Holding

The 1973 amendment is merely clarificatory and does not require prior presidential sanction under Article 304(b) proviso.

Summary

The appellants, dealers in khandsari molasses, challenged the constitutional validity of the East Punjab Molasses (Control) Amendment Act, 1973, alleging that its expanded definition of "molasses" imposed new restrictions on their trade without the prior presidential sanction required under Article 304(b) proviso of the Constitution. The High Court dismissed the petition, holding that the amendment did not uniquely affect the appellants because the original Act already regulated their business. On appeal, the Supreme Court examined whether the amendment was a mere clarification of an existing law or a substantive restriction requiring presidential approval. It held that the amendment merely clarified that the Principal Act applied equally to khandsari units, and since the Principal Act is an "existing law" under Article 366(10) read with Article 305, the amendment did not need prior presidential sanction. Consequently, the amendment was upheld as constitutionally valid and the appeal was dismissed.

Issues considered

Whether the East Punjab Molasses (Control) Amendment Act, 1973, being a clarification of an existing law, requires prior presidential sanction under Article 304(b) proviso of the Constitution.
Whether the amendment imposes additional substantive restrictions on trade, rendering it a regulatory measure that falls within the ban of Article 304(b).
Whether the Principal Act qualifies as an "existing law" under Article 366(10) and Article 305.

Legislation cited

Constitution of Indias. Article 304(b) proviso, s. Article 305, s. Article 366(10)
East Punjab Molasses (Control) Act, 1948s. 10, s. 11, s. 12, s. 13, s. 2(c), s. 2(d), s. 3(A), s. 4, s. 5, s. 6, s. 7, s. 8, s. 9
East Punjab Molasses (Control) Amendment Act, 1973s. 2(c), s. 2(f)

Subjects

Constitutional lawArticle 304(b)Presidential sanctionExisting lawStatutory amendmentRegulatory vs restrictiveTrade and commerceMolasses controlKhandsari sugar

Judgment

PUNJAB TRADERS AND ORS.
A
v.
STATE OF PUNJAB AND ORS.

SEPTEMBER, 18, 1990

[K.N. SINGH, T.K. THOMMEN AND KULDIP SINGH, JJ.] B

East Punjab Molasses (Control) Acr, 1948-Ss. 2(c) 2(f), 3, 3A,
4, 6, 8 & 13-C/arificatnry amendment of by East Punjab Molasses
,
(Control) Amendment Act, 1973-Constitu(ional validity of.

Constitution of India: Articles 304(b) proviso, 305 & 366( 10)-
East Punjab Molasses (Control) Act,· 1948-Existing Law-C/arifica- c
tory amendment of by East Punjab Molasses (Control) Amendment
Act, 1973-Previous sanction of President-Whether mandatory.

The East Punjab Molasses Control (Amendment) Act, 1973 sub-
stituted the defmition of "molasses" in section 2(c) of the East l'inijab D
Molasses (Control) Act, 1948 to mean "the mother liquor produced in
the final stage of manufacture of sugar or khandsari sugar". The
unamended section 2(c) had hitherto referred only to sugar. Conse-
quent changes were also made in other provisions of the Principal Act to
give effect to the amendment.
E
The appellants-dealers in khandsari molasses aggrieved by the
expanded definition of molasses challenged the constitutionality of .the
Amendment Act, 1973 on the ground that it had imposed direct and
immediate restrictions upon their trade and commerce unsupported by
the previous sanction of the President oflndia in terms of Article 304(b)
of the Constitution. F

The High Court dismissed the writ petition holding that the appel-
lants were not shown to have. been aggrieved solely by reason of the
amendmerit on the view that their business had been in equal measure
controlled by the Principal Act itself.
G
In this appeal by special leave, the appellants reiterated their
contentions advanced before the High Court. For the respondents it was
contended that the provisions of the Amendment Act, 1973 were regu-
latory measures enacted to facilitate trade and therefore they did not
come within the ban of the proviso to clause (b) of Article 304 to require
the previous sanction of the President. H

499
500 SUPREME COURT REPORTS I1990] Supp. 1 S.C.R.

Dismissing the appeal, the Court,
A
HELD: I. The main object of the Amendment Act, 1973 was to
clarify that the Principal Act applies in equal measure to a khandsari
unit as it does to any other sugar factory. It was always well understood
in trade that khandsari sugar was also sugar and that any reference to
B sugar, in the absence of specific exclusion or qualification, was capable
of equal application to sugar of all kinds including khandsari. The Act
did not become applicable to the appellants only as a result of the
amendment. Even though persons who dealt with the statute may have
understood its provisions in a restricted sense, such mistaken construc-
tion of the statute did not bind the Court so as to prevent it from giving
it its true construction. [316A-CJ
c
I
The Trustees of the Clyde Navigation v. Laird & Sons, 8 AC 658,
670 and National & Grindlays Bank Ltd. v. The Municipal Corpora-
tion of Greater Bombay, [1969] I SCC 541, referred to.

