Kumar Swastik Enterprises Pvt. Ltd. v. Union of India
1991-05-09
M.R.CALLA, M.S.SHARMA
body1991
DigiLaw.ai
JUDGMENT 1. - One of the prayers in the writ petition is that the provisions of the Cement (Quality Control) Order, 1962 in so far as it prohibit manufacture, storage, sale or distributor of cement not bearing I.S.Certification Mark may be declared illegal, invalid Ultra-vires, unconstitutional, null and void, abinitio. Another relief sought is for quashing the investigation in F.I.R. No. 79/89 pending at the Police Station Behror District Alwar and also for quashing the seizure of 507 bags of cement. 2. Cement (Quality Control) Order, 1962, (for short, the Order) was made by the Central Government in exercise of the powers conferred under Section 3 of the Essential Commodities Act, 1955 (for short, EC Act). Para 2(b) of the Order defines 'prescribed standard' which means the Indian Standard "(i) No. IS 8041 E-1976 relating to Rapid Hardening Portland Cement, (ii) No. IS 8042 E-1976 relating to white Portland Cement, (iii) No. IS 8043 E-1976 relating to Hydrophobic Portland Cement, (iv) No. IS 269-1976 relating to Ordinary and Low Heat Portland Cement (Third Revision). (v) No. IS 455-1976 relating to Portland Blast Furance Slag Cement (Third Revision). (vi) No. IS 1489-1976 relating to Portland Pozzolana Cement (Second Revision). (vii) No. IS 8112-1976 relating to High. Strength Ordinary Portland Cement and cement used for manufacture of railway sleepers. (viii) No. IS 3466-1967 relating to masonry Cement (First Revision). (ix) No. IS 8229 E-1976 Oil Well Cement (now under print). (x) No. IS 6909-1973 Super Sulpbated Cement. Explanation-Cement shall not be deemed to be of prescribed standard, if it is not of the nature, substance quality which it purports or it represents to be."Para-3 of the aforesaid Order prohibits manufacture or store for sale, sale, or distribution of any cement which is not of the prescribed standard. Para-3 of the Order reads as under : "3. Prohibition of manufacture, sale, etc of cement which is not of the prescribed standard. No person shall himself or by any person on his behalf manufacture or store for sale, sell or distribute cement which does not con,form to the prescribed standard and which does not bear 'IS' certification mark.
Para-3 of the Order reads as under : "3. Prohibition of manufacture, sale, etc of cement which is not of the prescribed standard. No person shall himself or by any person on his behalf manufacture or store for sale, sell or distribute cement which does not con,form to the prescribed standard and which does not bear 'IS' certification mark. Provided that the Central Government, may on an application made, permit any person to manufacture or store for sale, or sell or distribute cement without ISI mark for a period not exceeding three months, if it is satisfied that the grant of regular BIS certification mark is pending with the authorities under the Bureau of Indian Standards Act, 1986 (63 of 1986)". The aforesaid para 3 of the Order was substituted for earlier paragraph 3 vide Cement (Quality Control) Amendment Order, 1983. Prior to the aforesaid substitution it read as under : "No person shall himself or by any person on his behalf, manufacture, or store for sale, sell or distribute any cement which is not of the prescribed standard." It will therefore be clear that under the aforesaid amendment in the Order in the year 1983 prohibition was introduced in respect of manufacture or store for sale, sell or distribution of cement which did not bear 'IS' certification mark. Under the Indian Standards Institution (Certification Marks) Act, 1952 (for short, Certification Marks Act) in Section 2(f) 'Licence' is defined which means a licence granted under the Certification Marks Act to use the Indian Standards Institution certification mark, in relation to any article or process which conforms to the Indian Standard and under Section 2(g) 'marks' includes a device, brand, heading, label ticket, pictorial, representation, name, signature, word, letter or numeral or any combination thereof. 'Standard mark' under Section 2(l) means the Indian Standards Institution Certification Mark specified by the Indian Standards Institution to represent a particular Indian Standard. Under Section 2(n) an article is said to be marked with a Standard Mark if the article itself is marked with a Standard Mark or any covering containing or label attached to such article is so marked. Section 5 prohibits improper use of Standard Mark and it can only be used under a licence granted under the Certification Marks Act.
