Viklaid COAL Merchant, Patiala, Etc. Etc. v. Union Of India & Ors.

aA

_ | 657 VIKLAD COAL MERCHANT, PATIALA, ETC. ETC.

y, UNION OF INDIA & ORS.

October 28, 1983.

[D.A. Dest a AND O. CHINNAPPA REppy, wy. 1)

Constitution of India Art. 19(1) (g)—Freedom to carry on trade or business—-To examine whether restriction imposed :easonable—Court to find out trade affected and keep in view direct impact ofr restriction on trade and not ancillary or indirect effect.

Indian Railways Act, 1890-—See. 27A—Interpretation of —Whether vilative of Art. 19(1)(g) of Constitution. Preferential Traffic Schedule laying down priorities for movement of different goods issued by the Ministry of Railways under see. 27A—Validity of -Whether ultra vires sec. 27A— Whether ultra vires Arts. 14

_ and. 19(1) (g) of the Constitution. © indian Railways Act, 1890, section 28—Interpretation of—Ministry of Railways order dated April 1, 1972—-Whether violative of see. 28 and Ait. 19(2) (g) of the Constitution, °

Section 27 of the Indian Railways Act, 1890 cast a duty on the railway administration to arrange for receiving and forwarding traffic without unreasonable delay and without partiality. Section 28 prohibited the railway administration from giving undue or unreasonable preference or advantage to any particular person or railway administration or any particular description of traffic. Section 27A was inserted in the Act after 1950 to give power to the Central Government to issue directions for giving special facilities or preferential treatment in transport of goods or class of goods consigned to the Central Government or the Government of any State.or of such other goods o or class of

‘ goods as may be specified i in the order.

The Government of India, Ministry of Railways issued an order dated April 1, 1972 coniaining its decision to add an abbreviation ‘GX’ below the abbreviation ‘G’ in the list of abbreviations at page 14, Chapter Vi of the IRCA Alphabetical list of Railway-Stations in India and asking the railway administration to decide and notify the-names of stations to which this new provisions would apply. Putting abbreviation ‘GX’ against a station meant that the station ~ was not open for outward booking of coal, coal shale etc. in wagon loads.

Pursuant to this order; the abbreviation ‘GX’ was appended to all way-side stations in the coal-belt. Thereafter Government of India, Ministry of Railways

_ by its order dated April 27, 1972 revised rules] and 2 of the Eastern Railway

Coal Traffic Part |. The revised rules provided inter alia that all traffic in coal

658 "| SUPREME COURT REPORTS [1984] 1 s.c.r.

etc. in wagon loads will be loaded only from colliery sidings, coke oven plants and washeries on the Eastern Railway, but coal in wagons will not be permitted’

‘at the stations serving these colliery washeries. A further restriction followed with effect from December 4, 1979 when the Divisional Operating Superinten- .

dent, Bilaspur for apparent reasons stopped booking of coal in smalls including clubbing at all stations of North astern Railway. On February 11, .1980, a telegraphic communication was issued explaining that coal in wagon-loads can __ ‘be booked from colliery sidings by the collieries concerned. Booking of slack ‘ coal was wholly stopped as per a phone ¢all dated April 9, 1981. In exercise of the power conferred by sec. 27A of the Act, Union of India, the Ministry of _Railways-issued Preferential Traffic Schedule. The schedule prescribed five priorities ‘A’ to ‘E’ with inter se priorities amongst ‘A’ to ‘B’ to be accorded by the railways for transport of certain goods or class of goods specified under each category. Different kinds of coal falls.under priority ‘C’ (iii) which provides for movement of coal from collieries in accordance with programmes and _Movements sponsored or’ recommended by the Coal Controller andjor any Compiittee appointed by him and/or the State Government “and/or other -recommending authorities and accepted by the Railway Administrations and/or Director, Movement (Railways),. Calcutta, and in accordance with the Zonal Scheme applicable to each field and the principles of transport rationalisation in force from time to time. Priority ‘Es a residury clause again involves coal from collieries. : The petitioners who were coal merchants, alleged that. sum, total of various restrictions including one dated April 1, 1972 introducing ‘abbreviation

’

‘GX’ and the Preferential Traffic Schedule-specifying priorities under sec. 27A-. '

. (1) of the Act in their cumulative effect imposed a total ban on transport of coal by the Railways, at their instance and this action -was violative of Art. 14 and 19(1) (g) of the Constitution. The petitioners contended : Q) that the Railway Administration's action of giving priority to some transporters of coal ‘denying use of its transport facilities to the petitioners who were similarly situated was discriminatory in character and hence violative of Art. 14 of the

_ Constitution; (2) the orders dated April 1, 1972, December 31, 1980 and April 11, 1981 imposed unreasonabie restrictions on the the freedom of the petitioners to carry on their trade guaranteed by Art. 19(1) (g); (3) that sec. 27A is violative of Art. 19,1) (g); (4) that para (iii) of priority ‘C’ of the Preferential Traffic “Schedule in so far as it permits special facility or preference to individuals or groups of persons selected by the sponsoring authority or recommending body © for transport of coal is ultrn virea sec. 27A of the Act;‘(5) order dated April

1, 1972 was violative of sec. 28 of the Act and was also violative of Art. 19(1) (g)

of the Constitution, : Dismissing the writ petitions,

HELD: Railway is a monopolistic undertaking in the matter of transport of coal by’railways. Barring some tiny dots which may become visible only by a magnifying glass, the entire railway net work is nationalised and the railway is a department of the Union of India. It is therefore, indisputably a State monopoly. A monopoly unless kept within tounds may prove to be a menace.

* ' .

t e

VIKLAD COAL MERCHANT ¥. UNION — - . 659 -

Therefore, regulatory measures are necessary to prevent the abuse of mono-_ - polistic power. But there is a constitutional check on the State monoply, namely, it being State within the meaning of Art. 12 of the Constitution, all its actions will have to conform to the fundamental rights enshrined Part I{f in of, . the Constitution. Sec. 28 of the Indian Railways Act seeks to achieve the same result which on the advent of the Constitution, Art. 14 would achieve, But sec, 28 is subject to sec. 27A. If while giving effect io the orders of the Central Government issued under sec. 27A, priority is accorded in the matter of traps-

‘port of goods consigned to Central or State Government or -class of goods specified in the -general or special order issued in this behalf, the action of the railway administration in complying with such special or general order could not be said as tentamounting to giving undue or unreasonable preference or advantage to in favour of any particular ‘person or railway ‘administration . and thereforé violative of sec. 28. What sec. 28 forbids is discrimination in the . . ‘ matter of transport of goods against a class but this is subject to the permissible classification that would be introduced by a special or general order issued by the Central Government in.€xercise of the power conferred by sec. 27A.

_ It may be recalled that the Preferential Traffic Schedule according Priority. ‘C’

to transport of coal by those mentioned therein has been issued in exercise of

. the power conferred by sec. 27A. Therefore, the ‘submission that petitioners in the matter of transport of coal are similarly siti ated with the Central or State Government or transporters given priority by general of. special order issued under sec. 27A cannot be entertained. This’ is all the more so because the

. petitioners are coal merchants who want to transport their coal by railway for carrying on business in coal and they may sell the coal to any intending.spurchaser while those accorded preferential treatment under Priority‘ C’ of the Preferential Traffic Schedule are transporters of coal who have been recognised one year in advance under Zonal Distribution Scheme as rersons who would be transporting the coal to satisfy fixed’ goals which subserve needs of the public t large. Classification of those covered by Priority *C’ and the present petitioners is founded on intelligible differentia which distinguishes persons or things

_ that are grouped together from others left out of the group and the differentta — has a rational relation to the object sought to be achieved by the impugned orders. Those falling within Priority ‘C’ (iii) Would from a class by themselves and the petitioners clearly stand out of tlie group. [679 A-H; 680 A-E] Nay Rattanmal and Ors. v. The State of Rajasthan, (1962] 2 $.C.R; 324 referred to. ‘ ‘

Art. 19(1) (g)-guarantees to the citizen the fundamental freedom to carry on any occupation, trade or business, This fundamental freedom is subject to - reasonable restrictions that can be imposed by law.relating to the carrying. on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion complete or partial, of citizens or otherwise. Whenever the Court is called upon to examine the complaint that restrictions imposed on the freedom to carry on trade are unreasonable, it is necessary to find out what is the trade or business of the complainant-petitioner and to what extent the restriction; if any, is imposed upon the freedom to carry on trade or business and then to determine whether the réstriction is reasonable or otherwise. It is the direct impact of the i

