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New India Industrial Corporation Ltd. Vs. Union of India, Etc. - Court Judgment

LegalCrystal Citation
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 1300 of 1979
Reported inAIR1980Delhi277; ILR1980Delhi940
ActsEssential Commodities Act, 1955 - Sections 3; Delhi Ice Control Order, 1979; Constitution of India - Article 14
AppellantNew India Industrial Corporation Ltd.
RespondentUnion of India, Etc.
Advocates: G.L. Sanghvi,; S.K. Tiwari,; V.A. Bobede and;
Cases ReferredIn State of Bombay v. Virkumar Gulabachand Shah
Excerpt: control order, 1979, clause 6,7,8,9,10 & 12--whether ice is a 'food' and whether delhi administration can regulate the price and sale of ice--constitution of india, articles 14 & 19(1)(g)--whether violative.; in the instant case, the delhi administration issued a notification which provided for the fixation of price chargeable for the sale of ice in delhi. the petitioner challenged the legality of the notification by the way of a writ petition on the grounds that ice is nota food and that thereforee, its sale and pricing cannot be regulated under essential commodities act and the notification. they also contended that he provisions of the said notification violated the petitioner's fundamental rights guaranteed under articles 14 and 19(1)(g) of the constitution...........on trade guaranteed by article 19(l)(g) of the constitution. (3) in its counter affidavit, the delhi administration has claimed that ice is 'food' within the wider meaning of 'food'. the administration, then submits-that there are-enough guidelines in the order for fixation of a fair price. the administration states that the powers of inspection, entry, disclosure of stocks etc. will not be used by the administration to cause unnecessary hardship to the trade and it will bear in mind the peculiarities of the manufacture and trade in ice. it is then asserted that the restrictions imposed by the order are reasonable and in the interest of general public.(4) on these rival contentions, the first question for determination is whether ice is food for the purpose of essential commodities.....

S.B. Wad, J.

(1) This judgment will also dispose of Civil Writ Nos. 1301 to 1316 of 1979, as they-raise common question of law. For the sake of convenience I will take the facts as stated in Civil -Writ No. 1300 of 1979.

(2) On July 3, 1979 the Delhi Administration issued the impugned notification (Annexure-I) under section 3 of the Essential Commodities Act, 1955 read with the Government of India, Ministry of Agriculture & Irrigation (Department of Food) G.S.R. 800, dated June 9, 1978. This notification is called Delhi Ice Control Order, 1979. The order inter-alia provides for fixation of price, chargeable for the sale of ice in Delhi. It also gives the Administration a power of inspection, entry search and seizure. The petitioner challenge the legality and the constitutionality of this order. The main grounds of attack are :

(I)Ice is not 'food' and, thereforee, its sale and pricing cannot be regulated by Section 3 of the Essential Commodities Act, 1955 read withG.S.R. 800 of June 9, 1978.

(II)The power to fix price under clause 7 of the Order is arbitrary and is vocative of Article 14 of the Constitution.

(III)The power to submit reports regarding stocks, prohibition of refusal to sale and power of inspection, entry etc. are arbitrary.

(IV)The said provisions impose unreasonable restrictions on the fundamental rights of the petitioner, to carry on trade guaranteed by Article 19(l)(g) of the Constitution.

(3) In its counter affidavit, the Delhi Administration has claimed that ice is 'food' within the wider meaning of 'food'. The Administration, then submits-that there are-enough guidelines in the Order for fixation of a fair price. The Administration states that the powers of inspection, entry, disclosure of stocks etc. will not be used by the Administration to cause unnecessary hardship to the trade and it will bear in mind the peculiarities of the manufacture and trade in ice. It is then asserted that the restrictions imposed by the Order are reasonable and in the interest of general public.

(4) On these rival contentions, the first question for determination is whether ice is food for the purpose of Essential Commodities Act, 1955 and the impugned Order. The scientific concept of food is that it is an eatable with nutritive or nourishing value. But it is a fact of life that many articles of food are not consumed for the nutritive or nourishing value. Food is one of the normal enjoyments of human beings. Many food-stuffs are, thereforee, taken because they are. very palatable or have a very attractive taste. In common man's dictionary food is not associated with its scientific import of nutrition'. The elated feeling of taking tasty food is something that linger', on his tongue and 'in his memory. ' To me an eatable which makes food stuff more digestible or more palatable is, also 'food' within the extended concept of food.

