IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL No 44 of 2001 in SPECIAL CIVIL APPLICATIONNo 5981 of 1999 WITH LETTERS PATENT APPEAL NO. 692 OF 2000 IN SPECIAL CIVIL APPLICATION NO. 9076 OF 2000 For Approval and Signature: Hon'ble MR.JUSTICE R.K.ABICHANDANI and Hon'ble MR.JUSTICE M.C.PATEL =============== 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? YES 2. To be referred to the Reporter or not? YES : 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? no 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? no 5. Whether it is to be circulated to the Civil Judge? : NO no -------------------------------------------------------------- SATISH MAGANLAL VORA Versus UNION OF INDIA -------------------------------------------------------------- Appearance: LETTERS PATENT APPEAL NO. 44 OF 2001 : MR DS CHANDNANI FOR MR BD KARIA for Appellant MR MR SHAH Addl. Standing Central Govt. Counsel MR UA TRIVEDI, AGP for Respondent No. 2 & 3 LETTERS PATENT APPEAL NO. 692 OF 2000 MR DS CHANDNANI FOR MR BD KARIA for Appellant MR MR SHAH Addl. Standing Central Govt. Counsel MR UA TRIVEDI AGP for respondents No.2, 3 & 4 MR GN SHAH for MS MINOO A SHAH for respondents No.5, 6, 7 & 8 -------------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE M.C.PATEL Date of decision: 10/04/2001 ORAL COMMON JUDGEMENT (Per : MR.JUSTICE R.K.ABICHANDANI) 1. These two appeals arise out of judgement and order of the learned Single Judge dated 1st April 2000 in Special Civil Application No. 5981 of 1999 with Special Civil Application No. 1365 of 2000 and Special Civil Application No. 9076 of 2000, rejecting these writ petitions. Both the appeals have been argued together fully and finally by both the sides since they involved common questions and are filed by the same appellant, who had filed these petitions. 2. In Special Civil Application No. 5981 of 1999, the appellant had challenged the validity of the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractice's) Order, 1998 (hereinafter referred to as `the impugned Order of 1998') and seeking a declaration that the petitioner's product "Patrex" was not covered by the Essential Commodities Act, 1955 (hereinafter referred to as `the Act') and impugned Order of 1998. The appellant also challenged the order dated 3rd June 1999, at Annexure `K' to that petition passed by the District Supply Officer seizing the goods detailed in the order namely, Patrex branded motor fuel, Methanol, Hydrocarbon, Acetone, mixed raw material etc. The appellant also challenged the order dated 25-10-1999, at Annexure `L(1)' to that petition made under section 6-A of the said Act, confirming the order of the District Supply Officer and directing that the seized stock of the petitioner's proprietary concern M/s Sonar Petrochem valued at Rs.10,80,521=00 be confiscated. 2.1 In Special Civil Application No. 1365 of 2000 which was decided alongwith Special Civil Application No. 5981 of 1999, from which matters the Letters Patent Appeal No. 44 of 2001 has arisen, the appellant while challenging the validity of the impugned Order of 1998 on the ground that it was ultra vires the provisions of the Essential Commodities Act, 1955, also sought for a direction on the respondents to allot to him a monthly quota of 500 M.T. of Naphtha for manufacture of its product `Patrex' as prayed in his letter dated 5-2-2000 at Annexure `M' to that petition. He also claimed damages to the tune of Rs.5,00,000=00 for the alleged mental torture and agony to him by the impugned action of the respondents. 2.2 In Special Civil Application No. 9076 of 2000 from which the Letters Patent Appeal No. 692 of 2000 arises (in the title of which writ petition, the appellant had also mentioned Special Civil Application No. 5981 of 1999, Special Civil Application No. 1365 of 2000 and Special Civil Application No. 1326 of 1998 perhaps because of the overlapping nature of all the petitions, the appellant challenged the seizure order passed by the respondents on 25-2-2000 dated 5-4-2000 and 27-4-2000 at Annexure `K' collectively to that petition and the confiscation order as per Annexure `L' to that petition. A declaration was also sought that the impugned Order of 1998 as well as "Solvent Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000 (Annexure `M' to that petition), and again "Naphtha (Acquisitions, Sale, Storage and Prevention of Use in Automobile) Order, 2000 (Annexure `N' to that petition) were all ultra vires the provisions of sections 3 and 7 of the said Act. A direction was sought on the respondents authority to supply to the appellant 5000 Kilo Litres of Naphtha per month for manufacture of his product `Patrex'. 