Allahabad High Court
Aswani Cement Pvt. Ltd. vs The State Of Uttar Pradesh And Others on 5 October, 1990
Equivalent citations: AIR1991ALL62, AIR 1991 ALLAHABAD 62, 1991UP CRIR131, (1990) 2 ALL WC 1589, 1991 (1)ALL CJ1, (1991) 1 EFR 160
Author: B.P. Jeevan Reddy
Bench: B.P. Jeevan Reddy
ORDER
B.P. Jeevan Reddy, C. J.
1. This writ petition has been referred to Full Bench by a Division Bench of this Court since it was of the opinion that an earlier decision of a Division Bench reported in Gulshan Sugar and Chemicals Ltd. Muzaffarnagar v. State of U.P. (1988 (1) AWC 112) requires reconsideration.
2. The petitioner, a manufacturer of cement, who purchases hard coke as one of his raw materials, is questioning the validity of a circular letter dated 19-9-1985 issued by the Government of U.P. prays for a direction restraining the respondents (State of U.P. and its officers) from interfering with its right to sell and transport rejected coal and coke.
3. Coal is an essential commodity, governed by the Essential Commodities Act, 1955. In 1977, the Governor of Uttar Pradesh issued the Uttar Pradesh Coal Control Order, 1977 (hereinafter referred to as the Order) in exercise of the power conferred upon him by S. 3 of the Act. Cl. 2 of this Order defines certain expressions occurring in the order. It would be appropriate to notice the definitions of 'Coal', dealer and 'State Coal Controller' occurring in sub-cls. (c)(d) and (k) respectively. They read thus :--
"(c) "Coal" means coal, coke and other derivatives and includes slack coal, steam coal, soft coke, hard coke or dust coal of various grade but does not include cinder and products and by products of coal;
(d) "Dealer" means a person carrying on as a principal or agent, whether separately or in conjunction with some other business, the business of import purchase or storage for sale and sale of coal, in wholesale and granted a licence in Form 'B' and commonly known and herein referred to as Coal Agent or in retail and granted a licence in Form 'C' and commonly called and referred to herein as 'Coal Depot Holder' but does not include a consumer who imports, purchases or stores coal for his own use;
"(k) State Coal Controller means -
(a) the Commissioner, Food and Civil Supplies, Uttar Pradesh and includes the Additional Commissioner, Joint Commissioner and Deputy Commissioner Food and Civil Supplies, Uttar Pradesh or any other officer not below the rank of Assistant Commissioner, Food and Civil Supplies appointed by the State Government to administer this Order; respects coal dust (slack coal), soft coke and hard coke and steam coal for domestic consumption; and
(b) The Director of Industries, Uttar Pradesh including an Additional Director, Joint Director or Deputy Director Industries as respects steam coal and hard coke for industrial consumption."
Clause 4 provides for licensing. It says:--
"No person shall import coal and carry on business as a coal agent carry on business as a coal depot holder or run a brick kiln with coal except under and in accordance with the terms and conditions of a licence issued under this Order....."
Clause 5 provides the proceedure relating to the grant of licenses and the fee chargeable therefor. Cl. 7 provides the security which should be furnished by an applicant for licence, while clause 8 obliges the licensee to obey the directions that may be issued from time to time by the appropriate authorities, C1.9, 10 and 11 place certain other obligations on the licensee, like maintaining of accounts, display of stock position etc. Cl. 12 deals with export of coal and bricks. It says :--
"No person shall export, cause to be exported or offer for export coal or bricks produced with the aid of slack coal from the territory of Uttar Pradesh without obtaining prior written permission from the respective State Coal Controller;
Provided that nothing in this clause shall apply to bona fide traveller carrying to any place, outside the State of Uttar Pradesh Coal, not exceeding ten quintals in weight, as a part of his house hold effects."
