Holding

The Court held that the circular does not infringe Article 19(1)(g) or Article 14 because the restriction is reasonable, indirect, and the government is entitled to select approved dealers for implementing subsidy schemes.

Summary

The Kerala government issued a circular designating RAIDCO and KAICO as the sole suppliers of pump sets to farmers in eight districts under subsidy schemes, which private dealers challenged as violating their Article 19(1)(g) right to trade and the equality clause, Article 14. The Supreme Court examined whether the restriction directly impinged on the dealers' trade, whether it was a reasonable restriction under Article 19(6), and whether the policy was arbitrary or discriminatory. Relying on precedents, the Court held that the circular did not directly restrict the dealers' freedom to trade, that the government may select approved dealers to ensure genuine supply and after‑sale service, and that the restriction was reasonable and not arbitrary. Consequently, the Court found no violation of Article 19(1)(g) or Article 14 and dismissed the appeal.

Issues considered

Does the circular directing supply of pump sets through RAIDCO and KAICO infringe the fundamental right to carry on trade under Article 19(1)(g)?
Does the circular violate the equality clause, Article 14, by creating a discriminatory monopoly in favour of two dealers?
Can the restriction imposed by the circular be justified as a reasonable restriction under Article 19(6) without a statutory basis?
Is the impact of the circular on private dealers' trade direct or merely ancillary?
Is the policy decision underlying the circular arbitrary, capricious, or unreasonable warranting judicial intervention?

Subjects

Article 19(1)(g)Article 14reasonable restrictiontrade freedomgovernment procurementpublic policycircularco-operative societiessubsidy schemediscriminatory monopoly

Judgment

KRISHNAN KAKKANTH A
v.
GOVERNMENT OF KERALA AND OTHERS

OCTOBER 11, 1996

[G.N. RAY AND B.L. HASNARIA, JJ.] B

Constitution of India Article 19(1)(g)--Fundamental rights under the
Article-Not absolute and are subject to various restrictions in the interest of
.. general public-Imposition of reasonable restrictions-cHeld justified.

Right to Business-Held, one cannot insist Government or an in-
c
dividual for doing business with him.

Constitution of India Article l~Reasonableness-cNot necessary to
enter upon any exercise for finding out wisdom of policy decision of Govern-
ment, except for testing public policy and constitutionality. D
The government of Kerala issued a circular directing that the
Regional Agro Industries Development Corporation (RAIDCO) and M/s.
Kerala Agro Industries Corporation (KAICO) would supply pump sets to
farmers, in 8 districts of Kerala. The appellants challenged the Constitu-
tional validity of the circular in the High Court. The High Court upheld the E
circular. Aggrieved by the order of the High Court the appellant has ap-
proached this court.

The contention of the appellant was that the fundamental rights of ,
the private dealers under Article 19(1) (g) of the Constitution was violated .F
by the Government. The Circular impinges upon the right to trading ac-
tivities of dealers in pump sets. The circular has created discriminatory
monopoly in favour of two dealers and must be held violative of Article 14
of the Constitution.

On the other hand according to the respondent the trading activities G
of the pump sets have not been controlled or regulated. The Government
only indirectly created some prejudice in carrying on trade or business and
as such the action does not offend Article 19(1)(g). The respondent further
contended that the government is duty bond to select appropriate dealers
who would supply genuine pump sets to farmers with proper after sale
service. H
487
488 SUPREME COURT REPORTS (1996] SUPP. 7 S.C.R.
A Dismissing the appeal, this Court

HELD : 1. Fundamental rights Guaranteed under Article 19(1)(g) of
the Constitution are not absolute but are subject to reasonable restrictions
to be imposed to strike a balance between the freedom guaranteed under
B Article 19(1) and the social control permitted by clauses (2) to (6) under
Article 19. The reasonable restriction is to be determined in an objective
manner and from the stand point of the interests of general public.
[498-F-G]

2. The infringement of fundamental right under Article 19(1)(g)
C must have a direct impact on the restrictions on freedom to carry on trade
..
and not ancillary or incidental effects on such freedom. [500-E]

3. A citizen has a fundamental right to 'carry on trade or business
but he has no fundamental right to insist upon the Government or any
other individual for doing business with him. Any government or an
D individual has got a right to enter into contract with particular person or·
persons with whom he or it will deal. [499-H, 500-A]

4. It is not necessary to enter upon any exercise for finding out th1!
wisdom in the policy decisions ot the State Government to ascertain
E reasonableness and arbitrariness of Article 14 of the constitution. Unless
the policy decision is demonstrably capricious or arbitrary or suffers from
the vice of discrimination or infringes any statute or provision of the
constitution, it cannot be struck down. Except for the limited purpose of
testing a public policy in the context of illegality and unconstitutionality
Court should avoid "embarking on uncharted ocean of public policy".
F [501-G-H, 502-A]

Kharak Singh v. State of U.P., AIR (1963) SC 1295, relied on.

