IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
LETTERS PATENT APPEAL No 15 of 2003
in
SPECIAL CIVIL APPLICATIONNo 7190 of 2002
with
LETTERS PATENT APPEALS Nos. 16 of 2003 to 85 of 2003
with
LETTERS PATENT APPEAL NO. 314 OF 2003
WITH
LETTERS PATENT APPEALS NOS. 234/2003, 240/2003,
241/2003, 242/2003, 244/2003 & 246/2003
WITH
LETTERS PATENT APPEALS NOS.238/2003, 243/2003,
245/2003 & 247/2003
WITH
LETTERS PATENT APPEALS NOS.248/2003, 235/2003
& 303/2003
WITH
LETTERS PATENT APPEALS NOS.237/2003 & 239/2003
WITH
LETTERS PATENT APPEAL NO.236 OF 2003
WITH
LETTERS PATENT APPEAL NO.118 OF 2003
WITH
LETTERS PATENT APPEAL NO.225 OF 2003
WITH
CIVIL APPLICATION NO.213 OF 2003
WITH
CIVIL APPLICATIONS NOS.216/2003 TO 283 OF 2003,
285/2003, 291/2003, 1614/2003 TO 1628/2003,
566/2003, 1484/2003, 1866/2003
AND
CIVIL APPLICATION NO.2005/2003
For Approval and Signature:
Hon'ble MR.JUSTICE R.K.ABICHANDANI
and
Hon'ble MR.JUSTICE KUNDAN SINGH
============================================================
1. Whether Reporters of Local Papers may be allowed : YES
to see the judgements?
2. To be referred to the Reporter or not? : YES
3. Whether Their Lordships wish to see the fair copy : NO
of the judgement?
4. Whether this case involves a substantial question : NO
of law as to the interpretation of the Constitution
of India, 1950 of any Order made thereunder?
5. Whether it is to be circulated to the concerned : NO
Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?
--------------------------------------------------------------
SHRIJEE TRADING COMPANY
Versus
STATE OF GUJARAT
--------------------------------------------------------------
Appearance:
LETTERS PATENT APPEALS NOS. 15/2003 TO 85/2003
and 314/2003 :
MR.S.B.VAKIL, SR. ADVOCATE with MR.A.S.VAKIL
Advocate for the Appellants
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Respondents
LETTERS PATENT APPEAL NO.118/2003 :
MR.B.I.MEHTA, Advocate for the appellant
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Respondents
LETTERS PATENT APPEAL NO.225/2003 :
MR.J.S.YADAV, Advocate for the appellant
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Respondents
LETTERS PATENT APPEALS NOS.234/2003, 240/2003,
241/2003, 242/2003, 244/2003 & 246/2003 :
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Appellants
MR.J.S.YADAV, Advocate for Respondent No.5 in
LETTERS PATENT APPEAL NO.234/2003
RULE SERVED on the Respondents in all Appeals
LETTERS PATENT APPEALS NOS.238/2003, 243/2003,
245/2003 & 247/2003 :
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Appellants
MR.R.M.CHHAYA, Advocate for the Respondents in
all the Appeals.
LETTERS PATENT APPEALS NOS.248/2003, 235/2003
& 303/2003 :
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Appellants
MR.R.C.JANI, Advocate for the Respondents in
all the Appeals.
LETTERS PATENT APPEALS NOS.237/2003 & 239/2003 :
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Appellants
MR.M.K.VAKHARIA, Advocate for the Respondents
LETTERS PATENT APPEAL NO.236 OF 2003 :
MR.S.N.SHELAT, ADVOCATE GENERAL with Ms.Harsha
Devani, Assistant Government Pleader for the
Appellants
MR.J.S.YADAV, Advocate for the Respondents
--------------------------------------------------------------
CORAM : MR.JUSTICE R.K.ABICHANDANI
and
MR.JUSTICE KUNDAN SINGH
Date of decision: 01/08/2003
ORAL JUDGEMENT
(Per : MR.JUSTICE R.K.ABICHANDANI for the Court)
1. All these appeals are directed against the
judgement and order dated 4th December 2002 made by the
learned Single Judge in a group of petitions in which the
petitioners challenged the action of the State Government
of deciding not to renew under Rule 5 of the Gujarat
Essential Articles (Licensing, Control & Stock
Declaration) Order, 1981 (hereinafter referred to as "the
Licensing Order of 1981"), the licences of wholesale
kerosene dealers, who were not the agents / dealers of
the Oil Companies, from 1-8-2002, and seeking a direction
on the respondents to renew the licences of the
petitioners as wholesale dealers in kerosene for a period
of five years from the date of their applications for
renewal with consequential and incidental orders. The
petitioners challenged the provisions of Amendment Order
2002 made on 31-7-2002, by which definition of "Public
Distribution System Kerosene Wholesale Dealer" was added
as per Clause 2(18A) in the Licensing Order, 1981, and
also the circular dated 31-7-2002 deciding not to renew
the licences of those who were not covered by the said
definition and to take action to cancel the existing
licences of such persons.
1.1 One group of appeals, being Letters Patent
Appeals No.15 of 2003 & cognate appeals is filed by the
original petitioners against the orders rejecting their
applications for renewal of licences, while the other
group of appeals, being Letters Patent Appeal No. 234 of
2003 and cognate matters, are filed by the State
Government against the order allowing the petitions,
challenging the cancellation of existing licences. All
the appeals arise from a common judgement, and have been
argued together by the learned counsel appearing for the
respective parties.
2. According to the appellants - original
petitioners, though they had earlier succeeded in Letters
Patent Appeal No.538 of 2001, in which a Division Bench
of this Court had set aside the executive orders made for
excluding the wholesale kerosene dealers who were not
dealers appointed by the Government Oil Companies, the
State Government has repeated the same action and again
excluded the appellants from being considered for issuing
licences to them as wholesale kerosene dealers, to which
they were entitled under the provisions of the Licensing
Order of 1981 and which were being given to them and
renewed from time to time till the amendment was made in
the Licensing Order of 1981 by inserting the said
definition clause 2(18A) by the impugned Amendment Order,
2002. The respondents have now, on the basis of the
amendment taken a decision to abolish the wholesale
dealers from the business of Public Distribution System
in kerosene, excepting only those persons who were the
agents / dealers appointed by the Government Oil
Companies. According to the appellants, the respondents
have discriminated against the appellants though they
fell in the same class to which the other wholesale
dealers in kerosene appointed by the Government Oil
Companies belonged. The respondents, by a separate
definition of "Public Distribution System Kerosene
Wholesale Dealer", have created two classes of wholesale
dealers contrary to the provisions of the Licensing Order
of 1981 and in violation of the provisions of Article 14
of the Constitution of India. According to the
appellants, they were doing the business of selling
kerosene since 15 to 35 years and their families depended
on the said source of income. The respondents
authorities, however, by orders dated 31.7.2002 had
decided not to renew the licences and to cancel them if
already issued, in contravention of the directions
contained in the decision of this Court, by which the
earlier similar circulars were set aside. It was also
pleaded that the agents / dealers of the Government Oil
Companies were like any other traders or businessmen and
simply because they were appointed as the dealers /
agents by such Oil Companies, there did not exist any
intelligible differentia between them and the appellants
who were also wholesale dealers in the same business.
Moreover, the Licensing Order of 1981 did not provide for
any such disability. According to the petitioners, they
had a fundamental right under Article 19(1)(g) of the
Constitution to carry on the said business and the
restrictions which were sought to be imposed by the
respondents were not warranted by the provisions of
Article 19(6) of the Constitution. It was also pleaded
that if there were any instances of malpractice,
adulteration or violation of any provisions of the
Licensing Order, then action could be taken against the
defaulting individuals, but the removal of the entire
class of wholesale dealers in kerosene on the basis of
presumptions against them was not warranted and was
beyond the powers and jurisdiction of the respondent
No.1. According to the appellants, they had already made
applications for renewal before the expiry of their
licences and therefore, were entitled to get their
licences renewed in view of Clause-5 of the Order of
1981. It was pleaded that, before making the impugned
Amendment Order, 2002, the respondents did not undertake
any exercise for being satisfied for reaching an opinion
that it was expedient and necessary in the interest of
public to make such an order. It was also contended that
the impugned Amendment Order was not applicable to the
petitioners who had made their applications for renewal
of licences earlier than 31-7-2002. Moreover, it was
held by the order dated 10th July 2002 made by the
learned Single Judge in an earlier petition (Special
Civil Application No.3492 of 2002) that those petitioners
were entitled to get renewal for five years and not for a
lesser period. Similar treatment ought to be given even
to the present petitioners, whose applications for
renewal were pending on 31-7-2002.
3. In the affidavit-in-reply filed on behalf of the
respondent No.1 dated 6th September 2002, it was
contended that, on the basis of the facts and figures
which were available with the Department, there was
reason to believe that a large amount of stock of
kerosene was directly being diverted into the black
market and that the wholesale dealers of kerosene formed
the basis of irregularities and hence, it was desirable
to remove the basis itself. The wholesale dealers were
an extra chain in the system of distribution of kerosene
which was considered, by and large, responsible for the
black marketing of kerosene. It was stated that the
Amendment Order dated 31-7-2002 amending the Licensing
Order of 1981 by adding the definition of "PDS Kerosene
Wholesale Dealers" in clause 2(18A) was issued after
obtaining the opinion of the Legislative & Parliamentary
Affairs Department and concurrence of the Government of
India, and the said Order was not a mere executive
instruction since it was issued in exercise of the powers
under Section 3(1) of the Essential Commodities Act,
1955. The impugned notification dated 31-7-2002, at
Annexure "A" to the affidavit-in-reply, was issued
pursuant to the said Amendment Order, 2002, and
instructions were given to the subordinate officers not
to renew the licence of wholesale dealers who were not
company agents and whose licences had expired on
31-7-2002. It was contended that the policy decision was
taken in the interest of the public and to remove the
difficulties which were faced in the public distribution
system. In paragraph 9 of the said reply, it was stated
that, by the impugned order, the company's agents have to
operate in the public distribution system and directly
supply the PDS kerosene to the retailers, who in turn,
would supply to the consumers and thus, the government
have adopted a `two tier' system doing away with the
earlier `three tier' system. It is stated that the PDS
Kerosene is meant for the downtrodden and weaker sections
of the society and the government was spending a huge
amount of subsidy for PDS kerosene for giving relief to
the card-holders by supplying it at a cheaper rate and
therefore, it was the duty of the government to see that
the benefit of subsidy reaches the targeted people. It
is further stated that, on the basis of experience, it
was found that the extra tier (wholesale dealers, who
were not company agents/dealers) was engaged in diversion
of kerosene by converting blue kerosene into white
kerosene for the purpose of black-marketing and
adulteration. Therefore, the government took a policy
decision for the smooth functioning of the distribution
system through company agents and retailers. Such a
policy decision was in the interest of public at large
and was not violative of the fundamental rights
guaranteed by Article 14 or 19(1)(g) of the Constitution
of India. It was also contended that the petitioners
were not entitled to any renewal of their licences in
view of the said policy decision reflected by the
Amendment Order, 2002, and the impugned Circular.
