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PETITIONER:

STATE OF TRIPURA & ORS.

Vs.

RESPONDENT:

SUDHIR RANJAN NATH

DATE OF JUDGMENT: 13/02/1997

BENCH:

B.P. JEEVAN REDDY, SUJATA V. MANOHAR

ACT:

HEADNOTE:

JUDGMENT:

J U D G M E N T

B.P. JEEVAN REDDY, J.

Leave granted. Heard the counsel for the parties.

The Gauhati High Court has declared Rule 3 of the

Transit Rules framed by the Government of Tripura under

Section 41 and 42 of the Indian Forest Act, 1927 as illegal

and ultravires the Constitution. The correctness of the said

decision is challenged by the State of Tripura.

The Indian Forest Act, 1927 [the Act] was enacted to

consolidate the law relating to forests, the transit of

forest-produce and the duty leviable on timber and other

forest-produce. The Act was extended to the then Union

Territory of Tripura by the Union Territories [Laws] Act,

1950 [Act 30 of 1950]. It continues to be applicable to the

State of Tripura. The Indian Forest Act is thus a post-

constitutional enactment, so far as Tripura is concerned,

vide Mithan Lal v. The State of Delhi & Anr. [1959 S.C.R.

45] and New Delhi Municipal Committee v. State of Punjab

etc.etc. [1997 (1) J.T. (S.C.) 40].

Chapter II of the Act deals with reserved forests while

Chapter III deals with village forests. Chapter IV deals

with protected forests and while Chapter V with State

government control over forests and lands not being the

property of the government. Chapter VI provides for levy of

duty on timber and other forest-produce. Chapter VII

provides for control on timber and other forest-produce in

transit. Chapter VIII deals with drift timber. Chapters IX,

XI and XIII contain machinery provisions. A perusal of the

provisions of the Act shows that the Act is designed to

protect and increase the forest wealth and its proper

utilisation for the purposes of the State and the people.

For the purpose of the present case, it is not necessary to

notice the provisions of the several chapters of the Act

except Chapters VI, VII and XII. Section 39 in Chapter VI

confers upon the Central Government the power to levy duty

on timber and other forest-produce. Section 39 reads as

follows:

"39. Power to impose duty on timber

and other forest-produce--(1) The

Central Government may levy a duty

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in such manner, at such places and

at such rates as it may declare by

notification in the Official

Gazette on all timber or other

forest-produce--

(a) which is produced in the

territories to which this Act

extends, and in respect of which

the Government has any right;

(b) which is brought from any place

outside the territories to which

this Act extends.

(2) In every case in which such

duty is directed to be levied as

valorem the Central Government may

fix by like notification the value

on which such duty shall be

assessed.

(3) All duties on timber or other

forest-produce which, at the time

when this Act comes into force in

any territory, are levied therein

under the authority of the State

Government, shall be deemed to be

and to have been duly levied under

the provisions of this Act.

(4) Notwithstanding anything in

this section, the State Government

may, until provision to the

contrary is made by Parliament,

continue to levy any duty which it

was lawfully levying before the

commencement of the Constitution,

under this section as then in

force;

Provided that nothing in this sub-

section authorises the lev of any

duty which as between timber or

other forest-produce of the State

and similar produce of the locality

outside the State, discriminates in

favour of the former, or which, in

the case of timber or other forest-

produce of localities outside the

State, discriminates between timber

or other forest-produce of one

locality and similar timber or

other forest-produce of another

locality."

Sub-section (1) thus confers the power to levy duty

only upon the Central Government and not upon the State

governments. Sub-section (3), however, says that if any duty

levied under the authority of the State government on timber

or other forest-produce is in force in any territory on the

date of coming into force of the said Act, the same shall be

deemed to be and to have been levied under the said section.

Sub-section (4) says that until a provision is made to the

contrary by Parliament, the State government may "continue

to levy any duty which it was lawfully levying before the

commencement of the Constitution, under this section as then

in force". These sub-sections are referred to for the reason

that an argument is built upon them by the appellant-State,

which we shall refer to at a later stage.