Ramana Dayaram Shetty v. The Intemational AiTport Authority of
India, AIR (1979) SC 1628; Viklad Coal Merchants Patiala v. Union of India,
G [1984) 1SCR657, 682; Hanif v. State of Bihar, AIR (1958) SC 73; Laxmi v.
State of U.P., AIR (1981) SC 873, Traveli v. State of Gujarat, AIR (1968) SC
1323; Harekchand v. Union of India, AIR (1970) SC 1453; Sagir v. State of
U.P., [1955] 1 SCR 707; P. T.C.S. v. RTA AIR (1960) SC 801; Meenakshi
Mills v. Unio11 of I11dia, AIR (1979) SC 3366 and Lala Ha1icha11d Sarda v.
H Mizo District Cou11cil a11dA11r., [1967) 1SCR1012, referred to.
KRISHNANKAKKANTHv. GOVf.OFKERLA[G.N.RAY,J.) 489

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 13029 of A
1996.

from the Judgment and Order dated 7.2.96 of the Kerala High Court
in O.P. No. 16115 of 1995.

K.K. Venugopal, Fazlin Ahmed and E.M.S. Anam for the Appellant. B
K.N. Bhat, Additional Solicitor General, Bina Prakash and G.
Prakash for the Respondent No. 1.

Dipankar Gupta and T.T. Kunnikannan for the Respondent No. 2.
c
C.N. Sree Kumar and Shaju Francis for the Respondent No. 3.

The Judgment of the Court was delivered by

G.N. RAY, J. Leave granted.
D
Heard learned counsel for the parties. The constitutional validity of
the circular dated 19.5.1995 issued by the Secretary to the Government of
Kerala directing that for distribution of pumpsets under Comprehensive
Coconut development Programme and other similar schemes of the
Agriculture Department and in order to streamline the implementation of
the schemes specifying specific role and responsibilities for different agen- E
cies involved, M/s. Kerala Agro I~dustries Corporation (KAICO) and
Regional Agro Industries Development Corporation (RAIDCO) would
arrange supply of pumpsets in the districts of Kesarkoda, Kanner, Vyanad,
Koznikode, Malaopuraa1, Palekkad, Trissur and Kottayam and in the
remaining distri~ts supply will be effected by private dealers along with F
KAICO and RAIDCO, since challenged by the appellants in O.P. No.
16115 of 1995, but upheld by the impugned judgment of the High Court
dated February 7, 1996 is in question in this appeal. Such writ petition was
disposed by a common judgment along with other writ petitions being O.A.
Nos. 13936 and 14454 of 1995. In the said other writ petitions, the constitu- G
tional validity of the circular dated 30.3.1989 issued by the Registrar of
Co-operative Societies inter alia directing that all the Land Development
Banks, District Co- operative Banks and Service Co-operative Banks in the
State of Kerala would patroni~e RAIDCO to the fullest extent in
preference to private dealers in the matter of purchase of Agro Machine
under the scheme financed by the Banks/Societies and at in any rate not H
490 SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.
A less than 75% of total requirement of such Agro Machines should be
purchased through RAIDCO, was challenged. The I-ligh Court has also
upheld the validity of such circular by the impugned judgment.

It may be stated that in the circular dated 19.9 .1995 issued by the
Secretary to the Government of Kerala it was also indicated that pumpsets
B and accessories of the farmer's choice alone should be supplied and after
sale service facility should be provided by suppliers/dealers. It was also
indicated that the cost of pumpsets and accessories would be supplied at
a lesser price than that fixed by the State Level Technical Committee and
necessary advance amount would be provided to KAICO and RAIDCO
C for taking advance action for implementing the scheme.

