Posted On by &filed under Gujarat High Court, High Court.


Gujarat High Court
Satish Maganlal Vora Managing … vs Union Of India (Uoi) on 25 August, 2000
Author: M Calla
Bench: M Calla


JUDGMENT

M.R. Calla, J.

1. The petitioner herein claims to be a qualified Chemical Engineer and it is his case that by mixing Hydrocarbon liquid, like Naphtha, Methyl Alcohol and additives (trade secret), he had invented a product having brand name or trade name as “Patrex” way back in the year 1991 with the objective of evaluation of Fuel Economy and driveability benefits and that cost of this product was cheaper by Rs.1.50/- than average market price of Gasoline. According to the petitioner, this product Gasoline Substitute Fuel named “Patrex” was subjected to tests by the Petroleum Conservation Research Association (PCRA), New Delhi in January 1992. A copy of the evaluation report as given by the PCRA has been annexed with the petition as Exh. A at page 21. This report at item no.4 shows that the test was set up by way of Laboratory Trial on Maruti 800 CC Car on Chassis dynamometer and also the Field Trial on Maruti 800 CC Car. The results at item no.6 show that this product, “Patrex” gives an average of 17.47 km. per ltr. as against the average of Gasoline at 19.08 km. per ltr. indicating a drop of 8.44% in fuel efficiency. During the field trial of this product, “Patrex”, it has been observed that there was acute problem of vapour locking, hot startability and idle performance was extremely poor, irregular acceleration and that the product gave high Residue on Evaporation (ROE Value-6) and against the requirement of 4 Max. as per IS:2796 and it also gave high value of potential gums and have mixture of lighter components (92%) of the product distilled between 46-70 degree C. It is also the case of the petitioner that this product, “Patrex” was also subjected to test by Bharat Petroleum Corporation Ltd. (BPCL) and a copy of the test certificate has been enclosed with the petition as Exh. B at page 22. This test certificate at Exh. B dated 13th May 1994 certifies at the bottom that, “PRODUCT MEETS IS: 2796 SPECIFICATION except in Colour”. This test certificate has been signed by the Senior Quality Assurance Manager of BPCL. The petitioner has also placed on record a copy of the letter dated 28th June 1994 sent by the BPCL to the Editor of ‘The Times of India’ with reference to a press report which was published in ‘The Times of India’ dated 24th June 1994 with a caption, “Substitute for Petrol developed”. It has been mentioned in this letter that this report gives an impression that as per the certificate issued by the BPCL, “Patrex” could be used as a substitute for Petrol (Motor Spirit). In this letter, the BPCL has admitted the fact that samples of “Patrex”, as provided by M/s.Patrex Fuels India Ltd. were tested by BPCL and the test results forwarded to them, but it could not be construed as a certificate issued by BPCL for use of “Patrex” as a substitute for Motor Spirit, Certification of a new product as a substitute for an existing one like Motor Spirit is a very elaborate process involving extensive tests and trials and can be undertaken only by organisations like the Petroleum Conservation Research Association or the Indian Institute of Petroleum. In the end, a request has been made to the Editor of ‘The Times of India’ that, “in the interest of customers using Motor Spirit, please publish this clarification in your esteemed newspaper as prominently as the original Press Report.”

2. The petitioner’s case is that while his product has withstood the test by PCRA and BPCL, including the certificate that this product meets IS:2796 specification except in colour, the petitioner has his Factory for this product, situated at Plot No.2111, GIDC Area, Sarigam, District Valsad and has the necessary registration certificate, Storage licence, NOC by the Addl. District Magistrate, Valsad under sub-rule (1) of Rule 144 of the Petroleum Rules, 1976, NOC by Pollution Control Board, licence by the Supdt. of Prohibition under the Bombay Prohibition Act, 1949 for purchase, possession and use of Methyl Alcohol for manufacture of Patrex motor fuel and the registration certificate given by the Sales Tax Officer under the Sales Tax Department, Maharashtra, but it has been pointed out by the petitioner that such registration certificate in favour of the petitioner has also been issued by the Sales Tax Officer of the Sales Tax Department of the Govt. of Gujarat.

3. On 18th February 1998, the petitioner had to file Special Civil Application No.1326 of 1998 seeking a declaration from this Court under Article 226 that the product, “Patrex” is not covered under the Essential Commodities Act. This Special Civil Application was decided and dismissed by this Court on 3rd August 1998. In this Special Civil Application, the Court observed that it was a technical matter and the petitioner may file a suit, if deemed fit and by leading technical evidence, he may get necessary declaration from the competent Court and this was an aspect which cannot be gone into in writ jurisdiction. The petition was accordingly rejected and the notice was discharged. The operative part of this order is reproduced as under:

“ORAL ORDER:

1. Heard Mr. Suresh Payak, learned advocate for the petitioner and Ms. Talati, learned AGP for the respondent/State.

2. The petitioner is manufacturing a product known as “Patrex”, which claims to be an alternative fuel to petrol. The stock was seized. On the petitioner going in appeal, he was initially asked to furnish Bank guarantee for release of the stock. However, the stock has been released without insisting on Bank guarantee as Mr. Payak, learned advocate states. The petition is filed being aggrieved with the insistence on the Bank guarantee.

