Thomas v. State of Kerala — 1990 DIGILAW 255 (KER)

Judgment :- Viswanatha Iyer, J. The Essential Commodities Act, (the Act) has been enacted to provide, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce, in certain commodities. Sub-section (1) of S.3 of the Act empowers the Central Government, if it is of opinion that it is necessary or expedient so to do for maintaining or increasing supply of any essential commodity, or for securing its equitable distribution, and availability at fair prices, to provide, by order, for regulating or prohibiting the production, supply and distribution of the essential commodity, and trade and commerce therein. S.5 enables the Central Government by notified order to direct that the power to make orders, or to issue notifications, under S.3 shall, in relation to such matters and subject to such conditions, if any, as may be specified in the direction, be exercisable also by State Government, as may be specified in the direction. 2. The Act has been included in the Ninth Schedule of the Constitution as item No.126bythe Constitution (Amendment) Act, 1976. The Act is thus immune from attack inconsistent with, or taking away or abridging any of the rights conferred by any provisions of Part III of the Constitution. But the immunity does not extend to orders issued under S.3(1) as held by the Supreme Court in Prag Ice & Oil Mills v. Union of India, AIR 1978 S.C.1296. 3. Coconut husk is an essential commodity covered by the Act, being item No. 19 in the list of commodi ties not tied as such under S.2(a)(xi). By a notified order dated 30th April, 1986, a copy of which is marked as Ext.P2, the Central Government directed that the powers conferred on it by S.3(1) of the Act to make orders to provide for the matters specified in clauses (a), (c), (d), (e), (f), (h) and 0) of sub-section (2) thereof, shall in relation to coconut husks be exercisable also by the Government of Kerala subject to the conditions mentioned. Two of these conditions specified in sub-clauses (iii) and (iv) are as follows: "(iii) That the State Government shall not put any inter state or intrastate restriction on the transport of coconut husk under clause (d) of sub-section (2) of S.3 of the said Act, except to the extent necessary for operating the scheme for levy of coconut husk referred to in clause (iv). (iv) That the State Government shall, as soon as, may be after the coming into force of this order, notify a scheme providing for the procurement by way of levy from every ratter not more than Thirty per cent of the Coconut husk held in stock by him on the date of coming into force of the said scheme and any stock acquired by him thereafter". 4. In exercise of the powers so delegated, the Government of Kerala issued the Kerala Coconut Husk (Procurement of Levy) Order, 1986 (hereinafter referred to as the 1986 Order). Inter alia, the Order required by its clause 5, any "husk dealer", i.e., a person or institution engaged in the business of purchase, sale or storage for sale of husks, not to sell, offer to sell or dispose of, in any manner, husks, except under the authority, and in accordance with the terms of a disposal permission issued by the licensing officer in that behalf. The Order did not impose any obligation on the husk dealer to transport the husks so sold to the person to whom the husk was to be delivered, described as "husk receiver". A copy of the 1986 order is Ext.P3. 5. The 1986 Order was soon replaced by another order issued by the Government of Kerala on 19th April, 1988, called the Kerala Coconut Husk (Procurement by Three Point Levy) Order, 1988, a copy of which is marked as Ext.P4, (hereinafter referred to as the 1988 Order). This order made wide departures from the 1986 order. In particular sub-clause (i) of clause 8 required every copra producer or Husk Dealer to sell 30% of the quantity of husks disposed of.processed or proposed to be disposed of.processed or owned or produced or purchased or stocked by him as levy, to Government or an agent of the Government approved by the Director of Coir Development or any husk receiver authorized by the Licensing Officer (or the other authorities mentioned) under the Order. This Order also provided by sub clause (1) of clause 5, that no "copra producer" or "husk dealer" shall sell, offer to sell or dispose of many manner, or himself ret or process husk except under the authority, and in accordance with the terms and conditions of disposal permissions issued by the Licensing Officer in that behalf. The other sub-clauses of clause 5 contain detailed provisions regarding the application for grant of disposal permissions and the persons to whom levy husk could be directed to be sold. Sub-clause (3) of clause 5 requires the Licensing Officer, on receipt of an application for disposal permission to determine the quantity of husk to be sold as levy in accordance with sub-clause (1) of clause 8 from out of the quantity for which disposal permission is requested, as also the husk receiver for the quantity of levy husk so delivered. A husk receiver is the