Under Section 2(n) an article is said to be marked with a Standard Mark if the article itself is marked with a Standard Mark or any covering containing or label attached to such article is so marked. Section 5 prohibits improper use of Standard Mark and it can only be used under a licence granted under the Certification Marks Act. Under sub-section(2) of Section 5, no person shall, not with standing that-he has been granted a licence, use in relation to any article or process the Standard Mark or any colourable imitation thereof unless such article or process conforms to the Indian Standard. Section 20 confers powers on the Central Government to make rules subject to the condition of previous publication by notification in the Official Gazette and the rules can be made to carry out the purposes of the Certification Marks Act. Section 21 confers powers on the Central Government to make regulations by notification in the Official Gazette, not inconsistent with the Certification Marks Act and the rules made thereunder to carry out the purposes of that Act. Regulations have been framed in exercise of the aforesaid power. 3. The petitioner No.1 is a limited liability company incorporated under the provisions of the Companies Act, 1956, and having its registered office situated at 455, Adarsh Nagar, Jaipur. The petitioners Nos. 2 to 5 are Directors of the petitioner company and the petitioner company is engaged in manufacture and sale of cement and it has set up a mini cement plant factory situated at A-20, Industrial Area, Behror, District-Alwar. The petitioner company submitted an application on July 28, 1987, for licence to use the standard mark under the Certification Marks Act and also deposited registration fee for grant of licence. Ultimately, the licence was awarded to the petitioner company on May 22, 1989. In between the time of submission of application as well as grant of licence, i.e. July 28, 1987 and May 22, 1989, the petitioner company started manufacture of cement. On December 22, 1988, the District Supply Officer Alwar conducted the inspection of the factory premises of the petitioner company. During the said inspection 507 bags of portland cement of the petitioner company were seized by the said officer on the ground that the said produce was manufactured, sold and distributed without Indian Standard Certification marks. At the instance of the District Collector, Alwar and Distt.
During the said inspection 507 bags of portland cement of the petitioner company were seized by the said officer on the ground that the said produce was manufactured, sold and distributed without Indian Standard Certification marks. At the instance of the District Collector, Alwar and Distt. Supply Officer Alwar, the Enforcement Inspector Alwar lodged a report at the Police Station Behror under Section 3/7 of the EC Act for contravention of para 3 of the Order which is pending investigation. 4. It may also be stated that because the grant of licence was taking time on the application of the petitioner company the Department of Industrial development under its order dated January 19, 1989 with reference to the letter dated January 16, 1989, of the petitioner company, granted permission to the petitioner company for manufacture and sale of cement without ISI certification mark for a period of two months from the date of commencement of commercial production by the petitioner company. Again under letter dated April 26, 1989, the petitioner company was permitted to manufacture and sell cement without ISI mark for a further period of one month. But it will be seen that the aforesaid permission was only given after December 28, 1988 when the Distt. Supply Officer alongwith others conducted inspection of the factory premises of the petitioner company and seized 507 bag of port land cement because the said bags had been manufactured, sold and distributed without Indian Standard Certification mark. 5. The first contention of the learned counsel for the petitioner company is that the requirement of para 3 of the Order as amended in 1983 as aforesaid that the cement does conform to the prescribed standard and which do not bear 'ISI' certification mark is conjunctive and not independent and therefore if the cement which is manufactured for sale by the petitioner company conforms to the prescribed standard which in this case it conforms, even if it did not bear 1S1' certification mark, it cannot be said that para 3 of the Order has been contravened and no prima facie case is made out and investigation, therefore, should be quashed.
