Holding

The notification issued under clause 16(1) of the Textile (Control) Order, 1986 is constitutionally valid and does not violate Articles 14 or 19(1)(g).

Summary

The case involved G.T.N. Textiles and other spinning mills that only packed cotton yarn in cone form because they lacked reeling machines. The Textile Commissioner, exercising powers under clause 16 of the Textile (Control) Order, 1986, issued a notification requiring every yarn producer to pack at least 50% of its output in hank form each half‑year to meet the needs of the handloom sector. The mills challenged the notification, contending that it exceeded the Commissioner’s authority and violated Articles 14 and 19(1)(g) of the Constitution, relying on a prior decision that struck down a similar notification under the 1948 Order. The Supreme Court held that clause 16(1) provides detailed guidelines, distinguishing it from the earlier invalid provision, and that the notification serves a public interest, is uniformly applicable, and does not infringe the constitutional rights claimed. The Court also observed that the mills had accepted the packing condition in their industrial licences and that the notification’s impact was mitigated by a press note allowing transfer of surplus hank yarn. Accordingly, the appeals were dismissed.

Issues considered

Whether clause 16 of the Textile (Control) Order, 1986 and the subsequent notification are constitutionally valid.
Whether the notification violates Article 14 of the Constitution by being arbitrary or discriminatory.
Whether the notification infringes Article 19(1)(g) – the right to practice any profession, trade or business.
Whether the Textile Commissioner had authority to issue the notification in view of the earlier decision in Rani Lakshmi Mills case.

Legislation cited

Essential Commodities Act, 1955s. s.3
Textile (Control) Order, 1986s. clause 16

Subjects

Essential Commodities ActTextile (Control) OrderArticle 14Article 19(1)(g)yarn packinghank yarnhandloom sectorconstitutional validitynotification

Judgment

.... G.T.N. TEXTILES LTD. AND ANR. ETC. ETC.
v.
A

ASSISTANT DIRECTORS, R.O.T. COMMR.
AND ORS. ETC. ETC.

MARCH 17, 1993
B
"'- [KULDIP SINGH AND N.M. KASLIWAL, JJ.)

Essential Commodities Act, 1955:

Section J-Textile Control Order, 1986--Clause 16 and notification c
issued thereunde,--Textile commissioner prescribing manner of pack-
ing--Constitutional validity of
~
Constitution of India, 1950:

Articles 14 and 19( l)(grTexti/e (Control} Order, 1986-Clause 16 and D
notification issued thereunde,.__Textile Commissioner prescribing mode of
packing yam-Whether violative of

Different varieties of cotton yarn were manufactured by the appel-
!ant-Mills. Packing of the yarn was done in two forms, viz. cone form
which was used in powerloom and hosiery industry and hank form which E
was exclusively consumed by the handloom industry. For the cone form of
packing the ring frame cops were fed to the winding machines and for the
hank form of packing the cops were fed to the reeling macbines. The
appellants were packing the yarn in cone form only. Since they had not
installed the reeling machines, they could not pack the yarn in hank form. F

.,._ In exercise of powers under S.3 of the Essential Commodities Act,
1955, Textile (Control) Order, 1986 was issued by the Government. Clause
~
16 of the said order gave power to the Textile Commissioner to issue
directions providing the manner of packing of yarn in hanks, cones or in
...
any other form and in such proportion as he deemed necessary or ex- G
pedient. It also laid down the complete gu;delines for exercise of the
powers by the Textile Commissioner. Exercising his powers under clause
16 of the 1986 Order, the Textile Commissioner issued a notification on
29.3.90, which was amended on 11.5.90 and 17.5.90. According to the
Notification every producer of yarn should pack in hank form at least 50% H
403
404 SUPREME COURT REPORTS [1993] 2 S.C.R.

A of the total yarn packed hy him during each half-yearly period for civil
consumption.

The appellants challenged the constitutional validity of clause 16 of
the Textile (Control) Order, 1986 and the Notification issued thereunder,
by filing Writ Petitions before the High Court. The Writ Petitions were
B dismissed and the appellant-Mills preferred the present appeals.

