TYAGI, J. - (1.) THIS is an appeal filed by the State of Rajasthan against the judgment and decree dated 30th August, 1958 of the District Judge, Jodhpur restraining the defendant State not to recover any amount from plaintiff Mohanlal under the monopoly agreements for plying the plaintiff's buses for a period commencing from 26th January, 1950 to 31st March, 1951, on (i) Nagaur-Role-Deh and (ii) Kuchera-Khajwana routes in the area of the erstwhile Jodhpur State.
(2.) THE facts of this case are not in dispute and they are as follows : In 1948 the Government of the erstwhile State of Jodhpur issued a tender notice for granting monopoly rights to run motor transport services for passengers and goods on Nagaur-Role-Deh and Kuchera-Khajwana routes in the State. In pursuance of the said notice, plaintiff Mohanlal submitted his tender and the Govt. of Jodhpur State accepted the same, and by virtue of two agreements dated 8. 11. 1948 and 1st Dec. 1948 entered into between the State Government and plaintiff Mohan Lal, the monopoly rights were conferred on the plaintiff to run his vehicles for passenger and goods transport on the routes mentioned therein. THE monopoly for Nagaur-Role-Deh routes was for three years from December 1, 1948 to November, 30, 1951, and the plaintiff was to pay to the State Rs. 72,121/- for that route. As regards Kuchera-Khajwana route, the monopoly rights were given for three years and five months, that is from July, 1, 1948 to November, 30, 1951 on payment of Rs. 41,121/ -. It is alleged that the plaintiff had paid the amount of Rs. 51,000/- to the defendant State for the period upto January, 26, 1960, but according to the calculation of the plaintiff an over-payment was made by him to the tune of Rs. 1,346/ -. He has, however, relinquished his claim for the repayment of this amount of Rs. 1,346/ -. THE plaintiff's case was that after 7th April, 1949, the State of Jodhpur merged in the present State of Rajasthan and thereafter the Constitution came into force from January 26, 1950, guaranteeing certain fundamental rights to the citizens of India. According to the plaintiff, the monopoly contracts entered into between the plaintiff-respondent and the defendant-appellant became frustrated and therefore void by virtue of the provisions of the Constitution and, therefore under the terms of the said contracts the successor State, that is, the State of Rajasthan could not realise the suit amount for plying his buses and trucks on the said routes for the period in question, that is, from the 26th January, 1950 to the 31st March, 1951. It is further alleged by the plaintiff that the defendant State issued a demand notice for Rs. 69,932. 4. 0 requiring the plaintiff to pay the said amount for plying his vehicles on the aforesaid two routes between 26th January, 1950 and 31st March, 1951, but this demand, according to the plaintiff, was illegal and could not, therefore, be realised by the defendant State from the plaintiff. With these allegations, the plaint was filed by the plaintiff in the court of the District Judge, Jodhpur on 5th December, 1955 with a prayer that the defendant, its servants and agents be restrained by an injunction to recover a sum of Rs. 69,932. 4. 0 stated to be outstanding on account of the plying of his vehicles on the aforesaid routes for the period after 26th January, 1950 through the Public Demands Recovery Act or by any other means, and it may also be declared that the defendant State was not entitled to recover any money from the plaintiff for the period commencing from 26th January, 1950 to 1st April, 1951. The defendant-appellant contested the suit of the plaintiff and contended that the plaintiff continued to enjoy upto 31st March, 1951 single handed all the monopoly rights conferred on him under the monopoly agreements and hence he was bound to pay the money to the State under the contracts till the date the rights were enjoyed by the plaintiff under the said agreement. The State also denied that the contracts had become frustrated and void on account of the enforcement of the Constitution of India and prayed that the plaintiff's suit should be dismissed with costs. Neither party has led any oral evidence in this case. They have, however, placed on record certain documents. Learned trial Judge, after taking into consideration all the documentary evidence placed on record and relying on certain judgments of this Court and that of the Supreme Court, came to the conclusion that the impugned agreements of 8th November, 1948 and 1st December, 1948 became void on account of the guarantee given to the citizens of India by the Constitution under clause (g) of Art. 19 (1) as they have the effect of transgressing the fundamental rights of the plaintiff. In view of this finding, the trial court issued an injunction to the defendant-apppellant not to realise any money from the plaintiff for plying his buses and trucks on the two routes mentioned in the said agreements for the period between 26th January, 1950 and 31st March, 1951. Having felt aggrieved by this judgment the State has come in appeal before this Court. The stand taken by the defendant State before the trial court