IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY NINETH DAY OF JULY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 13591 of 2008 Between: The Fertilizers Wholesale Dealers Association (Regd.No. 415/04), 11-60-39, Waizulla Saheb Street, Vijayawada Rep. by its President Mr. E. Bheema Shankar Rao, S/o. Satyanarayana ..... PETITIONER AND 1 Government of India, Ministry of Chemicals and Fertilizers (Department of Fertilizers), Sastry Bhavan, New Delhi, Rep. by its Joint Secretary. 2 The State of Andhra Pradesh, Rep. by its Commissioner and Director of Agriculture, L.B. Stadium Road, Basheerbagh, Hyderabad. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of Mandamus or any other appropriate Writ, Order or Orders, Direction or Directions to declare the proceedings of the 1st Respondent in No.1202/5/2008-FPP dated 17.06.2008 and the consequential proceedings of the 2nd respondent in No.Fert-I(1)427/2008 dated 18.06.2008 whereby price revision of the fertilizers has been done without following Clause 3 of the Fertilizer Control Order, 1985, as illegal, arbitrary and unconstitutional and to issue a consequential direction to the Authorities of the 2nd respondent not to enforce the revised MRPs of Fertilizers on the members of the Petitioner Association and pass Counsel for the Petitioner: MR.V.SRINIVAS Counsel for the Respondent No.: MR.A.RAJASHEKAR REDDY (ASST SOLICITOR GEN) The Court made the following : O R D E R: 1. This Writ Petition is filed by The Fertilizers Wholesale Dealers Association, Vijayawada represented by its President Mr.E.Bheema Shankar Rao. The prayer sought for in the writ petition is as follows: “ For the reasons stated in the accompanying affidavit it is therefore prayed that this Hon’ble Court may be pleased to issue a writ of mandamus or any other appropriate writ, order or orders, direction or directions to declare the proceedings of the 1st respondent in No.1202/5/2008-FPP, dated 17.6.2008 and the consequential proceedings of the 2nd respondent in No.Fert-1)1_427/2008, dated 18.6.2008 whereby price revision of the fertilizers has been done without following Clause 3 of the Fertilizer Control Order, 1985, as illegal, arbitrary and unconstitutional and to issue a consequential direction to the authorities of the 2nd respondent not to enforce the revised MRPs of Fertilizers on the members of the petitioner-Association and pass such other order or orders as this Hon’ble Court may deem fit and proper in the circumstances of the case.” 2. Sri.E.Bheema Shankar Rao has sworn to the affidavit filed in support of the Writ Petition. The averments in the writ affidavit, in brief, are: The petitioner is a registered association representing the Dealers of Fertilizers in the State of Andhra Pradesh. Its members are having licences under the Fertilizer Control Order, 1985 to trade in fertilizers manufactured by various companies. The prices of fertilizers are revised by the 1st respondent from time to time depending upon the position of demand and supply. Such a power is available to 1st respondent by virtue of Clause 3 of the Fertilizer Control Order, 1985 which was issued under the powers vested in the Government of India under Section 3 of Essential Commodities Act, 1955. As per clause 3 of the Fertilizer Control Order, 1985, the central government may with a view to regulate equitable distribution of fertilizers and making them available at fair prices, by a notification in the official gazette, fix the maximum prices or rates at which any fertilizer may be sold by a dealer, manufacturer, importer or a pool handling agency. The central government can fix the prices only by issuing a notification in the official gazette. Such a notification may be made with reference to a dealer, manufacturer, importer or a pool handling agency. 1st respondent issued proceedings bearing No.12012/5/2008- FPP, dated 17.6.2008 requiring the manufacturers to sell the fertilizers at those prices only in order to make them eligible for the subsidy under the Concession Scheme for P & K fertilizers and New Pricing Scheme Stage III for Urea. The 2nd respondent-State of Andhra Pradesh, rep. By its Commissioner and Director of Agriculture, Hyderabad issued a circular dated 18.6.2008 directing all its subordinates to follow the rates communicated by Government of India. Pursuant to the circular, the Joint Directors of Agriculture were directed to give wide publicity to the revised rates and also to ensure that the fertilizers are sold at the revised MRPs only. There is substantial reduction in the prices of fertilizers due to the action of 1st respondent. The dealers received huge stocks of fertilizers prior to 18.6.2008 and are holding them as the agriculture season is shortly approaching. The stocks were purchased from the manufacturers at the rates prevailing prior to 18.6.2008. The authorities of 2nd respondent have already visited the business premises of all the dealers on 18.6.2008 itself