@JUDGMENTTAG-ORDER
1. Heard both the Counsel.
2. The present writ petition was earlier dismissed by a learned Single Judge of this Court dated 4-12-2002 following the judgments of the learned Single Judges of Madras High Court in W.P. No. 4566/1988 and Karnataka High Court in W.P. No. 11271/1998. In the writ appeal preferred by the petitioners''-association in W.A. No. 511/2003, the Division Bench of this Court, while setting aside the order of the Single Judge, remanded the matter for disposal afresh on merits.
3. This writ petition is filed to declare the Lubricating Oils and Greases (Processing, Supply and Distribution, Regulation) Order 1987 as unconstitutional.
4. The petitioner is a ''Greater Hyderabad Petroleum Products Dealers'' Association'' and the same is being represented by its Secretary. The case of the petitioner in the affidavit filed in support of the writ petition is that the impugned order is vitiated on the grounds of colourable exercise of power, infringing Articles 14 and 18 of the Constitution of India in respect of the fundamental right to equality and to carry on business according to law and to carry on the trade or profession vested in the members of the petitioner'' - association. The members of the petitioner'' - association are involved in the business of processing, manufacturing, blending, compounding, packaging, refining, re-refining, transporting and sale of any lubricating oil or greases or other petroleum products covered by the impugned order in Andhra Pradesh. The nature of the business carried on by the petitioner - association is classified as under:
a. Processor : Manufacturer or blender of
various ingredient to
produce the end product to
suit the needs of the
purchaser.
b. Dealer : Who sells the product to
ultimate consumers''
c. Refining : Who refines or re-refines
the waste oil procured from
various dealers and Ors.
for such refining.
5. It is stated that the petroleum products are defined in Section 2(a)(viii) of the Essential Commodities Act, 1955 (for short ''the Act'') and there is an order known as A.P. Petroleum Products Order 1980 which mentions that kerosene, motor spirit, diesel oil and liquefied petroleum gas as petroleum products. In the course of the writ affidavit, use of lubricating oils and greases is explained. It is stated that various products are manufactured from the petroleum products to suit the specific needs of the customer depending upon the use to which it will be put and depending upon the nature of the function of the machinery. The Indian Standards Institution has given a standard specification for these products and normally these specifications are only for the end product and that it does not prescribe any particular mode of manufacturing or blending of the lubricating oils. Any deviation from the specification to suit a particular need is not illegal and penal. However, by Clause 2(d) of the impugned order, such deviation is rendered ''perse'' adulterated, punishable and hence an offence is sought to be created by the Rules or the impugned order under the general powers conferred by Section 3 of the Act. It is stated that no penal offence can be created by delegated legislation and offences can only be violation of legislative enactment. It is pointed out that the Government owned oil companies like Indian Oil Corporation do no adhere to these specifications and that even customers do not generally demand I.S.I. specifications and instead choose their own specifications to suit their needs. In other words, the specification of the oils is a variable factor depending upon the usage and that any manufacturer or blender or re-refiner informs his customer of the specification of his product and normally supplies the order as per such specifications. It is stated that the intermediate products cannot be subject to any general specifications. In order to satisfy individual requirements, number of oil companies have been exempted and that the companies which are not exempted from the purview of the impugned order are compelled to abandon the production of such combination and the dealers are severely hurt. These oil companies purchase such of these products from processors at the specification required by them. It is almost impossible for processors to give a general specification for such products, as the said processors cannot anticipate or predict the specifications for any prospective customer. It is stated that the impugned order leads to too many impractical things and that the impugned order though allegedly passed with a laudable motive, would bring the industry actually to a grinding halt. Further Form 2-A licence which is insisted upon and in fact issued in favour of some of the applicants clearly discloses that the business has to be confined to only four particular brands narrated in the licence and not otherwise. It is stated that there are about 15 brands of lubricants at present with which the members of the petitioners'' - association are dealing with. Most of the members of the petitioners'' - association are petty deals and under the impugned order, power of entry, search and seizure is vested with officer not below the rank of Inspector of Police and this may result in harassment in their business activity. The 1st respondent-Union of India in the directions issued to the State Government has stated that the sole purpose of the impugned order is to check the marketing of spurious/sub-standard lubricating oils and greases in the country. As the products are already subject to the Act to prevent adulteration, any harmful fall in the standards set for the product is already punishable and that the impugned order is therefore basically a quality control order. It is stated that the impugned order requires even the transporter to obtain licence to transport oils and that this provision would hamper the transport and creates a bottle-neck. The broad statement of the provisions of the impugned order which is an executive order passed by the first respondent under the powers vested with it by Section 3 of the Act shows that it is a drastic piece of delegated legislation beyond its power. It applies to the whole of India. The words ''lubricating oils and greases'' has been assigned the meaning given to it under item 11-A of the I Schedule to Central Excise and Salt Act 1944 and, therefore, it should be deemed that non-standard formulation would include any speciality oil falling under item 68 of that schedule, which deals with items not otherwise provided for. Hence such formulations cannot be declared illegal, unless public harm is shown to be caused thereby. It is stated that the term ''processor'' has been given a very wide meaning to cover every person who manufactures or deals in the conversion of the oil into a final product and a dealer. The term however does not apply to oil companies specified in Schedule I appended to the order. In the affidavit, the petitioner -association has referred to different clauses and purport under those clauses. Finally it is stated that the impugned order affects the business and puts the members of the association in a disadvantageous position. The impugned order is vitiated by colourable exercise of power and the entire order is unconstitutional.
