Kerala High Court
Tata Iron And Steel Company Ltd. vs The State Of Kerala And Anr. on 19 November, 1971
Equivalent citations: AIR1972KER97, AIR 1972 KERALA 97, ILR (1972) 1 KER 165, 1972 KER LJ 83, 1972 KER LT 35
JUDGMENT Isaac, J.
1. The petitioner is an incorporated company having its registered office at Bombay, carrying on business of producing and selling iron and steel. It has got an office at Erna-kulam and a stock-yard at Cochin in the State of Kerala for the purpose of sellins the above goods. Iron and steel are essential commodities under Section 2 of the Essential Commodities Act, 1955 (hereinafter referred to as the Act). Section 3 of the Act provides that, if the Central Government is Of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or securing their equitable distribution and availability at fair prices, it may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. The section also confers powers on the Central Government to make orders in respect of the several matters mentioned therein. Section 4 provides that an order under Section 3 may confer powers and impose duties upon the Central Government or the State Government or Officers and Authorities of the Central Government or the State Government, and may contain directions as to exercise of any such powers or discharge of any such duties. Section 5 reads :--
"5. The Central Government may, by notified order, direct that the power to make order under Section 3 shall in relation to such matters, and subject to such conditions, if any, as may be specified in the direction, be exercisable also by--
(a) such officer or authority subordinate to the Central Government; or
(b) such State Government or such officer or authority subordinate to a State Government;
as may be specified in the direction."
By virtue of the powers under Section 3 of the Act the Government of India made the Iron and Steel Control Order, 1956, Clause 2-A of this Order provides that the Central Government may ' exempt steel of one or more categories specified in the First Schedule to the Order, or iron or scrap of any category as may be specified, from all or any of the provisions of the Order or declare that any provisions of the Order shall apply to the above commodities with such modifications as the Government may specify in that behalf. In exercise of the powers under the above clause, the Government of India issued an order Ext. P-1 dated 29-4-1967 exempting all categories of iron and steel from the provisions contained in Clauses 4, 5, 15, 18, 20 and 27 of the Iron and Steel Control Order.
2. Under Section 5 of the Act, the Government of India issued an order Ext. P-2 dated 18-6-1966. delegating the powers to make orders to provide for the matters specified in Clauses (d) to (j) of Sub-section (2) of Section 3 to be exercisable also by the State Government in relation to all commodities other than food stuffs, and fertilisers, subject to the conditions mentioned therein. One of those conditions is that no order shall be issued pursuant to the said delegation, if it is inconsistent with any order issued by the Central Government. In exercise of the powers conferred by Ext. P-2, the Government of Kerala, the first respondent, issued on 2-4-1968 the Kerala Iron and Steel (Declaration of Stocks and Maintenance of Accounts) Order, 1968 which is hereinafter referred to as the State Government Order. Ext. P-3 is a copy of this Order. It introduced several restrictions in the matter of distribution and sale of iron and steel. Pursuant to Ext. P-3, the Director of Industries and Commerce, Kerala, the second respondent issued a circular letter Ext. P-4 dt, 22-4-1968 to all dealers in iron and steel including the petitioner drawing their attention to Ext. P-3, and requiring them to furnish stock statements on due dates to his Directorate. This writ petition has been filed to quash Exts. P-3 & P-4 and to declare them as illegal and void and to prohibit the respondents from enforcing the provisions of the said two orders.
