Allahabad High Court
M/S B.N.K.N. Ferti Chem Private Limited ... vs State Of Uttar Pradesh ... on 26 October, 2017
Equivalent citations: AIR 2018 (NOC) 550 (ALL), 2018 (2) ALJ 465, (2017) 125 ALL LR 771, (2018) 2 ALL WC 2056, (2017) 11 ADJ 354 (ALL)
Bench: Devendra Kumar Upadhyaya, Rajesh Singh Chauhan
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH A.F.R. Court No. - 5 Case :- MISC. BENCH No. - 7644 of 2016 Petitioner :- M/S B.N.K.N. Ferti Chem Private Limited Thru. Its Director Respondent :- State Of Uttar Pradesh Thru.Prin.Secy.,Dept. Of Agri. & Ors. Counsel for Petitioner :- Pushpila Bisht Counsel for Respondent :- C.S.C.,Safiq Mirza Hon'ble Devendra Kumar Upadhyaya,J.
Hon'ble Rajesh Singh Chauhan,J.
(Per Hon'ble Rajesh Singh Chauhan, J.)
1. We have heard Ms. Pushpila Bisht, learned counsel representing the petitioner, learned Addl. Chief Standing Counsel representing the State-respondents and Sri Shafiq Mirza who has put in his appearance on behalf of U.P. State Agro Industrial Corporation Limited-respondent no. 3 (hereinafter referred to as "U.P. Agro"). Also perused the original records produced by District Agriculture Officer, Raebareli who is present before the Court pursuant to our order dated 23.10.2017/ 25.10.2017.
2. Petitioner company is manufacturer and supplier of fertilizers and is primarily aggrieved by the order dated 22.02.2016 passed by the Chief General Manager (Marketing) of U.P. Agro, whereby, the petitioner has been blacklisted for making supplies of fertilizers in future.
3. The basic premise on which learned counsel representing the petitioner has proceeded to advance her arguments assailing the impugned order dated 22.02.2016 is that though the impugned order is based on alleged test report of the samples of the fertilizer supplied by the petitioner according to which the samples were found to be substandard, however, while collecting and analyzing the samples, the officers of the State Government have not followed the relevant procedures of Fertilizer (Control) Order, 1985 (hereinafter referred to as "Control Order"). It has also been forcefully submitted by the learned counsel for the petitioner that the impugned order is absolutely non speaking one which is based only on the report and the instructions of the State government and hence any order sans application of mind by the authority, who has passed the order, cannot be permitted to be sustained.
4. Ms. Bisht has further emphasized that the provisions of the Control Order being statutory in nature ought to have been followed while collecting and analyzing the samples and by not doing so, the respondents have not only acted in contravention of the statutory provisions of the Control Order but on account of such an action, the petitioner's valuable statutory rights of referee analysis of samples have been marred.
5. Counter affidavit has been filed by U.P. Agro, a perusal of which unambiguously reveal that the impugned order by the Chief General Manager (Marketing) of U.P. Agro has been passed wholly on the report and instructions of the State Government and further that in collection and analysis of fertilizers supplied by the petitioner, U.P. Agro did not have any role. However, Sri Shafiq Mirza defending the impugned order has stated that since the supplies made by the petitioner were found to be not conforming to the standards, hence, no fault, much less any legal fault, can be found in the impugned order dated 22.02.2016.
6. Sri H.P. Srivastava, learned Addl. Chief Standing Counsel has also attempted to defend the impugned order and has tried to justify the procedure followed for collecting and analyzing the samples. Taking the Court to the original record which have been produced by District Agriculture Officer, Raebareli it has been submitted by learned Addl. Chief Standing Counsel that sampling and analysis of the samples of fertilizer supplied by the petitioner were done strictly in accordance with the law and provisions contained in the Control Order and since the samples were found to be substandard as per the analysis report submitted by the Government Laboratories situated at Alambagh, Lucknow, no exception can be taken by the petitioner to the impugned order, whereby, the petitioner company has been blacklisted for the future supplies of fertilizers.