3. The other grievance of the petitioner was that the product in question is not an essential commodity. Hence nothing should be insisted upon under the Essential Commodities Act, 1955 (“the Act” for brevity). In response to the allegation that Stock Register is not maintained, Mr. Payak states that action is being taken on some solvent used and what is produced is not something which falls under the Act. It is a technical matter. The petitioner may file a suit, if deemed fit and by leading technical evidence, he may get necessary declaration from the competent court. This is an aspect which cannot be gone into in writ jurisdiction.

4. The petition is, therefore, rejected. Notice is discharged. No order as to costs.

Sd/-

3rd August 1998 (H.L. Gokhale, J.)”

Learned Counsel for the petitioner has pointed out that at the time when the aforesaid order was passed on 3rd August 1998, the petitioner’s departmental appeal in the same subject matter being Appeal No.123 of 1997 was pending before the Secretary, Food and Civil Supplies Department, Govt. of Gujarat, and this appeal was allowed on 31st August 1998 and it was held in the appellate order by the Secretary, Food and Civil Supplies Department that the product “Patrex” was not an essential commodity, was not a solvent and the action taken by the Collector was set aside and the goods which were confiscated were returned. Learned Counsel for the petitioner has submitted that in the light of the order dated 31st August 1998, passed by the Secretary, Food and Civil Supplies Department, the petitioner sought to revive Special Civil Application No.1326 of 1998 (which was dismissed on 3rd August 1998) and for that purpose, a Civil Application No.2067 of 1998 was filed on 14th September 1998 in the nature of a review application and that review application was decided on 17th December 1998 and the review was allowed in terms of the order passed on that date, i.e. 17th December 1998 to the following effect:

“Heard Mr. Karia for the petitioner. None present for the respondent though served. This Applicant submits that, in view of the order passed by the State Government dt. 31.8.98, there are some changes in the circumstances which will have to be gone into. Hence with a view to give an opportunity to the petitioner, the order passed by me on 3.8.1998 is recalled. Petition No.1326/98 is restored to the file. It will be placed before the concerned Court. This review is allowed for the limited purpose. Mr. Mehta has appeared for the respondent before the order is signed.

 17.12.98                                                   Sd/-
                                                        (H.L. Gokhale, J.)"

 

Thus, Special Civil Application No. 1362 of 1998 was revived, but it is found that this Special Civil Application was dismissed for want of prosecution on 11th August 1999 (Coram: M.C. Patel, J.). It has also been submitted by learned Counsel for the petitioner that even otherwise this Special Civil Application No.1362 of 1998 has become infructuous in view of the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 and the actions are sought to be taken under the aforesaid order issued on 28th December 1998 by way of G.S.R. 772 (E), i.e. an order issued in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955.

4. The petitioner then preferred Special Civil Application No. 5981 of 1999 on 11th August 1999 challenging the validity of the aforesaid 1998 order i.e. Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998. In that petition, the notice was issued on 12th August 1999 and thereafter, Rule was issued on 30th September 1999 after hearing the respondents and by the very same order while issuing Rule, the interim relief was also granted in the terms saying that until further orders, there shall be ad-interim relief to the effect that coercive measures in connection with Patrex for the alleged violation of the provisions of Essential Commodities Act and of the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 shall be confined to the goods in question and that no coercive measures shall be taken against the petitioner or his dealers. While passing this order on 30th September 1999, the Court noticed the submission that, the product ‘Patrex’ which is manufactured by the petitioner is not covered by the provisions of Essential Commodities Act, 1955 as it is not a petroleum product. The Court also noticed the reliance placed on the appellate order passed by the Secretary, Food and Civil Supplies Department of the Govt. of Gujarat dated 31st August 1998 holding that the Patrex is not a petroleum product and not an essential commodity and is therefore, not covered under the Gujarat Essential Commodities (Licence, Distribution and Stock) Order 1991 and that no licence is required to be obtained to manufacture and sell ‘Patrex’. The interim orders passed by the Bombay High Court in Writ Petition No.751 of 1999 and by the High Court of Karnataka in Writ Petition No. 24445 of 1999 were also referred whereby the respondents to that Special Civil Application No. 5981 of 1999 including the Union of India had been directed not to interfere with the business of the petitioner and the dealers dealing in ‘Patrex’ in respect of the States. The Court also noticed the contentions which had been raised on behalf of the Union of India, and the State of Gujarat that the major ingredient of Patrex was Naphtha and it was a petroleum product and therefore, it was an essential commodity covered by the provisions of the Essential Commodities Act, 1955. The submission was also noticed that the Central Government had issued Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 and Clause 3(5) thereof was also taken note of. The submission was made on behalf of the respondents on the strength of the Order of 1998 that the Motor Spirit and High Speed Diesel could be sold only through dealers who are appointed by the Oil Companies and the said order forbids unauthorised exchange which means transfer or receipt of the product from dealer or consumer or to another dealer or consumer to any other persons in contravention of the directions issued by the State Government or Oil Companies which is punishable under the Order. On behalf of the respondents it was also submitted in the above proceedings that the test conducted by the PCRA and BPCL had found that the product had failed to meet IS:2796 specification in one respect or the other and the contention that the intention of the Central Government is not only to prevent the petitioner from indulging in unfair business practices and save the interest of the common man, but, petroleum products are covered under the Administered Pricing Mechanism and are over priced to provide subsidy for kerosene supplied in the economically weaker sections of the society under Public Distribution System as well as domestic LPG sold by the Public Sector Oil Companies. In case the petitioner’s product is permitted to be sold, apart from violation of law, supply of kerosene to economically weaker sections of the society and the supply of LPG a clear fuel at subsidised rates to the general public will also be adversely affected. So far as this Special Civil Application No. 5981 of 1999 is concerned, the same has been heard and the judgment thereon is to be completed to-day. In the aforesaid Special Civil Application No. 5981 of 1999, a Civil Application No. 2703 of 2000 had been moved seeking an amendment and yet another Civil Application No. 1926 of 2000 had also been moved to get the date fixed for hearing and yet another Misc. Civil Application No.1175 of 2000 had also been moved seeking to challenge certain seizure orders which had been passed during the pendency of the petition and confiscation orders dated 27th June 2000 with allied prayers. It was also given out by learned Counsel for the petitioner that the order dated 30th September 1999 as had been passed by the Court in Special Civil Application No.5981 of 1999 whereby Rule was issued and the interim relief was granted was made a subject matter of challenge before the Division Bench by way of Letters Patent Appeal No.1525 of 1999 by the petitioner and Letters Patent Appeal No. 54 of 2000 by the Union of India, but both these Letters Patent Appeals were dismissed on 25th February 2000 and no interference was made by the Division Bench with the order dated 30th September 1999. However, the petitioner was granted liberty to move for early hearing of the main petition.

