IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI FRIDAY, THE 5TH DECEMBER 2008 / 14TH AGRAHAYANA 1930 WP(C).No. 14350 of 2008(G) ---------------------------------------- PETITIONER(S): ----------------------- 1. ALL KERALA BHARATGAS DISTRIBUTORS' ASSOCIATION, SANSKRIT COLLEGE ROAD, TRIPUNITHURA, KOCHI 682 301, REPRESENTED BY ITS GENERAL SECRETARY, A.R.VENUGOPAL, AGED 61 YEARS, S/O.LATE N.R.NAIR. 2. JOSEPH GEORGE.P., AGED 59 YEARS, S/O.LATE C.J.GEORGE, PROPRIETOR, SEENA GAS, BHARATGAS DISTRIBUTOR, ANGAMALLY. BY ADV. SRI.H.B.SHENOY SRI.B.ASHOK SHENOY SRI.THOMAS P.MAKIL SMT.LAKSHMI B.SHENOY SRI.ABU MATHEW SRI.SOBHAN GEORGE RESPONDENT(S): --------------------------- 1. UNION OF INDIA REPRESENTED BY THE SECRETARY TO GOVERNMENT, MINISTRY OF PETROLEUM AND NATURAL GAS, SHASTRI BHAVAN, NEW DELHI-110 001 2. STATE OF KERALA REPRESENTED BY THE SECRETARY TO GOVERNMENT, FOOD AND CIVIL SUPPLIES (D) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001. 3. THE COMMISSIONER OF CIVIL SUPPLIES, COMMISSIONERATE OF CIVIL SUPPLIES, PUBLIC OFFICE, OPP.MUSEUM, THIRUVANANTHAPURAM-695 033. 4. THE TALUK SUPPLY OFFICER, TALUK SUPPLY OFFICE, ALUVA 683 101. GOVERNMENT PLEADER SRI.P.K.BABU FOR R2 TO 4 ADV. SRI.PARAMESWARAN NAIR , A.S.G. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05/12/2008, ALONG WITH WPC. NO.17673 OF 2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.14350/2008 APPENDIX PETITIONERS EXHIBITS P1:- COPY OF THE KERALA PETROLEUM DEALERS LICENSING ORDER 1981 ISSUED BY 2ND RESPONDENT AS PER G.O.(P) 22/81/FOOD DT. 22.5.1981 AND PUBLISHED AS SRO NO.606/81 IN KERALA GAZETTE EXTRAORDINARY NO.394 DT. 22.5.1981. P2:- COPY OF THE ORDER NO.S.O.35245 DT. 13.11.1962 ISSUED BY IST RESPONDENT AND PUBLISHED AT PAGE 3842 OF PART II, SUB-SECTION (II) OF SECTION 3 OF GAZETTE OF INDIA DT. 24.11.1962. P3:- COPY OF THE JUDGMENT DT. 7.11.05 OF THIS HONOURABLE COURT IN OP. 5516/95. P4:- COPY OF THE PETROLEUM PRODUCTS MAINTENANCE OF PRODUCTION STORAGE AND SUPPLY) ORDER 1999 ISSUED BY IST RESPONDENT DT. 16 APRIL, 1999. P5:- COPY OF THE LIUEFIED PETROLEUM GAS (REGULATION OF SUPPLY AND DISTRIBUTION) ORDER 2000 ISSUED BY IST RESPONDENT DT. 26.4.2000. P6:- COPY OF THE GAZETTE OF INDIA EXTRAORDINARY NO.444 DT. 1.10.07 CONTAINING GSR 637(E) AND 638(E) DT. 1.10.07 ISSUED BY IST RESPONDENT. P7:- COPY OF THE NOTIFICATION SRO NO.140/08 DT. 22.1.08 ISSUED BY 2ND RESPONDENT AND PUBLISHED IN KERALA GAZETTE EXTRAORDINARY NO.247 DT. 31.1.08. P8:- COPY OF THE PRESS RELEASE DT. 15.3.08 ISSUED BY DISTRICT COLLECTOR, ERNAKULAM NO.CS 10-2016/07. P9:- COPY OF THE NOTICE NO.A6-742-08 DT. 17.4.2008 ISSUED BY 4TH RESPONDENT TO 2ND PETITIONER. /TRUE COPY/ P.S. TO JUDGE tss “C.R” V.GIRI, J. ------------------------------ W.P.(C).Nos. 13855, 14350, 14629, 16631, 17673, 17734, 17789, 17871, 17920, 18006, 18007, 18017, 18143, 18144, 18225, 18240, 18268, 18274, 18282, 18574, 18600, 18622, 18631, 18632, 18700, 18706, 18709, 18712, 18755, 18864, 18946, 18982, 18984, 18985, 18990, 19007, 19009, 19012, 19120, 19371, 21088, 21252, 21325, 21341, 21730, 22625, 22635, 22649, 23133, 23194, 23415, 23420, 23499, 23501, 24602, 25717, 26776, 27338, 27493, 29698 of 2008 ------------------------------- Dated this the 5th day of December, 2008. JUDGMENT The validity and enforceability of the Kerala Petroleum Products Dealers Licensing Order, 1981 {hereinafter referred to as the “State Order”}, is the crucial question for consideration in these writ petitions. The petitions have been filed by dealers of Motor Spirit, High Speed Diesel and Liquefied Petroleum Gas. All of them are licensed under different orders issued by the Central Government, under the provisions of the Essential Commodities Act, 1955 [for short 'the Act']. 2. The petitioners contend that since they are governed by the provisions of orders issued by the Central Government under Section 3 of the Act, their activities W.P.(C).No.14350 of 2008 & con. Cases. :: 2 :: cannot, again, be regulated by the State Government by recourse to the provisions of the State Order. I will refer to W.P.(C)No.14350/08 as the leading case. W.P.(C)No.14350/08 3. The first petitioner is an association of Retail Dealers of LPG, appointed by the Bharat Petroleum Gas. The second petitioner is one of the distributors of LPG. The petitioners refer to the LPG (Regulation of Supply and Distribution) Order, 2000 issued by the Central Government under Section 3 of the Act seeking to regulate the supply and distribution of LPG. It seems that the dealers of LPG in the State are licensed under the provisions of the LPG order 1993 or its successor the Liquefied Petroleum Gas (Regulation of supply and Distribution) Order, 2000. The 2000 order is produced along with the writ petition and marked as Ext.P5. The petitioners referred to the enactment of the Petroleum Act, 1934 and the Petroleum and Natural Gas Regulatory Board Act, 2006 {hereinafter referred to as the “Board Act”} intended to regulate the transportation, storage and sale of petroleum products, including LPG. In W.P.