M/s. Himalaya Agro Chemicals Pvt. Ltd. vs The State of Bihar and Others

Navaniti Pd. Singh, J.—The petitioners, by these writ applications, have challenged the decision of the Director (Agriculture), Bihar, Patna dated 7.7.2008 as contained in Annexure-11 to the first writ application by which he has directed that manufacturers of mixture of fertilizers would not, under any circumstance, purchase their raw material, which are fertilizers, from the market. Counter affidavit and rejoinder have been filed. Pleadings, being complete, parties agree for disposal of the writ applications at the stage of admission itself. On behalf of petitioners, it is submitted that they being duly registered manufacturer of mixture of fertilizer under the provisions of the Fertilizer (Control) Order, 1985 (hereinafter referred to as the FCO) if the direction impugned is allowed to operate, it would be a complete death blow to them because for manufacturing mixture of fertilizers, as the name itself suggests, they have to buy as raw material fertilizers which they buy from the open market. If this is stopped, their right to business also stops. Shri S.D. Sanjay, Senior Advocate for the petitioners submits that the Director of Agriculture, Government of Bihar has no such authority and even if he had any such authority, the directions are contrary to the provisions of the Act and are not consistent therewith nor they are consistent with the policy of Government of India in that regard. He further submits that even if every aspect is held against the petitioners then the State Government must, before virtually ordering closure of the unit, ensure alternative source of supply of raw material. State, on the other hand, submits that if primary fertilizers are permitted to be used for manufacturing mixture of fertilizers that would cause scarcity of fertilizers in the market. The order restricting purchase of fertilizers is, thus, in the interest of agriculturists.

In order to appreciate rival contentions, it is necessary to refer to the provisions of the FCO. The first distinction, one would notice, is that the FCO is a regulatory order made u/s 3 of the Essential Commodities Act by the Central Government. Unlike licensing provisions, as provided in other orders made with reference to Essential Commodities Act herein, it is registration. The distinction becomes vital because in matters of registration, there is no discretion left to the registering authority if the conditions are fulfilled. In such a situation, he has to grant registration and once a person is registered then, except in so far as regulated or controlled by the FCO, his dealings cannot be restricted in any manner. The powers of authorities have to be drawn from and understood in reference to the powers as contemplated under FCO. This is so because right to carry on business is a fundamental right under Article 19(1)(g) 380 M/s Himalaya Agro Chemicals Pvt. Ltd. v. State of Bihar 2009 (3) PLJR of the Constitution of India and restrictions which are reasonable can only be imposed by law. Law here means law made by the Legislature or under authority of the Legislature. Thus, the power has to be authorized by law on a person to restrict the right to carry on business. There cannot be an inherent right in any officer to order or put restrictions on any right to carry on business for the simple reason that the right to carry on business is a fundamental right subject to reasonable restriction as may be imposed by law.

Learned counsel for the State submits that fertilizers are by and large subsidized. They are meant to reach as such to the agriculturists who must enjoy the subsidy. It is submitted that if subsidized fertilizers are used by manufacturers of mixture of fertilizer then the agriculturist would be deprived of the subsidy. The straight answer to this is to be found in Annexure-3 the office memorandum of Government of India in the Department of Fertilizer dated 28th March, 2002 wherein the policy of the Government of India who is the author of the FCO has been stated. It permits the use of subsidized fertilizer for manufacture of mixture of fertilizer. This position is then clarified by the Government of India in the Ministry of Agriculture by its letter addressed directly to the Director of Agriculture, Government of Bihar dated 26th of February, 2008 (Annexure-5) wherein the position is clarified. The State of Bihar, in matters of fertilizer, its manufacture, sale and distribution is only subordinate to the Government of India. u/s 3 of the Essential Commodities Act, it is the Central Government that has been conferred with authority to formulate orders in respect of matters enumerated therein. Section 5 of the Act permits the Central Government to delegate the authority to the State Government. The State Government is a delegate and cannot act contrary to the policy of the delegator. The Central Government has framed the FCO and if the FCO itself does not put any specific and unambiguous restrictions on the right of the petitioners then it is not open to the State Government to put such a restriction which virtually amounts to a prohibition on their right to carry on business. These are settled principles.

State''s next concern is about scarcity of fertilizers. In my view, one important aspect is missed out. Like other fertilizers granulated mixture of fertilizer also finds its end user as the agriculturist. Petitioners would not be manufacturing the mixture of fertilizer if agriculturist did not require the same. No person manufactures a product for which there is no market. If mixture of fertilizer is prohibited from being manufactured then it would surely create scarcity in the market of that product. To say that merely because they purchase fertilizer from the market, there would be scarcity in the market because either the primary fertilizer or mixture thereof both ultimately finds their way to the agriculturist. Thus, this apprehension on behalf of State is again misconceived.