The appellants contended that an identical notification dated
29.6.1979 issued under the Textile (Control) Order, 1948 was struck down
by the High Court and the said judgment having been upheld by this
Court, the respondents were bound by the same and the Textile Commis-
c sioner had no authority to issue a fresh notification in similar terms; and
that the appellants could not be compelled to manufacture something for
which the appellants have not installed necessary machinery and other
super-structure. It was further contended that the Notification was viola-
tive of Articles 14 and 19(1)(g) of the Constitution of India.
D
Dismissing the appeals, this Court,

HELD: 1. The present notification under challenge has been issued
under Clause 16(1) of the Textile (Control) Order, 1986. Unlike Clause
21(5) of the 1948 Order, proviso to Clause 16(1) of the 1986 Order
E provides complete guidelines to the Textile Commissioner to issue the
directions envisaged thereunder. [409G-H]

Sri Ra11i Lakshmi G.S. & W. Mills Pvt. Ltd. & Others v. Textile
Commissioner, Bombay & Ors., AIR 1986 Madras 66, distinguished.

F 2. In '·order to make available sufficient quantity of hank yarn at
reasonable price and also for the sustenance of Handloom workers
engaged in the largest cottage industry in India, it became necessary to
reserve hank yarn for Handloom sector by making it obligatory on the
part of the manufacturers of yam to pack a certain percentage of their
G production packet for civil consumption in the form of banks. Thus the
notification has been issued in the interest of the general public and also
for the larger interest of the textile industry, and is not violative of Art.
19(1)(g) of the Constitution of India. [411B-C]

3. Having accepted the condition regarding packing of yarn in hank
H form, while taking the licence, under clause 4 of the Industrial Licence, the
G T.N. TEX11LES v. ASSTT. DIRECTORS (KULDIP SINGH, J.] 405

appellants cannot now turn round and say that they are not bound by the A
~
same. [411F]

4. There is no violation of Art. 14 of the Constitution since the
notification has been made applicable uniformly to all the producers of
yarn. The appellants are required to pack yarn in hank form in the
proportion as provided in the notification keeping in view the total yarn B
packed by the mill concerned. In any case the grievance of the appellants
has been substantially mitigated by the press note dated May 11, 1990
issued by the Textile Commissioner, reinstituting the erstwhile relaxation
getting yarn obligation fulfilled by transfer of surplus yarn packing of
another producer, and allowing a producer to get hank yarn reeled c
through another producer having extra relying capacity. [411G-H; 412A]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1334-43
);-
of 1993.

From the Judgments and Orders dated 29.10.1991 of the Andhra D
Pradesh High Court in W.P. Nos. 9133, 8920, 8074, 7932 and 11119/90,
8113/91 (dt. 31.10.91), 8201/90, 8987/91 (dt. 30.10.91), 9165 & 7656of1990.

K.K. Venugopal,C.S. Vaidyanathan, Vijayanarayana and Ms. Vijaya-
lakshmi Menon for the Appellants.
E
K. Swamy and Ms. A. Subhashini for the Respondents.

The Judgment of the Court was delivered by

KULDIP SINGH, J. Special leave granted in all the petitions.
F
The appellants-petitioners challenged the constitutional validity of
~ Clause 16 of the Textile (Control) Order, 1986 [the 1986 Order] and the
notification, issued thereunder, dated March 29, 1990 as amended on May
11, 1990 and May 17, 1990 (the notification) by the Textile C~nhmissioner,
before the Andhra Pradesh High Court by way of writ petitions under
G
I rticle 226 of the Constitution of India. The High Court by its judlllllept
dated October 29, 1991 dismissed the writ petitions. These appeals by way
~. of special leave are against the judgment of the High Court

- The appellants are the Spinning and Weaving Mills in the State of
Andhra Pradesh. The cotton yarn manufactured by the mills is of different H
406 SUPREME COURT REPORTS [1993] 2 S.C.R.

