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Andhra High Court · body

2016 DIGILAW 739 (AP)

Kalangi Nageswara Rao v. State of Andhra Pradesh, Agriculture and Co-operation Department, Rep. by its Principal Secretary, Secretariat

2016-12-29

A.RAMALINGESWARA RAO

body2016
ORDER : 1. Heard learned Counsel for Petitioners and learned Government Pleader. 2. The point involved in this batch of cases is the legality of the restraint imposed on the petitioners by the fourth respondent – Joint Director of Agriculture, the Notified Authority, with regard to the area of sale to be operated by the petitioners after obtaining necessary acknowledgement in Form A2 under Clause 8(3) of the Fertiliser (Control) Order, 1985 (for short, the Control Order). 3. All the petitioners are wholesale dealers dealing with fertilizers under a licence issued under the above Control Order. 4. They sell the fertilizers through out the State. It is their case that by misinterpreting G.O.Ms.No.297, Agriculture & Cooperation (FP.II) Department, dated 08.12.2011, they are restrained from selling the fertilizers outside their respective districts. 5. The sale of fertilizers is governed by the said Control Order. The said Control Order was made in exercise of the powers conferred on the Central Government under Section 3 of the Essential Commodities Act, 1955. Clause 3 of the Control Order deals with fixation of prices of fertilizers and it prohibits sale of fertilizers at a price exceeding the maximum price fixed under the said Clause. The display of stock position and price list of fertilizers is provided in Clause 4. Clause 5 deals with sale of fertilizers in cash or credit and Form-M was prescribed. Chapter III containing the lone Clause 6 deals with distribution of fertilizers by manufacturer or importer. Chapter IV deals with authorization or registration of dealers. Clause 7 under the said Chapter states that no person shall sell, offer for sale or carry on the business of selling of fertilizer at any place as a wholesale dealer or retail dealer except under and in accordance with Clause 8. Clause 8 provides for furnishing Memorandum of Intimation (MOI) 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. On receipt of such Memorandum of Intimation, complete in all respects, the Notified Authority shall issue an acknowledgement in Form A2. The said acknowledgement shall be deemed to be an authorization letter granted to the concerned person as authorised dealer. In respect of wholesale business or retail dealership, separate Memorandum of Intimation shall be submitted. The said acknowledgement shall be deemed to be an authorization letter granted to the concerned person as authorised dealer. In respect of wholesale business or retail dealership, separate Memorandum of Intimation shall be submitted. If the fertilizers are obtained for sale from different sources, a certificate of source from each such source shall be furnished in Form O. A wholesale dealer shall issue a certificate of source only to a retail dealer, but not to another wholesale dealer. Clause 9 states that the Controller shall grant a certificate of registration in Form-B within thirty days of the receipt of application to any person who applies for it under Clause 8. The said certificate of registration can be denied, among other things, if he fails to enclose with the application a certificate of source or if the application is incomplete in any respect. Clause 10 provides that the certificate of authorization would be valid for a period of three years from the date of issue. Clause 11 provides for its renewal. Chapter VI deals with restrictions on manufacture, import, sale etc., of fertilizers. It does not impose any area restrictions. Clause 25 states that the fertilizers shall not be sold for purposes other than fertilization of soils and increasing productivity of crops. Chapter VII deals with enforcement authorities and Chapter VIII deals with analysis of samples. Clause 31 deals with suspension, cancellation or debarment and Clauses 32 and 32A provide for appeals to the Central Government and appeal to the State Government respectively. Clause 35 provides for maintenance of records and submission of returns etc. No where in the Control Order one finds a provision restricting the area of operation of sale. 6. Form A1 in Schedule IV, which is a prescribed Memorandum of Intimation, requires the details of place of business for sale and for storage. The terms and conditions of authorization specify that the dealer shall file a separate Memorandum of Intimation where the storage point is located outside the area jurisdiction of the Notified Authority where the sale depot is located. The dealer is also obligated to file a separate MOI for each place when the business of selling fertilizers is intended to be carried on at more than one place. A separate MOI has to be filed if the business of fertilizers involves both retail and wholesale. 7. The dealer is also obligated to file a separate MOI for each place when the business of selling fertilizers is intended to be carried on at more than one place. A separate MOI has to be filed if the business of fertilizers involves both retail and wholesale. 