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1995 DIGILAW 340 (DEL)

BALRAJ NARINDER KUMAR v. UNION OF INDIA

1995-04-20

D.P.WADHWA, M.K.SHARMA

body1995
D. P. WADHWA ( 1 ) THE petitioners numbering 47, who are dealers of fertilizers, have filed this petition under Article 226 of the Constitution seeking to quash the notification dated 9 June 1994 issued by the Government of India in the Ministry of Agriculture under Sub-clause (1) of clause 3 of the Fertilizer (Control) Order, 1985, whereby the Central Government fixed w. e. f. 10 June 1994 maximum price per tonne at which three fertilizers specified in the notification shall be sold by the dealers but at the same time the notification made it clear that stock of these three categories of fertilizers held by the dealers before and after the coming into force of the notification shall be sold at the old rates fixed under the notification dated 25 August 1992. It is this latter part of the notification dated 9 June 1994 with which the petitioners are aggrieved. The three fertilizers mentioned in the notification are (1) Urea (46% N), (2) Anhydrone Ammonia, and (3) Zincated Urea. ( 2 ) THE fertilizer being an essential commodity the Fertiliser Control Order, 1985 (for short the Order ) has been promulgated under the provisions of the Essential Commodities Act, 1955 (for short the Act ). The impugned notification has been issued in pursuance to sub-clause (1) of clause 3 of the Order. Petitioners admit that cost of manufacture of fertilizers is much more than the sale price and, thus, it is not remunerative for the manufacturers to manufacture fertilizers and sell the same at reduced prices governed by the Order. Respondent No. 1, therefore, framed a scheme under which it was decided to compensate the manufacturers in the form of subsidy for having to sell fertilizers at control prices which were lower than the actual cost of manufacture of the fertilizers. It is stated that this agreement was outside the purview of the Order. Respondent No. 1, therefore, framed a scheme under which it was decided to compensate the manufacturers in the form of subsidy for having to sell fertilizers at control prices which were lower than the actual cost of manufacture of the fertilizers. It is stated that this agreement was outside the purview of the Order. Petitioners then say that in past there has been number of occasions when the prices of fertilizers had been substantially decreased but the dealers like the petitioners who had purchased such fertilizers at increased rates had to sell the same at the controlled prices which were lower than the procurement prices and that in such cases no compensation was paid to the dealers for selling the fertilizers at the decreased rates except that in the year 1992 Union of India had framed a scheme to reimburse the loss suffered by the dealers. Petitioners then state that the Union of India revised the retail prices of fertilizers w. e. f. 24 July 1991 when the Union of India had decided that the fertilizer being sold by the dealers which was in stock as on the date of the notification, the difference between the old price and the new price shall be paid by the dealers to the Government. Another notification was issued by the Union of India on 14 August 1991 revising the prices of fertilizers and in that notification it was stipulated that the stocks held by the dealers as on the date of the notification shall be sold at the old prices wherever there was an increase in prices. Then on 25 August 1992 Union of India decided to de-control certain fertilizers. It was also decided that dealers who were having stocks of fertilizers as on the date of the notification were to sell such fertilizers at the controlled rates. It is stated that this decision was not under the Order and that such a decision of the Union of India resulted in fertilizer being sold in the market at two different rates without there being any policy for distribution of the fertilizers at the old rates which was discriminatory between the consumers of the fertilizers. Petitioners say this led to filing of a writ petition in this Court (CWP No. 3564/92) in which rule was issued on 4 May 1994 and that petition is still pending final disposal. Petitioners say this led to filing of a writ petition in this Court (CWP No. 3564/92) in which rule was issued on 4 May 1994 and that petition is still pending final disposal. Reference was made to counter-affidavit filed by the Union of India in that writ petition wherein it was stated that the Union of India admitted that there was no provision for any compensation towards loss, if any, sustained by the retail dealers, wholesalers/manufacturers in respect of the stocks despatched from the factory or sold by the traders from the date of the imposition of the price control. On this an argument has been raised that when the fertilizers are brought under control, if any loss occurred on that account the same was to be borne by the dealers and, therefore, for any increase in any price any profit is earned by the dealer that would also be allowed to be in his account. It is argued that such advantageous gains/ losses are to be treated to be the part of the business activities of the dealers. It is submitted that in the present case on account of the impugned notification the petitioners are likely to gain some profit. It is complained that this profit has been denied to them on