It will also be appropriate to state that in the circular dated 30.3.1989
issued by the Registrar of Co-operative Societies, it was indicated that
RAIDCO was the only co-operative in the state under the Co-operative
Department, having a net work of branches for distribution of all sorts of
D pumpsets etc. RAIDCO has dealership of almost all important pumpsets
manufactures in the country and RAIDCO was sole distributor for Villiers
Petrol/Kerosene engines manufactured by M/s. Enfield India Ltd. In addi-
tion, RAIDCO has set up its factory at Palghat with NCDC assistance for
the manufacture of pumpsets in collaboration with M/s. Kirloskar Bros.
E Explaining the justification of the said circular, it was also indicated :
"Tl1ough this is a Co-operative Institution, it is felt that the
Co-operative bank including the Land Development Banks in the
State do not patronise, this society faces . stiff competition with
private dealers. The District Co-op. Banks, Cannanore and Kasar-
F gode have taken policy decisions to the effect that the loans
sanctioned by them to the primary societies, for the purchase of
Agricultural implements shall be routed only through this Co-
operative. This being a society assisted by the Government sub-
stantially, it is necessary in the interest of Government also that it
functions properly with good business.
G
In the circumstances, all the Land Development Banks, District
Co-op. Banks and Service Co-operative Banks in the State arc
directed to patronise RAIDCO to the fullest extent in preference
to private dealers. At any rate not less than 75% of the total
H requirement of Agro Machineries under the scheme financed by
KRISHNANKAKKANTHv. GOVf.OFKERLA[G.N.RAY,J.) 491

the Banks/Societies should be purchased through RAIDCO." A
Mr. Venugopal, learned Senior counsel appearing for the appellant,
has submitted that the circular dated 19.5.95 issued by the Secretary to the
Government of Kerala Directing that in eight districts mentioned in the
circular only RAIDCO and KAICO would arrange supply of pumpsets and
in other parts of the State of Kerala the said RAIDCO and KAICO along B
with private dealers would arrange the distribution of such pumpsets under
Comprehensive Coconut Development Programme and other similar
schemes, offends Articles 14 and 19(1)(g) of the Constitution.

Mr. Venugopal has contended that private dealers in the State of C
Kerala have a fundamental right under Article 19(1) (g) of the Constitution
to carry on the busine;s of sale of pumpsets and dealership in the pumpsets
without being subjected to any unreasonable restriction in such trading
activities. The aforesaid circular imposes embargo on the farmers of eight
districts covered by financial schemes introduced by the Government to
purchase such pumpsets from any dealer of their choice. They have been D
compelled to select pumpsets to be offered by RAIDCO and KAICO only
even if better terms and conditions of sale and after sales service are
offered by private dealers.

Mr. Venugopal has submitted that it does not require any imagina-
tion to accept that majority of the farmers will take the financial assistance
E
under the schemes introduced by the Government for purchase of pump
sets. If such majority of consumers of pumpsets are compelled to purchase
from the said two organisations, namely, RAIDCO and KAICO, the private
dealers' right guaranteed under Article 19(1)(g) to carry on trading ac-
tivities without being subjected to unreasonable restriction, is bound to F
suffer.

Mr. Venugopal has further submitted that fundamental right guaran-
teed under Article 19(1)(g) may not be an absolute right and such right
may be subjected to reasonable restriction but such reasonable restriction
may be imposed by statutory law and regulation on cogent grounds justify- G
ing the reasonable restriction imposed with reference to the object for
which reasonable restriction is imposed. In this connection. Mr. Venugopal
has relied on a decision of this Court in Kliarak Singh v. State of U.P. AIR
1963 SC 1295. A constitution Bench of this Court considered the validity
of Regulation 236 clause (b) of U.P. Police Regulations. It has been held H
~-
492 SUPREMECOURTREPORTS (1996JSUPP. 7S.C.R.
A in the said decision that if the petitioner who has challenged the constitu-
tional validity of the Regulation is able to establish that the impugned
Regulation constitutes an infringement of any of the freedom guaranteed
. to him by the Constitution, then the only manner in which this violation of
the fundamental right C<iil be defended is by justifying the impugned action
I
B taken by the police under the said Regulation by reference to a valid law,
i.e. be it a statute, a statutory law· or a statutory regulation (emphasis
supplied) .

