Holding

The reduction of quotas was arbitrary as the government did not consider all relevant factors, and the petitioners are entitled to relief despite the absence of a fundamental right under Article 19(1)(g).

Summary

The petitioners, licensed manufacturers of firearms, challenged the Union of India's reduction of their monthly production quotas after the Arms Act, 1959 came into force. They argued that the curtailment caused hardship, was arbitrary, and that they were denied a fundamental right under Article 19(1)(g) to carry on the trade. The Union relied on the Industrial Policy Resolution of 1956, contended there is no such fundamental right, and alleged the petitioners were barred by laches. The Court held that while no fundamental right to manufacture arms exists under Article 19, the licences are statutory rights and the reduction was arbitrary because the government failed to consider all relevant factors such as production capacity, quality, and economic viability. The petitioners were not guilty of laches, and the Court directed the Union to reconsider the quotas after allowing the petitioners to present fresh material. The writ petitions were allowed.

Issues considered

Whether the reduction of firearm manufacturing quotas without proper consideration violates principles of natural justice and amounts to arbitrariness.
Whether Article 19(1)(g) of the Constitution confers a fundamental right to manufacture arms.
Whether the petitioners are barred by the doctrine of laches from seeking relief.
Whether the Industrial Policy Resolution, 1956 permits curtailment of existing licences.

Legislation cited

Arms Act, 1959
Constitution of Indias. Article 19(1)(g), s. Article 32

Subjects

Arms manufacturingquota reductionIndustrial Policy Resolution 1956Article 19fundamental rightsarbitrarinesslacheslicence renewalproof testingadministrative law

Judgment

847

A

RANJIT SINGH ETC. ETC.

v.
B
UNION OF INDIA

September 26, 1980

[V. R. KRISHNA IYER AND R. S'. PATHAK, JJ.]

Constitution oif India 1950, Arts. 19(1) (g) and 32 and Arms Act 1959- c
Petitioner granted licence to manufacture a specified number of gun~urtail
ment of quota-Whether valid-Whether [aches in invoking the jurisdiction of
the Court.
In 1950, the State Government issued a manufacturing licence renewabie
every year to the petitioners for the manufacture by hand of a specified num-
ber \of guns per month. The guns were however not proof-tested. D
After the Arms Act 1959, came into force, the government insisted that
the guns manufactured should undergo proof-testing. Pursuant to that condi·
tion ·in 1960, the petitioners installed machinery and plant, by making sub·
stantial investment of funds. From 1964, the Government of India, reduced
the monthly quota of guns.
The petitioners in their writ petitions under Article 32 alleged that· this E
reduction had resulted in considerable hardship to them because of the fixed
overhead costs which could not be avoided. They also alleged that though in
the case of a number of other such manufacturers quotas were restored, in
their cases, the Government refused to restore the quotas.
The Union of India, however, denied the allegation of arbitrariness, and
stated that: (a) what was done was pursuant to the Industrial Policy Resolu·
tion of 1956 which envisioned an exclusive monopoly in the Central Govern· F
ment in the matter of manufacturing arms and ammunition and that in fixing
the quota the manufacturing capacity of a concern was not a determining factor;
(b) there is no fundamental right under Article 19(1)(g) of the Constitution to
carry on the manufacture of arms; and (c) there was !aches on the ·part of
the petitioners.

Allowing the writ petitions, G
HELD: (a)(i) Any curtailment of the quota must proceed on the basis of
reason and relevance. The Government is entitled to take into consideration
the requirements of current administrative policy pePtinent to the maintenance
of law and order and internal securny. If all relevant factors are not con-
. sidered, or irrelevant consideratiolls a1lciwed to find place, the decision is vitiated
by arbitrary judgment. [850 F; El H
In the instant case the Gov.ernment of India had not taken into careful
consideration the several elements necessary for forming . a decision on the
84 8 SUPREME COURT REPORTS [1981) 1 S.C.R.

A quota permissible to each of the petitioners. That should be done and for
that purpose the petitioners would be entitled to place before the Government
a fresh and complete statement of their case, with supporting material, to
enable the Government to reach a just decision. [850G·H]

(ii) The Industrial Policy Resolution envisaged a prohibition against an
increase in the quota of guns, not its curtailment. No objection could be
B taken to the government's instructions on the subject. The other factors
governing the fixation of the actual quota are the production capacity of .the
factory, the quality of the guns produced and the economic viability of the
unit. The Industrial Policy Resolution contains a specific commitment to per-
mit the continuance of the factories which were functioning for several years
earlier. [850C; D-E)

c (b) The Arms Act 1959, expressly contemplates the grant of licences for
manufacturing arms and an applicant for a licence is entitled to have it con-
sidered in accordance with the, terms of the statute and to press for its grant
on the basis of the criteria set forth in it. [851A-B]

(c) The licences are granted for specific periods with a right to apply for
D renewal on the expiry of each period. Each renewal constitutes a further grant
of rights and it is open to the applicant to show on each occasion that the
quota governing the preceding period should be revised in th@ light of present
circumstances. [85JC]

In the instant case the petitioners had been continuously agitating for the
restoration of their quota. They are, therefore, not guilty of !aches and are
E entitled to relief. [851D]

ORIGINAL JURISDICTION : Writ Petition Nos. 833-835 of 1979.

(Under article 32 of the Constitution)

F P. Parmeswara Rao, G. D. Gupta and Ashwani Kumar for the
Petitioners.

