IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL No 330 of 2001 in SPECIAL CIVIL APPLICATIONNo 9764 of 2000 WITH LETTERS PATENT APPEAL NO. 331 OF 2001 IN SPECIAL CIVIL APPLICATION NO. 9446 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? 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 -------------------------------------------------------------- STATE OF GUJARAT Versus SAURASHTRA OIL MILLS ASSO. -------------------------------------------------------------- Appearance: LETTERS PATENT APPEAL NO. 330 OF 2001 AND LETTERS PATENT APPEAL NO. 331 of 2001 MR. SN SHELAT, Advocate General with MR. AD OZA, Government Pleader with MR. UA TRIVEDI, AGP for Appellant MR. V. SRINIVASAN for MR HARDIK RAVAL for Respondent No.1 MR AKSHAY MEHTA, Sr. Central Govt. Standing Counsel for Union of India -------------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE M.C.PATEL Date of decision: 19/04/2001 ORAL JUDGEMENT (Per : MR.JUSTICE R.K.ABICHANDANI) 1. These two appeals are directed against the common judgement and order dated 11th April 2001 passed by the learned Single Judge in Special Civil Applications Nos. 9446 of 2000 (Letters Patent Appeal No. 331 of 2001) and 9764 of 2000 (Letters Patent Appeal No. 330 of 2001), by which these two Special Civil Applications were allowed by setting aside the impugned Order dated 26th July 2000 at Annexure `A' to the petitions, prescribing stock limit of edible oilseeds and edible oils under clause 24(1) of the Gujarat Essential Articles (Licencing, Control & Stock Declaration) Order, 1981 (hereinafter referred to as `the State Order of 1981'), and by ordering that the words `edible oilseeds and edible oils' wherever occurring in the State Order of 1981 stand deleted hereafter. 1.2 Both these appeals have been fully and finally heard at the request of learned counsel appearing for both the sides. 2. In Special Civil Application No. 9764 of 2000, the petitioner (Shri Saurashtra Oil Mills Association) had challenged the order made by the respondent No.1 State on 26-7-2000 at Annexure `A' to the petition, by which in pursuance of sub-clause (1) of clause 24 of the State Order of 1981, the Government of Gujarat amended the order dated 14th August 1998 by substituting the storage limits in respect of dealers and thereby providing that no dealer shall either by himself or by any person on his behalf store or have in his possession at any time any edible oilseeds or edible oils in excess of the quantities specified thereunder, which were 1000 quintals for wholesaler of edible oilseeds including groundnut in shell, and, 100 quintals for retailer (all edible oilseeds taken together); and 300 quintals for the wholesaler and 20 quintals for the retailers (all edible oils including hydrogenated vegetable oils). The Order dated 14th August 1998 in which the amendment was made by the impugned Order of 26th July 2000 was made under clause 24(1) of the State Order of 1981 providing the stock limits for the aforesaid items which were 2000 quintals for edible oilseeds including groundnut in shell for the wholesaler and 100 quintals for the retailer. It provided the stock limits of 600 quintals in respect of edible oils for the wholesaler and 20 quintals for the retailer. 2.1 Invoking the provisions of Articles 14, 19(1)(g), 226, 251, 254 and 256 of the Constitution of India, the petitioner challenged the `inaction' on the part of the State Government in not deleting `edible oilseeds and edible oils' from the list of essential articles in the State Order of 1981 and sought for a declaration that the State Order of 1981 shall not apply to edible oilseeds and edible oils. According to the petitioner, the directions issued in the impugned Order dated 26-7-2000 were illegal and void. An amendment was effected on 10-11-1997 in the Pulses, Edible Oilseeds and Edible Oils (Storage Control) Order, 1977 (hereinafter referred to as `the Central Order of 1977') by virtue of which, from the clauses including clause 3 for licencing of dealers, `edible oilseeds and edible oils' were deleted. The Central Order of 1977 was issued by the Central Government under section 3 of the Essential Commodities Act, 1955 (hereinafter referred to as `the said Act'), and Clause 3 thereof related to licencing of dealers (and not licencing of dealers and producers as mentioned in paragraph 2 of the petition). According to the petitioner, a communication was sent on 13-11-1997 from the Central Government to the Secretaries of all States requiring them to comply with the Amendment Order dated 10-11-1997 deleting certain clauses of the Central Order of 1977 so far as they related to `edible oilseeds and edible oils'. The Amendment Order dated 10th November 1997 was issued by the Central Government under section 3 of the said Act for amending the Central Order of 1977 by deleting the words `edible oilseeds and edible oils' from the preamble and various clauses of the Central Order of 1977, the effect of which was that the Central Order no longer applied to `edible oilseeds and edible oils' after the omission of these words. The petitioner also referred to a letter written by the Joint Secretary to the Government of India on 23-12-1997 as per annexure `B' to the petition, stating that the State Governments / Union Territories had been requested to ensure compliance with the amendment to the Central Order of 1977. [That letter at Annexure `B' dated 23rd December 1997 appears to have been written by the Joint Secretary to one Mr. Shyam Bihari Mishra, Ex-M.P. in response to his letter dated 10-12-1997 and does not appear to be any circular to the State Governments, as has been assumed in his judgement by the learned Single Judge.] The petitioner has further stated that, on 21st August 2000, the Central Organization for Oil Industry & Trade had written a letter to the petitioner that action of not