5. It has been submitted by learned Counsel for the petitioner that despite the orders passed by this Court on 30th September 1999 in Special Civil Application No.5981 of 1999, the order passed by the Bombay High Court in Writ Petition No. 751 of 1999 and by the Madhya Pradesh High Court in Writ Petition No. 138 of 2000, the respondents were still proceeding against the petitioner and therefore, the petitioner submitted a representation to the Union of India on 28th February 2000 and a representation was also made to the respective four Oil Companies and demanded that in view of the orders passed by the four High Courts, the petitioner should be allotted the quota of Naphtha to the extent of 50,000 kilo ltrs. per year, but no response was given and the petitioner had to file yet another Special Civil Application No. 1365 of 2000 and that Special Civil Application is also pending after issue of the Rule. Now, pending the entire litigation as aforesaid, an order No. G.S.R. 519(E) has been issued by the Ministry of Petroleum and Natural Gas, New Delhi on 5th June 2000, namely, Solvent Raffinate and Slop (Acquisition, Sale, Storage and Prevention of use in Automobiles) Order, 2000 which is annexed with the present petition as Exh.M and yet another Order No. G.S.R. 518(E) issued by the Ministry of Petroleum and Natural Gas, New Delhi on 5th June 2000, namely, Naphtha (Acquisition, Sale, Storage and Prevention of use in Automobile) Order, 2000. Copies of these two notifications have been annexed as Exh. M and Exh. N respectively. Through this petition, the petitioner has challenged the seizure orders passed by the Collector, Valsad, on 25th February 2000, 5th April 2000, and 27th April 2000 and the proceedings pertaining to confiscation orders passed by the Collector, Valsad on 27th June 2000, the notifications Exh. M and Exh. N dated 5th June 2000, the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 and the validity of the notifications dated 5th June 2000 referred to above as being ultra vires of provisions of Sections 3 and 7 of the Essential Commodities Act, 1955 and the petitioner has also sought directions for supply of 5000 kilo ltrs. of Naphtha for manufacture of his product and allied prayers for prosecution of respondent no.9 for contempt proceedings etc. have been made. The prayers have also been made for interim orders in favour of the petitioner.

6. Thus, in this petition, it has to be examined as to whether the petitioner’s product, “Patrex” is an essential commodity within the meaning of the Essential Commodities Act, 1955 or not, whether it is a petroleum product under the Petroleum Act, 1934 and the Petroleum Products (Collection of Information) Order, 1966 and as to whether the notifications dated 5th June 2000 at Exh. M and Exh. N are ultra vires or not and as to whether the actions against the petitioner as complained of in the petition are valid or not.

1st Sept. 2000

7. The Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractice’s) Order, 1998 has been issued in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955. Section 3 of this order provides for the product supply and transportation. Clauses (iv) and (v) of Section 3 of this Order are reproduced as under:

“(iv) No person other than the Dealer or Oil Company or their agent shall be engaged in the business of selling product from underground storage tank.

(v) No person shall sell or agree to sell any petroleum product or its mixture other than Motor Spirit or High Speed Diesel, as specific in Schedule I, in any forms, under any name, brand or nomenclature, which can be and is meant to be used as fuel in Spark Ignition Engines or Compression Ignition Engines.”