(C).No.14350 of 2008 & con. Cases. :: 3 :: substance, the stand taken by the petitioners is that the Central Government has issued Orders in 1988, 1993 and 2000, the latest one being the Order issued in 2000, regulating the distribution and supply of LPG. The petitioners have submitted themselves to the provisions of the 2000 order, which they do not dispute, is binding on them. They also refer to the Board Act which the Parliament has issued in 2006 to contend that the Central Government has, as recently as, in 2006 enacted a legislation, comprehensively covering all areas dealing with the manufacture, transportation, storage and distribution of petroleum products including LPG. These are the provisions, which according to the petitioners, that alone can currently regulate their activities. 4. Similar are the contentions raised by the petitioners in the other cases, who are either dealers of Motor Spirit or High Speed Diesel. Dealers of MS and HSD refer to the provisions of Motor Spirit and High Speed Diesel (Regulation of Supply and distribution and Prevention of Malpractices) Order, 1998 and its successor Motor Spirit and W.P.(C).No.14350 of 2008 & con. Cases. :: 4 :: High Speed Diesel (Regulation of Supply and distribution and Prevention of Malpractices) Order, 2005, which prevails as on date. The 2005 Order has repealed the 1998 Order. It is contended that comprehensive provisions brought into force by the Central Government in exercise of its powers under Section 3 of the Act dealing with the licensing of Dealers of the said commodity, also provide the manner in which the said petroleum products are to be transported, sold or distributed. The contentions raised by the LPG distributors qua the enforcement of the 2006 Board Act are also reiterated by the petitioners in these cases, who, as stated above, are dealers of MS & HSD. 5. It is, in this background, that the petitioners contend that an order issued by the State Government, as the Kerala Petroleum Products Licensing Order 1981 {hereinafter referred to as “the State Order”}, will have to be understood. The aforementioned State Order, though issued by the State Government in the year 1981, was brought into force only on 22.1.2008 as per S.R.O.No.140/08. The State Order is issued by the State Government in exercise of the powers W.P.(C).No.14350 of 2008 & con. Cases. :: 5 :: conferred on it by Section 3 of the Act, read with an order of delegation of powers issued in that behalf by the Central Government, produced and marked as Ext.P2 in W.P..(C) No.12380/08. 6. I heard learned Senior counsel M/s.N.N.Sugunapalan, Govind Bharathan, and Mr.Ashok Shenoy, Mr.Jaju Babu, Mr.B.Suresh Kumar Mr.Jayachandran, Mr.Alias Cherian, learned counsel for the petitioners and learned Senior Government Pleader Sri.P.K.Babu. I think, it is appropriate to refer to the relevant provisions of the State Order, at this juncture. 7. Clause 3 of the State Order reads as follows: “(1) No person shall commence or carry on the business of storage or sale of any petroleum product in the State except under and in accordance with the terms and conditions of licence issued in this behalf by the licensing authority. (2) No existing dealer shall continue the business of storage or supply of any petroleum products without obtaining a licence from the licensing authority within 30 days from the date of receipt of a copy of this judgment W.P.(C).No.14350 of 2008 & con. Cases. :: 6 :: commencement of this Order. Provided that an existing dealer who has applied for a licence on payment of the requisite fee within 15 days of the commencement of this Order, shall be entitled to continue his business notwithstanding the expiry of the 30 days specified in this sub-clause until a decision rejecting his application is communicated to him. (3) No person shall after the commencement of this Order possess, store or transport motor spirit or high diesel oil in excess of thirty litres and cooking gas in excess of ten cylinders of sixteen kilograms each except in accordance with the provisions of sub-clause (1) or sub- clause (2): Provided that such limits shall not apply to carriers of petroleum products and to petroleum products in a tank fixed permanently to a vehicle owned or controlled by an Oil Company. (4) Any appointment or change of any dealer made by any oil company shall be reported to the Collector. Such dealers will be given licences by the Collector. Pending issue of such licences, the dealer will be entitled to carry on his trade.” W.P.