(5) In State of Bombay v. Virkumar Gulabachand Shah : 1952CriLJ1406 the question for consideration was whether 'turmeric' was 'Foodstuff' within the meaning of clause 3 of the Spices (Forward Contracts Prohibition) Order, 1944 read with Section 2(a) of the Essential Supplies (Temporary Powers) Act, 1946. Apart from the fact the turmeric was specifically mentioned as spices, in the order of 1944, the question was whether it would fall within the meaning of 'Foodstuffs' of the 1946 Act. Vivian Bose, J.. after considering all the dictionary meanings of the word food. as also decided cases on. the point, came to the conclusion that the term 'Foodstuff' is ambiguous The learned Judge then observed

'INone sense it has narrow meaning and is limited to articles which are eaten as food for purposes of nutrition and nourishment and so would exclude condiments and spices such as yeast, salt, pepper, baking powder and turmeric. In a wider sense, it includes everything that goes into the preparation of food proper (as understood in the narrow sense) to make it more palatable and digestible. In my opinion, the problem posed cannot be answered in the abstract and must be viewed in relation to its background and context'

The learned Judge then observed :

'THEproblem, I think is to be solved in common sense way'.

(6) The learned Judge warned against comparison of one Act with another, especially when the Act used for comparison is an English Act. The learned Judge then analysed the provisions of the 1944 Order and 1946 Act, to examine whether turmeric falls within the wider meaning of the term 'Foodstuffs'.

(7) Keeping in mind this approach, I will now examine the problem before me. The counsel for the petitioner submits that ice is not food either according to the narrow meaning or the wider sense. He submits that ice does not go into the preparation of food proper, bur is merely used as a cooling agent. The counsel for the respondent on the other hand, submits that 'Food' becomes more palatable by use of ice and hence the wider meaning of 'Food' covers ice. He then submits that ice is directly consumed through ice candy and similar articles of food. The counsel for the petitioner counters it by slating that every year Delhi Administration issues notice, warning people not to consume ice direct, as it is injurious to health. The counsel for the respondent submits that this is in keeping with Food Adulteration Rules, but' has no relevance to the problem.

(8) Let me examine these submissions. It is a matter of common knowledge that except the small number of people who afford refrigerators, the vast population of Delhi, uses ice for direct consumption. The roving water vendors in Delhi put ice slabs in the mobile water tanks. In small hotels and the fruit-juice-shops, ice cubes are directly added in the preparation of milk shake of fruit juice. Ice candies and ice-fruits are sold in vast quantities, particularly during summer. These are the matters of usual experience and common sight, all over Delhi and around. Apart from this direct consumption of ice, ice is used for preparation of ice creams, kulfi etc. Where there are no refrigerators or cooling machines, aerated waters, flavoured milk and similar soft drinks are cooled by ice. But the counsel for the petitioner says that ice does not go into the preparation of these items of food. It is true. that in cooked food, the articles which go in the preparation, particularly the condiments, lose their identity and become the part of the cooked food. But is it the only way that an article 'Can go into the preparation of Food' I think not. Ice A creams cannot be prepared without the use of ice and in that sense ice goes in the preparation' of ice creams. At least some articles of food ordinarily, and many articles of food during summer, are more palatable because of ice. Nobody would feel like taking aerated waters of flavoured milk, unless they are sufficiently cold. In fact, the craze is for chilled bear or chilled aerated water. Ice is an indispensible eatable particularly in summer. I have no hesitation in holding that ice is 'food' for the purposes of the present Order passed under the Essential Commodities Act. The object of the Order and the Act is to fix fair price and to ensure proper and equitable distribution of-ice to alt sections of the society.

