Karnataka High Court
Association Of Biotechnology Led ... vs Union Of India on 22 July, 2016
Equivalent citations: 2016 (4) AKR 33, (2016) 6 KANT LJ 660
Bench: S.Abdul Nazeer, B.Veerappa
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF JULY 2016
PRESENT
THE HON'BLE MR.JUSTICE S. ABDUL NAZEER
AND
THE HON'BLE MR.JUSTICE B. VEERAPPA
WRIT APPEAL NOS.1125 TO 1126/2016 (GM-RES)
Between :
1. Association of Biotechnology Led Enterprises,
Through Authorised Representative,
Having its Secretariat at 123/C, 16th Main Road,
5th Cross, 4th Block, Koramangala,
Bengaluru - 34, also having its office at
309, Mercantile House, 15, Kasturba Gandhi Marg,
New Delhi - 110 001.
2 Namdhari Seeds Pvt. Ltd.,
Through Authorised Representative,
Having its office at No.8, 12th Cross,
Ideal Homes Township,
Rajarajeshwaringar,
Bengaluru 560 098. .... Appellants.
(By Dr.Abhishek Manu Singhvi, Sr.Adv..for
Sri Aditya Narayan, Adv.)
2
And :
1 Union of India,
Through Joint Secretary,
Department of Agriculture,
Co-operation and Farmers Welfare,
Ministry of Agriculture & Farmers Welfare,
Krishi Bhavan, Rajendra Prasad Road,
New Delhi - 110 001.
2 National Seed Association of India,
909, Surya Kiran Building,
19, Kasturba Gandhi Marg,
New Delhi - 110 001.
3 Sri Rama Agri Genetics (India) Pvt Ltd.,
D.No.11-68, GF 2, Siddeswara
Apartments, Krishna Nagar,
Kurnool 518 002.
4 Ankur Seeds Pvt. Ltd.,
27, New Cotton Market Layout,
Opp.Bus Station,
Nagpur 440 018.
5 Sri K.T.Gangadhara,
South Indian Co-ordination Committee of
Farmers Movements, Godhuli Farm,
Toppinaghatta, Vidhyanagara Post,
Shivamogga 577 23.
3
6 Dr.Vandana Shiva,
D/o late Major Dan Singh Shiva,
Aged about 63 years, Director,
Navdanya/Research Foundation for Science
Technology and Ecology,
A-60, Hauz Khas, New Delhi - 110 16.....Respondents.
(By Sri Prabhuling K. Navadgi, Addl. Solicitor General for
Smt. Sayeda Shehnaz, CGC for R1
Sri Aditya Sondhi, Sr.Adv. for Sri Perikal K. Arjuan, Adv.
& Sri A.Murali, Adv. For R2
Sri Perikal K. Arjun, Adv. For R3 & R4
Prof.Ravivarma Kumar, Sr.Adv. for Sri Vikas Rojipura,
Adv. For R5 & R6)
---
These Writ Appeals are filed under Section 4 of the
Karnataka High Court Act, praying to set aside the order dated
3.5.2016 in W.P.Nos.15173-15174/2016, etc.
These Writ Appeals having been heard and reserved for
Judgment, this day, S.ABDUL NAZEER. J., pronounced the
following:
JUDGMENT
These writ appeals are directed against an interim order in W.P.Nos.15173-15174/2016 dated 3.5.2016 whereby the learned Single Judge has vacated the interim order granted on 21.3.2016.
2. First appellant claims to be a not-for-profit pan-India association/consortium representing the Indian Biotechnology 4 Sector. The second appellant is a duly incorporated company under the Companies Act, 1956. They have filed W.P.Nos.15173 to 15174/2016 to impugn the Cotton Seeds Price (Control) Order 2015 dated 7.12.2015 issued by the Department of Agriculture, Co-operation and Farmers Welfare, Ministry of Agriculture and Farmers Welfare, wherein the first respondent has sought to delineate the modalities for imposing an upper ceiling on the sale price of genetically modified cotton seeds by regulating/fixing the seed value, licence fee including royalty or trait value, dealer margins and taxes, if any. They have also sought to impugn the order dated 27.1.2016 issued by the respondents wherein the Committee has been constituted to recommend the maximum sale price of Bt. Cotton seeds for the year 2016-2017. The validity of the order dated 8.3.2016 fixing the maximum sale price of Bt. Cotton seeds for the financial year 2016-2017 has also been challenged in the writ petitions. The appellants have sought for an interim order staying the operation of the impugned orders at Annexures 'B' and 'D' till the disposal of the writ petitions.