deleting `edible oilseeds and edible oils' from the A.P. Schedule Commodities Dealers (Licencing & Distributing) Order, 1982 was challenged by the A.P. Oil Millers Association Ltd. before the Andhra Pradesh High Court in Writ Petitions Nos. 3816 and 7753 of 1998, which were allowed on 8-1-1998, and that the judgement of the learned Single Judge was confirmed by a Division Bench in Writ Petitions Nos. 1546 and 1549 of 1998, which were dismissed. Thereupon, the Government of Andhra Pradesh had issued a circular dated 7-8-2000 stating that there was no need for the dealers and traders to obtain any licence for doing business in `edible oilseeds and edible oils' under the Andhra Order of 1982. It is contended in paragraph 5 of the petition that whenever there is a conflict between the Central Act and the local Orders, Rules or Notifications issued thereunder, the conflicting rules, policies, orders or notifications would be illegal and void ab-initio to the extent of inconsistency with the Central Act. According to the petitioner, the effect of the amendment in the Central Order of 1977 was that, no licence was necessary for `edible oilseeds and edible oils' as earlier required by clause 3 of the Central Order which was now confined only to pulses. It is stated that whenever Central Control Order is amended, such amendment is deemed to be applicable to the Control Order of the State Government, and that the directions issued by the Central Government are binding upon all the State Governments. Any direction issued by the State Government in disregard of the directions of the Central Government would frustrate the very purpose of the amendment in the Central Order of 1977. Referring to the provisions of Articles 251, 254 and 256 in detail, in paragraph 13 of the petition, it has been contended that the executive power of the State is to be exercised so as to ensure compliance with the laws and directions of the Union of India and therefore, the impugned order at Annexure `A' is required to be quashed and set aside being void ab-initio and in violation of these constitutional provisions. It is stated that the Central Government has now permitted import of all types of edible oils, such as, cotton seed oil, sunflower oil, palmoline, soyabean oil etc. by lifting all the restrictions on their import and as a result thereof, it appears that the Central Government has thought it fit to delete `edible oilseeds and edible oils' from the Central Order of 1977, with a view to ensure smooth business operation without the harassment to the dealers / traders / producers from the Government officers. 2.2 The respondents in their affidavits-in-reply filed in the petition have contested the petition by contending that there is no conflict between the Central Act and the local Orders, because, the State Government had passed the Orders in exercise of its powers under section 3 read with section 5 of the said Act read with the orders of the Government of India made on 3-11-1974 and 9-6-1978 under section 5. According to the State Government, it was empowered to pass the impugned Order under clause 24(1) of the State Order of 1981, and that these measures were required to be taken for controlling the regular supply and prices of the essential commodities. It is pointed out that the State Order of 1981 was issued after prior concurrence of the Central Government with a view to maintain supplies of essential commodities and securing their equitable distribution and availability at fair prices. 2.3 In the affidavit in reply filed on behalf of the original respondent No.2 - Union of India, it was stated that considering the fact that the State Governments would be the proper authorities to assess the situation prevailing in their respective States in respect of certain essential commodities, including `edible oilseeds and edible oils', the Central Government had notified several orders under section 5 of the said Act delegating powers conferred by section 3(1) of the said Act to the State Government. Such orders were notified in the years 1972, 1974 and 1978. By virtue of these orders, the respective State Governments were duly empowered to take appropriate measures to achieve the purposes mentioned in section 3 of the said Act, subject to the conditions specified therein. It is stated that, in the earlier orders of 1972 and 1974, there was a condition to the effect that no Order should be issued in pursuance of the powers delegated if it was inconsistent with any of the Orders issued by the Central Government under the Act. However, this condition was deleted in the Order of 1978, while retaining the condition of prior concurrence of the Central Government before issuing an Order, as stated therein. It is pointed out that considering the local situation in respect of prices in respect of edible oils, especially groundnut oil in Gujarat, the then Minister for Food, Civil Supplies and Consumer Affairs of the State of Gujarat, by his letter dated June 19, 1998, brought to the notice of the Minister for Food and Consumer Affairs Department of Sugar and Edible Oil, Government of India, the unabated rise in prices of edible oil and in light thereof, he expressed his view that it was absolutely imperative that the State Government must have the power to enforce strict control over the unscrupulous oil traders and millers. It was brought to the notice of the Union Minister that ever since the amendment in the Central Stock Control Order of 1977, the oil traders and millers had absolutely a free hand, resulting in unprecedented price rise. The Government of India was therefore requested to reintroduce stock control at the earliest. In response to that letter, the Minister for Food and Consumer Affairs, Government of India sent a reply on 27th July 1998 drawing the attention of the State Minister to the Central