D 2. The Principal Act being an "existing law" within the meaning
of Article 366(10) read with Article 305 of the Constitution, and /he
provisions of the Amendment Act being clarificatory, the previous sanc-
tion of the President was not required. [3160-E]

Syed Ahmad Aga v. State of Mysore, [1975] Suppl. SCR 473,
E referred to. '

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1372
of 1980.

From the Judgment and Order dated the 19.5.1980 of the Punjab
F andHaryanaHighCourtinC.W.P.No.1378ofl973.

G.L. Sanghi, Vivek Gambhir, Dhruv Mehta, S.K. Gambhirnnd
Surender Karnail for the Appellants.

C.M. Nayar for the Respondents.
G
The Judgment of the Court was delivered by

THOMMEN, J. This appeal by special leave arises from the
Judgment of the Punjab & Haryana High Court in Civil Writ Perition
No. 1378 of 1973. The appellants in the writ petition challenged the '1
H constitutionality of the East Punjab Molasses (Control) Amendment
>'. PUNJAB TRADERS v. STATE 01' PUNJAB [THOMMEN, J.] 501

Act. 1973 (hereinafter referred to as the "Amendment Act, 1973") on
the ground that the said amendment had not received the previous
sanction of the President of India in terms of Article 304(b) of the
Constitution. The High Court dismissed the writ petition holding that
the appellants were not shown to have been aggrieved by the
impugned.amendment.
B
The Amendment Act, 1973 amended the provisions of the East
Punjab Molasses (Control) Act, 1948 (East Punjab Act No. 11 of
1948) (hereinafter referred to as the "Principal Ac:"}, as it stood at the
relevant time. The Principal Act had been earlier amended in 1950.
1957, 1964 and 1968. It was subsequently amended in 1976. The appel-
lants have, however, challenged only the Amendment Act, 1973 and c
have significantly not challenged the earlier or subsequent amend- ·
ments. Rejecting the appellants' contentions, the High Court observed:

" ..... We have very carefully gone through the petition
and we have ask'ed the learned counsel for the petitioners
to point out any averment from the petition, to show that D
the petitioners were dealing with molasses which were not
covered under the definition of molasses given in the
unamended Act, but are covered within the definition of
molasses under the Amending Act. No such averment has
been made ..... The grievance of the petitioners that they
have been made subject to the provisions of the Act in E
view of the Amending Act, thus does not stand substantia-
ted from the averments made in the petition ... "

The appellants admitted before the High Court· that, apart from
the Principal Act, as enacted ln 1948, being an 'existing law', and
therefore beyond challenge, none of its provisions could be regarded F
as an unreasonable restriction on the freedom of trade, commerce and
intercourse. The appellants, however, contended that the impugned
provisions inserted in 1973 were null and void for the reason that the
restrictions so introduced had not received the previous sanction of the
President.
G
Section 2 of the Principal Act was amended in 1973 to define
'molasses' as well as 'khandsari unit'. By this amendment, a new defi-
nition of 'molasses' was substituted in the place of the original defini-
tion [See Clause (c)]. Clause (f) of Section 2 was added to define a
. 'khandsari unit'.
H

f
502 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

Section ? of the Principal Act empowered the Controller to
A
"direct the owner or occupier of a sugar factory or any other person"
to_furnish returns of the stock of molasses in his possession. This Sec-
tion was amended in 1973 to bring a khandsari unit or distillery within
the statutory ambit. Section 3(A) had been added in 1964 to empower
the Controller to direct the owner or occupier of a sugar factory or
8 distillery, or any other person permitted to store and preserve molas-
ses. to construct tanks for the storage of molasses. This Section was
amended in 1973 to bring a khandsari unit within its ambit.

Section 4 of the Principal Act says that no person shall, without a
permit issued by the Controller, move molasses by road, rail, river or
by any other means or sell or otherwise dispose of molasses to any
c person other than the Government or a person licensed by the
Government in this regard. Ii also authorises the Controller to direct
the owner or occupier of a sugar factory to supply molasses of specified
quantity and quality to such persons as the Controller may direct. This
section was amended in 1964 to provide that no person shall store or
D preserve molasses without the Controller's permit. It was further
amended in 1973 to bring a khandsari unit within the ambit of the
controller's power to direct supply of molasses.

