VIKLAID COAL MERCHANT, PATIALA, ETC. ETC. v. UNION OF INDIA & ORS

Citation: [1984] 1 S.C.R. 657

Court: Supreme Court of India

Bench: D.A. DESAI, O. CHINNAPPA REDDY

Case summary

" •• (c)· Recommendatlon for allotment of wagons by a spon· soring authority or acceptance of recommendations or issue of sanction by the Railway Administration/ Director, Movement (Railways) does not guarantee allotment/supply of wagons.

Judgment text

VIKLAI) COAL MERCHANT, PATIALA, ETC. ETC. v. UNION OF INDIA & ORS. October 28, 1983. [D. A. DesA1 ANDO. CmNNAPPA REDDY, JJ. ] Conslit1ltion of India Art. 19(1) (g)-Freedom to carry on trade or •. busines! -To exanzine whether restriction imposed 1easonable-:-Court to find out trade affected and keep in· view direct impact of r'estriction on trade and not ancilfary or indirect "e. ffec't. Indian Railways Act, 1890-Sec. 27A-Interpretation of-rVhether v;W/ativc ofArt. 19(/)(g) of Con~titurion. ·preferential Traffic Schedule laying dolt'n priorities for movement of drfferent J:Oods issued by the Ministry OJ Railways under sec. 27A-Validi/y of-Wheth~r ultra Vire~ sec. 27A-Whether ultra Vires Arts. 14 and 19(1)(g) oftire Conslitulion. · · • Indian Railways Act, 1890, section 28-lnterpretation of-Ministry of Railwa)'S order dated April _I, 1972-U? /iether violative ofsec. 28 and A1 t. 19(I) (g) ofth~ . Constitution.

Section 27 of the Indian Railways Act, 1890 cast a duty on the railway administration to arrange for -receiving and forwarding traffic without 1:1nreason· able delay and without partiality; Sectiqn 28 prohibited the railway administration from giving undue or u. nreasonable preference or advantage to ally particular person or railw~·adrninistration or any particular description of traffic. Section 27A was inserted in the Act after 1950 to give power to the_ - Central Governrr. ent to issue directions for giving speci3. 1 facilities or preferenti3. 1 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 or clasS of goods as may b~ specified in the order.

The GovCtnment of India, Ministry of Railways issued aa order dated April 1, 1972 containing 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 coa1, coal shale etc. in wagon loads. Pursuant to this order; the abbreviation •a·X• was appended to all· way-side stations in the coat. belt. Thereafter- Qovernment of India,·Ministry of Railways . by its order dB. ted April 27, 1972 revised ru. les J and 2 of the Eastern Railway Coal Traffic Part L T\1. ,;; r~Yi$~d rules provided inter a! ia that all ttatfi~ i9 coal ' ' ' • 658 SUPREME COURT R. EPORTS [1984) 1 s. c. R. etc. in. wagon loads will. be loaded only fr;~ colliery sidings, coke oven .

plant8 _and washeries~on the Eastern Railway, ·bui coal in wagons will not be permitted· 'at the stations serving these colliery washeries. A further restdctiOn followed _with effect from December 4, t979 when the . Divisional Operating Superintendent, Bilaspur for apparent reasQnS stopped booking of coal in smalls includina clubbing at all stations of North Eastern Railway. On February 11, . J980, a telegraphtc commup. ication was issued explaining that coal in wagon-loads can be booked from colliery sidings by the collierJcS concern_ed. ~coking of slack • · coal was wholly stopped as per a phone coAL MERCl! A~T ii. UNION 659 Therefore, regulatory measures are necessary to prevent the abuse of mono-... polisti~ power. But there is a constitutional check on ihe 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 III in of. ·. J__,,. . the Constitution. Sec.