Now coming to the statutory provision. Learned counsel for the State, with reference to definition of retail dealer and wholesale dealer, as given in Clause 2(t) and 2(w) submits that a wholesale dealer is not permitted to sell fertilizer to units manufacturing mixture of fertilizers. Clauses 2(t) and 2(w) of the FCO are quoted hereunder:--

....

(t) "retail dealer" means a dealer who sells fertilizers to farmers or plantations for agricultural use, such as, for fertilization of soil and increasing productivity of crops;

(w) "wholesale dealer" means a dealer who sells fertilizers otherwise than in retail for agricultural use, such as, for fertilization of soil and increasing productivity of crops.

In my view, Clause 2(t) is clear. It clearly defines a retail dealer to mean a dealer who sells fertilizer to agriculturist for agriculture use. Clause 2 (w) is definition of wholesale dealer and the important words are otherwise than in retail. To my mind, what is sought to be defined is that a wholesale dealer is not to have any link with agriculturist. He does not deal with agriculturist because that is within the exclusive domain of retail dealers. Beyond this, this definition does not restrict the dealings of a wholesale dealer. Learned counsel for the State submits that this does not permit the wholesale dealer either to sell fertilizers to units manufacturing mixture of fertilizers. Here again, the submission is misplaced. In a free democratic country like India governed by Constitution where right to trade and business is a fundamental right, one does not have to look for a right to do business but to the contrary, one has to look for restrictions by laws. A right to do business is conferred by the Constitution and not by FCO. FCO only restricts the rights. As such, keeping this in mind, one has to see and if there is any restrictive provision in the FCO restricting the right of a manufacturer of mixture of fertilizer from purchasing the fertilizer from a wholesaler. No express provision to that effect has been pointed out.

In this connection, I may refer to other aspects of this argument. If one were to see the provisions in greater detail, one would find that both the wholesale and retail dealers and manufacturer of mixture of fertilizers have to register themselves as such. In respect of retail dealers when they apply for registration, they have to file alongwith their application, a certificate of source in form O. Thus, restricting their avenues of purchase of fertilizer to the source which have granted those certificates, as such, they are free to sell their fertilizers to any agriculturist. Thus seen, their procurement and sale are both controlled. Next when we come to wholesale dealer, similar is the provision in terms of their purchases. The manufacturers have to give certificates appointing their dealers for areas designated therein. It is only in those areas that the wholesalers can sell their products but significant to note is that wholesalers are not restricted in sale of fertilizer to any person except that they cannot sell to agriculturist directly. Now when we see the provisions with regard to manufacture of mixture of fertilizers, it would be seen that so far as they are concerned, they are not restricted in their purchase or in their sale to any particular class or persons. The provisions are totally silent.

Thus seen, where the Legislature wanted to impose restrictions, they imposed restrictions, where they required no restrictions to be imposed, they did not provide so. The intention is deliberate and clear. This is the principle of expression unius est exclusion alterius. Where a thing is expressly provided, it excludes, by implication, of other things. If that be intention then the Director of Agriculture cannot get in through the backdoor and indirectly do what directly was prohibited from being done. The Central Government did not envisage any restriction. It is not open to the Director of Agriculture, Government of Bihar to impose those restrictions. In my view, imposing those restrictions would create greater scarcity in the market because mixture of fertilizer would simply vanish. If State Government was so anxious, it could have approached the Central Government with a request to make a separate unitwise allocations to the petitioners of their requirement and ensure that those requirements were met by the Central Government in view of directions to be issued by them in terms of Clause 6 of the FCO and having got the Central Government to issue such directions then the right of manufacturers could be restricted but not otherwise.

Learned counsel for the State next submits that Clause 22 of the FCO is with regard to permission of sale. He submits that under the said, it is provided that a manufacturer, importer may sell the fertilizer manufactured by him in bulk to the manufacturer of mixture of fertilizers, compound/complex of fertilizers or special mixture of fertilizers. In my view, this is only an empowering section or an enabling provision. It cannot be read as a provision restricting the rights of others. It does not say that it is only a manufacturer or an importer of fertilizer who can sell fertilizer in bulk to manufacturer of mixture of fertilizer. An enabling provision cannot be read as a restrictive provision. The purposes are different. Beyond this, the learned counsel for the State is unable to refer to any provision which either confers authority on the State Government or the Director of Agriculture to issue such restrictive orders or any provision which restricts the right of the petitioners to purchase fertilizer from the open market even though they are subsidized.

In that view of the matter, the decision of the Director of Agriculture, as contained in Annexure-11 to the first writ petition which is Annexure-9 in the second writ petition, cannot be sustained and is hereby quashed as being wholly illegal, unauthorized and unsupported by statutory authority. The writ petitions, thus, are allowed.