UNION OF INDIA & Anr. v. M/S. RAJDHANI GRAINS & JAGGERY EXCHANGE LTD

The High Court was o( the view that the conditions which the Com. mission could attach to the certificate of registration were thos~ whic.h relate to the manner and the method of earrying on the business of forward contract, that condition No.(ii) in the-certificate did not relate H to the manner or method o! carrying on the business and that no power to impose such a condition cduld be implied as that would be repugnant to the power of government to control, regulate or prohibit forward trade in respect of any commodities vested in the Central Government under section 15 to 18 of the Act. I 6 I . ... 'SUPREME COURT Rl!l>ORTS . (1975] SUPP. S.C.R. } .B .A. • ·section 6 provides that the Central Government may, ifitis-satisfied :that it would. be in the interest of trade and also in public interel!t ti> .grant recognition to an association, grant recognition to the association .fa such form and with such condition as may be specified or prescribed ·:and shall specify in such. recognition the goods or cla!;Ses of go9ds with respect to which forward contracts may be eniercd into between: the -members of such association or through or with any such member. · . . According to. the High Court, while section 6 which give8 power to· the Central · Government to accord ·recognition to an assci\:ialion provides for specifying the goods in respect of which forward contra~t ·may b_e entered into by the memb_,rs of the recognized association, ;s. 14A is silent in regard to this matter implying ihereby that the :c . Commission has no power under this section to specify the goOds in · , • .·· .respect of which forward trading can be carried on. · . E F Commission is invested with power to remain static. They change. And unless · Recot,'Ilition of an association under s. 6 carries with it <Cettalil ·duties· and confers certain rights on the association. Section 8 states that -every recognized association shall furnish to the Central Goverrtc ·men( such periodical returns as may be prescribed. Section 9A pro- D vides that a recognised association may make rules with respect to matters specified therein. The fact that an association is recognized ·by the Central Government would not enable it to carry on th~busi- 11ess in forward contract. For carrying on business in forward' contract, a certificate of registration under s. 14A is a sine qua non. The area. covered by section 6 and l 4A is different. The fact that Central Gov- crnment has power to attach conditions as regards the commodities in respect of which the business of forward contract _can be carried on is not in· any way incompatible with the power of the Commission to impose conditions as respects the commodities in which the busine§S can be conducted. The conditions in the market dealing with forwar,i -contract do not further conditions with respect the business of forward contract can be carried on, the object of constituting the Commission would be frustrated. The assumption by the High Court that. when once conditions as to commodities in respect of which busi- • ness can be carried on have been laid down at the time recognition was granted by Government, the power of the Commission to attach further conditions as to the commodities in which transactions in for ward contract can) be carried on, would be repugnant to the power of · the Government, fails to take note of the changing conditions in the market. When s. 14A says that no association shall carry on business jn forward contracts except in accordance with' the conditions specified · in the Certificate, there can .be no doubt as to the nature of conditions which might be attached, to a certificate of registration. Under clause (f) of s. 4, the Commission has "to perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act, or as may be prescribed." Dealing with the expression "by or under this Act or may be prescribed" in s. 4 ( f), this Court has said in I. P. Gupta v. W. R. Natu(') that there was impose in which the commodities G H (!)A.LR. 1963 S.C. 274. UNION v. RAJDHANI GRAINS (Marhew, J.) no limitation upon the nature of the power that might be conferred except that which might flow from its Mving to be one in relation to the regulation of forward trading in goods which the Act is designed to effectuate. The Court observed that where the Court is concerned with the question whether it is legally competent to vest a particular pvwer in a statutory body, the.proper rule of interpretation would be that unless the nature of the power is such as is incompatible with the purpose for which the body is created, or unless the particular power is contra-indicated by any specific provision of the enactnrent bringing the body into existence, any power which would further the provisions of the Act could be legally conferred on it. And, as we already said, rule 7 A prescribes the conditions under which a certificate of registration can be issued and that authorises the incorporation of condition No. (ii} in the ,certificate of registration. We think thatf the reasoning of the High Court that s. 14A autho rises only the imposition of conditions as to the manner in which the business in forward contracts can be carried on and that the section has nothing to, do with the commodities with respect to which forward contracts can be carried on is fallacious. We cannot read any such limitation in the language of s. 14A nor can we find any indication in the other provisions of the Act to the contrary. , In other words, the power of the Commission is plenary as regards the nature of tht conditions which it can attach for regnlating and controlling the busi ness of forward contracts of a particular Association. We see no reason to think that specification of the commodities in respect of which business can be carried on is not a condition concerned with tbe regulation and control of the business relating to forward contracts. Sections 15 to 18 authorise the Central Government to impose restrictions as to the commodities with respect to which business in forward contracts can be carried on. These restrictions or· prohibi tions are general in character. and apply to all persons without any exceptions. These sections arc not concerned with restrictions or pro- .-hibitions as regards the commodities in respect of which ·business in • 'forward contract can be carried on by a particular association or its members. The Commission alone is invested with the power to im pose condition or prohibition with regard to the commodities in res pect of which forward contracts can be entered into by a particular association. These provisions can never clash with the power of the Commission to impose .conditions as respect the commodities in which the business of forward contract can be carried on. Recognition of the pow.e; o'. the . Commission to impose condition as respect the commod1tres m. which the business of forward contract can be carried on will the general power of government to specify the commodities in relation to which the bu.s1~css of. forward co.ntract can be carried on generally. The C?mm1ss10n, ~e.mg a subordinate body, is expected to act in conformity with the prov1s10ns of sectrons 15 to 18. Co-existence of these pow ers in the manner indicated is warranted by the rule of harmonious con struction. not derogate any manner 10 SC/75-2 7 A B c D E F G H ) J. ' .. 8 SUPREME COURT REPORTS [1975] SUPP. S.C.R. A It is not a relevant consi\]eration that the imposition of condition as to the commodities in respect of which business of forward contract can be carried on would. have the effect; of curtailing the area of busi ness of an association, for the very idea of setting up the Commission was to supervise and regulate the business of forward contract by im- B posing conditions subject to which alone the association can carry on business. Conditions are nothing but qualification, restriction or limitation modifying or even destroying to a certain extent the right to carry on the business. The commodities in which the association can carry on the business of forward contract is an integral part of its business activity. They are the subject matter or media for carrying on the business and specification of commodities in which business can be carried on is a condition sounding only in the realm of regulation and control of that business. c D No. (ii) in the certificate of registration. We therefore hold that Rule 7 A is intra vires the rule making power and that it was open to the Commission to impose condition It must follm~ that the con di!ion impugned was valid and that the direction issued by the Com mission to the respondent was justified. We are glad to find that the view which we have expressed has been taken by the High Court of Allahabad in Union of India & E Another v. Bullion and Agricultural Exchange Ltd. (1), after consider ing the relvant decisions including the one under this appeal. We set aside the order of the High Court and allow· the appeal without any order as to costs. F There was no appearance for the respondents. The Court acknow-· ledges its indebtedness to Shri Bishamber Lal, Advocate, for the assi stance rendered by him as amicus curiae. Appeal allowed. V.P.S. (1) I.LR. [1972] 2 Allahabad 562. , \ '