660° SUPREME COURT REPORTS [1984] 1 s.c.8.

restridtion on the freedom to carry on trade-that has to be kept in view and not the ancillary or incidental effect of the governmental action on the freedom tocarry on trade. (682 C-D; + FA]

\

In the instant case, if the law of demand and supply and non-availability of facility for loading coal in smalls at wayside stations result in not making available wagons to the petitioners because of pre-planning and priority it cannot be said that there has been a total. ban on the transport of coal offered by the petitioners by railways, which would violate the fundamental freedom to carry on their trade guaranteed to the petitioners under Art. 19{1) (g). If the impugned orders constitute a restricticn on the freedom of carrying on trade, ‘though it is not considered to be so, the same is reasonable and imposed in larger public interest. Prima facie it appears that the petitioners’ business or trade as coal merchants is no way interfered with by the railways by not being able to provide transport facility. Let it not be forgotten that the railway is not the only means of transport. There are other means of transport by which the coal can be transported by the petitioners to their respective place where they carry on their business as the coal merchants. Even assuming that the direct . impact of the policy laid down by the railway admigistration pursuant to the:

orders of the central Government under sec. 27A results in denial of allotment of wagon to the petitioners, the restriction will none-the-less be reasonable because petitioners are not wholly denied the allotment of wagons.

(681 H; 682 A-B; 683 A-C]

~

A developing country with mixed economy and economic planning have certain targets to achieve, These targets are planned in advance and the econo-

. mic activity is geared to the achievemént of these targets. If the required ‘resources nécessaty for achieving targets were readily available, no difficulty © would arise. But a de,eloping country has to so distribute its scarce resouftes to achieve and accomplish desired targets. This situation is bound to lead to a gap between the demand and supply of various facilities. Transport is one such. Once there is a gap between the demand for transport service offered by the railway and the supply of the service, the resources being not sufficient to meet with all existing demands, the Scarce resources will have to be equitably distributed keeping in view the planned target. This equilable’ distribution would necessitate - impposing. of Feasonable restrictions and according of Priorities. [683 cal oe

In the instant case, coal falls in Priority ‘C’ (iii) in the Preferential Traffic. 4

Schedule being the Primary source of energy. Planned regulated movement of

' coal to meet priority needs if it results in denial of that-facility to nonepriority sector could not be rejected as placing an unreasonable restriction on the fundamental freedom to carry on trade or business. And that is the object underlying sec. 27A, It is therefore, idle to contend that the section being violative of | Art. 19(1) (g) is unconstitutional. [684 A-B]

_ Annexure ‘B’ to Preferential Traffic Schedule sets out the list of sponsoring authorities. The list shows that ths Central ‘and State Governments as well as -highly placed Central and State Government Officers have been appointed as sponsoring authority i in respect of coal required by different area and industries.

on

ViKLAD COAL MERCHANT y, UNION t. 661

’ Again in various States various sponsoring outhorities have been set up by State . Government. Power is conferred on these sponsoring authorities to sponsor persons who would be accorded priority in transport of coal. These responsible persons and bodies set up in each State as spon: oring authority are expected to’

act in a responsible manner keeping in yiew the demands of the area and the ~ industry, for coal in each State. It is, therefore, idle to contend that’ setting up

- of sponsoring or recommending authority in Priority ‘C’ (iii) of the Preferential —

Traffic Schedule is ultra vires sec. 27A of the Act. [684,C-F]

The transport of coal is according to a plan drawn up a year in advance, Further this pian is subject to the decision of the Standing Linkage ‘Committee. Every meticulous detail is worked out in advance. A daily loading of maximum number of wagons is pre-planned. Loading of the wagons.with coal at a targeted number daily requires rotational movement also according to plan. A wagon once loaded with coal when it moves out to the destination has a certain average return time stipulated and worked out in advance. In order to

' give effect to this planned movement abbreviation ‘GX’ is devised and appended to all the railway stations informing the transporters that the station is not open for transport of coal in wagon loads. Coalin smalls can be offered. for’ transport that is what the petitioners do not desire, All the regulatory measure clearly indicate that tranaport of coal is scientifically planned and devised in

‘advance. All the impugned orders are made for effective implementation of the planned movement of coal. If consistent with this planning, the railways have stopped booking of coa! in wagon ‘load from wayside station, it canndt be said that this regulatory arrangement violates sec. 28 ofthe Act and also that this * "action has imposed such an unreasonable restriction on the fundamental freedom of the petitioners to carry on their trade as'to be violative of Art. 19(f) (g). . [685 A-B; F-H)} ORIGINAL JuRisDICTION : W.P.Nos. 6822,7350,7351,7457-58, 7461, 7609-18, 7625, 7637, 7638, 7945, 7966-68, 8003-04, 8007-08, 8068, 8078, 8088, 8196-8220, 8358-60, 8361-63, 8378, 8505, 8832- 33,

- 8912, 8917, 8918-19, 9083, 9110, 9135-36/81, 13, 36, 112, 159, 969,

2163, 2641, 7089, 7685,. 8004, 8119, 8187-88, 9186 & 9187/82, . 7462-63/82, 7765-67 /81, 160, 180, 1503/82, 1919/81, 1/82, 868, 1270, 1358, 2256, 2272, 4051-4052, 5123-26, 7147/82. 4

(Under article 32 of the Constitution of India)

Advocates for the Appearing Parties :

S.S. Ray, N.R. Choudhary, K.K. Mohan, S.K. Sinha, R.C. Kohli,

‘R.S. Sharma, S. Mitter, N.S. Das Bahl, E.C. Agarwala, A.K. Mitra, . HK. Puri & K. Chatterjee, B. Datta, Rishi Kesh & M. Chopra.,

S.C. Gupta'’& M. N. Shroff, S.K. Ghosh, D. Goburdhan, P. Mohanty, Abdul Khader, C.V. Subba Rao & Dalveer Bhandari, .

Cc

¥

H.

662 SUPREME COURT REPORTS - (1984) 1 sc.

The Judgment of the Court was delivered by " DesAr, J. When the hearing i in this group of petitions ‘concluded we pronounced the following order :

“All the Writ Petitions are. disinissed” and any interim order in each matter is hereby vacated. Inthe matters which are listed as ready, the petitioner shall pay cost to the respondents in one set in each petition and _ there will - be no order to costs in the matters which are shown as unready,

Reasons will follow.”

Here are the reasons, So *

The petitioners, in this group of petitions, under Art.’ 32 of

_ the Constitution are coal-merchants, who, according .to them, have been denied the use of the railways for transport of coal from vari- ous coalfields and way-side stations to. their destinations by the .

* illegal and unconstitutional action of the railway administration. “Constitutional conundrum invoked by them is the alleged violation of Art. 14 in that while certain transporters of coal have been accorded priority in the matter of transport of coal such as the

Central and the State Governments and the sponsored and recomm- |

’ ended transporters, the petitioners who are coal merchants were denied equality of opportunity inthe matter of transport of coal by railway. -Their further grievance is that total prohibition of booking

_ and transport of coal as Yequested by petitioners, by the railway administration, an instrumentality of the State envisaged by. Art. 12 imposes an unreasonable restriction on their fundamental freedom to .

carry on trade’guarnteed by Art. -19(1) (g) of the Constitution and hence impugned orders are invalid.

