Sri Balaji Industries, Rep. by R.K. Shrivastva S/O. Late S.K. Shrivastva and ors. Vs. Union of India (Uoi), Department of Industries and Commerce, Represented by Its Secretary, - Court Judgment

Excerpt:
- bureau of indian standars act, 1986.[c.a. no. 63/ f 1986]. section 14: [h.v.g. ramesh, j] electrical wires, cables appliances and protection devices and accessories (quality control) order, 2003, order 3 quality control order prohibiting manufacture/storage and distribution of goods without adhering to stands specified by the bureau of indian standards held, it is a reasonable restriction in form of regulatory measure to maintain certain standards to serve the consumers. order framed in the form of delegated legislation is not ultra vires the act or article 19(1)(g) of the constitution. of india. -- constitution of india. article 19(1)(g); electrical wires, cables appliances and protection devices and accessories (quality control) order, 2003, order 3 prohibiting manufacture/storage and distribution of goods without adhering to stands specified by the bureau of indian standards is a reasonable restriction in form of regulatory measure to maintain certain standards to serve the consumers. order framed in the form of delegated legislation is not ultra vires the act or article 19(1)(g) of the constitution. of india - the switch gears manufactured by them are said to be of good quality and are second to none in the market; the petitioners as well as the labourers are depending on the earning from the units established by them; so as a regulatory authority there is an obligation on the part of the bureau of indian standards to discharge its functions effectively and efficiently in acceptance and promotion of the indian standards and to prescribe certain standards regulate assurance of quality and specification in manufacturing and producing the products by the public sector and the private sector industries. in catena of decisions it is held that, union as well as state legislatures have the power to exercise legitimate regulatory control over the freedom of trade and commerce which does not amount to a restriction and that the legitimate regulation does not infringe the freedom as provided under article 301 of the constitution, where a restriction imposed by law imposes a direct burden on the freedom of trade under article 301, it may be constitutionally valid if it is required in the public interest.orderh.v.g. ramesh, j.1. in this petition, petitioners have filed a joint petition since the common question of law and facts are involved and sought for to quash the electrical wires, cables appliances and protection devices and accessories (quality control) order 2003, issued vide notification dated 17.2.03 as per annexure 'a' and also to declare that order 3 of the electric wires, cables appliances and protection devices and accessories (quality control) order 2003 as illegal and for such order reliefs.2 according to the petitioners, they registered themselves as a small-scale industry and the authority has granted permission to establish small-scale industry and the department has given the permanent registration number. the government has issued notification acting under section 14 of the bureau of indian standards act, 1986 and by virtue of the said order, it has included electrical wires, cables, appliances protection devices and accessories and prescribed the standards wherein it has made it obligatory for compulsory registration for the manufacture of the products and also to obtain a license under the act and that the process of manufacturing the product should be according to the act and order. according to petitioners, clause (3) of the order at annexure 'a' prohibits manufacture, storage and distribution of products and clause (3) (2) provides for prohibition from using the products and that they must be destroyed within three months from the date of notification. some of the petitioners are said to be engaged in manufacturing the electrical switch gears namely electric motor starters and some of them are dealers of switch gears; they said to have established the industry with a small investment and running the same over decades: the switch gears manufactured by them are said to be of good quality and are second to none in the market; there are said to be no complaints whatsoever in the market as to the quality of switch gears manufactured by them and also that they have gained goodwill in the market; the petitioners as well as the labourers are depending on the earning from the units established by them; they said to have established the infrastructure for manufacture of switch gears by investing their lifetime savings and borrowings. the respondents for the first time have included the product and issued a notification as per annexure 'a' prescribing the standard for manufacturing switch gears; the process of manufacturing of the petitioners' switch gear is completely different from the process prescribed in the order, rather the switch gears manufactured/produced by the petitioners are more worthy and are no instances of danger to human life; by this impugned notification petitioners are prohibited to manufacture, sell and distribute the product and it is mandated for destroying the raw material and finished products acquired and possessed by them. it is their grievance that the prohibition imposed on them violates the fundamental right guaranteed under article 19(1)(g) of the constitution of india, in ordering to destroy the components, raw materials and accessories acquired and possessed by