7. Similarly, the terms and conditions contained in Form B of Certificate of Registration to carry on the business of selling fertilizers as a dealer does not contain any restriction. The Certificate of Registration is granted to carry on the business of selling fertilizers in retail/wholesale at the place specified therein in a particular State subject to the terms and conditions specified therein. The terms and conditions do not contain any restriction, but states that the holder of certificate, shall, from time to time, report to the registering authority the change in the premises of sale depot and godowns attached to the sale depot. It also enjoins upon the dealer to submit stock details by the 5th of every month to the Block Development Officer or such other officer as the State Government may notify. The note appended to the said certificate states that where the business of selling fertilizers is intended to be carried on at more than one place, a separate registration certificate should be obtained in respect of each such place. If the dealer wants to conduct retail as well as wholesale business, separate written statement is required. The certificate of registration contains the description of the place and the type of business including location of sale depot and location of godowns attached to the sale depot. Thus, the MOI and Certificate of Registration contain the details of places of sale and godowns. Neither in the clauses of the Control Order or in the form prescribed, one finds restrictions on the area of operation of sale, unless the place of sale itself changes. 8. Learned Counsel for the petitioners submitted that in G.O.Ms.No.288, Agriculture & Cooperation (FP.III) Department, dated 15.12.2009, appointments were made in exercise of the powers conferred by Clause 26A of the Fertiliser (Control) Order 1985, appointing the Notified Authority for the purpose of issuing authorization letter. The Additional Director of Agriculture was designated as the Notified Authority for the purpose of issuing authorization letter to the wholesale dealer and others, in respect of more than one district in the entire State. The Additional Director of Agriculture was designated as the Notified Authority for the purpose of issuing authorization letter to the wholesale dealer and others, in respect of more than one district in the entire State. The District Joint Director of Agriculture was designated as the Notified Authority for the purpose of issuing authorization in their respective districts. The Assistant Directors (Regular) were designated as Notified Authorities for the purpose of issuing authorization letters in their respective jurisdiction. Thus, three separate authorities were notified for three different areas. Later on, G.O.Ms.No.297, Agriculture & Cooperation (FP.II) Department, dated 08.12.2011, was issued amending para 1 of the earlier Government Order, by substituting a new para, whereunder the wholesale dealer was omitted. As a result of such amendment, there is no Notified Authority for issuing the authorization letter to the wholesale dealer operating in more than one District in the entire State. Learned Counsel submitted that by virtue of the said amendment, in the absence of a Notified Authority for issuing letter of authorization for the wholesale dealers carrying on their business in more than one District in the entire State, it is being interpreted that the letter of authorization issued in respect of a wholesale dealer in a particular District should sell the product within the said District and not outside. There is no single Notified Authority who can issue letter of authorization for the wholesale dealers conducting their business in more than one district. Though a point of sale is located in one district and a dealer obtains the requisite letter of authorization, in the absence of any prohibition from conducting sale in more than one District, the said letter of authorization issued by a Notified Authority in a particular district is being construed as a restriction on the sale of fertilizers in more than one district. 9. A perusal of the terms and conditions of the Memorandum of Intimation and the Certificate of Registration clearly show that if there are different places of sale, the wholesale dealer has to file a separate Memorandum of Intimation. Probably, the amendment to Government Order was made in consonance with the said requirement, as there cannot be a condition in the authorization letter restricting the area of sale. Probably, the amendment to Government Order was made in consonance with the said requirement, as there cannot be a condition in the authorization letter restricting the area of sale. However, the point remains that if a wholesale dealer who is having a place of sale either in one district or more than one district can be prevented from selling the fertilizers within the territorial jurisdiction of the State. As stated above, no such specific restriction would be found in the clauses of Control order. But, the learned Government Pleader relied on a decision of this Court in Fertiliser Wholesale Dealers Welfare Association, Vijayawada vs. Government of A.P. 2010 (1) ALD 488 and submitted that an identical plea was negatived by the learned single Judge of this Court in the said decision. A perusal of the said decision shows that what was decided in the said case is the validity of insistence on submission of a separate intimation through different Notified Authorities in respect of each storage point and consequential validity of Clause (5) of the terms and conditions of Form A-1. The said insistence was found to be valid and there is no dispute that the present petitioners are complying with the said requirement, but what is contested in the present batch of cases is the restriction on the area of operation of sale involving more than one district, even though the place of sale is located in one district. 