The Essential Commodities Act, 1955 (in short, “Act
of 1955”), was enacted long time ago to “provide, in the interests
of the general public, for the control of the production, supply and distribution
of, and trade and commerce, in certain commodities.” Thus, it is a law
that empowers the government to regulate or prohibit the production, supply,
distribution, trade and commerce of the commodities (food articles
Recently, an amendment was brought in the Act of
1955 on 5th June, 2020, amending its Section 3 whereby sub-section (1A)
has been inserted into the provision. Let us understand the same.
At the outset, it is made clear that the author
intends to do merely an independent interpretative and legal analysis of
Section 3 (1) and 3 (1A) and does not wish to pass any judgment on the same or
has not looked at it from any other angle.
Section 3 (1) of the Essential Commodities
Act, 1955
“3. Powers to control production, supply,
distribution, etc., of essential commodities. - (1) If the Central Government
is of opinion that it is necessary or expedient so to do for maintaining or
increasing supplies of any essential commodity or for securing their equitable
distribution and availability at fair prices, [or for securing any essential
commodity for the defence of India or the efficient conduct of military
operations], it may, by order, provide for regulating or prohibiting the
production, supply and distribution thereof and trade and commerce therein.”
General Meaning and Understanding of Section
3 (1) of the Essential Commodities Act, 1955
S. 3 (1) grants power to the Central Government to
issue necessary orders for regulating or prohibiting the production, supply,
distribution, trade and commerce in relation to the following: -
1. Maintenance of supply of any essential
commodity.
2. For securing equitable distribution and
availability at fair prices of any essential commodity.
3. For securing any essential commodity for
defence of India.
4. For efficient conduct of military operations
Thus, powers of wide amplitude have been granted under
this provision to the Central Government to regulate in relation to the above. For
the sake of clarity, essential commodity means a commodity specified in the
schedule appended to the Essential Commodities Act, 1955. Further, we see that
two of the above-stated reasons are causally related to defence, security, and
military of India. Now, let us come to the newly inserted S. 3 (1A) of this Act.
Newly Inserted Section 3 (1A) of the
Essential Commodities Act, 1955
“3 (1A) Notwithstanding
anything contained in sub-section (1), -
(a) the supply of such foodstuffs, including
cereals, pulses, potato, onions, edible oilseeds and oils, as the Central
Government may, by notification in the Official Gazette, specify, may be
regulated only under extraordinary circumstances which may include war, famine,
extraordinary price rise and natural calamity of grave nature;
(b) any action on imposing stock limit shall be
based on price rise and an order for regulating stock limit of any agricultural
produce may be issued under this Act only if there is -
(i) hundred per cent. increase in the retail
price of horticultural produce; or
(ii) fifty per cent. increase in the retail
price of non-perishable agricultural foodstuffs, over the price prevailing
immediately preceding twelve months, or average retail price of last five
years, whichever is lower:
Provided that such order for regulating stock
limit shall not apply to a processor or value chain participant of any
agricultural produce, if the stock limit of such person does not exceed the
overall ceiling of installed capacity of processing, or the demand for export
in case of an exporter:
Provided further that nothing contained in this
sub-section shall apply to any order, relating to the Public Distribution
System or the Targeted Public Distribution System, made by the Government under
this Act or under any other law for the time being in force.
Explanation. - The expression "value chain
participant", in relation to any agricultural product, means and includes
a set of participants, from production of any agricultural produce in the field
to final consumption, involving processing, packaging, storage, transport and
distribution, where at each stage value is added to the product.”
General Meaning and Understanding of Newly Inserted
Section 3 (1A)
The newly inserted Section 3 (1A) is a non obstante
clause i.e. it starts with “Notwithstanding anything contained.” What is
a non obstante clause? The Hon’ble Supreme Court of India in the case of
State of Bihar v. Bihar Rajya MSESKK Mahasangh, (2005) 9 SCC 129,
held that: -
“45. A non obstante clause is generally
appended to a section with a view to give the enacting part of the section, in
case of conflict, an overriding effect over the provision in the same or other
Act mentioned in the non obstante clause. It is equivalent to saying that
in spite of the provisions of the Act mentioned in the non obstante clause,
the provision following it will have its full operation or the provisions
embraced in the non obstante clause will not be an impediment for the operation
of the enactment or the provision in which the non obstante clause occurs. (See
Principles of Statutory Interpretation, 9th Edn., by Justice G.P. Singh —
Chapter V, Synopsis IV at pp. 318 and 319.)