account of illegal, arbitrary and ultra vires decision of the Union of India to sell fertilizers at the old rates. It is stated that the action of the Union of India is violative of Article 14 of the Constitution. Reference has been made to some decision of the Union of India in the case of LPG dealers wherein it is stated that those dealers were allowed to take advantage of increase in prices as and when prices were increased with regard to the stock existing with such dealers on the date of increase in prices. ( 3 ) WE do not think we are concerned with the decision of the Union of India in the case of LPG dealers or to any other decision in the earlier notifications relating to the fertilizers. The impugned notification is not ambiguous and we have to see its effect as it stands, as to whether in a case like this we should exercise our extraordinary jurisdiction to support the case of the petitioners. The impugned notification is not ambiguous and we have to see its effect as it stands, as to whether in a case like this we should exercise our extraordinary jurisdiction to support the case of the petitioners. The petitioners admittedly have procured fertilizers from the manufacturers at subsidised rates as the manufactures had been paid from the public revenue to compensate them for the loss suffered by them in selling the fertilizers at reduced rates under the Order as cost of manufacturers was much more than the selling price fixed underthe Order. The petitioners now want to make profit by selling that very stock at a higher price when the impugned notification directs them to sell the same at controlled price as per earlier notification which stock had been procured by the dealers at subsidised rates. This Court cannot come to the aid of such dealers to have unconscionable profit at the cost of the public revenue and also which would be disadvantageous to the ultimate consumers, the cultivators. It will be useful to quote the following observations of the Supreme Court in M/s. Ram Chandra Mawa Lal, Varanasi and others v. State of Uttar Pradesh and others, AIR 1987 Supreme Court 1837 :- The Constitution which promises a socialistic pattern of Society in the preamble and traces of contours of the socialistic philosophy which permeates the spirit of the Constitution can neither command nor commend the exercise of the Constitutional Jurisdiction to issue high prerogative writs under Art. 32,226 or 227, in order not to remove injustice, but to do injustice, in order not to prevent exploitation of the poor by the rich, but to permit such exploitation. And yet the constitutional jurisdiction of the Court (as polarized from its error jurisdiction ) has been invoked in order to use the hand of the Court for transferring money from the pockets of poor cultivators (who feed the Nation) to the pockets of the dealers in fertilizers (who feed themselves) by challenging a notification on technical grounds. Such jurisdiction is invoked to enable the dealers to reap a rich harvest of unjust enrichment through the instrumentality of the Court at the cost and expense of the cultivators. We firmly believe that the Court exercising constitutional jurisdiction is not obliged to grant a writ in such circumstances. Such jurisdiction is invoked to enable the dealers to reap a rich harvest of unjust enrichment through the instrumentality of the Court at the cost and expense of the cultivators. We firmly believe that the Court exercising constitutional jurisdiction is not obliged to grant a writ in such circumstances. But we need not elaborate on the theme furthermore as the High Court has rejected the petition on merits and as we are of the same opinion. " ( 4 ) WE do not find anything wrong in the notification requiring the petitioners to sell the old stock at the old rates. It hurts judicial conscience to take note of any argument addressed by the petitioners to contend that the impugned order is in any way wrong. Respondents have stated in their counter-affidavit that as many as 63 dealers of fertilizers filed writ petition in the Punjab and Haryana High Court raising similar issues though relating to an earlier notification issued under the Order which was dismissed by judgment dated September 4,1991. It was, therefore, contended by the respondents that the petitioners knowing fully well the view taken by the Punjab and Haryana High Court have come to this Court and that this amounted to abuse of the process of the court. True this Court would have jurisdiction in the matter inasmuch as the impugned notification has been issued by the Union of India from Delhi, but then we are not bound to exercise our jurisdiction under Article 226 ofthe Constitution. Then we find the petitioners could have invoked the jurisdiction of the Punjab and Haryana High Court. Nevertheless, we are in agreement with the view taken by the Punjab and Haryana High Court. We have not been referred to any judgment wherein similar issue might have arisen. We are, however, of the firm view that if we allow the petition we will be conferring unconscionable benefit on the petitioners to which they are certainly not entitled to. We may, however, refer to one decision of the Supreme Court in A. Venkata Subbbarao and others v. The State of Andhra Pradesh, etc. (AIR 1965 Supreme Court 1773 = 1965 (2) SCR 577 ). This judgment was referred to by Mr. Vikas Singh, learned counsel for the petitioners, to say that