Gujarat High Court
Cargill India Pvt. Ltd vs The State Of Gujarat on 8 October, 2025
NEUTRAL CITATION
C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025
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R/SPECIAL CIVIL APPLICATION NO. 17398 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
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Approved for Reporting Yes No
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CARGILL INDIA PVT. LTD.
Versus
THE STATE OF GUJARAT & ORS.
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Appearance:
MR SUDHIR NANAVATI, SR. ADVOCATE FOR NANAVATI &
NANAVATI(1933) for the Petitioner(s) No. 1
MR NIKUNJ KANARA ASSISTANT GOVERNMENT PLEADER for the
Respondent(s) No. 1,2,3
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CORAM:HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 08/10/2025
ORAL JUDGMENT
1. By way of the present petition filed under Articles 226 Page 1 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025 NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined and 227 of the Constitution of India, the writ applicant has approached this Court challenging the legality and validity of the orders dated 03.12.2006 passed by the District Food Supplies Officer, Kutch, and 05.06.2007 passed by the Collector, Kutch, whereby 7.38 tonnes of Soyabean oil and 2.854 tonnes of Palm oil were confiscated under the provisions of the Gujarat Essential Articles Dealers (Regulation) Order, 1977.
2. The brief facts giving rise to the present petition can be stated as under:-
2.1 The petitioner-company is manufacturing and supplying edible oil in the State of Gujarat. On 03.12.2006 respondent No.3-authority carried out an inspection and seized 2.854 tonne of Palm oil and 7.38 tonne of Soyabean oil aggregating the value of Rs.4,40,062/- under the pretext of violation of Control Order of 1977, more particularly on the ground that no license was obtained for Soyabean oil under the provisions of Edible Oil Packaging (Regulation) Order 1988.
2.2 In furtherance of the aforesaid, a show-cause notice was issued by the respondent No.2 on 03.02.2007 alleging, inter alia, that 2.854 tonne of Palm oil and 7.38 tonne of Soyabean oil were found in excess to in comparison with the stock shown in the books of the accounts of the petitioner-company.
It was further alleged in the show-cause notice that necessary registers and records are not maintained as per the Control Order, 1977 and that no registration certificate for Soyabean Page 2 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025 NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined oils, industrial packaging was available and the rates and quantity of oil was not displayed on the board.
2.3 Pursuant to the aforesaid show-cause notice, petitioner submitted a detailed reply on 07.03.2007 specifically contending, inter alia, that in view of the Central Government Notification No.GSR 104E dated 15.02.2002 edible oil is a non-essential commodity and thereby Control Order, 1977 is not applicable and thus, the proceedings initiated by the respondent No.2 is without jurisdiction. Over and above the aforesaid contention with regard to jurisdiction, petitioner in its reply stated that there is no violation of the Control Order, 1977 as alleged.
2.4 The Collector, however, on 05.06.2007 ordered to confiscate 7.38 tonne of Soyabean oil and 2.854 tonne of Palm oil of total value of Rs.4,40,062/-.
3. Being aggrieved and dissatisfied by the aforesaid, petitioner has approached this Court by way of this petition for the appropriate reliefs.
4. Heard learned Senior Advocate Mr. Sudhir Nanavati for the petitioner and learned AGP Mr. Nikunj Kanara for the State authorities.
5. Learned Senior Advocate Mr. Nanavati, while challenging the impugned orders, has made following submissions mainly as under:-
Page 3 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined 5.1 Learned Senior Advocate appearing for the petitioner submitted that the impugned order passed by respondent No.2 - the Collector, is wholly without jurisdiction. In support of this contention, reliance was placed upon the Central Government Notification No. GSR 104(E), issued under Section 3 of the Essential Commodities Act, 1955. It was contended that, by virtue of the said notification, edible oil has been declared a non-essential commodity, and therefore, the initiation of proceedings for the alleged contravention of the Gujarat Essential Articles Dealers (Regulation) Order, 1977 ("the Control Order, 1977") is without any legal foundation.
Learned Senior Advocate submitted that once the Central Government has declared edible oil as a non-essential commodity, the State Government lacks the authority to regulate the same in contravention of the said Central Government notification. Consequently, the order of seizure and confiscation passed under the alleged violation of the Control Order, 1977 is without jurisdiction and deserves to be quashed and set aside by this Hon'ble Court.
