IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTY EIGHTH DAY OF AUGUST TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM WRIT PETITION NO : 18668 of 2008 Between: M/s. Nagarjuna Fertilizers & Chemicals Limited, A Public Limited Company, Having its Registered Office at Nagarjuna Hills, Panjagutta, Hyderabad - 82 Rep. by its Vice - President ( Legal), and Secretary, Mr.M.Ramakanth ..... PETITIONER AND 1 The Collector & District Magistrate, Guntur. 2 The Mandal Agricultural Officer and Fertilizer Inspector, Narsaraopet, Guntur District. 3 M/s. Avanthi Warehousing Service Limited, A Public Limited \ Company, Having its Registered Office at D.No. 6-3-713, 1st Floor, 7th Block, Topaz building, Amrutha Hills, Panjagutta, Hyderabad - 82, Rep. by its Branch Manager, Mr.K.srinivasa Rao. .....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 to issue an appropriate writ, direction or order especially in the nature of writ of Mandamus declaring the order E.C.Act Case No. 553/2008-S7 dated 24.08.2008 passed by the 1st respondent directing to sell of 29,200 bags of Urea weighing 1460 Mts lying in stock at Muralikrishna Dal Mill, Jalandhar Rao Godown, and GDCSGodown all in Guntur District as being illegal, arbitrary and unreasonable and set aside the order dated 24.08.2008 and pass Counsel for the Petitioner:MR.S.RAVI Counsel for the Respondent No.: GP FOR CIVIL SUPPLIES The Court made the following : THE HON’BLE SRI JUSTICE GODA RAGHURAM W.P.No. 18668 of 2008 Oral Order: Heard the learned counsel for the petitioner and the learned Government Pleader for Civil Supplies for respondent No.1 and the learned Government Pleader for Agriculture for respondent No.2 The petitioner is the manufacturer of fertilizers which has plants in East Godavari District in the State of Andhra Pradesh. The writ petition is ﬁled aggrieved by the order of the 1st respondent bearing reference E.C.Act Case No. 553/2008-S7 dated 24-08-2008 whereby for the recorded reason that the seized stock of 29,200 bags of Nagarjuna Urea is “subject to speedy and natural decay/evaporation in nature”, the 1st respondent in purported exercise of power and discretion under Section 6-A (2) of the Essential Commodities Act, 1955 (for short ‘the E.C. Act’) and pending ﬁnal determination of the case instituted under Section 6- A(1) of the E.C. Act, directed the Joint Director of Agriculture, Guntur to take delivery of the seized stock of Urea from the custodian i.e., Sri V. Seshu Kumar, Sattenapalli Road, Narasaraopet and dispose of the same as per the rules in vogue and remit the sale proceeds to a revenue deposit. According to the petitioner, as part of its business operations, it appoints handling and storage agents within and outside the State, wherever the petitioner is permitted to sell the urea manufactured by it. The 3rd respondent is one such handling agent accredited to the petitioner. The urea manufactured or imported and distributed by the petitioner as an handling agent of the Government of India is transported by rail/road to the 3rd respondent who stocks the urea in godowns and dispatches the same on behalf of the petitioner for sale. The 3rd respondent receives storage and handling charges in accordance with the rates and terms incorporated in an agreement between the petitioner and the 3rd respondent for performing this function. Apart from the godowns of the 3rd respondent, the petitioner claims to have godowns at several places in the State used for the purpose of storing the fertilizers manufactured or imported by it. The petitioner obtained a certiﬁcate of registration under the provisions of the Fertilizer (Control) Order, 1985 (for short ‘the Control Order’), an order issued by the Central Government in exercise of powers conferred under Section 3 of the E.C. Act. The certiﬁcate of registration was renewed on 18-05-2007 in terms of the power of renewal enumerated in Clause 11 of the Control Order. A copy of the renewal certiﬁcate with the renewal entries in Form-C has also been ﬁled along with writ petition. The certiﬁcate of registration as well as the renewal endorsements enumerate the particulars of the products for which the certiﬁcate is issued and the list of authorized godowns where the fertilizers may be stored. The 3rd respondent had two godowns, one at door No.7-3-2/A, Ikkurthy Road, Narsaraopet and the other at Door No. 2-550/A, Sattenapalli Road, Narasaraopet, which were not authorized godowns incorporated in the certiﬁcate, where the petitioner was entitled to store the fertilizers. On 02-06-2008 the petitioner applied for inclusion of these two godowns in the list of authorized godowns and sought endorsement of these godowns also in the certiﬁcate/renewal of certiﬁcate of registration under the provisions of the Control Order. Pursuant to the application dated 02-06-2008, on 13-06-2008 the Mandal Agricultural Officer, Narsaraopet inspected