3. The case of the appellant as reflected from his petition (Special Civil Application No. 5981 of 1999) is that he is the Managing Director of M/s Patrex Fuels India Ltd. and a sole proprietor of M/s Sonar Petrochem, and that he had invented a product by mixing Hydrocarbon liquid like Naphtha, Methyl Alcohol and additives (trade secret). According to him, `Patrex' served the purpose of providing motive power to petrol driven vehicles and the same can be used as substitute to normal ordinary petrol sold in open market through petrol pumps. According to him, his product was tested by Petroleum Conservation Research Association as well as Bharat Petroleum Corporation Ltd. Since the appellant had commercially developed his product `Patrex' throughout India, according to him, it was not feasible for him to go and file writ petitions in each and every State for declaration that his product was not covered by the Essential commodities Act, and that his business should not be obstructed and interfered with and therefore, in May 1997, he approached the Hon'ble Supreme Court by filing Writ Petition No. 202 of 1997 for a declaration that `Patrex' is not covered by the said Act. It is stated in paragraph 10 of that petition that, after hearing his advocate, the Supreme Court was pleased to dismiss the petition by its order dated 5-5-1997. The order of the Supreme Court reads as follows : "This writ petition is dismissed. However, the dismissal of the writ petition shall not come in the way of the petitioner to take recourse to such other appropriate remedy as may be available to him in law." In context of this order, the appellant has in paragraph 10 of his petition stated; "The petitioner says that this order of the Hon'ble Supreme Court clearly confirms the version of the petitioner that Patrex is not covered by the said Act. Obviously, this order came to be passed by Hon'ble Supreme Court in view of provisions of section 2(xi) of the said Act, which vests power with Parliament to include an article in the definition of essential commodity." 3.1 According to the appellant, once again on 30th June 1999, the District Supply Officer, Valsad seized the goods and raw material and other paraphernalia of the appellant at his factory at Sarigam in Umargam Taluka of Valsad under the impugned Order of 1998 with a direction that the seized goods should not be dealt with in any manner whatsoever or any purpose. The respondent No.3 Collector, Valsad proceeded with the matter and made an order on 25th October 1999 confiscating the goods under section 6-A of the Act. In that order dated 25-10-1999, at Annexure `L-1' to that petition, it has been recorded that, on a surprise visit of the District Supply Officer, Valsad on 30th June 1999 to the appellant's factory, it was found that the factory is purchasing and mixing Hydrocarbon, Methanol, Acetone and "XT" and manufacturing a product named `Patrex' which is used as motor fuel. It was found that inspite of the provisions of clause 3(v) of the impugned Order of 1998, which provided that no person shall sell or agree to sell any petroleum product or its mixture other than Motor Spirit or High Speed Diesel, as specified in Schedule I, in any forms, under any name, brand or nomenclature, which can be and is meant to be used as fuel in Spark Ignition Engines or Compression Ignition Engines, the said factory was manufacturing and selling motor fuels and has violated the provisions of the impugned Order of 1998. A show cause notice dated 20th July 1999 was issued to the appellant who was the sole proprietor calling upon him to show cause as to why the goods and raw material should not be seized in accordance with the provisions of section 6B(1)(a) of the said Act. He was offered a personal hearing on 7th July 1999. The appellant through his advocate informed the authority to treat his reply dated 10th July 1999 as the reply to the show cause notice. A personal hearing was sought and therefore, the matter was fixed on 3rd August 1999. It was again fixed on 21-9-1999 and 12-10-1999. On 2-10-1999, the appellant had stated that he did not have anything more to state than what was already stated by him in his letters dated 10th July 1999 and 20th July 1999. The concerned authority considered in detail the contentions raised in those letters and various litigations that the appellant had preferred in various High Courts as well as the ad-interim order made in Special Civil Application No. 5891 of 1999 on 30-9-1999. It was found that the appellant was purchasing raw material like Hydrocarbon, Methanol and X.T. and after mixing them, he was manufacturing liquid under the brand name of `Patrex' and selling it as motor fuel. It was recorded that it was never stated by him that he was manufacturing `Patrex' in accordance with the Indian Standards specifications and requirements mentioned in Schedule I of the impugned Order of 1998. Since `Patrex' did not meet with the Indian Standards specifications and the requirements laid down in Schedule I, the appellant had violated clauses 2(f), 2(g), 2(v), 3(vii) of the impugned Order of 1998. It was held that the explanation given by the appellant was not satisfactory and acceptable and that the order of the District Supply Officer dated 30th June 1999 seizing the goods was proper and valid and all the seized goods were liable to be confiscated. The seized stock was accordingly confiscated under section 6-A of the said Act. According to the appellant, such an order was not warranted in respect of the petitioner's product `Patrex', because, the impugned Order of 1998 was ultra vires the powers of the Union of India inasmuch as it had the effect of including in the definition of `essential commodity' given under the said Act, a product which was not included thereunder. Moreover, the impugned Order of 1998 was ultra vires the powers of the respondent No.1 Union of India since it defeated the aims and objects of the said Act and was not made for maintaining or increasing supplies of any essential commodity or for securing its equitable distribution and availability at fair prices. The impugned Order of 1998, according to the appellant, violated his fundamental rights guaranteed by Article 19 of the Constitution since it had the effect of restricting or obstructing his business and the business of his dealers. It also violated the Article 14 of the Constitution by denying the equality to the appellant and his dealers in their trade and business qua other similarly situated persons. It was also the appellant's case that the object underlying the impugned Order of 1998 was only to check malpractices indulged into by dealers of three Oil Companies with regard to the sale and purchase of petroleum products and such provisions cannot apply to the product of the appellant or to the business carried on by the appellant and his dealers in `Patrex'. According to the appellant, in none of the proceedings that he has filed in various High Courts and Special Courts, till today, the respondents were in a position to satisfy any Court of law to show that `Patrex' is covered under the provisions of the Essential Commodities Act or that the impugned Order of 1998 can be applied to `Patrex'. 3.2 In the affidavit in reply filed on behalf of the respondent No.1 - Union of India in Special Civil Application No. 5981 of 1999, reliance has been placed on clause 3(v) of the impugned Order of 1998 for contending that the appellant cannot legitimately sell his product `Patrex' for being used as fuel in the ignition engines. It is stated that the product `Patrex' was predominantly a mixture of Naphtha and Menthol, were liquid Hydrocarbons and hence, the product was covered under the provisions of the said Act. It is also stated that only the Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corporation Ltd. and IBM Company Ltd. were authorised by the Central Government to market motor spirit and high speed diesel oil, and that purchase of such products from sources other than those authorised by the Oil Companies shall be deemed to be `unauthorised purchase', and sale of such products by a dealer was punishable. It is stated that, in reply to questions, the Houses of Parliament were informed that the product `Patrex' was tested by the I.O.C. (R & D Centre) through P.C.R.A. and the tests carried out did not substantiate the claims made by the party about the product. These answers to the Rajya Sabha and Lok Sabha unstared questions No. 360 and No. 4460 respectively, appear at Annexure `II' and `III' to the said affidavit in reply. In fact, the Petroleum Conservation Research Association had written a letter on October 1, 1991 (Annexure `IV' to the affidavit in reply) in which the appellant was informed that his statement that the product was tested by PCRA as well as IOC (R&D) had surprised them and that it was misleading and unethical. It was stated; "In fact, you have submitted the product for evaluation and the test is still under progress. Hence, in these circumstances, you are not supposed to mention anywhere that the product has been tested by PCR." Bharat Petroleum Corporation Ltd., in reply to a news item, wrote to the Editor on 30-6-1994, as per copy of the letter annexed to the affidavit in reply, that the samples of Patrex were tested by BPCL, but such testing should not be construed as a certificate issued by BPCL for use of Patrex as a substitute for motor spirit. It was stated that certification of a new product as a substitute