IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 9446 OF 2000 WITH SPECIAL CIVIL APPLICATION NO.9764 OF 2000 SPECIAL CRI. APPLICATION NO. 627 OF 2000 SPECIAL CIVIL APPLICATION NO.10330 OF 2000 For Approval and Signature: Hon'ble MR.JUSTICE KUNDAN SINGH ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 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? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- RAJMOTI INDUSTRIES Versus STATE OF GUJARAT -------------------------------------------------------------- Appearance: In Spl.C.As. No.9446, 9464 and 627 of 2000. MR V. Shree Nivas for, MR HARDIK C RAWAL for Petitioner In Spl.C.A. No.10330/2000 M/s. Rani Advani, for the petitoner. In all petitions. MR SN SHELAT ADVOCATE GENERAL for Respondent No. 1 MR AKSHAY H MEHTA for Respondent No. 2 -------------------------------------------------------------- CORAM : MR.JUSTICE KUNDAN SINGH Date of decision:-11/4/2001 COMMON C.A.V. JUDGEMENT In these petition common issue is involved and hence all these petitions are disposed of by this common judgment. 2. These petitions being Special Civil Applications No.9446 and 9764 of 2000 are connected petitions in which the Control Order of Gujarat Government dated 26-7-2000 prescribing the stock limit on edible oil seeds and edible oils issued under Clause 24 of the Gujarat Essential Articles (Licencing Control and Stock Declaration), Order, 1981 (hereinafter referred to as Order, 1981, is under challenge. In Special Cri. Application No.627/2000 direction has been sought to follow the procedure for taking sample for analysis, prescribed under the provisions of the Food Adulteration Act, 1954 and Rules framed thereunder and for restraining the respondents authorities to take action against the petitioners on the basis of any adverse report of any sample and for a direction to the authorities concerned to supply one file of the report to the petitioner. 3. In Special Civil Application No. 10330/2000 the petitioner sought for a direction to take appropriate action and measures to effectively enforce the order dated 26-7-2000 and to invite the objections and suggestions from all the affected parties including the petitioners before taking any steps to amend, alter or vary the order dated 26-7-2000 and to take appropriate legal action against the traders who are not following the requirements of the order dated 26-7-2000. 4. In Special Civil Applications No.9664/2000 and 9746/2000 it is asserted that the petitioners are dealing in the ground nut oil, cotton seeds oil and other edible oil. They are manufacturing as well as marketing the aforesaid products since 1962. 5. By means of these petitions, the petitioners challenge the inaction on the part of the respondent no. 1 of deleting the edible oil seeds and edible oils from the list of Essential Articles in positively declaring that the Gujarat Essential Articles (Licencing Control and Stock Declaration) Order, 1981 is not applicable to the edible oil seeds and edible oils. The petitioners also challenged the order dated 26-7-2000 amending the Gujarat Essential Articles (Licencing Control and Stock Declaration) Order, 1981 whereby the stock limits have been specified in respect of edible oil seeds and edible oils. The aforesaid order in respect of the edible oil seeds and edible oil is illegal and void ab-initio as the respondents by the letter dated 23-12-1997 clarified with regard to the amendment made vide Order No. S.O.772(E) dated 10-11-1997, in the Pulses, Edible Oil Seeds and Edible Oils (Storage Control) Order, 1977. On the basis of that amendment Clauses including Clause (3) which is relating to the "Licencing of the Dealers and Producers" of the Order in so far as they relate to edible oil seeds and edible oils are concerned, have been deleted. The petitioners received the letter dated 21-8-2000 from the Central Organization for Oil Industry & Trade. 6. An affideavit-in-reply has been filed by the Joint Secretary, Food, civil Supply and Consumer Affairs Department, wherein it has been stated that the Central Government by the letter dated 24-7-1998 addressed to the Chief Secretary, State of Gujarat making clarification that the State Government, if it finds appropriate can regulate the storage, distribution, etc. of edible oils and edible oil seeds and the State Government would be an appropriate authority to take decision regarding permissible stock limits and turn over period within their area of jurisdiction. The State Government has fixed stock limits of ground nut oil and the oil seeds due to rising of the prices of ground nut oil, vide its order dated 14-8-1998 and the same has not been challenged by the Oil Millers. Therefore, because of sudden price rise in the month of July, 2000, it was necessary to take various actions to check the price rise which includes