SRINIVASA TRADING COMPANY MACHILIPATNAM Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) Choudary, J.-Cement like many other commodities essential for the life of community, has been for quite some time in continuous short supply in our country. It has therefore become necessary for the State to enact from time to time regulatory measures like the Essential Commodities Act (X of 1955) (hereinafter called as the Act) drastically interfering with the operations of ordinary market mechanism of supply-and-demand. Section 3 of that Act gives very wide and extensive powers to the Union Government to control and regulate production and ensure supply and distribution of essential commodities at fair prices. Under section 5 of the Act, the Central Government is empowered to delegate the powers under section 3 to such "officer or authority subordinate to the Central Government or such State Government or such officer or authority subordinate to the State Government", as may be specified in the Central directive. The effect of a delegation made by the Central Government under section 5 is to empower the delegate to exercise the powers mentioned in section 3 subject to such conditions as the Central Government may impose. Under section 3 (2) (/) it is specifically provided that an order made under that clause may require 'any person holding the stock, or engaged in the production, or in the business of buying or selling of any essential commodity to sell the whole or a specified part of the quantity held in stock or produced or received by him or in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government or such other person and in such circumstances as may be specified in the order.

(2.) The State of Andhra Pradesh in supersession of the Andhra Pradesh Cement Distribution Order, 1973 had issued in G.O.Ms. No. 1170, Industries and Commerce, dated 7th December 1977, the Andhra Pradesh Cement Distribution (Licensing and Regulation) Order of 1977 (hereinafter called the 1977 Order). Under the aforesaid 1977 Order no person shall sell cement as a dealer or carry on business as stockists except under and in accordance with the terms and conditions of a licence obtained under that order, from the licensing authority. The "Licensing Authority" is defined in clause 2 (J) to mean "The Director, the Collector or any other officer authorised by the Director or the Collector to perform all or any of the functions of the licensing authority under 1977 Order". Under clause 3 (2) (a) a dealer and a stockist authorised by a manufacturer and every person authorised by the licensing authority shall be issued a licence in Form I. Under that clause every dealer and every person applying for licence shall deposit with the licensing authority a sum of Rs. 200 towards cash security. The same clause deals with the existing licensees requiring them to make an application for renewal of their licences on or before the date of expiry of the period of licence. Clause 4 speaks of the power of the licensing authority to refuse to grant or renew licence, but subject to the condition that the applicant is given an opportunity of stating his case and reasons are recorded in writing for so refusing to grant or renew any licence. The licence once granted is liable to be cancelled on the ground that the licensee has contravened any of the provisions of the Order. It is the obligation of the licensee to comply with the directions issued to him from time to time by the licensing authority regarding purchase, storage and sale of cement. The 1977 Order requires the licensee to maintain various kinds of registers showing the receipts and sales of cement, opening and closing balances, stock of cement and every day quantities of cement received or removed on each day. The licensee should also submit to the licensing authority a return of these details every quarter.

(3.) The petitioners, on the day of the commencement of 1977 Order being licensees under the 1973 Order are dealing in storing and selling of cement subject to the conditions of their licenses. It may be mentioned that although under the statute they are licensed, they are appointed as dealers by the various manufacturers. This situation continued till the State Government in purported exercise of its power under section 3 of the Essential Commodities Act issued G.O.Ms. No. 1021, dated 29th December, 1978 and G.O. Ms. No. 1023 of the same date. By means of G.O. Ms. No. 1021, sub-clause (k) of clause (2) of the aforesaid 1977 order which defines 'manufacturer' was altogether omitted and sub-clause (2) (a) of clause 3 was amended by omitting the word 'manufacturer' and substituting in its place "an agency be nominated by the Government. Prior to the issuance of the aforesaid G.O. Ms. No. 1021, sub-clause (2) (k) reads as follows: 'Manufacturer' means the "manufacturer of cement". Prior to the issuance of aforesaid G.O.Ms. No. 1021, Clause 3 (2) (a) reads as follows: "All dealers and stockists, authorised by a manufacturer as on the date of commencement of this order and every person authorised by the licensing authority shall be issued a licence in Form I. After the amendment that sub-clause reads as follows : "All dealers and stockists authorised by an agency nominated by the Government as on the date of commencement of this order and every person authorised by the licensing authority shall be issued a licence in Form Following the above amendments made by the aforesaid G.O. Ms. No. 1021, the State Government has issued another G.O. viz., G. O. Ms. No. 1023 on the same day nominating the Andhra Pradesh State Trading Corporation Ltd., (S.T.C. in short) as the Agency referred to in the amended clause 3 (2) of the 1977 Order. On its being so nominated, the S.T.C. has assumed wide powers of taking control over the internal distribution of the cement within the State, appointing or recognising cement dealers collecting security deposits and handling charges from them at the rate of Rs. 3 per tonne. The S.T.C. has also issued various instructions such as those contained in its Notification dated 3rd February, 1979.