RAGHUBAR DAYAL JAI PRAKASH versus THE UNION OF INDIA AND OTHERS

Citation: [1962] 3 S.C.R. 547 · Decided: 12-09-1961 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed
Cited by 4 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

-
"'! 
3 S.C.R. 
SUPREME OOURT REPORTS 
RAGHUBAR DAYAL JAI PRAKASH 
1'. 
THE UNION OF INDIA AND OTHERS 
(P. B. GAJENDRAGADKAR, A. K. SARKAR, 
K. N. WANOHOO, K. C. DAs GUPTA and 
N. RAJAGOPALA AYYANGAR, JJ.) 
547 
Forward Contracts-Law to regulate such contracta-Ruog-
nition of G!&Ociations-Constitutional validity of enactm~nt
Forward Contract• (Regulation) Act, 1952 (74 of 1952), sa.2(j), 
5, 6, 10, 15, 16, 17, 20, 2I(e) & (f)-Con,,titution of India, Arl1 
14, 19(1)(!), 19(1)(g), 19(5), 19(6). 
Tradt"rs like the petitioner combined to,gether to form an 
association the objects of \Vhich were to regulate forward 
transactions in the sale and purchase of gur and other commo--
~ dities entered into between the n1embers -of the association, as 
also to declare the rates at which the contracts vvere to be 
settled on the dates fixed for delivery. 
The petitioner had 
entered into forward contracts of purchase . of gur at certain 
rates and had also deposited as the buyer the amount as well a1 
the special margin required to be deposited under the bye-laws 
of the association. Contracts entered into by him were outstand· 
ing on February 11, 1959, when on that date the Central 
Government isliued a notification under s.15 of the Forward 
Contracts (Regulation) Act, 1952, under which every forward 
contract for the sale of purchase of any goods specified in the 
~ notification which vvas entered into in the area specified therein 
otherwi5c than betv\.'een members of a recognised association 
or through or with any such member, shall be illegal. The 
association in question of which the petitioner was a me111ber, 
was not on the date of the notification dated February 11, 1959 
recoKnised by the Central Governn1ent under s. 6 of the ~A.ct, as 
a result of which the forwar.::1 contracts entered into by him 
' 
became illrgal and void. 
The further consequence of the 
.).- notification was that under s. 16 the transactions entered into 
by the petitionrr and others situated similarly like him which 
remained to be performed after the said date were to be 
deemed to be clo~ed out on that date and the differences arising 
out of the contract \\'ere to be payable not at the rate originally 
stipulated by the contracting parties but at the rates specified 
in the notification. The petitioner challenged the validity of 
the provi•ions of the Act on the grounds inter alia (I) that 
ss. 5 and 6 relating to the recognition of associations by the 
) 
Central Government and s. l 0 which enabled it to direct rules 
to be made and, in case the recognised 
as~ociation failed to 
\;\ke li\Ction, to them•clve• make the rules, infringed the frecdolll 
1961 
Stptembar 12. 
1961 
Ra~huhar Daynl 
Jai Prakash 
v. 
Thi l:'niori of India 
548 
SUPREME COURT REPORTS 
[1962] 
guaranteed by Art. 19(1)(c) of the Constitution of India, f' 
(2) thats. 15 infringed Arts. 14, 19(1)(f) and 19(l)(g), and 
(3) that s.16 in so far as it enabled the Government to fix the 
ratr:; at which thr. differences payable by or.e party to the other, 
without giving any indication of the principles underlying the 
fixation of the price, conferred an unguided power and offended 
Art. 14. 
Held: 
(I) that ss. 5, 6 and 10 and other provisions in 
Ch. III of the Forwards Contracts (Regulation) Act, 1%2, 
proceeded on the basis that or_ganisations of tradesmen might 
be ~ntrusted with the task of regulating these tran'.liactions, so 
that while legitimate trade might be furthered the evil conse-
quence< of undesirable speculation might be a\·oided, and they 
were enacted with the object of ensuring effective control over 
the mechanism of forward trading. 1\ccordingly, thi: provisions 
in Ch. III of the Act do not contravene Art. 19(1)'.r) of the 
Constitution. 
(2) that on a proper comtruction of s.15 the recognition 
of an association under the provisions of the Act \vas not an 
e!~ential pre.requisite before a notification could be issued under 
the section, and that the issue of such a notification \\·as not 
an unreasonable restriction on the right of the petitioners to 
carry on business within the meaning of Art. I 9(G) of the 
Con~tinttion of In<lia. 
(3) that the selection of the commodity for the regula-
tion of forward trading in it or of prohibition of <uch trading 
could only be left to the Government and the purposes for 
\\·hich the pow("r 'vas to be used and the machinery created for 
the investigation furnished sufficient guidance; consequently, 
s.15 did no
Excerpt shown. Read the full judgment & AI analysis in Lexace.