1. These writ petitions have been filed for quashing of the Orissa Public Distribution System (Control) Order, 2008 issued on 13th of March, 2008 by the Food and Supplies and Consumer Welfare Department and also for a declaration that the clauses there under are not applicable to those petitioners who are operating as wholesaler/sub-wholesaler in the State. Therefore, they were heard together and are disposed of by this common order. Since the facts and the relief claimed in all these writ petitions are similar, it is not necessary to discuss the facts of all the cases. Therefore, we refer to the facts as mentioned in W.P.(C) No.6037 of 2008.
2. The brief facts of the case are that the Food Supplies and Consumer Welfare Department of the Government of Orissa issued a notification on 13.3.2008 in exercise of powers conferred under Section 3 of the Essential Commodities Act, 1955 (10 of 1955) read with paragraph 5 of the Annexure to the Public Distribution System (Control) Order, 2001 published in the Gazette of India, Extraordinary Part II, Section 3, Sub-section (i), No.434, dated 31st of August, 2001 and the notification of Government of India, in the Ministry of Agriculture and Irrigation (Department of Food), GSR 800, dated 9th of June, 1978, published in the Gazette of India, Extraordinary Part II, Section 3, Sub-section (i) dated 17th of June, 1979 and the notifications in the Ministry of Industry and Civil Supplies (Department of Civil Supplied and Co-operation) No.S.O.681 (E) and S.O.682 (E) both dated 30 th of November, 1974 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 30th of November, 1974, issued the order namely, Orissa Public Distribution System (Control) Order, 2008 (in short '2008 Order'). In Clause-5 of the 2008 Order, it has been mentioned that no dealer shall hold a license to deal in a commodity under the Public Distribution System under this Order if he or any of his family members has a commercial interest in a business in or are commercial users of the said commodity or is a member of any Advisory or Vigilance Committee or any other Committee entrusted with supervision of the Public Distribution System. The said paragraph is quoted as under for reference.
"5. No dealer shall hold a license to deal in a commodity under the Public Distribution System under this Order if he or any of his family members have a commercial interest in a business in or are commercial users of the said commodity or is a member of any Advisory or Vigilance Committee or any other Committee entrusted with supervision of the Public Distribution System. Explanation : - For the purpose of this clause.
(i) Commercial interest shall include business partnership and a relationship of tenant/landlord of a commercial building;
(ii) Diesel and Petrol shall be deemed to be commodities closely related to Kerosene ; (iii) Owner of a commercial vehicle including boat shall be deemed to be a commercial user of Diesel/Petrol; and
(iv) Family shall mean a family unit consisting of the individual concerned, his/her spouse, their unmarried sons and daughters and married sons and dependent parents." Provided that the prohibition under this Clause shall not apply in relation to the vehicles meant for and primarily used for transportation of Kerosene from oil depots of the oil marketing companies to the business premises of a wholesaler agent of an oil marketing company.
Provided further that the license shall not be cancelled for violation of provisions of this clause if the dealer or his family member, as the case may be, relinquishes his interest in such other businesses within a period of three months from the date of coming into force of this order."
3. Paragraph-9 of the 2008 Order deals with the power to refuse the license which is quoted as under for perusal;
"9. Power to refuse licence:
(1) The licensing authority may refuse to renew any license if it is of the opinion that the performance of the licensee was not satisfactory, that the licensee has contravened any provisions of the Act or any order issued there under or terms and conditions of license, the licensee has other commercial interests, which may be detrimental to the smooth functioning of Public Distribution System, that the expected size of operations of the dealer is not economically viable and/or that the renewal of license would otherwise be not in the interest of efficient functioning of the Public Distribution System'
(2) The Licensing Authority may refuse to grant or renew the license of a private dealer, if another applicant from categories mentioned in sub-clause (3) or (4) of clause (4) is available to be appointed as a dealer in the locality or area served or proposed to be served by the applicant; and (3) The licensing authority may refuse to grant or renew the license of a sub-wholesaler in Kerosene if an agent wholesaler of oil company is operating in a business premises within 10 Km distance, from the business premises of the sub-wholesaler."