28 of the Indian Railways Act seeks to achieve the same result which on the advent of the Constitution, Art. 14 woul~ achieve. But Sec~ ~ 28 is subject to sec. 27A. If while giving effect to the orders of the Central Government issued under sec. 27A, priority iS accorded in the matter of trans· J ·port of goods consigned to Central or Siate GovCrnment or ·cl3. ss of goods 'specified in the . general or special order ·issued in thiS behalf, the action of the· railway administration ib complying with such special or general order could not be said as tentamountiog to gi". ing undue or unreasonable preference or advantage to in favour of any 'particul'ar ·person or railway administration and therefore 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 gener~rorde. r issued by the Central Government in .

e;xercise of the power conferred by sec. 27A. . It may be recalled that the Prefereritial Traffic Schedule according Priorit)'. •c• to transport of coal by those rneiltiOned therein has been issued in exercise· of . the power conferred by sec. 27A. Therefore, the ·s~bmission· that petitioners in the matter of transport of coal are similafly sitt ated with the Central or State Govern1nent ·or transporters given priOrity by general ot. special order issued under sec. 27Acannot 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 ill coal and they may sell the coal to any intendin8:...

-purchaser while those accorded preferential treatment under Priority • C' of the Preferential Traffic SchCdule are transporters of coal who have been recognised One year in advance under Zonal Distribution Scl1eme as rersOns who would be transporting the-coal to satiSfy fixed goals which subserve needs of the public «t l~rge. Classification of those cowred by Priority ·re' and the present petiti.. o~crs is founded on intellieible differentia which distin8uiShes pers:ons 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 _acpiev~d by the impugned orders.. Those fa1ling within Priority •c• (iii) Would 'from a class by themselves and the petitioners. clearly stand out of tile group. (679 A-H; 680 A-El Nav Rattanmal and Ors. v. The State of 11,ajasthan, (1962] 2 S. C. R. 324 referred to. ~ Art. 19(1) (g). g.

uarantees to the citi:Zen the fundamental freedon1 to carry on any occupation, trade or business. This fundamental freedom is ·subject to / reasonable reStri~tions that can be imposed by law. relating to the carryin-g. on by the ·state, or by a corpOration owned or controlled by the State, of any trade. _ business, -industry or service, wh~ther 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 bllsiness of the complainant-petitioner and to what extent the restriction, if any, is imposed upon· the _freedom tci carry on trade or business and then to determine whether the restriction is reasonable or otherwise. It ~s th('.

~irect impact of the restriCtion on the freedom to carry on trade·that has to be kept in view and not 'A the ancillary or inciden'tal effect of the KQverntnental action on the freedom to carry on tiade. [682 C-D; F-H] . \ In the instant case, if the law of den1and and supply and non--avaihibility ~\.. 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 oi;i the transport of coat 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). Jf the impugned orders constitute a restricticn on the·freedo.... 1 of carrying on trade, -though it is n. ot considered to be so, the san1e is reasonable and imposed in larger pUblic interest.

Priffiafacie it appears lhaf the petitioners' businCss or t~ade as coal merchants is no way interfered with bf the railways by not beiilg 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 ofthe policy laid down by the railway admi. (listration purSuant to the orders of the central Govern~ent under sec. 27A results in denial of allotn1ent of wagon to the. petitioners, the restriction Will none·the-less be r·e. isonable becaUse petitioners are not wholly denied the a11ot1nent of Wagons. [681 H; 682 A·B; 683 . A·CJ A developing ~oun~y with 'mixed economy and econ~n1ic planrling l1ave certain targets. to achieve.

The~e targets are plann~d in advance and the economic activity is geared tO the achieverpilnt of these targets. If the required ·resources ne·cessary for achieving targets were readily available, no difficulty would arise.. But a j:le,eloping country has to so distribute its sca. rce resou~es to a,chieve and accorilPlish desired targetS: This situation is bound to lead to agap between the demand an~ supply of various facilities. Transport is one such. Once there is a gap between the deman,d 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 ! tcarce resources will have to be equitably distributed keeping in view the planned target. Thh equitable · distribution would necessitate. impJ)osing of reasonabl& restrict! ons and according of priorities: [683 J?