These two Clauses are challenged on behalf of the petitioner on the ground that they are violative of the petitioner’s fundamental rights under Article 19(1)(g) of the Constitution of India in as much as they impose unreasonable restriction against the petitioner’s business with regard to the product in question, i.e. “Patrex”. Learned Counsel for the petitioner has submitted that Clause (iv) creates a monopoly in favour of the Oil Companies or Dealers or agents of such Oil Companies and Clause (v) imposes a blanket ban against all the persons with regard to the sale or agree to sell any petroleum product or its mixture other than Motor Spirit or High Speed Diesel as specified in Schedule I, in any form under any name, brand or nomenclature, which can be and is meant to be used as fuel in Spark Ignition Engines or Compression Ignition Engines. Learned Counsel for the petitioner has placed heavy reliance on the observations made by the Apex Court in para 10 of the decision in the case of Mohd. Faruk v. State of Madhya Pradesh, reported in AIR 1070 SC 93 at page 96. In the case before the Supreme Court, the petitioner who was in the vocation of slaughtering bulls and bullocks had claimed a declaration that the notification dated 12th January 1967 as had been issued by the Governor of Madhya Pradesh in exercise of powers conferred under sub-section (3) of Section 430 of the Madhya Pradesh Municipal Corporation Act, 1956 cancelling confirmation of the bye-laws made by the Jabalpur Municipal Committee for inspection and regulation of slaughter houses was invalid in so far as the bye-laws relate to slaughter of bulls and bullocks and an argument was raised that it seeks to infringe the fundamental freedoms guaranteed under Articles 14 and 19 of the Constitution. In para 4 of the judgment, the Supreme Court noticed that after the enactment of the Constitution, the controversy relating to the limits within which restrictions may be placed upon the slaughter of cows, bulls and bullocks was agitated in the case of Mohd. Hanif Quareshi v. State of Bihar, reported in AIR 1958 SC 731 and that in that case, the validity of the provisions made in three State Acts which imposed a total ban upon slaughter of all categories of “animals of the species of bovine cattle” was challenged and further that the petitioners who followed the occupation of butchers and of dealing in the by-products of slaughter houses challenged the validity of the three Acts, viz. Bihar Preservation and Improvement of Animals Act, 1955, the U.P. Prevention of Cow Slaughter Act, 1955, and the C.P. and Berar Animals Preservation Act, 1949, on the plea that the Acts infringed their fundamental rights under Articles 14, 19(1)(g) and 25 of the Constitution. In the case of Mohd. Hanif Quareshi (supra), the Supreme Court held as under:

(i) that a total ban on the slaughter of cows of all ages and calves of cows and of she-buffaloes, male and female, was reasonable and valid;

(ii) that a total ban on the slaughter of she-buffaloes or breeding bulls or working bullocks (cattle as well as buffaloes), so long as they were capable of being used as milch or draught cattle, was also reasonable and valid; and

(iii) that a total ban on the slaughter of she-buffaloes, bulls and bullocks (cattle or buffalo) after they ceased to be capable of yielding milk or of breeding or working as draught animals was not in the interests of the general public and was invalid.

It was then noticed in para 6 of the very judgment i.e. Mohd. Faruk vs. State of M.P. (Supra) that the notification dated 12th January 1967 issued by the Governor of the Madhya Pradesh which was impugned was another attempt, though on a restricted scale to circumvent the judgment of the Supreme Court in Mohd. Hanif Quareshi’s case (supra) and that the effect of this notification was to prohibit the slaughter of bulls and bullocks within the Municipality of Jabalpur and this cancellation of confirmation of bye-laws imposed a direct restriction upon the fundamental rights of the petitioner under Article 19(1)(g) of the Constitution. It was then observed in para 10 that the said impugned notification though technically within the competence of the State Government, directly infringes the fundamental right of the petitioner guaranteed by Article 19(1)(g) and may be upheld only if it is established that it seeks to impose reasonable restriction in the interests of the general public and a less drastic restriction will not ensure the interest of the general public. In para 11 of the judgment, the Court has noticed that the sentiments of a section of the people may be hurt by permitting slaughter of bulls and bullocks in premises maintained by a local authority, but a prohibition imposed on the exercise of a fundamental right to carry on an occupation, trade or business will not be regarded as reasonable, if it is imposed not in the interest of the general public, but merely to respect the susceptibilities and sentiments of a section of the people whose way of life, belief or thought is not the same as that of the claimant. Thus, according to the Supreme Court, the touch stone for deciding the question of reasonable restriction is the interest of the general public and not the sentiments of a section of people according to their way of life, belief or thought. In the instant case, there is no question with regard to susceptibilities and sentiments of any section of the society. The only question is as to whether the Central Government had the competence to provide the aforesaid Clauses (iv) and (v) in the order of 1998 under Section 3 of the Essential Commodities Act or not and as to whether business of selling such a product could be reasonably restricted only to the Oil Companies or their dealers or agents and as to whether it should be left open for any person to sell or agree to sell any petroleum product in any form under any name, brand or nomenclature so as to be used as fuel in Spark Ignition Engines or Compression Ignition Engines. Section 3 of the Essential Commodities Act, 1955 does cloth the Central Government with the powers to control production, supply, distribution etc. of the essential commodities. Section 3(1) of the Essential Commodities Act, is reproduced as under:

3. Powers to control production, supply, distribution, etc. of essential commodities. (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.