Cls. 13and 14 empower the authorities under the order to enter and search coal held or being removed contrary to the provisions of the Order and call for relevant information from the licensees and other users of coal. Cl. 15 provides for penalties, which may be imposed upon as person who imports or sells, or removes coal in contravention of the provisions of the Order. Clause 3 provides for certain exceptions. Sub-cl (A) says that movement of coal in certain situations shall not be governed by the provisions of the Order. Sub-cl. (B) exempts 'steam coal and hard coke for industrial consumption' from the operation of Cls. 4 to 10, 14 and 16. It would be appropriate to set out cl. 3 in full, since it has a crucial relevance to the controversy arising here: --
"3. Exceptions -- (A) Nothing in this Order shall apply to -
(a) movement of coal under the authority of the Coal Commissioner, Government of India or any other officer acting on his behalf ;
(b) Coal moved on Railway account;
(c) Movement of coal under and in accordance with Military Credit Note on Defence Account;
(d) Movement of Coal meant for the use of any Central Government Department or Corporation or under Central Government quota or under sponsoring by any authority not under the administrative control of the State Government;
Provided that such coal is consumed entirely by the Industry, Railway, Military, Central Government Department or Corpo-
ration or any other person for whom it is moved, as the case may be, for its own use;
Provided further that except in so far as transfer or sale of coal to any other consumer of the same category, effected with the permission of the sponsoring authority, or competent departmental authority is concerned if any, of the above consumers wishes to sell any part of the coal, surplus to his requirement, to other users thereof in Uttar Pradesh he shall do so only after obtaining the permission from the District Magistrate of the District where coal is stored and if the user or any user to whom this coal is proposed to be sold, is working in another District the District Magistrate of that District and further shall intimate full particulars of such sale to the (sic) or both the District Magistrates concerned immediately after, such sale.
(b) The provisions of Cls. 4 to 10, Hand 16 hereof, shall not apply to steam coal and hard coke for industrial consumption."
4. The petitioner, as stated herein before, is a manufacturer of cement. According to paragraph 2 of the writ petition, he mixes limestone, iron ore, clay and coke dust and after grinding this mixture prepares nodules, which are fired in kiln and the clinkers thus proved are grinded to form cement. Since coal is a controlled commodity, the petitioner requests the State Coal Controller for allotment of coal to meet his requirements from time to time. On that basis, he is supplied with coal. This system is popularly known as 'sponsoring'. According to the petitioner, he purchases coke from collieries as well as from steel plants. All the coke so purchased is not entirely fit for his use either because of the size or because of the quality. Certain coal dust also gets accumulated in his premises in the course of its transport and removal. On an aggregate, 13 to 16 per cent of the coke purchased by him is thus surplus and is of no use to him, which he has necessarily to dispose of. About 700 to 800 tonnes of coal dust/ rejected coal is thus rendered surplus every year and unless it is disposed of immediately, the entire factory gets cluttered making the operation of the plant difficult. Since the petitioner is a consumer of coal for industrial purposes, and is not a dealer as defined by the Order, he says he does not require a licence or permission to sell the said surplus coal/ coke/dust. By virtue of the definition of 'dealer' in sub-cl. (d) of Cl. 3, none of the provisions of the Order apply to the petitioner. He is, therefore, free to sell the said surplus material on his own to a purchaser within the State or outside the State. Notwithstanding the above legal position, says the petitioner, the Government of Uttar Pradesh has issued the impugned circular/ G.O. to all the authorities saying that if the industrial units wish to sell their surplus coal, they have to obtain a licence in accordance with the provisions of the Order and that for effecting such sale or disposal, they have to obtain the permission of the concerned District Magistrate. It further instructs the authorities under the Order that if any industrial unit sells or disposes of any coal in contravention of the circular, it shall be liable to be proceeded against under Cl. 15 of the Order as well as in accordance with G. O. dated 6th June, 1985. This circular/Order (G.O.) is contrary to the provisions of the Order, says the petitioner, and, therefore, not enforceable (The prayers in the writ petition reflect this case of the petitioner).