* There are different petitioners from different areas voicing their grievance against action of different zonal railway administrations but the running thread in the catalogue of grievancesis the same and therefore a few representative facts to appreciate the con- | tention as set out in Civil Writ Petition No. 8003-04 by M/s ‘Raniganj Coal Corporation & Ors. may be briefly enumerated. This petition is adopted as representative for the additional reason that a’

ery comprehensive counter affidavit has been filed. in it on’ behalf of the respondents. 1, . .

a

VIKLAD COAL MERCHANT y. UNION (Desai, J.) 663 Petitioners aver.that they are coal -traders and undertake

’ . supply of coal and coke throughont India but in particular in the States of Punjab, Haryana and the ‘Union Territory of Delhi. They carry on the additional business of supplying slack.coal ‘purehased from private collieries situated in the State of Meghalaya. In

- order to move coal from the collieries to consumers, Petitioners have to transport coal from various stations served ‘by North-Eastern Frontiet Railways (Meter gauge) New Gauhati and Badarpur Ghat in Silchar District in the State of Assam and Meghalaya. For the purpose of transporting coal they have to indent wagons as they want to transport coal in wagon-loads as the expression is under-

. stood in contra-distinction to smalls and clubbing. They submit — indent for wagons according to the procedure prescribed in the rele- - vant rules. Petitioners aver that prior to April 1, 1972, there was no restriction on booking of.coal in wagon-loads. : The Govt. of India, Ministry of Railways issued an order dated April 1,1972 which reads as under :

“Government of India (Bharat Sarkar) - - Ministry of Railways (Rail Mantralaya) Railway Board

No. TCR/VS10/71 _ New Dethi dated Ist April me

12th Chaitra, 1894 .

The Genera} Manager 11, India ‘Railways

The Railways Board have decided that in ‘the list of abbreviations at page-14 Chapter VI of the IRCA Alphabetical list of Rai!way Stations in India «(corrected upto 31.3.79) an additional entry below the abbreviations ‘GQ’

. should be incorporated: as under :

GX-Open for. goods, traffic of coal descriptions . excluding livestock, horse, large animals such as camels, elephants etc. carriages on their wheels and motor cars but not open for outward booking of coal,~ coal shale, lignite, patent fuel, shoft coké and hard . coke in wagon loads,’ *

664 | | * SUPREME COURT REPORTS (1984} 1 s.c.k.

® : The Railway Administrations are hereby - directed to - decide and notify the names of stations to which this new provisions would apply arid advise the General Secretary, .. LR.C.A, accordingly.

. The General Secretary IL.R.C.A. on receipt of the advicé from the Railway Administrations should arrange to issue the necessary corrections, to the alphabetical list of Railway Stations.

- Sd/- P.N Kalra, Dy. Director, Traffic (Rates) : cs Rly. Board, New Delhi, dated ’ -. Ist April. 72/12 Chaitra 64”.

*%

This is one of the. impugned orders in these petitions. The

_ abbreviation IRCA used inthe impugned order means Indian Railway ' Conference Association IRCA’ of short). The IRCA has compiled and.issued an alphabetic Jist of All India Railway Stations and — by 2 suitable abbreviation as shown against the name of each railway station indication is given about the facilities for traffic both goods and passenger available at different stations. As per the impugned orger when abbreviation ‘GX’ is appended to any railway station it~ - would inter-alia. mean. that the station is not open for outward booking of coal, coal-shale etc. in wagon-loads. It appears that the abbrevi-

‘ation ‘GX’ has. been appended to all way-side stations in the coal-belt, - conséquently no railway station in the coal-belt would be ina: posi- - tion'to book coal in wagon-loads from each such station. Consequent upon the issuance of the impugned notification, the Govt. of , _ India revised Rule 302(i) of the Goods Tariff No. .33 Part I issued by - IRCA.. Further, the Chief Commercial Superintendent, Eastern

Railway by a circular dated April 15, 1972 informed. the ‘station supérintendents and station-masters of all the stations served by the

Eestern Railway that the entry “GX’ should be appended to all the

‘stations within its jurisdiction. Thereafter Govt. of India, ministry of Railways by its order dated April 27, 1972 issued an order revising Rule 1 and 2 of the Eastern Railway Coal Traffic Part I as under :

“All Traffic in coal, coal-shale,. lignite, patent fuel, - soft,coke and hard coke im wagon loads will be loaded only from Colliery sidings, coke oven plants and yashe-

»~

VIKLAD COAL MERCHANT ¥. UNION (Desai, J)... 665 ries on the Eastern Railways. Though invoices may be . issued as from the stations serving these colliery washeries |. and coke oven plants, loading of coal in wagons ‘will not _ be permitted at those stations. Loading and booking of coal is also.not permitted from any other station on the Eastern Railway. This traffic will be booked under the following forms of invoices :— _ a) “Weight only” invoices showing the weight and rate - but not the calculated freight.

b) <‘Paid” invoices, c) “To pay’” invoices.

2. Coal will.be booked under “Paid”. invoices only on the written request of the sender despatching the coal and provided the freight is tendered at ‘the time of

" despateli.

_ # Wagons will be allotted only ‘an availability and will _ be subject to observe of priority and other Rules that are - _ in force.”

~

A further restriction followed when the Divisional operating

_ Superintendent, Bilaspur for apparent reasons stopped booking of coal in smails including clubbing at all stations of North-Eastern Railway. This restriction came into force on December 4, 1979.

On February 11, 1980'a telegraphic communication was issed explains ing that coal in wagon-loads can be booked-from colliery sidings, by the coalieries concerned. In other words, the coalieries booking the wagon must specify its name in the indent Booking of slack coal was wholly stopped as per a phone call dated April 9, 1981. Petitioners.

further contend that Union of India, Ministry of Railways has issued Preferential Traffic Schedule in exercise of power conferred by sec. 27A of the Indian Railways Act, 1890 (‘Act’ for short). This Preferential Traffic Schedule provides for preferential treatment in transport of goods from various stations. ‘It provides five inter se prorities A to E. Different kinds of coal falls wader priority ‘Cc? (HI) which reads as under:

(iii) Coal from collieries in accordance with commodity quotas laid down from time to time for/certain types ry

- 666

SUPREME COURT REPORTS [1984] 1 s.ciR.

’. of coal and/or in accordance. with programmes and |

«A movements sponsored or récommended by the Coal Controller and/or any Committee appointed by him and/or, the State Governments‘ and/or other reco-

. Annexure ‘B’.

mmending authorities and accepted by the/Railway Administrations and/or Director, Movement (Railways), Calcutta, and in accordance with the

"Zonal Scheme applicable to each field and the princi- ples of transport rationalisation in force from time to time. A list of sponsoring authorities authorised to Sponsor coal movements in this item is given in

- Note— (a) Coal in the. above item C(iii) means s “Coal as defined in Colliery Control. Order.”

(b) Besidés the sponsoring authorities mentioned in

(c)-

Annexure ‘B’ movement of Coal may be sponsored

_by “any other authority who -may be appointed by the Government from time to time.” ' Recommendation for allotment of wagons by a sponsoring authority or acceptance of _ recommendations or issue of sanction by the Railway Administration/ Director, Movement. (Railways) does not guarantee allotment/supply of wagons. Allotment/supply of

| wagons would be regulated according to the

. ()

¢

“availability of Coal/transport,and according to opera.

tional exigéncies from time to time. Allotment/supplies

: of wagons may be cancelled or reduced by Director,

Movement (Railways).

The period of validity of " programmes/sanctions for rakes/piece-meal movement may. be laid ‘dowa from

_ time to time by Railway Administration/Director,

Movement (Railways). The validity of programme/ sanction does not ‘guarantee allotment/supply of wagons... . ,

HH (e). Interse seniority. of the class of censumers would be laid down-from time to, time by Railway Adminis- tration/Director, ‘Movement (Railways) and may be

»-

VIKLAD COAL MERCHANT ¥, UNION (Desai, J.) 667 altered/modified from time to time. _ Within. the same class or category of consumers: seniority may be fixed from time to time depending upon the’ operational and other considerations.¢ Railway, Administration!

Director, Movement (Railway) may permit distress allotments/supply of wagons when considered nece-

‘sary. Nothing laid down herein sball be considered . -as contrary to notes (a) to &) appearing under

Priority ‘Pp.

Priority ‘E’ also includes coal from collieries in accordance © with targets laid down from time to time from the different fields and in accordance with the zonal scheme applicable to each field and the principle of transport rationalisation alréady in force. Petitioners contend that sum total of various restrictions including one dated April 1, 1972 introducing abbreviation ‘GX’ and the Preferential

; Traffic Schedule specifying priorities under section 27A of the Act .

in their cumulative effect impose a total ban on transport of coal by the Railways, at their instance and this action is violative. of Art. 14

. and] 15(t) (g) of the. Constitution.

A very detailed affidavit has been filed on behalf of the Tespon- dents. Some of its highlights may be noticed. . Lt + ‘Indian Railway net-work: serve 7000 tailway stations, scores of divisions and 9 zones. -In such an extensive net-work, all kinds of factilities by their very nature cannot be provided at all stations, nor can all kinds of traffic be lifted and moved from all stations.