5.2 Learned Senior Advocate Mr. Nanavati further submitted that, despite the petitioner having specifically drawn the attention of the Collector to the applicability of Central Government Notification No. GSR 104(E) through its reply, the Collector, Kutch, failed to consider the same in its true spirit. It was contended that the impugned order has been passed in a colorable exercise of power and without proper application of mind. Learned Senior Advocate argued Page 4 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025 NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined that it was incumbent upon the Collector to ascertain, prior to issuing notice, whether the commodity in question was covered within the definition of "essential commodity" under the Essential Commodities Act, 1955. It was further submitted that from the inception of the proceedings -- beginning with the issuance of the show-cause notice up to the passing of the impugned order -- the Collector acted mechanically and with a predetermined mindset. The impugned order, therefore, suffers from non-application of mind and deserves to be quashed and set aside in the interest of justice.
5.3 Learned Senior Advocate Mr. Nanavati lastly submitted that in an identical matter pertaining to the same petitioner, this Hon'ble Court, in Special Civil Application No. 20743 of 2006, had quashed and set aside the seizure and confiscation orders passed by the Collector, Junagadh, in respect of the commodity "Wheat," holding that, in view of the Central Government Notification dated 15.02.2002, the Control Order, 1977 was inapplicable. It was submitted that the present case stands on an identical footing, the only distinction being the commodity involved -- Soyabean oil. Accordingly, the decision of this Hon'ble Court in Special Civil Application No. 20743 of 2006 squarely applies to the facts of the present case. Learned Senior Advocate, therefore, urged this Hon'ble Court to allow the petition and quash the impugned order in the interest of justice.
6. By making above submissions, Learned Senior Advocate Mr. Nanavati for the petitioner has requested this Court to Page 5 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025 NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined quash and set aside the impugned orders and allow the petition in the interest of justice.
7. Per contra, learned AGP Mr. Nikunj Kanara, while supporting the impugned orders, has made following submissions:-
7.1 Learned Assistant Government Pleader, Mr. Nikunj Kanara vehemently opposed the present petition contending, inter alia, that the orders impugned are perfectly justified being passed in accordance with law and thereby present petition under Article 226 and 227 of the Constitution of India may not be entertained. Mr. Kanara, therefore, requested this Court to dismiss this petition.
7.2 Learned Assistant Government Pleader, Mr. Kanara, further submitted that the issuance of the Control Order, 2002 by the Central Government does not render the earlier State Control Orders of 1977 and 1981 inoperative. It was contended that the violations detected and the consequential proceedings initiated under the said State Control Orders, more particularly under the Gujarat Essential Articles Dealers (Regulation) Order, 1977, are lawful and duly justified.
Learned AGP submitted that the action taken by the Collector is in consonance with the statutory framework and, therefore, cannot be said to be without jurisdiction. Accordingly, Mr. Kanara urged this Hon'ble Court to dismiss the petition.
8. By making above submissions, learned AGP Mr. Nikunj Page 6 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025 NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined Kanara requested this Court to dismiss the present petition.
9. Heard Learned Advocates for the respective parties and have gone through the material produced on record. No other and/or further submissions were canvassed except what are stated hereinabove.
10. Having considered the submissions of the respective learned Advocates and having gone through the material produced on record, short question that falls for consideration of this Court is whether the order dated 05.06.2007 can be said to be illegal for want of jurisdiction?
11. So as to decide the aforesaid question, in my considered opinion, notification being No.GSR 104E dated 15.02.2002 issued under Section 3 of the Essential Commodities Act, 1955 deserves close scrutiny. For the ready reference, the said notification is hereby produced as under:-
G.S.R. 104(E).Whereas the Central Government is of the opinion that it is necessary and expedient to do so for securing the availability of commodities specified in the Order at fair prices throughout the country.
Now, therefore, in exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government hereby makes the following Order:
1. Short Title. Extent and Commencement
(a) This Order may be called the Removal of (Licensing requirement, Stock limits and Movement Restrictions) on Specified Foodstuffs Order, 2002.
(b) It extends all the States and Union Territories of India.
(c) It shall come into force after thirty days from the date of publication in the Official Gazette.