From the reading of the above Section, it is very clear that for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. The interest of the general public is sought to be safeguarded by securing equitable distribution and availability of such commodities and for that purpose, an order can certainly be issued so as to regulate or prohibit the production, supply and distribution thereof and trade and commerce therein. Keeping in view such wholesome provision, if an order is issued by the Government to provide that only Oil Companies or their dealers or authorised agents shall be engaged in the business of selling the products from the underground storage tanks and no person shall be free to sell or agree to sell any petroleum product or its mixture in any form, it cannot be said that such Clauses impose an unreasonable restriction or that such restriction is not germane to the interest of the general public. The interest of the general public is certainly to be served by equitable distribution and by making the availability of such products at fair prices. In case the business of selling such product is not kept confined to the Oil Companies, dealers or their authorised agents and it is left open to anybody to engage himself in the trade and commerce of such products, it would become very difficult to have a control for the purpose of equitable distribution and fair prices and any person will be free to sell such products at his own terms. In this context, this Court may also examine the ancillary argument that the object can be achieved by issuing licences and permits. The issue of licences and permits may be a less drastic restraint, but in cases of essential commodities, such less drastic restraint may not be sufficient to serve the interest of the general public and unless there is a ban as provided through Clauses (iv) and (v) of Section 3 of the Order, it may not be possible to serve the general public interest. It is known to all and sundry that even with the restrictions as obtaining now and the regulations of the supply of such essential commodities, the cases are writ large where the consumers are defrauded and cheated in ways more than one and notwithstanding all these laws in force and the machinery for implementation of such laws available at the command of the executive, the cherished values of public distribution system have not been achieved so as to ensure and regulate the supply, equitable distribution and fair prices and large number of cases involving violation of such laws have been repeated and reported. Thus, the ancillary argument with regard to the control or regulation through licences or permits in such cases may not be sufficient and if the Central Government is of the opinion that the ban as provided under Clauses (iv) and (v) is necessary to ensure the maintenance of the interest of the public at large, it cannot be said that these Clauses impose any unreasonable restriction.

8. In this way, there is no question of creating any monopoly also in favour of any particular Oil Company; it is a case in which the business is left open for various Oil Companies, their dealers and agents and as against individuals if the business in this regard has been kept confined to the Oil Companies, it cannot be said that it seeks to create a monopoly in favour of any particular Company. Besides it, it may also be noticed that the case of Mohd. Faruk (supra) was not a case with reference to the sale of any essential commodity. It was a case in which a ban was in the matter of slaughter of bulls and bullocks and in that matter also, it was only with regard to the third category, i.e. the total ban on the slaughter of she-buffaloes, bulls and bullocks (cattle or buffalo) after they ceased to be capable of yielding milk or of breeding or working as draught animals that the Court held that it was not in the interest of the general public and was therefore invalid. Mohd. Hanif Quareshi’s case (supra) was applied for the reason that the slaughter of such types of animals whose utility had ceased for the purpose of yielding milk or for breeding or working as draught animals even if not banned, it could not have affected the general public interest and it was only in the background of these facts and the law as had been laid down in Mohd.Hanif Quareshi’s case earlier by the Supreme Court that the notification which was impugned before the Supreme Court in the case of Mohd. Faruk (supra) was found to be invalid and that the impugned notification did not amount to a reasonable restriction or rather unreasonable and was called for in the facts of the case.

Thus, the challenge to the validity of Clauses (iv) and (v) of Section 3 of the Order of 1998 fails on both the counts.

9. The petitioner’s next challenge is to the validity of the notifications at Exh. M and Exh. N dated 5th June 2000. Exh.M, i.e. order dated 5th June 2000 is again a notification in exercise of the powers conferred by Section 3 of the Essential Commodities Act by the Central Government with regard to the solvents and Exh. N is with regard to “Naphtha”. In the notification Exh.M dated 5th June 2000, the word “Solvent” has been defined in Section 2(i) as under:

“Solvent” means volatile fractions derived either directly or indirectly from petroleum or coal. These solvents can be single hydrocarbon components like propane, benzene, toluene, xylene, etc. or narrow or wide boiling ranges of hydrocarbon.

Under Section 3, the restriction has been provided on sale and use of solvents etc. in the following terms:

3. Restriction on sale and use of solvents, raffinates, slops and other product:

(1) No person shall either acquire, store or sell solvents, raffinates, slops or their equivalent and other product, without a licence, issued by the State Government or the District Magistrate or any other Officer authorised by the Central or the State Government.

(2) No person shall either use or help in any manner the use of solvents, raffinates, slops or their equivalent or other product except motor spirit and high speed diesel, in any automobile.

Provided that nothing in this Order shall preclude the use of such products for research purposes on automobiles. (3) Any person whosoever is engaged in the sale or trading of solvents, raffinates, slops or their equivalent and other product, either imported or indigenous, for any purpose, whatsoever, shall file end-use certificates from consumers to whom he sells and furnish customer-wise sales to the District Magistrate or to the State Civil Supplies Authorities, on a quarterly basis.

