Hari Oil v. State of U. P. — 1986 DIGILAW 825 (ALL)

Judgment B.N. Sapru, J. 1. THE writ petition of M/s. Hari Oil and General Mills is being decided alongwith the other writ petitions at the admission stage. In some cases the counter affidavits are on record, whereas in the writ petition of M/s. Hari Oil and General Mills there is no counter affidavit. However, we arc disposing off the writ petition on the footing that the circumstances asserted against the petitioner are correct. 2. WE are of the opinion that a pure question of law is involved in these writ petitions. In the case of M/s. Hari Oil and General Mills, the petitioner has a licence in Form 8 prescribed under U. P. Oil-seeds and Oil-seed Products Control Order, 1966 (hereinafter to be referred to as ' the 1966 Order ') which was framed under the powers delegated by the Central Government under the Essential Commodities Act. The petitioner is a manufacturer/producer of edible oils. On 29-9-1986 the District Supply Officer, Mathura, alongwith the Supply Inspector and other officials made an inspection of the petitioner's Mill premises and having discovered breaches of the various Control Orders framed under the Essential Commodities Act, lodged a FIR at P. S. Narholi, District Mathura, on the basis of which the police registered a crime case No. 115 of 1986, under Sections 3/7 of the Essential Commodities Act (hereinafter to be referred to as ' the Act ') on the ground that the petitioner has violated the provisions of Clause 3 of the conditions of the Licence granted to the petitioner under the U. P. Oil Seeds and the Oil Seed Products Control Order 1966 (hereinafter referred to as the 1966 Order) as also the provisions of Clauses 3 and 8 of the U. P. Essential Commodities (Display of Prices and Stocks and Control of Supply and Distribution) Order, 1977 (hereinafter to be referred to as ' the 1977 Order '). The relevant allegations in the FIR are reproduced below : (Hindi portion omitted-Editor) 3. THE account books and certain essential commodities were seized by the officers concerned and were given in the; custody of the Supurdar. 4. The relevant allegations in the FIR are reproduced below : (Hindi portion omitted-Editor) 3. THE account books and certain essential commodities were seized by the officers concerned and were given in the; custody of the Supurdar. 4. BY this petition, the petitioner M/s. Hari Oil and General Mills prays that the FIR on the basis of which Crime No. 115 of 1986 under Sections 3/7 of the Act has been registered against the petitioner, be quashed and the respondents be prohibited from taking any action on the basis of the said FIR against the petitioner and the petitioner has also prayed for the release of the seized goods and documents. At this stage it will be useful to deal with the other connected cases. In the other connected writ petitions, the; essential facts are that the petitioners are the manufacturers/producers of edible oil. Their grievance is that they were informed by the respondents that they must obtain the Dealers Licence in Form 8 under the 1966 Order as they would be liable to prosecution if they did not obtain such a licence. In the counter affidavit it is stated that the petitioners were advised to take such a licence as it was required to run their business. The petitioner's case is that they are the manufacturers/producers and they are not required to take he licences but they were compelled to take out licences and renew the same. They pray that a writ in the nature of prohibition be issued against the respondents restraining them from launching any prosecution of the petitioner, their servants and agents for any contravention of the 1966 Order which, they claim, is no; applicable to them. 5. TWO short questions in all these cases are whether a producer/manufacturer of edible oil is required to take out a licence under the 1966 Order and whether if he contravenes any of the conditions of a licence granted under the 1966 Order, he is liable to prosecution and his goods liable to seizure. 6. IN the case of M/s. Hari Oil and General Mills, a further question is as to whether a producer/manufacturer is required to comply with the provisions of the 1977 Order. We will first take up the shorter question as to whether a manufacturer/producer has to comply with the provisions of the 1977 Order. 7. 6. IN the case of M/s. Hari Oil and General Mills, a further question is as to whether a producer/manufacturer is required to comply with the provisions of the 1977 Order. We will first take up the shorter question as to whether a manufacturer/producer has to comply with the provisions of the 1977 Order. 