The regulation contained in Chapter XX of the U.P. Police Regula-
.lions under which Regulation '237 is placed, have no such statutory basis
C but are merely executive. or departmental instructions framed for the
guidance of the police officers. They are, therefore, not 'a law' which the
State is entitled to make under relevant clauses (2) to (6) of Article 19 in
order to regulate or curtail fundamental rights guaranteed by the several
·clauses under Article 19(1) nor can the same be "a procedure established
by law," within Article 21 of the Constitution.
D
Mr. Venugopal has submitted that as the said circular of the Govern-
ment clearly impinges upon the right to trading activities of dealers in
pumpsets etc. and such restriction against free and uncontrolled trading
activities guaranteed under Article 19 of the Constitution is sought to be
E imposed, not through any statute or statutory rules and regulations or by
any proced~re established by law, but only on the basis of executive
direction of the State Government, the said unreasonable restriction sought
to be introduced by the said impugned circular must he held ·violative of
Article 19(1)(g) of the Constitution.
F.
Mr. Venugopal has contended that it had not been demonstrated that
as a matter of fact that private dealers in the said eight districts were not
supplying genuine pump sets etc. or they were charging price for such
implements at a rate higher than that offered by RAIDCO or KAICO or
that after sales service of the private dealers is unsatisfactory thereby
G causing hardship to the farmers purchasing pump sets etc.Jrom the private
dealers. Accordingly, there can not be any reasonable ground to give a
favourable treatment to a particular dealer or dealers and by giving unjus-
tified favourable treatment to such dealers, an unfortunate situation has
been created by which right to free trading activities of the dealers in pump
H sets etc. is seriou5Iy infringed..
KRISHNANKAKKANTHv. GOVf.OFKERLA[G.N.RAY,J.] 493

Mr. Venugopal has also submitted that a vast majority of the pur- A
chasers of such pump sets etc. are also being deprived of their unfettered
right to choose the dealers of their choice of such pump sets because of
the embargo on such farmers who have been given financial assistance
under the schemes of the State Government that they are to take delivery
of pump sets only from two dealers namely RAIDCO and KAICO. While
B
the farmers covered under financial assistance in areas outside the said
eight districts are free to choose their dealers and to strike better bargain
in an open competitive market, the farmers in eight districts have been
deprived of such free choice and consequential opportunity of striking
better bargain on account of open competition. Mr. Venugopal has sub-
mitted that when the Government has taken a decision to give largesses c
to the farmers by introducing benevolent schemes of financial assistance,
the Government cannot discriminate between farmers of one area and
farmers of another area in controlling the recepients of such largesses. In
this connection reference to the decision of this Court in Ramana Dayaram
0

Shetty v. The Intemational Airp01t Auth01ity of India, AIR (1979) SC 1628 D
has been made. In the said decision this court has held :

"It must, therefore, be taken to be the law that where the'
Government in dealing with the public, whether by way of giving
jobs or entering into contracts or issuing quotas or licences or
granting other forms of largess, the Government cannot act ar- E
bitrarily at its sweet will and like a private individual, deal with any
person it pleases, but its action must be in conformity with standard
or norm which is not arbitrary, irrational or irrelevant. The power
of discretion of the Government in the matter of grant of largess
including award of job contracts, quota, licences etc. must be F
confined and structured by rational, relevant and non-dis-
criminatory staµdards or norm and if the Government departs from
such standard or .norm in any particular case of cases, the action
of the Government would be liable to be struck down, unless it
can be shown by the Government that the departure was not
arbitrary, but was based on some valid principle which in itself was G
not irrational, unreasonable or discriminatory".

Mr. Venugopal has submitted that there is no demonstrable founda-
tion on fact that there was impelling reasons to treat the farmers of eight
districts, who got financial assistance under the schemes of the State H
494 SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.
A Government differently, thereby compelling them to take delivery of pump
sets from only two dealers. Hence, such action must be held to be arbitrary,
capricious and discriminatory without being informed by reason. The cir-
cular is therefore liable to be struck down also on the score of offending
Article 14 of the Constitution. Mr. Venugopal has submitted that the
impugned circular has resulted in creating a discriminatory monopoly in
B favour of only two dealers in the eight districts of the State in the dealership
business because by and large most of the farmers purchasing pump sets
etc. are covered by schemes introduced by the Government. Mr.
Venugopal, therefore, has submitted that the hostile discrimination meted
out to the farmers of eight districts and also dealers in pump sets etc.
C without any just reason, must be held violative of Articles 14 and 19 of the
Constitution and should be struck down by this Court by allowing this
appeal.