them for valuable consideration, without paying adequate compensation and as such order 3 passed is arbitrary and that annexure 'a' is a sub-ordinate legislation made by the central government exercising the power under section 14 of the bureau of indian standards act of 1986 and the prohibition contained in the impugned order at annexure a is illegal, arbitrary and without authority of law and violative of article 14 of the constitution and the same cannot be sustained.3. heard the learned counsel appearing for the petitioners and the learned counsel appearing for central government.4. it is the submission of the learned counsel for the petitioners that the order issued at annexure 'a' by the central government is in violation of the provisions of article 19(1)(g), 302, 303 and 304 of the constitution of india. it is further submitted that the order at annexure 'a' by way of sub-ordinate legislation is without the president's sanction as contemplated under article 304(b) of the constitution and that the principal act has not imposed any prohibition upon the manufacturers and dealers whereas clause (3) of the impugned order prohibits manufacturing and use of products, which is beyond the competence of the sub-ordinate legislation and it is violative of the fundamental rights. accordingly, sought for to quash the publication in the gazette of india dated 17.2.03 at annexure 'a'.5. it is the submission of the learned counsel appearing for the respondents that in order to maintain the standard and to ensure quality and to stick on to such specifications there is an act called bureau of indian standards act, 1986, which is a regulatory authority to look into the quality of production. as per the said act, any product manufactured and released to the public at large for consumption should maintain certain specifications to avoid misuse, duplication and also to avoid manufacturing of interior quality of goods in the interest of general public.6. a perusal of the impugned order at annexure 'a' depicts that it imposes a condition by a notification dated 17.2.03 in the extra-ordinary gazette of india by the department of industrial development wherein clause (3) of the said order reads thus:3. prohibition regarding manufacture, storage, sale and distribution etc: (no person shall by himself or through any person on his behalf manufacture or store for sale, sell or distribute any electrical wires, cables, appliances, protection devices and accessories, which do not conform to the specified standards and do not bear standard mark of the bureau on obtaining certification marks licence:provided that nothing in this order shall apply in relation to export of electrical wires, cables, appliances, protection devices and accessories required for export, which conform to any specification required by the foreign buyer and such specification shall not in any case be less than the specified standard.(2) the sub-standard or defective electrical wires, cables, appliances, protection devices and accessories or raw materials or components, which do not conform to the specified standard shall be deformed by the manufacturer beyond use and disposed of as scrap within three months.7. the apprehension of the petitioners in this case is that by virtue of this rule/notification issued they have been prevented from dealing with the goods already manufactured and substantial loss would be caused to them and as such, it is violative of their freedom of occupation and profession. as per the provisions of the bureau of indian standards act of 1986 if certain regulations are made by the central government by way of delegated legislation they should withstand the test of reasonableness i.e., such regulation or notification or rule framed shall not be ultravires to the parent act or the constitution. a reading of the above notification at annexure 'a' makes it clear that there shall not be any such manufacture of the goods and electrical items without conforming to the specified standards and also without there being a standard mark of the bureau they shall not deal with the articles in the market. at any stretch of imagination these rules cannot be ultravires to the parent act since they lay the standard and also regulate the manufacturing for distribution to the public consumption. according to the petitioners, the goods so manufactured by them even though they are up to the standard specification of bureau of indian standards, by virtue of this order without there being a standard mark of the bureau they cannot deal them in the market, as such, there will be substantial loss.8. it is needless to say in this regard that the bureau of indian standards act 1986 has been enacted during 1986 itself. it imposes an obligation on the government to prescribe certain standards in manufacturing the goods meant for public consumption, in general terms, to maintain quality and efficiency of service and to meet the cost/service of the product purchased by the consumer. the indian standards institution was established during 1947 itself with an intention to prepare and promote standards of production in various sectors of the national economy. during the post independence substantial progress has been made in the industrial sector. the industrial and agricultural sectors have also undergone a structural change and in this context a new thrust was given to maintain the standard and quality. the bureau is set up to regulate the activities in so far as manufacturing and production is concerned to maintain certain standard and quality in the products