7. It appears that for the purpose of procurement of fertilizers, the State Government in the department of Agriculture, appointed U.P. Agro as Nodal Agency. U.P. Agro is a Government company and accordingly it was rightly appointed to act as Nodal Agency for procuring fertilizers to be ultimately sold to and utilized by the peasantry at large in the State of U.P. Accordingly, on completion of the procedure of tender, the petitioner company was shortlisted for supply of fertilizers and therefore, a Memorandum of Understanding (hereinafter referred to as ''MoU') was entered into between the petitioner and U.P. Agro according to which the petitioner was to supply Zinc Sulphate 21% @ Rs. 29,000/- per metric ton. In terms of the MoU and the relevant circulars issued by the Government, the supply was to be made only after pre-supply sample was found to conform to the standards. The said MoU and circulars also provided that sampling would be done for the purpose of testing the fertilizers supplied by the petitioner after the supplies were made. It has been averred in para 29 of the writ petition by the petitioner that once the pre and post supply samples of the petitioner were found to be conforming to the standards by the laboratories concerned, the supplies were made and as such there was no reason for the respondents to have either rejected the supplies or to have passed the order blacklisting the petitioner company. In the counter affidavit filed by the State, the averment made in para 29 of the writ petition have been replied, wherein the fact that pre and post supply samples of the petitioner were found to be conforming to the standards has not been denied.
8. However, after supplies were made, it appears that the State Government received some complaints against the petitioner company which led the State Government to constitute a Task Force. The said Task Force is said to have collected the samples of fertilizers supplied by the petitioner at Raebareli on 30.08.2015. According to the respondents, the samples so collected by the Task Force were sent for analysis to the State laboratory at Alambagh, Lucknow which submitted the report after analyzing the samples that fertilizer samples were found to be substandard. The State Government thereafter, it appears, instructed the U.P. Agro to take appropriate action against the petitioner for the reason that the samples on analysis were found to be substandard. It is in this background that the impugned order dated 22.02.2016 has precipitated which has resulted in blacklisting of the petitioner.
9. A detailed procedure has been provided in Control Order for collection and analysis of the samples of fertilizers. The Control Order has been made by the Central Government in exercise of its powers conferred by Section 3 of the Essential Commodities Act, 1955 and hence the same being statutory in nature has statutory force and unless the context otherwise provides, the provisions of such statutory instrument will be binding on all concerned, including the State authorities. Part VII of the Control Order provides for Enforcement Authorities. Clause 28 falling in part VII of the Control Order defines the power of Inspectors and according to clause 28(1)(b) an Inspector may draw samples of any fertilizer in accordance with the procedure for drawing samples as provided in Schedule II. It further provides that Inspector shall prepare the sampling details in duplicate in form ''J' and handover the same to the dealer or representative from whom the sample is drawn. The word "dealer" has been defined in clause 2(f) of the Control Order to mean a person carrying on the business of selling fertilizers and includes a manufacturer, an importer and a pool handling agency carrying on such business and their agents. It also includes manufacturer or pool handling agency. So far as the petitioner company is concerned, there is no denial of the fact that it is manufacturer as well as is engaged in the business of selling fertilizers, hence, it is a dealer within the meaning of Section 28(1)(b) of the Control Order, 1985. Section 28(1)(b) is extracted herein below:
"draw samples of any fertilizer in accordance with the procedure of drawal of samples laid down in Schedule II. Provided that the inspector shall prepare the sampling details in duplicate In Form J, and hand over one copy of the same to the dealer or his representative from whom the sample has been drawn;
(ba) draw samples of any biofertilizers in accordance with the procedure of drawl of samples laid down in schedule III.
(bb) draw samples of any organic fertilizers in accordance with the procedure of drawl of samples laid down in schedule IV."
10. The definition of "dealer" as it occurs in Section 2(f) of the Control Order is also extracted herein below:
""dealer" means a person carrying on the business of selling fertilizers whether wholesale or retail or industrial use* and includes a manufacturer [Importer] and a pool handling agency carrying on such business and the agents of such person, manufacturer or pool handling agency."
11. As noticed above, drawl of samples is to be done in accordance with the procedure laid down for the said purpose in Schedule II appended to the Control Order. Schedule II is, in fact, referable to clauses 28 and 29 of the Control Order. Clause 29 falls in part VIII of the Control Order which deals with specific provisions for analysis of samples. Clause 29(b) talks about laboratories for referee analysis and provides that every laboratory referred to in sub-clause (1) of clause 29 shall be designated as referee laboratory for the purpose of analysis of any sample of fertilizers. This clause contains three provisos. Clause 29(b) is also relevant to be extracted herein, which runs as under:
"29B Laboratories for referee analysis.- (1) Every laboratory referred to in sub-clause (1) of clause 29 shall be designated as referee laboratory for the purpose of analysis of any sample of fertilizer :
Provided that no such laboratory which carried out the first analysis of the fertilizer sample shall be so designated in respect of that sample:
Provided further that in respect of any sample the analysis of which has been challenged, may be sent for referee analysis to any one of the other laboratories except those which are located in the State or where the first analysis has been done.