6. In the grounds raised in the writ petition it is stated that the impugned order is passed in view of the powers vested u/s 3 of the Act and with a view to check the marketing of spurious and adulterated lubricating oils and to ensure quality. Referring to Section 3 of the Act, it is stated that the Central Government can pass orders for maintaining or increasing supplies of any essential commodity; for securing their equitable distribution and availability at a fair prices; or for securing any essential commodity for the defence of India or the efficient conduct of military operations. It is stated that the impugned order is not intended for any one of the purposes mentioned in Section 3 and the subordinate legislation has exercised the power for totally a different purpose, than that of contemplated u/s 3 of the Act and, therefore, this amounts to colourable exercise of power and hence liable to be declared as unconstitutional. The impugned order creates an offence punishable u/s 7 of the Act. As per Section 3(6) of the Act, the impugned order has to be placed before both the Houses of Parliament and as the impugned order has not been so placed, it is unconstitutional. As per Rule 2(c) of the impugned order ''processor'' means any person carrying on or proposing to carry on the business of processing, manufacturing, blending, compounding, packaging, refining or re-refining or sale of any lubricating oil and greases, but does not include oil companies specified in Schedule I to the orders. Though these oil companies also deal with the same products like the petitioner - association, they are exempted and therefore, the same is arbitrary and the classification is unreasonable and violates Article 14 of the Constitution of India. Further Clause 8(c) of the impugned order empowers the officer who seizes the oil or greases from any premises to send the sample so seized to any one of the laboratories mentioned in Schedule II to the impugned order. The first respondent has nominated the oil companies which would have been covered by the impugned order, but for the exclusion of the same in the definition clauses, as the laboratories for testing the seized samples. It is stated that the first respondent has not only excluded the oil companies which are competitors of the petitioners''-association, but has also given them the power to render reports. Clause 2(d) of the impugned order states that lubricating oil or grease shall be deemed to be adulterated if the same does not meet the specifications declared by the processor. The licence application form calls upon the applicant to indicate the specification of his product. The processors who are members of the petitioner association act like pharmacist and supply the product as per desire of the customer, who in turn, base his order on his need. The specification of the product is, therefore, a variable factor and any restriction on the dealings on various specifications would amount to a bar on free trade. It is stated that the rules insofar as they restricts the business to a given specification, is violative of Articles 19(f) and 301 of the Constitution of India. It is further stated that the 1st respondent-Union of India has constituted a Technical Committee to assist the competent authority to discharge its functions and the said committee consists of the representatives from the oil industries, which have been excluded from the purview of the impugned order, but the representative of the petitioners''-association has not been given any representation in the committee and the same is arbitrary. Further the very persons, who are competitors, are allowed to sit in judgment. The further case of the petitioners'' -association is that under clause 5(3) of the impugned order, the competent authority can refuse the licence, but before doing so, no pre-decisional hearing is given. As the impugned order does not prescribe any time limit within which the competent authority is required to dispose of the licence application, it is arbitrary. The members of the petitioner-association have been directed to obtain licence before 30-6-1998 and as they are already carrying on business, it would lead to disastrous results and also affects the market. With these averments, the impugned order is sought to be declared as unconstitutional.
