Bombay High Court
The Municipal Corporation Of Greater ... vs Bharat Petroleum Corporation Limited ... on 6 February, 1992
Equivalent citations: AIR1993BOM54, (1992)94BOMLR194, AIR 1993 BOMBAY 54, 1992 MCC 445, (1992) MAH LJ 721, (1992) 2 BOM CR 682, (1992) 94 BOM LR 194
Author: S.H. Kapadia
Bench: S.H. Kapadia
ORDER Kapadia, J.
1. This appeal has been filed by the Municipal Corporation of Greater Bombay seeking to challenge the judgment of the learned single Judge dated 27th June, 1988 in the above Writ Petition No. 2472 of 1987.
2. An interesting question of law arises in this appeal, namely, whether the operation of Section 394 of the Bombay Municipal Corporation Act, 1888 stands limited/restricted by Section 31 of the Petroleum Act, 1934.
3. The facts giving rise to this appeal are as follows:
(a) Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corporation Ltd., Indian Oil Corporation Ltd., IBP Company Ltd., along with two of their dealers filed in this Court the above writ petition seeking to challenge the right of the Corporation to insist on their obtaining a licence under Section 394 of the Corporation Act read with Part-II, Schedule M to the said Act of 1888.
(b) The said oil companies manufacture and/or sell petroleum products and they also operate retail outlets themselves and through their dealers both in Bombay as well as all I over the country. The said writ petition has been filed on principles analogous to Order 1, Rule 8 of the Code of Civil Procedure. Retail outlets are operated by the dealers of the oil companies referred to above under the agreements executed between the said oil companies and their dealers. The storage licences for the product at these outlets are issued by the Explosive Department under the Petroleum Act, 1934 (hereinafter referred to as the Petroleum Act) which specifically deals with storage and transport of petroleum products. The licence is in respect of each retail outlet under the Petroleum Act.
(c) Under Section 31 of the said Petroleum Act the Central Government issued Notification bearing No. P.104 dated 4th May, 1950. By the said Notification the Central Government was pleased to limit the operation of certain enactments mentioned in Schedule to the said Notification dated 4th May, 1950. One of the enactments was the Corporation Act, 1888. As a result of the said Notification dated 4th May, 1950 the provisions of the Corporation Act were restricted and accordingly licence under the Corporation Act was required only in respect of the following petroleum products:
(1) Petroleum having a flash point below 24°, 4°C or 76°F (dangerous petroleum up to 6 gallons (Motor Spirits); (2) Petroleum having a flash point in excess of 76°F but less than 150°F in quantities up to 500 gallons (High Speed Diesel); (3) Petroleum having a flash point in excess of 150o F but below 200°F in quantities not exceeding 10,000 gallons.
In other words as a result of the notification operation of the Corporation Act was limited insofar as it related to storage and transport of petroleum, to the quantities specified in the notification i.e. up to 6 gallons in the case of petrol (whose flashing point was below 76°F) and quantities not exceeding 500 gallons for High Speed Diesel, (hereinafter referred to as the "Notified category").
(d) Some time in 1985, the Corporation called upon the oil companies to issue directions to all petrol pump stations to apply for licence under Section 394 of the Corporation Act failing which prosecution would be launched against the petrol pump stations.
(e) By letter dated 9th September, 1986 addressed by Bharat Petroleum Corporation Limited to the Municipal Commissioner attention was invited to the Notification dated 4th May, 1950 read with Section 31 of the Petroleum Act which limits the operation of Section 394 of the Corporation Act relating to storage and transportation of petroleum products and accordingly it was submitted to the Commissioner that in respect of storage and transportation of petroleum products in excess of the above quantities and kind of products i.e. 6 gallons and 500 gallons for petroleum and High Speed Diesel respectively, the dealers were not required to obtain licence under the provisions of the Corporation Act as the said quantities and kind of products fell within Section 31 of the Petroleum Act read with the said Notification dated 4th May, 1950.
(f) By letter dated 13th/17th December, 1986, the Corporation did not accept the contention of the oil companies particularly in view of the judgment of this Court in the case of Lalji Mulji v.. The State of Maharashtra, reported in 67 BLR 484.