Section 5 of the Principal Act empowers the Government to
regulate prices from time to time and prescribes the manner in which
E molasses has to be graded, marketed, packed or stored for sale. It was
amended in 1976 in certain respects which are not material. Section 6
provides for the imposition of penalty in the event of contravention of
any provision of the Act. The Section was substituted in 1964 for the
original Section. It was amended in 1973 in certain respects. Section 7
of the Principal Act refers to liability for breaches by corporation or
F company. This Section has not undergone any change. Section 8 of the
Principal Act provided that no court should take congnizance of any
offence punishable under the Act except on a report made by the
Controller. This section was substituted in 1964 to provide for the
exercise of supervision and control by the Controller over sugar
factories through subordinates. It was amended in 1973 by including a
G khandsari unit within its ambit. Section 9 of the Principal Act provided
for power of entry and seizure. It was substituted in 1973 by a new
section with certain changes which are immaterial. Section 10 of the

H
Principal Act provided for the procedure of seizure. It was substituted
by a new section in 1973, but the changes are not material. Section 11
deals with the delegation of powers. It has not undergone any change.
Section 12 of the Principal Act deals with the power of the Govern-
l
PUNJAB TRADERS v. STATE OF PUNJAB [THOMMEN. J.I 503

ment to exempt any area or person from the psovisions of the Act.
A
This Section was amended in 1973 to empower the Government to
exempt any kind of molasses from the provisions of the Act. Section t:J
of the Principal Act deals with the rule making power of the Govern-
ment. It was amended.in 1973 to include khandsari unit or distillery
within the scope of that Section. These are the changes made in the
Principal Act. B

The substaniiai change introduced by the Amendment Act, 1973
is in the substituted definition of 'molasses' so as to include within its
meaning mother liquor produced in the final stage of manufacture of
sugar or khandsari sugar.

The appellants being dealers in khandsari molasses are stated to
c
be aggrieved by the expanded definition of 'molasses'. 'Molasses' was
defined under the unamended Section 2( c) of the Principal Act as
follows:

"2(c) 'Molasses' means the heavy, dark coloured residual D
syrup drained away in the final stage of the manufacture of
sugar by vacuum pans or in open pans in sugar factories
either .from sugarcane or by refining gur; when such syrup
has a density of not less than 75 degrees brix and a forment-
able sugar content (expresent as reducing sugars) 19 per
cent." E

This definition was substituted by the Amendment Act, 1973 as
follows:

"2(c) 'molasses' means the mother liquor produced in the
final stage of manufacture of sugar or khandsari sugar, by F
vacuum pans or in open pans, from sugarcane or gur, with
• or without the aid of power."

The new definition of 'molasses' under the ainendment provision
. specifically refers to khandsari sugar, apart from sugar, while the
unamended section 2(c) referred only to sugar. Section 2(f), as intro- G
duced by the Amendment Act, 1973 defines 'khandsari unit' as
follows:
I "2(f) 'khandsari unit' means any premises, including the
land, godowns or out-houses appurtenant thereto, where-
in, or in any part of which a· manufacturing process con- H
504 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R. ;
'<""·

A nected with the production of khandsari sugar from
sugarcane or gur in open pans is carried on with or without
the aid of power."

The 'occupier of a khandsari unit' is defined as "a person who has
control over the affairs of a khandsari unit". The definition of 'sugar
B factory' has not undergone any change, and it reads as follows:

"2(d) 'sugar factory' means any premises, including the
land, godowns or outhouses appurtenant thereto, whereon
twenty or more workers are working, or were working on
any day of the preceding twelve months, and in any part of
which a manufacturing process connected with the produc-
c tion of sugar by means of vacuum pans or in open pans is
being carried on or is ordinarily so carried on, with the aid
of power."

The main object of the Amendment Act, 1973 is to clarify that the
D Principal Act applies in equal measure to a khandsari unit as it does to
any other sugar factory.

The contention is that the provisions of the Amendment Act,
1973, though not in themselves unreasonable restrictions, nevertheless
bring the appellants under greater statutory control, and are, there-
E fore, invalid for want of previous sanction of the President in terms of
the proviso to Article 304(b). This challenge, as seen above, has been
rejected by the High Court for the reason that the appellants' business
has been in equal measure controlled by the Principal Act itself. The
appellants being dealers in molasses, the new definition of the term
"molasses", which includes "khandsari sugar", does not subject their
F business to any greater control.