(C).No.14350 of 2008 & con. Cases. :: 7 :: 8. It may be noted here that 'petroleum products' are defined in Clause 2 as to mean motor spirit, high speed diesel oil petroleum-based lubricants and cooking gas. Clause 4 of the State Order, refers to the carriers of petroleum products and their obligation to obtain licences. The same reads as follows: “4. Carriers of petroleum products to obtain licences:-- (1) Every carrier of petroleum products shall apply to the Collector for the licence in respect of each vehicle intended to be used for the purpose of transporting products, in Form 'A' along with a Court fee stamp worth Rupees two affixed thereto and a chalan receipt in proof of remittance of licence fee of Rs.30.00 (Rupees thirty only) under the relevant head of account. After such verification as is found necessary by the Collector and if the applicant is found eligible to be used a licence, he shall be required to furnish a security deposit of Rs.5000/- (Rupees five thousand) in cash or in a deposit with Post Office Savings Bank endorsed in favour of the Collector. On furnishing such security, the applicant shall be issued a licence, in From 'B'. Application for renewal of licence shall also be made in Form 'A'. W.P.(C).No.14350 of 2008 & con. Cases. :: 8 :: Provided that the above provision shall not apply in respect of vehicles owned by an Oil Company. (2) Every carrier of petroleum products existing immediately before the commencement of this Order shall be entitled to be issued licence from Collector, provided that a security deposit of rupees five thousand in cash or in a deposit with Post Office Savings Bank endorsed in favour of the Collector is submitted to the Collector. He shall also be entitled to carry on his business until such licences are issued to him, provided that the application for the licence with the security deposit has been submitted within 15 days of the commencement of this Order.” 9. Clause 11 of the State Order provides for the manner in which a person will have to apply for a dealer's licence in terms of Clause 3. Clause 17 provides that no dealer shall sell or store and no carrier of petroleum products shall possess or transport adulterated petroleum products. Adulterated petroleum products are defined in Clause 2(a) as follows: “2(a) “Adultered petroleum products” means petroleum products which do not conform to the specifications of “petroleum class A' as defined in W.P.(C).No.14350 of 2008 & con. Cases. :: 9 :: Clause (b) of Section 2, of the Petroleum Act, 1934 (Central Act 30 of 1934) or which do not conform to the quality prescribed by the Indian Standards Institution”. 10. In effect, the State Order, therefore, provides that any person, who wants to deal with any petroleum product will have to obtain a licence in that behalf from the competent authority under the State Order. Form E to the order provides for the licence, which is to be issued by the competent authority under the 1981 order. It also envisages a situation where directions could be issued by the State Government or any other competent authority to any dealer licensed in that behalf under the 1981 order, in the matter of regulating the supply and distribution of the licensed products. 1981 order also provides for the standards of the products that could be sold. Contravention of the provisions of 1981 order would amount to a contravention within the meaning of the Essential Commodities Act followed by penal consequences as contemplated by Section 7 of the Act. 11. It is in this context that the petitioners are aggrieved by the 1981 order. They contend that all of them W.P.(C).No.14350 of 2008 & con. Cases. :: 10 :: are licensed or authorized, as the may be, under the provisions of 2005 order issued by the Central Government regulating the supply and distribution of MS and HSD, or the LPG order, 2000, insofar as it relates to LPG. They have applied for and obtained licences adhering to the standards prescribed in that behalf under the Orders issued by the Central Government. They are vulnerable to the conditions of 2005 order in the case of MS and HSD and 2000 order in the case of LPG. Therefore, there is an order in force; a comprehensive statutory instrument regulating the dealership for MS, HSD and LPG and prescribing the standards, which have to be maintained in the storage, transportation and distribution of such products. Those orders are also issued under Section 3 of the Act. The challenge against 1981 order is mounted by the petitioners, essentially on the following points: (A) Certain provisions contained in the State Order are clearly inconsistent with the provisions of Petroleum Act, 1934 and the Board Act 2006. A subordinate legislation cannot contravene the provisions of a plenary W.P.