(g) In view of the above mentioned facts, on 6th July, J987, the present petition came to be filed seeking to challenge the right of the Corporation to insist on the oil companies and their dealers to obtain licence under Section 394 of the Corporation Act even in respect of storage and transportation of petroleum products in excess of 6 gallons of petrol and 500 gallons of diesei as mentioned above.
(h) By the impugned judgment dated 27th June, 1988, the learned single Judge came to the conclusion that the said Petroleum Act was a law in force in the territory of India before the commencement of the Constitution which continued to remain in force even after the Constitution came into effect; that under Article 372 of the Constitution, the Petroleum Act continued to be in force; that it was not the contention of the Corporation that the Central Legislature had no legislative competence to enact the law and therefore the said Petroleum Act was valid and operative. The learned single Judge rightly came to the conclusion that under Entry 53 in List I of the 7th Schedule to the Constitution, the Union Government had the power to legislate in respect of petroleum and petroleum products and accordingly, the Notification dated 4th May, 1950 was also valid. The learned single Judge also found that the Corporation Act and particularly Section 394 of the Corporation Act was amended in 1962; that Section 394 deals with the licence for storage and transport of certain specified items; that the amended provisions of Section 394 of the Corporation Act touches upon public health, safety and local Government and therefore, the Corporation Act fell under List II of the 7th Schedule under Entries 1, 5 and 6. The learned single Judge accordingly rightly came to the conclusion that both the Petroleum Act as well as Corporation Act have been enacted in the valid exercise of powers by the Legislatures concerned. The learned single Judge rightly rejected the contention of the Corporation that the amended Section 394 of the Corporation Act prevails over the Petroleum Act particularly in view of the fact that the Petroleum Act was a law in force at the commencement of the Constitution and it continued to be valid under Article 372 of the Constitution. The learned single Judge also rejected the argument of the Corporation above mentioned on the ground that the Central Government had legislative competence to enact the Petroleum Act under Entry 53 in List I of 7th Schedule to the Constitution. Accordingly, the learned single Judge came to the conclusion that there was a repugnancy between the Central Act and the State Act to the extent of storage and transportation of the petroleum products of specified quantity as mentioned in the notification dated 4th May, 1950 and to that extent the Central Act must prevail over the State Act which is the Corporation Act under Article 254 of the Constitution. The learned single Judge also rightly came to the conclusion that the judgment of this Court in the case of Lalji Mulji (supra) did not have any application to the facts of the present case. The learned single Judge also came to the conclusion rightly that since there was overlapping of the two enactments to the extent indicated above, the Corporation could not insist on seeking a licence from the dealers of; the petroleum products in excess of 6 gallons and 500 gallons of petrol and diesei respectively. In the present circumstances, the learned single Judge was right in allowing the above writ petition.
(i) Against the impugned judgment dated 27th June, 1988, the Corporation has preferred this appeal.
4. Before referring to the various contentions raised by the rival parties, the scope of the 2 enactments is required to be considered. The Petroleum Act was enacted by the Central Legislature. It is an Act to consolidate and amend the law relating to the import, transport, storage, production, refining and blending of petroleum. The statement of: objects and reasons to the said Act shows that attention of the Government of India was drawn to the inconvenience arising from the existence of separate sets of rules in different provinces to regulate the importation, possession and transport of petroleum. The statement of objects and reasons further shows that all the local Governments agreed that there may be uniformity in all the provinces and accordingly it was agreed that the rule-making power in this connection should be transferred to the Central Government. The preamble of the Petroleum Act states that the said Act is an Act to consolidate and amend the law relating to the import, transport, storage, production, refining and blending of petroleum. Chapter I of the said Act deals with control over petroleum. Section 3'of the said Act deals with import, transport and storage of petroleum and it further states that no person shall import, transport or store any petroleum save and except in accordance with the rules made under Section 4 of the said Act of 1934. Section 3(2) stipulates that save and except and in accordance with the conditions