4. It has been submitted by the learned counsel for the petitioners that Kerosene is a Petroleum product. Regulation and development of Oil fields and Mineral Oil Resources, Petrol and Petroleum products other than liquid and substances declared by the Parliament by law as dangerously inflammable is included in the Union List vide Entry 53 and, therefore, the Union of India is only competent to legislate in the said field. The State does not possess legislative competence to make laws on the subject of regulation of Petrol and Petroleum Product which includes kerosene. In view of Article 162 of the Constitution of India, the State of Orissa has no executive power for regulation of kerosene. Regulation of kerosene is wholly within the domain of the Central Government. Petroleum and Petroleum product is an essential commodity under the Essential Commodities Act, 1955. Section 3 of the Essential Commodities Act, 1955 empowers the Central Government to control production, supply and distribution of M/S. essential commodities. Section 5 of the Essential Commodities Act deals with delegation of powers by the Central Government to any officer or authority subordinate to the Central Government or State Government or such officer or authority subordinate to the State Government. Accordingly, the Central Government issued notification 3011.1974 delegated powers to the State government and Union Territories to exercise powers conferred on sub-section (1) of Section 3 of the Act to make orders to provide for matters specified in clauses (d), (e),(f),(g),(h), (i) (ii) and (j) of sub-section (2) thereof in relation to all essential commodities other than food stuff and fertilizers. Clause (iii) of the said notification made it clear that no order should be issued in pursuance of the powers delegated if it is inconsistent, with any order issued by the Central Government under the Act. Similarly by another notification delegated powers to the State government to make orders to provide for the matters specified in clause of sub-section (2) thereof in relation to all essential commodities other than food stuff. Both the notifications specifically provided that no order inconsistent with any order passed by the Central Government shall be issued pursuant to the delegated power. As the various orders issued by the State Governments created a chaotic condition, the Central Government issued PDS Control Order, 2001, Clause 7 of the 2001 Order provided for licensing. It provided that the procedure for issue of licenses or authorization to the fair price shop for the distribution of essential commodities under Public Distribution System and duties responsibilities of the fair price ship owners shall be as in paragraph 5 of the annexure to the said order which, inter alia, provided that the State Governments shall issue an order under section 3 of the Act for regulating the sale and distribution of the essential commodities. In pursuance of powers delegated under paragraph-5 of the annexure, the Orissa Public Distribution System 9 Control) Order, 2002 was enacted. Thereafter the Orissa Public Distribution System (Control) Order, 2008 was issued whereby the Orissa Kerosene Control Order, 1962, Orissa Pulses and Edible Oil Dealers Orders, 1977, the Orissa Rice & Paddy (Control) Order, 1965, the Orissa Sugar Dealer Licensing Order, 1963 and the Orissa Public Distribution System (Control) Order, 2008 have been repealed. It is submitted by the learned counsel for the petitioner that the Order 2008 has tried to expand the definition of 'Dealer' to bring within its scope wholesalers/sub-wholesalers/retailers and Storage Agents. It is contended by the learned counsel for the petitioners that as the regulation of petroleum and petroleum products is covered under the Union List, only Government of India is competent to legislate on the said field and the State Government has no power for regulating the distribution of kerosene. He has further contended that the OPDS (Control) Order, 2002 as well as the Order, 2008 are inconsistent with the PDS (Control) Order, 2001 in so far as the wholesalers and sub-wholesalers have been included in the definition of 'dealers'. It is further contended that Clause 5 of the Order, 2008 is violative of Article 19(1) (g) of the Constitution of India and that the aforesaid Clause 5 as well as Clause 9(2) and (3) are inconsistent with the Central Control Order of 2001. Lastly, it is contended that the increase in the license fee and security deposit is not reasonable.