7. THE 1977 Order defines a ' wholesaler ' in Clause 1 (a) as follows : "2 (a) ' Wholesaler ' means a person engaged in the business of purchase, sale or storage for sale of any scheduled commodity by wholesale and includes his representative or agent ; " Clause 2 (b) defines a ' retailer ' as follows : " 2 (b) ' Retailer ' means a person engaged in the business of purchase, sale or storage for sale of any scheduled commodity by retail and includes his representative or agent; " ' Manufacturer or producer ' is defined in Clause 2 (e) as follows : " 2 (e) ' manufacturer or producer ' means a person engaged in the business of manufacture or production of a scheduled commodity ;" 8. IT will be immediately seen that the 1977 Order recognises a distinction between a ' wholesaler, ' retailer ' and a ' manufacturer/producer '. The petitioner in the case of M/s. Hari Oil and General Mills is alleged to have violated the provisions of Clauses 3 and 8 of the 1977 Order. Clause 3 sub-clause (1) of the 1977 Order runs as follows : "3. Exhibition of price list and stocks by wholesalers. (1) Every wholesalers shall before commencement of his business on any day exhibit at the entrance or some other prominent place of his business the wholesale price list of different classes or varieties of scheduled commodities actually held in stock by him for sale as fixed or approved by the Central or State Government, if any, or as fixed by the manufacturer, producer or distributor, and where no such price is fixed or approved by the Government or fixed by the manufacturer, producer or distributor, the price inclusive of all taxes, at which the scheduled commodities are offered for sale by the wholesaler." 9. IT will be immediately seen that Clause 3 (1) of the 1977 Order applies to a ' wholesaler ' who is required to display the price list and also to exhibit a separate list showing different classes or varieties of scheduled commodities actually held in stock by him. This clause obviously does not apply to a manufacturer/producer. 10. NOW we tome to Clause 4 of the 1977 Order. Clause 4 (1) runs as follows : "4. Exhibition of price list and stack by retailers- (1) Every retailer shall before commencement of his business on any day exhibit at the entrance or some other prominent place of his business premises the retail price list of different classes or varieties of scheduled commodities actually held in stock by him for sale as fixed or approved by the Central or State Government:, if any, or as fixed by the manufacturer, producer or distributor and where no such price is fixed or approved by the Government or fixed by the manufacturer, producer or distributor, the price inclusive of all taxes at which the scheduled Commodity is offered for sale by the retailer." Thereafter sub-clauses (2) and (3) prescribed the manner in which the price list should be prepared and displayed. Clause 4 expressly refers to a ' retailer '. 11. THE learned Additional Chief Standing Counsel argued that under Clause 4 (3) (ii) the petitioners who are the manufacturers/producers, are required to display the prices which are fixed by the manufacturer, producer or distributor. This clause obviously refers to the display of prices of goods by a ' retailer ' who are selling scheduled commodities which are manufactured by any other producer who has fixed the prices at the point of retail. For instance, a manufacturer of tyres may fix a retail price of tyres and it is the retailer who sells the goods, is required to display the prices fixed by the manufacturer and not the manufacturer itself. 12. UNDER Clause (8) of the 1977 Order which the petitioner is alleged to have violated by not maintaining true and proper account books and stock register, applies only to a wholesaler as is clear from a perusal of Clause 8. 12. UNDER Clause (8) of the 1977 Order which the petitioner is alleged to have violated by not maintaining true and proper account books and stock register, applies only to a wholesaler as is clear from a perusal of Clause 8. Sub-clause (2) of Clause 8 deals with the records to be maintained by a 'retailer ' and sub-clause (3) of Clause 8 requires either a ' wholesaler ' or a ' retailer ' to produce account books, stock register, if and when demanded by the Enforcement Officer. Thus, this provision also does not apply to a producer. We, then fore, find that the petitioner, M/s. Hari Oil and General Mills, cannot be said to rave violated the provisions of clauses 3 and 8 of the 1977 Order. 13. WE now come to the controversy which is common to all the cases. 14. THE petitioners' case is that that the 1966 Order does not apply to a ' manufacturer ' or a ' producer ' and as such a manufacturer or a producer is neither required to take out a licence under the 1966 Order nor can he be prosecuted or convicted of having contravened the 1966 Order. The 1966 Order was enforced by the Notification No. 4492/XX-D-54- 1966 dated June .'9, 1966. Ey clause 12, it rescinded the U. P. Oil-seeds and Oil-seed Products Control Order, 1964 (hereinafter to be referred to as ' the 1964 Order '). The 196 4 Order was promulgated by the Notification no. 3317/XXIX-D dated' Lucknow, August 19, 1964, on which date it was published in the Gazette of India, Extraordinary. It was framed under the powers conferred on the State Government under. sub-rules (2) and (3) of rule 125 of the Defence of India Rules, 1962. We and that a 'retail