of the licence for the purpose which the person may be required to obtain by the rules made under Section 4, no one shall import petroleum Class A and no one shall transport or store any petroleum. Section 4 provides that the Central Government may make rules prescribing places where petroleum may be imported, regulating the import of petroleum, prescribing the period within which licences for the import of petroleum shall be applied for and also providing for disposal by classification or otherwise of petroleum Class A in respect of which a licence has not been applied for or refused. It also provides for regulation of transport of petroleum. It also regulates the places at which the petroleum may be stored as also for transport of petroleum as provided in the licence. In pursuance of the a fore stated Section 4 of the said Act of 1934, the Central Government has framed the Petroleum Rules, 1979. Chapter VII of the said Rules of 1979 makes detailed provisions for obtaining licence for storage of petroleum. The said rules also provide for regulating storage, transport and importation of petroleum. It also provides for the nature and condition of the receptacle in which petroleum may be stored. Section 6 of the Petroleum Act provides that all receptacles containing petroleum Class A shall have a stamp on them as a warning. Section 7 of the said Act provides that the persons need not obtain licence for the transport or storage of petroleum of specified Class B or Class C quantity. Section 8 of the said Act provides that no licence is required for storage etc. of Class A petroleum not intended for sale. Section defines petroleum of various classes. Section 2(c) defines flash point of petroleum to mean the lowest temperature at which it yields a vapour. Section 31 of the said Act confers the powers upon the Central Government to limit powers of local authorities over petroleum products. The said Section 31 is set out hereinbelow:
"Power to limit powers of local authorities over petroleum.-
Where any enactment confers powers upon any local authority in respect of the transport or storage of petroleum, the Central Government may, by notification in the Official Gazette,--
(a) limit the operation of such enactment, or
(b) restrict the exercise of such powers, in any manner it deems fit."
5. It is in exercise of powers conferred by Section 31 of the said Act, that the Central Government issued Notification No. P.104 dated 4th May, 1950 by which the provisions of the Corporation Act, 1888 came to be restricted in respect of the above-mentioned quantity and kind of petroleum products. As result of the said notification, licence was not required to be obtained under Section 394 of the Corporation Act in respect of the quantity exceeding 6 gallons of specified kind of petrol and in respect of quantity exceeding 500 gallons of High Speed Diesel of specified flash point. The above provisions of Petroleum Act and the Rules thereunder also show that detailed provisions have been made with regard to safety in the matter of storage and transportation of the specified kind of petrol and diesel. In fact, for the said specific kind of petrol and diesel a complete code containing all their requisite requirements has been mentioned in the said Act of 1934 and Rules made thereunder of 1976. Even the licence which is issued under the Central Act takes care of the safety measures which a dealer is required to take steps to maintain.
6. On the other hand, Section 394 of the Corporation Act lays down that no person shall keep in or upon any premises any article in Part II of Schedule M to the Act in excess of the quantity therein specified as the maximum quantity without a licence. Part II of Schedule M deals with combustible liquids. Part II contains item at serial No. 133 "Petrol", whereas item at serial No. 80 of Part II(b) "High Speed Diesel". In other words under the Corporation Act storage of petroleum of any quantity in excess of 10 litres requires a municipal licence, while in the case of storage of diesel any quantity in excess of 20 litres requires a licence.
7. Mr. Dalai, the learned Counsel appearing on behalf of the appellant-Corporation submitted that the Corporation Act as well as the Central Act of 1934 are not in conflict in respect of the notified categories of the petroleum products and therefore, in respect of the said categories the dealers are required to obtain licence both under Section 394 of the Corporation Act as well as under the provisions of the Central Act of 1934. In other words, according to Mr. Dalai, the Corporation Act is supplementary to the Central Act and there is no conflict between the two enactments. According to the learned Counsel for the Corporation, the learned single Judge was in error in coming to the conclusion that there was conflict between two Acts and therefore, the Corporation Act will stand superseded by the Central Act of 1934. In support of the said contention. Mr. Dalal for the Corporation has placed very heavy reliance on the judgment of this Court in Lalji Mulji case (supra).