Section 41 vests in the State government control of all

rivers and their banks as regards the floating of timber as

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well as the control of all timber and other forest-produce

in transit by land or water. It also empowers the State

government to make rules "to regulate the transit of all

timber and other forest-produce". Sub-section (2) elucidates

several matters in respect of which rules can be framed. It

would be appropriate to set out Section 41 in its entirety:

"41. Power to make rules to

regulate transit of forest produce.

-- (1) The control of all rivers

and their banks as regards the

floating of timber, as well as the

control of all timber and other

forest-produce in transit by land

or water, is vested in the State

Government, and it may make rules

to regulate the transit of all

timber and other forest-produce.

(2) In particular and without

prejudice to the generality of the

foregoing power such rules may--

(a) prescribe the routes by which

alone timber or other forest-

produce may be imported, exported

or moved into, from or within the

State;

(b) prohibit the import or export

or moving of such timber or other

produce without a pass from an

officer duly authorised to issue

the same, or otherwise than in

accordance with the conditions of

such pass;

(c) provide for the issue,

production and return of such

passes and for the payment of fees

therefor;

(d) provide for the stoppage,

reporting, examination and marking

of timber or other forest-produce

in transit, in respect of which

there is reason to believe that any

money is payable to the Government

on account of the price thereof, or

on account of any duty, fee,

royalty or charge due thereon, or,

to which it is desirable for the

purposes of this Act to affix a

mark;

(e) provide for the establishment

and regulation of depots to which

such timber or other produce shall

be taken by those in charge of it

for examination, or for the payment

of such money, or in order that

such marks may be affixed to it,

and the conditions under which such

timber or other produce shall be

brought to, stored at and removed

from such depots;

(f) prohibit the closing up or

obstructing of the channel or banks

of any river used for the transit

of timber or other forest-produce,

and the throwing of grass,

brushwood, branches or leaves into

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any such river or any act which may

cause such river to be closed or

obstructed;

(g) provide for the prevention or

removal of any obstruction of the

channel or banks of any such river,

and for recovering the cost of such

prevention or removal from the

person whose acts or negligence

necessitated the same;

(h) prohibit absolutely or subject

to conditions, within specified

local limits, the establishment of

sawpits, the converting, cutting,

burning, concealing or making of

timber, the altering or effacing of

any marks on the same, or the

possession or carrying of marking

hammers or other implements used

for making timber;

(i) regulate the use of property

marks for timber, and the

registration of such marks;

prescribe the time for which such

registration shall hold good; limit

the number of such marks that may

be registered by any one person,

and provide for the levy of fees

for such registration.

(3) The State Government may direct

that any rule made under this

section shall not apply to any

specified class of timber or other

forest-produce or to any specified

local area."

Chapter XII confers an additional power upon the State

government to make rules. Sections 76, 77 and 78 occurring

therein read as follows:

"76. Additional powers to make

rules. -- The State Government may

make rules --

(a) to prescribe and limit the

powers and duties of any Forest-

officer under this Act;

(b) to regulate the rewards to be

paid to officers and informers out

of the proceeds of fines and

confiscation under this Act;

(c) for the preservation,

reproduction and disposal of trees

and timber belonging to Government,

but grown on lands belonging to or

in the occupation of private

persons; and

(d) generally, to carry out the

provisions of this Act.

77. Penalties for breach of rules.

-- Any person contravening any rule

under this Act, for the

contravention of which no special

penalty is provided, shall be

punishable with imprisonment for a

term which may extend to one month,

or fine which may extend to five

hundred rupees, or both.

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78. Rules when to have force of

law. -- All rules made by the State

Government under this Act shall be

published in the Official Gazette,

and shall thereupon, so far as they

are consistent with this Act, have

effect as if enacted therein."

A reading of Sections 41 and 74 discloses that besides

vesting total control over the forest-produce in the State

government and empowering it to regulate the transit of all

timber or other forest-product, the State government is also

empowered to make rules "generally, to carry out the

provisions of this Act". Thus, any rule made by the State

government which purports to give effect to any of its

provision would be within the four corners of the Act.

In exercise of the powers conferred upon it by the Act,

the State government has framed the Transit Rules. Rule 3,

with which alone we are concerned, reads thus:

3(1). Any person importing,

exporting or moving into, from or

within, or who has imported,

exported or moved into from or

within the State of Tripura any

forest product, shall present it to

the Forest Officer in Charge of the

place of origin or entry of the

forest produce, or to the Forest

Officer in Charge of the area

nearest to the place of origin or

entry of the same through which it

is transported, for examination and

check, and shall pay the amount, if

any, due thereon & obtain a transit

pass in Form C of the Appendix to

these rules.