5. The respondents dispute the correctness of the various contentions urged by the petitioner. According to them, since the petitioner is engaged in sale/ disposal of coal from time to time and year after year in a regular manner, he is a dealer within the meaning of Cl. 2(d) of the Order and, therefore, obliged to obtain the licence prescribed by the Order. It is also submitted that sub-cl. (b) of Cl. 3 is not attracted to the surplus coal disposed of by the petitioner; it applies only to that portion of the coal as is consumed for its industrial purposes. It is further submitted that the impugned G.O. (circular order) is wholly consistent with the Order and is a mere elucidation thereof. It does no more than seek to give effect to the order. It is perfectly within the power of the Government to issue appropriate instructions to its asuthorities for a proper implementation of the statutory Order and no exception can be taken thereto. In any event the said order is sustainable with reference to the executive power of the Governor affirmed in Art. 162 of the Constitution of India.
6. The object underlying the Order is self-evident. It seeks to regulate the import purchase, movement, storage and sale of coal within the State. It has evolved the system of licensing as a measure of such regulation. Cl. 3 contains exceptions to the Order. It provides situations to which the provisions of the Order do not apply. Sub cl. (A) says that the provisions of the Order shall not apply to :
"(a) movement of coal under the authority of the Coal Commissioner, Government of India or any other Officer acting on his behalf;
(b) Coal moved on Railway account;
(c) Movement of coal under and in accordance with Military Credit Note on Defece Account;
(d) Movement of coal meant for the use of any Central Government Department or Corporation or under Central Government quota or under sponsoring by any authority not under the administrative control of the State Government."
However, sub cl. (A) contains two provisos. The first proviso declares that the exceptions provided by Cls. (a), (b), (c) and (d) shall be applicable only to such coal as is consumed entirely by the Industry, Railway, Military, Central Government Department or Corporation or any other person for whom it is moved, as the case may be, for its own use. The second proviso says that except where the coal is transferred by a consumer of one category to another consumer of the same category (mentioned in cl. 3( A)) if any of the said consumers wishes to sell any surplus coal to other users thereof in Uttar Pradesh, he can do so only after obtaining the permission from the District Magistrate. Now, it is admitted that the petitioner does not fall within any of the exceptions mentioned in sub-cl. (A) of Cl. 3. His main contention in that he falls under the exception contained in Cl. (B) (?) which provides that the provisions of Cls. 4 to 10, 14 and 16 (provisions relating to licensing and other ancillary and incidental matters) "shall not apply to steam coal and hard coke for industrial consumption." He says that since he purchases hard coke for industrial consumption, the provisions of the order relating to licensing etc. do not apply to him. It is also submitted that the petitioner is not engaged in the purchase and sale of coal and, therefore, he is hot a dealer within the meaning of Cl. 2 (d). Yet another argument advanced is that the very definition of 'dealer' in Cl. 2(d) specifically exempts a consumer who imports, purchases or stores coal of his own. The petitioner also says that even Cl. 12, as quoted hereinbefore, prohibits only a dealer from exporting from the territory of Uttar Pradesh any coal without obtaining prior and written permission from the respective State Coal Controller. The question is whether the petitioner is right in his submissions?.
7. The factual situation is not in dispute. The petitioner is not engaged in the business of purchase and sale of coal, nor is he engaged in the business of import and export of coal. He is a cement manufacturer and one of the raw materials required by him is coal and/or hard coke, as the case may be. He purchases coal/hard coke on being sponsored by the State Coal Controller. A sizable quantity of the coal so purchased (ranging between 13 to 16% according to the petitioner) is unfit for his use. Whether it is coke or coal dust, it is in surplus to his requirements. Coke/coal dust so rendered surplus ranges between 700 to 800 tonnes every year. It is a very substantial quantity. Since it cannot be used by him, the petitioner has necessarily got to sell it, whether to a person within the State or outside the State. The question is whether he is required to obtain a licence or a permission for such sale/disposal and, if so, which provision of the order obliges him to do so.? This question, in our opinion, has to be examined under two heads.