8. The contention of the learned Counsel for the Corporation is not correct and therefore, it cannot be accepted. In the very first instance, it may be noted that Section 31 of Petroleum Act has been enacted prior to the Constitution coming into force. It has been enacted by competent Legislature. In fact, in the present case, the Corporation has not contended about the competency of the Indian Legislature to enact the Petroleum Act. Secondly, after the Constitution came into force on and from 26th January, 1950, the pre-Constitution enactment like the Petroleum Act of 1934 continued to remain in force under Article 372 of the Constitution. Thirdly, the Petroleum Act squarely falls within the ambit of Entry 53 of List I in the 7th Schedule to the Constitution which is the Union list and which gives the Central Government the power to legislate of petroleum and petroleum products. Further the Notification dated 4th May, 1950 came into force after the Constitution under Section 31 of the Petroleum Act and in view of the judgment of the Supreme Court in the case of South India Corporation (P.) Ltd. v. Secretary, Board of Revenue, Trivendrum , it is clear that the said Act of 1934 as well the notification dated 4th May, 1950 are valid. The learned single Judge was right in coming to the conclusion that notwithstanding the amendment to the Corporation Act in the year 1962, the Petroleum Act, 1934 read with Notification dated 4th May, 1950 be enacted in the valid exercise of powers by the Central Legislature would prevail over the State Act namely Bombay Municipal Corporation Act, 1888.
9. As regards the judgment of this Court in the case of Lalji Mulji (supra), it may be mentioned that the reliance placed on the said judgment by Mr. Dalai in the present case is totally misplaced. Mr. Dalai placed reliance on the said judgment in the case of Lalji Mulji in support of his contention that both the Corporation Act as well as Petroleum Act are supplementary to each other and that there was no conflict between the two enactments. At the outset it may be noted that the observations made by this Court in Lalji Mulji's case were totally in different context. Firstly, in the case of Lalji Mulji, the accused was keeping lubricating oil without a valid permit from the Municipal Commissioner. The total quantity of lubricating oil came to 7290 gallons. A complaint was lodged for contravention of Sec. 394(1)(a)(ii) of the Corporation Act. Accused in that case contended that Section 394 read with Schedule M of the Corporation Act was ultra vires Entry No. 53, List I of 7th Schedule of the Constitution. The accused further contended that Section 394 of the Corporation Act was in conflict with the provisions of the Petroleum Act. In the said case, it was found by this Court that the kind of product and the quantity of the product fell outside Section 31 of the Petroleum Act as also it fell outside the notification dated 4th May, 1950. In other words, the product fell within the ambit of the Corporation Act. It was in this light that the Bombay High Court was required to consider as to whether Section 394 of the Corporation Act was in conflict with Section 31 of the Petroleum Act and the notification issued thereunder. It was in the context of the above facts that this Court was required to consider whether Section 394 of the Corporation Act was ultra vires Article 246 of the Constitution read with Entries 53, 93 and 95 of Union List, 7th Schedule of the Constitution. There was no question, therefore, of the conflict arising between the product being covered under Section 394 of the Corporation Act and the product as covered by the Notification dated 4th May, 1950. This Court after considering various judgments came to the conclusion that the provisions of Section 394 of the Corporation Act are not ultra vires Article 246 read with Entry No. 53, List I, 7th Schedule of the Constitution. In view of the facts mentioned in Lalji Mulji's case, this Court took the view that there was no conflict between the Petroleum Act and the Corporation Act. It was in the facts of Lalji Mulji's case that this Court took the view that the two Acts existed within their spheres. As men-
tioned above the argument which arises in the present case was not advanced and could not have been advanced in Lalji Mulji's case. In the present case the question was whether the petroleum products if squarely covered by the Notification dated 4th May, 1950 under Section 31 of the Petroleum Act then whether to the extent of the notified category of goods the Corporation had a right to insist on the dealer obtaining licence under Sec. 394 of the Corporation Act. As stated above, Section 31 of the Petroleum Act restricts the Corporation and also restricts exercise of such powers by the local authorities under the Corporation Act and therefore, to the extent of the product coming within the notified category of the Petroleum Act, there is clearly a conflict between two enactments and therefore the Petroleum Act, 1934 read with Notification dated 4th May, 1950 would certainly supersede the provisions of Section 394 of the Corporation Act.
