaves

and was not therefore violative of Arts. 31, 301 and 304 of

the Constitution and the control of movement of tendu leaves

after their import from another State was in no way repug-

nant to Arts. 301 and 304.

The High Court rejected the contentions of the State. Hence

the appeal.

In order to find out whether the action of the Forest

Officer was justified, we have to look into the relevant

provisions of the Act and the rules framed thereunder. The

Act as its preamble shows is one to make provision for

regulating in the public interest the trade of tendu leaves

by creation of State monopoly in such trade. By s. 1(2) it

was to extend to the whole of the State and under sub-s. (3)

of s. 1 it was to come into force in such area or areas and

on such date or dates as the State Government may, by

notification, specify. The broad scheme of the Act appears

to be as follows. Under s. 3 the State Government was

empowered to divide every specified area defined in cl. (h)

of s. 2 into such number of units as it may deem fit. S. 4

empowered the State Government to appoint agents in respect

of different units for the purpose of purchase of and trade

in tendu leaves on its behalf. Under s. 5(1);

"On the issue of a notification under sub-

section (3) of section 1 in any area no perso

n other than-

(a) the State Government;

(b) an officer of State Government

authorised in writing in that behalf; or

841

(c) an agent in respect of the unit in which

the leaves have grown;

shall purchase or transport tendu leaves."

The two Explanations to this subsection show that purchase

of tendu leaves from the State Government or its officers or

agents was not to be deemed to be a purchase in

contravention of the Act and a person having no interest in

a holding but acquiring the right to collect tendu leaves

grown on such holding was to be deemed to have purchased

such leaves in contravention of the Act. Sub-s. (2) of the

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section allowed a grower of tendu leaves to transport them

from any place within the unit wherein such leaves had grown

to any other place in that unit and tendu leaves purchased

from the State Government or any officer or agent of the

Government by any person for manufacture of bidis within the

State or by any person for sale outside the State could be

transported by such person in accordance with the terms and

conditions of a permit to be issued in that behalf. S. 7

empowered the State Government to fix prices at which tendu

leaves were to be, purchased by it or its agent and under s.

9 the State Government or their authorised officer or agent

was to be, bound to purchase at the price fixed under s. 7

leaves offered for sale at the depot, subject to the right

of rejection of such leaves as were not fit for the

manufacture of bidis. Under s. 1 1 all manufacturers of

bidis and all exporters of tendu leaves had to get

themselves registered in such manner as might be prescribed.

S. 12 enabled the State Government to sell or dispose of

tendu leaves purchased by it or its agent as therein

prescribed. Under s. 1 5 any person contravening any of the

provisions of the Act or the rules thereunder was liable to

punishment, both with imprisonment and fine and tendu leaves

in respect of which such contravention took place were

liable to forfeiture by Government. S. 19 gave the

Government power to make rules to carry out the provisions

of the Act.

Rule 4 framed under the Act lays down the kinds of transport

permits which may be issued. They are to be, of four types

(i) for transport from collection depot to storage godown;

(ii) for transport from one storage godown to another or to

distribution centre; (iii) for transport from a distribution

centre to Sattedars or Mazdoors' and (iv) for transport

outside the State. The application for a transport permit

is to be under rule 9 in form 'M' and the permit to be

issued is to be in form 'M. Form 'M' gives the quantity of

tendu leaves purchased, the place or places where they were

stored, the destination to which they were to be transported

and the place or places where transported leaves were to be

stored. Similar particulars are to be contained in a permit

in form 'N'.

842

It was contended on behalf of the State that the High Court

had gone wrong in taking the view that the object of the Act

was confined to trading in tendu leaves grown in the State

as disclosed by the above provisions. It was urged that the

embargo on purchase and transport of tendu leaves by s. 5

was necessary for creation and preservation of the State

monopoly in tendu leaves. It was submitted that there was

nothing in the Act, which on the face of it showed that

tendu leaves mentioned in the different provisions were to

be confined to leaves grown in the State. It was further

submitted that unless the State had the power to check the

purchase of tendu leaves from outside the State and in any

event to restrict the transport thereof within the State,

the monopoly would not be effective. It was urged further

that transport of goods within the State was so essentially

integrated with the trade in the goods that the restriction

on transport should be upheld in the interest of the State

monopoly.

We find ourselves unable to accept the contentions put

forward by counsel on behalf of the State. All the relevant

provisions of the Act and the rules referred to above show

that the legislature intended that everybody growing leaves

within the State should offer the same to it or its agents

in different units for sale and the State was bound to

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purchase every single lot of tendu leaves unless the same

could be said to be unfit for the manufacture of bidis.