3. The petitioner's case has been presented before us with ability and learning by its learned Counsel, Shri T. K. Kochu Thommen. He raised three points :--
"(i) The whole power under Section 3 of the Act has been exercised by the Central Government in respect of Iron and steel to the extent it was deemed necessary by passing the Iron and Steel Control Order. The State Government has, therefore, no scope to make any regulation in respect of iron and steel and Ext. P-3 is as a whole illegal;
(ii) Clauses 4 and 6 of Ext. P-3 relate to controlling of prices, which is a power under Clause (c) Section 3 (21 of the Act. This power is not delegated to the State Government by Ext. P-2; and therefore the above two clauses of Ext. E-3 are ultra vires of its powers; and
(iii) The power under Clause (e) of Section 3 (2) of the Act is only to prohibit the withholding from sale of any essential commodity ordinarily kept for sale. Refusal to sell is different from withholding from sale. Therefore Clause (3) of Ext. P-3 in so far as it also prohibits refusal to sell is ultra vires of the powers conferred on the State Government,"
4. The power of the State Government under Section 3 of the Act to the extent it has been delegated to it by the Central Government as per Ext. P-2 is concurrent with that of the Central Government. The power of the delegate can only be subject to the power of the principal. Section 5 of the Act has expressly provided that the delegation may be subject to such conditions as may be specified. Sub-clause (iii) of Clause (a) in Ext. P-2 provides that no order shall be issued pursuant to Ext. P-2, if it is inconsistent with any order issued by the Central Government under the Act. The contention is that Ext P-3 is inconsistent with the Iron and Steel Control Order. Shri Kochu Thommen submitted that inconsistency arises not only where there is direct conflict between the two provisions, in the sense that both are incapable of obedience, but it can also arise when one provision is more stringent than the other. He also contended that if a power in respect of a matter has been exercised by the principal intending that what it has done was sufficient, the delegate has no power to make any further provision in respect of that matter; and what it does would be inconsistent. He referred us to a number of authorities in support of the above contentions.
5. In Deep Chand v. State of U. P., AIR 1959 SC 648 the Supreme Court laid down the following principles for deciding whether there is any Inconsistency between two legislative provisions. After quoting some authorities, the court said,--
"Repugnancy between two Statutes may thus be ascertained on the basis of the following three principles:
(1) whether there is direct conflict between the two provisions;
(2) whether Parliament intended to lay down an exhaustive code in respect of the subject-matter replacing the Act of the State Legislature; and (3) whether the law made by Parliament and the law made by the State Legislature occupy the same field."
Nicholas in his Australian Constitution, 2nd Edition, page 303, has stated the principles as follows :--
"(1) There may be inconsistency in the actual terms of the competing Statutes;
(2) Though there may be no direct conflict, State law may be inoperative because the Commonwealth law or the award of the Commonwealth Court is intended to be a complete exhaustive Code; and (3) Even in the absence of intention, a conflict may arise when both State and the Commonwealth seek to exercise their powers over the same subject-matter."
The above passage has been cited with approval by the Supreme Court in the aforesaid decision.
6. In State of Orissa v. Tulloch and Co., AIR 1964 SC 1284 at D. 1285 the Supreme Court stated :--
"The best of two legislations containing contradictory provisions is not, however, the only criterion of repugnancy; for, if a competent legislature with a superior efficacy expressly or im-pliedly evinces by its legislation an intention to cover the whole field, the enactment of the other legislature whether passed before or after would be overborne on the ground of repugnance. Where such is the position, the inconsistency is demonstrated not by a detailed comparison of provisions of the two statutes but by the mere existence of the two pieces of legislation."