The Railways, have therefore to plan and rationalise movement of | various commodities from various loading points to various destina- — tions and in various directions. It is said that till recently coal was the primary source of energy. It being an important commodity it has to be accorded such high priority being the primary source of . energy, that a senior officer called Director, Movement (Railways) is

" posted with headquarters at Calcutta and he controls and co-ordinates all movements of coal by rail. As far back as 1945, the Govt. of

“India by its resolution No. Coal 119 (1) dated December 4, 1945 appointed a *Committeé called the Indian Coalfields Committee which submitted its report in 1946. - Amongst various other recommen-. dations, the Committee suggested that in view of the shortage of transport, it is imperative that increased attention be given to zonal

668 , "SUPREME COURT REPORTS [1984] i s.cr- distribution of coal. It further notices that coal is invariably transported in full wagon-loads and at times despatched from depotstations in full train loads and therefore if any general revision of freight is undertaken in consequence of increased cost of operation of the railways, the preferential treatment now accorded to coal should be maintained. Statistical data relied upon in the report was annexed to the counter-affidavit. It is averred that railway has to.

rationalise movement of coal because daily on an average 10,000 wagons are required for movement and transport of coal all over the country. In order to explain why booking of coal from way-side -

Stations is probibited, it is averred that the Director, Movement.

(Railways) assesses the likely availability of wagons in a coming year -

_ for the movement of coal. _ After ascertaining the available capacity he advises Central Govt. and various State-Govts. with a request to sponsor coal traffic as per the requirement and policies. The whole programme of transport of coal from coalfields and coalieries to various points in India is worked. out in advance keeping in view the daily despatch of loaded wagons and return of empty wagons so as to be available for daily requirement of empty wagons. A chart is annexed to this counter-affidavit in which the average loading of coal in wagons per day is set out. ‘Ina letter dated December 21,1981 by. the Director, Movement (Railways) to Chairman of the Railway Board, it is stated that coal loading.the month is 10,478 per day compared to 10,121 wagons per day during October, 1981. A compartive breakage of loading during some months has been set out showing the number of wagons indented, the number of wagons allotted and the number of wagons loaded and the percentage of loading against offer. It is also stated in the counter-affidavit that _the Department of Coal, in the Ministry of Energy has set upa standing linkage committee whose fuctions to assess and link the requirements - to particular sources of coalso as to provide this © primary energy material to establishments like the Railways, Thermal Power Stations, Fertiliser Plants, Cement Plants, Steel Plants, Textile factories, Chemical Industries and like. The Committee assesses the - requirements of various industrial units, consumers establishments and other consumers located in different parts of the. -country and thereafter taking into account the. production programme of various _ collieries, it links the requirements of various consuming units to

' different individual coal-fields, and this linkage is reviewed frm time to time as the situation may necessitate. The availability of wagons is an integral part of this linkage programme. After specifying these facts, it is averred that this annual allotment drawn in advance

. “4 - ° -”

_ as under:

VIKLAD COAL MERCHANTS ¥. UNION (Desai, J.) 669 cannot be disturbed ‘by casual indent for transporting coal. It is further averred that the railway is a carrier which has to chop its own priority programmes keeping in. view the public interest of. rushing various commodities to different parts of the country. Ifin the process some individuals may not get a chance to transport their commodities, the action of the railway administration is neither violative of Art. 14 or 19 (1) (g) of the Constitution,

’ There are some averments in the counter-affidavit casting some doubt about the trade carried on by the petitioners but we consider the same irrelevant for the purpose.of disposing of these petitions.

_ A number of learned counsel addressed the Court on different facets of almost the same identical contentions. We would, however, only deal with the basic contentions raised in these petitions.

At the outset, a brief reference to some of the provisions of the Act would facilitate the examination of the contentions canvassed before us. Sec. 27 of the Act casts a duty On the railway administration to arrange for receiving and forwarding traffic without unreasonable delay andwithout partiality. Sub-sec. 1 of sec. 27 reads as under :

“27). Duty of railway administrations ‘to arrange for receiving and forwarding traffic without unreasonable delay and without partiality:—-

. .

(1) Every railway adminisration shall, according. to its powers, afford all reasonable facilities for the receiving, forwarding and delivering'of traffic upon and from the several railways belonging to or worked by it and for the return of rolling-stock.”

Sec: 27-A which was introduced by the Amending Act No. .11 of 1950 confers power on the Central Govt. to give directions in regard to transport of goods by railway administration. It reads

.

‘27 A. Power of Centraf Government to give directions in regard to transport of goods by railway. administration-(1} The Central Governmeut may, if in its opinion it is necessary in the public interest so to do, by general or special order, ‘direct any railway administration—

SUPREME COURT REPORTS [1984} 1 S.c.r.- consigned to the Central Government .orto the Government of any State or of such .other goods or

. class of goods, as may be specified in the order;

(b) to carry any goods or class of goods by such route or routes. and: at such rates as may be specified in the order.

(a) to give e special facilities for, or. preference to, the . transport of any such goods or class of goods —

(2) Any order made under sub-section (1) shall cease to

Section 23 prohibits giving undue reference by railway administra- It reads as under :

tion.

have effect after the expiry of six months from the date thereof, -but it may be renewed from time to time.

(3) Notwithstanding anything contained -in this Act, - every railway administration shall be bound to comply with any direction given under sub-section (1). any action taken by a railway administration in pursuance of any such direction shall not be. deemed ‘to be a contravention of Section 28.”

“

. 28, Prohibition of undue preference: -A railway adminis- tration shall not make or give any undue or unrea-— sonable prefernce or- advantage to, or in favour of, any particular person or railway administration, or ©. any particular description, of trafficl in any respect © whatsoever, or subject any particular person or railway administration or any particular description of traffic to any undue or unreasonable prejudice or

’ disadvantage in any respect whatsoever.”

In exercise of the power conferred by Sec. 27A Central Govt.

issued Preferential Traffic Schedule directing that all railway adminis-

. trations shall give special facilities for or preference tO the transport of goods or class of goods specified in the Schedule to the

" Amongst Priority ‘A’ to ‘E’ there is inter se priority and when under one Priority various goods or class of goods are clubbed they have inter se priority. amongst themselves, Coal falls under order.

together —

¥ x oe a

" VIRLAD COAL MERCHANT y. UNION (Desai, J.) _ 671

Priority ‘C’. Coal has to be moved. from collieries in accordance

‘with commodity quotas laid down from time to time for certain types of coal and/or in accordance with programmes and movements . sponsored or recommended by the Coal Controller and/or any: Committee appointed by him and/or the State Governments, and/or other recommending authorities and- accepted by the. Railway administrations and/or Director, Movement (Railways), Calcutta and

“ia accordance with the Zonal Scheme applicable to each coal-field.

from time to time. A list of sponsoring . authorities authorised to sponsor coal moyements under priority C(iii) is set out in Annexure ‘B’ to the Schedule. "The expression ‘coal’ has the same meaning as defined in the Colliery. Control Order. There is a further provision under Item (iii) that besidés the sponsoring, authority ‘mentioned in

' Annexure B, movement of coal may ‘be sponsored by ‘any other authority who may be appointed by the Govt. from time to time.” Sec. 27 provides for.smooth flow of traffic throughout the length and breasith of the country... The expression ‘traffic’ is defined -

_ to include rolling stock of every description as well ‘as passengers, ~ animals and goods. A duty is cast on every railway administration to afford reasonable facilities for receiving, forwarding and deli- vering of traffic upon and from several railways belonging to or worked by it and for the return of rolling stock. This is necessary because the railway net work is divided into various railway ‘such as Western Railway, Central Railways, meaning zonal railway administration and prior to nationalisation of the railways different compdnies operated different railwnys. Sec. 27 was enacted in the last decade of 19th Century when different companies had set up the railway net work in different parts of the country. In order to - -pro-

_ vide for. smooth flow of traffic thwarting the railway administrations creating their own preferences, throughout the length and breadth of the country it was made obligatory by Sec. 27 that every railway railway administration shall afford reasonable facilities for receiving, forwarding and delivering traffic and for return of the rolling stock. Sec. 27-A was introduced in 1950 with a view to conferring power on the Central Govt. to give directions in regard to transport of goods