….
47. Normally the use of a phrase by the
legislature in a statutory provision like “notwithstanding anything to the
contrary contained in this Act” is equivalent to saying that the Act shall
be no impediment to the measure (see Law Lexicon words “notwithstanding
anything in this Act to the contrary”). Use of such expression is another way
of saying that the provision in which the non obstante clause occurs
usually would prevail over other provisions in the Act. Thus, non obstante
clauses are not always to be regarded as repealing clauses nor as clauses which
expressly or completely supersede any other provision of the law, but merely as
clauses which remove all obstructions which might arise out of the provisions
of any other law in the way of the operation of the principal enacting
provision to which the non obstante clause is attached. (See Bipathumma v.
Mariam Bibi [(1966) 1 Mys LJ 162] , Mys LJ at p. 165.)
A bare perusal of the above would entail that non
obstante clauses are provided to have an overriding effect in cases of
conflict with the principal enacting provision to which the non obstante
clause is attached i.e., Section 3 (1) in the present case. Further, it is also
meant to remove all the impediments/obstructions that may arise out of the principal
enacting provision to which the non obstante clause is attached. Thus,
in view of our drafters of this law, there could have been impediments in Section
3 (1) that needed to be removed. What were those impediments? I am not sure
about it, but you may read Section 3 (1) and decide it for yourself.
Now, let us understand the purport of Section 3 (1A).
We have already understood that it is a non obstante clause and what it
means. Section 3 (1A) has two parts, S. 3 (1A) (a) and 3 (1A) (b).
1. S. 3 (1A) (a) – The supply of foodstuffs
may be regulated under “extraordinary circumstances” which may include
war, famine, “extraordinary price rise” and natural calamity of “grave
nature.” Thus, even if a foodstuff is an essential commodity, by virtue of
this provision, its supply could be regulated by the Central Government only
under “extraordinary circumstances.” What are these extraordinary circumstances?
The same has not been defined but what could be included in it has been
mentioned. In a similar manner, what is meant by “extraordinary price rise”
and “calamity of grave nature” has not been explained. Thus, could it be
said that supply of foodstuff cannot be regulated where there is ordinary price
rise and calamities of casual or general nature? It remains to be seen.
2. S. 3 (1A) (b) – This part talks about imposition
of stock limit by the Central Government and provides that the same shall be
based on price rise. The first part of this provision states that “any
action on imposing stock limit shall be based on price rise…”
Thereafter, there is an ‘and’ and it specifically
starts dealing with agricultural produces. Thus, if looked at from a stand-alone
point of view, it could mean that after enactment of this provision, any
imposition of stock limit can only be done based on ‘price rise.’ This
is certainly interesting as by virtue of this provision, the concept of stock limit
would attain a new dimension. What is its true meaning remains to be seen in
the times to come?
Further, for any agricultural produce, the stock
limit could be imposed only if there is: -
(i) 100% increase in the retail price of
horticultural produce; or
(ii) 50% increase in the retail price of non-perishable
agricultural foodstuff
The price is to be calculated by taking 1 year or
5 years average of the retail price, whichever is lower. This seems like a
novel methodology. Thus, if 1-year average retail price shows 100% increase for
horticultural produce and 5 years average retail price increase for the same
produce is 90%, then the lower increase i.e., 90% in 5 years, will be
considered for the purposes of this provision and no order for regulating stock
limit of such horticultural produce could be done.
There are two Provisos appended to S. 3 (1A) as
well.
First Proviso, the Explanation Appended and
the Interpretative Ambiguity
The First Proviso provides for the persons on whom
any order passed under this provision for regulating the stock limit cannot be
imposed. It also talks about “value chain participant.”
Who is a value chain participant? The explanation
appended to this provision provides that in relation to any agricultural
product, it means and includes persons from production of agricultural produce
in the field to final consumption, where at each stage (processing, packaging,
storage, transport and distribution) value is added to the product. Thus, no
stock limit can be imposed on any person who adds value to the agricultural
product at any stage mentioned above or produces the same if the stock limit of
such person does not exceed the overall ceiling of installed capacity of
processing.