(4) Any person whosoever is engaged in use of solvents, raffinates, slops or their equivalent and other product, either imported or indigenous for manufacture of any petrochemicals or any other purpose shall file end-use certificates to the District Magistrate or the State Civil Supplies Authorities, on a quarterly basis.

It is very clear from Section 3(1) itself that there is not a total ban. The sale and use of solvent is permissible with a licence issued by the State Government, or the District Magistrate or any authorised Officer by the Central or State Government. Sub-section (2) also makes a restriction for use of such products for research purposes in automobiles and through sub-sections (3) and (4), the procedure has been prescribed which is required to be followed by the persons who are engaged in the use of solvent etc.

In the notification at Exh.N dated 5th June 2000, the word “Naphtha” has been defined. Section 3 which provides for restriction is reproduced as under:

3. Restriction on sale and use of Naphtha.

(i) No person shall either acquire, store and/or sell Naphtha, without a licence, issued by the State Government or District Magistrate or any other Officer authorised by the Central or State Governments.

(ii) No person shall either se or help in any manner the se of Naphtha except Motor Spirit, High Speed Diesel and/or any other fuel permitted by the Central Government, in any automobile.

(iii) No person shall either adulterate or help in any manner adulterating of Motor Spirit and High Speed Diesel with Naphtha.

(iv) Every person whosoever is engaged in sale or trading of Naphtha either imported or indigenous, for any purpose, whatsoever, shall file end-use certificates from consumers to whom he sells and also furnish customer-wise sales to the District Magistrate or the State Civil Supplies Authorities by whatever name called, on a quarterly basis.

(v) Every person whosoever is engaged in actual use of Naphtha either imported or indigenous for manufacture of sale petrochemicals or any other purpose shall file end-use certificates to the District Magistrate or the State Civil Supplies Authorities by whatever name called, on a quarterly basis.

Section 3(i) provides that the sale and use of Naphtha cannot be undertaken without a licence issued by the State Government or District Magistrate or any other Officer authorised by the Central Government or the State Governments. Clause (ii) provides against the use of Naphtha as against the Motor Spirit, High Speed Diesel and/or any other fuel permitted by the Central Government in any automobile and Clause (iii) provides that no person shall either adulterate or help in any manner adulterate any Motor Spirit or High Speed Diesel with Naphtha, i.e. a provision to check the adulteration of Motor Spirit and High Speed Diesel with Naphtha; Clauses (iv) and (v) provide for the procedure to be followed by those who are engaged in the sale and trading or actual use of Naphtha. It, therefore, cannot be said that there is a total ban either with regard to the Solvent or with regard to Naphtha and the only requirement is that the licence has to be obtained and the same cannot be said to be unreasonable or without competence. The Central Government had the power to issue these orders under Section 3 of the Essential Commodities Act. The challenge thrown on behalf of the petitioner is that the Government cannot dictate the users not to go in for a particular item or product. This Court does not find that there is any such dictate. It is a reasonable restriction which has been sought to be imposed and the requirement is that the licence has to be obtained. Learned Counsel for the petitioner also argued that the Essential Commodities Act had been enacted to ensure that there is no adulteration and therefore, such orders could not have been issued as there is no adulteration in the case of the petitioner’s product. In the opinion of this Court, this argument is wholly misconceived. What is sought to be provided for is the regulation of the product and for that purpose, such orders can certainly be issued by the Government so as to take care of the possible mischief with regard to the essential commodities and once a commodity is covered under the Essential Commodities Act, for the purpose of regulating, maintenance and supply of such product, such orders can certainly be made. May be that the Essential Commodities Act was enacted to deal more effectively with persons indulging in anti-social activities like hoarding and black-marketing and the evil of vicious inflationary prices, but no exception can be taken if a provision has been made by issuing an order under Section 3 of the Essential Commodities Act against the possible mischiefs with the use of any item, sale and use of which is regulated on the basis of a licence. Thus, the grounds of challenge against the notifications Exh.M and Exh. N also fail.