Government's order dated 9-6-1978, whereby the powers under sub-section (1) of section 3 of the said Act were already delegated to the State Government under section 5. The State Government was advised that, if it found appropriate, it could regulate the storage, distribution etc. of `edible oilseeds and edible oils'. It was mentioned that the State Government would be the appropriate authority to take decision regarding permissible stock limits and the turnover period within the area of its jurisdiction. Thereafter, the State Government issued Order dated 14th August 1998 in pursuance of clause 24(1) of the State Order of 1981. It is stated that the Union of India has been aware of and vigilant about the situation prevailing in the State of Gujarat in respect of essential commodities and the Union Minister had addressed the letter to the Chief Minister on 16th July 1998 and the concerned Secretary of the Union Ministry had also written a letter to the Chief Secretary of the State on 24th July 1998, by which the State was advised to take appropriate measures by issuing orders pursuant to the delegation of powers under section 5 of the said Act. It was stated in paragraph 8 of the affidavit in reply that the State Government was duly empowered to issue orders in respect of `edible oilseeds and edible oils' irrespective of the fact that the Central Government had deleted the words `edible oilseeds and edible oils' from the Central Order of 1977. 3. In Special Civil Application No. 9446 of 2000 (filed by the petitioner - Rajmoti Industries), the impugned Order passed by the State Government on 26-7-2000 at Annexure `A' to that petition has been challenged on the same grounds as are narrated above, and a declaration is also sought that the words `edible oilseeds and edible oils' wherever occurring in the State Order of 1981 stand deleted forthwith. Even the respondents have taken up identical contentions in the affidavits in reply filed by them in that petition and these have already been referred to hereinabove. 4. The learned Single Judge held that there was no substance in the contention raised on behalf of the State Government that the impugned orders could be made by the State Government under the State Order of 1981, because, the State Government is not empowered to pass any orders inconsistent with the orders passed by the Central Government, and that the powers delegated to the State Government were subject to further directions of the Central Government. It was held that, by the government letters dated 13th November 1997 and 23rd December 1997, all the State Governments were required to make amendment in the existing State Government Orders to delete the words `edible oilseeds and edible oils' by making law to give effect to the directions of the Central Government, and that the State Government was not entitled to act as a delegate when the delegated powers in respect of `edible oilseeds and edible oils' had already been taken away by the Central Government vide its Amendment Order of 1997. It was also held that the impugned Order of the State Government was contrary to the order of the Central Government. Relying upon the decision of the Supreme Court in the case of District Collector, Chittoor v. Chittoor District Groundnut Traders' Association, reported in 1989 (2) SCC 58, the learned Single Judge held that the impugned Order passed by the State Government was made without any prior concurrence of the Central Government, and was therefore illegal and not sustainable in the eye of law. The learned Single Judge reproduced the contents of the correspondence between the State Minister and the Union Minister and the Government officials and came to the conclusion in paragraph 23 of the judgement that the extracts of the letters which were examined showed that the letters dated 27-7-1998 and 24-4-1998 of the Union Minister and the Secretary of the Central Government contained their personal opinion that the State Government had power under the delegation made under section 5 of the said Act to issue the orders in respect of `edible oilseeds and edible oils'. It was held that it was wrongly assumed that the delegated powers had not been taken back by the Central Government and that the State Order of 1981 was therefore still in operation in respect of `edible oilseeds and edible oils'. According to the learned Single Judge, the provisions of the State Order of 1981 could not operate, because, the powers delegated earlier stood withdrawn in view of the amendment by the Central Government in its own Central Order of 1977. The contents of the so called circular dated 23-12-1997, which, as pointed by us hereinabove, was only a letter written by the Joint Secretary of the Central Government to one Ex-M.P. Mr. Mishra are reproduced and relied upon by the learned Single Judge as if it was a Circular issued to all the State Governments. The other circular - letter dated 13-11-1997 which is reproduced in the judgement, is a letter which was written by the Chief Director, Ministry of Food and Consumer Affairs to the Secretary, Food and Civil Supplies Department of all States as well as Union Territories. It was under this letter that the Amendment Order dated 10-11-1997 was forwarded to all State Governments and Union Territories for information and compliance. This letter has been construed by the learned Single Judge as issuance of a mandate to the State Governments to amend their State Orders, by making similar deletion in respect of `edible oilseeds and edible oils' from them. The word compliance used in this letter is held by the learned Single Judge to mean making necessary corrections, modifications or amendments relating to storage and control of `edible oilseeds and edible oils' in the State Order of 1981 as were made by some State Governments by deleting `edible oilseeds and edible oils' from their respective Orders. The learned Single Judge concluded that once the `edible oilseeds and edible oils' were deleted from the Central Storage Order of 1977 by virtue of the Amendment Order of 1997 by the Central Government, the State Order of 1981 stood repealed in respect of licencing and stock declaration of edible oilseeds and edible oils. It was held that the impugned Order dated 26-7-2000 issued under clause 24(1) of the State Order of 1981 was without authority. The learned Single Judge therefore set aside that Order and declared that the words `edible oilseeds and edible oils', wherever occurring in the Gujarat Essential Articles (Licencing, Control and Stock Declaration) Order, 1981, stand deleted hereafter. 