A) ABSTRACT / HEADNOTE

In Narendra Kumar and Others v. Union of India and Others, the Supreme Court of India decisively interpreted the constitutional validity of certain provisions under the Non-ferrous Metal Control Order, 1958, promulgated under Section 3 of the Essential Commodities Act, 1955. The petitioners, dealers in imported copper, challenged clauses 3 and 4 of the said order, contending that they unreasonably infringed their fundamental rights under Articles 14, 19(1)(f), and 19(1)(g) of the Constitution. Specifically, clause 3 restricted pricing of copper, while clause 4 instituted a permit system to regulate acquisition, completely excluding dealers in favor of manufacturers. The Court upheld that “restriction” includes “prohibition”, provided it meets the test of reasonableness and serves public interest. However, it found clause 4 unenforceable since the principles guiding permit issuance were not officially published as required under the Essential Commodities Act. Consequently, clause 3 was upheld as a valid restriction, but clause 4 was struck down for procedural illegality. The judgment profoundly clarified the contours of reasonable restrictions under Article 19 and emphasized procedural adherence in subordinate legislation.

Keywords: Reasonable Restriction, Essential Commodities Act, Non-ferrous Metal Control Order, Fundamental Rights, Prohibition vs Restriction

B) CASE DETAILS

i) Judgement Cause Title: Narendra Kumar and Others v. Union of India and Others
ii) Case Number: Writ Petition No. 85 of 1958
iii) Judgement Date: 3rd December 1959
iv) Court: Supreme Court of India
v) Quorum: B. P. Sinha, C.J., Jafer Imam, J.L. Kapur, K.N. Wanchoo, and K.C. Das Gupta, JJ.
vi) Author: Hon’ble Justice K.C. Das Gupta
vii) Citation: 1960(2) SCR 375
viii) Legal Provisions Involved:

• Article 14 – Right to Equality

• Article 19(1)(f) – Right to Acquire Property

• Article 19(1)(g) – Right to Carry on Trade or Business

• Article 19(5) and 19(6) – Reasonable Restrictions

• Section 3, Essential Commodities Act, 1955

• Clauses 3 and 4, Non-ferrous Metal Control Order, 1958
  ix) Judgments Overruled by the Case (if any): None
  x) Case is Related to which Law Subjects: Constitutional Law, Administrative Law, Economic Regulation, Commercial Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The judgment emerged at a critical juncture when India’s post-independence industrial policy necessitated regulation over essential commodities. As India transitioned from colonial economic control to a planned development regime, legislative tools such as the Essential Commodities Act, 1955, empowered the Central Government to regulate prices and supply chains. The Non-ferrous Metal Control Order, 1958, was issued under this framework, targeting the manipulation and scarcity in the copper market by importers. The petitioners, traditional dealers in imported copper, were directly impacted by this shift. Their exclusion from trade due to the permit policy and pricing restrictions prompted the constitutional challenge. This decision became seminal in defining the scope and limits of economic regulations vis-à-vis fundamental rights under Article 19, particularly distinguishing between permissible restrictions and impermissible prohibitions.

D) FACTS OF THE CASE

The petitioners were dealers in imported copper, based in Jagadhri, Punjab. Prior to April 3, 1958, they had entered into contracts with importers in Bombay and Calcutta to purchase copper. However, before they could take delivery, the Central Government issued the Non-ferrous Metal Control Order, 1958, under Section 3 of the Essential Commodities Act. Clause 3 of the Order restricted sale and purchase prices to the landed cost plus 3.5%, while Clause 4 mandated that acquisition of non-ferrous metals could only be done through a permit issued by a Controller acting in accordance with principles specified by the Central Government. Notably, these principles were not published in the Official Gazette or laid before Parliament. A subsequent internal communication on April 18, 1958, revealed that permits were restricted solely to manufacturers, excluding dealers entirely. The petitioners applied for permits but were denied. They approached the Supreme Court under Article 32, alleging violation of their fundamental rights.

E) LEGAL ISSUES RAISED

i. Whether the complete exclusion of dealers from the copper trade via Clause 4 and the associated permit system violates Article 19(1)(f) and 19(1)(g) of the Constitution.

ii. Whether the restriction on price under Clause 3 constitutes an unreasonable restraint on the right to trade.

iii. Whether the discriminatory treatment between manufacturers and dealers infringes Article 14.

iv. Whether Clause 4 was invalid since the permit principles were not published or laid before Parliament as required by Section 3(5) and 3(6) of the Essential Commodities Act.