Mr. K.N Bhat, learned Additional Solicitor General appearing for
D the Sfate of Kerala, has however disputed the contentions of Mr.
Venugopal. He has submitted that no action has been taken by the Govern-
ment to regulate or control the business of dealership of pump sets etc. in
the State of Kerala. Hence question of violating the fundamental right
guaranteed under Article 19(1)(g) of the Constitution does not arise. Mr.
Bhat has submitted that unless any action has a direct impact on the right
E to carry on any trade or business, such action cannot be held to be violative
of fundamental right guaranteed under Article 19(1)(g). If the action of the
executive only indirectly creates some prejudice in carrying on any trade
or business such action per se does not offend Articli:; 19(1)(g). In support
of such contention, Mr. Bhat has referred to the decision of this Court in
p Vik/ad Coal Merchant Patiala v. Union of India, [1984] 1 SCR 657 (682). In
the said case, the Coal Merchants challenged the vires of Section 27A of
the Indian Railways Act and the circular issued thereunder relating to
Preferential Traffic Schedule providing for priorities for movement of
different goods. A circular was issued by the Ministry of Railway in
connection with movement of some goods including coal. The petitioners
G who were coal merchants, alleged that sum total of various restrictions
imposed by giving appreciation GX against all way side stations in the coal
belt and restricting loading of coal in wagons from the stations categorised
as GX and introducing Preferential Traffic Schedule, in their cumulative
effective resulted in total ban on transport of coal by Railways at their
H instance and such actions were violative of Articles 14 and 19(1)(g) of the
KRISHNANKAKKANTHv. GOVf.OFKERLA[G.N.RAY,J.] 495

Constitution. Repelling such contention, it has been held by this Court that A
whenever the court is called upon to examine the complaint that restric-
tions imposed on the freedom to carry on trade are unreasonable, it is
necessary to find out what is the trade and business of the complainant-
petitioner and to what extent the restriction, if any, is imposed upon the
freedom to carry on trade business and then to determine whether restric-
B
tion is reasonable or not. It is the direct impact of the restriction on the
freedom to carry on trade that has to be kept in view and not the ancillary or
incidental effects of the governmental action on the freedom to carry on trade.

(Emphasis supplied)

It has also been indicated that prima f acie it appears that petitioners
c
business or trade as coal merchants is in no way interfered with by the
Railways by not being able to provide transport facilities. Railway is not
the only means of transport. There are other means of transport by which
coal can be transported by the petitioners to their respective place of
business. Even assuming that the direct impact of the policy laid down by the D
Railway administration pursuant to the orders of the Central Government
under Section 27A results in denial of the allotment of wagon to the
petitioners, the restriction will none- the-less be reasonable because petitioners
are not wholly denied the allotment of wagons. (Emphasis Supplied)
E
Mr. Bhat has contended that trading activities in pump sets etc. have
not been controlled or regulated. Even within the area comprising the said
I eight districts, any dealer is free to carry on its trading activities in respect
of pump sets. By the impugned circular, the State Government has only
ensured that farmers in the said eight districts who have been given
financial assistance under a scheme of the Government, should take F
delivery of pump sets from RAIDCO and KAICO. Any other farmer or
( purchaser is quite free to choose his dealer. Such limited restriction is also
not there in respect of farmers, even though covered by the financial
assistance under the schemes of the Government, who are outside the area
comprising the said eight districts. It is, therefore quite apparent that there G
is no total ban of purchase of pump sets from private dealers in the State
of Kerala.

Mr. Bhat has submitted that it is quite open to the Government to
select appropriate dealers in pump sets for supply of pump sets to farmers
. or agriculturists to whom financial assistance has been given under schemes H
496 SUPREME COURT REPORTS [1996) SUPP. 7 S.C.R.
A of the. State Government. After all, that State Government will be within
its right to ensure supply of genuine pump sets at a desired price and
proper after sales service through its approved dealers so that the schemes
are effectively implemented by appropriate utilisation of the pump sets
over a reasonable period and, on such utilisation, the concerned farmer
may pay back the financial assistances received by him.
B
Mr. Bhat has further submitted that the impugned circular clearly
indicates that for "distribution of pump sets under the schemes of the
Government and for streamlining the implementation of the schemes
specifying specific roles and responsibilities of different agencies involved,
C the directions contained in the circular have been given.

Mr. Bhat has also submitted that there is no compulsion to any of
the farmers to get covered under the scheme. If any farmer within the said
eight districts, feels that it will be more advantageous for him to take
D delivery of pump sets from a dealer of his choice, instead from the said
two specified dealers, he may not avail the financial assistance under the
scheme. It is only when assistance is to be taken the choice of selecting
dealer has not been left to his discretion.