10. Mr. Dalai thereafter cited the judgment of the Calcutta High Court in the case of Caltex (India) Ltd. v. The Director, West. Bengal Fire Services, . The ratio of the said decision also proceeds on the basis that even if the provisions of the Petroleum Act, 1934 overlap the provisions of the Fire Services Act, 1950 which was the ' State Act still there was no repugnancy between the two Acts, because by its own premises the Petroleum Act was not meant to be exclusive but it was supplementary to the State Act. The facts of the said judgment in the case of Caltex (India) (supra) also show that there was no question of the goods falling in the notified category under Section 31 of the Petroleum Act. There was no question of conflict between the Petroleum Act read with Notification on the one hand and the Fire Services Act on the other hand. In fact the said judgment shows that there was no question of goods coming within the purview of the said Notification dated 4th May, 1950. In the circumstances, the observations of the Calcutta High Court was in a different context and the learned single Judge was right in the present case in distinguishing the facts of both Lalji Mulji's case as well as Caltex (India) Ltd.'s case. The question which arises in the present case is as to whether within demarcated area by the Notification dated 4th May, 1950 the Corporation Act stood restricted and to that extent the powers of the local authorities stood restricted and if so whether there is a conflict between the Petroleum Act read with Notification dated 4th May, 1950 and the State Act. The learned. single Judge was right in coming to the conclusion that there was a conflict between two Acts and the Petroleum Act read with Notification dated 4th May, 1950 superseded the provisions of Section 394 of the Corporation Act.
11. Mr. Setalwad, the learned Counsel appearing on behalf of the respondents submitted rightly that the Petroleum Act is a pre-Constitution law; that it was enacted by the Competent Legislature; that the Notification dated 4th May, 1950 came to be issued after the commencement of the Constitution; that the Petroleum Act was valid under the Government of India Act, 1935 and by reason of Article 372 of the Constitution the Petroleum Act must he deemed to be valid even today. It may also be clarified that the Corporation has not challenged the validity of the Petroleum Act. Since the Notification dated 4th May, 1950 was derived from Sec. 31 of the Petroleum Act which was valid enactment, the said notification was equally valid and continues to be valid even today. Mr. Setalwad rightly placed reliance on the judgment of the Supreme Court in the case of Kalyani Stores v. The State of Orissa, . The ratio of the said decision also shows that the law enacted under the Government of India Act, 1935 would continue to be valid even after the Constitution carne into force and the Notification issued after the Constitution would be valid if the law as enacted was valid. Mr. Satalwad also rightly contended that the Petroleum Act read with Notifications constituted a special law with regard to notified category of product and since it was a special law it will supersede the provisions of the Corporation Act to the extent of the notified category of the product and in the event of there being a conflict which is there in the present case, it is clear that the Central Act would supersede the Corporation Act. If the contention of the Corporation is to be accepted then the purpose of Section 31 of the Petroleum Act would also be defeated. Further even if one goes through the judgment of this Court in the case of Lalji Mulji (supra) the test of repugnancy has been laid down. The test is as to whether as a matter of fact the whole field has been occupied or there is any incidental encroachment. The test is whether there is direct conflict between the two provisions. The test is whether, the Parliament intended to lay down exhaustive Code in respect of the subject matter and whether the law made by the Parliament and the law made by the State Legislature occupied the same field. Applying the above tests it is clear that to the extent of notified category there is a conflict between the two enactments and therefore to the extent of notified category Section 394 of the Corporation Act will have no application. In the circumstances, the learned single Judge was right in coming to the conclusion that there was a conflict between the two enactments, and therefore, the Petroleum Act will supersede the provisions of the Corporation Act.
12. Mr. Satalwad also drew our attention to the case of Municipal Committee, Sunam v. Noori Mal, ILR 15(2) Punjab Series I, in which it has been laid down that Section 4 and Section 31 of the Petroleum Act read and considered along with Section 121 of the Punjab Municipal Act indicate that the provisions cover the same subject matter and the field of activity and therefore, the conclusion was that the operation of the Punjab Municipal Act, 1911 stood subordinated and limited in operation. This judgment in the case of Municipal Committee, Sunam (supra) squarely applies to the facts of the present case and we agree with respect to the ratio of the said judgment.
13. In the circumstances, there is no merit in this appeal. The appeal fails and is accordingly dismissed. However, in the circumstances of the case, there will be no order as to costs.
14. Appeal dismissed.