(C).No.14350 of 2008 & con. Cases. :: 11 :: law. In this view of the matter, the provisions of the State Order will, therefore, have to be treated as void or unenforceable to the extent of their inconsistency with the provisions of the aforementioned plenary legislations. (B) The Essential Commodities Act 1955, insofar as it comprehends petroleum and petroleum product, as an Essential Commodity, should be treated as having been impliedly repealed by the provisions of the Petroleum and Natural Gas Regulatory Board Act, 2006. (C) The provisions of the Central Orders and the State Order, give rise to different consequences and are not capable of resolution. In fact, there is a conflict between the provisions of these two. Consequently, the provisions of the State Order will have to be considered as repugnant and void to the extent of inconsistency. The principles underlying cases of repugnancy under Article 245(1) of the Constitution of India are applicable to orders issued by the Central Government and State Government under the Essential Commodities Act, 1955. (D) Statutory instruments have been brought into force by the Central Government W.P.(C).No.14350 of 2008 & con. Cases. :: 12 :: specifically to deal with petroleum products. The Central Government has, therefore, exercised its power under Section 3 of the Essential Commodities Act. If that be so, the field is not available to be occupied by the State Order, which, though issued in 1981, was enforced only in 2008, w.e.f. 22.1.2008, during the currency of the Central Orders issued in 2000 and 2005, as the case may be. 12. I will consider these points. Point No.(A): Whether the provisions of the State Order 1981 are invalid and unenforceable for the reason that they are inconsistent with the provisions of 1934 Act or the Board Act, 2006? 13. Section 7 of the Petroleum Act, 1934 provides that no licence is required for transportation and storage of limited quantities of Petroleum. Clause (b) deals with petroleum gas. Section 8 of the Petroleum Act, 1934 provides that no licence is needed for import and transport of small quantities of petroleum A provided, the quantity does not exceed 30 litres. An exemption is granted in respect of stationary engines under Section 9 of the W.P.(C).No.14350 of 2008 & con. Cases. :: 13 :: Petroleum Act. Detailed provisions are contained in the Petroleum Rules, 2002 dealing with the storage and transportation of petroleum products. The provisions contained in the State Order would require a person to obtain a licence under Clause 3 of the State Order for storage or sale of any petroleum product in the State. The Licensing Authority under the Order, 2003 is different from the Licensing Authority under the State Order. The standards to be maintained in relation to the same product are different and are specifically mentioned in the Petroleum Rules, 2002. 14. Petitioners contend that Clauses 3 and 4 of the State Order 1981 contravene the provisions of the Petroleum Act, 1934 and since the provisions of a subordinate legislation cannot be enforced in contravention of any Plenary Statute, the provisions of the State Order have to be declared void to the extent they contravene the provisions of the Petroleum Act. 15. Learned counsel for the petitioners referred to the judgments of the Supreme Court in M/s.Hoechst Pharmaceuticals Ltd. v. State Bihar {AIR 1983 SC 1019} and W.P.(C).No.14350 of 2008 & con. Cases. :: 14 :: Kerala Samsthana Chethu Thozhilali Union v. State of Kerala {2006(4) SCC 327}. 16. It is trite law that the validity of a subordinate legislation can be challenged on all grounds available, qua provisions of a plenary statute and also on the ground that it contravenes the provisions of another Plenary Statute. This is the principle that has been laid down by the Supreme Court in the aforementioned decisions and several other decisions and therefore, the contention raised by the petitioners in this regard would have definitely merited a serious consideration. But, I take note of the serious contention raised by the learned Government Pleader, on the strength of Section 6 of the Essential Commodities Act, which reads as follows: “6. Effect of orders inconsistent with other enactments:-- Any order made under Section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or any instruments having effect by virtue of any enactment other than this Act.” W.P.