Mr. Bhat has contended that it is immaterial if some of the dealers
E are prepared to supply pump sets on more.favourable terms. In the instant
case, the Government has felt that pump sets should be supplied to farmers
covered under the financial assistance scheme through the dealers of its
choice in eight districts. The choice of dealers has also not been made on
the ipsi dixit of the governmental authorities. The circular issued by the
F Secretary of Co-operative Societies has indicated that RAIDCO is the only
state sponsored Co-operative Society having dealership of almost all
varieties of pump sets. It has been ensured that both RAIDCO and KAI CO
will sell pump sets at a price lower than that fixed by State Level Technical
Committee and will give proper after sales service. In the impugned
circular, it has been indicated that necessary advance amount will be
G provided to RAIDCO AND KAICO for taking advance action for im-
plementing the scheme. Mr. Bhat has submitted that it is not feasible to
give advance to large number of dealers. Nor is it a practicable proposition
to keep proper watch and supervision in the functioning of large number
of dealers. Therefore selection of the said two dealers is neither un- (
H reasonable nor capricious.
KRISHNAN KAKKANTH v. GOVT. OF KERLA [G.N. RAY, J.) 497

Mr. Bhat has also submitted that for the entire state of Kerala, the A
said two dealers could have been selected by the State Government as
approved dealers. But as Co-operative movement is less organised in areas
outside the said eight districts, the State Government did not feel any
necessity to ensure purchase of pump sets in such areas only from the said
two dealers. Mr. Bhat has, therefore, submitted that any interference by B
this Court against the impugned judgment is not called for and the appeal
should be dismissed.

Mr. Dipankar Gupta, learned senior Counsel, appearing for the
other respondents. has also supported the contentions of Mr. Bhat. Mt.
Gupta has submitted that RAIDCO is a state owned co- operative society C
having large number of branches in the State of Kerala. It has also the
dealership of almost all brands of pump sets. If also manufactures pump
sets in collaboration with Kirlosker. RAIDCO has elaborate arrangement
for after sales service. KAICO is also an established Co-operative Society
having dealership in pump sets. The Government, providing finance to
farmers and agriculturists, certainly has anxiety to ensure that such farmers D
and agriculturists should get supply of pump sets from such dealer on
which the Government may repose confidence.

If on such consideration, the two dealers have been selected for
supplying pump sets in the said eight districts, to the farmers and agricul- E
turists, no exception can be taken by alleging that such course of action
infringes Article 14 and 19 of the Constitution.

Mr. Gupta has submitted that dealership business in the State of
Kerala or in the region comprising the said eight districts has not been
regulated and controlled. It is still open to all the dealers to carry on F
trading activities in the dealership of pump sets in such areas. Mr. Gupta
has further submitted that the executive instruction of the State Govern-
,. ment in fixing two dealers in the eight districts has been issued for stream-
.lining and safeguarding the interest of the Government because of large
scale malpractices prevalent and found to be indulged in by the private G
pump set dealers contrary to the interest of the economy of the State.

Referring to the counter affidavit of respondent No. 2 RAIDCO, Mr.
Gupta has submitted that it was brought to the notice of the Agricultural
Department of the State Government that false invoices had been issued
without effecting actual sale of the pump sets with a :view to draw loans, H
498 SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.

A subsidies and other financial benefit from the Government. There had been
newspaper reports about this wide spread manipulations and irregularities
in the activities of various private dealers in the matter of sale of pump sets
against subsidies and financial assistance from the Governm::nt.

Mr. Gupta has also contended that it has been indicated in the
B counter affidavit of respondent No. 2 that co-operative movements are
stronger in northern regions comprising the said eight districts where pump
sets are sold in large numbers. There was, therefore, a felt necessity to fix
approved dealers in such area by the Government. Mr. Gupta has further
contended that the dealers are not recipients of loans or financial assis-
C tance from the Government. The farmers have not raised any dispute that
by the impugned Gover!1ment circular, they have suffered any prejudice
whatsoever. The selection of two dealers in northern region of the State is
not only within the right and competence of the State Government but such
selection is not also otherwise arbitrarv, capricious and unreason able. r
D Hence, question of infringement of Articles 14 and 19 of the Constitution
·does not arise. The appeal should, therefore, be dismissed.