5
3. The main ground urged in the writ petitions is that respondent No.1's bid to fix the maximum sale price of Bt. Cotton seeds and to regulate the components thereof including the trait value payable to technology providers is beyond the powers conferred upon the Central Government. It is contended that the Central Government does not have the power under Section 3 of the Essential Commodities Act, 1955 ('Act' for short) to regulate the sub-components of an essential commodity and treat Bt. Cotton seeds as cotton seeds; fixation of the trait value by a committee constituted by the Central Government is totally illegal. It is further contended that the impugned order dated 8.3.2016 purportedly fixes the trait value, which is already governed by pre-existing and concluded contract between the members of appellant No.1 and different seed manufacturing companies and such an action will have a direct bearing on the integrity and sanctity of a concluded contract. It is further contended that Government has no power to regulate commercial or financial transaction relating to cotton 6 seeds. Therefore, the impugned orders relating to fixing/regulating the licence fee including royalty or trait value are ultra vires of Section 3(1) of the Act. Several other contentions have been urged in support of their claim that the impugned orders are bad in law.
4. On 21.3.2016, learned Single Judge has granted an interim order as under:
"Hence, fixation of the trait value under the notification dated 8.3.2016 shall not be given effect to by the respondents since it would be a matter between the first petitioner, its members including the second petitioner and their manufacturers based on the agreements entered into amongst themselves. However, while making seeds available to the farmers, the maximum sale price as notified in the notification dated 8.3.2016 shall be ensured and it shall not be exceeded."
5. The respondents have opposed the writ petitions. They have filed applications for vacation of the interim order. 7
6. After considering the rival contentions of the parties, learned Single Judge has vacated the aforesaid interim orders.
7. We have heard Dr.Abhishek Manu Singhvi, learned Senior Counsel for the appellants and Sri Prabhuling K. Navadgi, learned Addl. Solicitor General, Prof. Ravivarma Kumar, and Sri Aditya Sondhi, learned Senior Counsel for the respondents.
8. Though several contentions have been urged in the writ appeals, learned Senior Counsel for the appellants has mainly challenged the fixation of trait value at Rs.49/- per packet of Bt. Cotton seeds under the notification dated 8.3.2016. It was also contended that Bt.Cotton hybrid seeds cannot be treated as cotton seeds.
9. Appearing for the appellants, Dr.Singvi submits that Section 3 of the Act does not authorize respondent No.1 to regulate the prices of the components of an essential commodity 8 as if the components themselves were essential commodities. It is his submission that no order can be passed in respect of Section 3 until and unless the same is with respect to an essential commodity. In this connection, he has relied on the decision of the Supreme Court in the case of GIRDHARMAL KAPUR CHAND VS. DEV RAJ MADAN GOPAL - AIR 1963 SC 1587. He has also relied on the decision of the Bombay High Court in the case of MESSRS. AGARWAL AYENGAR & CO. LTD. VS. THE STATE - ILR 1952 BOM 105, wherein it has been held that Union does not have the power to regulate the price of a component of an essential commodity. It is further argued that the impugned order dated 3.5.2016 is bad in law as Section 3(2)(c) of the Act only empowers respondent No.1 to regulate and control the prices at which essential commodities may be bought or sold. Genetic Engineering or Genetic Modification Technology as defined by clause 2(g) of the Government Order dated 7.12.2015 is not declared as an essential commodity under Section 2A of the Act. It is argued that non-essential commodity cannot be converted into one for 9 the sake of control of an essential commodity. In this connection, he has relied on the decision of the Supreme Court in the case of STATE OF U.P. AND OTHERS VS.
CHHABRA BRICKS AND TILES MANUFACTURING COMPANY - (2000) 2 SCC 111. The Government Orders dated 7.12.205 and 8.3.2016 are at best executive orders and are ultra vires of the Act. It is further argued that Bt.Cotton seeds is not an essential commodity. He has also relied on the decision of the Supreme Court in PETROLEUM AND NATURAL GAS REGULATORY BOARD VS. INDRAPRASTHA GAS LIMITED AND OTHERS - (2015) 9 SCC 209. It is argued that the learned Single Judge was therefore not justified in vacating the interim order dated 21.3.2016.