dealer and wholesale dealer' had been defined. It did not define a ' manufacturer ' or a ' producer '. Clause 3 of the 1964 Order enabled the District Magistrate where he was of the opinion that it would be expedient for securing the equitable; distribution and availability of oil seeds and their products at fair prices by notification to be published in the Gazette, declare any place or area in his district) as a Controlled Oil-seeds and Oil-seed products Market. Clause 4 provides that no person other than a retail dealer in a Controlled Oil-seeds and Oil seed Products Market shall, occupy or set up any premises for purchase or sale of Oil-seeds or Oil seed products except under and in accordance with the terms of a licence granted by the District Magistrate under the 1964 Order. There were, of course, penal provisions under the 1964 Order for violation thereof and for search and seizure. It did not apply to a manufacturer/producer though Clause 5 provides that no person shall export or enter into any contract for the export: of oil-seeds or their products from any place within Uttar Pradesh or any place outside Uttar Pradesh except under and in accordance with a permit issued by the District Magistrate. This clause prevented a whole sale dealer from doing so with out permission from the District Magistrate. The 1966 Order has the following preamble :- "Whereas the State Government is of opinion that it is expedient so to do for securing the equitable distribution and availability of Oil-seeds and their products at fair prices : Now, therefore, in exercise of the powers under clauses (d) (h) (i) (ii) and (j) of sub-section (2) of Section 3 of the Essential Commodities Act, 1955 (Act no. 10 of 1955) read with the notification of the Government of India in the Ministry of Food. and Agriculture (Department of Food) published under G.S.R. 906, dated June 9, 1966 and all other powers enabling him in this behalf, and in supersession of the Uttar Pradesh Oil seeds and Oil seed Products Control Order, 1964 and with the prior concurrence of the Central Government, the Governor of Uttar Pradesh is pleased to make the following order, namely :" G.S.R. 906 dated June 9, 1986 referred to in the above quoted preamble of 1966 Order, runs as under :- "G.S.R. 906 -In exercise of the powers conferred by Section 5 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government thereby directs- (a) that the powers conferred on it by sub-section (1) of section 3 of the said Act to make orders to provide for the matters specified in clauses (a), (b), (c) (d), (e), f, (h), (i), (ii) and j of sub-section (2) thereof shall, in relation to food stuffs, be exercisable also by a State Government subject to the conditions :- (1)............... (2) that before making an order relating to any matter specified in the said clauses (a) (c) or in regard to regulation of transport of any foodstuffs under the said clause (d), the State Government shall also obtain the prior concurrence of the Central Government." 15. IT will be immediately seen from the preamble of the 1966 order that it has been made by the Governor of Uttar Pradesh under the powers conferred on him under clause (d, (h) (i) and (ii) and j of sub-section (2) of section 3 of the Act. 16. A reference t0 section 3 (2) of the Essential Commodities Act would immediately indicate that it was not framed by the Governor under the power conferred upon him under clause (a) of Section 3 (2) of the Act. The powers under Section 3 (2) (a) are conferred to regulate by licences, permits or otherwise the production or manufacture of any essential commodity. The powers under Section 3 (2) (a) are conferred to regulate by licences, permits or otherwise the production or manufacture of any essential commodity. The powers which were exercised by the Governor were claused) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity, clause (h) for collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters, clause (i) for requiring persons engaged in the production, supply or distribution of, or trade, and commerce in, any essential commodity to maintain and produce for inspection such books, accounts and records relating to their business and to furnish such information relating thereto as may be specified in the order ; Clause (ii) for the grant or issue of licences, permits or other documents, the charging of fees therefor, the deposit of such sum, if any, as may be specified in the order as security for the due performance of the conditions of any such licence, permit or other document, the forfeiture of the sum so deposited or any part thereof for contravention of any such conditions and the adjudication of such forfeiture by such authority as may be specified in the order, and clause j which runs as under :- "for any incidental and supplementary matter, including in particular, the entry, search or examination of promises, aircraft, vessels, vehicles or other conveyances and animals, and the seizure by a person authorised to make such entry, search or examination- (i) of