the issuance of Order by the State Government by the order dated 26-7-2000 as a result of the Central Government's order dated 10-11-1997, the dealers, traders and producers became free from any control which resulted in an abnormal price rise in Essential Commodities especially ground nut oil. The price of ground nut oil was Rs. 31.96 per kg. in October, 1977. Thereafter, there was rise in the price of ground nut oil in December 1997 due to abnormal rise in the price the State Government asked for permission from the Central Government to impose stock limits under Clause 24 of the Order 1981 and the Central Government has given direction to take measures. Accordingly, the State Government fixed the stock limit by the order dated 14-8-1998 and by imposing stock limit the State Government is a position to control the price rise, black marketing and hoarding. 73% of the total population of Gujarat is consuming ground oil as reported in Report of Prof. G.O. Parekh, Sardar Patel Institute of Economics & Research, Ahmedabad - January, 1996 and found that the ground nut oil is an important medium of nutrition and thus is an essential commodity for common people which is required to be made available at reasonable price and is required to be monitored by different measures including limit of stock etc. It is incorrect to say that the order dated 26-7-2000 passed by the respondent no. 1 is illegal and void as it does not comply with the Government of India Amendment order dated 10-11-1997 because with prior concurrence with the Central Government the Gujarat Government has published the order namely Gujarat Essential Articles (Licencing Control and Stock Declaration) Order, 1981 with a view to maintain supply of commodities and securing equitable distribution and availability at fair price , the Order 1981 was published. It is also stated that with prior concurrence of the Central Government vide letter dated 27-7-1998 the State Government passed the orders. It is also stated that there is no conflict between the Central Government and local orders because the State Government has passed the order under power conferred by Section 5 of the Essential Commodities Act, 1955 (hereinafter referred to as the Act, 1955) read with the order dated 9-6-1978 with prior concurrence of the Central Government. 7. The respondent no. 2 has also filed an affidavit-in-reply wherein it is stated that the Central Government under the provisions of Section 3 of the Essential Commodities Act, 1955 (hereinafter referred to the Act, 1955 has been empowered to control production, supply, distribution, etc. of the essential commodities for maintaining or increasing supplies of any essential commodity or securing its distribution and availability at fair prices the Central Government has power by order for regulating or prohibiting the production, supply and distribution thereof and trade commerce therein and Section 5 of the Act, 1955 provides for delegation of powers by the Central Government which could be exercised by it u/s 3 to the State Government or such authority or officer subordinate to the State Government by notified order subject to such conditions, if any. While exercising the powers u/s 3 (1) of the Act, the Central Government issued the order "Pulses, Edible Oilseeds and Edible oil (Storage Control) Order, 1977 with a view to regulate storage and supply and control the prices etc. The State Government would be the appropriate authority to assess the situation prevailing in their respective states in respect of certain essential commodities including edible oil and oil seeds, the Central Government has notified several orders delegating powers conferred upon it by Section 3 (1) of the Act to the State Government. Such orders have been notified in the years 1972, 1974 and 1978. The State Governments have been duly empowered to take appropriate measures to achieve the purpose mentioned in Section 3 of the Act subject to the condition specified therein including the conditions that no order should be issued in pursuance of the powers delegated if it was inconsistent with any order issued by the Central Government under the Act and the said condition has been deleted from 1978 Order. The State Government is required to obtain prior concurrence of the Central Government before issuance of any order by it. Considering the legal situation in respect of the prices of the edible oils especially groundnut oil in Gujarat, the Minister of Food Supplies and Consumer Affairs, Government of Gujarat, Department of Sugar and Edible Oil, made it clear that due to the unabeted rise of prices of edible oil it was absolutely necessary for the State Government to have power to enforce strict control over the oil traders and millers. It is also stated that ever since the withdrawal of stock control order in respect of edible oil seeds and edible oils from Pulses, Edible oilseeds (Storage Control) Order 1977, the oil traders and millers have absolutely free hand in effecting unprecedented price rise and the State Government requested the Minister of the Central government to reintroduce the same at the earliest possible. 