-F] In the instant case, coal falls in Priodty 'C' (iii) in the Preferential Traffic , 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 non.. priority ·G sector could not be rejected as placing an unreasonable restriction· on the. funda~ mental freedom to carry on trade or business. And that is the object underlying sec. 27A. Jt is therefore, idle to ~ontend that the section being violative of ~- Art. 19(1) (g) is unconstitutional. [684 A-BJ Annexure •B· to Prefefential Traffic Schedule sets out the list ofsponsoring auth~rities. The list shows that ths Central 'and State Governn1ents as well as highly placed Central and StatC Government Officers ,have been appointed as sponsOring authority in respect ·of coS;l,required by diffe~ent area and ind~stries. ViELAD COAL MERCHANT v. UNION 66i • ;t· · 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 ofcoal. These respo:Ilsible persons and bodies set up in each ~tate 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 . ofsponsoring or recommending authority in Priority 'C' (iii) of the Preferential Traffic Schedule is ultra v/rrs sec. 27A of the Act. [684,C-F] The tr·ansport of coal is 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 targeted nilmber daily requires rotational movement also according to ·plan. A w3.

gon once loaded with coal when it moves out to the destination has certain average return time stipulated and worked out in advance. Jn order to giv' effect to this planned moveμient 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 tbe pet. itioners do not desire. All the regulatory measure clearly indicate that tranaport of coal is scientifi. Cally planned and devised in advance. All the impugned orders a. fe made for effective implemeniation of the planned movement of coal. If consistent with this planning, the railways have stoj)ped booking of c()a1 in wagon·load from wayside station, it cannd't 6e said that this reSulatory 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(1) (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-t! 220, 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, 1919/8. 1, 1/82, 868, 1270, 1358, 2256, 2272, 4051-4052, 5123-26, 7147/82. • . (Under article 32 of the Constitution of India) ·• Advocates for the Appearing Parties : SS. Ray, N. R. Choudhary, K. K. Mohan, S. K. Sinha, R. C. Kohii, ·R. S. Sharma, S. Mitter, N. S. Das Bahl, E. C. Agarwa/a, A. K. Mitra, H. K. Puri & K. Chatterjee, B. Datra, Rish; Kesh & M. Chopra. , S. C. Gupta'& M. N. Shroff, S. K. Ghosh, D.

Goburdhan, P. Mo/uinty, Abdul Khader, C. V. Subba Rao & Dal,_er Bhandari, I The Judgment of the Court was delivered by • DESAI, J. When the hearing 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. Jn the inatters 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 w4ich are shown as unready. . C Reasons will follow. " Here are the reasons; i The petitioners, in this group of petitions, under Art. · 32 of D ' . · the Constitution are coal-. merchants, who, according . to them, have . been denied the use of the railways for transport of coal . from various coalfields and way-side statioo1s 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 w. hile certain transporters of . coal have been accorded priority in the matter of transport o( coal such as the Central and the S\ate Governments and the sponsored and. recomm- . ended transporters, the petitioners who are coal merchants were denied equality of o. pportunity in the matter of transport of coal by railway. Their further grievance is that total prohibition of booking and transport of coal as requested 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 Chnstitution 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 grievances is the sam~ and therefore a few representative facts to appreciate the contention 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 a,s represe! 1tativc for the additional . reason that a yery comprehensive counter affidavit has bee·n filed·in it on· behalf of the respondents. '. VIKLAD COAL MERCHANT v. UNION (Desai, J. ) 66~ • Petitioners aver. that they arc 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 Dclhj. They carry on the additional bu'siness of supplying 'lack coal purehased from . private collieries situated in the State of Meghalaya.

In order to move coal from the c_ollieries to consumers, petitioners have ' to- transport coal from various stations served ·by· North-Eastern • Frontier 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· r vant rules. Petitioners aver that prior fo April I, 19~2, there wa~ no restriction on booking of. coal in wagon-loads. : The Govt. of India, Ministry of Railways issued an order dated April U 972 which reads as under : · n· "Govern~ent of India (Bharat Sarkar)· Ministry of Railways (Rail Mantralaya) Rai\way Board • . No. TCR/15. 10/71 New Delhi dated· Ist April 197J I2~b Chaitra, 1894 . . The Genera) Manager 11, India Railways .... . . The R.