President, Secretary, Administrator or other authorized officer of a Coir Vyavasaya Co-operative Society or Thondu Society which receives levy husk from a copra producer or husk dealer or ratter. The proviso to sub-clause (3) states that the society or societies to receive the levy husk shall be located either within the project area under the jurisdiction of the licensing officer or within the project area or the project areas where the dealer or copra producer intends to sell the husk or within a project area through which the husk is to be transported for sale. Sub-clauses (4), (5), (6) & (7) deal with issue of the disposal permission for the levy husk, delivery of the levy husk to the husk receiver, his acknowledging receipt of the husk and issue of disposal permission for the balance quantity. Since the arguments a case centered on these provisions, we shall extract them as also sub clause (3) of clause 5. Since the arguments a case centered on these provisions, we shall extract them as also sub clause (3) of clause 5. "(3) On receipt of the application for disposal permission, the licensing officer will determine the quantity of husk to be sold as levy in accordance with sub-clause (1) of clause 8 from out of the quantity for which disposal permission is requested for which disposal permission is requested and the husk receiver husk receivers for the quantity of levy husk so determined: Provided that the society or societies to receive the levy husk shall be located either within the project area under the jurisdiction of the licensing officer or within the project area or the project areas where the dealer or copra producer intends to sell the husk or within a project area through which the husk is to be transported for sale. (4) After determination of quantum of levy husk and the husk receiver husk receivers as in sub-clause (3) the licensing officer shall in the first instance issue disposal permission. disposal permissions in Form No.V for the quantity of levy husk so determined in favor of the husk receiver husk receivers at the levy price notified in accordance with clause 18. (5) The Copra producer or husk dealer shall thereupon deliver the levy husk in accordance with the disposal. permission disposal permissions as per sub-clause (4) and obtain levy receipt in Form No.VI from the designated husk receiver; Provided that if a Copra producer or husk dealer effects part delivery of the quantum of levy determined as per sub-clause (4) and produces levy receipt for the same disposal permission for the corresponding quantity of non-levy husk shall be issued. (6) The husk receiver shall immediately on receipt of levy husk, acknowledge receipt of the same in Form no. VI and pay the price as per sub-clause (4). (7) On production of the levy receipt obtained in accordance with sub-clause (5) by the Copra producer or husk dealer the licensing officer shall issue disposal permission for the corresponding quantity of non-levy husk also in Form No.V without any restriction on selling price." 6. VI and pay the price as per sub-clause (4). (7) On production of the levy receipt obtained in accordance with sub-clause (5) by the Copra producer or husk dealer the licensing officer shall issue disposal permission for the corresponding quantity of non-levy husk also in Form No.V without any restriction on selling price." 6. Clause 18 empowers the Director of Coir Development to notify, on the recommendation of the Advisory Committee constituted by Government under class 17, the price at which green or retted husks may be obtained as levy separately at copra producers' or husk dealers' premises and/or retting places. In so notifying the price, the Director may take into consideration the quality of husks in a locality, the transportation expenses and facilities, and retting facilities, the regional and seasonal availability and Variations. The Advisory Committee mentioned is to consist of fifteen members, of which one shall be a nominee of the Government of India. Clause 20 requires every copra producer or husk dealer or ratter who undertakes transportation of husk, green, retted or dry, in any vehicle, to keep certain documents in the vehicle, like, the bill or voucher, levy notice, disposal permission, and levy receipt. These documents have to be produced before the Inspector or Director for verification, if necessary. On failure to keep these records, in the vehicle, the Inspector, Licensing Officer or Director may order seizure of the entire quantity of the husk transported in the vehicle and to order delivery of the same to any husk receiver as decided by the Inspector, Licensing Officer or Director. 7. Purporting to act under the powers conferred by clause 18, the Director has notified the prices at which pay men t shall be made for levy husk from April 22,1988. This notification is dated April 29,1988. There under, the Director has fixed the maximum price of green and retted husk separately in various project areas. So far as green husk is concerned, two different prices are fixed, one at retting site and the other, at other places. The price at the latter places is considerably less than at the retting site. For instance, in Quilon, Kottarakkara and Pathanapuram Taluks, where the petitioner is operating, the price at retting site is Rs. 152.