manufactured, produced and released to the consumption of public at large. so as a regulatory authority there is an obligation on the part of the bureau of indian standards to discharge its functions effectively and efficiently in acceptance and promotion of the indian standards and to prescribe certain standards regulate assurance of quality and specification in manufacturing and producing the products by the public sector and the private sector industries. in this regard, rules are framed in exercise of the power under section 14 of the bureau of indian standards act, 1986. the goods which are manufactured by the petitioners or some other private sectors must have a quality and standard which will ensure the specification prescribed by the bureau of indian standards. unless such a regulation is provided or conditions are imposed there is every possibility of misuse and abuse thereby producing the inferior quality of products and releasing the same in the market and fleecing the public at large and in that view of the matter if certain regulatory measures are imposed and if it is directed to the petitioners or to any other persons involved in manufacturing process, to manufacture the goods to conform to the specifications as per the indian standard bureau and also to have a standard mark/certification of the bureau of indian standards, the same cannot be held to be arbitrary or illegal or violative of the fundamental rights and as a duty bound on the part of the manufacturers/producers, they have to maintain certain standards to serve the consumers and it is not as if there were no such regulations earlier to the framing of the rules as per annexure 'a'.9. article 302 of the constitution of india provides for, the power of parliament to impose restrictions on trade, commerce and intercourse and it can impose such restrictions as may be required within the territory of india in the public interest. in catena of decisions it is held that, union as well as state legislatures have the power to exercise legitimate regulatory control over the freedom of trade and commerce which does not amount to a restriction and that the legitimate regulation does not infringe the freedom as provided under article 301 of the constitution, where a restriction imposed by law imposes a direct burden on the freedom of trade under article 301, it may be constitutionally valid if it is required in the public interest. the nexus of law with public interest must be reasonable. article 303 of the constitution of india, prohibits giving any preference to one state over another or making or authorising the making of any discrimination between one state and another in the matter of trade and commerce. however, for a special purpose such a restriction would be imposed to avoid scarcity of goods. what is being prohibited is manufacturing/producing of the goods by the manufacturers without adhering to the standards specified by the bureau of indian standards i.e., the goods manufactured or produced are to be of specified quality and standard in the interest of the consumer and the general public and it is not that there is an entire prohibition on manufacturing of goods. under the circumstances, the argument of the learned counsel for the petitioners that the regulations imposed at annexure 'a' are violative of articles 302 and 303 of the constitution of india and that there is a total prohibition on manufacturing of the goods cannot be accepted. such a restriction imposed is more in the form of regulation and a reasonable restriction and not a total prohibition on the process of manufacturing itself. as such, the rules framed in exercise of powers under section 14 of the act in the form of delegated legislation cannot be termed as ultravires of the statute or the constitution.10. the apprehension of the petitioners is that they have already manufactured the electrical products and they are up to the specifications of the bureau of indian standards. however, it is for the petitioners to get the products, which are already manufactured without the specifications of the indian bureau of standards, tested and if it is found that they are in conformity with the specifications of the bureau of indian standards, although no such certification was obtained earlier, the concerned authority shall allow the petitioners to deal them in the market with such certification. it the goods/products already produced/manufactured are not up to the specifications or the standard as per the bureau of indian standard then the petitioners can rectify the same and after certification they can deal them in the market. however, it appears, after filing of the petition these petitioners have obtained an interim order before this court and by virtue of the same they might have disposed of all the products manufactured by them. at least hereinafter, they shall stick on to the specifications and the standards specified and framed as a sub-ordinate legislation by the central government and published in the extra-ordinary gazette of india on 17th february 03 and to follow the same meticulously.11. accordingly, petition is disposed of. it is for the petitioners to get the goods/products already manufactured by them tested and if they meet the specified standard/requirement, then those goods should be certified to be sold in the market and the goods which are not up to the specification/standards, the petitioners to reprocess or reproduce/manufacture them within three months as per the standard prescribed by the bureau of indian standards. (sic) to deal with them in the market.