4. The petitioners denied the averments of the
affidavit-in-reply contending in their rejoinder that the
number of prevention of blackmarketing cases filed
against the wholesale dealers dealing in PDS kerosene was
substantially less in comparison to those appointed by
Oil Companies dealing in kerosene. A list of cases of
black marketing / adulteration filed against the agents
of the Oil Companies and Wholesale Dealers was given in
the rejoinder, and it was contended that, there was
indulgence and favouritism shown to the agents appointed
by oil companies in violation of the fundamental right of
the petitioners - guaranteed by Article 14 of the
Constitution of India. It was contended that the
impugned Amendment Order, 2002 appeared to have been made
at the dictates and wishes of the representatives of the
oil companies. It was further contended that the
petitioners had fundamental right to carry on trade in
kerosene and the restrictions on their rights to carry on
trade as wholesalers was unconstitutional and against the
decision taken by the Division Bench in the earlier
Letters Patent Appeals. It was also contended that the
system had not been changed and the government had
retained `three tier' system even after the impugned
Order, because, the wholesale licences possessed by the
agents of the oil companies had been kept intact, while
those who were not the agents or dealers of such oil
companies, were sought to be done away with. It was
contended that the impugned Orders were violative of
Articles 14, 19 (1)(g) and 21 of the Constitution. In
paragraph 8 of the rejoinder, the petitioners contended
that, to have an agency of an oil company was not a
matter of wish, desire or competence of the petitioners,
because, the agency was designed by all the oil companies
as per the marketing plan and it may not be possible for
the petitioners to get the appointment as an agent at the
places where they were doing business, because, prior to
the appointment of an agent, certain eligibility was
prescribed by the oil companies and such conditions were
mandatory. It was pointed out that the learned Single
Judge, by judgement and order in Special Civil
Application No.3492 of 2002, had directed the respondents
to strictly consider the applications for renewal of
licences made by those petitioners, in accordance with
clause 5 of the Licencing Order of 1981, and that
judgement should be treated as judgement in rem and made
applicable to all persons even though they may not have
appeared in Special Civil Application No.3492 of 2002.
In paragraph 10 of the rejoinder, it was contended that
almost in all cases, the petitioners had made
applications for renewal of licence in the year 2000-2001
and paid the renewal fees for a period of five years and
their licences should be treated to have been renewed in
view of the decision of the learned Single Judge in
Special Civil Application No.3492 of 2002.
5. In the sur-rejoinder filed on behalf of the
respondents, it is stated that, so far as distribution of
kerosene was concerned, the Central Government has always
been recognizing, in all, two entities, viz. (1) dealers
appointed by oil companies, and (ii) retailers, and it
was in this connection that the Central Government was
fixing up the amount of commissions for distribution of
kerosene and no category of wholesale licence holder was
taken into account. The category of wholesale licence
holder was brought in picture by the State Government as
a result whereof, the said wholesale licence holders were
operating between the dealers appointed by the oil
companies and the retailers on the other. It was however
felt that the category of "wholesale licence holders" was
quite unnecessary and unsatisfactory and was creating
operational difficulties at many a time. Moreover, it
was a root cause for various misuses, apart from the
consequential delays in the supply of kerosene to the
ultimate consumers. Under these circumstances, by virtue
of the amendment made on 31st July 2002, the category of
wholesale licence holder in kerosene has been done away
with. In paragraph 6 of the surrejoinder, it is
reiterated that, by doing away with the stage of
wholesale licence holder, kerosene was now being
distributed through two stages, namely, (1) from oil
companies' dealers to retailers, and (2) from retailers
to consumers and by the present set-up, supply of
kerosene, which is an essential item to be made available
to economically weaker sections of the society at fair
price, is not in any way affected by the amendment in
question and the supply has on the contrary become
faster. It is submitted that the public interest is on
the higher pedestal than the interest of an individual
and therefore, the policy decision taken in the larger
public interest would prevail. It is stated that the
policy decision with regard to the restriction of extra
channel from the existing public distribution system had
been taken with a view to see that supply of kerosene was
made faster and effective. The issuance of such
Licencing Order being a legislative function exercised in
the public interest could not be challenged on the ground
of non-complaince of the principles of natural justice.
6. The learned Single Judge, after considering in
detail the contentions raised by the rival parties,
relevant provisions and the record, held that since the
State took a decision to eliminate the system of
distribution through wholesale dealers who were not
authorized by the government oil companies with a view to
see that the kerosene was supplied directly by the
authorized dealers to the retailers, it could never be
said that such a decision was not in the public interest.
It was held that it was for the State to decide the
manner in which the system of distribution should work
and to ensure that the ultimate consumer gets better
quality and maximum supply of essential items. A
decision to eliminate middlemen like the petitioners from
the chain of supply could not be said to be a decision
which is not in a larger public interest. Such a
decision was not ultra vires the object of the Licencing
Order of 1981 or against any provisions of the Essential
Commodities Act, 1955. The learned Judge held that the
State had made the law by way of subordinate legislation
for a laudable purpose with a view to ensure that
consumer gets better supply of commodities by eliminating
the class of middlemen and this was not beyond the scope
of Article 19(6) of the Constitution. It was further
held that the company agents or authorized dealers were
directly getting supply from the manufacturers which was
not the case so far as the petitioners were concerned.
Moreover, the nature of control while functioning as a
dealer appointed by the oil companies and while
functioning as a wholesaler, without being appointed by
the oil companies, would be different, because, in the
former case, the authorization was subject to the control
of the Government of India as well as the oil companies,
during the course of supply, while in the latter, no such
authorization was required from the Government of India
nor was there any direct control of the oil companies.
The accountability was more in the case of company agents
in comparison to the petitioners who were not company
agents. It could, therefore, not be said that the
petitioners were similarly situated as those wholesalers
who were appointed by the company as agents. Thus, the
learned Single Judge negatived the challenge against the
Amendment order of 2002 on the ground that it violated
Article 14 or 19(1)(g) of the Constitution. It was
further held that the Amendment order was not
retrospective in nature and that the subordinate
legislation could be made with retrospective effect only
if there was a specific delegation made for the purpose
under the parent Act. There was no authority assigned by
the Central Government to the State Government to make an
Order under Section 3(1) of the Act or amendment in such
Order with retrospective effect and therefore, the
impugned Amendment Order was having prospective effect
only from 31-7-2002 being the date when was published.
It was therefore held that the instructions issued by the
State Government under the impugned notification dated
31-7-2002 could not have the effect of altering the
impugned Amendment order into an Order having
retrospective effect, nor could any condition in the
Licencing Order which was earlier issued have the effect
of any vested right of a person for holding a valid
licence by virtue of such condition. It was, therefore,
held that the Amendment Order of 2002 touching the
eligibility criteria for getting the licence as a
wholesaler, could not be made applicable to persons who
were already holding the licences on the date of
amendment, since there was no legislation made for
retrospectively taking away any vested rights under the
licence. It was therefore held that the instructions
issued on 31-7-2002 on the basis of the Amendment Order
could not have the effect of taking away the vested
rights of the persons holding valid licence as wholesale
dealers in kerosene. The notices issued by the State
Government proposing action against persons holding valid
licence on the date of the Amendment Order for cancelling
them were, therefore, held to be without authority and
bad in law. It was further held that so far as the
applications which were pending for renewal of the
licence on the date of the Amendment Order were
concerned, the provisions of the Amendment Order, as they
existed on the date of taking decision on such
applications, would apply and in that sense, the
Amendment Order had "retroactive effect". Mere pendency
of applications did not create any vested right in favour
of the applicants and such applications were to be
considered and decided keeping in view the eligibility
criteria reflecting from the new definition added by
clause 2(18A) of the Licencing Order. The learned Single
Judge, therefore, held that the amendment in the
Licensing Order of 1981 was not retrospective, and was
only prospective, and that the rights of the persons
already holding valid licence, to continue as wholesale
dealers in kerosene which existed on the date of
amendment, were not taken away until the expiry of the
date of validity of licences, and further that, those
whose applications for grant or renewal of licence were
pending on the date of the amendment were not entitled to
such licence on account of the Amendment Order of 2002
unless they acquire the status of company agents or
authorized dealers of the company, and also that the
Amendment Order of 2002 did not violate Article 14 or
19(1)(g) of the Constitution, rejected the petitions in
which the petitioners had claimed grant or renewal of
licences on the basis of their applications pending on
the date of the Amendment Order, and allowed the
petitions in cases where the petitioners were holding
valid licences on the date of the Amendment Order. The
present two groups of appeals are directed against this
decision, one by the petitioners whose applications for
grant or renewal of licence were pending on the date of
the Amendment Order and the other by the State Government
against the order allowing the petitions of those who
were holding valid wholesalers licences on the date of
the coming into force of the Amendment Order.
7. The learned Senior Counsel, arguing the appeals
for all the appellants, whose petitions have been
rejected, contended that the object of the definition
clause was merely to avoid frequent repetition of the
meaning of the words which are defined in the provisions
of the enactment, wherever they may have been used. The
definition of "PDS Kerosene Wholesale Dealer" inserted by
clause 2(18A) of the Licencing Order of 1981 would apply
wherever that phrase occurs in the said Licencing Order.
Such definition cannot by itself bring about an amendment
in the definition of the word "dealer" or "wholesaler" or
in Clauses 3, 4, 7, 8 or 9 of the Licencing Order of
1981. Since the phrase was not used in any of the
provisions of the Licencing Order, other than in the
definition clause 2(18A) which was inserted by the
impugned Amendment Order, 2002, such amendment was
abortive and it did not have the effect of adding
anything in the Licencing Order of 1981 that could
authorized refusal of licence to the wholesale dealers or
cancellation of the existing licences. It was submitted
that the Court cannot supply the lacuna in the enactment
and will not fill in the gaps or omissions in it.
Reliance was placed on the following decisions in support
of this contention.
[a] The decision of the Supreme Court in Smt. Hira
Devi v. District Board, reported in AIR 1952 SC
362, was cited for the proposition that it was
certainly not the duty of the Court to stretch
the words used by the Legislature to fill in gaps
or omissions in the provisions of an Act. In
paragraph 14 of the judgement, the Court observed
that it was unfortunate that when the Legislature
came to amend the old Section 71 of the U.P.
District Boards Act, 1922, it forgot to amend
Section 90 in conformity with the amendment of
Section 71. But this lacuna cannot be supplied
by any such liberal construction as the High
Court sought to put upon the expression "orders
of any authority whose sanction is necessary".
[b] The decision of the Supreme Court in P.K.Unni v.
Nirmala Industries, reported in AIR 1990 SC 933,
was cited to point out that it was held in
paragraph 9 of the judgement that the reason why
the legislature provided for different periods
for the two matters which are the necessary steps
- one following the other - to be taken for
setting aside the sale of an immovable property
sold in execution of a decree was not for the
Court to question. The Court would not assume
that the legislature made a mistake in this
respect or made an omission in accomplishing what
it had set out to achieve.
[c] The decision of the Supreme Court in Union of
India v. Deoki Nandan Aggarwal, reported in AIR
1992 SC 96, was cited for the proposition that it
is not the duty of the Court either to enlarge
the scope of the legislation or the intention of
the legislature when the language of the
provision is plain and unambiguous. The Court
court cannot rewrite, recast or reframe the
legislation for the very good reason that it has
no power to legislate. The Court cannot add
words to a statute or read words into it which
are not there. Assuming there is a defect or an
omission in the words used by the legislature,
the Court could not go to its aid to correct or
make up the deficiency. The Courts shall decide
what the law is and not what it should be. The
Court, of course, adopts a construction which
will carry out the obvious intention of the
legislature but could not legislate itself. It
was held that, to invoke judicial activism to set
at naught legislative judgement is subversive of
the constitutional harmony and comity of
instrumentalities. (See paragraph 14 of the
judgement).