the above godowns and certiﬁed that these godowns are ﬁt for storing fertilizers by the petitioner and recommended for inclusion of these godowns in the certiﬁcate of registration. On the basis of the petitioner’s application and the recommendation of the Mandal Agricultural Oﬃcer, Narasaraopet, on 23-07- 2008 the two godowns at Door No.7-3-2/A, Ikkurthy Road, Narasaraopet and another at 2-550/A, Sattenapalli Road, Narasaraopet were incorporated in the list of authorized godowns appended to the certiﬁcate of registration by an amendment to the renewal certificate dated 18-05-2007. On 19-07-2008 the Mandal Agricultural Oﬃcer, Narasaraopet, the very authority who had inspected the godowns on 13-06-2008 and certiﬁed their ﬁtness for incorporation in the certiﬁcate of registration of the petitioner, appears to have reported that certain fertilizer stocks are unauthorizedly stored in the godowns of the 3rd respondent which are not authorized godowns as per the certiﬁcate of registration granted to the petitioner. On the basis of such a report, after drawing up a mediators report, the stocks of fertilizers of a total quantity of 29,200 bags of Urea of which 7,600 bags were stocked in Murali Krishna Dal Mill; 11,420 bags in Jalandar Rao’s Godown and 10,180 bags in GDCMS Godown were seized and a process of enquiry under the provisions of Section 6-A (1) of the E.C. Act initiated. The petitioner sought impleadment in the proceedings initiated under the E.C. Act initially directed against the 3rd respondent alone. The petitioner was permitted to implead itself and thereafter the 1st respondent issued a notice under Section 6-B of the E.C. Act on 24-08-2008 to the 3rd respondent and to the petitioner. Inter alia the charges on which the proceedings under the E.C. Act were initiated including against the petitioner are regarding the storage of fertilizer stocks in three unauthorized godowns and thereby transgression of Clause 8 of the Fertilizer Order; that the 3rd respondent herein (1st respondent in the proceedings under Section 6-A of the E.C. Act) failed to display the stock board at the godowns and thereby violated Clause 4 of the Control Order and that the 3rd respondent herein failed to maintain the records properly for the stocks stored in the godowns and thereby violated Clause 35 (1) (a) and (b) of the Control Order. On the very date of issue of notice under Section 6- B of the E.C. Act, the 1st respondent passed another order directing the Joint Director of Agriculture, Guntur to take delivery of the seized stocks from the custodian of these stocks and dispose of the same. This order in purported exercise of power under Section 6-A (2) of the E.C. Act was passed by the 1st respondent for the recorded reason that the seized stocks of fertilizer are subject to “speedy and natural decay/evaporation in nature”. It is the speciﬁc case of the petitioner as evident from the representation dated 30-07-2008 seeking impleadment in the proceedings under Section 6-A of the E.C. Act, that ﬁve (5) of the godowns are already incorporated in the certiﬁcate of registration and in respect of other two godowns, the petitioner had applied for their incorporation in the certiﬁcate of registration. It is also the case of the petitioner that the entire stocks belong to the petitioner and not to the 3rd respondent herein and that the petitioner is furnishing the appropriate documentation in the form of rail/shipment documents to establish the plea that the urea was brought from the petitioner’s manufacturing unit at Kakinada or the Ports to the 3rd respondent godowns. It is also the case of the petitioner as apparent from its representation dated 30-07-2008 that the movement of urea is based on allocations by the State and Central Governments and within the matrix of the Fertilizer Monitoring System, in the public domain of the Central Government and cannot in any circumstances constitute unauthorized stocking or hoarding of fertilizers. Sri S. Ravi, the learned counsel for the petitioner in substantiation of the challenge to the 1st respondent’s order dated 24-08-2008 (directing interim sale of the seized stocks of fertilizer of an extent of 29,200 bags) would contend that since the petitioner had applied on 02-06-2008 for inclusion of the godowns in the list of authorized godowns appended to the certiﬁcate of registration and since the Mandal Agricultural Oﬃcer, Narasaraopet had also inspected the godowns on 13-06-2008 and certiﬁed their ﬁtness for inclusion in the certiﬁcation of registration, the stocking of fertilizers in these godowns (which is revealed by the inspection of these godowns on 19-07-2008) cannot be considered a transgression of the Control Order particularly since by an endorsement dated 23-07-2008 these godowns were incorporated in the list of authorized godowns. Alternatively, the learned counsel would contend that the violation if