8. The Minister of Central Government wrote a letter to drawing the attention of Shri Jashpalsingh to the Central Government's order dated 9-6-1978 whereby the powers conferred under Sub-section. (1) of Sec. 3 of the Essential Commodities Act, 1955, to make orders to provide for matters specified in clauses (a), (b), (c), (d), (e), (f) (h) and (j) on the Central Government have already been delegated to the State Government under Section 5 of the Act, 1955. He also advised that if the State Government finds it proper it could have regulate the storage distribution etc. of edible oils and edible oil seeds. It is also stated in the said letter that the State Government would be appropriate authority to take decision regarding the permissible stock limits etc. within the area of its jurisdiction. Thereafter, the State Government issued the order dated 14-8-1998 in pursuance of Subclause (i) of Clause 24 of the Order, 1981. The Secretary to the Central Government wrote a letter to the Chief Secretary, Government of Gujarat on 24-7-1998 advising to take appropriate measures by issuing orders pursuant to the delegation of powers u/s 5 of the Act in respect of the matters specified in Clauses (a), (b), (c), (d), (e), (f), (h) and (j). Thus, by virtue of the delegation of powers, the State Government u/s 5 of the Act, 1955 is duly empowered to issue the orders in respect of edible oil and edible seeds irrespective of the fact that the Central Government has deleted the edible oil seeds and edible oil from 1977 Order. 9. The contention of the learned counsel of the petitioner of Special Civil Applications No. 9446/2000, 9764/2000 and 627/000 is that the Central Government has been empowered u/s 3 of the Act, 1955 to make order in respect of the essential commodities for regulating or prohibiting the production, supply and distribution thereof, the trade and commerce therein, if it considers necessary or expedient for maintaining or increasing supplies of any essential commodities or for securing equitable distribution and availability at fair price. It can also provide for regulating by licenses, permits, or otherwise the shortage, transport, distribution, disposal, acquisition use or consumption of any essential commodity, for prohibiting the withholding from sale, for requiring any person holding in stock or engaged in production or in business of buying or selling it, for requiring person engaged in the production, supply or distribution of or trade and commerce to maintain and produce for inspection such books, accounts and records relating to their business and furnish such information required under the order, and for any incidental and supplementary matters including entry, search or examination of premises, air craft, vessels, vehicles or any other conveyances and animals and seizures by an authorized persons. Under explanation I to Clause (f) of subsection (2) of Section 3 of the Act, 1955, "edible oil seeds and edible oil" are also to be controlled by this Section. Under the powers given by Section 3 of the Act, 1955, the Central Government issued an order dated 21-9-1977 namely "The Pulses, Edible Oilseeds and Edible Oil (Storage Control) Order, 1977 which provides license to persons carrying on business as a dealer in pulses, or edible oil seed or edible oils subject to the conditions to be imposed under State Control Order prohibiting different stock limits to categories "A" cities, "B" cities" and "C" cities. It is further provided under clause 6 of the Central Government Control Order that the provisions of the State Orders relating to storage of pulses, edible oil seeds or edible oils shall apply in respect of any matter for which no provision has been specifically made by this order. The Central Government issued notification dated 9-6-1978 delegating the powers u/s 5 of the Essential Commodities Act, 1955 to the State Government to make control orders relating to the food stuffs specified in clauses (a), (b), (c), (d), (e), (f) (h) (i) (ii) and (j) and subsection (2) thereof subject to the conditions laid down therein that such powers shall be exercised by a State Government subject to such direction, if any as may be issued by the Central Government in this behalf and prior concurrence was required in respect of the matters specified in clauses (a), (c) or (f) or in regard to distribution or disposal of food stuffs to places out the State or in regard to regulation of transport of any food stuff under clauses (d) and State was required to authorize any officer in clause (j). 