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Loha Committee and ors. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ No. 69 of 1969
Judge
Reported inAIR1971All408
ActsIron and Steel (Control) Order, 1956; Constitution of India - Article 19(1)
AppellantLoha Committee and ors.
RespondentUnion of India (Uoi) and ors.
Appellant AdvocateR.C. Srivastava and ;S.C. Khare, Advs.
Respondent AdvocateJ.N. Tewari, Adv. and ;Standing Counsel
DispositionPetition allowed
Excerpt:
.....regulating steel distribution cannot come under clause 13 of that order as that clause is not concerned with steel distribution - the resolution is ultravires and illegal. - - in my opinion, both these contentions are well founded. --13. the controller may, where he is satisfied that such action is necessary in order to co-ordinate the production of iron or steel with the demands for iron or steel which have arisen or are likely to arise under authorisations to acquire duly issued under this part- (a) prohibit, (b) require with effect from such date and with reference to such periods as the controller may specify, any producer to obtain approval to his programme of manufacture and despatch of iron or steel of any of the categories specified in the schedule to this order:.....to the dealers in iron and steel. they, therefore, prayed that a writ of mandamus be issued to the state government not to give the entire quota to the small industries corporation limited, but to distribute the same amongst all thedealers. by an amendment application, which was allowed, the petitioners have prayed for the quashing of a resolution of the ministry of steel and heavy engineering published in the gazette of india extraordinary dated may 22, 1970, which, inter alia, lays down the procedure for indenting iron and steel by the dealers from the manufacturers. 2. the iron and steel (control) order, 1956, was made by the central government in exercise of its power under section 3 of the essential commodities act, 1955. clause 4 of this order regulated the acquisition of iron and.....
Judgment:
ORDER

G.C. Mathur, J.

1. The Petitioner No. 1 is a registered Society of dealers in iron and steel products of which the petitioners Nos. 2 to 43 are members. In the original writ petition their complaint was that the quota of iron and steel of the scarce variety allotted to the State of U. P. was passed on in its entirety to the Small Industries Corporation Limited, Kanpur, and nothing out of this quota was given to the dealers in iron and steel. They, therefore, prayed that a writ of mandamus be issued to the State Government not to give the entire quota to the Small Industries Corporation Limited, but to distribute the same amongst all thedealers. By an amendment application, which was allowed, the petitioners have prayed for the quashing of a resolution of the Ministry of Steel and Heavy Engineering published in the Gazette of India Extraordinary dated May 22, 1970, which, inter alia, lays down the procedure for indenting iron and steel by the dealers from the manufacturers.

2. The Iron and Steel (Control) Order, 1956, was made by the Central Government in exercise of its power under Section 3 of the Essential Commodities Act, 1955. Clause 4 of this Order regulated the acquisition of iron and steel from a producer or stockholder etc. Clause 5 regulated the disposal of iron and steel. Clause 15 conferred upon the Controller the power to fix maximum prices of iron and steel. Clauses 18, 20 and 27 regulated the acquisition, disposal and fixing of prices of scrap. Clause 13 conferred on the Controller the power to control production of iron and steel. Clause 17 conferred power on the Central Government to give directions as to the procedures to be followed by the authorities issuing quota certificates, permits etc.

3. By a notification dated February 29, 1964, issued under Clause 17 of the Order the Central Government withdrew control over prices and distribution of all varieties of iron and steel except certain varieties which were 'scarce varieties'. Under this notification a Joint Plant Committee was set up to control the distribution of scarce varieties of iron and steel. The dealers individually were not entitled to indent this variety of iron and steel directly from the producer. Quotas were fixed for each State and it is the contention of the petitioners that the State quota had to be distributed amongst the dealers in each state. The complaint of the petitioners is that the State Government has refused to give any part out of the State quota to the dealers and has allocated the entire quota to the Small Industries Corporation Limited, Kanpur, which is a creation of the State Government.

It has not been denied that the entire State quota has been allocated to the Small Industries Corporation Limited and that no part of it has been given to any dealer. The justification for this action is given in the counter-affidavit filed on behalf of the State of U. P. to be the fact that entire stocks of scarce iron and steel, which were with the dealers, were disposed of by them to persons of their choice and at their own prices in spite of the fact that the Government had directed them to sell them to Government departments who needed it. In my opinion, the action of the State Government is not justifiable. If any dealer had violated any orders binding upon him and such violation was punishable then the dealer should have been punished for that violation; but on account of that violation the State Government was not entitled to deprive the dealers of the scarce variety of iron and steel and givethe entire quota to the Small Industries Corporation Limited. The quota was given to the State Government for the purposes of distribution to the dealers within the State and the State Government was bound to distribute it amongst them.

It is thus clear that the withholding of the scarce variety of iron and steel from the petitioners and other dealers by the State Government is illegal. The complaint of the petitioners is justified. The complaint is in respect of the quota for the year 1968-69 and I am informed that this quota has yet to be received by the State Government from the manufacturers. If and when the quota is received, the State Government is bound to distribute it equitably amongst the dealers in the State.