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2. Definitions
(i) "Dealer" means any person engaged in the business of purchase, movement, sale, supply, distribution or storage for sale of any of the commodities specified in clause 3 of this Order, directly or otherwise, whether as a wholesaler or retailer and whether or not in conjunction with any other business and his representative or agent, (ii) "State Government" includes Administration of a Union territory.
3.With the coming into effect of this Order any dealer may freely buy, stock, sell, transport, distribute, dispose, acquire, use or consume any quantity of wheat, paddy/rice, coarsegrains, sugar, edible oilseeds and edible oils and shall not require a permit or licence therefore under any order issued under the Essential Commodities Act, 1955.
4. The provisions of this Order shall take effect notwithstanding anything to the contrary in any Order made by a State Government before the commencement of this Order except as respects anything done, or omitted to be done, thereunder before such commencement.
5. Issue of any order by the State Governments under powers delegated in GSR 452(E) dated the 25th October, 1972 issued by the Government of India in the then Ministry of Agriculture (Department of Food) and GSR 800 dated the 91" June, 1978 issued by the Government of India in the then Ministry of Agriculture and Irrigation (Department of Food) for regulating by licenses, permit or otherwise, the storage, transport, distribution, disposal, acquisition, use or consumption of any of the commodities specified in clause 3 shall require the prior concurrence of the Central Government.
6. Nothing contained in this Order shall affect the operating of the Public Distribution System (Control) Order, 2001 issued by the Central Government and orders of the State Governments issued in pursuance thereof.
[F. No. 10/1/2002-ECR&E] S. NAUTIYAL, Addl. Secy.
11.1 Upon a careful perusal of the aforesaid notification, more particularly Clause 3 thereof, it becomes abundantly Page 8 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025 NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined clear that dealers were permitted to purchase, stock, sell, transport, distribute, dispose of, acquire, use, or consume any quantity of wheat, paddy/rice, coarse grains, sugar, edible oilseeds, and edible oils without obtaining any permit or licence. It further emerges that, in view of the said notification, edible oils were specifically kept outside the purview and regulatory domain of the Essential Commodities Act, 1955.
11.2 In light of the aforesaid position, if the facts of the present case are examined, it is an admitted position that an inspection was carried out at the premises of the petitioner on 03.12.2006, during which quantities of Palm oil and Soyabean oil were seized. Both Palm oil and Soyabean oil are admittedly edible oils. This clearly indicates that, as per the Central Government Notification dated 15.02.2002, such edible oils did not fall within the ambit of essential commodities as defined under the Essential Commodities Act, 1955. Therefore, on the date of inspection, the seized goods were beyond the jurisdictional scope of the said Act.
11.3 In view of this undisputed factual and legal position, this Court is of the considered opinion that the State authorities lacked jurisdiction to initiate any proceedings against the petitioner for alleged violation of the Gujarat Essential Articles Dealers (Regulation) Order, 1977, which stands overridden by the aforesaid Central Government Notification No. GSR 104(E) dated 15.02.2002. Once the Central Government, in exercise of its powers under Section 3 Page 9 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025 NEUTRAL CITATION C/SCA/17398/2007 JUDGMENT DATED: 08/10/2025 undefined of the Essential Commodities Act, 1955, has declared certain commodities as non-essential, the State authorities are precluded from acting contrary thereto, except to the extent necessary to ensure the operation of the Public Distribution System (Control) Order, 2001. Accordingly, the action undertaken by the State authorities, culminating in the seizure and confiscation of edible oils from the petitioner's premises for alleged contravention of the Control Order, 1977, is held to be wholly without jurisdiction. Consequently, the impugned orders are liable to be quashed and set aside on this ground alone.
I answer the question accordingly.
12. For the foregoing reasons, present petition deserves to be allowed and is hereby allowed by quashing and setting aside the impugned orders dated 05.06.2007 passed by the respondent No.2 and order dated 03.12.2006 passed by the respondent No.3.
13. Rule is made absolute accordingly.
(NIRAL R. MEHTA,J) NIHAL PATEL Page 10 of 10 Uploaded by NIHAL PATEL(HC02355) on Fri Nov 07 2025 Downloaded on : Fri Nov 07 20:40:54 IST 2025