(9) This brings me to the consideration various provisions, which are challenged in the petition. The general submission of the petitioners is, that the manufacture and sale of ice have distinctive characteristics pecliarities In passing the unsigned Order the Adtemistration has not considered these special characteristics and has mechanically followed' the' pattern applicable to all other commodities. It is further contended by the petitioners that provisions of the Order are unrealistic, impracticable, and cast unreasonable burdon on the trade. It is then contended that arbitrary powers are conferred on the authorities through the impugned order.

(10) During the course of arguments, I found that the details of manufaeture and trade mentioned in the petition were not sufficient to appreciate the respective submissions. thereforee, with the consent of the counsel for the Administration, I permitted the petitioners to file a brief note on the manufacture and trade of ice in Delhi. The petitioners have accordingly 'filed the note and have supplied a copy of it to the counsel for the respondents.

(11) The gist of the note is that ice factory works with water, air and electricity as the three main raw materials. Ice manufacturing is a continuous process. Ice cans made of G.I. sheets are filled with water and are dipped in brine tank. The brine tank is filled with saline water. With the help of compressors run on electricity air bubbles are blown thrown the ice cans. At the appropriate temperature, water solidifies and transforms into ice slab. Once ice manufacturing starts, the process cannot be stopped in between. If during the process, elecricity goes off, air bubbles cannot be blown through the ice cans and ce in the process of manufacture, turns opaque. Under the instructions of the Health Authorities such opaque ice cannot be sold and goes completely waste. Failure of electricity particularly in summer is very common in Delhi. There is also danger of ice becoming salty and, thereforee, not saleable. This happens where the ice cans get lowered in the tank and Air bubbles instead of passing through the ice cans, pass through the brine tank by mistake. It there is failure of electricity when ice is almost ready for being taken out, the temperature of the brine water starts raising with the result that ice already manufactured starts melting in the ice cans.

(12) In order to ascertain the ready stock of ice at a given time it would be necessary to take out each and every ice can and to remove the ice manufactured therein, in order to know whether a particular slab with the given weight is ready. This is a very impracticable attempt. Once the ice is taken out from the cans, it cannot be replaced in the ice can again and at the same time if it is left Obi side it would start melting. This would result in loss of v/eight and there are chances of its getting polluted. It is impossible at a given time to give the exact weight of ice in stock as there is continuous process -of melting going on.

(13) The other peculiarity of the trade is that it is seasonal trade. In winter there is almost no sale while in summer the demands are so high that it is very difficult to meet them. Then 50 per cent of the ice factories are closed during off season. For working out the proper economics of the ice trade, it is, necessary to have some permanent commitments for all seasons. This is usually done by contracts with hospitals, defense establishments or some other manufactures whose manufacturing process needs ice throughout the year. Such permanent commitments are also required to be met in summer when general demand of ice is very high.

(14) Usually, the trade by the manufacture is with the wholesale dealer, as sale of ice in small quantities to individual consumers is impracticable. If ice slabs are cut in small pieces at different times, the process of melting gets faster, resulting into heavy losses.

(15) On this background the petitioners submit that there are no clear guidelines for fixation of fair price in the impugned Order. Let me examine clauses 6 and 7 in this regard. Clause 7 of the Order provides for price chargeable by the manufacturers and clause (6) provides for the margin of profit of wholesalers. and retailers. These clauses are as follows :

'MARGINof profit of wholesalers and retailers (1) No wholesaler shall sell ice at a price higher than the price which is arrived at by adding 25 per cent as margin of profit to the purchase price paid by him to the manufacturer.

(2)No retailer shall sell ice at a price higher than the price which is arrived at by addiqg 40% as margin of profit to the purchase price paid by him to the wholesalear or to the manufacture if the ice been purchased directly from the manufacturer.


'PRICEChargeable by manufacturers. No manufacturer shall sell ice at a prioe higher higher the price fixed by the Controller. while fixing the uniform price, the Controller shall have due regard to the priinciples and factors mentioned below:

(I)COSTof the raw material viz.. water, Chemicals etc;

(II)PROCESSING.CHARGESi.e. cost of electricity and labour ;

(III)Establishment and other incidental charges; and

(IV)Reasonable margin of profit.

PROVIDED that no manufacturer shall Increase the sale price of ice without the prior approval in writing of the Controller.'

