Godavari Oil Distributors vs Joint Collector and Others

B. Subhashan Reddy, J.—This writ petition raises a very important point with regard to the applicability of A.R Petroleum Products Order, 1980 (hereinafter referred to as the State Order) which was promulgated in exercise of the powers conferred by Section 3(1) of the Essential Commodities Act 1955 (hereinafter referred to as the Act), to a person like the petitioner, who is carrying on business in Kerosene as a parallel marketers under the provisions of Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993 (hereinafter referred to as the Central Order), which is an Order promulgated by the Central Government in exercise of the powers contained u/s 3 of the Act.

The petitioner is a wholesale distributor of Kerosene purchased from Vishaka Petroleum Products Private Limited under the parallel marketing system for East Godavari. Proceedings have been initiated against the petitioner in Cr. No. 4/ VC-KDA/95 by the Inspector of Police, Vigilance Cell, Civil Supplies Department, East Godavari District accusing of violation of Clauses 12 and 20 of the State Order read with Sections 7 and 8 of the Act and also conditions 3, 4, 5, 7, 8 and 12 of the licence issued under the State Order. Violation alleged is that the petitioner was not maintaining true and correct accounts and indulging in clandestine business by diverting the Kerosene in the black-market for unjust enrichment. 12,074 liters of kerosene, along with tanker worth Rs. 5,93,497-40 ps. was seized and proceedings u/s 6A of the Act were initiated.

We are not entering into the details of the commission of the alleged violation for the reason that this writ petition was filed questioning the very seizure and initiation of the proceedings u/s 6A of the Act. However, it is stated that during the pendency of this writ petition, as no stay was granted with regard to the proceedings and stay was only confined to the sale of the seized commodity, the proceedings went ahead culminating into confiscation order. But that depends upon the adjudication of this case, as, if the validity of the power stands, this confiscation order sustains or otherwise, the confiscation order becomes non est.

The fact that the petitioner is a parallel marketer under the Central Order is not disputed. The fact that the petitioner has also obtained licence under the State Order is also not in dispute. While Mr. Laksjunan Sarma, the learned Counsel for the petitioner submits that the State Order is not applicable and that the seizure is bad and also the consequent Section 6A proceedings, Ms. Rohini, the learned Government Pleader counters the said arguments stating that if the petitioner was not covered by the State Order, there was no occasion for him to obtain the licence under the State Order and the very fact that the licence was obtained under the State Order obligates the petitioner to scrupulously follow the provisions contained in the State Order and also the enumerated conditions of the licence. Ms. Rohini, also contends that merely because the Central Order is silent about obtaining of the licence and there is no repugnancy with regard to the obtaining of licence between the Central Order and the State Order, to that extent obtaining of licence by the petitioner and observance of conditions enumerated therein is necessary.

The Act derives legislative competence from the Concurrent List (List 3 of Schedule VII of the Constitution). The State Order was promulgated in the year 1980. The Central Order was issued during the year 1993. The seizure was effected on 1-2-1995. As such we are not required to check as to what was the position before 1993. While the State Order is comprehensive covering the petroleum products in general like petroleum, diesel, kerosene etc., the Central Order confines only to kerosene. It is needless to mention that whenever there is controversy between General Law and Special Law, Special Law always prevails over General Law, i.e., when there is overlapping of General Legal Provisions and Special Legal Provisions. In the instant case, the further question is as to whether the State Order is applicable at all and whether it covers the parallel marketer and parallel marketing system.

We have scanned through the provisions of State Order. The State Order defines Dealer as a person engaged in the business of purchase or storage, sale or storage for sale of the petroleum products and includes representatives, agents and servants or any other person acting on his behalf, but excludes an Oil Company from the definition of Dealer. Clause 3 of the State Order obligates obtaining of licence. The Licencing Authority may be Collector or any other officer authorised by him. Wholesaler is defined as a person obtaining petroleum products from the Oil Company or another wholesaler for sale to a retailer. Retailer is defined as a person who obtains petroleum products from the wholesaler or an Oil Company for sale to the general public. Thus the dealer, be it a wholesaler or a retailer, cannot derive or procure the kerosene from other sources. If there are more places than one, the dealer should obtain separate licences for each of the business places. Licences are issued as mentioned under clause 4. The licence fee, period of licence, deposit of security etc., are also specified in clauses 5 and 6.