(2) No person shall remove or cause

to be removed from the State for

the purpose of trade or otherwise

any timber and firewood to any

other place outside the state and

no trading depot shall be set up or

established in the State at any

place without licence for such

purpose from the Divisional forest

Officer having the jurisdiction

over the area subject to approval

of Conservator of Forests of the

circle.

(3) Every application for grant of

licence under the aforesaid rule

shall be made to the Divisional

Forest Officer having the

jurisdiction over the area in the

Form appended to this Rules and on

payment of non-refundable

application fee amounting to

Rs.1,000/-.

(4) Every order granting or

refusing a licence under these

Rules shall be in writing and in

case of refusal, shall contain the

reasons therefor. The licence fee

of Rs.2,000/- shall be paid and

deposited in Government

Treasury/sub-Treasury by challan

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and the receipted copy of the

challan must accompany the licence.

(5) A licensee shall be required to

pay the export duty for export of

timber and firewood from this State

to other States which shall not

exceed 100% of the market value of

such timber/firewood as will be

assessed by the Divisional forest

Officer.

(6) The conditions of the licence,

the route or routes through which

the timbers/firewoods are to be

transported to a place outside the

State and the period of validity of

the licence shall be such as may be

notified by the state Government in

the Official Gazette.

Provided further that such period

of validity shall not exceed 6

(six) months.

(7) Every licence granted under

this Rules may be renewed. An

application for renewal of licence

shall be made in form-E within 30

(thirty) days before the expiry of

the licence. the Divisional forest

Officer having the jurisdiction

over the area shall on receipt of

application for renewal of licence,

make such inquiry as he may think

fit and within a period of 60

(sixty) days from the date of

receipt of such application, either

grant or refuse to grant renewal of

the licence;

Provided that no renewal of licence

shall be granted unless the

Divisional forest Officer is

satisfied about the location,

availability of the raw materials,

financial capacity, past records in

business and relevant antecedent of

such person. Whether the Divisional

Forest Officer refuses to grant

such renewal of licence, he shall

record the reasons therefor and

such reasons shall be communicated

to the person in writing. For the

purpose of inquiry under this

rules, the Divisional Forest

officer may enter into or upon any

land, survey and demarcate the

same, make a map thereof or

authorises any Officer to do so and

also call for such documents as he

deems necessary for ascertaining

the merit of the application.

Provided further that no

application for renewal of licence

shall be rejected unless the holder

of such licence has been given an

opportunity of presenting his case

and unless the Divisional Forest

Officer is satisfied that the

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application for such renewal has

been made after the period

specified therefor or any statement

made by the person making such

application for grant of renewal of

the licence was incorrect or

materially false or such person has

contravened any of the terms and

conditions of the licence or any

provision of the Indian Forest Act

or the Rules made thereunder or

such person does not fulfil the

terms and conditions of such

licence.

(8) The quantity of timber and

firewood which will be permissible

for export by a export licensee

shall be determined on the basis of

availability of forest produce

after catering to the needs of the

local people of the State and those

of the Forest trade licence holder

for trading in forest produces

within the State meeting the

requirement of the people of the

State.

[Sub-rules (2) to (8) were added by

Notification dated May 7, 1990.]

Rule 3(1) obligates any person importing, exporting or

transporting any forest-produce into, from or within, the

State of Tripura to present the same to the appropriate

officer for examination and check and also to pay the

amount, if any, due thereon. He is also obligated to obtain

a transit pass in Form-C prescribed by the Rules for any of

the above purposes. Sub-rule (2) provides that no person

shall remove or transport any timber and firewood from

within the State to any place outside the State except under

a licence granted by the appropriate Divisional Forest

Officer. The sub-rule also prohibits setting up of any depot

in the State without such a licence. Sub-rule (3) says that

an application for licence shall be submitted in the

prescribed form and shall be accompanied by a non-refundable

application fee of Rs.1,000/-. Sub-rule (4) provides that a

licence, if granted, shall be issued on payment of licence

fee of Rs.2,000/-. [These amounts are fixed irrespective of

the value of the forest-produce involved.] Sub-rule (5)