Provided also that the Central Fertilizer Quality Control and Training Institute and Regional laboratories shall be considered as one group of laboratories and a sample first analysed by any one of them, shall not be sent for referee analysis to any other in that group, but only to any other laboratory notified by a State Government.
(2) Notwithstanding anything contained in this Order, the Appellate Authority as specified under paragraph (b) of sub-clause (1) or paragraph (b) of sub-clause(2) of clause 32, in case of sample analyzed by the State Government laboratory, or the Controller, in case of samples analyzed by Central Fertilizer Quality Control and Training Institute, Faridabad or its Regional Fertilizer Control Laboratories, as the case may be, shall decide and send, one of the two remaining samples, for reference analysis as provided under sub-clause (1)."
12. Schedule II appended to the Control Order contains complete and detailed prescription relating to procedure for drawing samples of fertilizers. Clause 6 of Schedule II provides for preparation of test sample and reference sample. It is noticeable that clause 6 occurring in Schedule II makes specific mention of two kinds of samples namely (I) Test Samples and (II) Reference Samples. Sub-clause IV of Clause 6 mandates that out of three samples which are to be collected, one sample has to be sent to the Incharge of the Laboratory notified by the State Government or Central Fertilizer Quality Control and Training Institute, Faridabad or Regional Fertilizer Control Laboratories at Mumbai, Chennai or Kalyani (Kolkata) for analysis. It further provides that the second sample shall be given to the manufacturer or importer or dealer or the purchaser, as the case may be. As per the requirement of this clause, the third sample is to be sent to the higher authority for keeping the same in safe custody. The provision further states that any of the latter two samples may be sent for referee analysis as provided for under sub-clauses of clause 29(b) of the Control Order. Clause 6 of Schedule II appended to the Control Order is reproduced herein below:
"Preparation of test sample and reference sample:
(i) The composite sample obtained above shall be spread out on a clean, hard surface and divide into three approximately equal portions [each of the weight as specified in Para 8]. Each of these samples shall constitute the test sample.
(ii) Each test sample shall be immediately transferred to a suitable container as defined under para 1(e). The slip with detailed description may be put inside the sample bag. Each bag shall also be properly labeled as mentioned in Para 1(f)
(iii) Each test sample container shall then be sealed with the seals of the inspector. If possible, seal of the manufacturer/ dealer or purchaser as the case may be, may also be affixed.
(iv) Out of three samples collected, one sample so sealed shall be sent to the Incharge of the Laboratory notified by the State Government under clause 29 or Central Fertilizer Quality Control and Training Institute, Faridabad or Regional Fertilizer Control Laboratories at Mumbai, Chennai or Kalyani (Kolkata) for analysis. Another sample shall be given to the manufacturer or importer or dealer or the purchaser as the case may be. The third sample shall be sent by the inspector to his next higher authority for keeping in safe custody. Any of the latter two samples may be sent for analysis as provided for under sub-clause 29-B."
13. We have already observed above that the provision contained in clause 6 of Schedule II makes mention of two kinds of samples i.e. (i) test sample and (ii) reference sample. Sub-clause IV of clause 6 talks about collection of three samples out of which two samples, which are found mentioned in the latter part of the said clause are to be preserved for referee analysis whereas, the first sample as mentioned in the said sub-clause, is to be sent for analysis/ testing to a laboratory notified by the State Government or the other laboratories which are mentioned in the said sub-clause itself.
14. We have already noticed above, that the provisions of Control Order, including sub-clause (iv) of Clause 6 of Schedule II are statutory in nature and hence are binding on all the concerned. A closure scrutiny and analysis of the entire scheme of the Control Order leads to an indefeasible conclusion that there is a purpose behind there being requirement of collection of three samples, first being a test sample and the second and third being the reference samples. In case the test sample as analysed by the laboratory notified by the State Government is found to be conforming to the standards and norms, since no further action would be needed, the other two samples will have no use. However, in case the test sample is found to be sub standard on analysis by the notified laboratory, the second and third samples, which are reference samples, assume significance and importance, inasmuch as, that these two latter samples can be send for referee analysis, if the result of the test sample is challenged by the dealer.