10. On the other hand, learned ASG appearing for respondent No.1 submits that the Act is only a skeleton legislation. The object of the Act is to make available the essential commodities at a fair price. The Act regulates production, distribution and supply of essential commodities, 10 which is evident from Section 3(1). He has taken me through the background in which the respondents were compelled to regulate the price of Bt. Cotton seeds. Appellants have already moved the Delhi High Court wherein they were not able to obtain an interim order. The appellants before this Court are closely linked with the Monsanto Company and MMBL and are being controlled by them. Maximum sale price is nothing but an aggregation of the trait value and the seed value. In order to effectively ensure availability of Bt. Cotton seeds to the farmers at uniform and fair prices, the impugned orders have been issued. It is further argued that the seed value cannot be regulated without regulating the trait value.
11. Prof.Ravivarma Kumar, learned Senior Counsel appearing for respondent Nos.5 & 6 has made similar submissions. It is submitted that the writ petitions filed by appellant No.1 is not maintainable. Second appellant cannot maintain the writ petitions as it is a beneficiary of the impugned order. Controlling of trait value is essential to regulate the value 11 of the seeds. Section 3(1) is widely worded even to control the trade and commerce.
12. Sri Aditya Sondhi, learned Senior Counsel appearing for respondent No.2 submits that first appellant is not a juristic person and cannot maintain the writ petitions. Second appellant is a seed company and is a beneficiary of the impugned order. It is argued that High Court of Delhi and Andhrapradesh High Court have not granted orders in favour of the appellants. Learned Senior Counsel argues that there is no irregularity whatsoever in the order passed by the learned Single Judge.
13. We have carefully considered the arguments of the learned Counsel made at the Bar and perused the materials placed on record.
14. Section 3 of the Act provides for power to control production, supply, distribution, etc., of essential commodities. Section 3(1) states that if the Central Government is of the opinion that it is necessary or expedient so to do for maintaining 12 or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Sub- section (2)(c) of Section 3 authorizes the Central Government to make an order for controlling the price at which essential commodity may be bought or sold.
15. The Central Government has passed an order dated 7.12.2015 in exercise of the powers under Section 3 of the Act. Clauses 5(1), (2) and (5) of the said order are as under:
"5. Power to Maximum Sale Price: (1) The Government, may, after taking into consideration the seed value, license fee which includes one time and recurring Royalty (Trait Value), trade margins and other taxes, whenever necessary, as it may deem fit, from time to time, notify in the Official Gazette, the Maximum Sale Price of cotton seeds on or 13 before 31st March of every year applicable for the next financial year.
(2) For the purpose of fixing Maximum Sale Price, the Government may constitute a Committee under the Chairmanship of Joint Secretary (Seed) and Controller, Department of Agriculture, Co-operation and Farmers Welfare to recommend Maximum Sale Price of Cotton Seed after taking into consideration the components of Seed Value, Licence Fee, which includes one time and recurring Royalty (Trait Value), trade margins and other taxes. The Committee may take inputs from such persons or associations or authority, as may be necessary for working out the Maximum Sale Price of the Cotton Seed.
(3) xxxxx xxxxx xxxxx (4) xxxxx xxxxx xxxxx (5) The Government, while fixing the Maximum
Sale Price, shall also fix and regulate the Seed Value and Licence Fee including royalty or trait value, if any, that constitute components of the Maximum Sale Price."14
16. Yet another notification has been issued on 8.3.2016 under Clause 5(1) of the Cotton Seed Price (Control) Order, 2015, which is as under:
"MINISTRY OF AGRICULTURE AND FARMERS WELFARE (Department of Agriculture, Co-operation and Farmers Welfare) NOTIFICATION New Delhi, the 8th March, 2016.
S.O.686(E).- In exercise of the powers conferred by sub-clause (1) of clause 5 of the Cotton Seed Price (Control) Order, 2015, the Central Government, after consultation with the Committee referred to in sub-clause (2) of the said clause to recommend the maximum sale price of cotton seed, hereby declares the maximum sale price of Bt. Cotton seed packets (450 grams of Bt. Cotton seed plus 120 grams refugia) specified in the Table below for the financial year 2016-17 for the whole of India.