ailways Board have decided that in the list of abbreviations at page•14 Chapter VI of the IRCA Alphabetical list of Railway Stations in India · (corrected . upto 31. 3. 79) an additional entry below the abbreviations 'G' should be incorporated· as under : OX-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 coke and hard _ II coke in wagon loads. ' · S! iI'ilEME COURT REPORTII i1984) 1S. d. ll. • The Railway Administrations are hereby ·directed to lA · decide and notify the riames of stations to which this new provisions would apply and advise the General Se RTS [1984r 1 s. c;a. · · 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 reco·' mmending authorities and accepted by the/Railway Administrations and/or Director, Movement (Ra'ilways), Calcuita, and in accordance with . the · Zonal Sche~e appli(! able to each field a~d the pri~ci· pies 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 Annexure 'B'. • . Note- (a) Coal in the above item C(iii) means "Coal as defined in. Colliery Control Order. " (b) Besides the sponsoring authorities mentioned in Annexure 'B' movem·ent of Coal may ,be sponsored by "any other authority who ·maybe appointed by the Governinent from time to time. " •• (c)· Recommendatlon for allotment of wagons by a spon· soring 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 exigencies from time to time. ;\llotmentisupplies· • of wagons may be cancelled or reduced by Director,· Movement (Railways). (d) The period of validity of programmes/sanctions for rakes/piece-meal movement may be laid 'down from time to time by Railway Administration/Director, ·G Movement (Railways): The validity of programme/ sanction does not ·guarantee alfotment/supply of \ wagons... le). , lnterse seniority. of the class of censumers would be ' · laid down·from time to. time· by Railway Adminis· ! ration/Director,·Movement (Railways) and may be VIKLAD COAL MERCHANT v. u. NION (De6ai, J. ) 667 -:-+ altered/modified from time to time. • Within the same . ' class or category of consumers seniority may be fixed from time to iime depending upon ihe 'operational • and other considerations. • . Rai\wai Administration. I Director, Movement (Railway) may permit distress r!

allotmentslsupply of wagons when considered nece- ·ssary'. ·Nothing laid down herein shall be considered l. as contrary to· notes (a) to (b) appearing under Priority 'E'. "- 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 already in force. Petitioners contend that ·sum total of various · restrictions including one dated April 1. 1972 introducing abbreviation 'OX' 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 o( Art. 14 · a. nd/19(l)'(g) of the. Constitution. A very detailed affidavit bas been filed on behalf of the respon: dents·. Some ·of its highlights may be noticed. .

• ·111dian Railway net-work serve 7000 railway staiions, scores of divisioi{s and 9 zones. ·In such an extensive net-work, all kinds ·of factilities by their very nature cant)ot be provide t by tlie railway administration on· its own . which it is prohibjted from doing'by Sec. 28 but it is under ail obligation·to do so if the Central Govt. gives a direction by general or special order in public, interest. "Jn •short, undue preference by \ railway administration is statutorily prohibited but preferential freat· rrient :in respect of goods or class of goods can be accorded if . the c~htral Government. by. a special _or general . order in public interest ·so· directs; V! KLAD COAL MERCHA! -iT v. UNION (Desai, J. ) . 673 Armed with thq. power conferred by Sec. 27A the Central . ~ · 1 . Government has·issued what is. called Preferenti~l Traffic Schedule.

4 It ;Jrescribed five priorities'/\' to 'E' with inter se priorities amongst 'A' to 'E' to be accorded by the railways· fof · transport of certain goods or class of goo. ds specified under each category. · A brief reference to various Priorities 'A'· to 'E' would at a glance show how the priorities have been.. determined in p~blic and national foterest. The Gener;tl Order No. 68 directs that in exercise of the powers eonterred by Sec. 27A cif 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 immediate and operational nature ordered by the Quarter Master General's Branch through Milrail, whiclr will be · marked. 'Immediate' in respect of Personnel, Vehicles a_nd Stores, Military Special. irains and · ' immediate Operational demands.

Demands of the Military ·have been accorded the highest priority. for the security of the nation.. Priority 'B' includes fo6dgrains', fertilisers, edible groundnut . 'cake: Iron and Steel etc. Next to national security hunger has been given priority. Priority 'C' incfodes inter alia coal from collieries. Coal has till . recently been the primary 'source S,Ul>RBME COURT RBPoRts t19S4] 1 s. c. a. used to catry on governn{ental activity undertaken for the benefit of . A .. 'public or to subser~e some public int'erest and which may as well ' include: the' efficient adminstration of the governmental agencies. Sec. 27A also confers power to. direct any railway administration-to ·give. special. facilities for or. preference 1. 0 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 Centra. 1 Government is better • ·~. equipped . to knciw what class of goods are required to b.