the petitioners were not the agents of the Central Government. That is not the issue before us. (AIR 1965 Supreme Court 1773 = 1965 (2) SCR 577 ). This judgment was referred to by Mr. Vikas Singh, learned counsel for the petitioners, to say that the petitioners were not the agents of the Central Government. That is not the issue before us. In this case, under the provisions of the Essential Supplies (Temporary Powers) Act, 1946, the State Government had passed various orders for the procurement and distribution of rice which could be procured only by the Government or by the procuring agents appointed by it and rice stock then disposed of according to the orders of the Government. Under these orders licensed wholesalers and retailers were also appointed. The appellants were procuring agents and wholesalers under that system. They entered into various agreements with the Government for the purpose and their duty was to procure rice from specified areas at prices specified by the Government from time to time and to deliver it at prices so specified, to the Government or to persons nominated by it or to other licensed purchasers. The procurement price was in each case lower than the selling price and the procuring agents were under the contrast entitled to the difference between the two prices. Under subsequent order the Government specified the prices which were on increase. On the date of the order each appellant had lying with him in stock certain quantity of rice which had been procured by them earlier at the then prevailing earlier purchase price and the appellants had, therefore, to sell the rice at new increased price and hence became automatically entitled to a larger sum than they were before the increase. The enhancement of the procuring agents profit was entirely due to the Government action in increasing the prices and the Government thought that they were not entitled to it and insisted that the excess sums should be paid to it by them. The appellants paid the money to the Government under protest and then filed suits against the Government for recovery of the money so paid. The appellants paid the money to the Government under protest and then filed suits against the Government for recovery of the money so paid. It is stated that the Government employed various methods for realising these excess amounts from the appellants : (1) in some cases the procuring agents were threatened with cancellation of their licences; (2) in other cases excess amounts were deducted from moneys payable by the Government to them for the rice supplied to them; and (3) yet another method was to requisition the stock of rice lying with the procuring agents on the day immediately preceding the coming into force of the increased price at the rate then obtaining and thereafter releasing such rice to the procuring agents only upon their paying the surcharge (excess amount) or on their executing an agreement to pay the same. There was no doubt that the extra profit which came into the hands of the appellants had not come to them by reason of any merit of their own, but had come into existence only because the exigencies of the circumstances prevailing had compelled the Government to increase the price. The court by majority, however, held that there was no legal basis for the demands made by the Government and that it was not possible to characterise them as anything else than as taxes and that these were imposed compulsorily by the executive and were sought to be collected by the State by the exercise inter alia of coercive statutory powers. Sarkar, J. in his dissenting judgment, however, held that there cannot be any objection to the third method employed by the Government. He held as under:- "if the procedure was legal, as I think it was, it could not have resulted in an illegal levy. I would, therefore, hold that where as a result of the requisition and release the Government had obtained moneys from the appellants the realisation had been legal and did not amount to unauthorised levy of tax and the appellants are not entitled to recover them from the Government. For the same reason where in respect of such requisition and release the appellants had not paid money directly, but had entered into engagements to pay moneys, those engagements would be legal and enforceable. For the same reason where in respect of such requisition and release the appellants had not paid money directly, but had entered into engagements to pay moneys, those engagements would be legal and enforceable. "this case is, however, quite distinguishable as in the present case before us the notification has been made under the provisions of the Fertilizer (Control) Order, 1985, framed under the provisions of the Essential Commodities Act, 1955, which is beyond challenge. Moreover, the benefit of subsidy, which has been availed by the manufacturers and the petitioners having procured the fertilizers at subsidised rates, is intended for the ultimate consumer, i. e. . the farmer. The benefit of subsidy must accrue to the ultimate consumers and not to the dealers, the petitioners herein. In these circumstances also we will not exercise our jurisdiction under Article 226 of the Constitution. This petition has no merit. It is dismissed with costs. Each of the petitioners shall pay Rs. 500. 00 as costs payable to Indian Council of Legal Aid and Advice, Chamber No. 3, Lawyers Chambers, Delhi High Court, New Delhi.