for an existing one like motor spirit is a very elaborate process involving extensive tests and trials and can be undertaken only by organizations like the Petroleum Conservation Research Association or the Indian Institute of Petroleum. The Indian Institute of Petroleum wrote a letter dated 10th June 1991, as per Annexure `IX' to the affidavit in reply, stating that the Institute was at no stage involved with `Patrex' claim of M/s Sesa Marketing Services and hence, their reference in the pamphlet was seriously objectionable. According to the respondent no.1, the petitioner had mislead the public by giving advertisements in the pamphlets that appellant's product was tested and approved by the IIP, IOC (R&D) and PCRA, Ministry of Defence. It is further pointed out in paragraph 10 of the affidavit in reply that, as per the letter written by the appellant, a copy of which is at Annexure `X' to the affidavit in reply, the appellant himself had admitted that `Patrex' was a motor spirit. In the said letter dated 19-4-1991, the appellant had written to the Deputy Secretary, Department of Petroleum, New Delhi stating that he had developed an alternative motor spirit `Patrex', which he described as "a well tested motor fuel to replace petrol, for internal combustion spark ignited petrol engine vehicles, meeting requirements of Indian Standard IS : 2796 for motor gasoline". It was further stated; "As defined under The Bombay Sales of Motor Spirit Taxation Act, 1958, `Patrex' is a motor spirit, declared as an Essential Commodity under the Essential Commodities Act, 1955 Act No.10 of 1995, and classified as class `A' petroleum product under the Petroleum Act, 1934 and the Petroleum Rules, 1976". It was stated that the appellant would be willing to comply with any of the formalities or objections to be met with as per the Departmental Rules for manufacturing and marketing the said product `Patrex'. It is further stated that, on 18-9-1997, the respondent No.1 rejected the appellant's application for grant of Naphtha, warning him that any one dealing in `Patrex' shall be prosecuted under the Motor Spirit and High Speed Diesel (Prevention of Malpractices in Supply and Distribution) Order, 1990. The Order of 1990 was repealed by the impugned Order of 1998 in which it was provided in clause 3(v) that, no person shall sell or agree to sell any petroleum product or its mixture other than Motor Spirit or High Speed Diesel, as specified in Schedule I, in any forms, under any name, brand or nomenclature, which can be and is meant to be used as fuel in Spark Ignition Engines or Compression Ignition Engines. It is stated that the product of the appellant is a petroleum product and is directly within the purview of the said Act. As per the expert comments of Adviser (Refinery), Ministry of Petroleum & Natural Gas, it was concluded that the claim of the petitioner that Patrex was neither petrol nor petroleum product is not correct. As stated in paragraph 13 of the affidavit in reply, it has been contended that `Patrex' is hydrocarbon and it is basically Naphtha based, and that the contention of the appellant that this product is neither petrol nor petroleum product nor a liquid hydrocarbon nor a mixture of hydrocarbons, is not correct. The predominant constituents of `Patrex' is Naphtha and Methanol, which are hydrocarbons. It is stated that the petitioner had very cleverly claimed in various advertisements that the product was tested by PCRA / IOC without giving the findings of the test results. In fact, PCRA was forced to bring it to the attention of petrol vehicles owners that the product does not meet with the required specifications and is not suitable for use in petrol powered vehicles. A copy of such announcement is at Annexure `XII' to the affidavit in reply. It is stated that petrol, besides aviation turbine fuel, is a controlled petroleum product and these are covered under the Administered Pricing Mechanism and are over priced to provide subsidy for kerosene supplied to the economically weaker sections of the society under the Public Distribution System as well as domestic LPG sold by Public Sector Oil Companies. It is stated that, if the appellant's product is permitted to be sold, apart from violation of law, supply of kerosene to economically weaker sections of the society and supply of LPG, a cleaner fuel, at subsidized rates to the general public, will also be adversely affected. 