5. Counter affidavit has been filed on behalf of opposite party no.3 stating that PDS Kerosene is allotted by the Central Government to the State Government for distribution to different districts of the State through the wholesalers/sub-wholesalers who obtain license from the licensing authority under the provisions of the Control Orders issued by the State Government in exercise of the power conferred under the Essential Commodities Act. The PDS kerosene is being made available at subsidized prices by the Government of India. The petitioners obtained license in accordance with the provisions of the OPDS (Control) Order, 2002 which has been renewed from time to time. The impugned Control Order, 2008 has replaced the Control Order, 2002. The petitioners had never challenged the validity of the Control Order, 2002. Rather they obtained the license under the said Control order, Section 5 of the Essential Commodities Act permits the State Government to make users and to issue notifications under section 3 in relation to such matter and subject to such conditions as may be specified by the Central Government. The Orissa PDS Order 2002 and 2008 have been issued in exercise of powers conferred by section 3 of the Essential Commodities Act. It is further stated in the counter affidavit that the agreement between the petitioner and the oil companies does not exempt him from licensing requirement. The licensing of dealer in kerosene has been and is being regulated under the orders issued by the State Government in exercise of powers conferred under the Essential Commodities Act and the Petroleum Act and the Rules made there under do not preclude licensing system under the Essential Commodities Act. The PDS Control Order 2001 as well as the OPDS Control Order, 2008, have been issued in exercise of powers conferred under Section 3 of the Essential Commodities Act and there is no conflict between the above two Control Orders. It is further stated that the definition of 'dealer' in the Control Order of 2008 is similar to that in the Control Order of 2002 and includes wholesalers and sub-wholesalers. Agent wholesalers defined in clause 2 ( c) are also covered in the definition of wholesalers in clause 2(s) and that of dealers in caluse 2(h). Hence all provisions of the Control Order, 2008 applicable to dealer and wholesalers are equally applicable to agent wholesalers. It is further stated that the definition of the 'public distribution system' as given in the PDS Control Order, 2001 does not mean that the PDS transactions at the level of wholesalers can not be regulated by the State Government. The term 'dealer' has not been defined in the PDS (Control) Order, 2001 and, therefore, the definition of 'dealer' in the OPDS (Control) Order, 2008 can not be said to violate the Control Order of 2001. It is submitted on behalf of opposite party no.3 that the objective of Orissa Public Distribution System (Control) Order, 2008 is for effective and efficient functioning of the Public Distribution System by addressing the problem of diversion of PDS commodities in general and kerosene in particular. The contention of the petitioners that Clauses (5) and (9) of the OPDS Control Order, 2008 are inconsistent with the PDS Control Order, 2001 has been stoutly denied by the opposite party no.3. The case of opposite party no.3 is that these provisions have been made for preventing the scope of diversion of PDS commodities and toensure that dealer with dissatisfactory performance and unviable dealerships do not operate. It is further stated that it is a policy decision of the State Government to replace private dealers by institutional dealers so that there is better community participations, transparency and proper distribution of PDS commodities. Likewise sub-wholesalers are not required in places where retailers can directly lift their quota from agent wholesalers. These provisions do not contradict any specific provisions of the PDS (Control) Order, 2001. On the aforesaid ground it is prayed that the writ petition be dismissed.
6. No law/rule/order can be issued contrary to the provisions of the Constitution as in our country, Constitution is supreme. Part-III of the Constitution is related to the fundamental rights. No doubt the State can impose reasonable restrictions which are necessary in the interest of the nation. Article 19 of the Constitution deals with Right to Freedom and Article 19(g) provides that all citizens shall have the right to practice any profession, or to carry on any occupation, trade or business. Clause (6) of Article 19 of the Constitution provides that nothing in sub-clause (g) of said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to the followings:
(i) the professional or technical qualifications necessary for practicing any profession or carrying on any occupation, trade or business, or
(ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.: But the restrictions can not be unreasonable, arbitrary or of an excessive nature.
7. In the instant matter, if we consider the impugned PDS Control Order separately, it would read as under:
"No dealer shall hold a license to deal in a commodity under the 2008 Order : (A) If he or any of his family members have a commercial interest in a business in or are commercial users of the said commodity or a commodity closely related to the said commodity ; or (B) Is a member of any Advisory or Vigilance Committee or any other Committee entrusted with supervision of the Public Distribution System."
In the explanation given below in Clause-5 of the 2008 Order, the following has been given : "(i) Commercial interest shall include business partnership and a relationship of tenant/landlord of a commercial building ;
(ii)Diesel and Petrol shall be deemed to be commodities closely related to Kerosene ; (iii) Owner of a commercial vehicle including boat shall be deemed to be a commercial user of Diesel/Petrol ; and
(iv) Family shall mean a family unit consisting of the individual concerned, his/her spouse, their unmarried sons and daughters and married sons and dependent parents." Here, it is necessary to peruse the definition of "Family" given therein i.e. family shall a mean family unit consisting of the individual concerned, his/her spouse, their unmarried sons and daughters and married sons and dependent parents meaning thereby that the case the spouse of a license holder is doing business closely related to a commodity irrespective of the fact that whether he/she is separated or judicially separated, the dealer can not continue his license or a person of such situation can not get any license. Further, if an unmarried son or daughter or married son are doing independent businesses and are separated (not the member of HUF), the dealer can not continue his license in his business in the essential commodities or fresh license can not be granted to a person having that circumstances.