was that uptill 1st of April, 1951 when the Indian Motor Vehicles Act, 1939 came into force in the State of Rajasthan, there was no law in the erstwhile State of Jodhpur and therefore the State Government had to realise the contract money from the plaintiff for plying his buses and trucks on the said two routes under the terms of the contracts, out after making a due search Mr. Ramavtar Gupta, appearing for the State changed His stand before us and urged that the Marwar Motor Vehicles Act, 1945 was in force at the relevant time and it remained in force upto 1st April, 1951 when the Motor Vehicles Act of 1939 was extended to the entire area of the newly formed State of Rajasthan including the area of the erstwhile State of Jodhpur, and there-fore the monopoly contracts which were entered into between the parties under the provisions of the "motor Bus and Taxi Services General Rules and Conditions" of 1933 shall be deemed to have been executed under the provisions of the Marwar Motor Vehicles Act, 1945. In this connection his main argument is that the Marwar Motor Vehicles Act, 1945 was amended on 8th June, 1946 and a new sub-sec. (8) was introduced to sec. 57 of the said Act. By adding this new sub-section, it was provided that the procedure to be followed for the grant of monopoly permits shall be as prescribed in the rules framed by the Government in that behalf provided that the practice and procedure for the grant of monopoly permits for the time being in force shall continue to be in force until such rules are framed. Mr. Gupta runner submitted that the Finance Member of the State Council of the Jodhpur Mate issued on 18th August, 1930 certain directions under the instructions of His Highness the Maharaja Sahib Bahadur of Jodhpur for constituting a Board of communications for the State of Jodhpur consisting of the Finance Member State Council, (2) the Revenue Member State Council, (3) the Manager, Jodhpur State Railway and (4) the Superintending Engineer, P. W. D. These directions contained a clause that the said Board shall be entitled to issue such rules to control public motor services for the grant of licence to run the motor services on contract system or any other system that the Board may consider advisable. It is alleged that in pursuance of these directions, the Board issued certain rules on 1st August, 1933 and these rules are known as. "the Motor Bus and Taxi Services General Rules and Conditions". According to Mr. Gupta, these rules after the amendment of sec. 57 of the Marwar Motor Vehicles Act, 1945 acquired the status of law as having been adopted by the said amended provision of the Act and until the new rules were framed in that behalf they were deemed to have been framed under sub-sec. (8) of sec. 57 of the Act. These rules provided a procedure for the grant of monopoly contracts. Mr. Gupta vehemently urged that these rules were framed in the interest of the general public as the object of granting the monopoly rights was to realise the maximum amount from the bus operators and to create with the help of that amount a Road Fund for the development and upkeep of the roads in the State. He also urged that the said rules read with sub-sec. (8) of sec. 57 of the Marwar Motor vehicles Act, 1945 shall be taken to have created a reasonable restriction on the fundamental rights guaranteed to the citizens of India under Article 19 (1) (g) of the Constitution, and that being so, the impugned monopoly contracts entered into between the plaintiff and the defendant cannot be said to have been hit by the fundamental rights as embodied in the Constitution and as such the defendant orate had a right under the contract to realise the amount from the plaintiff for using the highways by plying his buses and trucks on the said routes. Mr. B. B. Desai, appearing for the plaintiff- respondent, on the other hand, urged that the Constitution by virtue of Article 19 (1) (g) has guaranteed to the citizens of India a right of free trade including the right to ply buses and trucks on the road. He further submitted that a citizen of India enjoys a right of passage over the highways to ply his vehicles whether for the purpose of pleasure or past time or for trade and business and this right cannot be abridged by the State unless the restriction put thereon is a reasonable one and has the sanction of some valid law of the land. According to Mr. Desai the Motor Bus and Taxi Services General Rules and Conditions even if they are taken to have been framed under the Mar-war Motor Vehicles Act of 1945, as urged by Mr. Gupta, they have the effect of taking away the right of the citizens of India to use the routes mentioned in the impugned agreements and, therefore, these rules are violative of the guarantee given by the Constitution and as such they are void on account of the provisions of Article 13 and 19 (1) (g) of the Constitution. He challenged the validity of these rules also on the ground that they were never published in the Marwar Gazette and therefore they did not acquire the status of a law or rules. It was also urged by Mr. Desai that these rules cannot be said to have contained a procedure as envisaged by the