IN THE HIGH COURT OF JUDICATURE AT PATNA LPA No.947 of 2009 1. The State of Bihar in the Department of Food, Civil Supplies and Commerce, Government of Bihar, Patna through its Secretary. 2. The Commissioner-cum-Secretary in the Department of Food, Civil Supplies and Commerce, Government of Bihar, Patna. 3. The Collector-cum-District Magistrate, Patna Bihar. 4. The Special Officer Rationing, Patna 5. The Block Supply Officer, Bakhtyarpur, District-Patna. … Respondents-Appellants VERSUS 1. The Bihar Kerosene Dealer Association, an Association of Wholesale Kerosene Dealers of Bihar registered under the Societies Regulation Act, having its principal office at 78, Kavi Raman Path, East Boring Canal Road, P.S.Budhha Colony, Town and District Patna through its Chairman, Shri Shree Lal Saraf. 2. M/s Ratanlal Mahesh Kumar, a Proprietorship firm having its place of business at Bakhtiyarpur and a dealer of kerosene oil, P.S. Bakhtiyarpur, Sub-division- Barh, District-Patna through its Proprietor Shri Ratan Lal a member of Bihar Kerosene Dealer Association. … Petitioner-respondent 1st set. 3. The Union of India through the Ministry of Petroleum and Natural Gas, Government of India, New Delhi through its Secretary. …. Respondents-Respondents 2nd Set. For the appellants : Mr. P.K.Shahi, Advocate General. Mr. Purnendu Singh, Advocate. For respondents no.1 & 2: Mr. K.D.Chatterje, Advocate For respondent no.3 : Mr. Gopesh Kumar, C.G.C. ----------- 05. 08.03.2010 In this intra-court appeal the assail is to the order dated 19.12.2008 passed by the learned Single Judge in CWJC No.10699 of 2005 whereby he has quashed the order - 2 - dated 12.08.2005, contained in Annexure-14 to the writ petition, whereby the State Government had withdrawn the leakage allowance that was granted earlier to the dealers at the rate of 0.23%. 2. Be it noted, the learned Single Judge after adverting to the facts and referring to earlier orders passed by this court, which were remitted for reconsideration, expressed the view as under: “If the State Authorities acknowledge the fact of product loss, to this Court leakage shall be an integral part of one of the methods of product loss. The two are integrally connected to that extent. Compensation for product loss and accountability and liability to answer for the physical absence of the product to the extent of product loss are two different matters. Compensation for the former does not answer the latter. The impugned order dated 12.8.2005 is non- speaking in nature. It seeks to take shelter behind the observation of this Court that it had not given any directions in that regard, but had only required a reconsideration to justify withdrawal of the grant of leakage allowance of 0.23% by the order dated 28.8.2003. What the impugned order leaves unanswered is the acceptability by the State of product loss. In what manner was product loss different from leakage to justify withdrawal of the 0.23% leakage allowance granted after the availability of an expert report from the Ministry of Petroleum and Natural Gas, Government of India, New Delhi is left unanswered by the State Authorities. In absence of the aforesaid, the order becomes non-speaking in nature and is vitiated by non-application of mind. Though the learned Advocate General has invited the attention of the Court to certain orders passed by the State Authorities when the petitioner and their representatives were given an opportunity of hearing, and - 3 - which discussion does not form part of the order dated 12.8.2005, even if the respondents be permitted to rely upon the same, being clearly in excess of the impugned order dated 12.8.2005 and therefore not permissible in view of the decision of the Supreme Court in 2005 (7) S.C.C. 627 (Hindustan Petroleum Corporation Limited vs. Darius Shapur Chenai and others) at para-24, it is of no avail to the respondents in the present controversy. The order dated 12.8.2005 is therefore vitiated for non-application of mind and disclosing no reasons for a revision of the earlier decision in light of the expert report to grant 0.25% leakage allowance. The order dated 12.8.2005 is, therefore, set aside.” 3. We have produced the order passed by the learned Single Judge in extenso as we are of the considered opinion the earlier direction was to see the justifiability of the withdrawal and the fall-out therefrom. As is evident from the order of the learned Single Judge, he has opined that the order impugned is vitiated due to non-application of mind and disclosure of the reasons in the light of the expert report to grant 0.23% as leakage allowance. 4. When the matter was listed on 03.02.2010, it was argued before us by Mr.P.K.Shahi, learned Advocate General that the leakage allowance of 0.23% is inhered in the price fixation and, therefore, the grant of further allowance would unsettle the things and would not be in accord or in consonance with the policy of the Union of India. When such - 4 - a stand was taken, we thought it appropriate to ask the learned Standing Counsel appearing for the Union of India to produce the report of the Directors (Marketing) Committee which was referred to in paragraph 6 of the counter affidavit filed by the Union of India. 