After giving our careful consideration to the facts and circumstances
of the case and submissions made by the learned counsel for the parties,
it appears to us that the fundamental right for trading activities of the
E dealers in pump sets in the State of Kerala as guaranteed under Article
19(1)(g) of the Constitution has not been infringed by the impugned
circular. Fundamental rights guaranteed under Article 19 of the Constitu-
tion are not absolute but the same are subject to reasonable restrictions to
be imposed against enjoyment of such rights. Such reasonable restriction
F seeks to strike a balance between the freedom guaranteed by any of the
clauses under Article 19(1) and the social control permitted by the clauses
(2) to (6) under Article 19.
.v·
The reasonableness of restriction is to be determined in an objective
manner and from the stanc'point of the interests or general public and not
G from the '.:tandpoint of the interests of the persons upon whom the restric-
tions are imposed or upon abstract consideration. A restriction cannot be ,,.
said to be unreasonable merely because in a given case, it operates harshly
and even if the persons affected be petty traders Hanif v. State of Bihar,
AIR (1958) SC 73. In determining the infringement of the right guaranteed
H under Article 19(1), the nature of right alleged to have been infringed, the
KRISHNANKAKKANTHv. GOVT.OFKERLA[G.N.RAY,J.] 499

underlying purposes of the restriction imposed, the extent and urgency of A
the evil sought to be remedied thereby, the disproportion of the impositi_on,
the prevailing conditions at the time, enter into judicial verdict AIR (1981)
SC 673 Laxmi v. State of U.P., AIR (1986) SC 1323 Treveli v. State of
Gujarat and Harekchand v. Union of India, AIR (1970) SC 1453.

Under Clause (l)(g) of Article 19, every citizen has a freedom and B
right to choose his own employment or take up any trade or calling subject
only to the limits as may be imposed by the State in the interest of public
welfare and the other grounds mentioned in clause (6) of Article 19. But
• it may be emphasised that the Constitution does not recognise franchise or
rights to business which are dependent on grants by the State or business c
affected by public interest (Saghir v. State of U.P., (1955] 1 SCR 707).

It may be indicated that where a right is confer~ed .on a particular
individual or group of individuals to the exclusion of others, the reasonable-
ness of restrictions has to be determined with reference to the circumstan-
ces relating to the trade or business in question. Canalisation of a particular D
business in favour of specified individual has been held reasonable by this
Court where vital interests of the community are concerned or when the
• business affects the economy of the country (P. T.C.S. v. R. TA., AIR (1960)
SC 801; Meenkashi Mills v. Union of India, AIR (1974) SC 366 and Lala
Harichand Sarda v. Mizo District Council and Anr., [1967] 1 SCR 1012). E

It is true that even for imposing reasonable restriction on the fun-
damental right guaranteed under Article 19(1), the restriction is to be
imposed under a valid law, be it a statutory law or statutory regulation, and
not by any executive instruction of the Government. [Kharak Singh's case
(supra)]. F

But in the instant case, no fundamental right guaranteed under
Article 19(1) (g) of the Constitution has been infringed. Henc~, question of
invalidity on account of imposition of reasonable restriction of the exercise
of such right by executive order instead by a statute does not arise in the G
facts of the case.

It may be indicated that although a citizen has a fundamental right
to carry on a trade or business, he has no fundamental right to insist upon
the Government or any other individual for doing business with him. Any
government or an individual has got a right to enter into contract with a H
500 SUPREME COURT REPORTS (1996] SUPP. 7 S.C.R.

A particular person or to determine person or persons with whom he or it
will deal.

In the instant case, the farmer or agriculturist who has chosen to
receive subsidies or financial assistance under the schemes of the Govern-
ment has an obligation to accept the terms and conditions for such as~.is
B tance. One of such conditions is that in the northern region of the State,
pump set for which financial assistance has been given is to be purchased
from the approved dealers of the Government. The private dealer cannot
insist that the Government is also to enter into contract with any such
private dealer to make it an approved dealer. Since the Government has •
C every right to select dealers of its choice for delivery of pump sets at the
price agreed upon and to render after sales service to the purchasers of
pump sets covered by its financial assistance scheme. It is not open to
challenge such selection of dealers on the score that such selection amounts
to unreasonable restriction imposed on the r'ealers of the State to carry on
D trading activities in pump sets. It is nobody's case that all the farmers and
agriculturists have been compulsorily covered under such schemes. On the
contrary, it is open to any farmer or agriculturist not to volunteer for taking
such assistance.