A varieties. It is classified on the basis of counts. Ya~n with 1 to 40 counts is
coarse, 40 to 60 medium, between 60 and 100 fine and anything above 100
counts is described ll!i very fine. There are two methods of packing the
yarn. One is the cone form packing which is used in power-loom and
hosiery industry. The other is hank form packing which is exclusively
consumed by the handloom industry. Spinning and packing are the two
B stages of manufacturing yarn. Raw-cotton has to pass through the process
of blow-room, carding, drawing, simplex and finally the ring frame to
complete the process of spinning. The process of packing starts thereafter.
For the cone form packing the ring frame cops are fed to the winding
machines and for the hank form packing the cops are fed to the reeling
c machines. According to the appellants they are packing the yarn in cone
form. They have not installed the reeling machines and as such it is not
possible for them to pack the yarn in hank form.

The 1986 Order was issued by the Government of India in exercise
of its powers under section 3 of the Essential Commodities Act, 1955.
D' Clause 16 of the 1986 Order is as under :-

"16 (1) The Textile Commissioner, may from time to time,
issue directions in writing to any manufacturer or class of
manufacturers or manufacturers generally, regarding,
E (a) the clauses or specifications of cloth or yarn which
each manufacturer or class of manufacturers of or
manufacturers generally shall or shall not manufacture;

(b) the maximum or minimum quantities of cloth or yarn
which such manufacture or class of manufacturers or
F manufacturers generally shall manufacture during such
period as may be specified in the Order;

(c) the maximum price ex-factory, wholesale or retail at
which any class or specification of cloth or yarn may be
G sold; or

(d) the principles on which and the manner in which such
maximum prices may be determined by a manufacturer;
and

H (e) the manner of packing of yarn in hanks, cones or in
\ /

G.T.N. TEXTILES v. ASSTT. DIRECTORS [KULDIP SINGH, J.) 407

any other form and in such proportion as he may consider A
necessary or expedient:

Provided that in issuing any direction under this clause,
the Textile Commissioner shall have regard to:

(i) the demand for cloth or yarn; B
(ii) the needs of the general public;

(iii) the special requirements of the industry for such cloth
or yarn;
c
(iv) the capacity of the manufacturer or class of manufac-
turers or manufacturers generally, to manufacture or pack
different descriptions. or specifications of cloth or yarn;
and

(v) the necessity to make available to the general public D
cloth of mass consumption.

(2) While issuing any direction under sub-clause (1), the
Textile Commissioner may also provide that such direc-
tion shall be \vith reference to the quantity ·of cloth or yarn E
packed by the manufacturer or class of manufacturers or
manufacturers generally during the period specified in the
direction. ··

(3) Every manufacturer, or class of manufacturers or
manufacturers generally, to whom a direction has been F
issued shall comply with it.

( 4) Where, on an application made by any manufacturer
or class or manufacturers or otherwise the Textile Com-
missioner is satisfied that any direction issued by him
under this clause causes undue hardship or difficulty to G
any such manufacturer or class of manufacturers, he may,
by order and for reasons, to be recorded in writing, direct
that the direction shall not apply, or shall apply subject to
such modification as may be specified in the order to such
n:ianufacturer or class of manufacturers." H
408 SUPREME COURT REPORTS [1993] 2 S.C.R.

A In exercise of the powers under Clause 16 of the 1986 Order the
Textile Commissioner issued the notification. The operative part of the
notification is re-produced hereunder :-

"2. Every producer of yarn shall pack yarn for civil con-
sumption in hank form in each half-yearly period com-
B mencing from April-September, 1990, period and in every
subsequent half yearly period in proportion of not less
than fifty percent of total yarn packed by him during each
half-yearly period for civil consumption:

c Provided that not .less than eighty percent of the yarn
required to be packed in hank form shall be of counts 40s
and below in regard to category 1 at Annexure-I to this
Notification :

Provided further that the obligation to pack hank yarn
D pertaining to a particular half-yearly period can be ful-
filled before the end of the month succeeding such period
to which the obligation pertains."