7. The 1st respondent-Union of India, filed counter-affidavit and denied that the impugned order violates the fundamental rights guaranteed under Articles 14 and 19 of the Constitution of India. The impugned order deals with regulation of lubricants in accordance with law and such regulations cannot be termed as affecting the rights of the members of the petitioners''-association in carrying on their business. Article 19(1)(g) of the Constitution of India is subject to any law which imposes reasonable restrictions and in exercise of the said right the 1st respondent can regulate the business by way of making a law. It is stated that the provisions of the impugned order do not stipulate any standard competition or specification of the lubricating oils to be manufactured and as such the members of the petitioners''-association are free to manufacture the lubricating oils and greases according to the specifications or compositions suggested and required by their customers and the only requirement is that they should indicate the specification of the lubricants and greases which they intend to deal with as a manufacturer or trader while obtaining the licence in the prescribed Form No. 1 or 1-A as per Clause 5(1) of impugned order and that there is no requirement under the impugned order that manufacturer or trader shall only deal with the specifications prescribed by Indian Standards Institution. Referring to Clause (d) of the impugned order it is stated that if a processor deals with the product which is not as per the specifications declared by or applicable to him, then only he is deemed as adulterator. The exemption granted to the oil companies from the purview of the impugned order under Clause 2(c) read with Schedule-I has no relevance with the constitutionality or legality of the impugned order. It is stated that the impugned order does not infringe the fundamental rights of the processors in any way and would not affect their business as long as they deal with the lubricating oils and greases in accordance with the specifications declared by or applicable to them for which the licence is granted. It is stated that either in Form No. I-A or 20-A there is no restriction of number of items which are manufactured by various companies and its trade and that the manufacturer while obtaining the licence has to submit the products, which he is manufacturing and the specifications thereof and thus, there is no illegality in regulating the trade of lubricants and greases which are specified by the manufacturer at the time of obtaining the licence. It is further stated that only in case of violations, the required machinery under law will take action against the erring traders while enforcing the impugned order and the apprehension that the power will be misused, cannot be a ground to declare the impugned order as unconstitutional. It is stated that the impugned order is issued only in the interest of public, to check the environmental pollution and also to check the spurious/sub-standard/ adulterated lubricating oils and greases in the country. Under the impugned order, there is no requirement that a transporter shall have a licence to transport the oil and Clause 4 only prohibits transporting for sale of any lubricating oil or grease that has been adulterated. It is stated that the impugned order only imposes restriction with regard to the declaration of specification of lubricating oils or greases to be manufactured and sold, but does not impose any restriction in manufacturing lubricating oils and greases of specified standard and as such the same cannot be termed as illegal. u/s 3 of the Act, the Central Government is empowered to control production, supply and distribution of petroleum and petroleum products and as such the impugned order issued by the Central Government is well within its jurisdiction. It is stated that the High Court of Madras while dealing with the Constitutionality of present impugned order in W.P. No. 4566/1988 dated 13-7-1998 held that the powers of the Central Government u/s 3(1) are general in nature, and following several judgments of the Hon''ble Supreme Court of India, upheld the impugned order and the same has also become final. It is averred that placing the impugned order before both the Houses of Parliament u/s 3(6) of the Act is only directory and not mandatory as held by the High Court of Madras in W.P. No. 4566/ 1998. It is stated that the exemption granted to the Government Companies or Government Undertakings or other companies on considering relevant facts, cannot be termed as irrational and unconstitutional and violative of Article 14 of the Constitution of India. Article 14 is only attracted between the same group of persons and to be treated similarly and whereas one group of persons cannot compare with the separate group of persons and thereby seek equality clause. It is stated that the laboratories mentioned under Schedule-2 of the impugned order are not only the Government oil companies who are the competitors in the field, but there are also other Government laboratories and defence laboratories who are not the processors of the lubricating oils or greases. Apart from this, the laboratories of oil companies who are the competitors for the members of the petitioners''-association in the market have no control over the Government laboratories and defence laboratories and as such the ground raised in this regard is unsustainable. It is stated that there are no prescribed specifications in the manufacture of lubricating oils or greases, but the manufacturers have to confine the manufacturing process in accordance with the specifications given by them at the time of obtaining the licence. It is stated that there is no Technical Committee constituted by the 1st respondent to assist the competent authority under the impugned order and as such the question of validity or otherwise of the same will not arise. Power of licensing authority is only administrative function and as such a pre-decisional hearing is not required. However, under the impugned order, the competent authority while refusing the licence has to record reasons and communicate the same to the applicant and if the said reasons recorded in a given case are illegal and arbitrary, the same can be corrected in appeal and also before appropriate forum by way of judicial review. With regard to time limit in disposing of the application for licence, it is stated that non-prescription of any time limit cannot be taken as arbitrary and it has to be presumed that the said application has to be disposed of within a reasonable time. Subordinate legislation or legislation cannot be termed as unconstitutional on the ground of non-consultation with the persons interested in the business before its legislation. Under the impugned order, the concerned State Governments or the Union Territory Administrations have to notify any person or authority to exercise the powers to perform the functions of the competent authority. All the existing processors were given six months time from 1st April, 1987 for obtaining licence which was subsequently extended upto 30th June, 1988 and thus the existing processors were given in all fifteen months time for obtaining licence. Finally it is stated that the High Court of Madras in W.P. No. 4566/1988 dated 13-7-1998 and the High Court of Karnataka in W.P. No. 1 1271/1988 dated 13-2-1995 have considered the constitutionality of the impugned order and dismissed the writ petitions. With these averments, the writ petition is sought to be dismissed.