provisions of sub-sec. (8) of sec. 57 of the Marwar Motor Vehicles Act, 1945. Mr. Desai drew our attention to the constitutional amendment of 1951 in clause (6) of Article 19 wheerby a provision was made that monopoly rights could be created in favour of the State Government in respect of any trade or business, but, according to him, this provision did not empower the State to create monopoly rights in violation of the guarantee given by the Constitution to oust one citizen from the trade or business in preference to another citizen. Since, in the present case, the monopoly rights have been created in favour of an individual and not in favour of the State, the impugned agreements cannot be saved even if the rules relied upon by the State Government are taken to have been made under the provisions of the Marwar Motor Vehicles Act, 1945. Arguments have been addressed at length by learned counsel appearing for the State to show that the Motor Bus and Taxi Services General Rules and Conditions of Jodhpur State were issued under the command of His Highness the Maharaja Sahib of Jodhpur and therefore they had acquired the status of law, but this position has been contested very seriously by Mr. Desai appearing for the plaintiff-respondent as he has attacked the validity of the rules on the ground that they were never published in the Marwar Gazette and therefore even if they had been issued under the command and direction of His Highness the Maharaja of Jodhpur, they cannot be said to have acquired the status of law and therefore they cannot be used as an instrument to provide a reasonable restriction on the fundamental rights of the citizens of India to carry on the trade and business of plying vehicles on the highways owned by the State under cl. (6) of Art. 19 of the Constitution. In our opinion, we need not decide this controversy in this case whether the Motor Bus & Taxi Services General Rules and Conditions of Jodhpur have or have not acquired the status or force of law because we feel inclined to hold that even if these Rules had the force of law they cannot be successfully employed by the State to justify the creation of a monopoly in favour of the individual citizens as they do not impose reasonable restriction on the exercise of the fundamental rights guaranteed by sub-cl. (g) of cl. (1) of Art. 19 of the Constitution. In order to further examine the contention of the State that the said rules validly provide a reasonable restriction on the fundamental rights of the citizens of India as contained in Art. 19 (1) (g); we for the time being, assume without of course deciding the controversy raised by the parties that the rules had acquired the status of law, and it is in this light that we have to see whether they can stand the test laid down by the Courts in India for curtailing the fundamental rights by prescribing the restrictions under cl. (6) of Art. 19 of the Constitution. In support of his contention that the said rules imposed reasonable restriction on the fundamental rights of the citizens of India, Mr. R. A. Gupta has relied on three Supreme Court decisions, namely, The Lord Krishna Sugar Mills Ltd. vs. Union of India (1), J. Y. Kondala Rao vs. Andhra Pradesh States Road Transport Corporation (2) and The Collector of Customs, Madras vs. Nathella Sampathu Chetty (3 ). Before we take up for consideration the plea of the State, it will be relevant to note that except the order of the Finance Member of the State Council, Jodhpur dated 18th August, 1930 in which it was mentioned that the money realised from the sale of licenses for motor services shall be utilised to create a Road Fund and shall be spent for the development and upkeep of the roads in the State, there is nothing on the record to show that the State Government and after its merger the Government of the successor State of Rajasthan did use the money realised out of monopoly contracts for the purpose mentioned in the said order of the Finance Member. The State Government did not lead any evidence to show as to how this direction contained in the said order of the Finance Member of the Jodhpur State Council was complied with. On 7th April, 1949, the State of Rajasthan was formed and the erstwhile State of Jodhpur was merged therein, but it is not known to learned counsel for the appellant as to how the money realised from the monopoly contracts was spent by the successor State of Rajasthan. Mr. Gupta has not been able to satisfy us that such fund was maintained for the development of roads in the region of the erstwhile State of Jodhpur. In the absence of any positive evidence, it is difficult for us to accept the contention of the State-appellant that it was in public interest that the monopoly contracts were granted under the said rules. While judging the reasonableness of the restrictions imposed by the monopoly contracts on the fundamental rights of the citizens, we cannot altogether forget to take into consideration that the State has failed to establish that the impugned contracts were given in public interest. Now we consider the authorities cited by Mr. Gupta in support of his contention. In L. K. Sugar Mills Ltd. vs. The Union of