At this stage we may briefly notice the earlier litigation which ended with
E the judgment of the Madras High Court in Sri Rani Lakshmi G.S. & W
Mills Pvt. Ltd. & Others v. Textile Commissioner, Bombay & Ors., AIR 1986
Madras 66. In Rani Lakshmi Mills' case the constitutional validity of Clause
21(5) of the cotton textile (Control) Order, 1948 [1948 Order] and the
notification dated June 29, 1979 issued thereunder were challenged. The
said Notification was in similar terms as the notification before us in these
F appeals. Clause 21(5) of the 1948 Order was as under :-

"(5) The Textile Commissioner may, by General or Special
Order, direct any manufacturer or class of manufacturers
to pack yarn in hanks, cones or in any other form and in
such proportion as he may consider necessary or ex-
G
pedient: and thereupon such manufacturers or class of
manufacturers shall be bound to comply·with such direc-
tions".

It was argued before the Madras High Court that Clause 21(5) of the
H 1948 Order did not provide any guidelines for the exercise of power by the
. G T.N. TEXTILES v. ASSTT. DIRECTORS [KULDIP SINGH, J.] 409

Textile Commissioner ~nd as such was arbitrary and violative of Article 14 A
of the Constitution of India. The High Court accepted the argument and
struce down Clause 21(5) of the 1948 Order on the following reasoning :-

"A bare rea.ding of the provision of clause 21(5) would
lherefore, show that the proviso under that clause gives
completely uncontrolled and uncanalized power which B
can. only "be described as an arbitrary power depending
upon what he considers is necessary or expedient."

Special leave petitions 12569-92/84 against the judgment of the Madras
High Court were dismissed by this Court on February 21, 1991. c
Because pf the judgment of the Madras High Court in Rani Lakshmi
Mills case the 1948 Order was repealed and the 1986 Order was promul·
gated. Clause 16(1) of the 1986 Order gives power to the Textile Commis-
sioner to-issue directions providing the manner of packing of yarn in hanks, D
cones or in any other form and in such proportion as he may consider
necessary or expedient. Proviso to Clause 16(1) lays down complete
guidelines for the exercise of power by the Textile Commissioner.

Relying upon Rani Lakshmi Mills' case the learned counsel for the
-.(: appellants have contended that identical notification having been struck E
down by the Madras High Court and the judgment upheld by this Court,
the respondents are bound by the same and the Textile Commissioner had
no authority to issue fresh notification in similar terms. In any case accord-
ing to the learned counsel the impugned notification is liable to be struck
down on the same grounds. We do not agree with the learned counsel. The F
notification struck down by the Madras High Court was issued under
Clause 21(5) of the 1948 Order. The High Court held Clause 21(5) of the
1948 Order unconstitutional and a_s a consequence struck down the
notification dated June 29, 1979. The present notification has been issued
under Clause 16(1) of the 1986 Order. Unlike Clause 21(5) of the 1948
Order proviso to Clause 16(1)· of the 1986 Order provides complete G
guidelines to the Textile Commissioner to issue the directions envisaged
thereunder. As such the ground of attack which was available to the
petitioners before the Madras High Court is not available to the appellants
before us. We, therefore, reject the contention based on· the judgment of
the Madras High Court in Rani Lakshmi Mills' case. H
!__