“by railway administration.. In 1950 railways’ were the primary, carriers of passcngers and goods throughout the length and breadth

_ of the country. Road transport was then in its infancy and river navigation was practically unknown. On the advent of the indepen-

‘ dence and as a result of planned economy, there was a spurt in industrial activity with the result that demand from the | r ‘tailways for

672,00 SUPREME COURT REPORTS {i984 1 8.C. R. ‘rolling stock escalated. Various projects were being set up in different parts of the country which necessitated un-interrupted flow ‘of ‘ goods for speedy completion of the projects. By 1950, Constitution “became operative. Art. 14 loomed larged so that unless a specefic _ . power was taken for serving larger pubiic interest; the railways, an instrumentality of the State would be guilty of violating Article 14 if © it did not afford the same facility for transport of goods by indivi- . dauls agairist the state requirements as also. priority. requirements. . In order to arm the Central Govt.-with.power to give directions for according special facilities, or preferential treatment in transport of . ‘goods or class of goods consigned to the Central Govt. or the Govt. of any State or of such other goods or class of goods as may be. specified in, the order, Sec. 27A was introduced in the Act. It also’ ’ conferred power on the Central Govt. to give directions: for the same purpose of carrying goods or class of goods by such route or routes oo:

’ 4nd at such rates as may be specified in the order. The life of an _~ order giving such facilities or preferential treatment was to be initially - for a period of 6 months but it canbe renewed from time to.time, ~ Sec. 28 prohibited giving of undue ‘or unreasonable’ :advantage’ or . ‘preference by the railway administration in the matter of transport of goods in favour of any particular person or railway administration or particular ‘description of traffic. The scheme that emerges from the combined reading of Secs. 27, 27-A and. 28 is that the railway _ administration on their own shall not impede free flow of traffic and ‘return of rolling stock. Power. was conferred’on ‘the Central Govt. for according special facilities or preferential: treatment in the -matter | of transport of goods both in respect of consignees as well as class | of goods, if in its. opinion, it is necessary in the public interest to do so. However, Sec. 28-in the absence of general or special | order in this behalf by the Central Government under Sec. 27A: denied to the railway administration power to accord any undue or unreasonable preference or advantage in favour of any* particular pefson or any other. body. The preferential treatment in the matter of transport of: goods can be accorded not by the railway administration on’ its own - _ which jt is prohibited from doing by Sec..28 but itis under an obligation to do so if the Central Govt. gives. a direction by general or ; special order in public, interest. “In *short, undue preference by railway. administration is'statutorily prohibited but preferential treat- - ment: in respect of goods or class of goods can ‘be accorded if . the - Centra} Government by.a special or general order in public interest - So directs. oo a r

‘not falling within Priority | ‘Cc “(ti

VIRLAD COAL MERCHANT v, UNION (Desai, J } _ 673

~ Armed a with the, power conferred by Sec. 27h ‘the Central | . Government has'issued what is called Preferentia] Traffic Schedule.

It prescribed five priorities ‘A’ to ‘E’ with inter se priorities amongst ‘A’ to ‘E’ to be accorded by the railways for transport of certain

~ goods or class of goods specified under each category. A brief refe- _ rence to various Priorities ‘A’: to ‘E’ would at a glance show how the priorities have been, determined i in public. and national interest. The

‘General Order No. 68 directs that in exercise of the powers conferred by Sec. 27A of the ‘Act,the Central Government directs that all

Railway Administrations shall give: special facilities for or preference

‘to the transport of goods'class of goods specified in the schedule to ‘this order. Goods included in Priority ‘A’ cover all moves of imme- diate and operational nature ordered by the Quarter Master General’s Bratich through Milrail, whictr will be marked. ‘Immediate’ in respect of Personnel, Vehicles and Stores, Military Special-trains and ~ immediate Operational demands. Demands of the Military have been .

accorded. the highest priority. for the security of the nation. Priority ‘B’ includes foodgrains, fertilisers, edible groundnut . cake, Tron and Steel etc. ‘Next to national security hunger has been given priority.

Priority ‘C’ includes inter alia coal from collieries. Coat has till .

recently been the primary ‘source of energy and’ yet it receives its place in Priority ‘C’, ‘Energy thus gets Priority. ‘C’.: Priority .‘D’. ° includes raw materials and finished product from Asbestos Cement . ~

Industry, Cotton seed, foodstuffs such/pulses, fresh dates, perishable

- commodities snbject to. quota etc, Priorits “F’ is practically ‘a - residuary clause which again involves coal from collieries ‘is accordance, with the targets laid down from time to time from the different: ‘fields and ‘in accordance with the zonal scheme applicable to each field and the principle of transport rationalisation already i in for orce-but

‘Jn the backdrop: of this legal positron, we may now turn to the contentions raised on behalf of the petitioners.

1, ‘ Railway being a common carrier and by Sec. 28 of

-! .., the Act being-statatorily prohibited from giving undue - . _ preference by arbitrarily picking and choosing some |, out of those seeking to use its services and facilities , its action of giving priority to some transporters of coal denying use of. its transport facilities to the petitioners who are similarly situated ig discriminatory in character and hence violative of Art. 14.

fe

>.

ate

SUPREME COURT REPORTS (1984) 1 s.c.r.

Impigned Orders such as one dated April 1, 1972, December 31, 1980 and April 11, 1981 in their cumulative effect have imposed a total ban on the trans- port of coal offered by the petitioners by the Railway’

and thereby imposed unreasonable restrictions on the fundamental freedom of the petitioners to carry on their trade guaranteed’ by Art. 19(1N(8) and hence

, they are unconstitutional.

If upon its true construction, Sec: 27A enables the Central Government to impose a total ban on trans-

- port-of coal offered by the petitioners who are traders in coal, it (Sec. .27A) is violative of Art. 19{1)(g) and hence unconstitutional. .

In any view of the matter; Para (iii) of ocorty i Oe of the Preferential Traffic Schedule issued. by the.

Government of India in exercise of the power confe-

‘red by Sec. 27A in so far.as it-permits special faci- " jity or preference to individuals or groups of persons selected by the Sponsoring Authority or recommen-

_ ding body for transport of coal is ultra vires Sec. 27A.° of the Act.

Order No. TO(g) 1510/71 dated ‘April 1, 1972 intro-. . ducing abbreviation “GX? and. appending to alf railway stations denoting that cach such station is not open for outward booking of, coal, coal ‘shalc, lignite, patent fuel soft coke and hard coke in wagon loads is violative Sec.-28 because thereby the railway administration has subjected the petitioners as well

"as the coal offerred for transport to an undue and - unreasonable prejudice or disadvantage in the matter of coal transport.

At any rate, total stoppage of booking of coal from wayside stations and colliery sidings unless the collieries in their own name book the wagons imposes a total ban on transport of coal offerred by the petitioners and therefore, the order dated April 1, 1972 introducing ‘GX’ abbreviation ‘and appending it to all railway stations is violative of Art. 19(1)(g). We shall deal with these contentions seriatim.

t+ Re Ground I: Railway is a common carrier and: being State-owned it .

?

\

“YIKLAD COAL MERCHANT 9. UNION (Desai, J.) 675 is subject not only to the provisions of the Act but also the fundn- -mental rights guaranteed by Part III of the Constitution. However much before the advent of the Coristitution, when different Railways .

“were owned by incorporated companies, Sec. 28 of the Act.

precluded the different railway administrations from granting undue preference to any particular person or any: particular traffic or to any particular railway administration, or subject anyone to any undue or unreasonable prejudice or disadvantage in the matter of transport of | goods-or passengers. Railway being a Stale monoply, to checkmate

“its monopolistic:power in the larger public interest it has to be subjected to regulatory measures. Simultaneously it became

‘necessary to arm Central Government with power to direct railway administrative to give preference in the matter of transport of the goods of the Government, Central or State or specified goods to meet the demands of various regions as. well. as needs of Government.