8. The definition of "Dealer" has been given in the 2008 Order according to which dealer means any person, firm, association of persons, company, Panchayati Raj Institution, Urban Local Body, Co-operative Society, Women Self Help Group, Forest Protection Committee, Self Help Group or any other institution carrying on business on wholesale or retail basis in the purchase, storage, sale and/or distribution of essential commodities meant for distribution under the Public Distribution System. The term "Dealer" includes wholesaler/sub-wholesaler/retailer and storage agents. Clause 3 of the Kerosene (Restriction on use and fixation of ceiling price) Order, 1993 provides restriction on use of kerosene supplied under public distribution system and Clause 4of the said order provides procurement, storage and sale of kerosene under the public distribution system. Clause 3 and 4 thereof are quoted as under for perusal :
"3. Restriction on use of kerosene supplied under public distribution system; (1) No person shall use kerosene supplied under the public distribution system for any purpose other than cooking and illumination ;
Provided that the Central or State Government may by order permit any person to use kerosene for such other purposes as it may specify in that order.
(2) No dealer appointed under the public distribution system or a transporter shall sell, distribute or supply, kerosene under the public distribution system to any person other than the person to whom the supplied are meant for ;
4. Procurement, storage and sale of kerosene under the public distribution system:- (1) No dealer having stocks of kerosene supplied under the public distribution system at the business premises, including the place of storage ;
(a) Shall, unless otherwise directed by the Government or Government Oil Company, refuse to sell, distribute or supply the kerosene to any consumer on any working day, during working hours,
(b) Shall keep his business premises, including the place of storage, closed during working hours on any working day without the prior written permission of the Government or the Government Oil Company,
(c) Shall sell, distribute or supply kerosene at a price higher than fixed by the Government or Government Oil Company,
(2) Every dealer appointed under the public distribution system shall take all reasonable steps to ensure that adequate stocks of kerosene are available at the business premises including the place of storage at all times.
Explanation for the purpose of sub-Clause
(1) the expression "working hours' means the working hours fixed by the concerned Oil Company in accordance with the Shops and establishments act in force in the respective State or Union Territory."
It is the fundamental right of a citizen enshrined in clause (g) of Article 19(1) of the Constitution to practice any profession, or to carry on any occupation, trade or business. However, reasonable restrictions can be imposed on the exercise of such right in the interest of the sovereignty and integrity of India, the security of the State, friendly relations with Foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence. In applying the test of reasonableness, it is held that the court must take into account the following aspects ; (a) nature of the right infringed, (b) underlying purpose of the restriction imposed, 9c) evils sought to be remedied by the law, its extent and urgency, (d) how far the restriction is or is not proportionate to the evil; and (e) prevailing conditions at the time. If law imposing licensing does not set out the consideration, the law would be void, if considerations are set out in the law, but are departed from by the competent authority while administering the law then the order of the competent authority would be void. The considerations which generally prevail in judging the validity of a law or rule are whether the restrictions have been imposed by law; such restrictions are reasonable and is imposed for one of the specified purposes. Here is the question as to imposing restrictions on grant of license if any close relative of the applicant is doing business in petroleum product with a view to prevent corruption. The question is whether a person who intends to get license in kerosene can restrict any of his close relative to leave that business because of the reason that he would be able to get the dealership in kerosene in such circumstances and why a person doing independent business in petroleum product should leave his business because of the reason that if he will not leave that business his close relative, may be a poor one, would be deprived of getting license of dealership of kerosene. It should be taken into notice that dealer in petroleum product is an independent earning member and he can not be controlled by any other friends and relative in this regard. In the case of State of Gujarat v. Shri Ambica Mills Ltd., AIR 1974 SC 1300, the apex Court held that one to whom the application of a statute is constitutional will not be heard to attack the statute on the ground that it must also be taken as applying to other persons or other situations in which its application might be unconstitutional. In the case of Bombay Dying & Mfg. Co. Ltd. V. Bombay Environmental Action Group, (2006) 3 SCC 334, the apex Court has held as under :
"A policy decision, as is well known, should not be lightly interfered with but it is difficult to accept the submissions made on behalf of the learned counsel appearing on behalf of the appellants that the courts can not exercise their power of judicial review at all. By reason of any legislation whether enacted by the legislature or by way of subordinate legislation, the State gives effect to its legislative policy. Such legislation, however, must not be ultra verse the Constitution. A subordinate legislation apart from being intra vires the Constitution, should not also be ultra vires the parent Act under which it has been made. A subordinate legislation, it is trite, must be reasonable and in consonance with the legislative policy as also give effect to the purport and object of the Act in good faith."