- for 1000 numbers of green husk, while it is Rs.102.- at other places. The price at the latter places is considerably less than at the retting site. For instance, in Quilon, Kottarakkara and Pathanapuram Taluks, where the petitioner is operating, the price at retting site is Rs. 152.- for 1000 numbers of green husk, while it is Rs.102.- at other places. Almost the same variation is kept up in the other project areas as well. 8. Appellant's grievance is that clause 5 of Ext.P4 requires him to sell, and deliver to the husk receiver at his premises a certain quantity of husk as levy as fixed by the licensing officer, for which he is not paid any transport charges. This quantity of levy husk has to be delivered to the husk receiver as defined in clause 2(g) without payment of transport charges, the husk receiver being an office bearer of a co-operative society of the type mentioned in that clause. The proviso to clause 5(3) prescribes the location of the society, which could be designated by the Licensing Officer to receive levy husk from a particular husk dealer. It states that the husk dealer may be located either within the project area under the jurisdiction of the licensing officer or within the project area or the project areas, where the dealer or copra producer intends to sell the husk or within a project area through which the husk is to be transported for sale. The scheme of sub-clauses (3) to (7) is such that levy. Husk has to be transported first by the copra producer or husk dealer and delivered to the husk receiver, who acknowledges receipt of the husk and pays the price therefore. Thereafter, and only on production of this levy receipt, from the husk receiver, will the disposal permission be issued for the corresponding quantity of non-levy husk. In other words, there are two transports involved for a husk dealer like the petitioner, one of levy husk, and the other of non-levy husk. In so far as the dealer is concerned, he is not paid for the transport of the levy husk wherever the husk receiver is situate. It is stated in the original petition that the petitioner, a husk dealer, has to transport the levy husk for distances of 50 to 70 Kilometers to deliver them to the husk receiver without being paid therefore. It is stated in the original petition that the petitioner, a husk dealer, has to transport the levy husk for distances of 50 to 70 Kilometers to deliver them to the husk receiver without being paid therefore. This is stated to be unreasonable, as the identification of the husk receiver to receive the levy husk is not within the control of the husk dealerandis left to the unbridled and unguided choice of the licensing officer. 9. The Government Pleader on the other hand contends that the price of the husk to be delivered is fixed with reference also to the transport charges in the locality and therefore the transport charges to the husk receiver's location is also taken into account. The contention is that the element of transport charges to the husk receiver's place has also gone into the reckoning in fixing the price under clause 18 of Ext.P4 and therefore the petitioner has no room for complaint. 10. We are unable to accept this contention for the reasons mentioned below. It must be stated even in the first instance that the price fixation of April 29,1988 itself appears to be not in accordance with clause 18. The notification issued by the Director has fixed the price of green husks at the retting place, and at other places. What are the "other places" is not defined. Clause 18 requires the fixation of price at the husk dealer's or copra producer's premises and.or at retting places, and that has to be done with reference to the various factors mentioned. It does not refer to the fixation of price at any other place. The Government Pleader has not been able to satisfy us as to what exactly are the "other places" to which reference is made in the price fixation notification or that it refers only to husk dealers or copra producers, premises. When clause 18 requires that the price is to be fixed at the copra producer's or husk dealer's premises. Fixation of price generally for other places is vague, and not in accord with that clause. The fixation of price in accordance with clause 18 is a sine qua non for the operation of the provisions relating to delivery of levy husk and in the absence of a proper price fixation, the entire scheme of delivery of non-levy husk remains unworkable. 11. The fixation of price in accordance with clause 18 is a sine qua non for the operation of the provisions relating to delivery of levy husk and in the absence of a proper price fixation, the entire scheme of delivery of non-levy husk remains unworkable. 