10. Learned Counsel for the petitioner has further argued that the Order of 1998 as well as Exh.M and Exh. N are inconsistent and beyond the scope of Section 3 of the Essential Commodities Act and the Central Government under Section 3 has no power to issue such orders and the same are inconsistent. That nothing could be provided for in the Order of 1998 with regard to the malpractices or adulteration because Section 7 of the Essential Commodities Act only provides for penalties and by issuing such orders, Section 3 could not be sought to be amended in an indirect manner. It is not possible to even comprehend the misplaced import of this argument in as much as Section 3 provides for penalties for contravention of any order made under Section 3 of the Essential Commodities Act and the contravention of any order made under Section 3 has been made punishable under Section 7. In this view of the matter, it cannot be said that by issuing these orders, Section 3 is sought to be amended in an indirect manner. While the argument is incomprehensible, learned Counsel for the petitioner has cited the case of V. Sudeer v. Bar Council of India and anr., reported in AIR 1999 SC 1167. That was a case with regard to the Bar Council of India Training Rules, 1995 under the Advocates Act, 1961. In that case, the Supreme Court considered the validity of the Bar Council of India Training Rules, 1995 as amended by resolution of Bar Council of India in its meeting on 18th July 1998 relating to training to entrants of legal profession and found that it was ultra vires of the Rule making power under Advocates Act. The Training Rules provided certain pre-conditions to be complied with by an applicant to be enrolled on the roll of the State Bar Council. The Rules were promulgated in exercise of the Bar Council of India’s Rule making powers under Section 24(3)(d) of the Act. It was provided, through Rule 2 that no person shall be entitled to be enrolled as an Advocate unless he is eligible to be enrolled as such under Section 24 of the Advocates Act, 1961 and and had undergone training as prescribed under these Rules. Rule 2 further amended upto 19th July 1998 provided that while undergoing the training, the trainees shall be enrolled provisionally as “Trainee Advocates” after approval of name of their guides by the State Bar Council and the State Bar Council shall issue identity card to said provisionally enrolled “Trainee Advocates” for their identification. For this purpose, a detailed procedure had been laid down as to how a trainee advocate has to function during the period of training. These Rules had been framed by the Bar Council of India in exercise of its statutory power under Section 24(3)(d) of the Act. Sub-section (3) of Section 24 starting with a non-obstante Clause provides that, notwithstanding anything contained in sub-section (1), a person mentioned in categories (a), (aa), (c) and (d) may be admitted as an Advocate on a State roll if he applies as laid down in Clause (1) and fulfils the conditions specified in Clauses (a), (b), (e) and (f) of sub-section (1). The Court found that the Bar Council of India as a Rule making authority, could not by exercise of such rule making power, add to the conditions of enrolment as expressly laid down by Section 24(1) for the simple reason that Section 24 itself contemplates the qualifications of a person who seeks admission as an Advocate on the State roll; granting of admission for being enrolled as an Advocate under the Act is a statutory function of the State Bar Council and the Bar Council of India has no role to play on this aspect. All it has to do is to approve any Rules framed by the State Bar Council under Section 24(1) laying down further qualifications for a person to be enrolled by it on the State roll as an Advocate. The Rule making power mentioned under Section 24(1) was read conjointly with the Rule making power of the State Bar Council as provided under Section 28(1) especially Clause 2(d). It was found that once the statutory conditions laid down by Section 24 sub-section (1) were satisfied, there was no question of imposing further condition of disability of otherwise eligible candidates to be enrolled and it is this beneficial and enabling power for bringing in the sweep of Section 24(1); those who would have otherwise been out of it could not be extended to put any additional requirement. I do not find that this case is of any avail to the petitioner in the facts and circumstances of this case as I find that neither the Order of 1998 nor the notifications dated 5th June 2000 at Exh.M and Exh. N are in any way beyond the scope of Section 3 of the Essential Commodities Act as it is clear that the Central Government has been clothed with the power to frame and pass such orders under Section 3 for the purpose of control, production, supply and distribution of the essential commodities and it has already been held in the earlier part of this order that for maintaining or regulating supply of essential commodities or for securing their equitable distribution and availability at fair prices, such orders could be issued and through sub-section (2) of Section 3, even other items may be provided for without prejudice to the generality of the powers conferred by sub-section (1), through an order made thereunder. In the case of Ganpat Shantaram More v. Lingappa Balappa Gatade and anr., reported in AIR 1962 Bombay 104, which was a case under Prevention of Food Adulteration Act, 1954, the Supreme Court observed that the Rules made under any Act can never be intended to override the specific provisions of the Act itself and that the purpose of the Rules is to provide for procedural matters or matters which are subsidiary to the provisions of the Act, but no Rules can ever be construed to override the specific provisions of the Act itself. Since it has been found that the orders as have been issued do not override the provisions of Section 3 nor they are inconsistent and beyond the scope of Section 3, this decision is of no avail to the petitioner.

11. Faced with the failure of challenge to the Order of 1998 and the notifications at Exh.M and Exh. N dated 5th June 2000, learned Counsel for the petitioner submitted that the petitioner’s product, “Patrex” is not a petroleum product under the provisions of the Petroleum Act, 1934 and so also it could not be treated as an essential commodity and therefore, no action could be taken against the petitioner. The word, “petroleum” has been defined in Section 2 of the Petroleum Act, 1934 as under:

“2(a) “Petroleum” means any liquid hydro-carbon or mixture of hydro-carbons and any inflammable mixture (liquid, viscous, or solid) containing any liquid hydro-carbon.”

It is the case of the petitioner himself as stated in para 3 of the petition that the product, “Patrex” has been invented by mixing hydro-carbon liquid like Naphtha, Methyl Alcohol and additives (trade secret). Yet the argument has been raised that it is not a petroleum because it is simply a liquid hydro-carbon and it is not a mixture of more than one hydro-carbon and that according to the definition of the word, “Petroleum”, it has to be a mixture of more than one hydro-carbons; it is also not petroleum because it is not an inflammable mixture containing any liquid hydro-carbon. One fails to understand as to how in view of the petitioner’s own averments in para 3, it can be said that this product, “Patrex” is not a petroleum when the petitioner himself says that it is produced by mixing hydro-carbon liquid like Naphtha, Methyl Alcohol and additives. Even if it is taken that the product is not simply a liquid hydro-carbon or that it is not a mixture of more than one hydro-carbons, the later part of the definition clearly says that even a mixture (liquid, viscous or solid) containing any liquid hydro-carbon is petroleum and it is the petitioner’s own case that it contains liquid hydro-carbon. In view of these averments and looking to the definition of the word as contained in Section 2(a) of the Petroleum Act, 1934, by no stretch of imagination it can be said that the product, “Patrex” is not covered under the term ‘petroleum’ within the meaning of Section 2(a) of the Petroleum Act, 1934. It may also be mentioned here that under Section 2(h) of the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998, the word “Petroleum” has been given the same meaning as assigned to it in the Petroleum Act, 1934. Once it is found that the product in question, i.e. “Patrex” is a petroleum within the meaning of Section 2(a) of the Petroleum Act, 1934, for the purpose of Order of 1998 as above, it has to be taken as petroleum. On behalf of the petitioner, a reference was made to Section 2(c) of the Petroleum Products (Collection of Information) Order, 1966 which defines petroleum products as under:

