Case Note & Summary
This criminal appeal before the Supreme Court arose from a prosecution under the Essential Supplies (Temporary Powers) Act, 1946 read with the Iron and Steel (Control of Production and Distribution) Order, 1941. The appellants were a registered stockholder and her husband, manager of a firm, accused of selling iron bars at prices exceeding the controlled rates. A police report dated August 20, 1955 alleged that between January and February 1952 the firm sold specified quantities of iron bars at rates higher than those notified in the Government of India Gazette dated July 1, 1952. The Judicial Magistrate took cognizance, examined the accused under Section 364 of the Criminal Procedure Code, and framed a charge on March 24, 1956 under Section 7 of the Essential Supplies (Temporary Powers) Act, 1946 read with clause 11-B(iii) of the Control Order. The Sessions Judge, on revision, held that the police report did not set out the facts constituting the offence as required by Section 11 of the Act and recommended quashing the charge. The High Court single judge disagreed, referred the question of vires of clause 11-B to a Division Bench which rejected the Article 19(1)(g) challenge, and finally dismissed the reference, directing the prosecution to continue. The appellants appealed to the Supreme Court by certificate. The main legal issues were whether the notification fixing maximum prices was ultra vires clause 11-B(1); whether it discriminated between controlled stockholders and registered stockholders in violation of Article 14; whether the police report satisfied Section 11; and whether additional grounds could be raised. The appellants argued that the notification omitted classes, violated Article 14 due differential credit and cutting facilities, the report lacked specific facts, and the additional grounds should be considered. The State supported the prosecution. The Supreme Court held that the notification was intra vires because it included all registered producers and governed registered stockholders under the residuary category; differentiation was not per se discrimination under Article 14 absent material showing unfairness; Section 11's purpose was to confine prosecution to public servants and the report sufficiently designated the contravention without evidentiary details; additional grounds were allowed exceptionally but rejected on merits. The constitutionality of clause 11-B under Article 19(1)(g) was settled in Union of India v. Bhana Mal Gulzari Mal and not open. The appeal was dismissed, upholding the High Court order and permitting prosecution to continue.
Headnote
A) Iron and Steel Control - Price Fixation - Intra Vires of Notification - Iron and Steel (Control of Production and Distribution) Order, 1941, Clause 11-B(1) - The Controller's notification fixed maximum sale prices for categories of iron and steel. Appellants contended the notification was ultra vires for omitting classes. The Court held the notification included all registered producers (564) and governed registered stockholders under the residuary category of persons other than registered producers and controlled stockholders, thus intra vires. Held that the notification did not omit any class and was within the rule-making power. (Pages 1-2) B) Constitutional Law - Article 14 - Discrimination between Controlled Stockholders and Registered Stockholders - Constitution of India, Article 14 - The notification permitted credit facilities and charges for cutting and wastage to controlled stockholders but not to registered stockholders. The Court held differentiation is not per se discrimination and no material showed unfair or irrational discrimination. Held the notification did not offend Article 14. (Pages 1-2) C) Criminal Procedure - Cognizance on Police Report - Requirements of Report under Section 11 - Essential Supplies (Temporary Powers) Act, 1946, Section 11 - The police report alleged sale of iron bars above controlled rates without detailing all evidentiary facts. The Court held the purpose of Section 11 is to confine prosecution to public servants; the report must be in writing and set out facts constituting the offence, but need not include details necessary to prove guilt. Held the report satisfied Section 11. (Pages 2-5) D) Criminal Appellate Practice - Additional Grounds Before Supreme Court - Restrictive Principle - No specific Act - Appellants raised additional grounds not urged before High Court, including Article 14 violation. The Court stated additional grounds would not be permitted as a matter of course, only in exceptional circumstances like subsequent legislation or questions of fundamental and general importance; permitted here due to pending prosecution and counsel relying on record, but rejected on merits. Held additional grounds permissible but without merit. (Pages 5-6) E) Constitutional Law - Fundamental Right to Trade - Constitutionality of Clause 11-B - Constitution of India, Article 19(1)(g) - The issue of clause 11-B being ultra vires as violative of right to carry on business was raised before High Court and settled by Union of India v. Bhana Mal Gulzari Mal. Appellants did not challenge that decision before Supreme Court. Held clause 11-B not unconstitutional. (Pages 2-3)
Issue of Consideration
Whether the notification fixing maximum sale prices was ultra vires clause 11-B(1) of the Iron and Steel (Control of Production and Distribution) Order, 1941; whether the notification discriminated between controlled stockholders and registered stockholders in violation of Article 14 of the Constitution; whether the police report satisfied the requirement of Section 11 of the Essential Supplies (Temporary Powers) Act, 1946 to set out facts constituting the offence; whether additional grounds not urged before the High Court could be raised before the Supreme Court
Final Decision
The Supreme Court dismissed the appeal and upheld the High Court order directing continuation of prosecution. The notification fixing maximum prices was intra vires clause 11-B(1), did not violate Article 14, and the police report satisfied Section 11. Additional grounds were exceptionally permitted but rejected on merits.
Law Points
- Notification fixing maximum prices under clause 11-B(1) of Iron and Steel (Control of Production and Distribution) Order
- 1941 is intra vires
- differentiation between controlled stockholders and registered stockholders is not per se discrimination under Article 14 of Constitution of India
- police report under Section 11 of Essential Supplies (Temporary Powers) Act
- 1946 must set out facts constituting the offence but need not contain evidentiary details
- additional grounds not raised before High Court not permitted as matter of course before Supreme Court except in exceptional circumstances like subsequent legislation or questions of fundamental and general importance