(C).No.14350 of 2008 & con. Cases. :: 15 :: 17. The enforcement mechanism, contemplated by the Essential Commodities Act, 1955 is not really provided in the Act itself. It is meant to be dealt with by an Order that could be issued by the Central Government under Section 3 of the Act. In fact, the contravention of the provisions of the Act comes about by a contravention of the provisions of any of the Orders which are issued under Section 3 of the Act. The effect of Section 6 of the Act was considered by the Supreme Court in {AIR 1954 SC 465}, wherein the court dealt with the same in the following manner: “In our opinion the construction placed on Section 6 by the High Court is not right. Section 6 does not either expressly or by implication repeal any of the provisions of pre-existing laws; neither does it abrogate them. Those laws remain untouched and unaffected so far as the statute book is concerned. The repeal of a statute means as if the repealed statute was never on the statute book. It is wiped out from the statute book. The effect of Section 6 certainly is not to repeal any one of those laws or abrogate them. Its object is simply to by-pass them where they are inconsistent with the W.P.(C).No.14350 of 2008 & con. Cases. :: 16 :: provisions of the Essential Supplies (Temporary Powers) Act, 1946 or the orders made thereunder. In other words, the orders made under Section 3 would be operative in regard to the essential commodity covered by the Textile Control Order wherever there is repugnancy in this Order with the existing laws and to that extent the existing laws with regard to those commodities will not operate. By-passing a certain law does not necessarily amount to repeal or abrogation of that law. That law remains unrepealed but during the continuance of the Order made under Section 3 it does not operate in that field for the time being. The ambit of its operation is thus limited without there being any repeal of any one of its provisions. Conceding, however, for the sake of argument that to the extent of a repugnancy between an order made under Section 3 and the provisions of an existing law, to the extent of the repugnancy, the existing law stands repealed by implication, it seems to us that the repeal is not by any act of the delegate, but the repeal is by the legislative act of the Parliament itself. By enacting Section 6 Parliament itself has declared that an order made under Section 3 shall have effect notwithstanding any inconsistency in this W.P.(C).No.14350 of 2008 & con. Cases. :: 17 :: order with any enactment other than this Act. This is not a declaration made by the delegate but the legislature itself has declared its will that way in Section 6. The abrogation or the implied repeal is by force of the legislative declaration contained in Section 6 and is not by force of the order made by the delegate under Section 3. The power of the delegate is only to make an order under Section 3. Once the delegate has made that order its power is exhausted. Section 6 then steps in wherein the Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than this act. Parliament being supreme, it certainly could make a law abrogating or repealing by implication provisions of any pre-existing law and no exception could be taken on the ground of excessive delegation to the act of the Parliament itself. There is no delegation involved in the provisions of Section 6 at all and that Section could not be held to be unconstitutional on that ground.” 18. The overriding effect given to the provisions of the Orders issued under Section 3 of the Act, is not by reason of a clause contained in that behalf in the subordinate W.P.(C).No.14350 of 2008 & con. Cases. :: 18 :: order, but, by reason of the declaration made by the Parliament under Section 6 of the Act. Thus, the overriding effect, which is given to the provisions of the State Order, has sanction of a plenary legislation. It is as if for the said limited purpose, the provisions of the State Order is incorporated as part of the plenary legislation. If that be so, the question of a subordinate legislation coming into conflict with the plenary legislation really does not arise in the present case. There is an overriding effect to the provisions of an Order issued under Section 3 of the EC Act, qua any other statute. This would include any other Act passed by any other legislature. I am, therefore, not inclined to accept the contention of the petitioners that the provisions of the State Order 1981 are rendered unenforceable and therefore, void by reason of it coming into conflict with the 1981 order. 19. Jurisprudentially, a similar contention taken as regards the provisions of the State Order, qua the provisions of the Board Act, 2006, should meet the same fate. No doubt, the 2006 Act is a subsequent legislation and is an enactment on the subject of petroleum and petroleum W.P.(C).No.14350 of 2008 & con. Cases. :: 19 :: products. Learned counsel for the petitioners point out that comprehensive provisions are contained in the 2006 Board Act which deal with the storage and transportation of petroleum products and the legislative coverage afforded by the 2006 Act extends from the stage of manufacture to the stage of distribution to the ultimate consumer, and therefore, the