at all, in the peculiar facts and circumstances of the case, is a marginal technical violation and the petitioner cannot be assumed, in the totality of circumstances to be a hoarder of fertilizers particularly since the sale of fertilizers to the farmers by the petitioner through the petitioner’s accredited agencies (including the 3rd respondent) is wholly controlled and it is not the allegation of the 1st and 2nd respondents as apparent from the proceedings initiated under Section 6-A of the E.C. Act including the charges incorporated in the 1st respondent’s proceedings dated 24-08-2008 under Section 6-B of the E.C. Act that the petitioner or the 3rd respondent were indulging in black-marketing of fertilizers. It is alternatively contended that the order of the 1st respondent dated 24-08-2008 (directing interim sale of the seized stocks of urea of a quantity of 29,200 bags in purported exercise of powers under Section 6-A (2) of the E.C. Act for the stated reason that these stocks of fertilizers are subject to speedy and natural decay/evaporation in nature) is a mechanical and irrational incantation of a statutory phrase and therefore constitutes an arbitrary exercise of discretion. In the facts and circumstances of the case, to the extent relevant and material for considering the validity of the order of interim disposal passed by the 1st respondent, it requires to be noticed that in the chronology of facts adverted to above, the issue whether in the context of petitioner’s application dated 02-06-2008 and the inspection of two godowns by the Mandal Agricultural Oﬃcer, Narasaraopet on 13-06- 2008 and their formal incorporation in the petitioner’s certiﬁcate of registration by the amendment/endorsement dated 23-07-2008; the godowns are authorized godowns only with eﬀect from the date of the amendment/endorsement, on 23-07-2008 or the authorization relates back either to the date of application i.e., 02-06-2008 or at least the date of inspection by the Mandal Agricultural Oﬃcer, Narasaraopet i.e., 13-06- 2008, are open arguable positions of law, appropriate for a decision in the ﬁnal proceedings under Section 6-A of the E.C. Act. Neither from the expressed phraseology of the three charges enumerated in the 1st respondent’s proceedings dated 24-08-2008 nor from the complaint of Mandal Agricultural Oﬃcer, Narasaraopet which led to the initiation of the proceedings under Section 6-A of the E.C. Act, is an inference legitimized that any hoarding of the fertilizers is alleged. The petitioner is a manufacturer and the assertion in the writ petition that the sale of fertilizer is wholly controlled by extant protocols monitored and issued by the Central Government is not controverted. It is the clear assertion on behalf of the petitioner that the price at which the fertilizers could be sold to the farmers is also regulated by the orders of the Central Government and that a transgression of the determined prices (for sale to the farmers) by the petitioner or by any authorized agent of the petitioner would render the petitioner liable for appropriate action, a risk that the petitioner would be subjected to and corollary sanction that the State may enforce in case of such transgression. In the circumstances and in particular since Urea is not subject to speedy and natural decay/evaporation by nature within a reasonable timeframe relevant for the ﬁnal determination under Section 6-A of the E.C. Act by the 1st respondent, this Court holds that the order of interim disposal by the 1st respondent is unsustainable. The order of the 1st respondent bearing reference E.C. Act Case No. 553/2008-S7 dated 24-08-2008 to the extent it directs the interim sale of the quantity of 29,200 bags of Nagarjuna Urea by the Joint Director of Agriculture, Guntur is set aside. Sri S. Ravi, the learned counsel for the petitioner states that the petitioner is equally anxious and willing not only in commercial interests, but in the interests of the general public as well to dispose of the quantity of 29,200 bags of Urea by sale to the farmers at the earliest. In the circumstances since this is also the interest of the State as evident from the general tenor of impugned order of the 1st respondent, the petitioner is at liberty to present an application to the 1st respondent for release of the seized stock of Urea, undertaking that the Urea would be sold by the petitioner within a time to be determined by the 1st respondent. On such an application being made, the 1st respondent shall consider and pass appropriate orders within a week from the date of presentation of such an application. The learned Government Pleader for Civil Supplies and Agriculture are present in the Court, have noted this order and undertake to communicate the same to the 1st respondent. The writ petition is disposed of as above. No costs. ____________________ GODA RAGHURAM, J Dated: 28-08-2008 pvks