India (1), it was contended by the manufacturers of sugar that the whole export programme in respect of sugar under the Sugar Export Promotion Act, 1958, amounted to an infringement of their fundamental rights under Art. 19 (1) (f) and (g), and amounted also to a compulsory acquisition of their property without payment of compensation, and therefore it was urged that the Act was an unreasonable restriction upon the fundamental rights guaranteed to them under Art. 19 of the Constitution. The learned Judges of the Supreme Court held that the need of foreign exchange to finance the various development schemes was quite obvious and therefore the object of enacting the Sugar Export Promotion Act, which provided ample foreign exchange to the country, was obviously in public interest and that the foreign export served the national interest by establishing the sugar market so that the production of sugarcane may be maintained at a reasonable level. It also stabilised national economy by earning foreign exchange. The loss, if any, was comparatively small and was spread over many factories. In these circumstances, their Lordships were of the opinion that the restriction was not unreasonable. The circumstances of that case were entirely different from those of the present case and therefore the observations of their Lord-ships of the Supreme Court in that case do not, in any manner, help the defendant State. In J. Y. Kondala Rao vs. Andhra Pradesh State Road Transport Corporation (2), the monopolies created in favour of the State under the Motor Vehicles Act, 1939 by nationalising the road transport services under Chapter IV-A of the said Act were challenged by the petitioner before the Supreme Court as being violative of the fundamental rights guaranteed by the Constitution. Their Lordships in this case repelled the argument of the petitioners by observing that Art. 19 (6) is a saving provision and the law enacted to empower the State to carry on a business to the exclusion of others is secured from attack on the ground of infringement of the fundamental rights. They further observed that sub-cl. (ii) of cl. (6) of Art. 19 was couched in very wide terms and the State can make law for the State to carry on business to the exclusion, complete or partial, of other citizens and to that extent the fundamental rights can be abridged. It is clear from this authority that the Constitution envisages the creation of monopoly rights but such rights can be created by enacting law only in favour of the State and not in favour of individual. In the present case, the monopoly contracts were granted to the individual and not to the State and therefore this ruling cannot help the State. In the Collector of Customs, Madras vs. Nathella Sampathu Chetty (3), sec. 178-A of the Sea Customs Act, 1878, which lays down the rule of evidence casting burden of proof on the person from whom specified goods have been seized to establish that they are smuggled. , was impugned being violative of Art. 19 (1) (f) and (g ). Their Lordships of the Supreme Court, while considering the question whether the provisions of this section were saved by clauses (5) and (6) of Art. 19 of the Constitution, laid down certain tests to ascertain the reasonableness of the restrictions imposed by the provisions of law and in that connection their Lordships quoted with approval a passage from the judgment of Patanjali Sastri, C. J. , in State of Madras vs. V. C. Row (AIR 1952 Supreme Court 196 at p. 200): "it is important in this context to bear in mind that the test of reasonableness wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. " Their Lordships also laid down that: "it would be apparent that this is in line with the great principle underlying the structure of the rights guaranteed by Art. 19, viz. , a balancing of the need for individual liberty in the matter inter alia of the right to hold property or of the right to trade, with the need for social control in order that the freedoms guaranteed to the individual subserve the larger needs - moral, social, economic and political - of the community and thus ensure orderly progress towards the goal indicated by the preamble. It would follow that the reasonableness of the restraint would have to be judged by the magnitude of the evil which it is the purpose of the restraint to curb or eliminate. " These criteria, as laid down by their Lordships of the Supreme Court, when applied to the facts and circumstances of the present case do not, in any manner, justify the imposition of restrictions by eliminating the citizens of India to exercise their fundamental rights of using the highway by plying the buses on the said two routes. In our opinion, the authorities cited by the appellant do not in any manner go to support the cause of the appellant advocated before us.