F) PETITIONER/ APPELLANT’S ARGUMENTS

i. The counsels for the Petitioners submitted that Clause 4 of the Order, interpreted alongside the unpublished principles from April 18, 1958, imposed a total prohibition on dealers engaging in copper trade. They argued this amounted to not a mere restriction but an unconstitutional prohibition, hence violating Article 19(1)(g), which permits only “reasonable restrictions” under Article 19(6). Furthermore, by allowing only manufacturers and excluding dealers, the principles were discriminatory, violating Article 14. They also contended that such unpublished principles lacked legal enforceability, as they were not notified in the Official Gazette nor laid before both Houses of Parliament, thus breaching Section 3(5) and 3(6) of the Act. Clause 3, which fixed sale prices at 3.5% above landed cost, was also attacked for effectively driving dealers out of business.

G) RESPONDENT’S ARGUMENTS

i. The counsels for Respondent submitted that both Clause 3 and Clause 4, along with the principles guiding permit issuance, were reasonable economic measures enacted in public interest. The Government contended that the dramatic rise in copper prices due to monopolistic behavior of importers had necessitated urgent control. Therefore, both price fixation and issuance of permits to actual users (manufacturers) rather than intermediaries (dealers) served the larger interest of consumers and industry. They asserted that these measures fell within the permissible scope of reasonable restriction under Articles 19(5) and 19(6). The Government maintained that the Essential Commodities Act authorized such subordinate legislation, and there was no malice in the issuance of the Order.

H) RELATED LEGAL PROVISIONS

i. Article 14, Constitution of India
ii. Article 19(1)(f), 19(1)(g), 19(5), 19(6), Constitution of India
iii. Section 3, Essential Commodities Act, 1955 – Indian Kanoon Link
iv. Clauses 3 and 4, Non-ferrous Metal Control Order, 1958

I) JUDGEMENT

a. RATIO DECIDENDI

i. The Court held that the term “restriction” under Articles 19(5) and 19(6) includes “prohibition” if it is reasonable and enacted in public interest. Citing Chintaman Rao v. State of Madhya Pradesh, [1950 SCR 759], Cooverjee B. Bharucha v. Excise Commissioner Ajmer, [1954 SCR 873], and Madhya Bharat Cotton Association Ltd. v. Union of India, [AIR 1954 SC 634], the Court emphasized that regulatory and even prohibitory measures may be constitutional if justified in the context of economic control.

ii. Clause 3, which fixed the sale price at landed cost + 3.5%, was held to be a valid and reasonable restriction in the public interest, as it sought to counter the exploitative pricing by importers and ensure affordability for manufacturers and consumers.

iii. However, Clause 4 was declared void and unenforceable as the principles governing permits were never published or laid before Parliament, violating Section 3(5) and 3(6) of the Essential Commodities Act, 1955.

b. OBITER DICTA

i. The Court remarked that total elimination of middlemen is not per se unreasonable if the object is to reduce costs and improve access to essential goods. It acknowledged the utility of middlemen but justified regulatory exclusion in larger economic interest.

c. GUIDELINES

• “Restriction” under Article 19 includes “Prohibition” if it satisfies the reasonableness test.

• Economic regulations that aim to control prices or distribution can be constitutional even if they result in elimination of certain players.

• Subordinate legislation must follow procedural requirements under the parent statute to be valid.

• Non-publication or lack of parliamentary oversight invalidates administrative rules, even if the intent is valid.

J) CONCLUSION & COMMENTS

This decision established a clear boundary between regulatory powers and procedural mandates. While affirming the Government’s economic policy prerogatives, the Court emphasized procedural compliance as essential to constitutional legitimacy. The interpretation of “restriction” to include “prohibition” significantly widened the scope of permissible State action under Article 19, provided it passes the reasonableness test. However, the invalidation of Clause 4 reaffirmed that even well-intended policy instruments must adhere to statutory procedures, especially in the case of economic rights and administrative law. The judgment is a cornerstone for judicial review of subordinate legislation in India.

K) REFERENCES

a. Important Cases Referred

1. Chintaman Rao v. State of Madhya Pradesh, [1950] SCR 759 [1]

2. Cooverjee B. Bharucha v. Excise Commissioner and Chief Commissioner, Ajmer, [1954] SCR 873 [2]

3. Madhya Bharat Cotton Association Ltd. v. Union of India, AIR 1954 SC 634 [3]

4. A.K. Gopalan v. State of Madras, [1950] SCR 88 [4]

5. Saghir Ahmad v. State of U.P., [1955] 1 SCR 707 [5]

b. Important Statutes Referred

1. Constitution of India, Articles 14, 19(1)(f), 19(1)(g), 19(5), 19(6), 32

2. Essential Commodities Act, 1955, Section 3(1), (5), (6) – Link

3. Non-ferrous Metal Control Order, 1958, Clauses 3 and 4