It has already been indicated that in Vikalad's case (supra), it has
E been held by this Court that infringement of fundamental right under
Article 19{1)(g) must have a direct impact on the restriction on the
freedom to carry on trade and not ancillary or incidental effects on such
freedom to trade arising out of any governmental action. It has also been
held in that case that unless the trader or merchant is not wholly denied
p to carry on his trade, the restriction imposed in denying the allotment of
wagon in favour of such trader or merchant to transport coal for carrying
out trading activities does not offend Article 19(1){g) of the Constitution.
No restriction has been imposed on the trading activity of dealers in pump
sets in the State of Kerala including northern region comprising eight
districts. Even in such area, a dealer is free to carry on his business. Such
G dealer, even in the absence of the said circular, cannot claim as a matter
of fundamental right guaranteed under Article 19(1)(g) that a farmer or
agriculturist must enter into a business deal with such trader in the matter
of purchase of pump sets. Similarly, such trader also cannot claim that the
Government should also accept him as an approved dealer of the Govern-
H ment. The trading activity in dealership of pump sets has not been stopped
KRISHNAN KAKKANTH v. GOVT. OF KERLA [G.N. RAY, J.] 501

or e~en controlled or regulated generally. The dealer can deal with pur- A
chasers of pump sets without any control imposed on it to carry on such
business. The obligation to purchase from approved dealer has been fas-
tened only to such framer or agriculturist who has volunteered to accept
financial assistance under the scheme on various terms and conditions.
B
In our view, the impugned circular does not offend Article 14 of the
Constitution. The direction contained in said circular cannot be held to be
vitiated being arbitrary, capricious or unreasonable. The impugned circular
specifically mentions that in order to implement the schemes introduced
by the Government for streamlining specific roles and responsibilities of
different agencies invoived, the directions contained in the circular have C
been given. It has been placed on record that it was brought to the notice
of the agricultural department of the State Government that false invoices
had been issued by dealers without effecting actual sales with a view to
draw loans, subsidies and other financial benefits from the Government.
Reports were published in newspapers about wide spread manipulation D
and irregularities in the activities of various dealers in the pumpsets. It is
also not in dispute that RAIDCO is only government controlled co-opera-
tive society in the State of which eighty per cent capital was subscribed by
the Government. The other approved dealer KAICO is also a Co-operative
society involved in dealership of pump sets. If the State Government on
consideration of such facts and circumstances and to ensure genuine sale E
of pump sets at proper price with effective after sales service has felt that
farmers covered by financial assistance scheme should be fastened with an
obligation to purchase pump sets only from approved dealers in a region
where according to State Government there is a felt need of purchase from
such approved dealers, it cannot be held that such action of the State F
Government lies in its ipsi dixit, without being informed by any reason.

- To ascertain unreasonableness and arbitrariness in the context of
Article 14 of the Constitution, it is not necessary to enter upon any exercise
for finding out the wisdom in the policy decision of the State Government. G
It is immaterial if a better or more comprehensive policy decision could
have been taken. It is equally immaterial if it can be demonstrated that the
policy decision is unwise and is likely to defeat the purpose for which such
decision has been taken. Unless the policy decision is demonstrably capri-
cious or arbitrary and not informed by any reason whatsoever or it suffers
from the vice of discrimination or infringes any statute or provisions of the H
502 SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.
A Constitution, the policy decision can not be struck down. It should be borne
in mind that except for the limited purpose of testing a public policy in the
context of illegality and unconstitutionality, court should avoid "embarking
on uncharted ocean of public policy."

The contention that the impugned circular suffers from hostile dis-
B crimination meted out to the farmers in northern region of the State
covered by the financial assistance under the Government schemes, by
fastening such assistance with an obligation to purchase pump sets only
from two approved dealers, cannot be accepted in the facts of the case.
The reasons for fastening the farmers of northern region with the obligation
C to purchase pump sets from the said two dealers have been indicated by •
Mr. Bhat and Mr. Gupta and, in our view, it cannot be held that suclt
reasoning suffers from lack of objectivity. The law is well settled that even
in the matter of grant of largese, award of job contracts etc. the Govem·
ment is permitted to depart from the general norms set down by it, in
favour of particular group of persons by subjecting such persons with
D different standard or norm, if such departure is not arbitrary but based on
some valid principle which in itself is not irrational, unreasonable or
discriminatory [Dayaram Sherry's case (supra)].

It may be stated here that Mr. Venugopal's contention that the
E impugned circular has resulted in black listing of the private dealers of
pump sets without even giving them an opportunity of being heard cannot
be accepted. In our view, it cannot be reasonably contended that if the
Government selects a dealer as its approved dealer, the same may mean
that all the other dealers have been black listed. The question of black
listing does not arise because it is nobody's case that all other dealers were
F previously approved dealers of the Government but by the impugned
circular, they have been suddenly stripped of such status without affording
them an opportunity of being heard.

G
In the aforesaid facts, we do not find any reason to interfere with the
impugned judgment of the High Court. The appeal therefore fails and is
dismissed without any order as to cost.
·-
S.V.K.I. Appeal dismissed.