8. The Assistant Director in the Office of the Commissioner of Industries, A.P. Hyderabad filed counter-affidavit on behalf of respondents 2 and 3. In the counter it is stated that the impugned order is not violative of Articles 14 and 19 of the Constitution of India. The Government issued mandatory orders for manufacturing and processing of lubricating oils and greases in accordance with ISI standards and the regulations aims at streamlining the standard of lubricants. As per the Act and as per the A.P. Petroleum Products Order 1987, the powers for inspection with regard to adulteration and also maintenance of standard and quality is given to Inspector of Police. It is stated that the Assistant Director is the competent authority for issuance of licence, for registration of proposed unit under the impugned order and as per the Ministry''s Letter No.P-1 3012/I/78-sup, District volume II (dated 20th March, 1987) the said order was published in part n, Section 3 Sub-section (1) of the Gazette of India dated 28-3-1987 under GSR No. 233. It is stated that the said order was also communicated to the District Heads under the control of Assistant Director vide Memo No. 824/A2/Desk-2/93 dated 27-7-1993 for sending the proposals and renewals of the lubricating oils and grease manufacturing industries. In the counter filed by the respondents 2 and 3, the averments made in the counter-affidavit filed by the 1st respondent are reiterated and the tenor is the same and, therefore, the said averments are not being reproduced.
9. The petitioner-association has also filed reply affidavit to the counter-affidavits and also taken additional grounds.
10. From the above averments, the case of the petitioner-association is that the specifications given by the Indian Standards Institution are normally only for end product and it does not prescribe any particular mode of manufacturing or blending of the lubricating oils and any deviations are not illegal or penal, but Clause 2(d) of the impugned order mandates such deviations punishable. In other words, the case of the petitioner-association appears to be that only end product has to conform to the prescribed specifications and not the intermediate products. In this regard it is necessary to look into Section 2(d) of the impugned order and the same is extracted as under :
Without prejudice to the meaning assigned to Adulteration" under the Prevention of Food Adulteration Act, 1954 (37 of 1954) any lubricating oil or grease shall be deemed to be adulterated if the same does not meet the specifications declared by or applicable to the processor.
11. Section 2(ia) of the Prevention of Food Adulteration Act, 1957 has defined the term ''adulterated'' and the purport of the definition is that the article manufactures shall exactly contain permitted quantities of raw materials and it shall not affect or shall have any injurious effect on the end user i.e., the consumer. Further as per Clause 2(d) of the impugned order any lubricating oil or grease shall be deemed to be adulterated if the same does not meet the specifications declared by or applicable to the processors. In other words, if the lubricating oil or grease does not conform to the specifications declared by or applicable to the processors, it is said to be adulterated. In essence, the lubricating oil or grease shall have the ingredients which were declared or applicable to the processors. As stated in Paragraph No. 8 of the counter, the manufacturer has to obtain licence by applying Form No. 2-A under the impugned order and while doing so, he has to submit the product which he is manufacturing and the required specifications thereof. Therefore, he is required to confine the manufacturing process in accordance with the specifications given by him at the time of obtaining licence. Therefore, the contention of the petitioner-association that any deviation from the specifications in obtaining the end product is not illegal or penal, is not tenable. Though in the affidavit filed in support of the writ petition it is stated that various products are manufactured from the petroleum products to suit the specific needs of the customer depending upon the user to which it will be put and depending upon the nature of the function, the product has to necessarily conform to the specifications prescribed while obtaining licence, otherwise, it amounts to adulteration as defined u/s 2(ia) of the Prevention of Food Adulteration Act, 1957, Further in the counter-affidavit filed by 1st respondent it is specifically stated that the restriction imposed in the impugned order is only with regard to the declaration of specification of lubricating oils or greases to be manufactured and sold, but not a restriction imposing specified standard in manufacturing lubricating oils and greases. In the counter it is also stated that the petitioner-association are free to manufacture the lubricating oils and greases according to the specifications or compositions suggested and required by their customers, but only conforming to the specifications declared by them while obtaining licence. It is also stated that either in Form No. 1-A or 2-A there is no restriction of number of items which are manufactured by various companies and its trade. In the light of this statement, the averment of the petitioner-association at Paragraph No. 10 of the writ affidavit that as per Form 2-A licence, the business is to be confined to only four particular brands narrated in the licence, is also not correct.
12. The grievance of the petitioner-association is that under the impugned order, the officer who seizes the oil or grease from any premises can send the samples to any of the laboratories mentioned in Schedule II of the impugned order and they include the Government companies. It is stated that companies which are competitors to the petitioner''s-association are rendered the power of submitting reports. It is to be seen that as stated in the counter-affidavit, the laboratories mentioned under Schedule - 2 of the impugned order are not only the Government oil companies who are the competitors in the field but there are also other Government laboratories and defence laboratories who are not the processors of the lubricating oils or greases. Further the laboratories of oil companies who are the competitors for the members of the petitioner-association in the market, have no control over the Government and defence laboratories. Therefore, the grievance of the petitioner in this regard is not well founded and hence rejected.