any articles in respect of which such person has reason to believe that a contravention of the order has been, is being or is about to, committed and any packages, coverengs or receptacles in which such articles are found : (ii) of any aircraft, vessel, vehicle or other conveyance or animal used in conveying such articles, is such person has reason to believe that such aircraft, vessel, vehicle or other conveyance or animal is liable to be forfeited under the provisions of this Act ; (iii) of any book of accounts and documents which in the opinion of such person, may be useful for, or relevant to, any proceeding under this Act and the person from whose custody such books of accounts or documents are seized shall be entitled to make copies thereof or to take extracts therefrom in presence of an officer having the custody of such books of accounts or documents." In view of the fact that the powers under section 3 (2) (a) of the Act has not been exercised by the Governor in framing the 1966 Order, there is no power to regulate by Iicences, permits or otherwise the production or manufacture of any essential commodity. However, under clause (i), there is a power to frame an order reqairing a person engaged in the production, supply or distribution of, or trade, and commerce in, any essential commodity to maintain and produce for inspection such books, :accounts and records relating to their business and to furnish such information relating thereto, as may be specified in the order. 17. NOW we come to the definition clause of the 1966 Order. The 1966 Order defines a " retaiI dealer ", 'wholesale dealer' and ' dealer ' in sub-clause (a) f and (g) of clause 2, which are reproduced below : "(a) " Retail Dealer " means a dealer who sells to any person at any one time less than 75 Kilograms of any one kind of Oil seeds or less than sixteen Kilograms of any kind of oil or less than 75 Kilo grams of oil cake. " f "Wholesale Dealer" means a dealer who sells to any person any one time 75 Kilograms or more of any one kind of oil seeds or sixteen Kilograms or more of any one kind of oil or seventy five Kilograms or more of oil cake. (g) " Dealer " means a person engaged in the business of purchase or sale or storage for sale of Oil seeds or oil seed products, but does not include the Food Corporation of India, the U. P. Food and Essential Commodities Corporation or a dealer who stocks less than 5 quintals of oil or less than 10 quintals of oil seeds or less than 25 quintals: of oil-cakes." 18. THEREAFTER a Commission Agent ' is defined in Clause 2 (h) as a person who is not himself a dealer but carries on the business of purchase, sale or storage for sale on behalf of a dealer or any other person for commission. Clause 4 povides that no dealer or a commission agent shall occupy or set up any premises for purchase or sale of oil seeds or oil seed products, except under and in accordance with the terms of a licence granted by the Regional Food Controller under this order. Form 8 prescribes the licence for dealing in oil seeds and oil-seed products. 19. Form 8 prescribes the licence for dealing in oil seeds and oil-seed products. 19. THE argument of the learned Additional Chief Standing Counsel is that the petitioners are the ' Dealer ' within the meaning of the 1966 Order as they are engaged in the business of purchase or sale or storage for sale of oil seeds or oil seed products and as such they are required to take out a licence under clause 4 of the 1966 Order and comply with the terms of a licence granted to them under form B. In the broadest sense, a manufacturer or a producer can be said to be a dealer as he is also engaged in the business of purchase or sale or storage for sale of oil seeds or oil seed products and if this be so, all the petitioners are required to comply with the: 1966 Order and the petitioner, M/s. Hari Oil and General Mills, could be prosecuted for the violation of the 1966 Order. If the allegations against them are true and goods and account books are seized, by virture of section 3(2) (i) of the Act, a manufacturer or a producer could be required to maintain an account and produce it. 20. IN order, 1 owner, to appreciate the true meaning of the word ' Dealer ' in 1966 Order, we have to look at some other Control Orders. The Central Government has framed the Pulses, Edible Oilseeds and Edible Oil (Storage Control) Order, 1977 (hereinafter to be referred as ' the Central Order ') which was published in the Gazette of India, Extraordinary part II, Section 3 (ii) dated 21-11-1977 at pages 2831-34. It extended to the whole of India. Clause 2 (e) thereof defines a ' Commission Agent' Clause 2 f defines a dealer as meaning a person engaged in the business of purchase, sale or storage for sale of any pulses, edible oilseeds or edible oils, whether or not in conjunction with any other business and includes his representative or agent. Thereafter comes the original definition of a ' producer ' in clause 2 j which is reproduced below : "'Producer' means person carrying on the