5. The learned Advocate General appearing for the appellant - State of Gujarat in these two appeals contended that, in view of the powers delegated to the State Government under section 5 of the said Act, the State Government was empowered to issue the State Order of 1981, which was independent of the Central Order of 1977, and therefore, the validity of the provisions of the State Order of 1981 did not depend upon the provisions of the Central Order of 1977. It was contended that the directions that may be issued under clause 24 of the State Order of 1981 did not require any concurrence under the conditions imposed in the Notification dated 9-6-1978 delegating powers to the State Government under section 5 of the said Act. It was pointed out that, in the preamble of the State Order of 1981, it was recorded that the order was made with prior concurrence of the Central Government. It was therefore argued that even clause 24 of the State Order of 1981 was issued after obtaining prior concurrence, meaning thereby that the Central Government had agreed to the State Government issuing the directions which were contemplated by section 24. It was submitted that there were no directions of the Central Government to the effect that the State Government should not impose any stock limit under clause 24 of the State Order and in fact, the Central Government had concurred with the State Government in issuance of the directions under the order dated 14th August 1998 made under clause 24 of the State Order of 1981. Even before the Court, the Central Government had filed an affidavit showing that it was agreeable to the issuance of such order by the State Government, and that the order dated 14th August 1998 was justified. It was therefore futile to issue a writ directing deletion of the entries notwithstanding the concurrence of the Central Government also expressed before this Court, even though no concurrence was required under the order delegating the powers in matters which were within the scope of clause (d) of section 3(2) of the said Act. The learned Advocate General then referred to the correspondence between the Union and the State Government and submitted that there was no question of any personal opinion being expressed in such official correspondence and the State Government had impressed upon the Central Government about the need to control the stocks of `edible oilseeds and edible oils' in the State having regard to the escalation of prices and to prevent hoarding. It was pointed out that the Central Government had readily agreed that the State Government may go ahead with the stock restrictions in respect of these commodities and it is only thereafter that the order dated 14th August 1998 was issued by the State Government under clause 24(1) of the State Order of 1981. It was submitted that even the Central Government never considered that by amending the Central Control Order of 1977, the powers of the State Government were being taken away. The State Government was in fact asked to go ahead with such restrictions under the provisions of the State Order of 1981, which was made by the State Government under section 3(1) of the said Act read with section 5 thereof. It was also submitted that this was not a case where the State Government did not have its own powers in respect of such commodities pointing out that the subject matter fell within entry 33 of the Concurrent List. It was submitted that even the State Government on its own could have made a law on the subject and controlled these essential commodities and that the executive power of the State Government was coextensive with its legislative powers under Article 162 of the Constitution. Therefore, even the State Government on its own could have exercised these powers within the limits of the constitutional provisions which had a bearing on the aspect of repugnancy. He submitted that the Central Legislature enabled the State Government to exercise the statutory powers under section 3(1) in respect of a matter which was falling in the Concurrent List and this should be therefore viewed from the angle that the central legislature thought it proper to take States into confidence by empowering their governments to make orders under section 3(1) whenever the powers were delegated so that the State Government may harmoniously act. 5.1 The learned Advocate General relied upon the following decisions in support of his contentions :- [a] He referred to the judgement in Roop Chand v. State of Punjab, reported in AIR 1963 SC 1503, in which it was held by the Supreme Court that a power when delegated under the Act remains the power of the Government. The Government can only delegate the powers given to it by the statute and cannot create an independent power in the officer. It was held that when the delegate exercises the powers, he does so for the government. Therefore, an order made by an officer, on delegation to him of the powers of the government for the purposes of the Act, would be an order of the government. [b] The decision of the Supreme Court in K. Ramanathan v. State of Tamil Nadu, reported in