-~

410 SUPREME COURT REPORTS [1993] 2 S.C.R.
"

A Mr. Venogopal and Mr. Vaidyanathan learned counsel for the ap-
~
pellants have then contended that the appellants do not manufacture hank
yarn. The contention is that the respondents cannot compel the appellants
to manufacture something for which the appellants have not installed the
necessary machinery and other superstructure. The notification according
;
to the learned counsel infracts their fundamental right under Article
B
19{1)(g) of the Constitution of India. We see no force in the contention.
>
The Textile Industry in this country is the second largest industry, next to
agriculture, providing employment to millions of people. This industry is r•
~
accounting for 20% of the total industrial output. The appellant-mills are
part of the textile industry in the State of Andhra Pradesh. The respon-
c dents, in their written statement before the High Court, have elaborately
explained the spinning and the packing processes undertaken by the ap- r
pellant-mills. According to the respondents it is not correct that the
appellants are being forced to manufacture something which they are not
•
manufacturing already. The five stages of spinning (blow room, carding,
drawing, simplex and ring frame) are common and only thereafter the ring
"""
D •
frame cops are either packed in hank form or in cone form. The respon-
dents have given cogent reasons for issuing the impugned notification. We
'
may briefly state the same. '
•
The textile industry consists of three sectors namely, Mill- Sector,
E Powerloom Sector and Handloom Sector. The primary product in the
~
industry is yarn. It is produced only by the Mill-sector. The Powerloo.m and
I
Handloom Sectors manufacture fabrics and they depend upon the Mill- '
Sector for yarn. The yarn is packed in· two forms namely, cone form and
L
hank form. The cone form is consumed entirely by the Powerloom Sector
F and the hank form by the Handloom Sector. The handloom industry is the
largest cottage industry in India. Nearly one third of the country's require-
ment of cloth is met' by this Sector. As per the National Handloom Census, ...
~
1987-88 there were 3.9 million handlooms spread all over the country oUI-
of which three million were engaged in production of cotton cloth. The
Handloom-Sector provided direct employment to 8.4 million during 1988-
G 89 and indirect employment to millions of people. The production target
for Handloom Sector for the Seventh Plan was 4600 million mts. In order
to achieve the said production target a minimum of 460 million kgs. of hank
was required. The employment generated in the three sectors during the
year 1988 was 84.22, 50.95 and 11.81 lakh persons in Handloom Sector, ""'
H Powerloom Sector and Mill-Sector respectively. The production of cloth
G.T.N. TEXTILES v. ASSTT. DIRECTORS [KULDIP SINGH, J.] 411

+ for Handloom Sector during the Eighth Plan has been targeted at 7000 A
million mts. out of which cotton cloth is 5610 million mis. In order to
achieve this target 561 million kgs. of hank yarn is required. Against the
said requirement only 355 million kgs. of cotton yarn is being packed in
hank form. According to the respondents there is a big gap between the
demand and supply. This causes scarcity of yarn in the market and results
B
..... in spiralling of prices. It further results in unemployment in Handloom
Sector. In order to make available sufficient quality of hank yarn at
reasonable prices and also for the sustenance of Handloom workers, it
became necessary to reserve hank yarn for Handloom Sector by making it
obligatory on the part of the manufacturers of yarn to pack a certain
percentage of their production packet for civil consumption in the form of Cl

. hanks .

We are satisfied that impugned notification has been issued in the
interest cif the general public and also for the larger interest of the textile
industry.
D
It is not disputed that under Clause 4 of the Industrial Licence
granted to the appellants one of the conditions is as under :-
'I
"the packing of yarn in hank form and count wise produc-
tion shall be in accordance with the policy in force and
-{ E
the directions issued by the Textile Commissioner in this
regard from time to time."

- same.
The appellants, having accepted the above condition while taking the
licence, cannot now turn round and say that they are not bound by the

Mr. Vaidhyanathan further contended that under the impugned
F

notification unequals have been treated as equals. According to him dif-
ferent mills have installed different machinery and have different equip-
ments. The contention is t~at the impugned notification is violative of
Article 14 as it has been made uniform!y_.pplicable to mills which do not G
have the same capacity to produce hank yarn. We see no force in the
contention. The impugned notification has been made applicable uniformly
to all the producers of yearn. The appellants are required to pack yarn in
hank form in the proportion as.provided in the notification keeping in view
, the total varn packed by the mill concerned. In any case the grievance of H
412 SUPREME COURT REPORTS (1993] 2 S.C.R.

A the appellants has been substantially mitigated by the press note dated May ~
11, 1990 issued by the Textile Commissioner, Bombay. The relevant part is
re-produced hereunder :-

'2. The Government have now reinstituted the erstwhile
relaxation of getting hank yarn obligation fulfilled by trans-
B fer of surplus hank yarn packing of another producer.
Secondly, the Government have also allowed a producer
to get Hank yarn reeled through another producer having
extra relying capacity with the permission of the Central
Excise Authorities and with the arrangements through the
State Handloom Corporations and Apex. Handloom
Cooperative Organisations in the areas having concentra-
tion of handloom weavers."

We, see no ground to interfere with the judgment of the High Court.
We, therefore, dismiss the appeals with costs. We assess the costs as Rs.
D 5000 to be paid by each of the appellants.

G.N. Appeals dismissed.

I·