It was also contended that if the construction of the aforesaid para 3 of the Order is that the requirement is disjunctive, before one could manufacture or store, or sell, or distribute any cement, not only it must conform to the prescribed standard but also should bear the 'ISI' certification mark, then it is unreasonable restriction on the petitioner company to carry out occupation trade or business and therefore is ultravires of Article 19(1)(g) of the Constitution of India. In our opinion, this contention has no force. Cement is an essential item for the manufacture of dams,buildings, bridges etc. and the structure of the aforesaid of cement manufactured and sold by the petitioner company, prescribed standards and procedure for obtaining the licence to use IS certification mark has to be adhered to by the petitioner company since these are the statutory requirements. A licence under Section 2(f) of the Certification Marks Act is grant use the 'ISI' certification mark in relation to any article or process which conforms to the Indian Standard. The mark therefore is required to be used on each and every bag of cement. The certification mark is a convenient measure to secure standardisation of commodities and is in use in many progressive countries such as the U.K. France etc. As defined in the Trade Marks Act it is a mark adapted in relation to any goods to distinguish in the course of trade goods certified by any person in respect of origin, material, mode of manufacture, quality, accuracy or other characteristic, from goods not to certified. The underlying idea is to convey this assurance to the purchaser that the goods or services so certified have been inspected, tested, and certified by some agency of competence and that they may be purchased with more than ordinary assurance that certain standards of quality have been met. It was with a view to achieve the aforesaid object as set forth in the Government resolution dated September 3, 1946, Gazette of India, 1951, Extra-Pt.II- Section-2, page 6 that the Bill was introduced and later on Certification Marks Act was made by the Parliament. It will therefore be clear that the licence which is granted under the Certification Marks Act is granted to use the 'ISI' certification mark on the article which is manufactured for sale or store for sale.
It will therefore be clear that the licence which is granted under the Certification Marks Act is granted to use the 'ISI' certification mark on the article which is manufactured for sale or store for sale. The ISI certification mark on the article which is manufactured for sale or store for ale. The IS1 certification marks appearing on the products like cement provides third party guarantee to the common consumer about its quality, and we are of the opinion that the requirement contained in para 3 of the Order that the cement must not only conform to the prescribed standard of quality but it must also bear 'ISI' certification mark and this requirement is not in the alternative but is independent and both the terms and conditions must be satisfied, otherwise it will amount to contravention of para 3 of the Order. As said earlier, so far as purchaser is concerned, he will have and have no knowledge whether the licence under the Certification,Marks Act has been obtained or not and only if the licensee who under law is required to use the Certification Mark, uses the certification and the cement bag bears 'ISI' certification mark, the purchaser can have the knowledge that the cement has been tested and certified by some agency of competence and he may purchase it with more than ordinary assurance that the same is of quality. The object of the amendment made in the year 1983 was that the cement must bear the 1st' certification marks besides being of the prescribed standard. We are therefore of the opinion that there can be absolutely no doubt that the terms and conditions must be satisfied i.e. not only the cement must conform to the prescribed standard, but it must also bear 'ISI' certification mark. 6. The next contention of the learned counsel for the petitioner is that on two occasions, the petitioner was given permission for manufacture for sale of cement without 'ISI' certification mark for two months which was extended for another one month, goes to show that the condition of cement bearing 1st' certification mark is not mandatory and relaxation can be granted.
The next contention of the learned counsel for the petitioner is that on two occasions, the petitioner was given permission for manufacture for sale of cement without 'ISI' certification mark for two months which was extended for another one month, goes to show that the condition of cement bearing 1st' certification mark is not mandatory and relaxation can be granted. In our opinion, it will not make any difference to the view which we have already taken in the earlier part of this order about the satisfaction of the twin conditions contained in earlier part of this order about the satisfaction of the twin conditions contained in para 3 of the Order because we have already said that the inspection was done much before the aforesaid permission was granted and at the time of inspection, no permission to manufacture and sale of cement without 'ISI' certification mark had been granted. The said permission 'appears to have been granted because the application for grant of licence under the Certification Marks Act was pending. We may also state that petitioner company has not challenged the provisions of the Certification Marks Act or Rules or Regulations made there under which contain elaborate procedure for grant of licence to use for 'ISI' certification mark. In a case where one applies for licence for use of 'ISI' certification mark under the Certification Marks Act, if unusual delay takes place, a party will always be free to come to this court for a writ of mandamus for decision whether to grant or not to grant 'ISI' certification mark. Within reasonable time, but merely because licence to use 'ISI' certification mark under the Certification Marks Act is not issued the manufacturer can have no right to manufacture such of the essential commodities which may be covered under any Order made under Section 3 of the EC Act, so far as quality control is concerned,. It appears that proviso to para 3 of the Order was inserted by SO 324(E) dated May 3, 1989 and the proviso vests powers in the Central Government on an application made to it, to permit any person to manufacture or store for sale, or sell or distribute cement without ISI mark for a period not exceeding three months, if it is satisfied that the grant of reg.