e sent to any · , particular area expeditiously to meet some shortage, or . for national security or to meet an emergency or any natural· or man-made • . catastr9phy so as to accord special treatment in the matter of transport. See. 28 can be s~id to some extent to be a cor9llary to Sec. 27 A in as 'much as 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 admini'stration, or any particular description of traffic, in any respect whatsoever, or subject ·any particular ·person or railway" admin'istratlon or any particular description of tr~ffic to any undue or unreasonable prejudice or. D" disadvantage in any respc. ct whatsoever. To repeat railway being a · . State monopoly undertaking, it had to be statutorily ·controlled from abusing its 1Donopolistic characte,r by prohibiting it from giving any· . - undue or unreasonable prefernce or.

advantage or acting 'in any manner which. would evidence undue. or tirireasonable prejudice or" disadvantage in any. respect whatsoever.. Equality guaranteed be Art. 14 is translated·· into statutory provision . in Sec. 28. A Staie 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 F;.. or special fa~ility, in an' emergency this equal opportunity· would create a havoc. Therefore on the other hand, the Central Govc. rnment io meet the needs of the couniry arisi~g in any eventuality can , give directions for giving . sp_ecial facilities for cir preference to t)le -1 ·traMport. of goods or. any class_ of goods. In the absence of power. such as conferred by Sec. 27A, floods, draughts; .

national secu~ity ~·requirements, unscropulous hoarders, artificial shortages matefildS ·for national projects in a country of the dimensions of ·India cannot. · be effectively and adequately tackled. This is the ·genesis of the power conferred by Sec. 7_7A. · . . ' -, :Armed with the power conferred by Sec. 27A the Central Government has . issued Preferential Traffic Schedule. Priorities 'A' VJKLAD COAL MERCHANT v. UNION (Desai, J. ) 677 • . to 'E' therein set oui in the matter of transport of goods by railway clearly manifests 'a. public policy framed to subserve public. intrest. Coal the primary source of en~rgy has been Telegated below the . military requirement '(Priority 'A'). and foodgrains and fertilisers, Iron and Steel material for wagon b~ilding, seeds etc. · (Priority 'B') and then comes the primary source of energy in Priority 'C' . Co11l. Does this prior;ty manifost undue· preference prohibited by Sec.

28 or a general· order· issued 'by, the Central Government in· public interest.? · Let orie i;onfusion be 'cleared at the outset.. Submission that ·there i. s virtually a total embargo on the transport of coal by. ·railway at ihe·instance 6ft. he 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, includi~g the impugned order dat~d April I, 1972, is to impose a total ban o. n the transport· of coal offered bi! : the petitioners. As w)ll be . presently· pointed out, this statement is · unfounded in ·fa. cts and pr~sents a distorted picture in the· matter ·of transport of coal J? y railways. ! 'riotity 'C' (iii) which deals with coal provides . for transport of coal from collieries to various parts in fodia. It was ·subjected to varylng constructions. · It ha~ been. extracted earlier.

In order to be · 'eligible fpr obtaining' allotmen't of wagon under Priority 'C',. it is necessary for the person indenting the wagon to satisfy tbe various . conditions specified therein. . They are : (i)' that the coal is to be loaded from . the collieries; (ii) that the coal to bb load. ed 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 Goveinment 'rnd/or other' recoqimending authoiities'. 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 witli the Zonal Scheme applicable. to each field and the principles of transport rationalisation • in force from time to time. In order to pomply with the precon.

ditions for eligibility under Priority 'C', a list of sponsqring authority aut~orised to. sponsqr coal movements is drawn up and is set' out in Annexure '! l' to· the Preferential· Traffic Schedule. These ·general c~nditions are further subject to Notes A ·\Q E. Why such • 678 SUPREM~ coURt REPORTS [1984] 1 s. c. il. an exhaustive and detailed provision is made is . not difficult to . · answer? Coal forms 32% of the total transport of goods ha~dled by the Railways. On an average, more than 10,000 wagons will have to be allotted daily for transport -of 9oal. 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, it is necessary to handle its transport with scientific precision.