provides that on export of timber from the State of Tripura

to other States, an export fee not exceeding hundred percent

of the market value of the timber/firewood concerned would

be leviable. Sub-rule (6) empowers the government to notify

the route or routes along which the forest-produce shall be

transported to a place outside the State. Sub-rule (7) deals

with renewal of licences, Sub-rule (8) says that the

quantity of timber and firewood to be exported from the

State shall be determined on the basis of availability of

forest-produce after catering to the needs of the local

people of the State and the requirements of the people of

the State.

The High Court has declared that the levy of

application fee of Rupees one thousand and of licence fee of

Rupees two thousand amounts to levy of tax and is bad. This

is on the ground that the State has not established the

service rendered in lieu of the said fees. The High court

has also held that sub-rule 5), which levies export duty on

export of timber from the State is beyond the rule-making

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power conferred upon the State government by Section 41. It

has also found fault with sub-rule 98). The High Court has

been of the further opinion that rule 3 violates Article 301

of the Constitution and since the proviso to clause (b) of

Article 304 has not been complied with, the rule is liable

to be declared unconstitutional.

The correctness of the judgment is challenged in this

appeal by Sri S.S. Javali, learned counsel appearing for the

State of Tripura. we have also heard Sri Har Dev Singh,

learned counsel for the respondent who supported the

reasoning and conclusion of the High Court besides

submitting that the power to regulate conferred by section

41 of the Act does not empower the State government to

prohibit the export of forest-produce from within the State

to a place outside the State as provided by sub-rule (8) of

rule 3. Counsel submitted that the power to regulate does

not include the power to prohibit.

We shall first deal with the validity of sub-rule (5)

of rule 3 which empowers the State government to levy export

duty extending upto hundred percent of the market value of

timber/firewood concerned. We agree with the High Court that

there is nothing in Section 41 which empowers the State

government to levy export duty. The power to levy duty is

conferred only upon the Central Government by Section 39 and

that power is neither delegated to the State government nor

is the State government empowered to make rules with respect

to the said levy. Neither the powers conferred upon the

State government by Section 41 nor the power conferred by

Section 76 comprehend the levy of export duty. The power to

levy duty is conferred only upon one named authority, viz.,

the Central Government. it must accordingly be held that

sub-rule (5) has been rightly declared bad.

We next take up the validity of the levy of application

fee and licence fee of rupees one thousand and Rupees two

thousand respectively. In our opinion, the High Court was

not right in holding that the said fee amounts to tax on the

ground that it has not been proved to be compensatory in

nature. In our opinion the fee imposed by sub-rules (3) and

(4) is a fee within the meaning of clause (c) of sub-section

(2) of section 41. It is regulatory fee and not compensatory

fee. The distinction between compensatory fee and regulatory

fee is well established by several decisions of this Court.

Reference may be made to the decision of the Constitution

Bench in Corporation of Calcutta v. Liberty Cinema [1965 (2)

S.C.R.477]. It has been held in the said decision that the

expression "licence fee" does not necessarily mean a fee in

lieu of services and that in the case of regulatory fees, no

quid pro quo need be established. The following observations

may usefully be quoted;

This contention is not really open

to the respondent for s.548 does

not use the word `fee'; it uses the

words `licence fee' and those words

do not necessarily mean a fee in

return for services. In fact in our

Constitution fee for licence and

fee for services rendered are

contemplated as different kinds of

levy. The former is not intended to

be a fee for services rendered.

This is apparent from a

consideration of Art.110(2) and

Art.199(2) where both the

expressions are used indicating

thereby that they are not the same.

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In Shannon v.Lower Mainland Dairy

Products Board, 1938 A.C.708: (AIR

1939 PC 36) it was observed at

pp.721-722 (of AC): (at pp.38-39 of

AIR):

`if licences are granted, it

appears to be no objection that

fees should be charged in order

either to defray the costs of

administering the local regulation

or to increase the general funds of

the Province or for both

purposes.....It cannot, as their

Lordships think, be an objection to

a licence plus a fee that it is

directed both to the regulation of

trade and to the provision of

revenue.'