The principles are clear from the above decisions; and it is not necessary to quote from mere authorities. The provisions of the Iron and Steel Control Order and of the State Government Order Ext. P-3 have to be examined in the light of the aforesaid principles. Clause 4 of the Iron and Steel Control Order provides for a quota certificate or permit to acquire any iron or steel. Clause 5 provides for special or general written order of the Controller for disposal of iron and steel. Clause 7 provides that iron or steel acquired under Clause 4 shall not be used except in accordance with the conditions subject to which it was acquired. Clause 8 provides that a person disposing of iron and steel shall obtain from the acquirer the authority under which it was disposed of. Clause 10 confers powers on the Controller to issue directions for sale. Clause 11 prohibits removal without written permission from the Controller. Clause 12 empowers the controller to require dealers to maintain such books, accounts and records as he may deem necessary, and to call for their production and filing of returns. Clause 13 empowers the Controller to issue directions in the matter of production. Clause 14 (1) provides that the Controller may issue directions to maintain and exhibit a list of godowns in which iron or steel is stocked. Clause 14 (2) provides that the Controller may direct every purchaser or stockholder when selling iron or steel to give to the purchaser a memorandum containing specified particulars. Clause 14 (3) provides that no such person shall without sufficient cause refuse to sell iron or steel which he is authorised to sell. Clause 14 (4) empowers the Controller to issue general directions to such persons. Clause 15 empowers the Controller to fix prices. Clause 16 empowers the Controller to control production. Clause 17 empowers the Central Government to give directions to the Controller and other authorities. Clauses 18 to 27 deal with scraps; and they contain more or less similar provisions as in the case of iron and steel. Clause 27 contains the powers of the Controller to secure compliance with the provisions of the Iron and Steel Control Order. By notification Ext. P-1 dated 29-4-1967, the Central Government exempted the categories of steel mentioned therein from the provisions of Clauses 4, 5, 15, 18, 20 and 27 of the Iron and Steel Control Order. This Order has been amended by inserting Clauses 17-A and 17-B as per Notification dated 29th March, 1971 of the Central Government. These clauses read :--
"17-A. Power of Central Government to give directions to producers, etc,-- The Central Government may give directions to producers and stockists of any category of iron or steel or to such other persons, as it considers necessary regarding the procedure to be followed in the production, despatch, stocking and placing of orders on producers or stockists, whether such category of iron or steel is subject to, or exempt from, the operation of all or any of the provisions of this order.
17-B. Power of Central Government to set up Committees, etc,-- (1) For the purpose of giving effect to the provisions of this order, with respect to any category of iron or steel, whether such category is subject to or exempt from the operation of all or any such provisions, the Central Government may, by notification in the Official Gazette, set up, from time to tune. such committees, bodies or authorities as it may consider necessary.
(2) The Committee, body or authority set up under Sub-clause (1) shall carry out such functions as may be specified in the notification under which such committee, body or authority is set up."
Under the above clauses, a Joint Plant Committee and Steel Priority Committee have been constituted by the Central Government. These Committees have issued directions from time to time in the matter of production and distribution of iron and steel. Those directions have statutory force; and the production and distribution of iron and steel are governed wholly by those directions. On an examination of tha Scheme and ambit of the Iron and Steel Control Order, it appears to us that this is a case where the Central Government has laid down an exhaustive code or evinced an intention to cover the whole field in exercise of its powers under Section 3 of the Act in respect of iron and steel. In such a case, as stated in the passage extracted above from the decision of the Supreme Court in AIR 1964 SC 1284 at page 1285 "the inconsistency is demonstrated not by a detailed examination of the provisions of the two statutes but by the mere existence of the two pieces of legislation". In this view of the matter, Ext. P-3, the State Government Order, cannot stand in the face of the Iron and Steel Control Order,
7. Shri Kochu Thommen, Counsel for the petitioner, also contended that some of the provisions of Ext. P-3, the State Government Order are directly in conflict with some of the provisions of the Iron and Steel Control Order, and that Ext. P-3 as a whole should be held to be invalid, as the said Order would not have been made by the Government without the above provisions, which cannot stand in view of the conflict. Ext. P-3 reads :--
"The Kerala Iron and Steel (Declaration of Stocks and Maintenance of Accounts) Order, 1968.
Whereas the Government of Kerala are of opinion that it is necessary and expedient so to do for maintaining the supplies of Iron and Steel and for securing their equitable distribution and availability at fair prices Now, therefore, in exercise of the powers conferred by Sub-sections (1) and (2) of Section 3 of the Essential Commodities Act, 1955 (Central Act 10 of 1955) read with the order of the Government of India, in the Ministry of Commerce No. 26 (ll)-Com-Genl/66 dated 18th June, 1966 published in the Gazette of India Extraordinary Part II Section 3 Sub-section (ii) dated the 18th June, 1966, the Government of Kerala hereby make the following Order, namely:-
ORDER
1. Short title, extent and commence ment.--(1) This Order may be called the Kerala Iron and Steel (Declaration of Stocks and Maintenance of Accounts) Order, 1968.