There seems to be an interpretative ambiguity that
may exist in this provision. Let us reproduce it again here: -
“Provided that such order for regulating stock
limit shall not apply to a processor or value chain participant of any
agricultural produce, if the stock limit of such person does not exceed the
overall ceiling of installed capacity of processing, or the demand for export
in case of an exporter:”
Please note that there are two commas in this
Proviso. The first comma is after “any agricultural produce” and the
second comma is before “or the demand for export in case of an exporter.” Before
adverting to the possible interpretations, let us understand the significance
of commas and punctuation marks in a statute. In the case
of Kantaru Rajeevaru (Right to Religion, In re-9 J.) (2) v. Indian Young
Lawyers Assn., (2020) 9 SCC 121, a similar situation arose before the
Hon’ble Supreme Court. It stated as under: -
“20. It was held that the words used in Section
27, namely, “manufacture for sale”, “sells” have a comma after each clause but
there is no comma after the clause “stocks or exhibits for sale”. The
absence of any comma after the words “stocks” clearly indicates that the clause
“stocks or exhibits for sale” is an indivisible whole.
21. Construction of Order XLVII Rule 1 of
the Supreme Court Rules should be made by giving due weight to the punctuation
mark “comma” after the words “the Court may review its judgment or order”. The
intention of the rule-making authority is clear that the abovementioned part is
disjunctive from the rest of the rule. …..”
Admonishing excessive reliance on punctuation
marks, the Supreme Court in the case of Aswini Kumar Ghose v. Arabinda
Bose, 1953 SCR 1, observed that: -
“…..Punctuation is after all a minor element
in the construction of a statute, …. When a statute is carefully
punctuated and there is doubt about its meaning, a weight should undoubtedly be
given to the punctuation [ Vide Crawford on Statutory Construction, p. 343]
. I need not deny that punctuation may have its uses in some cases, but it
cannot certainly be regarded as a controlling element and cannot be allowed to
control the plain meaning of a text [ Ibid].
….. If punctuation is without sense or conflicts
with the plain meaning of the words, the court will not allow it to cause a
meaning to be placed upon the words which they otherwise would not have….”
Thus, in light of the above-mentioned
interpretations of punctuation marks and commas, a possible
interpretation of the First Proviso could be that no stock limit could be
imposed on a value chain participant of any agricultural produce or the demand
for export in case of an exporter. This could further mean that no stock
limit could be imposed on the demand for export in case of an exporter in
relation to an agricultural produce. It could also mean that no stock limit
could be imposed on the demand for any export on an exporter. However, that may
not be the case as the same seems improbable or absurd.
Also, there are two categories of persons here,
value chain participant or processor and exporter. Some form of upper stock
limit has clearly been provided in case of the value chain participant or
processor but going by the conscious usage of commas by the legislature
and specifically providing for two separate categories of persons, it could
also mean that the legislature consciously decided to exclude any exporter from
the ambit of stock limit in relation to any agricultural produce. How this Proviso
is implemented will further make the intention of the legislature clearer in
this regard. For now, we have to be content with the interpretative values of
punctuation marks and commas.
Second Proviso
The Second Proviso to S. 3 (1A) is simpler to
comprehend and provides that S. 3 (1A) shall not be applicable to the Public Distribution
System (PDS) or the Targeted Public Distribution System (TPDS) made under any
law for the time being in force.
Concluding Remarks
The drafting of the new amendment law is interesting
to say the least. It seeks to override Section 3 (1) in respect of some items. Whether
it remove impediments from Section 3 (1) seems doubtful at this stage. On the
contrary, Section 3 (1A) has had the effect of excluding certain essential
commodities from the ambit of Section 3 (1). This could also be one of the possible
uses of non obstante clauses.
Section 3 (1A) also seeks to provide a framework
in relation to supply of foodstuffs and imposition of stock limits. How this
provision will be implemented in the times to come remains to be seen and it would
certainly be noteworthy to observe it since many interpretative ambiguities may
surface in this regard in the times to come.
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