11. There is also considerable force in the petitioner's contention that the nonpayment of charges for the transport of heavy husk from the husk dealer's premises to the husk receiver's premises is arbitrary. Sub-clause (5) of clauses requires the husk dealer to deliver levy husk to a husk receiver, who may be located at any of the places mentioned in the proviso to sub-clause (3) of clause 5. He may be nearby or may be far away. He may be within the project area or may be even outside. In fact one of the locations specified is the place where the husk dealer may sell his non-levy husk, which may be far away. There is also no stipulation that the delivery is only at a retting place. It may be elsewhere. The husk dealer has to deliver the levy husk to the husk receiver, wherever he is, in the first instance, at his expense, come back with the levy receipt, and then only he is given the disposal permission for the non-levy husk. Whatever be the distance, a husk dealer is not paid any amount by way of transport charges, which, in the circumstances, and having regard to current day costs, can be considerable. He is at best paid only the price of the husk at his premises (unless the delivery, in a given case, is a treating place), even though that again has n&t been definitely fixed as noted by us in the proceeding paragraph. The ingenious contention of the Government Pleader based on the reference to transportation expenses in clause 18, and the suggested inference that the transport charges to the husk receiver's premises have also gone into the reckoning in fixing the price by the notification of April 29,1988, are not sustainable. Clause 18 has made transportation expenses and facilitates, relevant factors in fixing 'the price. Clause 18 has made transportation expenses and facilitates, relevant factors in fixing 'the price. But the price fixation could certainly not have taken into account the transport from the husk dealer's premises to the husk receiver's place (other than a retting place) for the reason that clause 18 requires fixation of the price at the husk dealer's premises, and not at the husk receiver's place. Therefore, whatever be the distance to be traversed by the husk dealer to the place of the husk receiver, no transport charges are paid to him. This appears on the face of it, to be arbitrary and unreasonable. It is indisputable that the transport charges vary with the distance and the quantity to be transported. The whole thing, particularly the identification of the husk receiver to receive levy husk from a particular dealer depends upon the will.whims of the licensing officer, who can identify the husk receiver in accordance with his choice. There are no guidelines for the purpose. The husk receiver can be anywhere within a large area, as is obvious from the proviso to clause 5(3). In the absence of any guidelines, and in the absence of any provision for payment of transport charges irrespective of the distance to be traversed, sub-clause (5) of clause 5 of Ext.P4 appears to be irrational, unjust and discriminatory. It violates Art.14 of the Constitution. The direction in sub-clause (5) of clause 5 to deliver husks at the husk receiver's premises without provision for payment of transport changes has to be struck down as arbitrary. Sub clause (5) of clauses of Ext.P4 is thus illegal and unconstitutional. 12. These aspects of the matter have not been gone into by the learned Single Judge who stated that "the totality of the circumstances would not justify an invalidation of the enactment"-It was stated so with reference to the obligation of the appellant to deliver the levy husk at the husk receiver's place. It was also stated that such an obligation will not involve any undue hardship or unreasonable restriction, as the appellant's business involves transport of goods, requiring a fairly good organization. These are not relevant in considering the validity of the clause in question, when discrimination and arbitrariness are otherwise writ large on it - 13. It was also stated that such an obligation will not involve any undue hardship or unreasonable restriction, as the appellant's business involves transport of goods, requiring a fairly good organization. These are not relevant in considering the validity of the clause in question, when discrimination and arbitrariness are otherwise writ large on it - 13. In this view of the matter we are not going into the question raised by the petitioner that the first respondent's power under Ext.P2 stands exhausted by the issue of the 1986 order and that they had no further power to issue the 1988 order with vastly different provisions. 14. We therefore allow the writ appeal. We declare that sub-clause (5) of clause 5 of the Kerala Coconut Husk (Procurement by Three Point Levy) Order, 1988 providing for delivery of levy husk at the husk receiver's premises, without payment of charges for transport is unreasonable, arbitrary and violative of Art.14 of the Constitution. Having regard to the circumstances, we consider it just and proper that this - declaration of invalidity of sub clause (5) of clause 5 will operate only prospectively from the date of this judgment. The writ appeal is allowed as stated above. There will be no order as to costs.