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Bharat Barrel and Drum Manufacturing Co. Pvt. Ltd. and anr. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 42 of 1972
Judge
Reported inAIR1973Delhi138; ILR1973Delhi779
ActsIron and Steel Control Order, 1956; Constitution of India; Import & Export (Control) Act, 1947; Import Control Order, 1955
AppellantBharat Barrel and Drum Manufacturing Co. Pvt. Ltd. and anr.
RespondentUnion of India and ors.
Advocates: A.B. Divan,; Ravnder Narain,; J.N. Aggarwal,;
Excerpt:
constitution - suspension of supplies - clauses 11a, 17 and 17a of iron and steel control order, 1956, import and export (control) act, 1947 and import control order, 1955 - whether suspension of supplies of iron and steel to petitioner justified under clause 11a - contention that alleged sale of imported material contravened direction issued under order, 1956 - power to issue directions subject matter of clauses 17 and 17a of order - no such directions involved in present case - action under clause 11a taken for contravention of condition laid down under order or direction issued there under - if petitioner contravened conditions of user's import license action can be taken against it under order, 1955 and act, 1947 - suspension of supplies under clause 11a not justified. - - (5).....v.s. deshpande, j. (1) on the 8th of june, 1972 the o.s.d. (vigilance) iron and steel control calcutta issued the following letter to the hindustan steel ltd. :-'supplies of raw materials have been suspended to a large number of firms. criminal cases have also been instituted with the c. b. 1. against some firms for misutilisation of steel materials etc. the statement (appendix a & b) show the particulars of such firms and are forwarded to all concerned' (page 850 of the paper book). in appendix 'b' item 21 refers to the fir lodged with c. b. 1. bombay on 9th febraury, 1972 against m/s. bharat barrel & drum . in respect of 'sale of imported materials in the black market.' the title of the schedule 'b' is as follows, 'criminal cases instituted with the c. b. 1. during 1971-72 up to date.....
Judgment:

V.S. Deshpande, J.

(1) On the 8th of June, 1972 the O.S.D. (Vigilance) Iron and Steel Control Calcutta issued the following letter to the Hindustan Steel Ltd. :-'Supplies of raw materials have been suspended to a large number of firms. Criminal cases have also been instituted with the C. B. 1. against some firms for misutilisation of Steel materials etc. The statement (appendix A & B) show the particulars of such firms and are forwarded to all concerned' (page 850 of the paper book). In appendix 'B' item 21 refers to the Fir lodged with C. B. 1. Bombay on 9th Febraury, 1972 against M/s. Bharat Barrel & Drum . in respect of 'sale of imported materials in the black market.' The title of the Schedule 'B' is as follows, 'Criminal cases instituted with the C. B. 1. during 1971-72 up to date for violation of Iron and Steel Control Order 1956.'

(2) It was contended for the Union of India and the Iron and Steel Controller that the petitioner Bharat Barrel and Drum ., had been found transporting from its factory some Iron and Steel which had been imported by it exclusively for the purpose of manufacturing drums and barrels in its factory. There was a reasonable suspicion, thereforee, that the transport was with a view to sell the said material in black market.

(3) The question for the decision is whether the suspension of the supplies of Iron and Steel to the petitioner by the Iron and Steel Controller was justified under clause 11-A of the Iron and Steel Order 1956. Clause II-A reads as follows :-

'11-A.Notwithstanding anything contained in this part or in the conditions governing the acquisition or disposal of any categories of Iron or Steel, the Controller may order suspension of supplies of Iron or Steel forthwith to any person against whom there exists a credible information, or a reasonable suspicion of the contravention, of any conditions laid down under this Order or of any directions, issued there under.'

(4) It is necessary for the application of Clause 11-A that credible information or reasonable suspicion should exist of the contravention : (1) of any conditions laid down under this Order or (2) of any directions issued there under.

(5) Shri Tandon for the Union of India has invited out attention to the Fir lodged against the petitioner in which it is complained that the imported material was being transported outside the factory for sale and the petitioners' manager did not produce the account books of the factory before the Officer of the Iron and Steel Control to show that the material was not being sold but was being sold for being used for the manufacture of barrels and drums. Shri Tandon then argued that the complaint discloses that a reasonable suspicion existed against the petitioner for having contravened Clauses 7 and 28 of the Iron and Steel Control Order. These clauses read as follows:-

'7.A person acquiring iron or steel shall not use the iron or steel otherwise than in accordance with any conditions contained or incorporated in the document which was the authority for the acquisition or otherwise than for the purposes mentioned by him in the application for such acquisition.'

'28.The Controller may, with a view to securing compliance with this order:- (a) require any person to give such information in his possession in respect of stocks of iron or steel or of scrap acquired by him or in respect of any business carried on by that or any other person; (b) inspect or cause to be inspected any stocks of iron or steel or of scrap held by any person and any books or other documents belonging to or under the control of any person; (c) enter and search, or authorise any Gazetted Officer to enter and search, any premises and seize or authorise the officer aforesaid to seize, any article in respect of which he has reason to believe that a contravention of this Order has been, is being or is about to be committed, and any other article in the premises which he has reason to believe has been or is intended to be used in connection with such contravention.'