[d] The decision of the Supreme Court in State of
Kerala v. Mathai Verghese, reported in (1986)4
SCC 746 was relied upon for the proposition that
the Court can merely interpret a provision so as
to make explicit the intention of the
legislature. It cannot rewrite, recast or
redesign the provision since the power to
legislate has not been conferred on the Court.
The Supreme Court also held that the Court should
make a purposeful interpretation so as to
`effectuate' the intention of the legislature and
not a purposeless one in order to `defeat' the
intention of the legislators wholly or in part.
7.1 It was then contended that the Government has, in
the impugned circular at Annexure "E", assumed
consequences which did not follow from the impugned
Amendment Order that licence cannot be issued to a person
who is not appointed as a dealer by the government oil
company. It was submitted that if this proposition was
correct, then the impugned circular at Annexure "E" did
not have the backing of the Licencing Order, 1981. It
was submitted that a mere circular cannot be effective
and will not take away the rights under the Licencing
Order. In support of this contention, the learned Senior
Counsel relied upon the decision of the Division Bench in
Letters Patent Appeal No.538 of 2001 and other cognate
matters, decided on 1-8-2001, in which, it was held in
paragraph 21 of the judgement that that the impugned
directions of the circulars which were sought to be
supported on clause 25 of the Licencing Order, could not
have been issued contrary to the provisions of the
Licencing Order to provide for only one class of
wholesalers who were agents of the oil companies, with
further direction that the licencing authority should
gradually phase out by eliminating class of wholesale
dealers directly appointed by the licencing authority and
not renew their licences on expiry of the periods of
their licences. In paragraph 22 of the judgement, it was
held that the State has derived it powers under Section 3
of the Act by virtue of section 5 thereof, and as a
delegated authority it was required to follow the same
procedure for making an order, as was to be followed by
the Central Government under Section 3 of the Act. In
paragraph 26 of the judgement, it was concluded that that
impugned circular was merely executive instructions de
hors the Licencing Order, 1981, and it was not a law, nor
was it a delegated or subordinate legislation which could
be said to be covered under Article 19(6) of the
Constitution. The Court, therefore, set aside the
circulars by which the policy decision of the State
Government not to renew the licences of kerosene
wholesale dealers who were not the agents of the oil
companies.
7.2 It was then contended that the impugned Amendment
Order, 2002 was ultra vires the provisions of Section
3(1) of the Essential Commodities Act, because, unless it
was found that, but for such an order, the community will
be deprived of the supplies or services concerned, such
an Order could not be issued. Reliance was placed on the
decision of the Supreme Court in Rajendra Kumar Gupta v.
State of U.P., reported in (1997)4 SCC 511, in support of
this contention, in which the impugned requisition order
was held to be ultra vires Section 23 of the Defence and
Internal Security of India Act, 1971, unauthorized and
incompetent on the ground that the object underlying the
impugned requisition order had no nexus with the
maintenance of supplies and services essential to the
life of the community and was totally de hors the
provisions of Section 23.
7.3 The learned Senior counsel further argued that
the impugned Amendment Order, 2002 and the impugned
circular were violative of the appellants' fundamental
rights to equality, because, they invidiously
discriminated amongst wholesale dealers in kerosene who
belong to the same class. The appellants, though not
appointed as dealers by the government oil companies,
were considered to be eligible for wholesaler's licence
in kerosene between the years 1981 to 2002 and were doing
their business as wholesale dealers in kerosene till the
date of the Amendment Order. Now, there was brought
about a classification between those who were recognized
by the oil companies and those who were not and all those
who were not appointed by the oil companies as dealers,
were sought to be en mass made ineligible. Such a
classification had no reasonable nexus with the object
sought to be achieved by the said Act or the Licencing
Order, 1981, of adequate supply of essential commodities.
It was argued that the burden of showing that the
differentiation between the two classes had reasonable
nexus which is sought to be achieved was on the State,
which has not been able to show what were the policy
considerations that weighed with it in making the
impugned Order. The State had put a sweeping restriction
on one class and shown special favour to those who were
dealers of the government oil companies to the exclusion
of all other wholesalers though all dealers had a
fundamental right to carry on business as wholesalers.
No justification was shown for such classification and
therefore, the impugned Order was violative of Article 14
of the Constitution. In support of this contention, the
learned Senior Counsel, relied upon the following
decisions :
[a] The decision of the Supreme Court in Union of
India v. Cynamide India Ltd., reported in AIR
1987 SC 1802, was cited to point out that, in
paragraph 4 of the judgement, it was held by the
Supreme Court that the Court can examine the
validity of the Price Control Order, if there is
any hostile discrimination. In the same
decision, the Supreme court held that the
legislative activity being a subordinate or
delegated legislative activity, it must
necessarily comply with the statutory conditions,
if any, no more and no less, and no implications
of natural justice could be read into it unless
it is a statutory condition.
[b] The decision of the Supreme Court in D.S.Nakara
v. Union of India, reported in AIR 1983 SC 130,
was cited for the proposition that the thrust of
Article 14 is that the citizen is entitled to
equality before law and equal protection of laws.
Legislative and executive action may accordingly
be sustained if it satisfies the twin tests of
reasonable classification and the rational
principle correlated to the object sought to be
achieved. (See paragraph 16 of the judgement).
[c] The decision of the Supreme Court in Kumari
Shrilekha Vidyarthi v. State of U.P., reported
in AIR 1991 SC 537, was cited to point out that,
it was held by the Supreme Court in a case where
there was no discernible principle for impugned
action of changing all government counsel in
districts throughout the State, even those whose
tenure in office had not expired, it was held
that such a drastic action could be justified
only on the basis of some extraordinary ground
equally applicable to all government counsel in
the Districts throughout the State which is
reasonable. The Court held that the reason, if
any, for considering such en-bloc change
necessary had not been disclosed either in the
circular or at the hearing, and that it was
difficult to appreciate the ground that the
decision to terminate the professional engagement
had been taken in order to streamline the conduct
of the government cases and effective prosecution
thereof was a reasonable basis for such drastic
and sweeping action, particularly when the Manual
provided ordinarily for renewal of the tenure of
the appointees.
[d] The decision of the Supreme Court in Food
Corporation of India v. Om Prakash Sharma,
reported in (1998)7 SCC 676, was cited to point
out that in a case where no material was produced
by the Corporation to justify the amendments
introducing classification between the graduates
and non-graduates and where it was asserted that
there was no difference in duties of graduates
and non-graduates, it was held that amendments to
the Regulations making a differentiation between
graduates and non-graduates in the matter of
promotion to the posts of AG I and AG II offended
the equality clause and were, therefore,
unconstitutional.
[e] The decision of the Supreme Court in Onkar Lal
Bajaj v. Union of India, reported in (2003)2 SCC
673, was cited for the proposition that Article
14 guarantees to everyone equality before law.
Unequals cannot be clubbed. Likewise, an
arbitrary exercise of executive power deserves to
be quashed. In the case before the Supreme
Court, the only reason for the en masse
cancellation of allotment was that a
"controversy" had been raised and the solution
resorted to, without there being an application
of mind to any case, a controversy had been
raised for cancellation of all allotments, which,
as held by the Supreme Court in paragraph 45 of
the judgement, was worse than the problem. It
was held that equal treatment to uneuqals is
nothing but inequality. To put both the
categories - tainted and the rest - on par was
wholly unjustified, arbitrary, unconstitutional
being violative of Article 14 of the
Constitution.
7.4 It was then contended that the impugned Amendment
Order and the impugned circular were violative of the
fundamental rights of the appellants guaranteed by
Article 19(1)(g) of the Constitution. The impugned
circular was not a law and cannot impose any restriction
under clause (6) of Article 19 on the fundamental rights
guaranteed under Article 19(1)(g) of the Constitution of
India. The impugned Amendment Order, 2002 and the
Circular in so far as they excluded all the wholesalers
in kerosene, not appointed by the oil companies, from the
field of distribution of kerosene through public
distribution system imposed a disproportionate
restriction on the fundamental right to do business and
were liable to be set aside on the doctrine of
proportionality as unreasonable restriction imposed on
the fundamental rights of the appellants under Article
19(1)(g) of the Constitution of India. Reliance was
placed on the following decisions in support of this
contention :
[a] The decision of the Supreme Court in Bachan Singh
v. State of Punjab, reported in AIR 1982 SC
1325, was cited to point out that it was held in
paragraph 32 of the judgement that, when a law is
challenged on the ground that it imposes
restrictions on the freedom guaranteed by one or
the other sub-clause of clause (1) of Article 19
and the restrictions are shown to exist by the
petitioner, the burden of establishing that the
restrictions fall within any of the permissive
clauses (2) to (6), which may be applicable, must
rest upon the State. The State would have to
produce material for satisfying the Court that
the restrictions imposed by the impugned law fall
within the appropriate permissive clause from out
of clauses (2) to (6) of Article 19. The Supreme
Court further held that there may be cases where
the nature of legislation and the restrictions
imposed by it may be such that the Court may,
without more, even in the absence of any positive
material produced by the State, conclude that the
restrictions fall within the permissible
category, as for example, where a law is enacted
by a Legislature for giving effect to one of the
Directive Principles of State policy and prima
facie, the restrictions imposed by it did not
appear to be arbitrary or excessive.
[b] The decision of the Supreme Court in Union of
India v. G. Ganayutham, reported in (1997)7 SCC
463 was cited for the proposition that a statute
can be struck down if the restrictions imposed by
it are disproportionate or excessive having
regard to the purpose of the statute, and that
the Court can go into the question whether there
is a proper balancing of the fundamental right
and the restriction imposed. In paragraph 28 of
the judgement, it was observed that, "As and when
an executive act or administrative action taken
in excess of statutory powers, is alleged to
offend fundamental freedoms, it will then be for
the Supreme Court to decide whether the principle
of proportionality applies in administrative law
sphere in our country and whether the courts will
take up a primary role. Whether the primary role
will be confined to Articles 19, 21 etc. and not
to Article 14 will also have to be decided".
[c] The decision of the Supreme Court in M.R.F. Ltd.
v. Inspector Kerala Government, reported in
(1998)8 SCC 227, was cited for the proposition
that, in examining the reasonableness of a
statutory provision, whether it is violative of
the Fundamental Right guaranteed under Article
19, one has to keep in mind that the restrictions
must not be arbitrary or of an excessive nature
so as to go beyond the requirement of the
interest of the general public, and that, there
must be a direct and proximate nexus or a
reasonable connection between the restrictions
imposed and the object sought to be achieved.
[d] The decision of the Supreme Court in Om Kumar v.
Union of India, reported in (2001)2 SCC 386 was
cited to point out that the Indian Supreme Court
had applied the principle of proportionality to
legislative action since 1950. It was held that,
by "proportionality", we mean the question
whether, while regulating exercise of fundamental
rights, the appropriate or least-restrictive
choice of measures has been made by the
legislature or the administrator so as to achieve
the object of the legislation or the purpose of
administrative order, as the case may be. Under
the principle, the Court will see that the
legislature and the administrative authority
"maintain a proper balance between the adverse
effects which the legislation or the
administrative order may have on the rights,
liberties or interests of persons keeping in mind
the purpose which they were intended to serve".