Therefore, there is a prior planning aboura year in ·advance drawn up by the Director, Movement (Railways) setting out Zonal Scheme ofdistribution 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 tbi:ir respective regions would be in clos~ and intimate contact "with the consumers of coal both industr. ial and individual. Even though· pbwer bas been conferred on them to spousor 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 tra·nsport of coal.

In· addition to this the Government has set lip 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, c. emerit plants steal plants, ·textile factories, chemical industries and the like. This very narration would show that if there is disturbance in regular supply of coal to this priority sector resulting in their closure, there would be a ripple • ·effecting various ancillary industries creating a major dislocation in ··in the national economy and escalating haunted spectre of layoff . and unemployment. Jhat 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 seriou~ dislocation of this primary source of energy being distributed • all over' the country keeping in. view national priorities. , With this backg~ound, it is no~ difficult to appreciate the H. various orders issued,by the Railway Administration and the Central •Government regulating the movement of coal. • • \IIKLAb COAL MERCHANT v. UNION (lJesai, J:) . 679 . Railway is a monopolistic undertaking. in the· matter of transport of coal by Railways. Barring some tiny dots which may become v'isible only by a magnifying. glass, the entire railway network 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. bounds may prove to be a menace, . Therefore, regulatory measur~s are necessary to preven~ 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, nam'ely, it being State within the meaning of Art. " 12 of the Constitution, all its actions will have to conform to the fundamental rights ensl;frined in Part III of the Constitution. P! trt Ill 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 arbitr. arily picking and choosing some out of those seeking to use its serviCes and facilities. But Sec. 28 is subject to Sec.. 27A.

Ifthe railway administration -accords priority in transport of goods by giving ·special facilities fur orprefe~ence fo 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 wJth such special or general order could never be attacked as being violative of Sec. 28. · Sec. 28 forbids discrimination by ,giving undue or unreasonable preference or advantage in respect ·ofany particular traffic to any particular person or any other railway admiilistration but'this general pr~hibi· tion against discrimination is subject to the ·overriding power conferred on Central Government under Sec. 27A. If whiie giving effect to the orders of the Central Government i. ss. ued under ·Sec.

27A, priority is accorded in the matter of transport of goods consig• ned to Central or l>tate government or class of goods specified in the general or special order issued iirthis 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 · pooference or advantage to or in favour ofany particular person or· railway administration. Wh_at Sec. 28 forbids is discrimination. in the matter of transpo_rt of goods against a class but. thi~ is subject to • "680 .. SliPRilME COliRt _REPORTs (1984) 1-s. c. a. 'ihe permissible classification that W· between the demand and supply of various facilities. Trans· port is one such. Once.

there is a gap between the demand for transport service offered by the Railway arnl 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 targets. · • This equitable distribution would necessitate imposing of . reasonable 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 accor· ded 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 respec! °of Personnel, . Vehicles and Stores, Military Special trains and immediate Operational demands that. is nati,onal 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. H1:1nger has been accorded. Priority 'B'. · And coal falls in Priodty 'C' being the primary source of energy, Planned regulated. movement of . coal to . meet priority needs if it results in denial of tliat facility to non-prio- •rity·sector could not be rejected as placing an unreasonable· restri~ ction on the fundamental freedom to carry on. trade or business. '·-· \ And that is the objecrunderlyirig Sec. ·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 . C(iii) in the matter or'transport of cqal from colliery sidings permits special facility or preference to individuals or groups of persons se)ected by sponsoririg aut\10rity or recommending body for transport of coal, it is ultra vires Sec. 27A of the Act.

One has merely to look at the list of sponsoring and recommending authority to reject · this submissi~n. Annexure 'B' to Preferential Traffic Sched~le sets out the ! 1st of sponsoring authorities · It is a long list but a bar~ perusal of it is sufficient to sho1v at a glance that Central and_ State . Governments as well as highly placed _Central and State Government . Ofi)cers have been appointed as spo_nsoring authority in respect of 1 coal required by different area and industries. Again in various States- various sponsoring'· authorities have been set up . by _State Government. · Power is confered on these sp0nsoring authorities ,to . sponsor persons who would be accorded priority in transport oj; coal. . These responsible persons and bodies set up in each State as sponsoring authority 'arc expected to aet in a responsible manner keeping . in view the demands of the area and the industry,~ for coal {n each State.