(6) Shri Tandon argues that Clause 7 of the Order applies even to imported iron and steel. As we see the matter however, it appears to us that there is a clear distinction between the import of iron and steel under the Imports and Exports (Control) Act, 1947 and the Import Control Order issued there under and the control of production, distribution, use sale etc. of iron and steel under the Essential Commodities Act 1955 and the Iron and Steel Control Order 1956. The subject matter of Imports and Exports (Control) Act 1947 relates to entry 41 of the Union List of the 7th Schedule of the Constitution. On the other hand the subject matter of the Essential Commodities Act 1955 relates to entry 33 of the Concurrent List of the 7th Schedule of the Constitution. Even though after the amendment of entry 33 in 1954 the control of certain imported goods was included in its perview, the operation of the Essential Commodities Act relates to such commodities as required to be controlled. If a person imports steel under a license issued to him under the Imports and Exports (Control) Act and the Import Control Order then such a thing becomes his private property which he can use only in accordance with the terms of the import license. The iron and steel which has become the property of the importer to be used for specific purpose only does not require to be controlled under the Essential Commodities Act or the Iron and Steel Control Order. For, already the importer is prohibited from selling it or even from consuming it in any manner except in accordance with the terms of the import license. If he violates the terms of the license, action against him can be taken under the Imports and Exports (Control) Act and the Import Control Order. There is nothing in the Essential Commodities Act 1955 and the Iron and Steel Control Order 1956 issued there under to show that either the Act or the Order was intended to apply to such imported iron and steel which is the private property of the user and subject only to the conditions of the import license regarding its use. No question of production, distribution, sale or consumption of such an article can arise under the Essential Commodities Act and the Iron and Steel Control Order. We are not, thereforee, convinced that either the Essential Commodities Act or the Iron and the Steel Control Order were intended to deal with the Iron and Steel imported under the user's license to be used only for the manufacture of a specified commodity.

(7) Secondly, the language of Clause 7 of the Order prohibits the use of iron and steel acquired by a person otherwise than:-(1) in accordance with the conditions contained or incorporated in the document which was the authority for the acquisition or (2) otherwise than for the purposes mentioned by him in the application for such acquisition- The acquisition of iron and steel is dealt with in clause 4 of the Iron and Steel Control Order 1956. Clause 4(1) shows that such acquisition excludes the import of iron and steel.. Shri Tandon, however, points out that prior to the amendment 'of 29th March, 1971 clause 7 related only to the Iron and Steel 'which had been acquired in accordance with the provisions of Clause 4. But by this amendment these words were ommitted and the ambit of Clause 7 was widened. Shri Tandon states that after the amendment Clause 7 prohibits the misuse of even imported iron and steel even though the acquisition under Clause 4 does not include import of iron end steel. Ordinarily, the concept of acquisition under Clause 4 should govern reference to acquisition under Clause 7. But even if it is assumed for the sake of argument that the acquisition under Clause 7 has a wider scope than it has under Clause 4 we have to further see whether the words in Clause 7 viz. 'Conditions contained in the document which was the authority for the acquisition' or 'the purpose mentioned by the applicant in the application for such acquisition' would refer to the import license and the application for the import license made under the Imports and Exports (Control) Act and the Import Control Order. Bearing in mind the fact that the Iron and Steel Control Order is issued under the Essential Commodities Act, such a construction of clause 7 of the Order seems to us far fetched and beyond the scope not only of the Iron and Steel Control Order but also of the Essential Commodities Act., We are not satisfied, thereforee, that the suspension of the sale of imported iron and steel is covered by the language of Clause 7. As far -the conditions of Clause 28 it was argued by Shri Divan for the petitioner that petitioner was always willing to show the account books to the Officer of the Iron and Steel Control but was unable to do so because of the disturbed conditions in the factory.

(8) We, thereforee, come to the most important question which is the construction of Clause 11-A of the Order. It is contended by Shri Tandon that the alleged sale of imported material contravened direction issued under the Iron and Steel Control Order. Power to issue directions is the subject matter of Clauses 17 and 17A of the Order. No such direction is involved in the present case. Shri Tandon however, says that the order to produce account books under Clause 28 would also amount to a direction under the Order a contravention of which would fall under Clause 11-A. The language of Clause 11-A treats the laying down of the conditions under the Order in the same way as directions issued there under. Its language proceeds on the well known distinction between a provision of the Order itself and a .condition or a direction issued under the Order. In our view, a condition laid down under the Order or a direction issued under the Order would not include a provision of the Order itself. For instance the contravention of the provision of the Order itself is punishable under section 7 of the Essential Commodities Act. On the other hand action under Clause 11-A is taken for the contravention of a condition laid down under the Order or a direction issued there under. It appears to us, thereforee, that action under clause 11-A cannot be taken for the contravention of either Clause 7 or Clause 28 itself as distinguished from the contravention of a condition or a direction laid down or issued under the Order.

(9) If the petitioner has committed any contravention of the condition of the user's import license action can be taken against it under the Import Control Order and the Imports and Exports (Control) Act. The suspension of supplies under clause 11A was not, however, justified for the above reasons. Item 21 of schedule 'B' of the Order of suspension dated 8-6-1972 set out at the inception of this Order is thereforee quashed in so far as it relates to the petitioner alone. Similarly, the letter by Deputy Iron & Steel Controller dated 14th of July, 1972 addressed to Divisional Manager Hindustan Steel Ltd. in so far as it purports to clarify the order of suspension relating to the petitioner is also quashed. In view of the above it is not necessary to go into other grounds of attack urged by the petitioner against the suspension Order and the clarification Order in the writ petition.

(10) Further relevant of the Counsel for the petitioners and the final order dated 20-4-73 are not necessary for the purpose of this Reported.


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