It would, therefore, appear that a

provision for the imposition of a

licence fee does not necessarily

lead to the conclusion that the fee

must be only for services rendered.

This decision has been followed in several decisions,

including the recent decisions of this Court n Vam Organic

Chemical Industries v. Collector of Central Excise, Bombay

[1997 (1) J.T. (S.C.) 641) and Bihar Distillery & Anr. v.

Union of India [1997 (2) J.T. (S.C>) 20]. The High Court

was, therefore, not right in proceeding on the assumption

that every fee must necessarily satisfy the test of quid pro

quo and in declaring the fees levied by sub-rules (3) and

(4) of rule 3 as bad on that basis. Since we hold that the

fees levied by the said sub-rules is regulatory in nature,

the said levy must be held to be valid and competent, being

fully warranted by Section 41.

So far as sub-rule (20 is concerned, it merely provides

for a licence for removal of timber or firewood from within

the State to any place outside the State and also for

setting up or establishing a trading depot within the State.

This sub-rule is equally within the four corners of Section

41. Indeed, clause (d) of Section 76 which empowers that

State government to make rules generally to carry out the

provisions of this Act also serves as an authority for the

said sub-rule.

Objection is next taken to sub-rule (8). It is

submitted that the power to regulate conferred upon the

State government by Section 41 does not take in the power to

prohibit whereas sub-rule (8) empowers the State government

to prohibit the export of timber and firewood if such a

course is necessary to cater to the needs of the local

people or for meeting the requirements of the people of the

State. This in turn raises the question, what is the meaning

and ambit of the expression "regulate" in Section 41(1) of

the Act? [Section 41(1) empowers the State government "to

regulate the transit of all timber and other forest-

produce".] The expression is not defined either in the Act

or in the rules made by the State of Tripura. We must,

therefore, go by its normal meaning having regard to the

context in which, and the purpose to achieve which, the

expression is used. As held by this Court in Jiyajee Cotton

Mills Ltd. & Anr. v. Madhya Pradesh Electricity Board & Anr.

[1989 Suppl. (2) S.C.C.52], the expression "regulate" `has

different shades of meaning and must take its colour from

the context in which it is used having regard to the purpose

and object of the relevant provisions, and as has been

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repeatedly observed, the court while interpreting the

expression must necessarily keep in view the object to be

achieved and the mischief sought to be remedied" [at Page

79]. Having regard to the context and other relevant

circumstances, it has been held in some cases that the

expression "regulation" does not include "prohibition"

whereas in certain other contexts, it has been understood as

taking within its fold "prohibition" as well. it has been

held in K.Ramanathan v. State of Tamil Nadu & Anr. [1985 (2)

S.C.C.116] that:

The word `regulation' cannot have

any rigid or inflexible meaning as

to exclude `prohibition'. The word

`regulate' is difficult to define

as having any precise meaning. it

is a word of broad import, having a

broad meaning, and is very

comprehensive in scope.....It has

often been said that the power to

regulate does not necessarily

include the power to prohibit, and

ordinarily the word `regulate' is

not synonymous with the word

`prohibit'. This is true in a

general sense and in the sense that

mere regulation is not the same as

absolute prohibition. At the same

time, the power to regulate carries

with it full power over the thing

subject to regulation and in

absence of restrictive words, the

power must be regarded as plenary

over the entire subject. it implies

the power to rule, direct and

control, and involves the adoption

of a rule or guiding principle to

be followed, or the making of a

rule with respect to the subject to

be regulated. The power to regulate

implies the power to check and may

imply the power to prohibit under

certain circumstances, as where the

best or only efficacious regulation

consists of suppression. It would

therefore appear that the word

`regulation' cannot have any

inflexible meaning as to exclude

`prohibition'. It has different

shades of meaning and must take its

colour from the context in which it

is used having regard to the

purpose and object of the

legislation, and the court must

necessarily keep in view the

mischief which the Legislation

seeks to remedy.

To the same effect is the decision of this Court in

State of Tamil nadu v. M/s. Hind stone & Ors. [1981 (2)

S.C.C.205]. Dealing with the contention that Section 15 of

the Mines and minerals [Regulation and Development] Act,

1957 authorises the making of rules regulating the grant of

mining leases and that the power does not take in power to

prohibit the grant of leases, this court held:

We do not think that `regulation'

has that rigidity of meaning as

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never to take in `prohibition'.