Clause 7 vests discretion in the Licencing Authority to refuse to grant the licence for the reasons recorded. Clause 8 requires carriers of petroleum products (kerosene in this case) to obtain a registration certificate for each vehicle engaged for transportation and there is an embargo for the vehicles transporting petroleum products from carrying edible oils. Procedure for application for registration certificate, renewals, period of registration, fee chargeable thereon, security deposit are also provided under clauses 9, 10 and 11.

Clause 12 obligates the dealer to maintain true and correct accounts of the purchases and sales of petroleum products and submission of monthly returns to the prescribed Authority. Clause 13 places an embargo on the dealer from selling the petroleum products at a price higher than the price fixed by the Government. Clause 14 contemplates issuing supply cards. Clause 15 says that the supply card is the property of the State Government and clause 17 imposes prohibition of the transfer of the supply card. Clause 20 obligates the dealer to display the working hours, stock and price. Clause 21 permits the dealer to declare holiday for the shop either on Friday or Sunday or of his choice in the week by taking prior permission from the Collector in that regard.

Clause 32 empowers entry, search and seizure of the petroleum products by the Authority concerned, if they suspect contravention of the provisions of the State Order or of the conditions of the licence enumerated therein. All the above provisions, show beyond doubt that the State Order deals and governs petroleum products in public distribution system and more so, kerosene, as there is a price control, movement control and distribution control. May be, the Central Government thought that another mode of Kerosene distribution by free market system should be introduced and as such the Central Order was promulgated. Reading the Central Order as a whole, it deals not only with the public distribution system but also parallel marketing system (private marketing system).

The distinction between public marketing system and parallel marketing system is obvious. For such of those provisions relating to public distributing system enumerated under the State Order and which do not clash with the Central Order, the Central Order is silent about obtaining of licence. As such, obtaining of the said licence and the procedures prescribed thereof under the State Order relating to kerosene by the public distribution system is not inconsistent with the Central Order.

But insofar as the parallel marketing system is concerned, the same is not at all covered by the State Order and it is exclusively covered by the Central Order only. The definition of a Dealer under the Central Order includes a person, firm, association of persons, company, institution, organisation or a co-operative society approved by the Government Oil Company, Central or State Government (relatable to public distribution system) and also parallel marketer and engaged in the business of buying and selling kerosene and private marketer is one defined, who carries on business of importing, refilling, producing, packing marketing, distributing and selling kerosene under the parallel marketing system. Parallel marketing system is defined as the system "other than the public distribution system", under which the person imports, transports, packs, distributes or sells kerosene under "his own arrangement".

Clause 3 of Central Order places restriction on use of kerosene supplied under public distribution system both by consumer and also the dealer, and further restrictions of procurement, storage and sale of kerosene under public distribution system are found in Clause 4. So also, displaying of stock by the dealer appointed under public distribution system in addition to maintenance of accounts, registers and submissions of returns. Clause 7 deals specifically with parallel marketing obligating him to intimate before hand, his intention to engage in all or any one of the activities regarding importing, transporting, packing, marketing, distributing or selling of kerosene specifying therein his capability to do so and other relevant particulars. An obligation is also cast on parallel marketer of kerosene to submit monthly returns before 15th day of the following month. Further the parallel marketer shall furnish to the Central Government in the Ministry of Petroleum and Natural Gas, in cases where Central Government requisitioned parallel marketer to give such other information, the latter is obligated to do so under Sub-clause (c) thereof. In fact, clause 8 specifically distinguishes kerosene under public distribution system from that of parallel marketing system stating "kerosene supplied through public distribution system shall 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".