(16) It cannot be said that there are no guidelines given in these provisions to the Controller while fixing the price. While fixing the pries the controller shall have due regard to the cost of material, namely, water, sates, Chemicals etc. The Controller shall taKe into consideration the. cost of electricity aad labour towards the processing charges. Expenses of establishment and other incidental charges are also to be taken into consideration while fixing the fair price. After calculating all these components, the Controller has to decide what is the reasonable margin of profit. The petitioners complain that the factor of loss and waste is net taken cafe of by clause (7). 'The counsel for the respondent counters this submission by staling that the loss as due to failure of electricity and in the process of handling would be considered by the Controller, while applying his mind to the cost of electricity and other incidental charges.

(17) Even if the factor of cost of electricity or the other factor of losses incidental charges would not cover, the Controller is bound to consider the inevitable losses while determining what is the reasonable margin of profit. In' order to be reasonable, the profit must be a tangible reasonable return on the manufacturers investment and labour. Profit should not be allowed to be melted away while fixing the margin of profit. The Controller shall have due regard .to the factor of losses to ice manufacture and trade. There are other guidelines also provided that order for fixing the reasonable margin of profit. Clause 6 provides that the wholeseller will have 25% as a margin profit 'over his purchase price and the retailer will have profit of 40 per cent on the pruchase price from the wholeseller or from the manufacturer, if ice is purchased from the manufacturer directly. With these two percentages for the retailer and for the wholeseller expressly specified by the Order, it should not be difficult for the Controller to fix the reasonable margin of profit for the manufacturer. These guidelines are clear and effective enough to exclude any chance of capricious or arbitrary fixation of price for the manufacturers.

(18) Although the object of the Order is eminently in the public interest, its administration through clauses 8, 9, 10 and 12 has air of unreality and impracticability. Unless these provisions are recast in the light of the peculiarities of the trade they would seriously effect the right of the petitioners to practice the trade. The powers given to the Administration are not well thought out, and have no rational bearing. they are bound to result in arbitrariness. They also impose unreasonable restrictions on the petitioner's fundamental right under Article 19(i)(g) of the Constitution.

(19) From the very nature of the trade, submission of a 'stock' returns is impossible. What is meant by 'stock' of ice, at what point of time stock is to be ascertained, is the quantity of ice that has grown opaque or become salty to be included in the stock, is the stock to be. disclosed in the number of slabs or in weight, how is the quantity of ice lost in the process of half-manufacture (due to failure of electricity) to be included in the stock, how loss of weight from the time the slab leaves the brine can to, the time the Inspector checks it, is to be measured and how the details are to be maintained are questions which bristle with uncertainties. These are the factors,' on which a manufacturer has no control. How can any direction in regard to stock returns in clause (8) be complied with by the .manufacturer

(20) All problems regarding the 'stock' mentioned above would be present, when amanufacturer is required to display stock-cum-price board at a conspicuous place of the business premises under clause 9.

(21) Under clause 10, a dealer cannot refuss to sale ice at the price displayed to any customer a wholeseller, a small retailer or an individual consumer. If a small retailer demands half of the slab or quarter of the slab, the slab would berequired to be cut every time. The problem would be highly aggravated, where small consumers would go for purchasing one or two kg. of ice. Ice would be required to be cut in small pieces to serve such consumers and at frequent intervals. The resulting loss by melting would be very heavy. In spite of these losses, the dealer would be required to sell ice to a wholesale dealer, a retailer and a small consumer, at the same price, displayed on the price board.

(22) An officer or an inspector of Food and Supplies Department would have powers to inspect, entry, search and seizure of stocks under clause 12. When the inspector visits the premises he would ask for information regarding stocks and would also inspect the stocks of ice. Considering the difficulties regarding the stocks mentioned above, it will be impossible for the manufacturer to give any definite information or to show the exact stocks to the inspector. There will always be a difference of opinion between' the inspector and the dealer. This will inevitably subject the dealer to penalties under the Act. The powers of seizure of ice stocks, of having safe custody of ice and production of ice in a Court of law in the event of prosecution, are also very capricious and arbitrary. If after the prosecution, it is found that the dealer has not committed any offence, how can the seized stock ice, in the same quantity and weight be returned to the dealer. Even otherwise, from the time the stock of ice is seized till it is produced before a Court, it would undergo so much of loss in size and weight, that it would be impossible to prove as to what was the original quantity.