Intention was to classify governmentina class by. itself for ihe purpose of Art. 14. To meet.the challenge of Art. 19 (1) (g) the Central Government was armed with power to accord priority in transport of goods in larger public interest. Soon after’ the advent of the Constitutions, to arm the Central, Government with requisite power to direct the railway administration to give special facilities for or preference to the transport of any such goods or class of goods consigned to the Central ‘Government or to the Government of any State or such other goods or class of goods as may be specified in the ~ order, Sec. 27A was ‘introduced in the Act which enabled it by a general or special order to direct the railway administration to grant special facilities for or preference to the transport of goods. Such a general or special order can be issued by the Central Government if

_ in its opinion it is necessary in the public interest to. do so. Now indisputably the goods consigned to the Central Government or to

Government of any State must obviously have a priority over what

» we may loosly describe as ‘private transporters, because it is well- settled that the Central or the State Government is ina class by itself. This view is founded on the assumption, that all activities of the State are in public interést in the, sense that they are either undertaken on behalf of the public or ‘that the loss or gain arising form them falis upon the public (See Nav Rattanmal and Others v. The State of Rajasthan.) The goods consigned to the Central or the

- - State Government are, unles$ shown to the contrary necessarily to be

@) 196272 SCR. 324,

é - -

-

D:

E.

676- - ~~ *° ‘SUPREME COURT REPORTS ~ [1984] 1s.ck used to catry on governmental activity undertaken for the benefit of ‘public or to subserve some public interest and which may as well include: the’ efficient adminstration: ofthe governmental agenicies. Sec. 27A also confers power to direct any railway administration-to

~” give special fucilities for or preference to the transport of goods or a ' class of goods as may be specified in a general or special order that.

may be issued in this behalf. The Central Government is better ‘equipped to know what class of goods are required to be sent to any . particular area expeditiously to meet some shortage, or for national: ‘security or to meet an émergency or any natural or man-made, catastrophy so as to accord special treatment in the matter of trans-

. port. See. 28 can be said to some extent to be a corollary to Sec. 27 A in as muchas the railway administration on its own is prohibited

_ from giving undue or unreasonable preference or advantage to, or in - ~ favour of, any particular person or railway administration, or any particular description of traffic, in any respect whatsoever, or subject ‘any particular person or railway” administration or any particular

. description of traffic to any undue or unreasonable prejudice or, ~~ disadvantage in any respect whatsoever.. To repeat railway being a _ State monopoly undertaking, it had to be statutorily controlled from abusing its monopolistic character by prohibiting it from giving any -undue or unreasonable prefernce or, advantage or acting in any manner which. would evidence undue.or unreasonable prejudice or’ disadvantage in any -respect whatsoever. Equality guaranteed be Art. 14 is translated into statutory provision in Sec: 28. A State monopoly like the railway administration cannot be. trusted to act- _ fairly and that is the object underlying Sec. 28. If everyone was to "get equal | facility for transport of his goods by railway without ‘ anyone claiming priority or anyone having power to grant preference or special facility, in. an* emergency this equal’ opportunity would create a havoc. Therefore on the other hand, the Central Government to meet the needs of the country arising in any eventuality can give directions for giving | special facilities for or preference to the transport of goods or “any class of goods. Inthe absence of power.

such as conferred by Sec. 27A, floods, draughts; national security

. -requirements, unscropulous hoarders, artificial shortages materials

-for national projects in a country of the dimensions of -India cannot,

" be effectively and adequately tackled. This is the - ‘genesis of the 7 power conferred bys Sec. 27A. - . - : “Armed with the power conferred by Sec. 27A the Central Goverament has issued Preferential Traflic Schedule. Priorities ‘A’

oN a,

_to'E’ therein : set out in the matter of transport of goods by railway clearly manifests a public policy framed to subserve public intrest. Coal the primary source of energy has been relegated below the

_ Military requirement (Priority ‘A’). and foodgrains and fertilisers,

Iron and Steel material for wagon building, seeds etc.’ (Priority “B’ ) and then comes.the primary source of enérgy in Priority ‘C’ Coal. Does this priority manifest. undue preference prohibited by Sec. 28 or a. general - order issued ‘by, the Central Government in public intérest.?

, Let one confusion be ‘cleared at' the outset. Submission that

“there is virtually a total embargo on the transport of coal by.

.

‘ railway at ihe instance 6f the present petitioners or others similarly situated is substantially incorrect. «Throughout the hearing of these © petitions, it was pepeated ad nauseum that cumulative effect of all orders, including the impugned order dated Aprif 1, 1972, is to impose a total ban on the transport of coal offered by: the petitioners. As will be - presently pointed out, this statement is unfounded in

-facts and preseits a distorted picture i in the: matter -of transport of coal by railways.

. Priotity ‘€’ (iii) which deals with coal provides ‘for transport of coal from collieries to various parts in India. It was subjected to ~ varying constructions. It has been extracted earlier. In order to be.

eligible for obtaining’ allotment of wagon under Priority ‘C’,. it is necessary for the person indenting the wagon to satisfy the various , conditions specified therein. They aré : (i)* that the coal. is to be

“loaded from the collieries; (ii) that the coal to be loaded is in confor- ‘ mity with the commodity quotas laid down from time to time for certain types of coal and/or in accordance with the programmes and. ‘Movements sponsored or recommended by the. Coal ‘Controller and/or any Committee appointed by him; (iii) or it is sponsored or

- recommended by the State Government énd/or. other’ recommending authorities.and accepted by the Railway Administrations; (iv) or it is | sponsored or recommended by Director, Movement (Railways), Calcutta : (v) and it must be in accordance with the Zonal Scheme applicable to each field and the principles of transport rationalisation in force from time to time. -In order to gomply with the preconditions for eligibility under Priority ‘C’, a list of sponsoring authority authorised to. sponsor coal movements is drawn up and is set’ out in Aanextre ‘B’ to the Preferential: Traffic Schedule, These general conditions are further subject to Notes A to E. Why such

&

VIKLAD coaL MERCHANT ¥, UNION (Desai, J. ) ._ 677 o

-E

”

678 . | SUPREME count REPORTS (1984) 1 S.C.R an exhaustive and detailed provision is made is: not difficult to -answet? Coal forms 32% of the total transport of goods handled by

. the Railways, On an average, more than 10,000 wagons will have to be allotted daily for transport of coal. Coal being a primary .source - _ of energy used by heavy industries, electricity generating plants, steel plants as also cooking fuel used in the remotest parts of the country, itis necessary to handle its transport with scientific precision, Therefore, there is a prior planning about'a year in’ advance ‘drawn up by the Director, Movement (Railways) setting out Zonal Schefne of distribution applicable to each coal-field and the principles of transport-rationalisation in force from time to time. The purpose. | underlying setting up of sponsoring and recommending authorities is — to ascertain the needs of various regions of the country who in their respective regions would be in clos® and intimate contact with the consumers of coal both industrial and individual. Even though’ — power has been conferred on them to sponsor or recommend. indenting of wagons of coal from collieries this network of sponsoring and recommending authorities are subject to the Zonal Scheme applicable | to each coal field and the principles of transport rationalisation in force from time to time. The nerve centre is the Director, Movement — (Railways) of all the activities connected with transport of coal. In addition to this the Government has set up a Standing Linkage

- Committee in the Department of coal in the Ministry of Energy. .

This Committee assesses the link and requirement of particular source of coal. The Committee keeps in view the requirements of such major industries and establishments using coal like the Railways, thermal power stations, fertiliser plants, cement plants steal plants, textile factories, chemical industries and the like. This very narration would show that if there is disturbance i in regular supply of coal to _this priority sector resulting in their closure, there would be a tipple “effecting various ancillary industries creating a major dislocation in - in the national economy and escalating haunted spectre of layoff and unemployment. That is why planning is undertaken every year in ‘advance and but for any emergency it is considered inadvisable to disturb the advance Planning because any such disturbance results in serious dislocation of this primary source of energy being distributed all over the country keeping in view national priorities.

‘With this background, it is not difficult to appreciate the various orders issued, by the Railway Administration and the Central ‘Government regulating the movement of coal. +

- «

2 NIKLAD COAL MERCHANT y. UNION (Desai, J.) 679

- Railway is a monopolistic undertaking in the. matter of trans- port of coal by Railways. Barring some tiny dots which may become visible only by a magnifying glass, the entire ‘railway network is nationalised and the railway is a.department of the Union of India.

