Dismissed

Federation of Maharashtra Kerosene Dealers Association v. State of Maharahstra and Anr.

Bombay HC1 Oct 2014WP/2718/2009

Case brief

AI extract

What is this about?

The High Court rejected a writ petition challenging the Maharashtra PDS Kerosene Wholesalers, Semi-Wholesalers and Hawkets (Licensing) Order, 2008. The Court held that the creation of a semi-wholesaler tier was legal and in the public interest, remitting disputes to collectors, and noted no new licences would be issued after 2009.

What did the court decide?

Petition rejected with no order as to costs.

2By the said Licensing Order, the category of semi-wholesalers as a part of the public distribution system in relation to the supply of Kerosene was introduced. Clause 3 of the Licensing Order provided that the PDS Kerosene can be acquired in the case of a Wholesaler from an Oil company, in a case of a semi-wholesaler from a wholesaler and in the case of a retailer or a hawker from a semi- wholesaler or a wholesaler. It was also provided

that the PDS Kerosene can be sold by a wholesaler to a semi-wholesaler or if there is no semi-wholesaler to a retailer or a hawker and by the retailer to eligible ration card holders. Amendment made on 19th May 2009 which is the subject matter of challenge makes only one amendment to clause (3) of the Licensing Order,2008. It provides that a retailer or a hawker can acquire PDS Kerosene only from a semi-wholesaler. It further provides that if there is no semi-wholesaler within the licensed territory, a retailer or a hawker, as the case may be, can acquire PDS Kerosene from a wholesaler. It further provides that a wholesaler can sell PDS Kerosene to a retailer or a hawker provided there is no semi- wholesalers in the licensed territory.

3The first challenge to the Licensing Order,2008 as well as the amendment dated 19th November 2009 is on the ground that by creating a tier of a semi- wholesaler in between a wholesaler and a retailer, additional burden of cost is sought to be imposed on the PDS system as a semi-wholesaler will be also entitled to receive commission. The submission is that by adding a tier of the semi-wholesaler, the cost of the PDS Kerosene supply to the end customers will be increased as a separate commission is payable to a semi-wholesaler. The second contention is based on the statements made in the affidavit-in- reply of D.R.Chandrikapure, Under Secretary, Food, Civil Supply and Consumer Protection, Mantralaya, Mumbai. He pointed out that in the affidavit-in- reply, it is admitted that the Licensing Authorities

issued semi- wholesale licences despite there being no provision of semi-wholesale licence in the Licensing Orders till 1995. He pointed out that the affidavit discloses that the State Government vide its order dated 8th December 1995 stayed the issuance of new semi-wholesale licences and the said stay is still in force. He submitted that the Licensing Order of 2008 has been issued with a view to protect the category of semi-wholesalers which was illegally created in the year 1995 without any authority of law. He has invited our attention to the Judgment and Order of the Apex Court dated 5th February 2007 in Civil Appeal No.713 of 2007 arising out of Judgment and Order dated 28th September 2009 in Writ Petition No.3455 of 1994. He, therefore, submitted that the very creation of category of semi- wholesalers is completely illegal and to that extent, the challenge to the Licensing Order of 2008 must succeed. The learned AGP supported the stand of the Government as set out in the Affidavit- in-reply.

4We have carefully considered the submissions. It is stated in the affidavit-in-reply of D.R.Chandrikapure, Under Secretary that till the year 1995, though there was no provision in the Licensing Order, the Licensing Authorities issued semi-wholesale licences. It is noted that with effect from 8th December 1995, the State Government stayed the process of issuance of new semi- wholesale licences. The affidavit discloses that those who were earlier issued semi-wholesale

licences continued to function and in fact, the State Government by order dated 13th October 1979 directed that the margin prescribed by the Government of India shall be apportioned on 50:50 basis between the Wholesalers and semi-wholesalers. It is stated that since the year 1979, wholesalers from Talukas having no semi-wholesalers were drawing commission as prescribed by the Government of India. In the case of Talukas where there were semi- wholesale licences issued, the commission was apportioned on 50:50 basis between the wholesalers and semi-wholesalers. The affidavit records that the wholesalers whose commission was apportioned requested the State Government that the wholesalers should be given commission at the rate prescribed by the Central Government. After considering the grievance, the Government Resolution dated 25th September 2001 was issued directing that the entire commission as prescribed by the Government of India shall be paid to the wholesalers and independent commission of Rs.150/- per Kilo Litre shall be paid to the semi-wholesalers. It will be necessary to make a reference to the statements in the said affidavit and in particular paragraph 8 thereof which read thus:

“8...After the issuance of the Maharashtra Kerosene Dealers Licensing Order 1966 time and again the Government carried out modifications in order to subserve the public purpose. Also a new tier of Semi- Wholesalers came into existence in the

kerosene distribution system in the public interest and are operational for past approximately 25-30 years. I state that these existing semi wholesalers were not regulated by any Licensing Order and hence their regulation was done at the relevant time under Maharashtra Kerosene Dealers Licensing Order 1966. It was therefore necessary that the existing semi- wholesalers who were not regulated earlier; where first time regulated by the Maharashtra PDS Kerosene Wholesalers, Semi- Wholesalers, and Hawkers (Licensing) Order, 2009 on 17th January 2009. I, therefore, respectfully submit that the said semi wholesaler license holders are not impleaded as party respondents in the instant Writ Petition and hence no order in law can be passed behind their back. However, it is stated that no new Semi- Wholesale licences are intended to be issued under this order dated 17.1.2009. As regards contents in respect of M/s.Poona Kerosene Supply Co. is concerned the matter is out of context and has no relevance whatsoeverinthematterunder consideration.”

6At this stage, we must note that the first petitioner-Association represents the wholesalers under the Maharashtra Kerosene Dealers Licensing Order,1966 and the other petitioners are also the wholesalers.

7InWritPetitionNo.2357of1997 (M/s.Agriculture & Commercial Agencies Vs. M/s.Poona Kerosene Supply Co. and others) decided by this Court on 30th July 1997, this Court considered the grievances made by the petitioner therein who was a wholesaler. The challenge was to the Circular dated 18th October 1979 by which PDS quota of Kerosene was apportioned between the wholesalers and the semi- wholesalers. While rejecting the challenge, the Division Bench has observed thus:

“...Undisputedly the Kerosene is essential commodity Distribution is only under the licence system in individual capacity and in the present case the Kerosene under License Policy has been supplied in a devised manner. The arrangement is to be operated and the operation does not depend on the wholesaler. Moreover, the distributor system has devised the license policy for the benefit of the community at large. It being so, the grievance regarding adverse affect on the interest or business enterprises cannot be prevailed or entertained...”

8In effect, by rejecting the said Writ Petition, this Court upheld the policy of the State Government of granting semi-wholesale licences. Writ Petition No.3455 of 1994 was filed in this Court by the semi- wholesalers. The challenge in the said petition was to the action of the State Government of apportioning commission between the wholesalers and semi-wholesalers. The Division Bench of this Court partly allowed the said petition by Judgment and Order dated 28th September 2004. The said decision was challenged by the petitioner in the said Writ Petition No.3455 of 2004 by filing the Civil Appeal No.713 of 2007.

9We must note here that the said appeal was partly allowed by the Apex Court by Judgment and Order dated 5th February 2007. In the said Judgment and Order, the Apex Court made a reference to the observations made by the Division Bench while deciding the aforesaid Writ Petition No.2857 of 1997 to which we have made a reference earlier. The Apex Court observed that keeping in view the fact that the Order seeks to achieve the purpose of proper and effective supply and distribution of kerosene to the consumers, it is necessary that the controversy between the parties should be determined by the Collector of the district and the matter was remitted to the Collector. The order of the Collector was challenged before the State Government. The order of the State Government dated 5th November 2007 records the existence of semi- wholesale licence holders and wholesale licence

holders. Directions were given under the said order to allocate a particular area to semi-wholesale Kerosene licence holders. Therefore, this Court as well as the Apex Court have not disturbed the system which provides for the existence of semi-wholesalers as well as wholesalers. Therefore, we see no merit in the challenge by the learned senior counsel for the petitioner to the creation of the category of semi-wholesale licence holders. The manner and mode of distribution of commodities under the PDS system is a matter of policy decision for the State Government.

10As far as the second contention is concerned, the affidavit of Shri Chandrikapure records that the semi-wholesale licence holders who were granted licences till 8th December 1995 continued to function under the Maharashtra Kerosene Dealers Licensing Order, 1966 and only for the purpose of regulating the existing semi-wholesale licences, on 17th January 2009, a Licensing Order was issued. It is categorically stated that after 17th January 2009, no fresh semi-wholesale licences were intended to be issued. Thus, after 8th December 1995 when stay was granted, semi-wholesale licences were not issued. The affidavit also records that semi- wholesalers were existing in the system for 20 to 25 years. Therefore, we cannot accept the submission that the impugned Licensing Order was issued for protecting the semi-wholesalers who were illegally granted licences.

Federation of Maharashtra Kerosene Dealers Association v. State of Maharahstra and Anr.

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Federation of Maharashtra Kerosene Dealers Association v. State of Maharahstra and Anr.

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