13. The next grievance of the petitioners''-association is that under the impugned order the power of search and seizure are vested with the Inspector of Police and exercise of the power, may result in harassment in the carrying on the business as they are petty dealers. This apprehension is totally baseless. Any business, if carried in accordance with law and as per the terms and conditions of the licence granted by the Government, cannot be interfered with by any authority and only in case of any violation, the required law machinery will take action. In case of misuse of power, the aggrieved can always approach appropriate forum and seek relief.
14. The case of the petitioner is that as per the impugned order, even the transporter of the oil has to obtain licence. In the counter filed by the 1st respondent it is stated that a transport is not required to have any licence for transporting oil and that Clause 4 of the order, 1987 prohibits transporting or sale or any lubricating oil or grease that has been adulterated. Therefore, the grievance of the petitioner-association in this regard is without any basis.
15. The other contention of the learned Counsel for the petitioner is that the impugned order is issued by virtue of the provisions u/s 3 of the Act and the purpose of the Section is to control production, supply and distribution of the essential commodities. But the present order is in the nature of quality control which the Section itself does not provide for and, therefore the impugned order is liable to be set aside. To meet this contention, it is necessary to look into the intendment of the Legislature for enacting the Essential Commodities Act, 1955. The Act has been enacted to provide, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce in certain commodities. Therefore, it is clear that the interests of the general public is the paramount consideration for enacting the statute for the purpose of control of production, supply and distribution of essential commodities under the Act. The impugned order is issued by virtue of the powers conferred u/s 3 of the Act. The same to the extent relevant is extracted as under :
Section 3. Power to Control Production Supply Distribution Etc. of Essential Commodities :�(1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair price (or for securing any essential commodity for the defence of India or the efficient conduct of military operation, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
(2) Without prejudice to the generality of the powers conferred by Sub-section (1), an order made thereunder may provide�
(a) for regulating by licences, permits or otherwise the production or manufacture of any essential commodity;
(b) ...
(c) ...
(d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition use or consumption of any, essential commodity;
(e) ...
(f) ...
(g) ...
16. From a reading of the heading of Section 3 of the Act, it is clear that it is meant to control production, supply, distribution, etc., of essential commodities. Therefore, the use of word ''etc'' in the heading of the Section itself indicates that it is not exhaustive. Further the intention of the Legislature is that if the Central Government is of opinion that it is necessary or expedient to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair price, it may, by order, provide for, regulation or prohibition, the production, supply and distribution thereof. Further without any prejudice to the provisions of Sub-section (1) of Section 3, Sub-clauses (a) and (d) of Sub-section (2) permit the Central Government to make order for regulating by licences, permits or otherwise the production or manufacture of any essentiality commodity. Therefore, it is clear that u/s 3 the Central Government has power to make order not only for controlling production, supply distribution, but also by regulating by licences, permits or otherwise the production or manufacture of any essential commodity. In the present case, the Central Government with the object of streamlining the standards in lubricants and greases and to maintain quality and for controlling selling and manufacturing of spurious/sub-standard/ adulterated lubricating oils and greases, issued the impugned order. Therefore, it is clear that the Central Government is perfectly entitled to issue the impugned order u/s 3 and the object of the impugned order is within the ambit of Section. A learned Single Judge of this Court in
The submission made by the learned Counsel ignores the object and purpose for which the Parliament enacted the Act. It is an Act to provide for the control of production, supply and distribution of essential commodities in the interest of general public. No doubt, Section 3 of the Act does not specifically empower the Central Government to regulate and control the quality of essential commodities as well. But, it would be absurd to think that regulation of supply, distribution, sale at fair price etc., are only intended in the interest of general public and not the quality. u/s 3(1) of the Act consumption of any essential commodities can also be regulated. Further u/s 3(2)(j) the Control Order may provide for any incidental or supplemental matters. Therefore, any Control Order which prescribes standards of quality and method of distribution or selling the essential commodity is intra vires the powers u/s 3 of the Act. The standard of quality of the essential commodities can be a subject of regulation.
17. In view of the above discussion and also in view of the judgment of the learned Single Judge of this Court and, in the light of the object of the Legislature it is clear that the Central Government has power to issue Control Order u/s 3 of the Act, prescribing the standards of quality of the essential commodities. Hence, the contention of the Counsel for the petitioners-association that order issued u/s 3 cannot be in the nature of quality control order, is liable to be rejected and accordingly rejected.
