LexNEW BIHAR BIRI LEAVES CO. & ORS. versus STATE OF BIHAR & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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417
NEW BIHAR BIRI LEAVES CO. & ORS.
v.
STATE OF BIHAR & ORS.
lam/pry 6, 1981
[R. s. SARKARIA AND R. s. PATHAK, JJ.]
1J
I
Constitution of India 1950, Articles 19(6) clauses
(i) &
(ii)-Clauses
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whether distinct and separate-Law covered by the clauses whether to satisfy
the test of reasonableness.
~ Article 19(1) (g)-Citizen's right to enter into contract with State-Whether
fundamental right can be enforced though contractual.
C
Bihar Ke11du Leaves (Control of Trade) Act 1973 & Bihar Ken.du Leaves
(Control of Trade) Rules, 1973-Clause 13 and Clause 4(bb) of agreement
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prescribed by rules-Whether unreasonable and violative of Articles 14 and 19.
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Kendu leaves used in the manufacture of bidis are grown oo forest produce
in several States.
On March 10, 1972 the State of Bihar issued the Bihar
D
Kendu Leaves (Control of Trade) Ordinance, 1972, which was replaced by
the Bihar Kendu Leaves (Control of Trade) Act, 1973. The purpose was to
create a State monopoly in the matter of sale of Kendu leaves to the manu-
facturers· of bidis to regulate the trade in relation to the grower of Kendu
plants and their collection and sale through the agency of the State to the
registered manufacturers of bidis. Section 4, empowered the State Government
for the purpose of purchase and sale of Kendu leaves on its behalf, to appoint
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agents in respect of different units.
Section 9 provided that the authorised
aSents will be bound to accept delivery of all those Kendu leaves which are
fit for the purpose of mannfacture of bidis.
In exercise of its ru.Ie-.making powers the State Government notified the
Bihar Kendu LeavOB (Control of Trade) Rules, 1972, which was continued
by Section 23 of the Act even after the repeal of the Ordinance. Provisions
regarding the disposal of Kendu leaves were made in Rule 9.
Sub-rule (I)
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-provided that Kendu leaves collected or likely to be collected shall be sold
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or otherwise disposed of by tender on terms and conditions spocified in the
Tender Notice. The Tender was required by sub-rule (2) to be advertised
in newspapers. Sub-role (9) provided that the successful tenderer or success-
ful bidder shall be appointed as purchaser and the entire quantity of Kendu
leaves collected or likely to be collected or such lesser quantity out of it as
may be offered to him by the State shall be purchased by him on terms and
conditions in the agreement to be executed by the purchaser. Sub-rule (10)
required the purchaser to execute an Agreement in Form 'M' within 15 days
of the receipt of the order o:E appointment.
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By a Notification dated January 16, 1974 the Rules were amended and
sub-clause (bb) after clause 4(b) was added in Form 'M' of the Agreement
which provided that the purchaser shall not raise any objection against the
quality of Kendu leaves or shortage of leaves.
Condition 13 of the Tender
Notice was a1so incorporated in the statutory Agreement, Form 'M' providing
F
G
B
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418
SUPREME COURT REPORTS
[1981) 2 S.C.R.
A
that for every unit a minimum royalty will be 'payable by the purchaser,' and
that this amount shall be payable by the tenderer even if by the end of the
season, the price of Kendu leaves at the offered rate, collected und delivered
to the purchaser, fell short of this amount, the amount being payable before
the leaves are utilized or taken out and if not paid, realisable as arrears of
land revenue.
B
In their writ petitions the petitioners who were carrying on trade in ~en~u
leaves, assailed the Rules framed under the Act and clause ,13 and clause 4(bb)
of the Tender Notice and the Statutory Agreement and the notices of demand
issued demanding royalty in respect of the undelivered
quantity
of Kendu:
leaves.
c
It was contended that : (i) the provisions and conditions contained in clause
4(bb) and clause 13 amount to an unreasonable restriction on freedom to
carry on trade or business in Kendu leaves guaranteed under Article 19 (I) {g)
of the Constitution and that they are not within the protection of sub-clause
(ii) i)l the second part of clause (6) of Article 19; (ii) that the provisions in
their immediate operation and effect, are harsh,
unconscionable,
arbitrary,
unfair and oppressive, thereby violating Article 14, (ill) the foreclosure of the
right of the purchaser to refuse delivery Oil the ground of the \eaves offered,
not being of requisite quality, is inconsistent and ultra vires of the pExcerpt shown. Read the full judgment & AI analysis in Lexace.