Judgment:
ORDER

H.V.G. Ramesh, J.

1. In this petition, petitioners have filed a joint petition since the common question of law and facts are involved and sought for to quash the Electrical Wires, Cables appliances and Protection Devices and Accessories (Quality Control) Order 2003, issued vide Notification dated 17.2.03 as per Annexure 'A' and also to declare that Order 3 of the Electric Wires, Cables appliances and Protection Devices and Accessories (Quality Control) Order 2003 as illegal and for such order reliefs.

2 According to the petitioners, they registered themselves as a small-scale industry and the authority has granted permission to establish small-scale industry and the department has given the permanent registration number. The Government has issued notification acting under Section 14 of the Bureau of Indian Standards Act, 1986 and by virtue of the said order, it has included electrical wires, cables, appliances protection devices and accessories and prescribed the standards wherein it has made it obligatory for compulsory registration for the manufacture of the products and also to obtain a license under the Act and that the process of manufacturing the product should be according to the Act and Order. According to petitioners, Clause (3) of the order at Annexure 'A' prohibits manufacture, storage and distribution of products and Clause (3) (2) provides for prohibition from using the products and that they must be destroyed within three months from the date of notification. Some of the petitioners are said to be engaged in manufacturing the electrical switch gears namely electric motor starters and some of them are dealers of switch gears; they said to have established the industry with a small investment and running the same over decades: the switch gears manufactured by them are said to be of good quality and are second to none in the market; there are said to be no complaints whatsoever in the market as to the quality of switch gears manufactured by them and also that they have gained goodwill in the market; the petitioners as well as the labourers are depending on the earning from the units established by them; they said to have established the infrastructure for manufacture of switch gears by investing their lifetime savings and borrowings. The respondents for the first time have included the product and issued a notification as per Annexure 'A' prescribing the standard for manufacturing switch gears; the process of manufacturing of the petitioners' switch gear is completely different from the process prescribed in the order, rather the switch gears manufactured/produced by the petitioners are more worthy and are no instances of danger to human life; by this impugned notification petitioners are prohibited to manufacture, sell and distribute the product and it is mandated for destroying the raw material and finished products acquired and possessed by them. It is their grievance that the prohibition imposed on them violates the fundamental right guaranteed under Article 19(1)(g) of the Constitution of India, in ordering to destroy the components, raw materials and accessories acquired and possessed by them for valuable consideration, without paying adequate compensation and as such Order 3 passed is arbitrary and that Annexure 'A' is a sub-ordinate legislation made by the Central Government exercising the power under Section 14 of the Bureau of Indian Standards Act of 1986 and the prohibition contained in the impugned order at Annexure A is illegal, arbitrary and without authority of law and violative of Article 14 of the Constitution and the same cannot be sustained.

3. Heard the learned Counsel appearing for the petitioners and the learned Counsel appearing for Central Government.

4. It is the submission of the learned Counsel for the petitioners that the order issued at Annexure 'A' by the Central government is in violation of the provisions of Article 19(1)(g), 302, 303 and 304 of the Constitution of India. It is further submitted that the order at Annexure 'A' by way of sub-ordinate legislation is without the President's sanction as contemplated under Article 304(b) of the Constitution and that the principal Act has not imposed any prohibition upon the manufacturers and dealers whereas Clause (3) of the impugned order prohibits manufacturing and use of products, which is beyond the competence of the sub-ordinate legislation and it is violative of the fundamental rights. Accordingly, sought for to quash the publication in the Gazette of India dated 17.2.03 at Annexure 'A'.

5. It is the submission of the learned Counsel appearing for the respondents that in order to maintain the standard and to ensure quality and to stick on to such specifications there is an Act called Bureau of Indian Standards Act, 1986, which is a regulatory authority to look into the quality of production. As per the said Act, any product manufactured and released to the public at large for consumption should maintain certain specifications to avoid misuse, duplication and also to avoid manufacturing of interior quality of goods in the interest of general public.

6. A perusal of the impugned order at Annexure 'A' depicts that it imposes a condition by a notification dated 17.2.03 in the extra-ordinary Gazette of India by the Department of Industrial Development wherein Clause (3) of the said order reads thus:

3. Prohibition regarding manufacture, storage, sale and distribution etc: (No person shall by himself or through any person on his behalf manufacture or store for sale, sell or distribute any electrical wires, cables, appliances, protection devices and accessories, which do not conform to the Specified Standards and do not bear Standard Mark of the Bureau on obtaining certification marks licence:

Provided that nothing in this Order shall apply in relation to export of electrical wires, cables, appliances, protection devices and accessories required for export, which conform to any specification required by the foreign buyer and such specification shall not in any case be less than the Specified Standard.(2) The sub-standard or defective electrical wires, cables, appliances, protection devices and accessories or raw materials or components, which do not conform to the Specified Standard shall be deformed by the manufacturer beyond use and disposed of as scrap within three months.

7. The apprehension of the petitioners in this case is that by virtue of this rule/notification issued they have been prevented from dealing with the goods already manufactured and substantial loss would be caused to them and as such, it is violative of their freedom of occupation and profession. As per the provisions of the Bureau of Indian Standards Act of 1986 if certain regulations are made by the Central Government by way of delegated legislation they should withstand the test of reasonableness i.e., such regulation or notification or rule framed shall not be ultravires to the parent act or the Constitution. A reading of the above notification at Annexure 'A' makes it clear that there shall not be any such manufacture of the goods and electrical items without conforming to the specified standards and also without there being a standard mark of the bureau they shall not deal with the articles in the market. At any stretch of imagination these rules cannot be ultravires to the parent act since they lay the standard and also regulate the manufacturing for distribution to the public consumption. According to the petitioners, the goods so manufactured by them even though they are up to the standard specification of Bureau of Indian Standards, by virtue of this order without there being a standard mark of the bureau they cannot deal them in the market, as such, there will be substantial loss.