The legislature and the administrative authority
are, however, given an area of discretion or a
range of choices, but, as to whether the choice
made infringes the rights excessively or not is
for the court. That is what is meant by
proportionality.
7.5 It was also contended that the impugned Order
adversely affected the vested rights of the appellants,
who had applied for renewal before the expiry date of
their licences i.e. before 31-12-2001, to get renewal
under clause 5 of the Licencing Order, 1981, as its
provisions existed before the amendment. This right was
taken away by the impugned circular and the amendment,
though the provisions of the Amendment Order, 2002 were
not retrospective. The applications for renewal were
already pending and the Amendment Order cannot apply to
such pending proceedings. Right to renewal cannot be
taken away unless a valid statutory amendment is made
with a retrospective effect. Even if the amendment
applied to fresh applications for licence, it cannot
affect the vested right to the renewal of licence and the
right to continue business as deemed licensee till the
renewal was granted or refused. It was submitted that
the right was being claimed as a licence holder under
clause 5 for getting the renewal, and not as a dealer.
It was further argued that the law affecting vested
rights cannot be absolute and a delegated legislation
cannot apply retrospectively as per the settled legal
position. When any enactment affects vested rights, it
would be retrospective and not retroactive. It was
submitted that, in capacity as licence holders, the
appellants had vested right under the scheme of the
Licencing Order to get renewal or to be considered for
renewal in accordance with law, as it stood prior to the
amendment. The learned senior counsel referred to the
decision of the Supreme Court, State of Gujarat v.
Hon'ble High Court of Gujarat, reported in (1998)7 SCC
392 in this regard, and pointed out that, in paragraph 47
of the judgement, the Supreme Court approvingly referred
to a passage from Oxford Hand book of Criminology on
"Retroactive and Retrospective Theories".
7.6 The other counsel, who appeared in these appeals
for the parties who were original petitioners, have
adopted the contentions which have been canvassed by the
learned Senior Counsel for the original petitioners in
these appeals.
8. The learned Advocate General appearing for the
respondents, supporting the decision of the learned
Single Judge in the petitions which have been rejected
and opposing it in the petitions which have been allowed,
contended that the provisions of the Essential
Commodities Act, 1955 were placed at item 126 in the
Ninth Schedule read with Article 31B of the Constitution
of India and this fact should be kept in mind while
dealing with any of the Orders made under the said Act,
though he fairly submitted that such Order, will not
attract the immunity given to the parent Act by virtue of
its being placed in the Ninth Schedule. It was submitted
that the said Act was enacted to provide, in the interest
of general public, for the control of the production,
supply and distribution of and trade and commerce in
certain commodities and the Act and the Orders made
thereunder were law giving effect to the directive
principles to State policy contained in Articles 38 and
39(b) of Part IV of the Constitution and therefore,
protected even by Article 31C of the Constitution. It
was argued that, under Section 5 of the said Act, the
Central Government was empowered to delegate its powers
to the State Government and by virtue of section 6, the
Orders made under Section 3 had an overriding effect over
other enactments. It was then submitted that the public
distribution system in kerosene was different from the
parallel marketing system and these were recognized as
different systems under the provisions of the Kerosene
Restriction on Use and Fixation of Ceiling Price Order,
1993, and that the Central Government had also issued the
Public Distribution System (Control) Order, 2001, as per
which, the supply of essential commodities including
kerosene was to be made as per the said system to ensure
that the essential commodities are supplied to the ration
card holders who are poor persons targeted to be
benefitted by the public distribution system. It was
submitted that the general delegation of powers was made
by the Central Government in favour of the State
Government by its resolution dated 30-11-1974 issued
under Section 5 of the said act and therefore, the State
Government possessed all the powers that could have been
exercised by the Central Government under the Licencing
Order of 1981. It was argued that, after the amendment
made in the Licencing Order, 1981, by Amendment Order
dated 22-2-1994, licence was required only for PDS
kerosene since, as per Schedule I Part II of the
Licencing Order, 1981, after the said amendment, in Item
2(a) "Kerosene other than the kerosene sold under
parallel marketing system as defined in the Order of the
Government of India, Ministry of Petroleum and Natural
Gas No. GSR/584(E) dated 2nd September 1993" was the
essential article within the meaning of clause 2(8) for
which an application for licence was required to be made
in context of Clauses 3, 4 and 5 of the Licencing Order.
It was submitted that, in view of the amendment in Part
II of Schedule I, naming PDS kerosene as an essential
article and the addition of definition by clause 2(18A),
defining `PDS kerosene wholesale dealer' as a person who
is appointed by a government oil company as a dealer,
and, the requirement in the application Form "A" to
mention the particulars including the category for which
the licence is required, it was clear that no other
amendment was required to be made in the Licencing Order,
because, as per all these provisions, while applying for
a licence as a wholesale dealer in respect of PDS
kerosene, the definition clause defining `PDS kerosene
wholesale dealer' would automatically apply for
determining the eligibility of such applicant. If a
person wanted wholesalers licence in PDS kerosene, he had
to apply in Form "A" and while considering the
application, the licencing authority would consider the
definition of "PDS kerosene wholesale dealer" in clause
2(18A) which was devised for such a situation. The said
definition being a special provision had the effect of
prevailing over general definition of wholesale dealer,
and those who dealt with kerosene sold under parallel
marketing system, as defined in the Order dated 2-9-1993
and were not appointed by the oil companies were excluded
from the definition. It was contended that the said
Order of 2-9-1993 necessitated the amendment of the
Licencing Order of 1981 to bring it in tune with the said
Central Order. It was argued that there was no
inconsistency between clause 3 of the Licencing Order and
the definition under Clause 2(18A), and that the said
definition was neither a surplusage nor was it redundant.
8.1 The learned Advocate General further argued that,
in order to achieve speedy distribution of PDS kerosene,
which was coloured "blue" and meant for distribution
through PDS to the licenced fair price shops, the
middlemen wholesale dealers who were required to buy it
from the dealers appointed by the company were removed in
public interest. Moreover, there were complaints against
such wholesalers and the supply meant for the ration card
holders was being diverted as a result of this
intervening chain of wholesalers. It was submitted that
it was for the government to decide what mode of
distribution should be adopted and what channels should
be prescribed in a public distribution system of
essential commodities and as per the policy decision, it
has been decided to exclude the wholesale dealers who are
not appointed by the government oil companies from the
public distribution system of kerosene which was meant to
be supplied to the poor. It was also argued that the
gazetted circular dated 31st July 2002 should be treated
as a part of the exercise of delegated powers by the
State Government under Section 3(1) of the Act and should
be held to be having a statutory force.
8.3 The learned Advocate General contended that the
Court should give full effect to all the words in the
enactment and nothing should be read as redundant. For
this proposition, he relied upon the following decisions:
[a] The decision of the Supreme Court in Aswini Kumar
Ghose v. Arbinda Bose, reported in AIR 1952 SC
369, was cited for the proposition that it is not
a sound principle of construction to brush aside
words in a statute as being inapposite
surplusage, if they can have appropriate
application in circumstances conceivably within
the contemplation of the statute. (see paragraph
26 of the judgement).
[b] The decision of the Supreme Court in J.K.Cotton
Spinning & Weaving Mills Co. Ltd. v. State of
Uttar Pradesh, reported in AIR 1961 SC 1170, was
cited for the proposition that, in the
interpretation of statutes, the Courts always
presume that the legislature inserted every part
thereof for a purpose and the legislative
intention is that every part of the statute
should have effect. These presumptions will have
to be made in the case of rule making authority
also. (See paragraph 7 of the judgement).
[c] The decision of the Supreme Court in Mohammad Ali
Khan v. Commissioner of Wealth Tax, reported in
AIR 1997 SC 1165, was cited for the proposition
that, just as it is not permissible to add words
or to fill in a gap or lacuna in statute,
similarly it is of universal application that
efforts should be made to give meaning to each
and every word used by the legislature.
8.4 It was also argued that the Courts should adopt a
purposeful construction so as to make the object of the
legislation effective. In support of this argument, the
learned Advocate General referred to the following
decisions :
[a] The decision of the Supreme Court in Hindustan
Lever Ltd. v. Ashok Vishnu Kante, reported in
J.T. 1995(6) SC 625, was cited to point out that
the Supreme Court in paragraph 41 of the
judgement, approvingly referred to its earlier
decision in Workmen of American Express
International Banking Corporation v. Management
of American Express International Banking
Corporation, reported in 1985(4) SCC 71, wherein
it was observed that the words occurring in
statutes of liberal import such as social welfare
legislation and human rights legislation were not
to be put in Procrustean beds or shrunk to
Liliputian Dimensions. The Supreme Court in
paragraph 42 approvingly referred to a passage
from the book, "Statutory Interpretation", 2nd
Edition, by Francis Bemmion, in which, it was
observed that a purposive construction of an
enactment was one which gives effect to the
legislative purpose by following the literal
meaning of the enactment where that meaning is in
accordance with the legislative purpose or
applying a strained meaning where the literal
meaning is not in accordance with the legislative
purpose.
[b] The learned Advocate General also relied upon the
following passage from "Principles of Statutory
Interpretation" by Mr. Justice G.P.Singh, Eighth
Edition, p.106-107 :-
"The rule which is also known as `purposive
construction' or `mischief rule', enables
consideration of four matters in construing an
Act : (1) What was the law before the making of
the Act, (ii) What was the mischief or defect for
which the law did not provide, (iii) What is the
remedy that the Act has provided, and (iv) What
is the reason of the remedy. The rule then
directs that the courts must adopt that
construction which "shall suppress the mischief
and advance the remedy"."
8.5 It was then argued that there was no presumption
that there was casus omissus in the statute and creases
in the legislation should be iron out. In support of
these contentions, the learned Advocate General relied
upon the following decisions :
[a] The decision of the Supreme Court in Commissioner
of Income-Tax, Central, Calcutta v. National Taj
Traders, reported in AIR 1980 SC 485, was cited
for the proposition that a casus omissus cannot
be supplied by the Court except in the case of
clear necessity and when reason for it is found
in the four corners of the statute itself, but at
the same time, a casus omissus should not be
readily inferred and for that purpose, all the
parts of a statute or section must be construed
together and every clause of a section should be
construed with reference to the context and other
clauses thereof so that the construction to be
put on a particular provision makes a consistent
enactment of the whole statute.
[b] The decision of the Supreme Court in Ahmedabad
Municipal Corporation v. Nilaybhai R. Thakore,
reported in AIR 2000 SC 114 was cited to point
out that, in paragraph 14 of the judgement, the
Supreme Court approvingly cited the oft-quoted
principle that, when a defect appears, a judge
cannot simply fold his hand and blame the
draftsman. He must set to work on the
constructive task of finding the intention of
Parliament and then he must supplement the
written words so as to give `force and life' to
the intention of the Legislature. A Judge must
not alter the material of which the Act is woven,
but he can and should iron out the creases. It
was held that this statement of law made by Lord
Denning has been consistently followed by the
Supreme Court.