Prima facie trade in tendu leaves as was held by this Court

in Vrajlal Manilal v. M. P. State(1) would consist of

dealing in those leaves i.e. their purchase and sale but

"transport of the leaves once purchased or sold would not

prima facie be an organic or integral part of dealing in

those leaves." It was further held in that case:

:..a permit system which regulates the

movement of leaves purchased by a manufacturer

of bidis from the unit where they

are purchased to his warehouse, then to the

branches and to the sattedars cannot up to

that stage be regarded as unreasonable in the

light of the object of the Act, the economic

conditions prevailing in the State, and the

mischief which it seeks to cure. At the same

time to expect the manufacturer to get permits

issued to his sattedars for distribution by

them to the innumerable mazdoors of

comparatively small quantities of these leaves

would not only be unreasonable but

frustrating."

In that case there was no question of import of any tendu

leaves from outside the State or the issue of any permits in

that regard. What was objected to was the insistence upon

transport permits for the leaves to be distributed by the

manufacturers to his innumerable sattedars and mazdoors

under s. 5 of the Act. It was held that though the section

"is couched in apparently wide language,

(1) [1970] 1 S.C.R. 400 at 408.

843

the very object of the Act, as disclosed by its long title,

contains inherent limitations against an absolute or as

strictly regulated a ban as it would at first reading of the

section appear." Though the Court there upheld the

provisions relating to the creation of the monopoly in the

public interest in the matter of sale and purchase of tendu

leaves, it was not disposed to uphold the restrictions on

movement to the extent it was sought to be enforced by the

State in that case.

In coming to the above conclusion the Court relied on the

dictum in Akadasi Padhan v. State of Orissa(1)

"A law relating to a State monopoly cannot, in

the context, include all the provisions

contained in the said law whether they have

direct relation with the creation of the

monopoly or no the said

expression should be construed to mean the law

relating to the monopoly in its absolutely

essential features. If a law is passed

creating a State monopoly, the Court should

enquire what are the provisions of the said

law which are basically and essentially

necessary for creating the State monopoly. It

is only those essential and basic provisions

which are protected by the latter part of Art.

19(6). If there are other provisions made by

the Act which are subsidiary, incidental or

helpful to the operation of the monopoly, they

do not fall under the said part and their

validity must be judged under the first part

of Art. 19(6). In other words, the effect of

the amendment made in Art. 19(6) is to protect

the law relating to the creation of monopoly

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and that means that it is only the provisions

of the law which are integrally and

essentially connected with the creation of the

monopoly that are protected. The rest

of the

provisions which may be incidental do not fall

under the, latter part of Art. 19(6) and would

inevitably have to satisfy the test of the

first part of Art. 19(6)."

It is settled law that where two constructions of a

legislative provision are possible one consistent with the

constitutionality of the measure impugned and the other

offending the same, the Court will lean towards the first if

it be compatible with the object and purpose of the impugned

Act, the mischief which it sought to prevent ascertaining

from relevant factors its true scope and meaning.

It was in the light of this principle that the High Court

observed :

"If s. 5 of the Act or any of its provisions

were to be construed as prohibiting the import

of tendu leaves into

(1) [1963] Supp. 2 S.C.R. 691.

844

the State or restricted within the State of

imported leaves, then the provision would

clearly be invalid as violative of Arts. 301

and 304 of the Constitution."

Without expressing our views on the subject we hold that the

entire provisions of the Act and the rules are consistent

with and aim at the State monopoly in the trade of tendu

leaves in case of leaves grown or _produced in the State and

the legislature never intended that the monopoly should be

operative even to the extent of banning import of tendu

leaves from outside or stalling the tendu leaves once they

found their way into the State from outside. The transport

of tendu leaves purchased outside but consigned to places

within the, State to be used for the manufacture of bidis is

not integrally connected with the State monopoly as

envisaged in the Act. It stands to reason that

manufacturers of bidis in the State of Madhya Pradesh would

not think of importing tendu leaves from distant places

like, Bihar and Maharashtra if they could help it and it

must be the exigencies of the situation which drives a

manufacturer of bidis to such course of action. In any

event, the Act ought not to be construed so as to ban import

of tendu leaves from outside the State or restrict their

movement once they were within the State unless clear

language was used in that behalf. If and when such express

embargo is imposed, a question may arise as to whether it

offends the different provisions of Part XIII of the

Constitution.

In the result the appeal fails and is dismissed with costs.

S.C. Appeal dismissed.

845