15 TABLE Sl. Components BG-I Version of BG-II version No. Bt. Cotton of Bt. Cotton hybrid hybrid 1. Seed Value (in 635 751 rupees) 2. Trait value including 0 49 taxes (in rupees) Maximum sale 635 800 price (in rupees) [F.No.6-2/2015-SD.V] RAJESH KUMAR SINGH, Jt. Secy. (Seeds)"
17. The contention of the learned Senior Counsel in these appeals is primarily with regard to fixation of trait value. Section 3(1) provides for fixation and controlling of price. The provisions of Section 3 of the Act cover very wide jurisdiction. The objects for exercising powers under this Section is for maintaining or increasing supplies of essential commodities or for securing their equitable distribution and availability at fair price and the power extends to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.16
18. In JAI BHARAT, ETC. VS. STATE OF HARYANA - ILR 1980 (2) PUNJAB & HARYANA 101, it has been held that the object of exercising power under Section 3 of the Act is for maintaining and increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, and the power extends to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Therefore, charges paid for storing the food stuffs in the cold storage have to be added to the ultimate price of the essential commodity. This is necessary with a view to ensure that essential commodities are made available at fair price. Regulation of cold storage charges is essential and is one of the steps which will certainly help in ensuring fair price of the essential commodities.
19. In UNION OF INDIA AND OTHERS VS.
HINDUSTAN ALUMINIUM CORPORATION LIMITED AND ANOTHER - AIR 1983 CAL 307, it has been held that the Central Government may having regard to 17 relevant factors include the estimated cost of production of indigenous aluminium produced by a producer, by order, fix from time to time, the retention price in respect of indigenous aluminium produced and sold by such producer and different retention prices may be fixed in respect of indigenous aluminium of different specifications produced by such producer. It is held that power to fix retention price is found in Section 3 itself and that is the regulatory power of the Government. The power to regulate has been conferred on the Government in order to achieve the objects of Section 3. If the retention prices are not fixed and no payment is required to be made to the Aluminium Regulation Account, there would be no supply commensurate with the demand and consequently, non-availability of the commodity at a fair price. Thus, it was incumbent upon the Government to fix the retention prices for different producers and provide for payment Aluminium Regulation Account.
20. It is settled that the expression ' regulation' in Section 3 of the Act should be given liberal interpretation. Thus, unless 18 it is manifestly unjust, any action by the Government in exercise of its regulatory power in the matter of availability of any essential commodity at a fair price will be perfectly legal and justified. With a view to ensure that the Bt.Cotton seeds are made available to the farmers at fair prices, regulation of the trait value is essential and is one of the steps, which will certainly help in ensuring fair price. In our opinion, trait value forms an intrinsic and integral part of the cotton seeds and the two cannot be severed if the price of the Bt.Cotton seeds is to be effectively regulated so as to benefit the consumer public. Trait value is a key component of the price of cotton seeds. Therefore, it was incumbent upon the Central Government to fix the trait value. We are also of the view that Bt.Cotton seeds are nothing but cotton seeds, which is an essential commodity. Prima facie, we are of the view that there is no illegality in fixing the trait value.
21. Now let us consider the decisions relied on by the learned Senior Counsel for the appellants. 19
In GIRDHARMAL KAPUR CHAND's case (supra), the Hon'ble Supreme Court has held that Section 3 of the Act empowers the Central Government to make various orders but only in connection with essential commodities and that no order can therefore be considered to be in respect of any matter specified in Section 3 unless it is in respect of an essential commodity. In the instant case, the order has been made in respect of Bt.Cotton seeds, which is an essential commodity. We have held that in order to make available the Bt.Cotton seeds at a fair price, as the regulatory measure, the trait value has been fixed. Therefore, this decision has no application to the facts of the present case.
In MESSRS. AGARWAL AYENGAR AND CO.
LTD.'s case (supra), the Bombay High Court has held that sub- sections (1) and (2) of Section 3 empowers the Central Government to issue orders only with regard to the commodities specified as essential commodities under the Act. The inference that the Legislature intended to confine the powers of the Central Government to essential commodities 20 only and did not intend to authorize it to issue orders with regard to other commodities. In the instant case, the Regulation has been made only in respect of essential commodities. Therefore, this decision also has no application to the facts of the present case.
In CHHABRA BRICKS & TILES MANUFACTURING CO.'s case (supra), the Apex Court has held that coal being an essential commodity, the State Government is certainly entitled to regulate its use. That power, however, does not extend to the control in any manner of the bricks so produced. This decision also has no application to the facts of the present case because trait value is an integral part of Bt.Cotton seeds.
In PETROLEUM AND NATURAL GAS REGULATORY BOARD's case (supra), the Apex Court has held that the regulatory provisions are to be read and applied keeping in view the nature and textual context of the enactment as that is the source of power. This decision also has no application to the facts of the present case. 21
22. The respondents have raised objection as to the maintainability of the writ petitions. Learned Single Judge has kept open this question. Therefore, no opinion is expressed on this question.
23. We do not find any merit in these appeals. They are accordingly dismissed. No costs.
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