BIS certification mark is pending with the authorities under the Bureau of Indian Standards Act, 1986. But even because, it can be said that the Central Government was granting permission during the pendency of grant of licence for use of 'IS1' certification mark, for a maximum period of three months, for manufacture or store for sale cement, and only if the permission is granted as aforesaid one may manufacture or store for sale cement, sell or distribute it without 'ISI' certification mark, but in that case even the cement must conform to the prescribed standard, and after the period of three months as aforesaid unless the cement bears 'ISI' certification mark, its manufacturer will not be entitled to manufacture or store for sale or distribute the same. 7. Taking into consideration the contention of the learned counsel for the petitioner that with the aforesaid construction of para 3 of the Order, the restrictions placed are unreasonable and should be struck down, we are of the opinion that this contention too has no force. The restrictions contained in the Order are in the larger interest of the public and are reasonable restrictions. One has the right to carry on any profession, trade or business under Article 19(1)(g) of the Constitution of India, but under Articles 19(1) (g) of the Constitution of India reasonable restrictions can be imposed on the exercise of the aforesaid right in the larger interest of the public and the twin conditions imposed under para 3 of the Order that the cement must not only conform to the prescribed standard but should also bear the 'ISI' certification mark, are in the interest of general public. 8. It was yet contended by the learned counsel for the petitioner that the licence under the Certification Mark Act was granted to the petitioner company on May 22, 1989 and the application for the same was filed by the petitioner company on July 28, 1987 and therefore, the licence must relate back to July 28, 1987.
8. It was yet contended by the learned counsel for the petitioner that the licence under the Certification Mark Act was granted to the petitioner company on May 22, 1989 and the application for the same was filed by the petitioner company on July 28, 1987 and therefore, the licence must relate back to July 28, 1987. In our opinion, and as has already been said, the twin conditions must be satisfied and the mere grant of licence is not sufficient and the grant of licence under Certification Marks Act only authorises the use of ISI certification mark and the cement could not have been sold unless it bears ISI Certification mark and therefore, the petitioner company cannot derive any advantage out of that apart, it cannot be said that the licence to use ISI certification mark will relate back to the date of the application because unless a licence with a Code Number of ISI certification mark is granted, the cement cannot bear it on its bag and therefore it cannot relate back to the date of application. 9. It was further contended by the petitioner company that providing that the cement must bear 'ISI' certification mark under para 3 of the Order is discriminatory because no such provision is made in respect of other essential commodities. Learned counsel contended that even other law can be examined on the subject to test the reasonableness of law and because for other essential commodities no such provision is made that they must bear ISI certification mark, to that extent para 3 of the Order is discriminatory and violative of Article 14 of the Constitution of India. In support of his contention learned counsel for the petitioner has placed reliance on the case of L.K. Sugar Mills v. Union of-India, AIR 1959 SC 1124 . In the aforesaid case the majority view was that the court in judging the reasonableness of a law will necessarily see not only the surrounding circumstances but all contemporaneous legislation passed as part of a single scheme. The reasonableness of the restriction and not of the law has to be found out and if restriction is under one law but countervailing advantages are created by another law, passed as part of the same legislative plan, the court should not refuse to take that other law into account.