In Craies on Statute law, 7th Edn., it is stated at pp.297-
98: "The initial difference between subordinate legislation (of the kind dealt with in this chapter) and statute law lies in the fact that a subordinate law-making body is bound by the terms of its delegated or derived authority, and that courts of law, as a general rule, will not give effect to the rules, etc., thus made, unless satisfied that all the conditions precedent to the validity of the rules have been fulfilled. The validity of statutes can not be canvassed by the courts, the validity of delegated legislation as a general rule can be. The courts therefore (1) will require due proof that the rules have been made and promulgated in accordance with the statutory authority, unless the statute directs them to be judicially noticed ; (2) in the absence of express statutory provision to the contrary, may inquire whether the rule-making power has been exercised in accordance with the provisions of the statute by which it is created, either with respect to the procedure adopted, the form or substance of the regulation, or the sanction, if any, attached to the regulation; and it follows that the court may reject as invalid and ultra vies a regulation which fails to comply with the statutory essentials."
Similar restriction was imposed by the Government of Uttar Pradesh prohibiting grant of retail/petty diesel licence within a radius of 5 km. of a regular diesel retail outlet and the constitutional validity of the said order was challenged in the case of Daulat Ram Gupta v. State of Uttar Pradesh, AIR 1996 Allahabad 30 and the Court held that the direction was liable to be quashed being violative of Article 19(1) (g) of the Constitution and the said order is arbitrary and based on unwarranted assumption. The control order does not prohibit either expressly or by necessary implication the grant of retail dealer licensing to a person within 5 kms. Of the radius of regular diesel out let. Imposing ban against grant of license or carrying on business on the general assumption is not justified. Right to carry on trade or business is subject to constitutional restrictions as provided under Article 19(1)(g). Which restrictions are reasonable and which are unreasonable have been delineated by the Supreme Court in series of decisions.
In the case of Lal Babu Prasad v. State of Bihar and another, AIR 1989 Patna 68, the Government cancelled the coal trading license of the petitioner
on the ground that the petitioner suppressed the fact that his father was carrying on the same business. The Court found the order of cancellation of licence void. Debarring a member of the family to carry on a particular trade because another member of the family carries on the same trade can not be reasonable restrictions. Cancellation of the licence on the said ground was clearly ultra vires Article 19(1)(g).
9. Clause (9) of the Control Order deals with renewal of the license. It says that renewal may be refused if the licensing authority is of the opinion that the performance of the licensee was not satisfactory, that the licensee has contravened any provisions of the Act, or any order issued thereunder or the terms and conditions of license, if the licensee has other commercial interests, which may be detrimental to the smooth functioning of Public Distribution System or if an agent wholesaler of oil company is operating in a business premise within ten kilometres from the business premises of the sub-wholesaler dealing in kerosene. No doubt the State Government has powers to issue control orders in exercise of powers conferred under Section 3 of the Essential Commodities Act but imposing a restrictions on a dealer or person applying for license under Kerosene which is beyond his control and if such a thing deprives him from getting license when he is not at any fault would be an arbitrary action.
10. In the instant cases, as discussed above, if the persons dealing with other commodities or agent of any oil companies are closely related to the petitioners, who are not dependent on the dealer or the person applying for dealership and are doing their business independently, how the dealer can be restricted or refused a licence on the ground that a person who is a relative of the dealer in kerosene or the person applying for dealership but not under his control is doing business in commodities closely related to kerosene.
11. In view of the above facts and circumstances and the discussion made above, this Court is of the opinion that the clause 5 may be modified accordingly and till modification is made, the same shall be kept in abeyance.
The writ petitions are accordingly allowed in part. There would be no order as to costs. Writ petitioner allowed in part.