~ Itis therefore, indisputably a State monopoly. A monopoly unless kept within, bounds may prove to be a menace. Therefore, regula- tory measures are necessary to prevent the abuse of monopolistic power. The reasons which led to the enactment of the Monopolies and Restrictive Trade Practices Act may have to be kept in view even while keeping a watch over the activities of a State» monopoly. But there is a constitutional check on the State monopoly, namely, it being State within the meaning of Art. 12 of the Constitution, all its actions will have to conform to the fundamental rights enshrined in. Part III of the Constitution. Part II provides a positive and healthy ° check on the railway administration. Sec, 28 of the Act seeks to

-achieve the same result which on the advent of the Constitution, _ Art. 14° would achieve. Sec. 28 undoubtedly prohibits railway administration from giving any undue preference by arbittarily picking and choosing some out of those seeking to use its services and facilities. But Sec. 28 is subject to Sec. 27A. If the railway administration - accords: priority in transport of goods by giving special facilities for or ‘preference to the transport of goods, in compliance with any general or special order made by the Central Government in the public interest in this behalf, compliance with such special or”. general order could never be attacked: as being violative of Sec. 28. --

“Sec. 28 forbids discrimination by. giving undue or unreasonable prefe- rence or advantage i in respect of any particular traffic to any particular person or any other railway administration but this genetal prohibition against discrimination is subject to the ‘overriding power conferred on Central Government under Sec. 27A. If while giving

. effect to the orders of the Central Government issued under Sec,

27A, priority is accorded in the matter of transport of goods consig~ ned to Central or State government or class of goods specified in the

_ general or special order issued inthis behalf, the action. of the rail- way administration in complying with such special or general order,

-could not be said as tentamounting to giving undue or unreasonable :

preference or advantage to or in favour of any particular person or: railway administration. -What Sec. 28 forbids is discrimination. in the matter of transport 0 of goods against a class but this i is subject to

”

680° a SUPREME COURT REPORTS. oo [1984] 18.c.8.

; .

“the permissible classification that would be introduced by a .special or general order issued by the Central Government in exercisé of the

‘power conferred by Sec. 27A. It may be recalled that the Preferential Traffic Schedule according Priority ‘C’ to transport of coal by those mentioned therein has been issued in exercise of the power conferred _ ‘by Sec, 27A. Therefore, the submission that petitioners in the ‘matter of transport of coal are similarly. situated with the Central or State Government or.transporters given priority by general or special order issued under Sec. '27A cannot be entertained. This is all the more -

" so because the petitioners are coal merchants who ‘want to transport _ their coal by railway for carrying on business in coal and they may sell .

the coal to any intending purchaser while those accorded preferential

‘treatment under Priority ‘C’ of the Preferential Traffic Schedule are transporters of coal who have ‘been recognised one year in advance © ‘under Zonal Distribution Scheme as fefson who would by-trans-.

porting the coal to satisfy fixed goals. which subserve needs of the public:at large. For this’ additional reason the contention ‘of the petitioners that’they are similarly situated with those set out in. Priority ‘C’ (iii) cannot .be entertained. Classification of those _ covered by Priority. ‘C’ and. the present petitioners is founded on intelligible. differentia which. distinguishes persons or things that are grouped together from others left out of the group’ and the differentia has a rational relation to the object sought to be achieved by the impugned orders. . Those falling within Priority ‘C’ (iii) would form a class by themselves and the petitioners clearly: stand out of the group and for reasons herein stated petitioners could not be said to be similarly situated with those grouped together in. ‘Priority oe

SC’ (iii)e oS ' .

Re Gr. 2: It was next contended that the impugned orders’ dated

‘April }, 1972, December 31, 1980 and April 11, 1981 in their cumplative effect have imposed a total ban on the transport of coal offered by the petitioners by the’ Railways and thereby imposed an unreasonable restriction on their fundamental freedom to carry on their trade guaranteed by Art. 19(1)(g) of the Constitution. It is - factually

- jncorrect to say that the impugned.orders have in‘ their cumulative effect imposed a total ban on the transport of coal: offered by the

. petitioners. by Railway. © Priority ‘BR’ in Preferential. Traffic Schedule provides for transport of coal from collieries in‘ accordance with ' the

~ targets laid down from time to.time from the different fields and in . accordane with the Zona] Schemé applicable to each field and the principle of transport fationalisation already ‘in force. Priority ‘C’

»

A.

‘ . ‘

(iii) caters to transport of certain types of coal as’recommended and sponsored by recommending and sponsoring authorities. Priority “B’ (ii) caters to-a situation where cal is required to be transported from collieries in accordance with the. targets laid down in’ advance.

Therefore, if the petitioners | are unable to obtain any sponsorship or ~ recommendation for transport of coal-by Railway, they may as well” come under Priority ‘E’ (ii). Assuming they even -do not come. . within the sweep of Priority ‘E’ (ii), it is crystal clear that any avai-. lable wagon after all priorities are satisfied can be made available to.

the petitioners. If even then wagons are not allotted to petitioners, they can complain of violation of Sec..28° But it was urged that the Priority ‘A’ to “E” have been so exhaustively drawn up that conceivably not a single wagon would be available. after all the priorities are met with. That may be so but that is unavoidable when the law of demand and Supply operates. There is always an yawing. gap

‘ between the demand for the wagon and the available supply of the.

same. That situation itself would justify making of orders under Sec. ‘27A. If the tailways were in a position to meet with every. demand of the wagon -for transport of goods, it was absolutely unnecessary to. -

" provide for priority. The very fact that there. is a discernible gap between the demand for the wagons and, the supply of.the same that led to the nécessity of introducing Sec..27A-. and making a general order drawing up Preferential Traffic, Schedule in.. exercise’ of the

- power conferred by Sec. 27A. . Further it was said that,coal can’ be — * transported in smalis from certain wayside stations not suffixed-with abbreviation ‘GX’. But the: pétitioners want .to transport their coal in, wagon loads. The Railways may not be able to provide wagon fromthe wayside stations because each. empty wagon at ~ wayside

Station is accounted for in the daily supply of wagons approximately

10,000 for tansport-of coal from colliery siding to various: desti-

' nations in the country. It may be as the petitioners’ contend that a

_ counter-affidavit shows that each such empty wagon is accounted for, - loaded wagon may reaeh a: wayside station and is unloaded but the

@ year in advance towards supply of more than 10,090 wagons. daily. {0 the colliery. sidings for transport of coal... And this. _pre-planning

“cannot be disturbed by excluding such wagons from the calculations .

about available wagons and hand it over to. the ‘petitioners. There is a further difficulty in making available wagons: to the petitioners.

* Every’ small wayside station is not equipped with nccessary equipment

_ for loading of coal. Therefore; if the Jaw of demand and’ supply, and non-availability. of facility for loading coal in small at wayside’

stations result in not ‘making available wagons to the petitioners

_VIKLAD COAL MERCHANT v, UNION (Desai, J.). -- 681

"-

682 . ' SUPREME COURT REPORTS [1984] 1 S.CRe

, because of pre-planning and priority it cannot be said that there has ‘been a total ban on the transport of coal offered by the petitioners by the railways, which would violate the fundamental freedom to carry ' on their trade guaranteed to the petitioners under Art. 19(1})(g). If the impugned orders constitute a restriction on the freedom of

- carrying on trade, though we. do not consider it to be so, thé same is reasonable and imposed in larger public interest. The contention must accordingly be rejected, ,

Re Gr. 3: It was next contended that if upon its true construction

_ Sec. 27A enables the Central Government to impose a total ban on transport of coal offered by the petitioners who.are traders in coal,

_ Sec. 27A would be violative of Art. 19(1)(g) and should be declared unconstitutional. Art, 19(1)(g) guarantees to the citizen the fundamental freedom to carry on any occuption, trade-or business. . This

' fundamental freedom is subject to reasonable restrictions that can be ' imposed by law relating to the carrying on by the State, or by a corporation owned or controlled by the State; of any trade, business,

.. industry or service, whether to the exclusion complete or partial, of - citizens or otherwise.