3.3 In the affidavit in reply in Special Civil Application No. 5981 of 1999 filed on behalf of the State Government, the Under Secretary to the Food & Civil Supplies Department has contested the petition supporting the seizure and confiscation orders and the impugned Order of 1998. It is further contended that the activities of the appellant are in violation of the provision of section 52 of the Motor Vehicles Act, 1988. It is stated that the seizure order was issued under clause 4 A (iv) of the impugned Order of 1998, since the appellant had violated clauses 2(f), 2(g), 3(v) and 3(vii) of the impugned Order of 1998. 4. In Special Civil Application No. 1365 of 2000, the appellant raised a similar contention stating that his product `Patrex' was not covered by the provisions of the said Act. It was stated that his applications dated 25-2-1997, 9-3-1997 and 21-7-1997 for monthly quota of 200 M.Ts. of Naphtha made to the Union of India were turned down on the ground that `Patrex' did not meet with Indian Standards : IS 2796 and that the Oil Companies or their authorised agent alone could deal in motor spirit. The appellant not being authorised agent of the Oil Companies cannot deal in `Patrex'. The petition raised contentions similar to those raised in Special Civil Application No. 5981 of 1999 with emphasis on the aspect that he should be given quota of Naphtha for manufacturing his product `Patrex'. At Annexure `A' collectively to that petition, the appellant annexed copies of various licences. The appellant's concern was registered with the excise authorities and the description of the excisable goods in the registration certificate was, " `Patrex' Tropical Motor Fuels" and the purpose for which the concern was registered was described as, "Blending & Manufacturing". In Form XIV, at Annexure `A' collectively to that petition, the licence which was to remain in force till 31st December 1996 shows that the appellant was licensed to store petroleum as stated in the Schedule which reads, "Petroleum Class `A' ..... 20,000 liters and Petroleum Class `B' ...... 5,000 liters". Thus, the excise registration and the licence obtained by the appellant shows that his product `Patrex' was even according to him a petroleum product, for which he obtained a licence for storage. Again, the No objection Certificate at Annexure `A' collectively issued by the Additional District Registrar, Valsad to the appellant for storage was also for petroleum class `A' products namely, Methanol, Naphtha, Tolvene as mentioned therein. The certificate of registration as per the Central Sales Tax (Registration and Turnover) Rules, 1957, a copy of which is also at Annexure `A' collectively shows that the certificate was obtained by M/s Patrex Fuels India Ltd., of which the appellant is the Managing Director for re-sale of petroleum products and chemicals. The appellant also obtained a registration certificate in his name on 30-7-1998 from the Sales Tax Officer for the class of goods described as `petroleum products and chemicals'. 5. In Special Civil Application No. 9076 of 2000, over and above raising the contentions similar to those raised in the other petitions, the only additional emphasis was of raising challenge against the Solvent Raffinate and Slop (Acquisition, Sale, Storage & Prevention of Use in Automobiles) Order of 2000 (hereinafter referred to as `the impugned Solvent Order of 2000') and the Naphtha (Acquisition, Sale, Storage & Prevention of Use in Automobiles) Order of 2000 (hereinafter referred to as `the Naphtha Order of 2000'). 6. The learned Single Judge, in the impugned judgement and order dated 1-9-2000 given in Special Civil Application No. 5981 of 1999 and Special Civil Application No. 1365 of 2000, after considering all the relevant aspects of the matter, held that there was no illegality in the seizure and confiscation orders issued by the competent authority which were according to the provisions of the said Act and the impugned Order of 1998. It was held that the ban as provided in sub-clauses (iv) and (v) of clause 3 of the impugned Order of 1998 was in the interest of general public, because, it ensured equitable distribution of the essential commodity. It was held that section 3 of the Essential Commodities Act clothes the Central Government with powers to control production, supply, distribution etc. of essential commodities and the impugned Order of 1998 was issued in lawful exercise of the powers of the Central Government under the said Act. The learned Single Judge negatived the challenge against the sub-clauses (iv) and (v) of clause 3 of the impugned Order of 1998, incorporating by reference the reasons that were given by him in detail for holding that Patrex was a petroleum product in the other judgement delivered on the same day in Special Civil Application No. 9076 of 2000. In His Lordship's judgement dated 1st September 2000 in Special Civil Application No. 9076 of 2000, the learned Single Judge held that, looking to the definition