(2) it extends to the whole of the State of Kerala.
(3) it shall come Into force at once.
2. Definitions.-- in this Order, unless the context otherwise requires,--
(a) "dealer" means a person carry-ing on the business of purchase or sale of iron and steel, whether wholesale or retail and whether or not in conjunction with any other business and includes manufacturers and commission agents engaged in any such business;
(b) "retail dealer" means a dealer who is not a wholesale dealer :
(c) "wholesale dealer" means a dealer who sells iron and steel to other dealers or to bulk consumers.
3. Dealer not to withhold stocks from sale.-- No dealer shall withhold from sale or refuse to sell iron and steel ordinarily kept for sale.
4. Price list to be displayed at places of business.-- Every dealer shall exhibit at the entrance or some other prominent place of his business premises, the price list and stock position of iron and steel separately held by him for sale. Such price list and stock position shall be legibly written in the principal language of the locality concerned. It shall indicate separately the prices of different variety of iron as well as steel.
5. Dealer to maintain accounts.--(1) Every dealer shall maintain a register of daily accounts of his stock of iron and steel showing correctly.--
(a) the opening stock on each day;
(b) the quantities received on each day showing the place from where and the source from which received;
(c) the quantities delivered or otherwise removed on each day showing the places of destination; and
(d) the closing stock on each day.
(2) Every dealer shall complete his accounts for each day on the day to which they relate unless prevented by reasonable cause, the burden of proving which shall be upon him.
(3) Every dealer shall submit to the District Collector or any other officer authorised by him in this behalf, a true return of the stocks, receipts and deliveries of iron and steel separately every fortnight (1st to 15th the 16th to the end of the month), so as to reach the District Collector or the officer authorised within 7 days after the close of the fortnight.
6. Dealer to issue receipt or invoice.--Every dealer shall issue to every customer a correct cost memo showing his own name and address, the name and address of the customer, the date of transaction, the quantity sold, the price per unit of sale and the total amount charged and shall keep a duplicate of the same to be available for Inspection on demand by the Director, of Industries and Commerce, the District Collector or any other officer authorised by the Director of Industries and Commerce or the District Collector in this behalf,
7. Dealer to give facilities for Inspection.-- Every dealer shall give all facilities at all reasonable times to any executive officer not below the rank of Technical Supervisors in the Industries Department, any officer of the Revenue Department not below the rank of Tahsildar or any officer of the Police Department not below the rank of Sub Inspector for inspection of his stocks and accounts at any shop, godown or other places used by him for the storage, sale or purchase of iron and steel.
8. Powers of entry, search and seizure.-- (1) Any Officer specified in Clause 7, may, where he has reason to believe that any contravention of the provisions of this order has been, is being or is about to be committed, or generally for the purpose of satisfying himself that the provisions of this order are being complied with, with such assistance, if any, as he thinks fit.--
(a) require the owner, occupier or any other person in charge of any place, premises, vehicle or vessel connected with or in use for the purpose of his trade, to produce any book, accounts or other documents showing all or any of his transaction;
(b) enter, inspect or break open with such assistance as he considers necessary and search any place or premises, vehicle or vessel, connected with, or in use for the purpose of his trade;
(c) take or cause to be taken, extracts from or copies of. any documents showing all or any of the transactions; and
(d) search, seize or remove stocks of iron and steel and the animals, vehicles, vessels or other conveyances connected with, or used in carrying, them and take or authorise the taking of all measures necessary for securing production of iron and steel and the animals, vehicles, vessels or other conveyances so seized, in a court, and for their safe custody pending such production.