' The first question that may bz posed in this context is : what is the trade being carried on by the petitioners? Are they coal transporters? [sthe transport of coal their business? Or are they coal merchants who are dealers in. coal and-for the purpose of carrying on

‘of business at a certain place they are required to transport coal from ‘the colliery sidings to their place of business 2? Obviously their busi- ness is not transport of coal, Transport is merely incidental to their ‘business, namely, trade in coal. Assuming that the Railways have wholly banned transport of coal offered by the petitioners by wagons could it be said that the action of the Railways would violate Art. © 19(1)(g) in relation to them. Whenever the Court i is ‘called upon to examine the complaint that restrictions imposed on the freedom to

, _ carry on trade are unreasonable, it is necessary to find out. what is the trade or business of the complainant-petitioner and to what extent *

“the restriction, if any, is imposed upon the freedom to carry on trade or business and then to determine whether the. restriction is reasonable or otherwise. It is the direct impact of the restriction on the freedom to carry on trade that has to be kept in view and not* the ancillary or incidental effect of the governmental action on the

- freedom. to carry on trade. The petitioners are not transporters of coal. They are coal marchants scattered over various parts in

VIKLAD COAL MERCHANT P. UNION (Desai, J.) 683 |

India and now they complain that they are -unable to transport coal because the Railways have so arranged its prioritiesin the matter of transport of coal that the petitioners would never be able to obtain

4 Single wagon for transport.of their coal. Prima facie it appears:

that the petitioners’ business or trade as coal merchant is in no way

" interfered with by the railways by not being able to provide transport facility. Let it not be forgotten that the railway is not the- only means of transport. There are other means of transport by which

_ the coal can be transported by the petitioners to their respective place where they carry on their business as the coal merchants. Even assuming that the direct impact of the policy ‘laid down by the railway administration pursuant to the orders of the Central Government under Sec. 27A results in denial of allotment of wagon to .the petioners, the restriction will none-the-less be reasonable because petitioners are not wholly denied the allotment of wagons.

A developing country with mixed economy and economic

- planning have certain targets to achieve. These. targets are planned in advance and the economic activity is geared to the achievement - . of these targets, If the required resources necessary for achieving ©

_targets were readily available, no difficulty would arise. But a developing. country has to so distribute its scarce resources to achieve a gap between the demand and supply of various facilities; Trans-

. port is one such. Once there is @ gap between the demand for transport service offered by the Railway and, the supply of the service,

‘the resources being not sufficient to meet with all existing demands, the scarce resources will have to be equitably distributed keeping i in view the planned targets. , .

This equitable distribution would necessitate imposing of

Teasonable restriction and according of priorities. Coal as pointed ’. out earlier being the primary source of energy, the demand for it to keep wheels of industry rotating is very high and it has to be accorded a fairly high priority and that is done by the Preferential Traffic

_ Schedule. Only two other items have a priority over coal and they are in respect’of Personnel, Vehicles and Stores, Military Special trains and immediate Operational demands that is national security.

. This does not require any explanation because national security has the highest priority, and it is accorded Priority ‘A’. Priority ‘B’ provides for foodgrains, edible oils, goods in connection with relief and rehabilitation of displaced persons, seeds etc. Hunger has been

‘and accomplish desired targets. This situation is bound to lead to.

‘

Cc

684 , " SUPREME COURT REPORTS ; [1984] 1 s.c.k.

accorded, Priority ‘B’. And coal falls in Priority ‘C’ being the primary source of energy, Planned regulated. movement of .coal to

__meet priority needs if it results in denial of that facility to non- -prio-

"rity: sector could not be rejected as placing an unreasonable restriction on the fundamental freedom to carry on_ trade or business. And that is the object’ underlying Séc. -27A. It is therefore, idle to

‘contend that. the section being violative of Art.- 19(1)(g) is unconsti-" tutional. :

Re Gr. 4:. It was next contended that in so far as Priority ©

(iii) i in the matter of transport of coal from colliery sidings permits special facility or preferenice to individuals or groups of persons

- seJected by sponsoring authority or recommending body. for trans- — port of coal, it is ultra vires Séc. 27A of: the Act. One has mefely to look at the list of sponsoring and recommending authority to reject

’ this submission. Annexure ‘B’ to Preferential Traffic Schedule sets out the list of sponsoring authorities ” It isa long list but a bare perusal of it is sufficient to-show at a glance that Central and State Governments as well as highly placed Central and State Government

_ Officers have been appointed as sponsoring authority in respect of _ coal required by different area and industries. Again in various

States. various. sponsoring’ autkorities have been set up .by State Government.’ Power is confered on these sponsoring authorities .to

" sponsor persons ‘who would be accorded priority. in transport of, coal.

.. These responsible persons and bodies sct up in each State as sponsoring authority ‘are expected to act ina responsible manner keeping in view the demands of the area and the industry,’ for coalin each State. It is therefore, idle to contend that setting up of sponsoring or recommending . authority in Priority C(iii) of the Preferential. Tratiic § Schedule is ultra vires Sec. 27A of the Act.

ReGr. 5: It was next contended * that the Order No. _TO (g)

1510/71 dated April 1,1972 introducing of abbreviation ‘GX’ ‘and appending it to ali railway stations has resuited in every such station ©

~ being not open for outward booking of ‘coal, coal shale, lignite etc. ‘in wagon loads and'therefore it violates Sec. 28 of the Act because: thereby: petitioners are wholly prohibited from transporting their. coal by railway and. making every empty wagon available to: those covered by_ Priority C(iii). It was said that the order dated April.

1,1972 has the pernicious tendency of giving undue preference to *

Priority ‘C’ (iii) transporters and subjects petitioners to undue or’ “unreasonable prejudice. or disadvantage, both situations being prohi-

_ ited by Sec, 28. As pointed out _ earlier, transport of coal is ae

" VIKLAD COAL MERCHANT ¥, UNION (Desai, J.) . 685

- according to a plan drawn up a year-in advance: Further this plan is subject. to the decision of the Standing Linkage*Committee. Every

‘meticulous detail is. worked out in advance. A daily loading of maximum number of wagons is pre-planned. Loading of the wagons with coal at a targated number daily requires rotational movement

' also according to plan. -A wagon once. loaded with coal it moves

RE Gr. 6:1 was lastly urged* that by affixing abbreviation ‘GX’ - out to its destination has a certain average return time stipulated and a, ‘worked out in.advance.. There may be dislocations. In order to - meet this everitualify ‘in the counter-affidavit it is stated - that no

“: wagon: load of coal can be booked from wayside stations. It can otly be booked from colliery sidings and that ought to beso. To achieve this desired end, an abbreviation ‘GX’ was devised and appended to all stations. Where a’ station has an abbreviation’GX’ appended to it, it would mean. that the station is not open for outward booking of coal,. coal shale, lignite, patent fuel, soft coke and hard coke in wagon loads. We fall to-see how. this regulatory arrangement violates Sec. 28. In’ fact, this incidental arrangement helps. in smoothly working the Zonal Distribution Scheme and the . planned movement of coal. And it is not disputed thatthe coal in ~ smalls, if offered and if the space is available can be moved from . wayside stations. - Therefore, we find no merit in ‘the submission.

a to all waysides stations, ‘a totaliban is- imposed on the’ transport of coal offered by the petitioners and therefore, the Order’ dated April

' 1,1972 is violative of Art. 19(1).(g). It is the :same submission

"slightly differently clothed. As stated earlier niovement of coal is.

planned and regulated and no tinkering is permissible. Petitioners are equally subject to this planning and regulated” movement.” It cannot be tinkered with. To give effect to this planned movement abbreviation ‘GX’ is devised and appended to all the. railway stations informing the transporters ‘that the station is not open for transport

". of coal in wagon loads. Coal in smalls can be: offered for transport _ that is what the petitioners do not desire. All regulatory measures —. discussed in’ detail héreinbefore clearly indicate that transport of _ coal is scientifically planned. and devised in advance. All the impugned orders are made ‘for effective implementation ‘of the ‘ planned movement ‘of coal. If consistent with this planning, the - railways, have stopped booking of coalin wagon load from. wayside Station, it cannot be said that this action has imposed such an unreasonable restriction on the fundamental freedom of the petitioners © to-carry on their trade as to be Vidlative of Art; 19(1) (g).

. 686 | _'. SUPREME COURT REPORTS [1984] 1 s.c.r!

- We cannot part with this judgment without recording our

_ uninhibited appfeciation of thorough study of the knotty issues, ' “research and analysis of historical background, and _ scientific and painstaking presentation of the facts and issues of law involved in these petitions by Shri Gupta learned counsel, who appeared for the various railway administrations. The intense labour putin by ‘him in collecting the most useful matarial and elucidating the same before the Court in a very able manner helped - us considerably i in disposing of these petitions.

These are the reagons which persuaded 1 us to make the order

" set out at the comracneémant of the judgment.

; HSK. oo - - Petitions dismissed. ”

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