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2008 DIGILAW 516 (PAT)

Dinanath Prasad v. State of Bihar

2008-03-18

body2008
ORDER 1. Heard. 2. The petitioners hold certificates of registration both as a wholesale dealer and as a retail dealer in fertilizer duly granted under the Fertilizer (Control) Order, 1985. By the said impugned order, as contained in Annexure-2, being the order of the District Agriculture Officer-cum-Registering Authority, East Champaran, Motihari their certificates of registration in respect of retail trade have been cancelled. This order of cancellation is solely based on letter no. 3968 dated 26.10.2006 issued by the Director of Agriculture, Bihar, Patna (Annexure1). Equally in issue would be purported notification dated 13th August, 2007 (Annexure-A/1 to the counter affidavit) which is a reiteration of the letter no. 3968 dated 26.10.2006 (Annexure-1) with the exception that the said communications are not to apply to Sugar Mills. The effect of the communications issued by the State is that now no person can do business of selling fertilizer in more than one capacity i.e. he can do business only as a buffer stockist or only as a wholesale dealer or only as a retail dealer. He is now prohibited by law in doing business as a wholesale dealer and a retail dealer in fertilizer. It is the legality and validity of this direction/decision of the State Government which has visited the petitioners with cancellation of their retail registrations that is the question before this Court. 3. In fairness to the learned counsel for the State it may be noted that a preliminary objection has been taken as to the maintainability of the writ petition on the ground that the impugned order Annexure-2 is an order of cancellation of registration against which a statutory appeal is provided and the petitioners not having exhausted alternative remedy, the writ petition should not be entertained. In my view, this submission is to be noted only to be rejected. The Registering Authority has not acted on his own and it is not a matter of contravention which requires factual investigation that the registration has been cancelled. He has solely acted on the basis of the directions of the State Government and the validity of those directions is, in question. No authority that is either the Registering Authority or the Appellate Authority has the jurisdiction to deal with this question. He has solely acted on the basis of the directions of the State Government and the validity of those directions is, in question. No authority that is either the Registering Authority or the Appellate Authority has the jurisdiction to deal with this question. The challenge is that the direction is wholly ultra vires the provisions of the Fertilizer (Control) Order, 1985 and is an unreasonable restriction on trade within the meaning of Article 19(1)(g) of the Constitution and is otherwise arbitrary and discriminatory being violative of Article 14 of the Constitution and thus ultra vires the Constitution. These contentions cannot be dealt with much less entertain by statutory authority. In that view of the matter, the writ petition is maintainable for the relief sought for in the writ petition. 4. In order to appreciate the submissions it is necessary to notice the provisions of the Fertilizer (Control) Order, 1985 (hereinafter referred to as the "FCO"). The FCO is an order issued by the Central Government in exercise of powers conferred on it by Section 3 of the Essential Commodities Act, 1955, apart from other thing this order regulates by registration of dealer of fertilizer. Clause 2(f) defines a dealer: "dealer" means a person carrying on the business of selling fertilizers, whether wholesale or retail (or industrial use), and includes a manufacturer and a pool handling agency carrying on such business and the agents of such person, manufacturer (importer) or pool handling agency." 5. Clauses 2(P) and 2(W) define retail dealer and wholesale dealer. Clause 2(ii) defines an industrial dealer. 6. From the definition as given aforesaid under the FCO. It would be seen that basically there are three types of dealers contemplated under the FCO that is an industrial dealer, a wholesale dealer and a retail dealer and each is an exclusive category in itself. The difference is the nature of their sell. An Industrial dealer sells fertilizer only from industrial purposes which is as defined by Clause 2(iii) a wholesale dealer sells fertilizer only to a retail dealer whereas a retail dealer sells fertilizer only to an agriculturist. Clause (7) of the FCO has been substituted by a new Clause (7) by the Fertilizer (Control) Amendment Order, 2003 and reads as follows : "7. Clause (7) of the FCO has been substituted by a new Clause (7) by the Fertilizer (Control) Amendment Order, 2003 and reads as follows : "7. Registration of Industrial dealers and authorisation of other dealers-No person shall sell, offer for sale or carry on the business of selling of fertilizer at any place as wholesale dealer or retail dealer except under and in accordance with Clause 8: Provided that a State Government may, if it considers it necessary or expedient, by notification in the official Gazette, exempt from the provisions of this Clause any person selling fertilizer to farmers in such areas and subject to such conditions as may be specified in that notification." 7. Clause 7 provides that no person either as a wholesale dealer or a retail dealer shall carry on business of selling of fertilizer at any place except under and in accordance with Clause 8. Proviso thereof grants authority on the State Government to exempt a class of persons from such obligation. Clause 8 provides for intimation or registration of a person carrying on business of selling fertilizer at any place. Clause 8 reads as: "8. Proviso thereof grants authority on the State Government to exempt a class of persons from such obligation. Clause 8 provides for intimation or registration of a person carrying on business of selling fertilizer at any place. Clause 8 reads as: "8. Application for intimation or registration:- (1) Every person intending to sell or offer for sale or carrying on the business of selling of fertilizer as industrial dealer shall obtain a certificate of registration from the Controller by making an application in Form A together with the fee prescribed under clause 36 and a certificate of source in Form O. (2) Every person including a manufacturer, an importer, a pool handling agency, wholesaler and a retail dealer intending to sell or offer for sale or carrying on the business of selling of fertilizer shall make a Memorandum of Intimation to the Notified Authority, in Form A1 duly filled in, in duplicate, together with the fee prescribed under Clause 36 and certificate of source in Form O. (3) On receipt of a Memorandum of Intimation, complete in all respects the notified authority shall issue an acknowledgment of receipt in Form A-2 and it shall be deemed to be an authorisation letter granted and the concerned person as authorised dealer for the purposes of this order: Provided