A) ABSTRACT / HEADNOTE

This case, Union of India & Ors. v. M/s Bhana Mal Gulzari Mal & Ors., deals with the constitutional validity of Clause 11B of the Iron and Steel (Control of Production and Distribution) Order, 1941, and a subsequent notification issued under it, which fixed the maximum prices of steel. The dispute arose when the Controller issued a notification reducing the steel price by ₹30 per ton, and the respondent-company was prosecuted for selling steel at prices above the newly fixed rate. The respondents challenged the validity of Clause 11B and the notification, asserting that they infringed their fundamental rights under Articles 19(1)(f) and (g) of the Constitution. The Punjab High Court ruled in their favour, but the Supreme Court reversed the decision, holding that neither Clause 11B nor the notification violated fundamental rights. The judgment reaffirmed that delegated legislation is valid if it adheres to legislative policy and that price control regulations aimed at equitable distribution and fair pricing of essential commodities do not inherently infringe constitutional rights unless they unreasonably restrict them. The ruling draws upon the precedents set in Harishankar Bagla v. State of Madhya Pradesh, [1955] 1 SCR 380, and distinguishes it from Dwarka Prasad Laxmi Narain v. State of Uttar Pradesh, [1954] SCR 803. This case remains a crucial precedent for evaluating the limits of delegated legislation and state regulation of essential commodities.

Keywords: Clause 11B, Iron and Steel Control Order 1941, Article 19, delegated legislation, price fixation, Essential Supplies Act, constitutional validity.

B) CASE DETAILS

i) Judgement Cause Title: The Union of India & Others v. M/s Bhana Mal Gulzari Mal & Others

ii) Case Number: Criminal Appeals Nos. 36 to 38 of 1955

iii) Judgement Date: 16 December 1959

iv) Court: Supreme Court of India

v) Quorum: B.P. Sinha, C.J., P.B. Gajendragadkar, K. Subba Rao, K.C. Das Gupta, J.C. Shah, JJ.

vi) Author: Justice P.B. Gajendragadkar (majority); Justice K. Subba Rao (concurring)

vii) Citation: [1960] 2 SCR 627

viii) Legal Provisions Involved:

• Clause 11B, Iron and Steel (Control of Production and Distribution) Order, 1941

• Sections 3, 4 and 7, Essential Supplies (Temporary Powers) Act, 1946

• Articles 19(1)(f) and (g) of the Constitution of India

ix) Judgments Overruled by the Case: None explicitly overruled, but Punjab High Court judgment was reversed.

x) Case is Related to which Law Subjects: Constitutional Law, Administrative Law, Economic Regulation Law, Criminal Law.

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The post-Independence Indian government inherited wartime economic control mechanisms like the Iron and Steel (Control of Production and Distribution) Order, 1941, which were enacted under the Defence of India Rules. As India transitioned into a constitutional democracy, the constitutionality of such delegated legislation became contentious. The Essential Supplies (Temporary Powers) Act, 1946 extended the control mechanisms with modifications suitable to peacetime governance. Clause 11B empowered the Iron and Steel Controller to fix maximum prices for various categories of steel, a power seen by the business community as intrusive, especially when reductions affected their inventory valuations retroactively.

On 10 December 1949, a notification under Clause 11B reduced steel prices by ₹30 per ton. The respondent-company, a registered stockholder, was prosecuted for selling at old prices. They approached the Punjab High Court, which found Clause 11B ultra vires for infringing Articles 19(1)(f) and (g). The Union of India appealed to the Supreme Court, contesting this finding.

D) FACTS OF THE CASE

The respondent-company, M/s Bhana Mal Gulzari Mal Ltd., a registered stockholder since 1948, operated under the Iron and Steel (Control of Production and Distribution) Order, 1941. In December 1949, the Iron and Steel Controller issued a notification under Clause 11B reducing prices by ₹30 per ton for all steel categories. The company was alleged to have sold from its old stock at prices higher than the newly notified ones.

Criminal prosecutions were initiated under Clause 11B read with Section 7 of the Essential Supplies Act, 1946, charging them for violating the price control. The company and its officials approached the Punjab High Court under Article 226, seeking quashing of the criminal proceedings and challenging the constitutionality of Clause 11B and the notification. The High Court ruled in their favour, terming the clause unconstitutional. The Union of India, aggrieved, preferred an appeal under Article 132(1) of the Constitution before