8.6 It was then contended that the Amendment Order
was prospective and from the date it came into force, it
should be given full effect and all the decisions as
regards the grant or renewal of licence were to be
rendered on the basis of the amendment after the date of
the amendment. If, at the stage of renewal, the
applicant was ineligible to get any licence, the
application had to be rejected, because, right of renewal
was not a vested right. In support of this contention,
the learned Advocate General relied upon the following
decisions :
[a] The decision of the Supreme Court in Bishun
Narain Misra v. State of Uttar Pradesh, reported
in AIR 1965 SC 1567, * was cited to point out
that, in a case where rule provided that, from
the date it came into force, the age of
retirement would be 55 years, it was held that,
such a rule would apply from that date to all
government servants even though they may have
been recruited before 25th May 1961 when the
government again reduced the age of retirement to
55 year from 58 years, which was earlier raised
to 58 years from 55 years, in the same way, as
the rule of 1957 which increased the age from 55
years to 58 years applied to all government
servants even though they were recruited before
1957. It was held that there was no
retrospectivity of the rules. The contention
that the proviso to the rule showed that it was
applied retrospectively was rejected. Proviso
laid down that the government servant who had
attained the age of 55 years years on or before
17th June 1957 and had not attained the age of 58
years on May 25, 1961, would be deemed to have
been retained in service after the date of
superannuation, namely, 55 years. It was held
that this proviso did not make the rule
retrospective; it only provided as to how the
period of service beyond 55 years should be
treated in view of the earlier rule of 1957,
which was being changed by the Rule of 1961.
[b] The decision of the Supreme court in Punjab
University v. Subash Chander, reported in AIR
1984 SC 1415, was cited to show that, in
paragraph 11 of the judgement, the decision in
B.N.Misra (supra) was cited with approval.
[c] The decision of the Supreme Court in Dena Bank v.
Bhikhabhai Prabhudas Parekh & Company, AIR 2000
SC 3654, was cited for the proposition that the
legislation may be made to commence from a back
date, i.e. from a date previous to the date of
its enactment. To make a law governing a past
period on a subject is retrospectivity. A
legislature is competent to enact such a law.
The ordinary rule is that a legislative enactment
comes into operation only on its enactment and
retrospectivity is not to be inferred unless
expressed or necessarily implied in the
legislation, specially those dealing with
substantive rights and obligations. It was
pointed out that the Supreme Court approvingly
cited a passage from the Principles of Statutory
Interpretation by Justice G.P.Singh, Seventh
Edition, 1999, page 369, in which, it was
observed that rule against retrospective
construction was not applicable to the statute
merely, "because a part of the requisites for its
action is drawn from a time antecedent to its
passing".
[d] The decision of the Supreme Court in State of
Tamil Nadu v. M/s Hind Stone, reported in AIR
1981 SC 711, was cited to point out that, it was
held that Rule 8C of the Tamil Nadu Minor Mineral
Concession Rules (1959) was attracted when
applications for renewal of lease were dealt
with. In paragraph 12, the Supreme Court
observed : "If as a result of experience gained
after watching the performance of private
entrepreneurs in the mining of minor minerals, it
is decided to stop grant of leases in the private
sector in the interest of conservation of the
particular mineral resource, attainment of the
object sought will be frustrated if renewal is to
be granted to private entrepreneurs without
regard to the changed outlook. In fact, some of
the applicants for renewal of leases may
themselves be the persons who are responsible for
the changed outlook. To renew leases in favour
of such persons would make the making of Rule 8C
a mere exercise in futility. It must be
remembered that an application for the renewal of
a lease is, in essence, an application for the
grant of a lease for a fresh period. We are,
therefore, of the view that Rule 8C is attracted
in considering applications for renewal of leases
also". In paragraph 13, the Supreme Court
observed : "While it is true that such
applications should be dealt with within a
reasonable time, it cannot on that account be
said that the right to have an application
disposed of in a reasonable time clothes an
applicant for a lease with a right to have the
application disposed of on the basis of the rules
in force at the time of the making of the
applications. No one has a vested right to the
grant or renewal of a lease and none can claim a
vested right to have an application for the grant
or renewal of a lease dealt with in a particular
way, by applying particular provisions. In the
absence of any vested rights in anyone, an
application for a lease has necessarily to be
dealt with according to the rules in force on the
date of the disposal of the application despite
the fact that there is a long delay since the
making of the application."
[e] The decision of the Supreme Court in V.Karnal
Durai v. The District Collector, reported in
J.T. 1998(8) SC 301 was cited to point out that
the earlier decision of the Supreme Court in
State of Tamil Nadu v. M/s Hind Store (supra)
was approvingly referred to in paragraph 12 of
the judgement.
[f] The decision of the Supreme Court in Darshan
Singh v. Ram Pal Singh, reported in AIR 1991 SC
1654, was cited for the proposition that a
statute was not retrospective merely because it
affected existing rights, nor was it
retrospective merely because a part of the
requisites for its action is drawn from a time
antecedent to its passing. The Supreme Court in
paragraph 36 of the judgement approvingly
referred to a passage from Halsbury's Laws of
England, 4th Edition, on the meaning of
"retrospective". In the same decision, the
Supreme Court also referred to the meaning of
"retrospective law" from Black's Law Dictionary.
[g] The decision of the Supreme Court in Dilip v.
Mohd. Azizul Haq, reported in AIR 2000 SC 1976,
was cited to point out that, in context of the
provisions of Clause 13-A of the C.P. & Berar
Letting of Houses and Rent Control Order (1949),
it was held by the Supreme Court that the said
provision merely provided for a limitation to be
imposed for the future which in no way affects
anything done by a party in the past and statutes
providing for new remedies for enforcement of an
existing right will apply to future as well as
past causes of action.
8.7 The learned Advocate General further contended
that if on enactment of the amendment, the definition of
"PDS kerosene wholesale dealer" under clause 2(18A) makes
a dealer ineligible, his wholesale dealer licence can be
revoked. In support of this contention, he placed
reliance on the decisions in the case of Dena Bank v.
Bhikhabhai Prabhudas Parekh & Company (supra) and Bishun
Narain Misra v. State of Uttar Pradesh (supra), and
further referred to the following two decisions:
[a] The decision of the Supreme Court in Punjab
University v. Subash Chander, reported in AIR
1984 SC 1415, was cited to point out that, where
a candidate had joined M.B.B.S. course in the
year 1965, but appeared for the final examination
in the year 1974, when he was not eligible for
grace marks for the subjects as a result of which
he was declared fail, it was held that a
declaration that the candidate failed by virtue
of amended regulation as regards grace marks was
not invalid, and there was no element of
retrospectivity in the change brought by the
amendment. It cannot be said to be retrospective
in operation merely because though introduced in
1970, it was applied to the candidate who
appeared for the final examination in the year
1974, after he had joined the course earlier in
the year 1965. The Supreme Court held that no
promise was made or could be deemed to have been
made to him at the time of his admission in the
year 1965 that there will be no alteration of the
rule or regulation in regard to the percentage of
marks required for passing any examination or
award of grace marks.
[b] The decision of the Supreme Court in Mohinder
Kumar v. State of Haryana, reported in AIR 1986
SC 244, to point out that the classification of
buildings with reference to the date of
commencement of the Haryana Urban (Control of
Rent and Eviction) Act (11 of 1973), had a
rational basis and had a clear nexus with the
object to be achieved by the act of encouraging
the construction of new buildings, and that,
Section 6(1)(3) thereof could not be said to be
bad on the ground that the provisions operated
retrospectively and sought to take away the
vested rights of the tenants under the Act. It
was held that the question of acquiring any
vested rights really did not arise. Even if it
could be said that the tenants had acquired any
right because of any invalidity of the earlier
provision before amendment, it was always open to
the Legislature to remove any defect to make it
valid.
9. In reply, the learned Senior Counsel for the
appellants argued that the State Government, while
exercising delegated powers under Section 5 read with
Section 3(1) of the said Act, had no authority to
legislate with retrospective effect unless the power was
expressly conferred. It was submitted that there was no
such power conferred on the State Government to make
orders having retrospective effect and in absence of any
such delegation, no retrospective effect could be
attributed to the amended order, as was sought to be done
by the impugned circular. As regards the argument that
condition No.1 of the licence which referred to the
provisions of the Licencing Order, 1981, should be deemed
to include any amendments that may follow, it was
contended that the said condition had reference to the
provisions of the Licencing Order as they stood on the
date on which the licence was issued and future
amendments could not have been contemplated by that
condition. Reliance was placed on the following
decisions in support of this contention :
[a] The decision of the Supreme Court in Jethanand
Betab v. The State of Delhi, reported in AIR
1960 SC 89, was cited to point out that, in
paragraph 7 of the judgement, the Supreme Court
had approvingly referred to Maxwell on
interpretation of statute by re-producing a
passage, in which it was stated that, "Where the
provisions of one statute are, by reference,
incorporated in another and the earlier statute
is afterwards repealed the provisions so
incorporated obviously continue in force so far
as they form part of the second enactment."
[b] The decision of the Supreme Court in Ram Sarup v.
Munshi and others, reported in AIR 1963 SC 553,
was cited for the same proposition that, where
the provisions of an Act are incorporated by
reference in a later Act the repeal of the
earlier Act has, in general, no effect upon the
construction or effect of the Act in which its
provisions have been incorporated.
9.1 It was also contended that the licence carried a
vested right for five years under clause 5(1) of the
Licencing Order, and it was not just an existing right to
apply for a renewal in abstract. It was submitted that
none of the judgements cited on behalf of the respondents
dealt with vested rights. It was argued that in cases
where the government had filed appeals, licences were
already issued and those petitioners had vested rights to
carry on their business under the licence as wholesale
kerosene dealers notwithstanding amendments made by
insertion of clause 2(18A) in the Licencing Order. A
decision of the Supreme Court in State of U.P. v.
Daulat Ram Gupta, reported in AIR 2002 SC 1633, was cited
to point out that the Supreme Court, in context of the
provisions of the U.P. High Speed Diesel Oil and Light
Diesel Oil (Maintenance of Supply & Distribution) Order
(1981), particularly clause (16) thereof, held that it
was manifest from the provisions of the Statutory Order,
in so far as conditions of grant of licence for sale of
diesel oil are concerned, that the Statutory Order was a
complete code in itself and there was no provision in it
under which the Licencing Authority could refuse to renew
a licence if licensee's place of business falls within a
radius of 5 KMs of a government run retail outlet.
10. The Essential Commodities Act, 1955 was enacted
in the interests of general public, for the control of
the production, supply and distribution of and trade and
commerce in commodities which were declared as essential
under the Act. To achieve these objectives, the
government has been vested with powers under the Act, to
issue orders for regulating the production, storage,
transport and distribution of such essential commodities
and for controlling the prices etc. Section 5 of the
said Act enables the Central Government to delegate the
powers to make Orders or issue notifications under
Section 3 of the Act to State Government and to other
officers or authorities mentioned in that section. The
Orders made under Section 3 shall have an overriding
effect, under Section 6, over anything inconsistent in
any enactment other than the Essential Commodities Act.
11. Under clause (d) of Section 3(2) of the Act, an
Order made under sub-section (1) of Section 3 may provide
for regulating by licence, permit or otherwise the
storage, transport, distribution, disposal, acquisition,
use or consumption of any essential commodity.
"Petroleum and petroleum products" are at item (viii) of
the classes of commodities defined as "essential
commodity" under clause (a) of Section 2 of the said Act.