18. The learned Counsel for the petitioner submitted that under the impugned order certain companies mentioned in Schedule-I under Clause 2(c) are exempted from the operation of the order and the same is sought to be justified on the ground that they are Government Companies. His contention is that when the Principal Act does not confer any power on the delegate to grant any exemption in respect of any companies or individuals and no guidelines are laid down either in the Act or in the order as to the basis on which exemption may be granted, the exemption granted under the impugned order is arbitrary and is violative of Article 14 of the Constitution of India. This aspect has been aptly considered by the learned Single Judge of the High Court of Karnataka in W.P. No. 1 1271/1988 dated 13-2-1995, wherein the very same Order of 1987 was under challenge. The relevant portion is extracted as under :
3. The second contention urged on behalf of the petitioner is that the order in question is violative of Article 14 of the Constitution, inasmuch as it grants exemption in favour of the big companies and there is control of quality insofar as the production manufactured by them are concerned, while it imposes unreasonable restraint on the freedom of trade insofar as the members of the petitioner-association is concerned and the restriction imposes on the petitioner is not applicable to such giant companies. But a reading of the order in isolation of other orders that are issued on the matter would not be proper. So far as the members of the petitioner-association are concerned, they are controlled by the impugned order in the matter of maintaining the quality. However, the exemption under the order did not take the companies exempted under the order out of the purview of control because they are all companies coming under the Industries Development and Regulation Act and necessary orders have been issued in that regard in relation to regulating the business in lubricating oils and greases. The specifications mentioned by them could be verified with reference to the control exercisable under the Industries Development and Regulation Act. Therefore, such of the dealers and manufacturers who were not covered by the Act are sought to be brought under the purview of the order to ensure that they produce and sell quality products. In view of this situation, it cannot be said that there is any discrimination between the members of the petitioner - association and other oil companies which fall under the exempted category. In that view of the matter, there is no substance in the second contention either.
19. Further it is not in dispute that Government companies are not exempted and they are covered under the Industries Development and Regulation Act and the present petitioners-association, who are admittedly petty dealers, manufacturers of lubricants and grease oils are brought within the purview of the impugned order. Further, it is to be seen that Article 14 cannot be made applicable between unequals. Admittedly, as per the case of the petitioners''-association they are petty dealers and manufacturers and they cannot compare themselves with Government Companies or Undertakings. Hence, the contention of the petitioner in this regard is rejected.
20. The other grievance of the petitioner is that under Clause 5(3) of the impugned order, the competent authority can refuse the licence and before doing so, there is no pre-decisional hearing. Further there is also no time limit for disposal of applications. From a perusal of the impugned order it is clear that Clause 7 provides for appeal. As per the sad clause, if any person is aggrieved by any order passed by the competent authority under Clauses 5 or 6, may file appeal within thirty days of the receipt of the order by him and the State Government may with a view to securing the compliance, may after giving the applicant an opportunity of being heard, confirm, reverse or modify such order. However, even under Clause 5(3) itself, the competent authority shall record reasons for refusing to grant or renew licence and such reasons shall be furnished to the applicant. It is well settled that any arbitrary action violative of the principles of natural justice is also subject to judicial scrutiny. With regard to prescription of any time limit is concerned, it is well settled that when there is no time limit, the acts required to be done by the competent authority have to be done as expeditiously as possible and delay in disposal of applications would subject the authorities to judicial scrutiny and also entitles the applicants to claim damages for the losses sustained by them, in proof, in competent Courts. From a penisal of the impugned order, it is clear that it is like an self contained code. Therefore the grievance of the petitioners on this count is untenable.
21. The next grievance of the petitioner is that the 1st respondent has constituted a Technical Committee to assist the competent authority to discharge its functions and the said committee consists of the representatives of the Government Companies and no representation is provided for the petitioners''-association who is affected. In the counter filed by the 1st respondent it is stated that no such Technical Committee is constituted. In view of this, no adjudication on this aspect is required.