The reasonableness of the restriction and not of the law has to be found out and if restriction is under one law but countervailing advantages are created by another law, passed as part of the same legislative plan, the court should not refuse to take that other law into account. We are of the opinion that this authority has no application to the present case. It will differ from commodity to commodity, which may be essential commodity, whether any quality control is required or not ? and we have already said earlier that the cement is such an item for which quality control is very necessary for the public interest, otherwise there may be public losses. If the cement of cheap quality is manufactured, and stored for sale, multistoried buildings may fall, dams may be of no use and bridge may collapse. Therefore, merely because the quality control has been prescribed and twin conditions in para 3 of the Order have been laid down for the cement it cannot be said that it is discriminatory on the ground that no such condition have been laid down for other articles, which are not the articles of same type of cement. 10. Viewed from any angle, we are of the opinion that para 3 of the Order is a valid piece of legislation and is beyond challenge. 11. Coming to yet another contention of the learned counsel for the petitioner company that there was no mensrea so far as this case is concerned, we can do no better than refer to Section 10-C of the EC Act, which raises a presumption of culpable mental stage. Under sub-section(1) of Section 10 of the EC Act, in any prosecution for any offence under at Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such Mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Under explanation to sub-section(]), 'culpable mental state', includes intention, motive, knowledge of a fact and the belief in or reason to believe, a fact. Therefore, there is initial presumption about the existence of mental state and it will be for such person who may be prosecuted to rebut the same. 12.
Under explanation to sub-section(]), 'culpable mental state', includes intention, motive, knowledge of a fact and the belief in or reason to believe, a fact. Therefore, there is initial presumption about the existence of mental state and it will be for such person who may be prosecuted to rebut the same. 12. It was last contended by the learned counsel for the petitioner that there are no allegations in the FIR that the petitioners Nos.2 to 5 who were the Directors of the petitioner company at the time of alleged contravention of para 3 of the Order was committed, were incharge of and were responsible to the company for the conduct of business of the company as well as the company. Therefore under the deeming provision of sub-section(1) of Section 10 of the EC Act and they cannot be prosecuted or punished. It is also contended that there is no allegation in the FIR that the offence was committed by the petitioner No.1 with the consent or connivance of petitioners Nos.2 to 6. In support of his contention that it is necessary to so allege and if not so alleged in the FIR, the investigation cannot proceed, learned counsel has placed reliance on the case of Municipal Corporation of Delhi v. Ram Kishan Rohtagi and others, (1983) 1 SCC 1 : wherein dealing with a case of deemed provision of Food Adulteration Act, the court said that so far as the manager of the company is concerned, he was prima facie responsible but the same cannot besaid about the Directors of the company and there must be evidence to show that any Act has been committed by the Director on the basis of which he can be made liable. The case is still under investigation. The law is settled that in a complaint case if from the complaint and the statements if any recorded no case is made out the complaint can be quashed and in case of FIR, if from the FIR and the evidence collected during investigation no prima facie case is made out but still cognizance of the offence is taken by the court, then the chargesheet can be quashed.
So far as FIR is concerned it is not the last word for the prosecution and it will depend upon the evidence collected during investigation whether or not and if so to what extent the petitioners Nos.2 to 5 at the time contravention of para 3 of the Order was committed were incharge of and were responsible to the company for the conduct of the business of the company or the contravention was done with the conivance of one or more of them and it is not the stage where the investigation in FIR can be quashed. It may be observed here that earlier also the petitioner company filled a writ petition (No.3496/1989) Kumar Swastik Enterprised Pvt. Ltd. v. Union of India and the same was withdrawn and this court (one of us M.B. Sharma 3.) on August 31, 1989 passed the following order:- "The writ petition is dismissed as withdrawn with liberty to file fresh writ petition. It is, however, observed that any action shall only be taken against the Director/Directors only if their case is filed under section 10 of the Essential Commodities Act, then they could be held vicariously liable." It is therefore expended that even during the investigation, the Investigating Officer will only try to apprehend, if apprehension at all is necessary and if prear rest bail is not granted, such of the Directors or any other person who on the material collected by the Investigating Officer may be prima fade found responsible for the conduct of the business of the company at the time contravention, if any, by the Company was committed. The petitioners or any of them if they apprehend their arrest in the investigation of the case are free to move the competent court for pre-arrest bail, which in a case of present nature, should not be difficult to secure. 13. Consequently, we find no merit in the writ petition. It is hereby dis,missed with no order as to cost.Writ Petition Dismissed. *******