12. The Government of Gujarat, being of the opinion
that it was necessary and expedient, so to do for
maintaining supplies of certain essential commodities and
for securing their equitable distribution and
availability at fair prices, made the Gujarat Essential
Articles (Licencing, Control & Stock Declaration) Order,
1981, in exercise of its powers under Section 3 of the
said Act, read with the Order of the Government of India
dated 30th November 1974, and other relevant Orders
mentioned in the preamble to the said Licencing Order of
1981, by which the powers were delegated to it.
12.1 The word "dealer" is widely defined in clause
2(5) so as to mean, a person, a firm, an association of
persons, a company, a corporation or a cooperative
society engaged in the business of purchase, sale or
storage for sale of any essential article, whether or not
in conjunction with any other business and includes his
representative, agent or, as the case may be, commission
agent. The expression, however, does not include, inter
alia, an oil company dealing in petroleum products.
The expression "essential article" is defined in
clause 2(8) so as to mean any an article specified in
Schedule I. This is an important definition which will
demarcate the area of operation of the Licencing Order.
The word "retailer" has been defined in clause
2(18) as follows :
"2(18). `Retailer' means a dealer who sells
essential articles to consumers and holds a
retailer's or hawker's licence issued under this
Order."
The word "wholesaler" is defined in clause 2(25)
as under :
"2(25). `Wholesaler' means a dealer who sells
essential articles to retailers, other dealers or
bulk consumers and holds a wholesaler's licence
issued under this Order."
The expression "PDS Kerosene wholesale dealer" as
defined by the newly inserted clause 2(18A) by the
impugned Amendment Order, reads as follows :
"2(18A). `PDS Kerosene wholesale dealer' means a
dealer appointed by any of the oil companies
engaged in marketing of PDS Kerosene, as per the
authorization from the Government of India".
12.2 As per the Scheme of the said Licencing Order,
clause 3(1) provides for licencing of Dealers and
Producers, and it lays down that, on and after the 20th
day of April 1981, no person shall carry on business as a
dealer, inter alia, in petroleum products, except under
and in accordance with the terms and conditions of a
licence granted under this Order. Clause 4 contains
provisions for issuance of licence and lays down that
every application for issue or re-issue of a licence or
renewal thereof shall be made to the licensing authority
in Form `A'. Every licence shall be issued, re-issued or
renewed in Form `B'. It is provided that every licence
issued under this Order shall be non-transferrable. It
will be seen that neither Clause 3 nor Clause 4 by
themselves refer to any category of licences. However,
the statutory Form `A' in which an application is
required to be made and which must be read as a part of
the Licencing Order, contains particulars including the
categories of licence required and even Form `B' which
also is a part of the Licencing Order, refers to the
capacity in which the licence is issued to the applicant.
Clause 5 of the Licencing Order, 1981 prescribes period
of validity of a licence to be five years from 1st
January of the year in which it was issued, and also lays
down that such licence may be renewed for a period of
five years. Sub-clause (2) of Clause 5 provides that,
when an application for renewal of a licence is made
either within the period of validity of the licence under
sub-clause (1) or before the end of February under the
second proviso to sub-clause (1), the licence holder
shall be deemed to be duly licenced till the date on
which the licensing authority either renews or refuses to
renew the licence.
12.3 Clause 7 of the Licencing Order deals with powers
to refuse licence, which may be exercised by the
licencing authority after giving an opportunity of being
heard to the applicant, and for the reasons to be
recorded in writing. The order refusing to grant or
renew the licence is appealable under the provisions of
clause 11. Sub-clause (2) of clause 7 enumerates cases
where the licencing authority shall refuse to grant or
renew the licence and these are of a minor or a lunatic
or a person of unsound mind and an undischarged insolvent
or cases where three years' period has not expired from
the date of conviction of the applicant under the Act.
12.4 Clause (8) deals with suspension or cancellation
of licence for contravention of the Licensing Order or
conditions of licence, and Clause (9) relates to
cancellation of licence on contravention of any Order
made under Section 3 of the Act. Clause 17 relates to
submission of returns and in a circular which was issued
on 21-1-1999 under sub-clause (2) of clause 17, a dealer
in an essential article included in the public
distribution system including kerosene was required to
furnish a monthly return so as to reach the licencing
authority on or before 10th day of next following month.
13. The contention of the appellants is that the
added definition of "PDS Kerosene wholesale dealer" in
the Licencing Order of 1981 makes no sense without any
corresponding change being made in the substantive
provisions of the said Order under which the appellants
were entitled to get wholesale dealers licence. The
definition of "PDS kerosene wholesale dealer" even as
added in the order cannot by itself affect any rights,
obligations and powers dealt with by the provisions of
the Order.
13.1 The Licencing Order, 1981 was enacted by the
State Government in exercise of the powers conferred by
Section 3 of the Essential Commodities Act read with the
delegation order dated 30-11-1974, making it obligatory
for the dealers to get a licence under the Order for
carrying on business in essential articles specified
under clause 3(1)(a) or in petroleum products under
clause 3(1)(b). `Petroleum products' are essential
commodities under clause (viii) of Section 2 of the
Essential Commodities Act; and `essential articles' for
the purpose of the Licencing Order, 1981 are those which
are specified in its Schedule I which earlier included in
Part II the following entry :
"SCHEDULE I
(See Clause 2(8))
Part I - xxxxx
Part II
(Other than food stuff)
(1) xxxxx
(2) Petroleum products namely (a) kerosene,
(b) light diesel oil, (c) high speed diesel oil
or any other petroleum products which the State
Government may by notification in the official
gazette specify for the purpose of this Order."
13.2 By amendment made by Amendment Order dated
22-2-1994, the aforesaid item (2a) was substituted as
under :
"Part II
Other than Food stuff
(1) xxxxx
(2) Petroleum products namely :
(a) + Kerosene other than the kerosene sold
under parallel Marketing System as defined in the
order of the Government of India, Ministry of
Petroleum and Natural Gas No. G.S.R. 584(E)
dated the 2nd September 1993.
(b) xxxxx "
13.3 Therefore, anyone wanting to carry on business as
a dealer, whether as "retailer" or "wholesaler" in any
essential article including kerosene which is a petroleum
product was required to obtain a licence under clause 4
of the Licencing Order, 1981.
13.4 An application for issue or re-issue or renewal
of licence has to be made in the statutorily prescribed
Form `A'. This Form clearly indicates from item (4) that
there are five categories of licences, namely,
(i) Retailer's licence
(ii) Hawker's licence
(iii) Wholesaler's licence
(iv) Commission agent's licence
(v) Producer's licence
13.4 The kind of essential articles for which the
licence is sought are required to be mentioned in the
application Form `A'. The applicant is required to
specifically state the category of licence required by
him and strike out the categories which are not
applicable. He has also to mention whether he desires to
carry on business as commission agent or wholesaler or
retailer or hawker or producer, against clause 19 of Form
`A' or whether he is already a commission agent,
distributor, wholesaler, retailer, hawker, producer or
any other kind of dealer, against clause 10 of the
Application Form. Even in Form `B' prescribed under
clause 4(2) of the Licencing Order in which licence is to
be issued by the licencing authority, it is to be
specifically mentioned that the licence was issued for
business in the capacity of retailer or hawker or
wholesaler or commission agent or producer, as the case
may be, and the description not applicable was required
to be struck out. It was also to be mentioned that the
licence was for purchase / sale / storage for sale of
essential articles named therein.
13.6 Thus, when a `dealer' within the meaning of
clause 2(5) engaged in the business of purchase, sale or
storage of any essential article applied for a licence,
he was required to specify the essential article and the
category for which he was making the application for
licence. As noted above, by amendment in Schedule I Part
II of the Licencing Order, 1981 made by Amendment Order
dated 22-2-1994 (bearing No. GTH/23/KSN/1093/3015/B),
the earlier general entry 2(a) of `kerosene' was
substituted and after the said date, Part II of Schedule
I it included only "kerosene other than the kerosene sold
under parallel marketing system as defined in the Order
of the Government of India, Ministry of Petroleum and
Natural Gas No. GSR:584(E) dated the 2nd September
1993", as the essential article within the meaning of
clause 2(8) for which a licence was required to be
obtained by anyone desiring to do business as `retailer'
or `wholesaler' etc. in such kerosene.
13.7 By virtue of the aforesaid amendment made on
22-2-1994 in the Licencing Order, 1981, kerosene other
than the kerosene sold under the parallel marketing
system, as defined in the Kerosene Order dated 2nd
September 1993, which means only the public distribution
system kerosene (PDS Kerosene), was specified as an
essential article under clause 2(8), for which a licence
was required under clause 3. Therefore, in an
application for licence in Form `A', if made for public
distribution system kerosene, essential article was
required to be mentioned, as also the category for which
the licence was applied for, namely, whether as a
`retailer' or `wholesaler' etc. The applicant was
required to state against item 19 of the Form `A' whether
he desired to do business as `retailer' or `wholesaler'
etc. in such essential article. In cases where the
application was made for a wholesaler's licence for PDS
kerosene, the definition in clause 2(18A) of the amended
Licencing Order, 1981 would necessarily be attracted for
the purpose of deciding whether such licence could be
issued under clause 4, because, the application was
required to be made in the prescribed Form `A' for
getting a licence as wholesale dealer in public
distribution system kerosene, which was an essential
article included in Part II item 2(a) of the Schedule I
contained in the Licencing Order, 1981. The Amendment
Order of 2002 introducing the definition of `Public
distribution system kerosene wholesale dealer' under
clause 2(18A) cannot, therefore, be said to be an
abortive exercise, nor can it be said that the said
definition was inapplicable in the context of the
provisions relating to issuance of wholesaler's licence
in PDS kerosene.
14. Public Distribution System is a deliberate social
policy adopted in India in the process of its planned
economic development and an important component of the
policy of growth with justice. The public distribution
system is aimed at providing foodgrains and other
essential articles, including kerosene, to vulnerable
sections of the society at subsidized prices, and to
ensure equitable distribution of essential commodities.
Kerosene oil is used both as a lighting material and
cooking medium by poor households. The supply to the
State Governments, on the basis of allocations made by
the Central Government, is arranged by the public sector
Oil Companies either from domestic production or by
imports and it is sold at subsidized prices.
14.1 The Central Government, in exercise of its powers
under Section 3(1) of the Essential Commodities Act,
1955, made Public Distribution System (Control) Order,
2001 on 31st August 2001, after forming an opinion that
it was necessary and expedient so to do for maintaining
supplies and securing availability and distribution of
essential commodities under the public distribution
system. The provisions of the said Public Distribution
System (Control) Order show that it is directed to make
available the essential commodities to poor sections of
the community. Under Clause 2(j) a `fair price shop'
means a shop, which has been licenced to distribute
essential commodities by an order issued under Section 3
of the Essential Commodities Act, to the ration card
holders under the Public Distribution System. The words
`Public Distribution System' as defined by clause 2(l)
mean, the system for distribution of essential
commodities to the ration card holders through the fair
price shops, such as, rice, wheat, sugar, edible oils,
kerosene and such other commodities as are notified by
the Central Government under clause (a) of section 2 of
the Act. Clause 3 provides for identification of
families living below the poverty line, which function is
to be performed by the State Government, as per the
guidelines indicated in paragraph 1 of the Annexure to
this Order. The State Government under clause 4 is
required to issue distinctive ration cards to "Above
Poverty Line", "Below Poverty Line" and "Antyodaya"
families, and is required to conduct periodic review and
checking of ration cards as indicated in paragraph 2 of
the Annexure to the said Order. Under clause 5, the
Central Government is required to make available to the
State Governments foodgrains for distribution under the
Public Distribution System at such scales and prices as
provided in paragraph 3 of the Annexure to the said
Order. Under clause 6(2), it is the duty of the fair
price shop owners to take delivery of stocks from
authorized nominees of the State Governments to ensure
that essential commodities are available at the fair
price shop within first week of the month for which the
allotment is made. Clause 7 makes a licensing provision
for the fair price shops and the procedure for issue of
licences or authorization to the fair price shops for the
distribution of essential commodities under Public
Distribution System and duties and responsibilities of
the fair price shop owners shall be as per paragraph 5 of
the Annexure to the said Order. Under clause 5 of the
Annexure to the Order, the State Governments are required
to issue an Order under Section 3 of the Act for
regulating the sale and distribution of the essential
commodities.