It i~ therefore, idle to contend that setting up of sponsoring or recommending . authority in Priority C(iii) of the Preferential. Traffic Schedule lsultra vires Sec. 27A of the Act. · R~ Gr. 5 : It was next contended· that the Order No... TO (g) 1510/71 dated Ap~il 1,1972 introducing of abbreviatio. n 'GX' and appending it to all railway stations has resulted in every such station -. \· befog not open for outward boo~ing of ·coal, coal shale, lignite etc. ·. in wagon. loads and'therefore it violates Sec. 28 of the . Act because· thereby petitioners are wholly prohibiie_d from transporting their coal by railway and, making every empty w_agon available io those covered byJ'riority C(iii). · lt wai said that the order dated April. ! ,1972 has the pernicious tendency of giving u·ndue preference-to ' ·Priority 'C'(iii) tr~nsporters and subject~ petitfoners to undue or · unreasonable prejudice. or disadvantage, both situations_ being prohibited by Sec. 28. As pointed out earlier, .

transp~rt of . coal is .. VIKLAD COAL MERCHAN'f v. UNIO. N (Desai: J. ) 685 according to a pian drawn up a yeadn advance: Further this pfan is subject to the decision of the Standing Linkage"Committee~ Every · meHculous detail is. worked out in . advance. A daily loading of maximum number' of wagons is pre-planned. Loading of t_he wagons with coal at a targate<I number daily requires rotational movement also according to plari. . A wagon once. loaded with coal it moves . . .. . , out to its destination has a certain average return time stipulated and ·worked oui in.. advance. There may ·be dislocations. In orde. r to meet ·this eventuality ·in the counter,affidavit it is 'stated ·that no wagon· load of coal can be booked from wayside stations. It can only be booked from colliery sidings and that ought to be so. To achieve this desired end, an abbreviation '. GX' was· devised and C. appended to all stations. Where a station bas an abbreviation'GX' appended to it, it would J:!

lean that the station is nof operi for outward booking of coal,. coai shale, lignite, patent fuel, soft coke an<! · hard coke in wagon loads. We fall to see· how: this iegulatory arrangement . violates Sec. 28. In' fact, this incidental arrangement helps in smoothly working the Zonal Distribution Scheme arid the ·planned movement ·ofcoal. And it is not disputed· that· the coal in ·smalls, if offered and if the· space is available can be moved from wayside stations: · Therefore, we find no meflt in' the submission. · Re· Gr. 6 : It was laStlY ~r~ed". that ~Y affixin~· ~~br~viation 'GX' ·~ •. to all waysides stationsia total 1ban is· imposed on the· transport of coal offered by the petitioners and therefore, the Order· dated April 1,1972 is violative of Art: )9(1). (g). It is the -same submission slightly_ differently clothed. As stated ear1ier movement of coal is · planned and regulated and no tiqkeririg is permissible.

Petitioners are equally subject to this planning and regul_ated ·:movement. · It cannot be tinkered with. To give elfeci to this planned movement ) ~bbreviation 'GX' is devised and appended t~ ~U the railway stations fofonning the transporters that the. station is not ·open for transport of coal. in wagon loads. Coal in smaUs can be offered for transport that is what. the petitioners do not desire. All regulatory measuros discussed in detail hereinbefore clearly indicate that transport of coal is ·scientifically planned and devised in_ advance. All the ) ,,,; ,. · impugne4 ordets ,are made ·for effe<;tive implementation ·of the ' planned movement of coal. If consis_tent with this planning,_. the·· railways. have stopped booking Of coal in wagon load from wayside station, it cannot be said th~t this action. has imposed such an unreasonable restrict{on on ihe fundamental freedom of the petitioners to carry on their trade as to be violative of . Art. 19(1) (g). • ..

We cannot part with this judgment without recording our uninhibited appl'lociation of thorough study of the knotty issues, re. search 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 put in by hiin in collecting the most useful ma\arial and elucidating the same before the Court in a very able manner helped. us considerably ill disposing of these petitions. • These are the reasons which persuaded us to make the order · set out at the commencemant of the judgment. H. S. K. Petitions dismissed. • ·~ . . ' . •