(2) The provisions of the Cri minal Procedure Code, 1898 (Central Act 5 of 1898) relating to search and seizure shall, so far as may be, apply to search and seizure under this clause."
8. Counsel for the petitioner sub-mitted that the Joint Plant Committee constituted under Clause 17-A of the Iron and Steel Control Order has laid down the policy for distribution of Iron and Steel, and that distribution can be made only in accordance with the priorities provided therein. Exts. P-5 and P-7 contain the directions in that respect. Accordingly, the petitioner cannot sell iron and steel to anybody who asks for it. He has to withhold his stock from sale from those who offer to buy it, and distribute the same according to the order laid down in Exts. P-5 and P-7. Clause 14 (3) of the Iron and Steel Control Order provides that no producer, stock-holder or other person holding stocks of iron and steel shall, without sufficient cause, refuse to sell any iron or steel which he is authorised to sell. As these persons are bound to distribute their stock in accordance with the aforesaid priorities, he would have sufficient cause to refuse to sell it to persons other than those who are entitled to buy it according to the order of priority. Clause 3 of Ext P-3 provides that no dealer shall withhold from sale or refuse to sell iron and steel ordinarily kept for sale. The prohibition in the said clause is absolute; and it is incapable of obedience in the light of Clauses 17-A and 17-B of the Iron and Steel Control Order and the directions issued by the authorities concerned. The learned Government Pleader contended that Clause 3 of Ext. P-3 can be complied with in the case of the stock, if any available, for sale in the open market after satisfying all the priorities, and that the said clause would be valid in respect of such balance stock. It is difficult to accept this contention. This clause, as it stands, would apply to the whole stock kept for sale. It was neither intended to apply, nor would it apply in the face of regulations made by the Central Government authorities in the matter of distribution. There is also Clause 10 of the Iron and Steel Control Order, which provides that the Controller may require any stock-holder to sell the whole or part of his stock to such person or class of persons on such terms and conditions as may be specified in the Order. If the Controller issues any such Order, the stock-holder is bound to withhold his stock from a person who offers to buy it and reserve the same to be sold as required by the Controller. In such an event Clause 3 in Ext. P-3 cannot be complied with.
9. The petitioner's counsel also attacked Clause 5 of Ext. P-3 on the ground of conflict. Clause 12 of the Iron and Steel Control Order reads :--
"12. Power to require keeping of accounts and to obtain information.--(1) Every producer and every stockholder shall keep such books, accounts and records relating to the business carried on by him as the Controller may require.
(2) Every producer or stockholder and every person employed in connection with the business of a producer or stockholder shall on being requested so to do, either by notice served on him or special or general direction issued by the Controller--
(a) produce to such person such stocks of iron or steel and such account and other documents and within such period as may be specified in the notice or direction;
(b) furnish to the Controller such estimates, returns and other information relating to the business and within such period as may be specified in the notice or direction."
Shri Kochu Thommen submitted that Clause 5 of Ext. P-3 and Clause 12 of the Iron and Steel Control Order deal with the same matter, that the provisions contained in Clause 5 of Ext. P-3 are more stringent, and it provides a different authority for submission of returns. This may not be a case of conflict as such, since both provisions are capable of obedience. But the law is well established that if power is vested in two authorities, one subordinate to the other, to act in respect of a certain matter, the subordinate authority has no scope to act, if the superior authority has already acted. It would be all the more so, if the subordinate authority makes different and more stringent provisions. It was contended on behalf of the respondents that Clause 12 of the Iron and Steel Control Order only empowers the Controller to act in respect of the matters mentioned therein, and that so long as the Controller has not acted in exercise of that power no question of any inconsistency with the provisions contained in Clause 5 of Ext. P-3 arises. Such a contention was advanced before the Supreme Court in AIR 1964 SC 1284 at page 1285. In that case the constitutional validity of certain provisions in the Orissa Mining Areas Development Fund Act, 1952, which empowered the State Government to levy a cess or a fee on all extracted minerals for the development of the mining areas was questioned on the ground that the said provisions were repugnant to Section 18 (1) of the Mines and Minerals (Regulation and Development) Act, 1957. This section only empowered the Central Government to take all steps as may be necessary for the conservation and development of minerals in India; but the Central Government had not taken any such steps or made rules in that respect. So it was contended that, until the Central Government acts under Section 18 (1), there was no repugnancy, which should exist in fact, and not depend merely as a possibility. The contention was reiected by the Supreme Court. After laying down the tests which should be applied for ascertaining whether there is conflict between the two legislative provisions -- we have already quoted the relevant passage -- the Court stated:--
"In the present case, having regard to the terms of Section 18 (1). It appears clear to us that the intention of Parliament was to cover the entire field, and thus to leave no scope for the argument that until rules were framed, there was no inconsistency and no supersession of the State Act."