5. In pursuance of the aforesaid order, the said report has been filed before us. Chapter with heading „Executive Summary‟ deals with various aspects, including operating cost and operating product losses under the heading „Leakage allowance/ Operating Product Losses‟ wherein it has been stated as follows:- “iv) Leakage allowance/Operating Product Losses The element considered is Rs.19.03 per KL for operating product loss of 0.23% since there is no change in product price of Rs.8275.90 per KL, this element can be retained as Rs.19.03 per KL.” 6. On a perusal of the aforesaid report, it is quite clear that 0.23% has already been taken into consideration while fixing the price per kilo litre towards operating product losses. Once the same is inherent in price fixation, we are of the considered opinion that the stand of the State Government is justified that no leakage allowance should be given. The report is a report by the expert body. - 5 - 7. A division Bench of this court in M/s Pulak Enterprises Vs. The Bihar State Electricity Board & Ors, 2000(3) PLJR 552, has expressed the view as under:- “23. The significance of the question as to whether fixing the rate of fuel surcharge is a legislative function or a non-legislative function is that if the function is held to be legislative, in the absence of any provision in that regard the principles of natural justice would not be applicable and the scope of judicial review would also be limited to plea of discrimination i.e. violation of Article 14 of the Constitution. As a general proposition, the law on the point is settled. In Prag Ice and Oil Mills vs. Union of India, AIR 1978 Supreme Court 1296, a Seven Judge Bench of the Apex Court by majority observed, “In the ultimate analysis the mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of persons, the procedural basis of price fixation has to be accepted in the generality of cases as valid.” The legal position was reiterated in Rohtas Industries vs. Bihar State Electricity Board, AIR 1984 Supreme Court 657 and Kerala State Electricity Board Vs. M/s S.N.Govind Prabhu & Brothers, AIR 1986 Supreme Court 1999, wherein it was observed, “Price fixation is neither the forte nor the function of the Court.” As regards the nature of the function, in Saraswati Industrial Syndicate Limited vs. Union of India, AIR 1975 Supreme Court 460, the Court had observed that the price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material. It should not therefore give rise to a complaint that rule of natural justice has not been followed in fixing the price. In Prag Ice and Oil Mills vs. Union of India (supra) the Court observed, “ We think that unless by the terms of particular - 6 - statute or order, price fixation is made a quasi judicial function for specified purposes or cases it is really legislative in character……. the legislative measure does not concern itself to the facts of an individual case. It is meant to lay down a general rule applicable to all persons or objects or transactions of a particular kind or class.” In Union of India Vs. Cynamide India Limited, AIR 1987 Supreme Court, 1802 the Court held that except in cases where it becomes necessary to fix the price separately in relation to individuals, price fixation is generally a legislative act, the performance of which does not require giving opportunity of hearing. Following passage from the judgment may usefully be noticed: “Legislative action, plenary or subordinate, is not subject to rules of natural justice. In the case of Parliamentary legislation, the proposition is self- evident. In the case of subordinate legislation, it may happen that Parliament may itself provide for a notice and for a hearing - there are several instances of the legislature requiring the subordinate legislating authority to give public notice and a public hearing before say, for example, levying a municipal rate – in which case the substantial non- observance of the statutorily prescribed mode of observing natural justice may have the effect of invalidating the subordinate legislation… but where the legislature was chosen not to provide for any notice or hearing, no one can insist on it and it will not be permissible to read natural justice into such legislative activity.” Reference may also be made to a Constitution Bench decision in Shri Sitaram Sugar Company Limited vs. Union of India, (1990) 3 SCC 223.” 8. In view of the aforesaid, when there has been fixation of the leakage allowance by the expert body which - 7 - has been followed by the State Government, no fault really could have been found with the same. As the learned Single Judge has set aside the said order on the ground of non- application of mind and non-ascribing of reasons, we are afraid, the same would not be sustainable as a policy decision has been taken. 9. In view of the aforesaid analysis, the appeal is allowed and the order passed by the learned Single Judge is set aside and the order passed by the State Government on 12.08.2005 is restored. There shall be no order as to costs. Sunil (Dipak Misra, C.J.) (Mihir Kumar Jha, J.)