(3.) WE now turn to the contentions raised by Mr. Desai appearing for the plaintiff-respondent. His main contention is that after the Constitution came into force the impugned contracts creating monopoly rights in favour of the plaintiff became void by virtue of Arts. 13 and 19 (l) (g) of the Constitution and as such the contracts became frustrated from 26th January, 1950 when the Constitution came into force in the country and thereafter no right is left with the State Government to realise any amount under the contract from the plaintiff for plying his buses or trucks on the aforesaid route or routes. His argument is that after the Constitution came into force the plaintiff plied his buses on the route or routes in pursuance of his fundamental right to carry on the trade of plying buses on the highway which was guaranteed by the Constitution and not by virtue of the terms of the contracts; and therefore the State Government had no right to realise any money under the contracts. This question whether the contract of monopoly can be sustained even after the Constitution has guaranteed the fundamental rights of carrying on free trade under Art. 19 (l) (g) of the Constitution came up for consideration of this Court on various occasions and this Court has expressed its consistent opinion that the contracts which have the effect of precluding the citizens of India from exercising their fundamental rights guaranteed by Chapter III of the Constitution of India are violative of the provisions of the Constitution and hence void. The same question came up for detailed consideration before a Bench of this Court in Vasudeo vs. Nanalal (Civil First Appeal No. 37 of 1953, decided on 29th January, 1958 ). There the Bench consisted of one of us held: ". . . . . . . . . that the continuance of the monopoly after the coming into force of the Constitution would be attended- with still greater infirmities as any citizen would be free to carry on the business of ginning and pressing subject of course to such laws as the State might make, and the defendant could not be heard to rely on his monopoly agreement to prevent any body from carrying on the same business in what was the Paragana of Mirnbaheda. " The view was followed by this Court in Shivdayal vs. Vasudev (S. B. Civil Regular Second Appeal No. 105 of 1957, decided on 1st October, 1952) and Mubarak Hussain vs. State of Rajasthan (D. B. Civil Regular First Appeal No. 7 of 1958, decided on 11th October, 1965 ). We have already observed, while dealing with the contentions raised by the appellant that even if the Motor Bus and Taxi Services General Rules and Conditions, 1930 are assumed to be the law, they cannot save the monopoly agreements as the restrictions imposed by virtue of these rules for carrying on the business of plying the buses and trucks on the roads cannot be said to be reasonable restrictions and hence they are not covered by the protection given by clause (6) of Art. 19 of the Constitution. In this connection, our attention has been invited by Mr. Desai to an authority of the Supreme Court in Saghir Ahmad vs. State of U. P. (4 ). In that case, appellant Saghir Ahmad had challenged the validity of the U. P. State Road Transport Act (2 of 1951) under which the State Government could monopolise the transport services on any route within the territory of the State on the ground that, the right granted to the State was in direct conflict with a fundamental right of the petitioners under Art. 19 (l) (g) of the Constitution. The impugned legislation in that case had excluded all private bus operators from the field of transport business. Their Lordships, while dealing with the contention of the appellants, observed as follows: "prima facie' it is an infraction of the provision of Art. 19 (l) (g) of the Constitution and the question for our consideration therefore is, whether this invasion by the Legislature of the fundamental right can be justified under the provision of clause (6) of Art. 19 on the ground that it imposes reasonable restrictions on the exercise of the right in the interests of the general public. Art. 19 (6) of the Constitution, as it stands after the amendment of 1951, makes a three fold provision by way of exception to or limitation upon clause (1) (g) of the Article. In the first place it empowers the State to impose reasonable restriction upon the freedom of trade, business, occupation or profession in the interest of the general public. In the second place it empowers the State to prescribe the professional and technical qualifications necessary for practising any profession or carrying on any occupation, trade or business. Thirdly, - and this is the result of the Constitution (First) Amendment Act of 1951 it enables the State to carry on any trade or business either by itself or through a corporation owned or controlled by the State to the exclusion of private citizens wholly or in part. " These observations of the Supreme Court when applied to the circumstances of the present case negative the contention of the defendant-appellant because the state-appellant in this case has firstly failed to establish that the restrictions imposed on the fundamental rights of the citizens by the impugned contracts were in public interest, and secondly, the monopoly rights were created in favour of an individual and not in favour of the State and therefore even the first amendment of the Constitution which permits the monopolies to be created in favour of the State cannot go to help the defendant-appellant. ;