The appellants' counsel, Mr. G.L. Sanghi contends that the pro-
visions of the Amendment Act, 1973 impose direct and immediate
restrictions upon the appellants' trade. They are a burden on trade and
they deter the appellants from trading. They directly affect the free-
G dom of trade and commerce. They are not merely regulatory for the •
purpose of facilitating the free flow of trade and commerce. They are
restrictions hampering trade. They may be justifiable as reasonable
restrictions, but being restrictions unsupported by previous sanction of
the President, they are nevertheless invalid.
I
H Mr. C.M. Nayar, appearing for the respondents, on the other
PUNJAB TRADERS "· STATE OF PU!'<JAB [THOMMEN, J.] sos
•..
~

hand, contends that the impugned provisions of the Amendment Act,
A
1973 are regulatory measures enacted to facilitate trade and they do
not come within the ban of the proviso to clause (b) of Article 304.
These provisions do not require the previous sanction of the President
in terms of the proviso to Article 304(b ).

Counsel on both sides, in support of the respective contentions. B
refer to the principle stated by this Court in Atiabari Tea Co., Ltd. v.
State of Assam & Ors., [1961] 1 SCR 809; The Automobile Transport
(Rajasthan) Ltd. v. The State of Rajasthan & Ors., [1963] 1 SCR 491
and State of Bihar & Ors. v. Harihar Prasad Debuka & Ors., [1989] 2
SCC 192 and other cases. [1967] (2) SCR 361; [1971] (I) SCC 59;
[ 1986] ( 1) SCR 939; [ 1989] (3) sec 211; [1990] (3) sec 87; [1957] SCR
721; [1970] (1) SCR 400; [1955] (1) SCR 380; [1954] (3) All E.R. 607; c
[1954] (5) SCR 873, 880; [1975] Supp. SCR 473; [1983] (3) sec 237
and [ J969] (I) sec 541.

It is not, and cannot be, disputed that if the impugned provisions
are not merely regulatory with a view to facilitating trade, but are in D
quality and substance restrictive, though reasonable as restrictions can
be. and if they in effect constitute a hinderance or impediment to the
free flow or movement of trade, they are unconstitutional in the
absence of previous sanction of the President. The question, however.
is. the Principal Act, being an "existing Jaw" and, therefore, beyond
challenge. do the impugned provisions. introduced in 1973, being E
additional provisions, enlarge in substance and quality the scope and
ambit of the Principal Act, thereby impeding in greater measure the
free flow or movement of trade so as to fall within the ban of the
proviso to clause (b) of Article 304? In other words, does the Amend-
ment Act, 1973, restrict the appellants' business to a greater extent or
is it merely clarificatory in so far as. at any rate, the appellants are F
concerned?

The point then really is, has the amendment made the Act more
stringent in so far as the appellants are concerned? If the answer is
negative, as the High Court has held, the appellants are not aggrieved.
and cannot, therefore, successfully challenge the Amendment Act. G

Referring to t~e principle of contemporanea expositio, Mr.
Sanghi says that the Act, as it stood before the amendment, was not
understood to apply to khandsari unit. and consequently to the busi-
ness of the appellants, and it became· applicable only as a result of the
amendment. We do not agree that this submission is right. The High H
506 SUPREME COURT REPORTS [1990) Supp. 1 S.C.R.

A Court has, on the basis of the pleadings and other evidence, and with
reference to the relevant provisions, categorically held that the Act, as
it originally stood, was applicable to the trade of th'e appellants, and
~ the amendment in effect did not make any difference to them. The
High Court has found that the appellants were not aggrieved solely by
reason of the amendment, and the provisions, as they stood prior to
B
the amendment, applied to them in equal measure. This apart, the
amendment, in our view, was merely clarificatory, and it was always
well understood in trade that khandsari sugar was also sugar, and that
any reference to sugar, in the absence of specific exclusion or qualifica-
tion, was capable of equal application to sugar of all kinds including
khandsari. Even if it is true that persons who dealt with the statute
c understood its provisions in a restricted sense, such mistaken construc-
tion of the statute did not bind the Cour~ so jlS to prevent it from giving
it its true construction. (see the observation of Lord Blackburn in The
Trustees of the Clyde Navigation v. Lailrl & Sons, 8 AC 658, 670), as
quoted in National&, Grindlays Bank Ltd. v. The Municipal Corpora-
tion of Greater Bombay, [1969) 1SCC541.
D
We are of the view that the reasoning of the High Court was
correct. The Principal Act being an 'existing law' within the meaning
of Article 366(10) read with Article 305 of the Constitution, and the
provisions of the Amendment Act, 1973 which are impugned in this
appeal being clarificatory, the previous sanction of the President was
E not required. See the principle stated in Syed Ahmad Aga v. State of
Mysore, [1975) Suppl. SCR 473. We do not, however, express any
view as to whether the impugned Act is regulatory or restrictive, for
that question, for the present purpose, is, in our opinion, academic.

The appeal is dismissed with costs throughout.

P.S.S. Appeal dismssed.