By this, it is now crystal clear that the storage and sale of kerosene is channalised by two systems i.e., (i) Public Distribution System and (ii) Parallel Marketing System; and the one has got no relation or connection with the other. While the kerosene covered by the Public Distribution System is covered by State and Central Order, subject to consistency, and where there is repugnancy the Central Order supersedes the State Order to that extent. The power of entry, search and seizure is available to the same Inspector of Police, Vigilance, Civil Supplies, if there is contravention, be it under State Order or Central Order. Insofar as the Central Order is concerned, the contravention can be attributed if there is violation of clause 7 of the Central Order to a Private marketer, like the petitioner, as he is not at all covered and governed by the State Order. In that event the concerned Inspector of Police can inspect, search and seize accounts and kerosene if has reason to believe that there is a contravention of clause 7 of Central Order by a private marketer.

In the instant case, under the assumption that the petitioner having obtained the licence under the State Order has committed violation of the same in not complying with the provisions of the said order and also enumerated conditions of licence, search and seizure were effected and the kerosene was confiscated. The petitioner has never apprised that he was governed by the Central Order and that he is liable to be dealt with under the Central Order. May be the petitioner was also under the misconception that he was governed by the State Order and across the Bar we are told by Mr. Lakshman Sarma, the learned Counsel for the petitioner, that since the action was taken against the petitioner earlier, he was forced to take the licence. The fact remains that the respondents too, thought that the petitioner was obligated by the licence under the State Order, even if he is a private marketer and that is the case of misconception and misinterpretation of the legal provisions and merely because the petitioner had obtained the licence under misconception, he cannot be bound by the said licence, as it is a settled law, that there cannot be any estoppel against the statute. As we have held that the State Order is inapplicable to the Private Marketeers, like the petitioner, the petitioner is not under the obligation to observe the conditions of the licence granted under the State Order and henceforth he is not required to obtain any licence to comply with the provisions of the State Order.

However, he is obligated to scrupulously follow the duties which are cast upon him under clause 7 of the Central Order. Mr. Lakshman Sarma, the learned Counsel for the petitioner, submits that he has got evidence to show that there is strict compliance of clause 7 of the Central Order. Ms. Rohini, the learned Government Pleader, counters the said move, stating that relates to fact finding, which can be enquired only by a fact finding Authority and as such this Court cannot enquire with regard to the said aspect of the compliance or otherwise of the obligations cast on the petitioner under clause 7 of the Central Order. We accept the contention of the learned Government Pleader on this aspect with regard to the fact finding.

In view of what is stated supra, we hold:

(i) that the kerosene being dealt by the parallel marketer under the parallel marketing system, defined under clause 2(h) and (i) of the Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993 is covered and governed by the above order and not by the provisions of the A.P. Petroleum Products Order, 1980;

(ii) that the seizure of kerosene effected from the custody of the petitioner though not sustainable under A.P. Petroleum Products Order, 1980, but is sustainable under the provisions'' of the Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993;

(iii) that the order of confiscation of kerosene by the primary and appellate authority are void ab initio and as such are treated as non est under law;

(iv) that the Joint Collector, Kakinada, first respondent herein, shall now consider within a period of one month from the date of receipt of this order, as to whether there is material to form opinion with regard to the violation by the petitioner of clause 7 of the Central Order. For arriving at this opinion with regard to the culpability of the petitioner, the first respondent shall be entitled to call for such information as is contemplated and relatable to Clause 7 of the Central Order, 1993; and

(v) if the first respondent opines so, that there is violation, it is open for him to initiate proceedings afresh u/s 6A of the Act and by following the procedure u/s 6B of the Act, he shall conclude the proceedings by conducting enquiry after affording opportunity to the petitioner within a period of three months from the date of the receipt of the notice by the petitioner.

The writ petition is allowed in part to the extent indicated above. Each party shall bear their own costs.