and noted down the stock position as on that date. Thus, the stock position of dealers of the Complex Fertilizers purchased prior to 18.6.2008 is very much available with 2nd respondent. If the members of the petitioner- association is compelled to sell the fertilizers at the reduced rates, it would cause severe loss to the members of the petitioner-association to the tune of Rs.1000/- to Rs.2000/- per metric tonne on complex fertilizers. No gazette notification was issued by 1st respondent with regard to the reduction of prices of fertilizers as required under clause 3 of the Fertilizer Control Order. Thus the proceedings of 1st respondent as well as consequential proceedings of 2nd respondent are illegal, arbitrary and unconstitutional. Whenever the prices of fertilizers are reduced from a particular date, the Government was reimbursing the price difference to the dealers in respect of those stocks which were held by the dealers as on the cut off date. Unless the dealers are permitted either to sell the stocks existing as on 18.6.2008 at the pre-revised MRPs or alternatively to be reimbursed with the price difference in respect of stocks existing as on 18.6.2008, the dealers would suffer huge loss. The action of the authorities of 2nd respondent insisting the members of the petitioner- association to sell the complex fertilizers as on 18.6.2008 at the revised MRPs is arbitrary, unreasonable and violative of Articles 14 and 19(i)(g) of the Constitution of India. 3. When the writ petition came up for admission, learned Standing Counsel for Central Government received notice on behalf of 1st respondent and filed counter affidavit. One Dinesh Mohan Verma, Under Secretary, Department of Fertilizers, Government of India has sworn to the counter affidavit. It is stated in the counter affidavit that Government of India in exercise of the powers under Fertilizer (Control) Order, 1985 notified the price of Urea on 28.2.2002. In respect of controlled fertilizer like Urea, the government is required to notify the MRP by gazettee notification. So far as the fertilizer in question in this writ petition i.e., phosphate and potash ( P & K), a gazettee notification is not required as these are covered under concession scheme. The concession scheme does not have any direct interference with the dealers. If there is any loss to the dealers on account of revised selling prices, the same should be taken up with the respective companies rather with the Government of India. In past also, even when there has been increase in selling prices of fertilizers, no subsidy has been directly recovered by Government of India from dealers/wholesalers pertaining to stocks in hand. Under the concession scheme in respect P & K fertilizers, no subsidy is directly released to any wholesalers or any dealer by Government of India. The maximum retail prices of complex fertilizers are notified by Government of India, Department of Fertilizers, from time to time under the concession scheme. The gazettee notification is issued for notifying the price of urea which is a controlled fertilizer. The MRPs are not statutory in respect of complex fertilizers and are applicable for being eligible for receipt of subsidy under concession scheme on P & K fertilizers. The subsidy is released to the manufacturers/ importers under the concession scheme and is not available to the dealers directly. The companies are responsible to ensure sale of fertilizers on indicated Maximum Retail Price (MRP) in order to be eligible for receipt of subsidy. The Department of Fertilizers communicates revision in MRPs to the State Governments for necessary follow up actions and to monitor the sale, so that the subsidy released is completely available to the farmers. The dealers should approach their respective companies for reimbursement of differential subsidy. The notification clearly indicates that all the sales beyond 17.6.2008 need to be done on revised MRPs and same will be eligible for revised subsidy. The statement of the petitioner-association that in the past whenever prices for fertilizers are reduced from a particular date, the government was reimbursing the price difference to the dealers in respect of those stocks which were held by the dealers as on the cut off date is not correct. The Government of India never reimbursed any amount to the dealers or wholesalers directly. 4. When the writ petition came up for admission hearing, learned counsel appearing for the petitioner-association and learned Standing Counsel appearing on behalf of Central Government i.e. 1st respondent consented for disposal of the main writ petition itself. 5. Heard learned counsel appearing for the petitioner and learned Standing Counsel appearing on behalf of 1st respondent. 