business of milling any of the pulses or expelling, extracting, manufacturing or refining any edible oil ". Thereafter comes the original definition of a ' producer ' in clause 2 j which is reproduced below : "'Producer' means person carrying on the business of milling any of the pulses or expelling, extracting, manufacturing or refining any edible oil ". This definition of ' producer ' was amended by S. O. No. 64 (e) published in the Gazette of India, Extraordinary, Part II, Section 3 (ii) No. 50 dated 2-4-1978. The amended definition of the word ' Producer ' runs as under :- " j ' producer ' means a person carrying on the business of milling any of the pulses or expelling, extracting; or manufacturing any edible oil- (i) by buying pulses or edible oilseeds for being processed by himself and selling the finished. products to a wholesaler or through a commission agent : or (ii) by doing any of the processes of miling, expelling, extracting or manufacturing on behalf of another." The amendment was mad; to put beyond doubt the position of a ' Producer ' that merely because for carrying on the process of manufacture of oil products from oil seeds would not make him either a wholesaler or a retailer. 21. A retailer is defined in clause 2 (1) as meaning a dealer in pulses or in edible oil seeds or in edible oils who is not a wholesaler. A wholesaler is defined in clause 2 (n) as meaning a dealer in pulses or in edible oil seeds or in edible oils who sells such commodities to other dealers or to bulk consumer. 22. THEREAFTER came clause 3 which provides for licensing of dealers. Clause 4 provides for restrictions on possession of pulses, edible oil seeds and edible oils. The Central Order clearly distinguishes between a 'producer', a 'retailer' and a 'wholesaler'. 23. CONSEQUENT upon the enforcement of the Central Order, the U. P. Government under the powers conferred by Clause 5 of the Central Order issued a notification No. 1284/XX1X-E-C 1-141 (O. S.) 77 dated Lucknow March 8, 1978 published in the U. P. Gazette dated 8-3-1978 requiring a dealer as defined in Clause 2 f and a producer as defined in Clause 2 j of the Central Order to furnish a return. This shows that the Governor was quite aware that producers were different from other dealers. 24. This shows that the Governor was quite aware that producers were different from other dealers. 24. SIMILARLY, another Notification No. 7628/XXIX-E C-l 141 (05) published in the U. P. Gazette, Extraordinary., dated 31-7-78 was issued in super-session of the earlier Notification dated 8-3-78 which again recognises the distinction between a dealer as defined in Clause 2(f) and a producer as defined in Clause 2 j of the Central Order. Having set forth the various Control Orders and the language thereof, we have now to determine what the word 'dealer' means in the 1966 Order. It will be useful here to repeat the provisions; of Clause 2 (g) which defines a ' dealer ' as meaning a person engaged in the business of purchase or sale or storage for sale of oil seeds or oil seed products but does not include ....." 25. THE question for determination is whether a producer is a dealer within the meaning of Clause 2 (g) of the 1966 Order. A producer necessarily purchases oil seeds and sells oil seed products. In one sense, he is a dealer but a producer is not a person engaged in the business of selling oil seeds as oil products or oil. He converts the oil seeds in the oil products and then sells it. Consequently, a 'producer' is distinct from a 'retailer'. A producer is not required to obtain a licence as a 'producer' under the 1966 Order. He is also not required to register himself under the 1966 Order. 26. IT appears that the word ' dealer ' which is defined in Clause 2 (g) of the 1966 Order, was defined comprehensively to include 'retail dealer ' and ' wholesale dealer '. The word ' dealer ' cannot be extended to include in the context in which it is placed to include to a ' producer ' of oil products from oil seeds. As we have held that the petitioners in none of the cases are dealers within the meaning of the 1966 Order, they cannot be required to take out licences under Clause 41 of the 1966 Order and cannot be prosecuted for the breach of the conditions of a licence which they are being compelled to take out by the authorities. 27. IN the result, all the writ petitions succeed and are allowed. 27. IN the result, all the writ petitions succeed and are allowed. IN writ petition of M/s. Hari and Oil General Mills and others, the FIR dated 29-9-86 (Annexure II to the writ petition) is quashed and the respondents are directed to return the seized goods and documents to the petitioners within two weeks of the presentation of a copy of this order before the authorities in whose possession the seized goods and documents are. It is declared that none of the petitioner is required to take out a licence under the U. P. Oil Seeds and Oilseed Products Control Order, 1966. The petitioners will be entitled to their costs in all the writ petitions. Petitions allowed.