15. Such a provision, in our considered opinion, has been consciously made by the rule making authority to provide a safeguard and as a measure of checks and balances against any possible arbitrary and unlawful action on the part of State authorities or the officers who conduct the collection of the sample and its testing. We may notice at this juncture that such a provision in fact, is made to meet the requirement of principles of natural justice and in case no provision of referee analysis existed, that would have deprived the dealer to have an opportunity to establish its innocence. Accordingly, we are of the considered opinion that provision for collection of referee sample and sending the samples for referee analysis in terms of provisions of Section 29(B) of the Control Order read with clause 6(IV) of Schedule II appended thereto has been provided for by the rule making body with care and caution. The purpose, thus, of having such a provision is not only to conform to the principles of natural justice but also to check any possible arbitrary action on the part of State authorities.
16. So far as the facts of the present case are concerned, the original record produced by the District Agriculture Officer does contain form ''J', however, the said record does not disclose in any manner that the sample collected on 20.08.2015 was handed over to the petitioner company or its representative.
17. Learned Addl. Chief Standing Counsel, on the basis of instructions received from District Agriculture Officer who is also present before the Court, has submitted that three samples were collected by the Task Force on 30.08.2015 of which one sample was sent to the laboratory notified by the State Government and one sample was handed over to the Incharge of the Godown where the fertilizers supplied by the petitioner company was stored. It has been further stated by learned Addl. Chief Standing Counsel that the third sample was sent to higher authority.
18. Sri H.P. Srivastava has however, attempted to justify the action on the part of Task Force in not handing over the sample to the petitioner company by submitting that in sub-clause IV of clause 6 of Schedule II, the requirement of giving the sample is to the manufacturer or importer or dealer or the purchaser. His submission is that if the sample is given to either of these four categories persons namely, either to the manufacturer or the importer or the dealer or the purchaser, the requirement of the provisions contained in sub clause IV of clause 6 of Schedule II shall be fulfilled and since in the present case the second sample was given to the purchaser i.e. the Incharge of the godown where the fertilizer was stored after having been supplied by the petitioner, there is no illegality in the process adopted by the Task Force.
19. We are afraid we just cannot agree to the submission of learned Addl. Chief Standing Counsel. The complete sentence dealing with the requirement of giving second sample occurring in Clause 6(IV) of Schedule II is "another sample that shall be given to the manufacturer or importer or dealer or the purchaser as the case may be." Learned counsel representing the State authorities has thus not given any attention to the last phrase occurring in the said sentence i.e. "as the case may be". As to whom the second sample is to be given, either to the manufacturer or importer or to the dealer or to the purchaser thus depends upon the context. Therefore, interpretation given by us is fortified by occurrence of the phrase "as the case may be" given in clause IV Schedule II. The phrase "as the case may be" leaves no room of doubt that the second sample can be given to either of the aforesaid four persons, however, it will depend on the context as to whom the second sample is to be given.
20. In the instant case, the second sample was given to the purchaser but giving the second sample to the purchaser would not fulfill the requirement of law and will also be against the purpose for which clause 6(IV) has been provided for in the Schedule II of the Control Order. In case the test sample is found to be substandard, it is not the purchaser who will suffer some adverse consequences; rather it is the supplier or the dealer or the manufacturer who is going to have some adverse consequence. In this situation i.e. in a situation where the sample is found to be substandard,the right of having referee analysis will be exercisable not by the purchaser but by either the manufacturer or the dealer or the importer or the supplier. In the instant case, such a right of referee analysis has to be exercised not by the purchaser (which in this case is the Government and a Government company), but by the petitioner whose test sample is said to have been found not conforming to the norms and standards as per the analysis report of the Government notified laboratory. If the interpretation which is sought to be given by the learned Addl. Chief Standing Counsel to the provisions contained in clause 6(IV) of schedule II is accepted, the same would frustrate the very purpose of having such a provision which, as outlined above, is to provide for safeguard against any possible arbitrary action on the part of State authorities and also to ensure observance of principles of natural justice.
21. Admittedly in the instant case, the second sample was not provided to the petitioner and hence the process of collection of sample adopted in this case by the Task Force cannot be said to be in conformity with the requirement of the Control Order.
22. There is yet another factor which, in our considered opinion makes the procedure adopted by the respondent vitiated. Right to referee analysis to the dealer or supplier or manufacturer flows from clause 28 of the Control Order read with clause 6(IV) of Schedule II appended thereto. Clause 28(1)(b) of the Control Order clearly mandates that the sample collected has to be given to the dealer or its representative from whom the sample has been drawn. The purpose of giving such sample to the dealer has already been elaborated herein above and the purpose is to give an opportunity to the dealer of referee analysis. The right of referee analysis can be exercised by a dealer only if the second sample collected by the authority concerned is given to him and also only when the report of test sample, in case it is found to be substandard, is provided to him.