6. Learned counsel appearing for the petitioner-association submits that the authorities of 2nd respondent inspected the shops of the members of petitioner- association and noted the stocks available with them and therefore the members of the petitioner-association are required to be permitted to sell the stocks existing as on 17.6.2008 with reference to MRPs existing as on the date of receipt of stock and in case they are forced to sell the fertilizers at the reduced prices as indicated in the proceedings dated 17.6.2008 issued by 1st respondent, the members of the petitioner-association would suffer a loss of Rs.1,000/- to Rs.2,000/- per metric tonne. A further submission has been made that there is no notification issued by 1st respondent with regard to reduction of prices of fertilizers as required under clause 3 of Fertilizer Control Order and therefore the proceedings issued by 1st respondent on 17.6.2008 cannot be given effect. 7. Learned Standing Counsel appearing on behalf of 1st respondent submits that notification in respect of fixation of prices of complex fertilizers is not required to be gazetted since the controlling of prices in respect of grades of complex fertilizers is covered by a concession scheme. It is further contended by him that subsidy under concession scheme for P & K fertilizers is being given to manufacturers as and when there is reduction of prices of fertilizers. 8. The core question in this writ petition is whether the members of the petitioner- association can be permitted to sell the stocks existing as on 18.6.2008 at pre- revised rates. Admittedly, the manufacture, sale and purchase of fertilizers and other ancillary materials are governed by the provisions of Fertilizer Control Order, 1985 which has been promulgated by the Central Government in pursuance of the powers conferred by Section 3 of Essential Commodities Act, 1955. The Central Government has, from time to time issued instructions in the form of notifications with regard to the maximum price at which fertilizer is to be sold. The Government revised the price of sale of fertilizer and fixed the maximum rate at which the various fertilizers are to be sold. In SHRI SITARAM SUGAR CO. LTD. V. UNION OF INDIA it has been held by the Supreme Court that fixation of price is not a matter for judicial review as the judicial function in respect of such matters is exhausted when there is found to be a rational basis for the conclusions reached by the concerned authority. 9. The purpose of reduction of prices of fertilizers is to augment the need of the farmers. Such is the object, the farmers cannot be made to purchase the fertilizers at two different rates, one with regard to the stocks available with dealers as on 17.6.2008 and the other with regard to the stocks received by the dealers after 17.6.2008. Permitting the operation of dual prices with respect to the selfsame grades of complex fertilizers is neither desirable nor permissible under any of the provisions of the Act. 10. Much argument has been advanced by learned counsel appearing for the petitioner that there is no notification reducing the prices of grades of complex fertilizers and therefore the proceedings issued by 1st respondent dated 17.6.2008 cannot be given effect. The 1st respondent clarified the position in the counter affidavit stating that fixing of prices is covered under the concession scheme where under the subsidy is released to the manufacturers and importers. For better appreciation, I may refer the relevant portion and it is thus: “ In reply to para 6 of the affidavit, I submit that the maximum retail prices of complex fertilizers are notified by the government of India, Department of Fertilizers from time to time, under the concession scheme. Gazettee Notification is issued for notifying the price of urea which is a controlled fertilizers. The MRPs are not statutory in nature of complex fertilizers and are applicable for being eligible for receipt of subsidy under concession scheme on P & K fertilizers. The subsidy is released to the manufacturers/importers under the concession scheme and is not available to the dealers directly. The companies are responsible to ensure sale of fertilizers on indicated Maximum Retail Price (MRP) in order to be eligible for receipt of subsidy.” 11. The total stocks available either with the manufacturer or the dealer has already been identified by the authorities. In case the members of the petitioner-association are going to incur loss because of reduction of MRPs, they have to work out their remedies with the manufacturers for percolating the subsidy allowed by government of India to them also. Therefore, the relief sought for in the writ petition permitting the members of the petitioner-association to sell the stocks available as on 18.6.2008 at pre-revised rates cannot be granted. 12. For the reasons stated above, this writ petition fails and is thus dismissed. No order as to costs. 29th July, 2008. (B.Seshasayana Reddy,J) tnb ASSISTANT REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{MSN} THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO.13591 OF 2008 29TH JULY, 2008.