8. It is needless to say in this regard that the Bureau of Indian Standards Act 1986 has been enacted during 1986 itself. It imposes an obligation on the Government to prescribe certain standards in manufacturing the goods meant for public consumption, in general terms, to maintain quality and efficiency of service and to meet the cost/service of the product purchased by the consumer. The Indian Standards Institution was established during 1947 itself with an intention to prepare and promote standards of production in various sectors of the national economy. During the post independence substantial progress has been made in the industrial sector. The industrial and agricultural sectors have also undergone a structural change and in this context a new thrust was given to maintain the standard and quality. The Bureau is set up to regulate the activities in so far as manufacturing and production is concerned to maintain certain standard and quality in the products manufactured, produced and released to the consumption of public at large. So as a regulatory authority there is an obligation on the part of the Bureau of Indian standards to discharge its functions effectively and efficiently in acceptance and promotion of the Indian Standards and to prescribe certain standards regulate assurance of quality and specification in manufacturing and producing the products by the public sector and the private sector industries. In this regard, rules are framed in exercise of the power under Section 14 of the Bureau of Indian Standards Act, 1986. The goods which are manufactured by the petitioners or some other private sectors must have a quality and standard which will ensure the specification prescribed by the Bureau of Indian Standards. Unless such a regulation is provided or conditions are imposed there is every possibility of misuse and abuse thereby producing the inferior quality of products and releasing the same in the market and fleecing the public at large and in that view of the matter if certain regulatory measures are imposed and if it is directed to the petitioners or to any other persons involved in manufacturing process, to manufacture the goods to conform to the specifications as per the Indian Standard Bureau and also to have a standard mark/certification of the Bureau of Indian Standards, the same cannot be held to be arbitrary or illegal or violative of the fundamental rights and as a duty bound on the part of the manufacturers/producers, they have to maintain certain standards to serve the consumers and it is not as if there were no such regulations earlier to the framing of the rules as per Annexure 'A'.

9. Article 302 of the Constitution of India provides for, the power of Parliament to impose restrictions on trade, commerce and intercourse and it can impose such restrictions as may be required within the territory of India in the public interest. In catena of decisions it is held that, Union as well as State legislatures have the power to exercise legitimate regulatory control over the freedom of trade and commerce which does not amount to a restriction and that the legitimate regulation does not infringe the freedom as provided under Article 301 of the Constitution, where a restriction imposed by law imposes a direct burden on the freedom of trade under Article 301, it may be constitutionally valid if it is required in the public interest. The nexus of law with public interest must be reasonable. Article 303 of the Constitution of India, prohibits giving any preference to one state over another or making or authorising the making of any discrimination between one state and another in the matter of trade and commerce. However, for a special purpose such a restriction would be imposed to avoid scarcity of goods. What is being prohibited is manufacturing/producing of the goods by the manufacturers without adhering to the standards specified by the Bureau of Indian Standards i.e., the goods manufactured or produced are to be of specified quality and standard in the interest of the consumer and the general public and it is not that there is an entire prohibition on manufacturing of goods. Under the circumstances, the argument of the learned Counsel for the petitioners that the regulations imposed at Annexure 'A' are violative of Articles 302 and 303 of the Constitution of India and that there is a total prohibition on manufacturing of the goods cannot be accepted. Such a restriction imposed is more in the form of regulation and a reasonable restriction and not a total prohibition on the process of manufacturing itself. As such, the rules framed in exercise of powers under Section 14 of the Act in the form of delegated legislation cannot be termed as ultravires of the statute or the Constitution.

10. The apprehension of the petitioners is that they have already manufactured the electrical products and they are up to the specifications of the Bureau of Indian standards. However, it is for the petitioners to get the products, which are already manufactured without the specifications of the Indian Bureau of Standards, tested and if it is found that they are in conformity with the specifications of the Bureau of Indian Standards, although no such certification was obtained earlier, the concerned authority shall allow the petitioners to deal them in the market with such certification. It the goods/products already produced/manufactured are not up to the specifications or the standard as per the Bureau of Indian standard then the petitioners can rectify the same and after certification they can deal them in the market. However, it appears, after filing of the petition these petitioners have obtained an interim order before this Court and by virtue of the same they might have disposed of all the products manufactured by them. At least hereinafter, they shall stick on to the specifications and the standards specified and framed as a sub-ordinate legislation by the Central Government and published in the extra-ordinary gazette of India on 17th February 03 and to follow the same meticulously.

11. Accordingly, petition is disposed of. It is for the petitioners to get the goods/products already manufactured by them tested and if they meet the specified standard/requirement, then those goods should be certified to be sold in the market and the goods which are not up to the specification/standards, the petitioners to reprocess or reproduce/manufacture them within three months as per the standard prescribed by the Bureau of Indian Standards. (sic) to deal with them in the market.