23. In the instant case, it has categorically been stated by the petitioner in para 59 of the writ petition that the report of the test sample from the State notified laboratory was not given to the petitioner or its representative. In reply to the said averment, in para 38 of the counter affidavit filed by the U.P. Agro, it has been stated that the authorities of U.P. Agro does not have any concern with Task Force. The State authorities in their reply to the said averments made by the petitioner, has stated in para 39 that the same does not need any comment. Accordingly, in the counter affidavit filed both by the State authorities and the authorities of U.P. Agro, there is no denial that the petitioner was not given or furnished with the report of the analysis of test sample. However, Sri H.P. Srivastava, learned Addl. Chief Standing Counsel on the basis of instructions submits that the said report was furnished to the petitioner through registered post, though the record produced today before the Court does not contain anything to suggest that the said report was sent to the petitioner by registered post. At this juncture,Sri Srivastava submits that requisite document evidencing that the report sent to the petitioner through registered post is available in the office of District Agriculture Officer. The reply submitted by the State in this regard thus creates a situation of ambiguity and hence in view of the order which follows, we propose to direct the competent authority of the State Government to furnish the report of the analysis of the test sample to the petitioner.
24. In view of the forgoing discussion and on a closure scrutiny of record of this writ petition and also the original record produced by the District Agriculture Officer, we are convinced that the collection of samples in this case has not been done as per the statutory prescription available in the Control Order. The decision of U.P. Agro to blacklist the petitioner is based solely on the report and instructions received by the State Government on the basis of report of the analysis of test sample conducted by the State notified laboratory. The analysis report of the test sample given by the laboratory notified by the State Government, in our opinion, in the facts and circumstances of the present case, cannot be said to be conclusive for the reason that petitioner admittedly in this case has been deprived of its right of referee analysis in terms of the provisions contained in clause 28, 29(b) of Control Order read with clause 6 (IV) of Schedule II appended to the said Control Order. We may reiterate that the prescriptions available in the Control Order are statutory and thus are binding. We may further reiterate that the purpose of giving a right of referee analysis to a dealer is not only to conform to the principles of natural justice but also to provide for a safeguard against any possible arbitrary action on the part of State authorities. The facts of the instant case as discussed above, clearly establish that the petitioner has been deprived of its statutory right of referee analysis of the sample and accordingly, we are of the opinion that such an opportunity needs to be given to the petitioner.
25. We have been informed by District Agriculture Officer that the two samples, the one given to the Incharge of Godown and the other sent to higher authority, have been kept in a preserved state and by efflux of time or for any other reason, no deterioration would have been caused as to the quality of the samples of the fertilizer which are still kept in the safe custody of the Incharge of the Godown and the higher authority.
26. In these circumstances, the writ petition is disposed of in the following terms:
(i) Impugned order dated 22.02.2016 passed by the Chief General Manager (Marketing), U.P. Agro as is contained in Annexure No. 1 is hereby quashed.
(ii) The competent authority in the State Government is directed to furnish copy of the report of the analysis of the test sample to the petitioner within 10 days from today. On receipt of the copy of the analysis report of the test sample, the petitioner shall, if so advised, make objection to the competent authority and on receipt of such an objection, the two samples, the one kept with the higher authority and the other kept with Incharge Godown shall be sent for referee analysis in accordance with the provisions contained in Fertilizer (Control) Order, 1985. The referee analysis shall be conducted by the authority/ laboratory concerned within a maximum period of one month from the date of objection which may be filed by the petitioner to the analysis report in respect of the test sample. It is further directed that both these samples for referee analysis will be sent either to the Central Fertilizer Quality Control and Training Institute, Faridabad or Regional Fertilizer Control Laboratories at Mumbai, Chennai or Kalyani (Kolkata).
(iii) After receipt of the report of the referee analysis from the laboratory concerned, the same shall be intimated to the petitioner within 10 days thereafter. Based on the report of the referee analysis, further action, if any, may be taken by the authorities concerned but in case any adverse action is proposed against the petitioner on the basis of referee analysis report, the petitioner shall be associated with the process by giving adequate opportunity of hearing.
27. In any case, the entire procedure in terms of this order shall be completed by the authority within a period of four months from today. It is further directed that within this period of four months, it will not be permissible for the petitioner company to make any supplies of fertilizers to the State of U.P. or any of its agencies.
28. No order as to costs.
Order Date :- 26.10.2017 IrfanUddin/CPP