10. Pursuant to the delegation order of the Central Government dated 9-6-1978, the State of Gujarat issued "The Gujarat Essential Articles (Licensing, Control and Stock Declaration) Order, 1981" on 20-4-1981. Clause 3 of the Control Order of the Gujarat Government of 1981 requires licensing of dealers and producers and provides that no person shall carry on business as a dealer in edible oil seeds including ground nut in shell, edible oils, including hydrogenerated vegetable oils, food grains, pulses, Khandsari and sugar if the stock of such essential articles in his possession at any time exceeds the quantity article specified against it in the table mentioned therein. Clause 4 of the Order 1981 requires licence. Clause 5 requires period of licence and fees chargeable. Clause 15 of the said Order, 1981 says about restriction on possession of essential articles that no person shall either himself or by any person on his behalf store or have in his possession at any time any essential articles mentioned in Schedule-I in excess of the quantity fixed under any Order issued by the Central Government or State Government or under the direction of issued by the State Government under this Order. 11. It is further submitted that the Central Government convened a meeting of the representatives of all the States in 1997 for evaluation of tendency of food stuffs through out country regarding production, supply, equitable distribution and availability of the essential commodities at fair price. After discussion and consideration it was found that the edible oil seeds and edible oils were available at fair prices through out the country, hence there was no need to impose any control in respect of edible oil seeds and edible oils in any part of the country. The Finance Minister of the Central Government made an announcement in his Budget Speech for 1997-98 that the storage controls on edible oil seeds and edible oils has been lifted in November, 1997. The Central Government by the order dated 10-11-1997 issued a notification for amendment in Pulses, Edible Oil Seeds and Edible Oils (Storage Control) Order 1977 omitting, the words "edible oil seeds and edible oils" wherever these words were occurring in the said Control Order, 1977. The Central Government also issued the directions to the State Government on 13-11-1997 and on 23-12-1997 for removal of not only restrictions on stock limit but also licensing of dealer and other requirement in respect of "edible oil seeds and edible oils. The State of Rajasthan by the order dated 13-4-1998 omitted the words "edible oil seeds" and amended as follows : "Para 4 :- In subclause (i) of clause 3 of the said order: (i) Existing expression "Pulses, Edible Oilseeds and Edible Oils (Storage Control) Amendment Order, 1987" shall be substituted by the expression "Pulses (Storage Control), Order, 1997. (ii) Existing expression "or Expelling, Extracting, Manufacturing or refining any edible oil" appearing between the expression "any of the pulses" and "mentioned in Schedule-I" shall be omitted. Para 5 :- In Schedule-I appended to the said Order, the existing "PART-C (Oil Seeds)" and "PART-D (Edible Oil)" and entries thereto shall be deleted." 12. Pursuant to the directions of the Central Government, the territory of Delhi by the order dated 9-7-1998 amended as under : "F.9(1)/97/F&S (P&C/(ii)/252 dated 9-3-1998. O R D E R. In exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955 (10 of 1955) read with the Government of India, Ministry of Agriculture and Irrigation (Department of Food) Order GSR 800, dated the 9th June, 1978, and with the prior concurrence of the Central Government , the Governor of National Capital Territory of Delhi is pleased to rescind the Delhi Edible Oils (Licensing and Control) Order, 1977, published vide Order No. F.6 (30/76-F&S (P&C) dated 19-4-77, in para IV of the Delhi Gazette Extra Ordinary with immediate effect". 13. In the same manner the State of Madhya Pradesh, also made an amendment in the State Order by the order dated 11-7-1998, omitting the words "edible oil seeds and edible oils". The Government of Gujarat instead of making amendment in the State Order, 1981 published the amending order 1997 of the Central Government in the extra ordinary Gazette on 12-1-1998. The Government of Gujarat also received the direction of the Central Government dated 13-11-1997. The contention of the learned counsel for the petitioners is that once the edible oil seeds and edible oils have been deleted from the Central Storage Order, 1977, the same is also liable to be carried out by the State as per directions issued by the Central Government dated 13-11-1997, as the Central Government has lifted the storage control on the edible oil seeds and edible oils and directed the State Government to