Much depends on the context in

which the expression is used in the

Statute and the object sought to be

achieved by the contemplated

regulation. it was observed by

Mathew, J. in G.K.Krishnan v. State

of Tamil nadu [1975 (1) S.C.C.375]:

`The word `regulation' has no fixed

connotation. Its meaning differs

according to the nature of the

thing to which it is applied'. In

modern statutes concerned as they

are with economic and social

activities, `regulation' must, of

necessity, receive so wide an

interpretation that in certain

situations, it must exclude

competition to the public sector

from the private sector. More so in

a welfare State. It was pointed out

by the Privy Council in

commonwealth of Australia v. Bank

of New South Wales [1950 A.C.235 =

(1949) 2 ALL.E.R.755 (PC)] - and we

agree with what was stated therein

- that the problem whether an

enactment was regulatory or

something more or whether a

restriction was direct or only

remote or only incidental involved,

not so much legal as political,

social or economic consideration

and that it could not be laid down

that in no circumstances could the

exclusion of competition so as to

create a monopoly, either in a

State or commonwealth agency, be

justified. Each case, it was said,

must be judged on its own facts and

in its own setting of time and

circumstances and it might be that

in regard to some economic

activities and at some stage of

social development, prohibition

with a view to State monopoly was

the only practical and reasonable

manner of regulation. The statute

with which we are concerned, the

Mines and Minerals [Development and

Regulation] Act, is aimed, as we

have already said more than once,

at the conservation and the prudent

and discriminating exploitation of

minerals. Surely, in the case of a

scarce mineral, to permit

exploitation by the State or its

agency and to prohibit exploitation

by private agencies is that most

effective method of conservation

and prudent exploitation. if you

want to conserve for the future,

you must prohibit in the present.

We have no doubt that the

prohibiting of leases in certain

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cases is part of the regulation

contemplated by Section 15 of the

Act.

We do not think that it is necessary to multiply the

decisions except to point out that in a different context,

the power to regulate is held not to include the power to

prohibit [see State of Uttar Pradesh v. Hindustan Aluminium

Corporation (1979 (3) S.C.C.229 at 243)].

Sri Har Dev Singh, learned counsel for the respondent,

however, brought to our notice a decision of the

constitution Bench of this Court in State of Mysore v. H.

Sanjeeviah [1967 (2) S.C.R.361]. Section 37 of the Mysore

Forest Act is in pari-materia with Section 41(1) of the

Indian Forest Act. Similarly, clause (b) of sub-section (2)

of Section 37 of the Mysore Act is in pari-materia with

clause (b) of sub-section (2) of Section 41 of the Indian

Forest Act. By virtue of the rules made under the Mysore

Forest Act, the Government of Mysore totally prohibited the

transport of forest-produce between 10.00 P.M. and sunrise.

It also placed certain restrictions on the movement of the

forest-produce between sunset and 10.00 P.M. as well. This

court held that the power to regulate conferred by Section

37(1) read with Section 37(2)(b) does not empower the State

government to prohibit the movement/transport of forest-

produce altogether, observing: "prima facie a rule which

totally prohibits the movement of forest-produce during the

period between sunset and sunrise is prohibitory or

restrictive of the right to transport forest-produce. A rule

regulating transport in its essence permits transport,

subject to certain conditions devised to promote transport;

such a rule aims at making transport orderly so that it does

not harm or endanger other persons following a similar

vocation or the public and enables transport to function for

the public good". The said decision is, however, of no help

to the respondent inasmuch as Rule 3 framed by the State of

Tripura is not only relatable to Section 41 but also to

clause (d) of Section 76. Clause (d) of Section 76, which

has been extracted hereinbefore, empowers the State

government to make rules generally to carry out the

provisions of the Act, which means the carrying out the

object and purposes of the Act. The object f the Act is to

preserve and protect the forest wealth of the country and to

regulate the cutting, removal, transport and possession of

the forest-produce in the interest of the States and their

people. It is for achieving the above purpose that the Act

provides for declaration of reserve forests, formation of

village forests and declaration of protected forests. It is

for achieving the very purpose that the Act vests, in the

government, control over forest and lands not being the

property of the government controls even the collection and

movement of drift and stranded timber. It is not a taxing

enactment but an enactment designed to preserve, protect and

promote the forest wealth in the interests of the nation. It

must necessarily take within its fold catering to the needs

to the people of the State and that is what sub-rule (8)

provides. In our opinion, therefore, sub-rule (8) of Rule 3

is perfectly valid.