8. So far as export of coal from the territory of Uttar Pradesh is concerned. Cl. 12 is specific and clear. It says, "No person shall export, cause to be exported or offer for export coal..... from the territory of Uttar Pradesh without obtaining prior written permission from the respective State Coal Controller." It is needless to emphasise that clause 12 is not confined to dealers. It applies to every person who seeks to export coal from the territory of the State of U.P. He cannot do so except under a prior written permission of the respective State Coal Controller. Therefore, in so far as the petitioner exports or causes to be exported or offers for export any coal from the territory of this State, he cannot do so except under a prior written permission of the respective State Coal Controller.
9. Now, in so far as the coal sold/disposed of within the State is concerned, it is necessary to examine and determine the precise meaning and scope of sub-cl. (B) of Cl. 3 of the Order. It says that Cls. 4 to 10,14 and 16 (relating to licensing and other incidental and ancillary matters) "shall not apply to steam coal and hard coke for industrial consumption." What do these words mean?.
10. According to the petitioner, all the coal purchased by him for being used for industrial consumption is exempt from the operation of the aforesaid clauses, notwithstanding the fact that a part of it is sold/disposed of by the petitioner. On the other hand, it is the case of the State that the said exemption from the specified clauses of the order operates only to such coal/ hard coke as is actually used for industrial purposes and has no application to that portion of coal/ hard coke which is not used for industrial purpose and is sold/disposed of by the petitioner. According to the State, it is immaterial for what reason the petitioner is not using a portion of the coal/hard coke for industrial purposes. All the coal which is not used for industrial purposes is outside the purview of sub-cl. (B) of Cl. 3 says the State.
11. On a consideration of the rival contentions and the language of Clause 3(B), we are inclined to accept the interpretation placed upon it by the State. The language of sub-clause (B) is clear. It says that the provisions of Clauses 4 to 10, 14 and 16 shall not apply to steam coal and hard coke for industrial consumption. It does not say that all the coal which is purchased with the intention of being used for industrial consumption is exempt. It, no doubt, also does not say that the said provisions do not apply to steam coal and hard coke used for industrial consumption, but having regard to the fact that it is an exception clause, it must be construed strictly and should not be stretched beyond its natural confines. We are, therefore, of the opinion that Cls. 4to 10, 14 and 16 do apply to hard coke which is not used by the petitioner for industrial consumption and is sold/disposed of by him which means that he has to obtain a licence under Cl. 4
12. But then the petitioner argues, and with some justification, that the licensing provided by cl.4 is appliable only to such persons who import coal and carry on business as coal agent or carry on business as coal depot-holder. He says that he does not fall under any of these two categories; he is neither a coal agent, nor a coal depot holder.
13. It may be noticed that the meaning of the expression 'coal agent' and 'coal depot holder' have been clarified in the definition of 'dealer' in sub-cl. (d) of Cl. 2 of the order. A 'coal dealer' means a person who carries on, as a principal or agent, whether separately or in conjunction with some other business, the business of import, purchase or storage for sale and sale of coal. Now, it cannot be said that the petitioner is engaged in the business of import or purchase or storage for sale or sale of coal. Of course, he does not fall within the category of 'coal depot holder'. The situation, therefore is that in so far as the sale of coal by the petitioner within the territory of the State of U.P. is concerned, neither is there any express prohibition in the order, nor is he obliged by any express provision of the order to take out a licence under Cl. 4. But this, in our opinion, does not conclude the matter. The impugned G.O. (circular) is still valid and effective and governs the sale/ disposal of coal by the petitioner within the State of U.P. for the following reasons.