2(c) “Petroleum Products” means-

(i) aviation spirit;

(ii) aviation turbine fees;

(iii) fuel oil;

(iv) high speed diesel oil;

(v) light diesel oil;

(vi) inferior kerosene;

(vii) superior kerosene;

(viii) motor spirit;

and such other products as may be specified by the Central Government from time to time.

The submission of the petitioner is that the petitioner’s product has not been specified at any time by the Central Government as a petroleum product and therefore, it is not a petroleum product within the meaning of Section 2(c) of the Petroleum Products (Collection of Information) Order, 1966. This contention cannot be accepted for the simple reason that in case this product is covered by any of the items at Nos.(i) to (viii) under Clause (c) of Section 2, it is not necessary that the product must be specified by the Central Government at any time. In case the product in question is covered by any of these eight items under Section 2(c), it is not necessary that it must be separately specified by the Central Government. It is the case of the petitioner himself as stated in para 3 of the petition, Clause (a) under ground 8 that the product in question, i.e. “Patrex” is manufactured from Naphtha, Methyl Alcohol and additives and that Naphtha is a liquid hydro-carbon. The further claim of the petitioner himself that it is a fuel alternative to petrol clearly brings it within the meaning of Section 2(c)(iii) and thus becomes a petroleum product under this Order of 1966. Even under Petroleum Products (Maintenance of Production) Order, 1970, the term “Petroleum products” has been defined under Section 2(b) at Item No.3 there under, the word is fuel oil and at Item No.9, the word is Naphtha. Thus, Naphtha itself means a petroleum product as would appear from Section 2(b),(3) and (9) as under:

2(b) “Petroleum products” means-

(3) Fuel Oil,

(9) Naphtha.

Under Section 2(a) and (viii) of the Essential Commodities Act, 1955, petroleum products have been included under the definition of essential commodities and thus, the product in question is deemed to be petroleum and petroleum product is certainly an essential commodity and thus on the basis of the provisions as aforesaid, it cannot be said that the product in question, i.e. “Patrex” is not an essential commodity.

12. Once the contentions raised on behalf of the petitioner as aforesaid fail, it cannot be said that the seizure orders passed by the respondent no.2, i.e. orders dated 25th February 2000, 5th April 2000 and 27th April 2000 are illegal. Such orders could be passed with regard to seizure and it cannot be said that all or any of these orders suffer from any illegality. Even otherwise, it is found that Section 6 of the Essential Commodities Act provides in no uncertain terms that any order made under Section 3 shall have the effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act. Similar provisions so as to give over-riding effect are also there under the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 and under Section 7 it has been clearly provided that the provisions of the Order would prevail over the previous orders of the State Governments etc. Thus, notwithstanding the order which had been passed by the Secretary, Food and Civil Supplies Department, Govt. of Gujarat, this Order of 1998 shall have the effect. Section 7 of this Order is reproduced as under:

“7. Provision of the Order to prevail over previous orders of State Governments, etc.- The provisions of this Order shall have effect notwithstanding anything to the contrary contained in any order made by a State Government or by an Officer of such State Government before the commencement of this Order except as respect anything done, or omitted to be done there under before such commencement.”

Even in the notification/orders dated 5th June 2000 with regard to the Solvent and Naphtha respectively, i.e. Exh.M and Exh. N with the petition, it has been provided that the provisions of the Order will prevail over the previous orders of the State Government. Section 7 as contained in each of these two notifications dated 5th June 2000 is reproduced as under:

“7. Provision of the Order to prevail over previous orders of State Government: The provisions of this Order shall have effect notwithstanding anything to the contrary contained in any order made by a State Government or by an Officer of such State Government before the commencement of this Order except as respects anything done, or omitted to be done there under before such commencement.”

It is, therefore, clear that the petitioner has no case whatsoever even against the impugned orders passed with regard to seizure filed with the petition collectively as Exh. K and the petitioner is not at all entitled to the return of the goods which have been confiscated and in this view of the matter, no direction can be issued against the respondents nos.1, 5 and 8 to supply to the petitioner a quota of 5,000 ltrs. kilo ltrs. of Naphtha for manufacture of the product in question, i.e. “Patrex”.

13. In view of the discussion as aforesaid, this Court does not find any merit in this Special Civil Application. The same is hereby dismissed.


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