10. Learned Counsel for the petitioners brought to the notice of this Court an order of the learned single judge passed at the interlocutory stage, when the acknowledgement of the Memorandum of Intimation in Form A2 restricting it to “selling of fertilizers as a wholesale(r) within district” by the Joint Director of Agriculture, Ranga Reddy District was challenged in W.P. No. 6945 of 2012. The order passed on 28.03.2012 reads as follows: “It is contended by the learned Government Pleader that the web based fertilizer monitoring system and Clause 3-A and 3-B of the Fertilizer (Movement Control) Order, 1973 clearly envisage preparation of supply plans of all fertilizers and the same is to achieve and sub-serve the larger interests of the farming community. It is therefore submitted that the writ petitioner cannot carry on the sale of business beyond the territorial limits of the Notified Authority. It is therefore submitted that the writ petitioner cannot carry on the sale of business beyond the territorial limits of the Notified Authority. Undoubtedly, laudable are the objectives of the scheme framed by the State Government in consultation with the Central Government. But, as was already noticed supra, sale of fertilizers is a regulated business activity. Like any other provision contained in any other regulatory legislation, the clauses of the Control Order are liable to be construed strictly. Clause 26-A of the Control Order undoubtedly empowers the State to appoint and notify various authorities to function as Notified Authorities. Since Clause 8(3) introduces a legal fiction of grant of license in the form of an acknowledgement in Form A-2, it requires limits of exercise of power to be delineated. When more than one authority is notified for according the acknowledgement in Form A-2, it is but necessary to delineate the territorial limits for exercising the said power by each of the Notified Authority. Illustratively put, if a person wants to carry on the business of sale of fertilizers as a wholesaler or retailer, let us say, at Pochampalli in Nalgonda district, he can only apply in Form A-1 to the Notified Authority available in Nalgonda District, he cannot apply to the Notified Authority of the neighbouring Ranga Reddy District. Delineation of the territorial limits for exercise of powers by the respective notified authorities is one aspect of the matter; whereas limiting the power to sell fertilizers to a customer coming from across the local limits of the District is a different matter. When Clauses 8(2) and 8(3) are read with Forms A-1 and A-2 what emerges is, a license is required to be obtained for carrying on sale of fertilizers at a specified place or location. So long as the licensees carries on business at the same premises or location, no further objection can be raised with regard to the sale of fertilizers by such a licensee in favour of a person who was hailing from outside the local limits of the Notified Authority. To my mind, the power conferred upon the Notified Authorities is limited only to deal with receipt and grant of acknowledgements in Forms A-1 and A-2 respectively. Thereafter, it has no power to restrict the sale of fertilizers in favour of a customer who hails from outside their territorial limits. To my mind, the power conferred upon the Notified Authorities is limited only to deal with receipt and grant of acknowledgements in Forms A-1 and A-2 respectively. Thereafter, it has no power to restrict the sale of fertilizers in favour of a customer who hails from outside their territorial limits. Forms A-1 and A- 2 are integral part of Clauses 8(2) and 8(3) respectively of the Control Order, framed by the Central Government. The Control Order never did contain the caption “Selling of fertilizers as a wholesaler within the District.” Such a caption was subscribed not even by the State Government in terms of Clause 26-A of the Control Order. Clearly, there is no sanction of law to do so. There can be variety of reasons why a customer might prefer to buy a particular commodity from a particular dealer. In a commercial enterprise, there can be many attractive features including the quality assurance and credit worthiness of the customer. Hence, the introduction of caption “Selling of fertilizers as a wholesale(r) within the District” in Form A-2 is clearly an unsustainable one; even State Government has no such authority. Hence, a strong case is made out for grant of injunction as prayed for by the petitioner.” 11. It is stated that a Writ Appeal was preferred against the said interim order and the same was disposed of. Though the above opinion of the learned single Judge was while disposing of the interlocutory application in the main Writ Petition, the views expressed by the learned single Judge can be taken as the opinion of the learned Judge since it was passed after hearing both sides. However, it appears that the said Writ Petition is still pending. 12. In the instant batch of cases, the same argument was advanced by the learned Government Pleader and in the absence of any restriction in the clauses of the Control Order, this court is of the opinion that the Government cannot impose any restriction either by Government Order or circulars. 13. In view of the above, all the Writ Petitions are allowed by declaring that the petitioners, who are wholesale dealers in fertilizers and obtained acknowledgement and Certificate of Registration by showing their respective places of sale and storage, are entitled to sell their product outside their districts also, but within the territorial jurisdiction of the concerned State. 13. In view of the above, all the Writ Petitions are allowed by declaring that the petitioners, who are wholesale dealers in fertilizers and obtained acknowledgement and Certificate of Registration by showing their respective places of sale and storage, are entitled to sell their product outside their districts also, but within the territorial jurisdiction of the concerned State. The miscellaneous petitions pending in these Writ Petitions, if any, shall stand closed. There shall be no order as to costs.