22. The learned Counsel for the petitioner, submitted that u/s 3(6) of the Act, the impugned order has to be placed before both the Houses of Parliament and as the same was not done, the impugned order is unconstitutional. In support of his contention, the learned Counsel strongly relied on the Larger Bench judgment of the Apex Court in
23. Now it is necessary to look into the judgment of the Apex Court reported in Narendra Kumar''s (supra). Facts of the said case reveal that the Central Government has issued Non-ferrous Metal Control Order, 1958 in exercise of its power u/s 3 of the Essential Commodities Act. The said order was issued with the intention of controlling the rise in price of copper, which is the essential commodity. This intention was made clear under Clause 3 of the said order and Clause 4 necessitates for obtaining permits and under the said clause, certain principles, were to be specified by the Central Government from time to time for obtaining permits by the importers. The order was published in the Gazette of India on 2-4-1958, but no principles were specified by the Central Government as contemplated under Clause 4 of the Order. However, the Central Government in a communication addressed by the Deputy Secretary to the Government of India dated 18-4-1959, gave certain guidelines. But the said principles were not published as per the procedure prescribed under Sub-sections 3 and 6 of Section 3 of the Act. Further the Apex Court on the facts and circumstances of the case found that non-publication of the principles as stated under Clause 4 of the Order, resulted in total stoppage of the copper trade. The Apex Court at Paragraph Nos. 26 and 27 held as under :
26. But without the principles, Clause 4 of the Order is not effective. The system of permits which this clause is designed to introduce can come into existence only if the permits can be issued; but permits can be issued only in accordance with the principles laid down by the Central Government. It is not possible to build on the use of the words "may specify" in Clause 4 an argument that so long as no principles are specified the controller would have authority to issue permits by exercise of his own judgment and discretion. The words used in Clause 4 do not permit such a construction and compel the conclusion that so long as the principles are not specified by the Central Government no permit can be issued by the Controller. Enforcement of the provision that no person shall acquire or agree to acquire except under a permit, would thus, so long as the principles are not specified in a legal manner as required by Sub-sections (5) and (6) of Section 3 of the Essential Commodities Act, would mean a total stoppage of the copper trade - not only of the transactions of dealers but of any transaction whatever in imported copper. On the face of it this could not be a reasonable restriction in the interests of the general public. There is no escape therefore from the conclusion that so long as principles are not specified by the Central Government by an order notified in accordance with Sub-section (5) and laid before both Houses of Parliament in accordance with Sub-section (6) of Section 3, the regulation by Clause 4 as it is now worded is not within the saving provisions of Articles 19(5) and 19(6) of the Constitution, and is void as taking away the rights conferred by Articles 19(1)(f) and 19(1)(g).
27. All that is necessary to make Clause 4 effective is that some principles should be specified, and these notified in the Gazette, and laid before the Houses of Parliament. It may be necessary from time to time to specify new principles in view of the changed circumstances; these have again to be notified in the Gazette and laid before the Houses of Parliament, in order to be effective. So long as new principles do not come into operation, by being specified by Government, and thereafter notified in the Gazettee, and laid before Houses of Parliament, the previous principles last specified, notified in the Gazette and laid before Houses of Parliament, will remain effective. As, however, the principles specified in the letter of the 18th April have not been notified in the Gazette, nor laid before Houses of Parliament, and no principles appear to have been specified before or after that date, Clause 4 of the Order, as it now stands, must be struck down as void.
24. From the above, it is clear that under Clause 4 of the said order, the Central Government intended to specify certain principles for obtaining permits. Though the principles were communicated by the Deputy Secretary to the Government of India to the Chief Industrial Adviser to the Government of India, New Delhi, the same were neither gazetted, nor placed before both the Houses of Parliament. In those circumstances, the Apex Court held that Clause 4 of the Order as void. Further it is to be noted that for obtaining permits under Clause 4 principles are to be specified and without which no permit can be issued and this has resulted in total stoppage of copper business. Therefore, such principles are necessarily to be published in the Official Gazette. The same was not done. It is to be seen gazetting of the principles under Clause 4 appears to be mandatory for granting licence. From the above extract, the focus of the Larger Bench of the Apex Court is mainly on the non-issuance of the principles as per Clause 4 of the Order and incidentally also held that the placing of such principles before both the Houses as mandatory.
25. Coining to the facts of the present case, Clause 3 of the impugned contemplates for obtaining licence and Clause 4 prohibits business of lubricating oil or grease which has been adulterated. Clause 4 is extracted as under :
Restriction on Processing and storage of lubricating oils and greases :�No person shall carry on the business of a processor except under and in accordance with the terms and conditions of a valid licence granted to him under this order.
26. From a reading of the above order it is clear that if a person intends to carry on the business of a processor, he shall do so in accordance with the terms and conditions of a valid licence granted to him under the order. Clause 4 is unambiguous and is not subject to any condition precedent. The remaining clauses in the impugned order deal with grant of licence, suspension, appeal etc. The facts in Narendra Kumar''s case (supra) reveal that for dealing with the grant of permits, the Central Government has to necessarily issue certain principles or guidelines. They were not specified and gazetted. In the counter-affidavit filed on behalf of the respondents 2 and 3 it is specifically stated that the impugned order was published in the Gazette of India on 28-3-1987 and further the same was also communicated to all the District Heads. Further it is to be seen that the non-placement of the impugned order before both the House of Parliament has not resulted in total stoppage of business in lubricating oils and greases. Therefore it is clear that the facts of the present case are quite distinguishable from the facts before the Larger Bench in the decision cited in Nalgonda District Oil Millers Association v. Government of India (supra).
27. It is to be further seen that for non-compliance of the provisions u/s 3(1) of the Act, no consequences are provided. Considering Sub-section (6) of Section 3, the Full Bench of the Apex Court in Atlas Cycle''s case (supra), held as under:
20. Thus two considerations for regarding a provision as directory are : (1) absence of any provision for the contingency of a particular provision not being complied with or followed and (2) serious general inconvenience and prejudice that would result to (he general public if the act of the Government or an instrumentality is declared invalid for non-compliance with the particular provision.