14. It must be remembered that coal is an essential commodity. It is not freely available, the demand for coal in the country exceeds its supply. The petitioner obtains coal because he is sponsored by the State Coal Controller on the ground that he requires coal/coke for manufacturing cement, unless sponsored, he cannot get coal. The regulation sought to be imposed by the impugned circular is with respect to coal which the petitioner gets on being sponsored. In such a situation, is it beyond the power of the State to regulate the sale/disposal of the surplus coal by the petitioner? In our opinion, the very power of allotment (sponsoring) includes the power to regulate its use and disposal. The requirement laid down by the impugned G.O. that for selling the surplus coal, the petitioner (and other persons similarly placed). As required to obtain a licence is well within the power of the state. Such a power is implicit in the very power to sponsor and allot. The coal not used for industrial purpose continues to be under the control of, and subject to the regulatory power of the State Coal Controller. He can still control its sale/disposal. Now, there is no magic in the use of the word 'licence' employed in the G.O. All that it means is that for monitoring and regulating the sale/disposal of the surplus coal, the petitioner shall obtain a licence. What it really says is that sale/ disposal of the surplus coal/coke will be subject to the supervision and control of the authority specified thereunder. The petitioner cannot be heard to say with any justification that once the coal is allotted to him for being used for an industrial purpose, the State Coal Controller has no further say in the matter even if he does not use it for industrial purpose and that he is free to sell or dispose of that coal, or a portion thereof, in such manner as he pleases. We are, therefore, of the opinion that the impugned G.O. merely elucidates and gives expression to what is implicit in the power of 'sponsoring'. It is not inconsistent with the 1977 order, nor does it amount to amending it. It merely supplements it, in so far as, and to the extent, it is silent. It may also be seen that sale of surplus coal is not a solitary or occasional act on the petitioner's part. It is more or less a regular and continuous activity. Every year, it sells 700 or 800 tonnes of coal, from time to time. It is no small quantity. There is no reason why the coal supplied to him, in excess of his requirements, be not subject to the same regulation and control which any other coal, is subject to.
15. Now, so far as the argument of not being a 'dealer' (as defined by Cl. 2(d) is concerned, what the impugned circular/ G.O. does is to adopt the existing system of licensing instead of evolving a fresh procedure therefor. The circular adopts the same procedure. It is only a method, a mode, of exercising the regulatory power the Government has by virtue of the fact that it is "sponsored coal" if we can use the expression. The petitioner suffers no prejudice by taking out the licence. On that account he does not become a 'dealer' as defined by clause 2(d) of the Order. He will be a licensee only for the purpose of the impugned G.O. and nothing more. His only obligation is to comply with such directions as the appropriate authority may give regarding sale, disposal and transfer of surplus coal. The impugned G.O. is relatable to the executive power of the State (Art. 162 of the Constitution) and is perfectly competent. See Bishambhar Dayal v. State of U.P., (AIR 1982 SC 33). As stated above, the impugned G.O. supplies to omission and covers the field left unprovided for by the order. This is not a case of supplanting but supplementing. It must be remembered that the petitioner gets the coal on being sponsored by the 'State Coal Controller', a creature of the 1977 Order, and not under the orders of any other authority. Another circumstance to be noticed is that a person who gets coal on being sponsored by the Central Government (or its officers/ authorities) cannot divert or sell the surplus coal except under the permission of the District Magistrate -- See the two provisos to sub-cl. (A) of Clause 3 of the Order, set out hereinbefore.
16. Now coming to the decision of the Division Bench in Gulshan Sugar and Chemicals, Muzffarnagar v. State of U.P., (1988 (1) AWC 112), it firstly holds that an industry (Similarly placed as the petitioner) is not engaged in the business of purchase and sale of coal and is, therefore, not a dealer and hence not required to take out a licence under Cl. 4 of the Order. The decision does recognise that "some provision could certainly be made regulating the disposal of rejected or surplus coal or coal dust" and says that not making a provision similar to the one contained in the two provisos to sub-cl. (a) of Cl. 3 in sub-cl. (B) is an omission. It says that it is always open to the govt. to provide such regulation. The decision, however, says that no such regulation is found in the Coal Control Order and that the said omission cannot be supplied by way of a G.O. To the extent that the decision says that this omission cannot be provided for by way of a G.O., we are in respectful disagreement with the said decision. We have given our reasons hereinbefore. According to us, such a power is inherent and implicit in the very power of allotment, that is, the power of sponsoring. To hold that the Government has no power to regulate the sale, disposal and transport of the surplus coal would amount to creating a void, besides being inconsistent with the underlying policy and object of the Coal Control Order.
17. For the above reasons, we hold that the impugned G.O. (circular) dated 19-9-1985 is perfectly valid and enforceable.
18. The writ petition fails and is dismissed. No costs.
19. Petition dismissed.