14.2 Having regard to the nature of the public
distribution system in the essential articles including
kerosene, it is clear that the purpose underlying the
public distribution system will be frustrated if the
essential articles meant to reach the ration card
holders, who are economically poor persons, at subsidized
rates, get diverted to open market for being sold at
higher rates, resulting in illicit profits to the dealers
who so divert the essential commodity in violation of the
Public Distribution System policy and the provisions of
the Public Distribution System (Control) Order 2001 as
well as the Essential Commodities Act. Therefore, any
effort to ensure that the scope of such diversion is
minimized would be a reasonable step in the direction of
achieving the objects of Public Distribution System.
15. The Public Distribution System, which in the
context of kerosene, finds a specific reference in the
"Kerosene (Restriction on Use and Fixation of Ceiling
Price) Order, 1993 issued by the Central Government in
exercise of its powers under Section 3 of the Essential
Commodities Act, 1955, is thus a well-known concept. The
amendment in Part II of Schedule I of the Licencing
Order, 1981 by the Amendment Order dated 22-2-1994, by
which "kerosene other than the kerosene sold under the
parallel marketing system as defined in the Order of the
Government of India, Ministry of Petroleum & Natural Gas,
No.G.S.R. 584(E), dated 2nd September 1993" was
substituted for "kerosene" is to be understood in light
of the provisions of the said Kerosene Order of 1993 as
well as the Public Distribution System (Control) Order of
2001 issued by the Central Government.
15.1 Clause 2(c) of the Kerosene Order, 1993 defines
`dealer' so as to mean a person, firm, association of
persons, company, institution, organization or a
co-operative society approved by Government Oil Company
or Central or State Government or a parallel marketer and
engaged in the business of buying and selling kerosene.
The Government Oil Companies are enumerated in clause
2(f) of the said Order. Under sub-clause (h) of clause
(2), `parallel marketer' is defined so as to mean any
person, firm, company, institution, association of
persons, co-operative society or organization carrying on
the business of importing, storing, refining, producing,
packing, marketing, distributing and selling kerosene
under the parallel marketing system. The words `parallel
marketing system' are defined in clause 2(i) to mean, the
system other than the public distribution system, under
which a person imports, stores, transports, packs,
distributes or sells kerosene under his own arrangement.
The expression `public distributions system' as defined
in clause 2(j) of the Kerosene Order, 1993, means the
system of distribution, marketing or selling of kerosene
at declared price through distribution system approved by
the Central or State Government.
15.2 Clause 3B of the said Kerosene Order provides for
restriction on Sale and Use of Kerosene Imported under
`Parallel Marketing System' by persons not authorized,
and lays down that, "No person other than the dealer or
Government Oil Company or Parallel Marketer shall sell
kerosene to any person". It will, thus, be seen that
there is a restriction on a dealer appointed under the
public distribution system to sell, distribute or supply
kerosene under the system to any person other than for
whom the supplies are meant. Thus, the dealers appointed
under the public distribution system would be obliged to
supply kerosene under the public distribution system to
the fair price shops which are governed by the Public
Distribution System (Control) Order, 2001.
15.3 Clause 4 of the Kerosene Order of 1993 deals with
procurement, storage and sale of kerosene under the
public distribution system. Clause 6 provides for
maintenance of registers, account books and submission of
returns by a dealer under the public distribution system.
It is clear from clauses 4, 5 and 6 of the Kerosene Order
that the dealers under the Public Distribution System are
required to work under the stringent conditions
prescribed under the said Order, and all this is
obviously aimed at ensuring that the public distribution
system functions efficiently so far as the essential
article of kerosene is concerned. Separate provisions
are made in clause 7 for maintenance of records and
furnishing of information by `parallel marketers'. By
clause 8 of the said Order, it is provided that kerosene
under public distribution system should be made
distinguishable from the kerosene to be imported, sold or
distributed under parallel marketing system by use of
suitable measures to be adopted by the Government Oil
Companies, as and when necessary. This explains the
distinguishing feature of the PDS Kerosene, namely, its
blue colour.
15.4 Since `public distribution system' means the
system of distribution, marketing or selling of kerosene
at a declared subsidized price through distribution
system approved by the government, it would be lawful for
the State Government to determine a medium through which
the distribution of kerosene should be made. In view of
the definition of `parallel marketing system' and `public
distribution system' in clauses 2(i) and 2(j) of the
Kerosene Order, 1993, it becomes clear that the entry of
essential article `kerosene other than the kerosene sold
under parallel marketing system as defined in the Order
of the Government of India ........., dated the 2nd
September 1993" appearing in Schedule I Part II, at item
2(a) of the Licencing Order, 1981 would mean kerosene
sold under the Public Distribution System i.e. `PDS
Kerosene'.
15.5 It will be noticed from the provisions of the
Kerosene Order, 1993 that the restrictions on dealers
appointed under the public distribution system are made
more stringent in order to achieve the objects of the
public distribution system. No person other than the
dealer or government oil company or parallel marketer can
sell kerosene to any person and no dealer appointed under
the public distribution system can sell, distribute or
supply `PDS kerosene' to any person other than for whom
the supplies are meant. Such dealer has to be a person
approved by the government oil companies or Central or
State Government or a Parallel Marketer and engaged in
the business of buying and selling kerosene as per the
definition of `dealer'. All that the State Government
has done by adding the definition under clause 2(18A) of
the Licencing Order, 1981, read with the relevant
essential article i.e. kerosene under the public
distribution system, is to confine the wholesale
dealership in `PDS kerosene' only to one category of
dealers i.e. those who are approved by the government
oil companies, as envisaged by clause 2(c) of the
Kerosene Order of 1993, for the purpose of licence under
the Licencing Order, 1981 to sell `PDS kerosene' as
wholesale dealers. This has been done with a view to
eliminate other wholesalers who were themselves required
to buy `PDS kerosene' from the dealers appointed by the
government oil companies and then supply it to the fair
price shops established under the Public Distribution
System (Control) Order. Instead, the dealers appointed
by the government oil companies would now directly supply
the `PDS kerosene' to the fair price shops under the
Public Distribution System. Such a course was open to be
adopted by the State Government in regulating the
distribution of kerosene to fair price shops, because,
there appeared to be no need for middlemen between the
dealers of the government oil company and the fair price
shops. Moreover, removal of middlemen would eliminate
one cause of illicit diversion of kerosene meant for the
PDS fair price shops and ration card holders, to the open
market. Such a course even if it adversely affected the
right to carry on business, was a reasonable restriction
in the interests of general public, as contemplated by
the provisions of Article 19(6) of the Constitution.
Having regard to the underlying purpose of the
restriction imposed, namely, to provide a speedy and more
convenient distribution of kerosene through the public
distribution system and the evil sought to be remedied by
removing the unnecessary chain of middlemen from the
public distribution system for distribution of kerosene
to ration card holders, the restriction imposed by the
amended Licencing Order of 1981, is a reasonable
restriction imposed in the interests of general public on
the exercise of rights guaranteed by Article 19(1)(g) of
the Constitution. The restriction is clearly aimed at
promoting the welfare of the people who are economically
weak and is in consonance with the directive principles
of State policy enjoining a duty on the State to direct
its policy towards securing that the ownership and
control of the material resources of the community are so
distributed as best to subserve the common good. The
restriction can, therefore, by no means, be termed as
excessive or disproportionate, as alleged. The challenge
against the Amendment Order, 2002 on the ground that it
violates the fundamental rights of the appellants
guaranteed by Article 19(1)(g) of the Constitution,
therefore, fails.
16. The Kerosene Order of 1993 itself recognizes
separate classes of dealers and provided different
treatment to those who dealt with kerosene under the
parallel marketing system and the dealers who were
appointed under the public distribution system. The
public distribution system was kept under the total
control of the government. The classification of dealers
into those who were appointed under the public
distribution system and those who were in the parallel
marketing system was a valid and rational distinction
between the two categories devised under the Kerosene
Order of 1993 so as to provide more stringent control
over the dealers appointed under the public distribution
system.
16.1 The dealers appointed by the government oil
companies are selected on the basis of the comprehensive
guidelines for Dealer Selection issued by the Government
of India, Ministry of Petroleum & Natural Gas. The
selection of kerosene dealers is to be made by a Dealer
Selection Board headed by a retired Judge of a High Court
or retired District Judge as Chairman nominated by the
government and with members nominated by the oil
industry. There exist guidelines for the Dealer
Selection Board to judge the inter-se suitability of the
candidates and to evaluate them. The dealers in kerosene
appointed by the government oil companies are, therefore,
under a comprehensive control, as regards the kerosene
meant for distribution under the public distribution
system, which had necessarily to come through them.
Therefore, the distribution of `PDS kerosene' to the fair
price shops governed by the Public Distribution System
(Control) Order, 2001 can be directly done by such
dealers of the government oil companies through whom the
oil companies marketed their commodity. The dealers in
kerosene who are appointed by the government oil
companies, by virtue of their association with the oil
companies, form a distinct class. Confining the issuance
of PDS kerosene wholesale dealer's licence to such
dealers of the oil companies has a rational relation to
the object sought to be achieved by the amendment in the
Licencing Order of 1981, because, the supply of kerosene
meant for PDS fair price shops for the ration card
holders can be smoothly and efficiently effected by a
direct distribution through the dealers of the government
oil companies to retailer fair price shops rather than
through the middlemen who were bound to purchase the PDS
kerosene from the dealers of the government oil
companies. Therefore, no equals are treated unequally
since the classification is based on a rational criteria.
The classification has a rational nexus with the object
sought to be achieved by the law which is of effecting
proper supply and distribution of `PDS kerosene' to the
poor masses through the PDS fair price shops. The
challenge against the impugned Amendment Order, 2002 on
the ground that it is violative of fundamental rights to
equality guaranteed by Article 14 of the Constitution,
therefore, fails.
17. The case of those whose licences were in fact
renewed for five years and the case of those whose
applications were pending, cannot be treated in the same
category because of the intervention of the amendment in
the Licencing Order that materially changed the effect of
the substantive provisions of issuance of licence for
kerosene. The decision of the learned Single Judge in
Special Civil Application No.3492 of 2002 directing the
authorities to consider issuance of licence for five
years to those petitioners, as stipulated in clause 5(1)
of the Licencing Order, as against three to six months
for which licence was granted, did not create any right
in rem in all those whose applications were pending for
renewal and no renewal can be sought against the
provisions of the amended Licencing Order, 1981. That
decision of the learned Single Judge was not challenged,
as stated by the learned Advocate General, and it's
correctness is not in issue before us. It cannot,
however, have the effect of precluding this Court from
considering the impact of the provisions of the Amendment
Order, 2002. The appellants cannot claim breach of right
to equality on the ground that the cases of those whose
applications were pending before the amendment and
others, who were granted licences under the provisions of
the Order, stood on the same footing.