4. The second relief, which the petitioners have sought, is based on a notification of the Central Government dated April 29, 1969, published in the Gazette of India Extraordinary dated May 1, 1969. This notification was issued under Clause 2-A of the Order. By this notification the Central Government exempted all the categories of iron and steel specified in the Schedule to the Order from the operation of the provisions contained in Clauses 4, 5, 15, 18, 20 and 27 of the Order. The effect of this notification was that virtually all control was lifted from all varieties of iron and steel so far as acquisition, disposal and fixation of prices thereof were concerned. This control having been lifted, it was open to dealers to place orders for all varieties of iron and steel with the producers directly.

In the Gazette of India Extraordinary dated May 22, 1970, a resolution of the Ministry of Steel and Heavy Engineering dated May 22, 1970 was published. Under this resolution a Steel Priority Committee and a Joint Plant Committee were set up. Paragraph 7 of this resolution lays down the procedure regulating the indenting of iron and steel. Under this paragraph all indentors are required to book orders for iron and steel through the Joint Plant Committee. The indents are required to be accompanied by such documents as may be prescribed by the Joint Plant Committee. After receiving the indents, the Joint Plant Committee is required to scrutinise them and to forward them to the producers for booking orders. The Joint Plant Committee is authorised to prescribe the financial and other formalities to be completed by the indentors before the manufacturers accept the indents.

I am informed that the Joint Plant Committee has laid down that each indent is to he accompanied by a bank draft for 25 per cent of the value of the indent. The sale orders will be valid for a period of two years only from the date of booking and will automatically lapse at the end of that period. On the lapse of the order, the deposit is to be returned to the indentors without any interest. It will thus be seen that this resolution seeks to regulate the acquisition and distribution of iron and steel. In the heading of the notification itself it is set out:--

'Subject:-- System of Planning and Distribution of Iron and Steel.'

The argument of learned counsel for the petitioners is that all controls having been lifted from all varieties of iron and steel, there was no power in the Central Government to impose any restrictions on the acquisition and distribution of iron and steel. It is further urged that even if there was any such power under the order, it could only have been exercised by a notification under the Order and not by a resolution of the Ministry of Steel and Heavy Engineering as is sought to be done now. In my opinion, both these contentions are well founded. If any restrictions are to be imposed on the fundamental right of the petitioners to carry on their business in iron and steel, they can be imposed. Only under the Order. No such restrictions can be imposed by a resolution of any Ministry or even of the Central Government. The impugned notification does not purport to be issued under any provision of the Order, Learned counsel for the Union of India has contended that the impugned notification has been issued under Clause 17 read with Clause 13 of the Order.

As already stated, the notification does not state that it has been made under Clauses 13 and 17 of the Order and there is no material on the record from which such an inference can he drawn. Apart from this, it is clear that, after the removal of controls over the acquisition, disposal and price fixation of all varieties of iron and Steel, there was no power left in the Central Government to regulate the distribution of iron and steel. Clause 13 relates to the control only on the production of iron and steel. The relevant part of the section on which the learned counsel for the Union of India relies reads thus:--

'13. The controller may, where he is satisfied that such action is necessary in order to co-ordinate the production of iron or steel with the demands for iron or steel which have arisen or are likely to arise under authorisations to acquire duly issued under this Part-

(a) prohibit, ............;

(b) require with effect from such date and with reference to such periods as the Controller may specify, any producer to obtain approval to his programme of manufacture and despatch of iron or steel of any of the categories specified in the Schedule to this Order:

(c) ................ .

In the first place, Clause 13 conferspowers on the Controller and not on theCentral Government or the Ministry ofSteel and Heavy Engineering. In the second place, this clause is concerned with coordinating the production of iron and steel and with the producers of iron and steel. It is not concerned at all with the distribution of iron and steel. The impugned notification cannot, therefore, be justified under Clause 13, Clause 17, on which also reliance is placed, is in these words:--

'The Central Government may give directions as to the procedure to be followed by the authorities issuing quota certificates, permits or written orders, referred to in Clauses 4 and 5, as to the maintenance by the Controller of records in connection with the distribution of iron or steel and generally for the purpose of giving effect to the provisions of this part.'

This clause provides for the giving of directions regarding the procedure to be followed for exercising the powers conferred by Clauses 4 and 5 of the Order. The power under Clause 17 is really a power ancillary to the power under Clauses 4 and 5. When Clauses 4 and 5 have themselves ceased to operate, there is no power under Clause 17 that can he exercised. Therefore, the impugned notification could not have been made under Clauses 13 and 17 of the Order. In my opinion, the Central Government or the Ministry of Steel and Heavy Engineering have no power to impose restrictions on the distribution of iron and steel which, they have sought to impose by the impugned resolution. The impugned resolution is beyond their powers and is illegal.

5. The writ petition accordingly succeeds. The State Government is directed, when it receives the quota allotted to it of scarce iron and steel for the year 1968-69, to distribute the same equitably amongst the dealers in the State and not to give the entire quota to the Small Industries Corporation Limited. The resolution of the Ministry of Steel and Heavy Engineering dated May 22, 1970, published in the Gazette of India Extraordinary dated May 22, 1970, is quashed and the Union of India is directed not to enforce that part of it which deals with the distribution of iron and steel particularly the indenting procedure. The respondents Nos. 1 and 2 will nay the costs of this petition to the petitioners.


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