Ranjit Singh v. Union of India, AIR 1981 SC 461

(REASONABLENESS)

FACTS:

1. In these three petitions under Article 32 of the Constitution, the petitioners separately pray for a restoration of the quota originally granted to them in their respective licences for the manufacture of fire-arms.

2. The petitioner had been carrying on the business of manufacturing guns for a number of years. His quota to manufacture guns was considerably reduced by the Government. The quota was reduced from 30 guns to 10 guns per month, and it is alleged that this has resulted in considerable hardship in view of the financial liability and the establishment expenses suffered pursuant to the installation of the machinery.

3. The justification given was that the Industrial Policy Resolution of 1956 envisaged a monopoly in the Central Government for manufacturing arms and ammunition. The Court said: “Any curtailment of quota must necessarily proceed on the basis of reason and relevance.”

ISSUE:

Whether the Order passed by the Union of India curtailing the manufacturing quota is reasonable?

PETITIONER CONTENTIONS:

1. Writ Petition No. 833 of 1979 has been filed by Ranjit Singh who alleges that his father Pritam Singh commenced the business of manufacturing guns in 1950 under a licence issued by the Government of Jammu and Kashmir. The petitioner claims that his plea for the restoration of his original quota has been supported by the State Government. The petitioner cites a number of cases where the quota reduced in the case of other manufacturers has been restored and relies on other material to show that the determination of his quota has been arbitrary.

2. Writ Petition No. 834 of 1979 has been filed by Bachan Singh. The facts incorporated in the petition run a materially similar course, except that the original quota granted to the petitioner consisted of 50 guns per month and has now been reduced to 5 guns per month.

3. The petitioner in the third Writ Petition, No. 835 of 1979, is Uttam Singh. In his case, the original quota of 50 guns a month has been reduced to 15 guns a month. Here again, the pattern of facts is substantially similar to that traced in the other two writ petitions.

RESPONDENT’S CONTENTIONS:

1. It is asserted that in fixing a quota the manufacturing capacity of a concern is not a determining factor, and it is denied that the Government has acted arbitrarily. It is also urged that the petitioners should be denied relief on the ground of laches.

2. The Union of India rests its case on the Industrial Policy Resolution of 1956. Under that Resolution, however, it was decided that no objection would be taken to the continuance of the manufacture of arms and ammunition by existing units in the private sector already licensed for such manufacture provided the operation of those units was strictly restricted to the items already manufactured by them and that no expansion of their production or increasing the capacity of the items already produced was undertaken without the prior sanction of the Government of India.

3. On behalf of the Government it is urged that there is no fundamental right under Article 19(1)(g) of the Constitution to carry on the manufacture of arms. That contention is disposed of shortly. The Arms Act, 1959, expressly contemplates the grant of licences for manufacturing arms. An applicant for a licence is entitled to have it considered in accordance with the terms of the statute and to have for its grant on the basis of the criteria set forth in it.

4. The other contention on behalf of the Government is that the petitioners are guilty of laches.

RATIONALE:

1. Any curtailment of the quota must necessarily proceed on the basis of reason and relevance. If all relevant factors are not considered, or irrelevant considerations allowed to find place, the decision is vitiated by arbitrary judgment. On the material placed before us, we are not satisfied that the Government of India has taken into careful consideration the several elements necessary for forming a decision on the quota permissible to each of these petitioners. We are of the opinion that it should do so now. And, for that purpose, the petitioners should be entitled to place before the Government a fresh and complete statement of their case, with supporting written material, to enable the Government to reach a just decision in each case.

HELD:

The Court found that the Industrial Policy Resolution contained a specific commitment to permit the continuance of existing factories. In determining the specific quota of a manufacturing unit, the relevant considerations were the production capacity of the factory, the quality of guns produced and the economic viability of the unit on the one hand, and the requirements of current administrative policy pertinent to the maintenance of law and order and internal security on the other. These factors were impliedly read by the Court into the statute. Since the Government had left out these relevant considerations, its action was held to be arbitrary.

Accordingly, the Court allowed the writ petitions and directed the respondent Union of India to reconsider the manufacturing quota fixed in the case of each petitioner after allowing a reasonable period to the respective petitioners to set forth their case on the merits, with such supporting written material as they may choose to place before it.

COMMENTARY:

Though a statute may give prima facie an almost unlimited discretion to take administrative action, yet the Court may imply some limitations into this power and this may go to such an extent in a case that it may be difficult to say whether the Court is merely concerned with the legality of the order or it is going into the merits of the case. - MP JAIN