U. R. Lalit and Miss A. Subshashrni for the Respondent.

The Judgment of the Court was delivered by
G PATHAK, J.-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.

Writ Petition No. 833 of 1979 has been filed by Ranjit Singh
H.
who alleges tliat his father Pritam Singh commenced the business of
manufacturing guns in 1950 nnder a licence issued by the Government
of Jammu and Kashmir. The licence permitted him to manufacture
RANJ1i slNCiH v. uN"10N (Parhak, J.) 849

30 guns per month. The guns were manufactured by han~ ail.a were A
not proof-tested. The licence was renewed annually and tlie quota
was maintained throughout. Later, with the enactment of the Amis
Act, 1959, the licence was issued under that statute. The Government
insisted that the guns manufactured by Pritam Singh should undergo
proof-testing, and for that purpose it became necessary for the manu-
facturer to purchase and install the necessary machinery and plant. B
The machinery was installed shortly after 1960 on a substantial
investment of funds raised with great difficulty and, n is said, in the
result the factory is now capable of manufacturing 50 guns per month.
Until the year 1963, the licence in favour of Pritam Singh was rene-
wed by the Government of J aminu & Kashmir for the full quota of
30 guns. But wit'h effect from the year 1964 the Government of
1ndia began to issue the licences. 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. On the death of Pritam Singh in 1969, the business was D
carried on by the petitioner and his mother, and the licence now
stands in their names" Several representations were made to the
authorities for the restoration of the original quota f:iut there was no
satisfactory response. The pe;itioner 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 E
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.

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 originhl quota granted to the petitioner consisted of
50 guns per month and has now been reduced to 5 guns per month.
The petitioner in the third Writ Petition, No. 835 of 1979, is
Uttam Singh. In his case, the original quota of 50 guns a montlfhas
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. G

In opposition to the writ petitions, the Union of India which is
the sole respondent, relies on an Illdustrial Policy Resolution of 1956
which envrsions an ~xclu.sive monopoly in the Central Government in
the matter of manufacturing arms and ammunition while permitting
.existing manufactur~rs in. the private sector to continue to carry on
their business on a limited scale. It is asserted that in fixing a quota
1he manufacturing capacity of a concern is not a deteril1ining factor,
850 SUPREME COURT REPORTS [1981] 1 S.C.R.

A and it is denied that the Government has acted arbitrarily. It is also
·urged that the petiti:oners should be denied relief on the ground of
lacheS'.

The Union of India rests its· case on the Industrial Policy Reso-
B lution of 1956. Under that Resolution, however, it was decided that
no objection would be taken to the <ionti:nuance 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 producti:on or increasing the capa-
c city of the items• already produced was undertaken without the
prior sanction of the Government of India. Plainly, what was
envisaged was a prohibition against an increase in the quota, not
its curtai:lment. Purporting to implement the Industrial Policy ""·
Resolution, the Government. issued instructions that the quota:
fixed should be such that the market was not flooded with arms and
D ammunition. No objection can be raised to that. It is as it should be,
but with that primary consideration defining the outer limits, there are
other factors which govern the fixati:on of the actual quota. There is
the production capacity of the factory, the quality of guns produced
and the economic viability of the unit. The Government is bound to
keep these in mind while deciding on the manufacturing quota. There
E is need to remember that the manufacture of arms has been the business
of some of these units for several years and the Industrial Policy Re-
solution contains a specific commitment to permit the continuance of
those factories. On the other side, the Government is entitled to take
into consideratron the requirements of current administrative policy
pertinent to the maintenance of law and order and internal r>ecurity.
F
Any curtailment of the quota must necessarily proceed on the basis of
reason and relevam:e. If all relevant factors are not considerpd, or
irrelevant considerations allowed to find place, the decision i:s vitiated
by arbitrary judgment. On the material placed before us, we are not
satisfied that the Government of India has taken into careful consi-
G deration the several. elements necessary for forming a decision on the
quota permi:ssible to each of these petitioners. We are of opinion that
it should do so riow. And, for that purposa, the petitioners &hould
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.
H
We need not, iin .the circumstances, consider the other grounds on
which the petitioners claim relief.
I
RANJIT SINGH v. UNION (Pathak, ].) 851

On behalf of the Government it is urged that there is no funda- A
mental right under Article 19(1)(g) of the Constitution to carry on the
manufacture of arms. That contention is disposed of shortly. Th<l
Arms Act, 1959, expressly contemplates the gra.llt of licences for
manufacturing arms. An applicant for a licence is entitled to hav~
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. B
The other contention on behalf of the Government is that the
petitioners are guilty of laches. We are not impressed by the conten-
tion for the reason that the licences are granted for specific periods
with a right to apply for renewal on the expiry of each period. Each
renewal ~onstitutes a further grant of rights and it is open to the appli- c
cant to show on each occasion that the quota governing the preceding
per!od should now be revised in the light of present circumstances.
Besides, the petitioners have been continuously agitating for the resto-
ration of their quota. Having regard to the peculiar circumstances of
these cases, we are not inclined to deny them relief.
D
Accordingly, we allow the writ petmon5' and direct the· respondent
Union of India .to reconsider the manufacturing quota fixed in the
case of each petitioner after allowing a reasonable period to the res-
pective petitioners to set .forth their case on the merrts, with such
supporting written material as ¢ey may choose to place before it.
E
N.V.K. Petitions allowed.
. -.(

L