22 ...In the instant case, it would be noticed that Sub-section (6) of Section 3 of the Act merely provides that every order made u/s 3 by the Central Government or by any officer or authority of the Central Government shall be laid before both Houses of Parliament, as soon as may be, after it is made. It does not provide that it shall be subject to the negative or the affirmative resolution by either House of Parliament. It also does not provide that it shall be open to the Parliament to approve or disapprove the order, made u/s 3 of the Act. It does not even say that it shall be subject to any modification which either House of Parliament may in its wisdom think it necessary to provide. It does not even specify the period for which the order is to be laid before both Houses of Parliament nor does it provide any penalty for non-observance of or non-compliance with the direction as to the laying of the order before both Houses of Parliament. It would also be noticed that the requirement as to the laying of the order before both Houses of Parliament is not a condition precedent but subject to the making of the order. In other words, there is no prohibition to the making of the orders without the approval of both Houses of Parliament. In these circumstances, we are clearly of the view that the requirement as to laying contained in Sub-section (6) of Section 3 of the Act falls within the first category i.e., "simple laying" and is directory not mandatory. We are fortified in this view by a catena of decisions, both English and Indian.
28. The Apex Court in the very same judgment Atlas Cycle Industries Ltd. v. State of Haryana''s case (supra), also considered the judgment of the Larger Bench in Narender Kumar''s case (supra), and distinguished as under:
30. The decision of this Court in
29. Coming to the case on hand, it is to be seen that the impugned order issued for effective control of the manufacturing and selling of spurious/sub-standard/ adulterated lubricating oils and greases in the interest of general pubic and to check the environmental pollution, as there is no other existing law which regulates the said field. The impugned order has been published in the Gazettee and also communicated to all the District Heads for effective implementation. Therefore following the judgment of the Apex Court in Atlas Cycle''s case (supra), it is clear that non-compliance of Sub-section 6 of Section 3 will not make the order void. The Larger Bench judgment of the Apex Court is clearly distinguishable from the facts of the present case. The Apex Court in
30. The other judgments of the Apex Court to the effect that the judgment of the Larger Benches have to be given preference to Smaller Benches is concerned, the said proposition cannot be disputed, but as already stated above, the Larger Bench judgment cannot be squarely made applicable to the facts of the present case, as the factual aspects are distinguishable.
31. The other judgment of the Apex Court relied on by the Counsel for the petitioner in K. Prasad''s case (supra) stating that mere non-mention of consequences of violation of the provision will not necessarily indicate that the provision is not mandatory, is concerned, it is to be seen that it is a service matter, whereas, the present case is under the Essential Commodities Act, whereunder the interests of the general public is the paramount consideration. The Central Government with the object of having effective control on the manufacture of unadulterated lubricating oils and greases issued the impugned order and also keeping in view the environmental pollution. Further the Full Bench of the Apex Court in Atlas Cycle''s case (supra) considering the very same provision, which is involved in the present case held that the provision of placing the order made by the Central Government u/s 3 before both the Houses of Parliament as envisaged under Sub-section (6), is only directory. In view of these circumstances, the judgment of the Apex Court in Prasad''s case (supra) cannot be made applicable to the facts of the present case.
32. The other grounds that the members of the petitioner-association are facing difficulty in procuring licence and facing hardship in carrying the business or that unless there is any harm in manufacture of the lubricants according to the specifications of the customers or manufacturers, cannot be construed as germane to declare the impugned order as unconstitutional and further the impugned order is not violative of any fundamental rights guaranteed under the Constitution. At the cost of repetition, the impugned order is issued in order to effectively control the manufacturing and selling of spurious/substandard/adulterated lubricating oils and greases in the interest of the general public and to check the environmental pollution. It is well settled that the petitioners''-association has to carry on the business in accordance with law and any violation would attract penal provisions and it is also well settled that ultimately the convenience and interests of the general public and their welfare and the ecology have to be given paramount consideration in preference to ostensible difficulties pleaded by the petitioners'' association in the conduct of their business. A learned Single Judge of this Court in Nalgonda District Oil Millers Association''s case (supra) held that for examination of reasonableness of restriction under Article 19(1)(g of the Constitution Act, hardship to businessman cannot be considered and the interest of the general public has to be the main consideration. The relevant portion at Paragraph No. 47 is extracted as under :
It is also settled law that individual hardship to businessman is not the test to be applied for examining the reasonableness of restriction under Article 19(1)(g of the Constitution. The test to be applied is as to whether the restrictions are in the interest of general public....
33. For the foregoing reasons, I do not find any illegality or unconstitutionality in the impugned order and the writ petition is dismissed. No costs.