18. The Amendment Order, 2002 is in consonance with
the policy of distributing kerosene through public
distribution system, as contemplated by the Public
Distribution System (Control) Order of 31-8-2001 and the
Kerosene Order, 1993, both issued by the Central
Government. The Amendment Order, 2002 has been issued in
exercise of powers under Section 3(1) of the Act read
with the delegation order with the prior approval of the
Central Government and is clearly warranted by the
provisions of Section 3(1) of the Essential Commodities
Act. There is no valid ground for holding that the
Amendment Order, 2002 is ultra vires Section 3(1) of the
said Act and therefore, the contention raised on that
count on behalf of the appellants cannot be accepted.
19. The contention of the appellants that they had a
vested right to get the renewal of the licence on the
basis of clause 5(1) of the Licencing Order, 1981 and the
terms of the licence, which contemplated renewal, is
based on the ground that they had made applications for
renewal before the expiry of their licence on 31-12-2001.
19.1 Clause 5(1) of the Licencing Order, 1981 deals
with duration of the licence and the period for which it
may be renewed. There is no obligation on the licencing
authority to renew the licence and renewal may be refused
as much as grant of a licence itself, as is clear from
the provisions of clause 7(1), which empowered the
licencing authority to refuse to grant or renew a licence
after giving the applicant an opportunity of stating his
case and for the reasons to be recorded in writing. The
licence in Form `B' is issued subject to the provisions
of the Licencing Order, 1981 and therefore, when an
application is made for renewal, the decision to grant
licence cannot be taken in violation of the provisions of
the Licencing Order, 1981. Under clause 5 of the
licence, there is a condition that the licence holder
cannot contravene the provisions of the Licencing Order,
1981 or any other Orders relating to essential articles
issued under the provisions of the said Act. An
application for renewal does not create any right to get
the licence renewed, because, there is no automatic
renewal contemplated by clause 5(1) of the Licencing
Order, 1981. If the contention of the appellants that
they have a right to get the licence renewed for five
years, because, the licence holders have made the
applications for renewal within the period of the
validity of their licence is accepted, then
notwithstanding any change in the Licencing Order, 1981,
having effect of making the applicant ineligible, a
licence holder can manage to continue, on the basis of
renewals from time to time, perpetually.
19.2 Even the sub-clause (2) of clause 5 indicates
that there is no right to renewal, because, when
application for renewal is validly made, the licence
holder shall be deemed to be duly licenced till the date
on which the licencing authority either renews or refuses
to renew the licence as provided therein. Therefore,
there was no vested right to get the renewal of the
licence under the provisions of the Licencing Order,
1981. The application for renewal, like any application
for grant of a licence, was required to be considered in
light of the provisions of the Licencing Order, 1981, as
they existed at the time of taking a decision on such
application.
19.3 There is a distinction between accrual of vested
right and a privilege or expectation to get a right. The
expectation or privilege to get a renewal of licence
under clause 5(1) of the Licencing Order, was not a right
acquired or accrued to hold a renewed licence. Mere
pendency of the application for renewal did not create
any accrued or vested right to get the renewal.
Therefore, the renewal applications, which were pending,
were required to be dealt with according to the law in
force on the date of the disposal of such applications.
19.4 As held by the Supreme Court in State of Tamil
Nadu v. Hind Stone (supra), an application for the
renewal of a lease is, in essence an application for the
grant of a lease for a fresh period. While applications
should be dealt with within a reasonable time, that does
not clothe an applicant for a lease with a right to have
the application disposed of on the basis of the rules in
force at the time of the making of the application. It
was held that, in the absence of any vested right in
anyone, an application for a lease has necessarily to be
dealt with according to the rules in force on the date of
the disposal of the application despite the fact that
there was a long delay since the making of the
application. In Gajraj Singh v. STAT, reported in
(1997)1 SCC 650, it was held that grant of renewal is a
mere privilege and not an accrued or a vested right. In
P.T.R. Exports (Madras) (P) Ltd. v. Union of India,
reported in (1996)5 SCC 268, the Supreme Court held that
the applicant for licence has no vested or accrued right
to grant of licence in accordance with the policy
obtaining at the time of submitting the application, and
that the court would not bind the Government to its
previous policy by invoking the doctrine of legitimate
expectation of the applicant for licence.
19.5 The Amendment Order, 2002, therefore, did not
take away any vested right of the appellants whose
applications for getting the renewal of licence were
pending on the date of the amendment. The challenge
against the Amendment Order, 2002 on the ground that it
has a retrospective effect or that it takes away the
rights of the appellants to renewal of licence, fails,
because, there was no vested right of renewal in the
appellants under the Licencing Order, 1981 which could be
said to have been adversely affected by the Amendment
Order, 2002.
20. That takes us to the consideration of the
validity of the instructions issued in the impugned
circular that steps should be taken to cancel the
licences which were already issued before the Amendment
Order came into force. The Amendment Order, 2002 does
not purport to have any retrospective effect, but it was
argued that it has a retroactive effect of making the
licence holders who were not appointed by the Government
oil companies ineligible to continue as wholesale dealers
in `PDS kerosene' and therefore, their licences can be
cancelled by giving them show cause notice and making a
cancellation order.
20.1 When a licence is granted for a period of five
years as specified by clause 5(1), the licence holder
becomes entitled to do his business under the licence
during that period. Such a right was not merely a
procedural right, but a substantive right. In fact, a
licence of this nature only regulates an already existing
fundamental right to do business, subject to the
reasonable restrictions imposed as per Article 19(6) of
the Constitution. The licencing provisions eclipse the
exercise of the fundamental right to do business and only
those who are licenced would acquire a right under such
licence to do their business in the field regulated
validly by the licencing provisions. Without a licence,
there was no right to do business in the field of
purchase, sale or storage of essential commodities when
Licencing Orders are issued under Section 3(1) of the
Act. The said provision of Section 3(1) of the Act was
immune to any challenge on the ground that it was
inconsistent with the rights conferred by Part III of the
Constitution in view of the Act being included in the
Ninth Schedule. However, once a valid licence is
granted, the right to do business in the field covered by
the Licencing Order is acquired and can be exercised
during the currency of the licence. Thus, the wholesale
dealers in kerosene acquired a right to do business in
kerosene, as per the terms and conditions of their
operative licences. There was no statutory cancellation
or revocation made of these licences. The subordinate
legislation in form of Amendment Order 2002 did not even
purport to cancel the existing licences.
20.2 A statute which affects the substantive rights is
presumed to be prospective unless made retrospective
either expressly or by necessary implication. To say
that, by the impugned circular, `retroactive' effect was
given to the amended provision in view of the licenced
dealers having now become ineligible due to their not
being the appointees of the Government oil companies is
to bring a result which is neither intended nor warranted
by the Amendment Order, 2002. Reading the new definition
under Clause 2(18A) in the context of the provisions
having bearing on the aspect of cancellation of licences,
it does not create any new ground for cancellation of the
licence on the basis of ex-post facto ineligibility
brought about by the Amendment Order 2002. To camouflage
the attempt under the word `retroactive' will be to
recognize retrospective effect of taking away the right
accrued to the licence holders to do their business as
per the conditions of licence during the period of its
life of five years. No retroactive effect of taking away
the acquired or accrued right can be attributed by an
executive direction contained in the impugned circular,
to the enactment which does not either expressly or
impliedly impair such right acquired under the licence.
When the enactment is alleged to impair an accrued or
vested right, there would not be any distinction while
considering it is intended to do so either expressly or
by necessary implication by such enactment, on the ground
that it is retrospective or retroactive, because, when
vested right is impaired, the meaning and effect of these
terms will be the same.
20.3 In this context, we may refer to the dictionary
meanings of "retrospective" and "retroactive" from
Merriam-Webster's Dictionary of Law, which are
re-produced hereunder :
"Retrospective :- affecting things past, :
retroactive
specific
: of, relating to, or being a law that takes
away or impairs vested rights, creates new duties
or obligations, or attaches new disabilities with
respect to acts and transactions completed before
its enactment."
"Retroactive : extending in scope or effect to a
prior time or to conditions that existed or
originated in the past
esp.
: made effective as of a date prior to
enactment, promulgation, or imposition
Example : a retroactive tax
(see also ex post facto law)"
20.4 In New Oxford Dictionary, these terms are defined
as under :
"Retrospective :- (of a statute or a legal
decision) - Taking effect from the date in the
past"
"Retroactive :- (especially of legislation)
Taking effect from the date in the past."
21.3 In Black's Dictionary, "retrospective law" and
"retroactive law" are defined as under :
"Retrospective law : A law which looks backward
or contemplates the past; one which is made to
affect acts or facts occurring, or rights
accruing, before it came into force. Every
statute which takes away or impairs vested rights
acquired under existing laws, or creates a new
obligation, imposes a new duty, or attaches a new
disability in respect to transactions or
considerations already past. One that relates
back to a previous transaction and gives it a
different legal effect from that which it had
under the law when it occurred."
"Retroactive law :`Retroactive' or
`retrospective' laws are generally defined from a
legal viewpoint as those which take away or
impair vested rights acquired under existing
laws, create new obligations, impose a new duty,
or attach a new disability in respect to the
transactions or considerations already past."
20.6 Therefore, it has to be ascertained from the
enactment under scrutiny, whether it is calculated to
have a retrospective or retroactive effect of interfering
with the accrued or vested rights. It has to be
ascertained from the enactment itself whether it contains
express provisions or provisions which, by necessary
implication, have the effect of retrospective or
retroactive operation of taking away or impairing vested
rights. No such retrospective or retroactive operation
can be attributed to the Amendment Order of 2002 in
absence of there being any provision indicating such an
effect.
20.7 Moreover, subordinate legislation cannot have
retrospective effect unless the rule-making power in the
statute concerned expressly or by necessary implication
confers such power. The person or authority exercising
subordinate legislative functions cannot make a rule,
regulation or bye-law which can operate with
retrospective effect. (See I.T.O. v. M.C.Ponnoose,
[(1969)2 SCC 351, Hukum Chand v. Union of India [(1972)2
SCC 601, State of M.P. v. Tikamdas [(1975)2 SCC 100,
Regional Transport Officer v. Associated Transport
Madras (P) Ltd. [(1980)4 SCC 597], Union of India v.
Tushar Ranjan Mohanty [(1994)5 SCC 450] and Bejgam
Veeranna Venkata Narasimloo v. State of A.P. [(1998)1
SCC 563].
20.8 Therefore, the impugned circular, to the extent
it directs cancellation of the existing licences, issued
under the Licencing Order, 1981 before the expiry of
their duration, is ultra vires the provisions of the
Licencing Order, 1981 and has been rightly held to be
illegal and inoperative by the learned Single Judge.
21. In view of the above discussion, we are unable to
accept any of the contentions raised in the respective
two groups of appeals, and find ourselves in agreement
with the decision rendered by the learned Single Judge.
All the appeals are, therefore, dismissed with no order
as to costs. All the Civil Applications also accordingly
stand dismissed with no order as to costs.
[R.K.ABICHANDANI, J.]
[KUNDAN SINGH, J.]
parmar*
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