carry out such deletion in the State Licensing Control and Stock Declaration Orders. Thus, the Gujarat Essential Articles (Licensing, Control and Stock Declaration) Order, 1981 would stand deleted in respect of the edible oil seeds and edible oils not only restrictions on stock limits but also the licensing of dealership and other requirements stand dispensed with, as the Central Government made delegated powers subject to such directions if any as may be issued by the Central Government in this behalf, by Order dated 9-6-1978. The State of Gujarat is not competent to issue order dated 26-7-2000 and the order dated 24-8-1998 in pursuance of the clause 24 (1) of the Order 1981 specifying storage limits. He also relied on the decision of the learned Single Judge of the Andhra Pradesh High Court in the case of A.P. Oil Millers Association Ltd. Vs. Commissioner of Civil Supplies and Consumer Affairs & Others in Writ Petition No. 3816 of 1998 dated 10-9-1998 where the State of A.P. asserted to have powers on the basis of the Central Government's Order dated 9-6-1998 whereby the powers of the Central Government were delegated to the State Government. The learned Single Judge of the Andhra Pradesh High Court has held as under : "For the foregoing reasons, I hold that when once the edible oil seeds and edible oils are deleted from Central Government Storage Order, 1997, by virtue of Pulses, Edible Oil Seeds and Edible oils (Storage Control) Amendment Order, 1977. the same is also liable to be carried out by the State as per directions issued by the Central Government on 13-11-1997. Consequently, the commodities "edible oil seeds and edible oils" wherever occurring in A.P.. Scheduled Commodities, Dealers (Licensing and Distribution) Order, 1982 stands deleted. Thus, not only the restrictions on stock limits, but also the licensing of dealer and all other requirements shall stand dispensed with." 14. The above decision of the learned Single Judge of the Andhra Pradesh High Court was affirmed by the Division Bench of Andhra Pradesh High Court in Writ Appeals No. 1546 of 1998 and other cognate writ appeals on 30-6-1999 and the Apex Court dismissed Special Leave Petition Appeal No. Cc 3461 - 3464/2000 vide order dated 10-7-2000 upholding the decision rendered by the learned Single Judge of the Andhra Pradesh High Court, on 10-7-2000. 15. On the contrary, the learned Advocate General submitted that by the order dated 9-6-1978 of the Central Government, the powers u/s 3(1) of the Essential Commodities Act, have been delegated to the State Governments to make orders to provide for matter specified in clauses (a), (b), (c)) (d), (e) (f), (h) and (j)) subject to certain conditions. Those powers have not been taken back by the Central Government. As such, the State Government has those powers and the Gujarat State Government's Order 1981 is still in operation and under clause 24 (1) of that Order, 1981, the State Government has issued the orders dated 24-8-1998 and 26-7-2000 and those orders are fully within the competence of the State Government. As those orders dated 24-8-1998 and 26-7-2000 have been issued under clause 24 (1) of the Order, 1981, no concurrence of the Central Government is required, as held by the learned Single Judge of this Court in the case of Patel Mafatlal Jethalal Vs. State of Gujarat, reported in 1997 (3) G.L.R. 2212. Even the concurrence of the Central Government will be deemed to have been given under the communication of the Central Government dated 27-7-1998 and 24-7-1998 for taking appropriate decision by the State Government, regarding the permissible stock limits and turn over period within their area of jurisdiction. The learned Advocate General also felt some difficulty as to whether the communication of the Minister of Central Government and Additional Secretary of Central Government would amount to concurrence by the Central Government or not, then he submitted that in the Affidavit-in-Reply filed on behalf of the Central Government in Special Civil Application No. 9446/2000 the Central Government has given concurrence as stated in paragraphs 5 and 6 of the Affidavit-in-Reply which are reproduced below : "para 5 : At the outset I say that the Central Government by letter dated 24-7-98 addressed to the Chief Secretary, State of Gujarat and clarified that the State Government, if it finds appropriate, can regulate the storage, distribution, etc. of edible oils and oil seeds. It has been further clarified that in their view the State Government would be appropriate authority to take decision regarding the permissible stock limits and the turn over period within their area of jurisdiction. A copy of the said letter is annexed hereto and marked as Annexure-A. The Central Government has also clarified recently, as under : "It may be mentioned that vide D.O.