The same principle applies here. The authority competent to exercise the power under Section 3 of the Act is the Central Government; and that authority has exercised the power in respect of the matters mentioned in Clause 12 of the Iron and Steel Control Order by empowering the Controller to do such things as he deems necessary. Then the State Government, who is another delegate of the Central Government, has no scope to come into that field and do anything. The powers delegated to the State Government are not additional powers, but concurrent powers which can be exercised only subject to the exercise of the said powers by the Central Government. Clause 5 of Ext. P-3 cannot, therefore, be sustained in the face of Clause 12 of the Iron and Steel Control Order.
10. The position is more or less the same with regard to Clause 6 of Ext. P-3. Clause 14 (2) of the Iron and Steel Control Order provides that the Controller may by notification in the official Gazette direct that every producer or stockholder when selling any iron or steel shall give to the purchaser a memorandum containing the particulars specified in such notification. This is the same matter dealt with in Clause 6 of Ext. P-3. The reasons stated for holding that Clause 5 of Ext. P-3 is inconsistent with Clause 12 of the Iron and Steel Control Order would apply also to Clause 6 of Ext. P-3; and it cannot, therefore, be sustained. It was not seriously disputed that Clauses 7 and 8 of Ext. P-3 cannot stand in the face of Clause 28 of the Iron and Steel Control Order. Then the only remaining; clause in Ext. P-3 is Clause 4, which provides for exhibition of price list and stock list. This is only one of the provisions in the scheme envisaged by Ext. P-3; and if Clauses 3 and 5 to 8 cannot stand, Clause 4 which is an integral part of the scheme cannot stand independently. The true principle is thus stated by the Supreme Court in Harakchand v. Union of India, AIR 1970 SC 1453 :
"In a case of this description the real test is whether what remains of the Statute is so inextricably bound up with the invalid part that what remains cannot independently survive, or as it is some times put whether on a fair review of the whole matter it can be assumed that the legislature would have enacted at all that which survives without enacting the Part that is ultra vires."
There is a clear statement of the law fa Cooley on Constitutional Limitations, 8th Edition page 360. The relevant passage has been quoted with approval in the above decision.
11. For the reasons stated above, we hold that the State Government Order. Ext. P-3 cannot apply to the petitioner who is governed by the Iron and Steel Control Order 1956. Ext. P-4 is a notice issued by the second respondent pursuant to Ext. P-3; and it cannot, therefore, be sustained. Ext. P-4 is accordingly quashed.
12. In the light of the above conclusion, it is not necessary to consider points (ii) and (iii), which relate only to the validity of Clauses 4 and 6 and part of Clause 3 of Ext. P-3. The attack against these clauses was based on two decisions of a learned Single Judge of this Court in Udavasi v. State of Kerala, 1969 Ker LT 69 and Chacko Mathew v. State, 1969 Ker LT 222. The correctness of these decisions was seriously questioned before us. It is not, however, necessary to express any opinion on that question for the disposal of this case.
13. In the result this writ petition is allowed to the extent herein stated. The parlies will bear their costs.