(23) It is clear from these provisions that there is complete nonapplication of mind to the realities of the ice trade. The impugned order, it appears is a mere mechanical copy of the similar orders issued under the Essential Commodities Act. The provisions of the control orders which are appropriate for commodities such as cement, steel, or even edible oil, are most improper for trade in a commodity like ice. I have no alternative but the strike down clause 8, 9, 10 and 12 of the impugned order as they are arbitrary and unreasonable.

(24) Consultation of interests and trade is a salutary practice in Administrative law. The present- case vividly illustrates the seIf-defeating consequences of non-consultation. The result is that a well meaning Control Order, patently in the interest of the general public, cannot be implemented. Consultation^ of interest infuses law making process with democratic norms particularly in what is called bureaucratic legislation. Apart from this, it is an administrative necessity. Effective and meaningful administration, is impossible without imaginitive administrative process. If the citizens are to receive the advantage of any beneficient measures of the administration, the administrative process should besuch that the benefit reaches the citizen in full measure and with expeditions. The advantages of consultation to administration are neatly summarised by Jain & Jain in their book of Administrative Law (Principles of Administrative Law by Dr. M. P. Jain and S. N. Jain) 3rd Edition page 90 in the following words :

'THISprocess of exchange of ideas is beneficial to both; to the affected interests, insofar as they have an opportunity to impress on the authority their point of view; to the rulemaking authority, insofar as it can gather necessary information about the issues involved and thus be a better position to appreciate a particular situation.. ....Consultation ensures that delegated legislation is passed by the authority concerned with adequate knowledge of the problems involved, and that the rule making agency has before it all relevant materials so that it does not make decisions on insufficient information. Making rules regarding the present day complex problems involving economic, technical and other difficult issues requires expert knowledge and adequate and reliable data. This often needs to be collected by the Administration from outside sources, that is, from persons who are likely to be affected by the rules and who are able to grasp and assess their significance effect and practicability.'

(25) H.W.R. Wade in his book on Administrative Law (4th Edition Page 729) has quoted with approval the minutes of evidence before the Committee on Ministers Powers, which inter-alia went into the question of consultation interests. The evidence is as follows :

'NOminister in his senses, with the fear of Parliament before his eyes, would ever think of making regulations without (where practicable) giving the persons who will be affected thereby (or their representatives) an opportunity of saying what they think about the proposal'.

(26) Dr. Wade further explains the practice that obtains in England says;.

INBritain the practice counts for more than the law. Consultation with interests and organizations likely to be affected by rules and regulations, is one of the firmest and most carefully observed conventions. It is not a matter of legal right, any more than it is with Parliament's own legislation. But it is so well settled a practice that is most unusual to hear complaint.'

(27) Till the time we Indianise the Administrative and Legal System by better innovations, there should be no harm in adopting this extremely usefull British practice.

(28) The problem becomes more acute in cases of sub-delegations. The Central Government had delegated powers under the Essential Commodities Act to Delhi Administration and these powers are further delegated by the Administration to the Deputy Commissioner of Food & Supplies, Assistant Commissioner Food and Supplies and Civil Supplies Officers, Sub delegation such as the impugned order are not required to be laid, like normal statutory rules, before the Parliament. thereforee, no scrutiny of the sub-delegation is possible at any stage. Consultation of affected interests and their representatives are, thereforee, crucial in these cases.

(29) The results; that ice is 'Food' 'and the Delhi Administration (under the relevant provisions of the Act and the impugned order) is competent to regulate price and sale of ice. The provisions of clause 7 of the impugned Order are valid and constitutional. Provisions of clause 8, 9, 10 and 12 violate Article 14 and 19(l)(g) of the Constitution and are, thereforee, struck down. The administration can reframe the provisions of clauses 8, 9, 10 and 12 after due consultation with the representatives of ice trade in Delhi.

(30) The Writ petition succeeds to the extent stated above. Rule made absolute with costs.

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