that a certificate of registration granted before the commencement of the Fertilizer (Control) Amendment Order, 2003 shall be deemed to be an authorization letter granted under the provisions of this order: Provided further that where the applicant is a State Government, a manufacturer or an importer or a poll handling agency, it shall not be necessary for it or him to submit Form O: Provided also that a separate memorandum of intimation shall be submitted by an applicant for wholesale or retail dealership, as the case may be: Provided also that where fertilizers are obtained for sale from different sources a certificate of source from each such source shall be furnished in Form O." 8. A reference to Clause 8 would show that Clause 8 provides for registration of industrial dealer but when it comes to a wholesale or a retail dealer all that is required is that the wholesale or a retail dealer has to make statutory application complying with the conditions therein as prescribed in Form A-1. A reference to Clause 8 would show that Clause 8 provides for registration of industrial dealer but when it comes to a wholesale or a retail dealer all that is required is that the wholesale or a retail dealer has to make statutory application complying with the conditions therein as prescribed in Form A-1. Once such an application complying with statutory provisions are made, the same are to be acknowledged by the notified authority (the Registering Authority/Licensing Authority) in Form A-2. The moment acknowledgment is issued in Form A-2. The person becomes a person authorized to deal with fertilizer either in wholesale or in retail. The FCO does not give any discretion in the matter provided the statutory compliances are made. This is very much different from the general licensing provisions where grant of licence is based on subjective satisfaction on objective considerations. 9. In the present case, there is nothing like that and the authorization to deal is an automatically operating statutory right but there is a Proviso which is the third proviso out of the four Provisos to Clause 8. This Proviso only indicates that separate memorandum of intimation shall be submitted by an applicant for wholesale business or retail dealership, as the case may be. This Proviso is of significant value. Reading this Proviso it would clearly be apparent that FCO itself contemplates that the same person can do business as a wholesaler and a retailer, the only restriction being he has to make separate application and get separate authorization. If the intention of the Central Government was to restrict the authorization to anyone type of the trade then instead of such a Proviso there would have been a Proviso clearly authorizing or pointing out that no person could have more than one intimation/authorization of any nature. This is not so. 10. The question thus is if FCO does not prohibit a dealership vesting in person both wholesale and retail rather recognizing the same in the same very person, can the State arrogate to itself the authority to do otherwise. 11. It is rightly submitted by Mr. N.K. Agrawal, learned senior counsel-appearing in support of the writ petition that Proviso to Clause (7) permits the State Government to grant exemption but no provision of the FCO permits the State Government to put restriction on the right to trade. 11. It is rightly submitted by Mr. N.K. Agrawal, learned senior counsel-appearing in support of the writ petition that Proviso to Clause (7) permits the State Government to grant exemption but no provision of the FCO permits the State Government to put restriction on the right to trade. That right has been conferred by Section 3 of the E.C. Act on the Central Government and pursuant thereto Central Government has made, issued and then enforced FCO. 12. In my view, Mr. Agrawal is correct in submitting that if the law has not conferred any authority on the State to impose such restriction then State cannot issue direction as contained in Annexure 1 which is merely executive fiat. It is well established that by mere executive fiat no restriction on fundamental right can be put in terms of Article 13 of the Constitution of India. Fundamental rights can be restricted by law and law means law made by the legislature or under the authority of legislature. Executive instructions cannot take place of law for the said purpose. Thus, being the position, Annexure-1 being merely an executive fiat unauthorized by law would automatically be arbitrary qua Article 14 and unreasonable restriction qua Article 19(1)(g) of the Constitution, the same cannot be sustained and is quashed as unconstitutional. 13. Coming to Annexure A/1 to the counter affidavit of this case, it would be seen that the said decision of the State has been sent to be notified in the Gazette. It appears that this has been done keeping in view of the provisions of Section 3(5) of the Essential Commodities Act. This exercise would have been valid if FCO permitted the State to take such an exercise. Proviso to Clause 7 of the FCO grants power to the State to exempt from the provisions of the certain types of dealer from the obligation under Clause 8. This is a power to exempt and not power to restrict. The two are contradictions. Power to exempt means power to releave of onerous conditions. What power State has exercised is not to releave onerous condition under the FCO but to restrict the right as granted under the FCO thereby virtually amending the FCO itself. This power State surely does not have much less without such a specific power in relation to FCO being delegated to it by the Central Government or the legislature. What power State has exercised is not to releave onerous condition under the FCO but to restrict the right as granted under the FCO thereby virtually amending the FCO itself. This power State surely does not have much less without such a specific power in relation to FCO being delegated to it by the Central Government or the legislature. No such power has been delegated. Thus even Annexure A/1 is not constitutionally valid and is thus quashed. 14. Even assuming that the object for which such a decision is taken is laudable that by itself cannot confer authority on the State to take such a decision for which they are not competent. All illegal activities have to be checked by lawful means and not otherwise. 15. Thus, having found both Annexures 1 and A/1 to be unconstitutional and even otherwise invalid, the very basis on which the impugned order canceling the intimation granted to the petitioners in respect of retail trade in fertilizer as they held intimations in respect of wholesale trade as well, cannot be sustained. The impugned order, as contained in Annexure-2, thus looses its very sole foundation and must fall with Annexure1 and Annexure-A/1. The result is that Annexures-1, 2 and A/1 all are liable to be quashed and are quashed as such. The consequence thereof would be that in law and in fact their retail dealings would not be adversely affected in any manner and would continue as such. 16. The writ petition thus stands allowed.