Case: State of Uttar Pradesh and Ors Vs. Gulshan Sugar and Chemicals Ltd

1. The respondent, M/s. Gulshan Sugar and Chemicals Limited, is a company carrying on the business of manufacturing of chemicals. For undertaking the manufacturing work, it has to consume coal, which if an essential commodity and attracts the provisions of the Uttar Pradesh Coal Control Order, 1977 (the Control Order), which has been issued under Section 3 of the Essential Commodities Act, 1955. The Government of Uttar Pradesh vide its Memo dated 6.6.1985 required the District Magistrate, Bulandshahar, to see if any industrial unit was selling unused coal or coal dust improperly and if so, to take action, inter alia, under Clause 15 of the Control Order, By Memo of 19.9.1985 all District Magistrates of the State were required to take action against the industrial units if they sell or transfer unused coal/coal dust without obtaining licence under the provisions of the Control Order.  The respondent challenged the validity of these two Government Orders by filing a petition under Article 226 of the Constitution before the Allahabad High Court A Division Bench of the High Court by its judgment, which has been impugned in this appeal, held that the aforesaid Orders Could not have been issued and it was further held that the respondent was not required to obtain licence for the transfer of the surplus or rejected coal or coal dust. The legality of the judgment has been assailed by the State of Uttar Pradesh in this appeal.  3. There is no dispute on facts. The same are that the respondent consumes coal for running its factory. Sometimes quality of coal supplied is not of the kind required by the respondent. The same is therefore, rejected. Further, a huge quantity of coal dust is collected during the storage, loading and unloading of coal. Coal dust is also produced when coal is broken into pieces of required sizes. The rejected coal and the coal dust being of no use to respondents it disposes of the same without obtaining any licence under the Control order.  4. On the aforesaid facts, the question for determination is whether licence as mentioned in the aforesaid G.Os. is necessary. The High Court has answered this question in negative for two reasons. First, the respondent cannot be said to be dealer as defined in Clause 2(d) of the Control Order secondly, the case of the respondent is squarely covered by Clause 3(B) of the Control Order. The High Court did not accept the contention of the State that because of what has been provided in Clause 3(A) the respondent is required to obtain licence in question.

Court's reasoning:
7. The High Court held the respondent not to be dealer for two reasons : (i) it does not carry on the business of sale or storage for sale; and (ii) it being a consumer of coal, it would not be a dealer because of what has been mentioned in the last part of the definition of dealer. The contention of the appellant before the High Court that carrying on business of sale etc. is not necessary to be regarded as a dealer because of the expression in conjunction with finding place in the definition, was rejected by the High Court. According to us, this expression as placed in the definition clause cannot mean that to become dealer one need not carry on business, because mention has been made about in conjunction with to make it clear that carrying on of business may be either separately or along with some other business; but business it has to be8. The High Court, in taking the view it did, has referred to the decision of this Court in Manipur Administration v. Nila Chandra 1964CriLJ465 , in which, while interpreting the meaning of the word business as finding place in Manipur Foodgrains Dealer Licencing Order, it was held that mere selling of articles or storing of the same would not make it a business, as this concept postulates continuity of transaction. It was stated that a casual solitary transaction would not make a person a dealer. There being nothing on record to show if there was continuity in transactions of sale of coal dust or rejected coal by the respondent, we agree with the High Court that the respondent was not in the business of sale or storage for sale of coal. What has been stated in the concluding part of the definition of dealer also lends assurance to the view taken by the High Court.