We shall now consider the attack based upon Article

301. In our opinion, the reason for which Rule 3 has been

held to be in contravention of Article 301 of the

Constitution are unsustainable in law. The impugned Rule 3

is made by the State as the delegate of the Parliament to

carry out the purposes of the Act. It is not a law made by

the legislature of the State of Tripura nor is it a rule

made by the Government of Tripura in its capacity as the

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Government of Tripura. This is the basic distinction between

the present case and the decision in H. Sanjeeviah where the

enactment concerned was a law made by the State legislature

and had, therefore, to comply with clause (b) of Article

304. We have also pointed out hereinabove that the Indian

Forest Act is a post-constitutional Parliamentary enactment

insofar as Tripura is concerned for the reason that it has

been extended to Tripura [which was then a Union Territory]

by the Union Territories [Laws] Act, 1950. Sections 41 and

76 are, therefore, laws within the meaning of Article 302 of

the Constitution which empowers the Parliament to impose

such restrictions on the freedom of trade, commerce and

intercourse between one State and another or within any part

of the territory of India, as may be required in the public

interest. If Sections 41 and 76 are saved by Article 302,

any rule made to carry out the purposes of the said

provisions or to elucidate the meaning and purport of the

said provisions must equally be protected by Article 302, as

held by this Court in M/s. Krishan Lal Praveen Kumar v.

State of Rajasthan [1981 (4) S.C.C. 550].

It is relevant to notice that Article 302 uses the

expression "restrictions". In other words, it empowers the

Parliament to impose such restrictions on the freedom of

trade, commerce and intercourse between one State or another

or within any part of the territory of India, as may be

required in the public interest. Though the expression

"restrictions" in this article is not qualified by the word

"reasonable", we shall proceed on the assumption, for the

purposes of this case, that such restrictions ought to be

reasonable. Even so, it would be evident that the provision

in Article 302 has a close parallel with clauses (2) to (6)

of Article 19. Under clauses (2) to (6) of Article 19, it

has been held by this Court that the power to impose

reasonable restrictions takes in the power to prohibit also

in appropriate situations [see Narendra Kumar v. Union of

India (1960 (2) S.C.R. 361)]. It may also be mentioned that

the prime example of the exercise of power under Article 302

is the Essential Commodities Act, 1955, which not only

empowers the making of the rules for the purpose of

regulating the production, supply and distribution of

essential commodities but also for prohibiting the

production, supply and distribution of essential commodities

and trade and commerce therein. For the above reasons, we

are of the opinion that Rule 3 of the Tripura Transit Rules

cannot be said to be violative of Article 301 nor is it

required to comply with the requirement of the proviso to

clause (b) of Article 304 of the Constitution.

The levy of duty is sought to be sustained by the

learned counsel for the State of Tripura with reference to

sub-section (3) and/or sub-section (4) of Section 39. It is

submitted that the Princely State of Tripura has imposed the

said duty and that the same is being continued after the

commencement of the Constitution. Article 305 of the

Constitution is also invoked in this behalf. We are unable

to appreciate the submission. No order or proceeding of the

Princely State of Tripura has been produced before the High

Court or this Court levying the duty. We also do not know at

what rate and on what basis, if any, the duty was being

levied. We are also not sure whether the said plea can fall

within the four corners of either sub-section (3) or sub-

section (4). Sri Javali requested for grant of sometime to

enable the State to produce the proceedings. We are not

inclined to accede to this plea either. Having not produced

the proceedings/orders either before the High Court or

before this Court all these years, the State cannot

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reasonably ask for more time to produce the same when the

matter has come up for final hearing.

For the above reasons, the appeal is allowed in part.

Rule 3 of the Tripura Transit Rules, except sub-rule (5)

thereof, is declared to be perfectly valid and effective.

The judgment of the High Court is set aside to the above

extent.

No costs.