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Section 3 – The Essential Commodities Act, 1955

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, 2[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.

 

(2) Without prejudice to the generality of the powers conferred by sub-section (1), an order made thereunder may provide—

 

(a) for regulating by licences, permits or otherwise the production or manufacture of any essential commodity;

 

(b) for bringing under cultivation any waste or arable land, whether appurtenant to a building or not, for the growing thereon of food-crops generally or of specified food-crops, and for otherwise maintaining or increasing the cultivation of food-crops generally, or of specified food-crops;

 

(c) for controlling the price at which essential commodity may be bought or sold;

 

(d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of, any essential commodity;

 

(e) for prohibiting the withholding from sale of any essential commodity ordinarily kept for sale;

 

3[(f) for requiring any person holding in stock, or engaged in the production, or in the business of buying or selling, of any essential commodity,—

 

(a) to sell the whole or a specified part of the quantity held in stock or produced or received by him, or

 

(b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him,to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order.

 

Explanation 1 .—An order made under this clause in relation to food-grains, edible oilseeds or edible oils, may, having regard to the estimated production, in the concerned area, of such foodgrains, edible oilseeds and edible oils, fix the quantity to be sold by the producers in such area and may also fix, or provide for the fixation of, such quantity on a graded basis, having regard to the aggregate of the area held by, or under the cultivation of, the producers.

 

Explanation 2. —For the purposes of this clause, “production” with its grammatical variations and cognate expressions includes manufacture of edible oils and sugar;]

 

(g) for regulating or prohibiting any class of commercial or financial transactions relating to foodstuffs 4[***] which, in the opinion of the authority making the order, are, or, if unregulated, are likely to be, detrimental to the public interest;

 

(h) for collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters;

 

(i) for requiring persons engaged in the production, supply or distribution of or trade and commerce in, any essential commodity to maintain and produce for inspection such books, accounts and records relating to their business and to furnish such information relating thereto, as may be specified in the order;

 

5[(ii) for the grant or issue of licences, permits or other documents, the charging of fees therefor, the deposit of such sum, if any, as may be specified in the order as security for the due performance of the conditions of any such licence, permit or other document, the forfeiture of the sum so deposited or any part thereof for contravention of any such conditions, and the adjudication of such forfeiture by such authority as may be specified in the order;]

 

6[(j) for any incidental and supplementary matters, including, in particular, the entry, search or examination of premises, aircraft, vessels, vehicles or other conveyances and animals, and the seizure by a person authorised to make such entry, search or examination,—

 

(i) of any articles in respect of which such person has reason to believe that a contravention of the order has been, is being, or is about to be, committed and any packages, coverings or receptacles in which such articles are found;

 

(ii) of any aircraft, vessel, vehicle or other conveyance or animal used in carrying such articles, if such person has reason to believe that such aircraft, vessel, vehicle or other conveyance or animal is liable to be forfeited under the provisions of this Act;

 

7[(iii) of any books of accounts and documents which in the opinion of such person, may be useful for, or relevant to, any proceeding under this Act and the person from whose custody such books of accounts or documents are seized shall be entitled to make copies thereof or to take extracts therefrom in the presence of an officer having the custody of such books of accounts or documents.]]

 

(3) Where any person sells any essential commodity in compliance with an order made with reference to clause (f) of sub-section (2), there shall be paid to him the price therefor as hereinafter provided—

 

(a) where the price can, consistently with the controlled price, if any, fixed under this section, be agreed upon, the agreed price;

 

(b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;

 

(c) where neither clause (a) nor clause (b) applies, the price calculated at the market rate prevailing in the locality at the date of sale.

 

8[(3A) (i) If the Central Government is of opinion that it is necessary so to do for controlling the rise in prices, or preventing the hoarding, of any food-stuff in any locality, it may, by notification in the Official Gazette, direct that notwithstanding anything contained in sub-section (3), the price at which the food-stuff shall be sold in the locality in compliance with an order made with reference to clause (f) of sub-section (2) shall be regulated in accordance with the provisions of this sub-section.

 

(ii) Any notification issued under this sub-section shall remain in force for such period not exceeding three months as may be specified in the notification.

 

(iii) Where, after the issue of a notification under this sub-section, any person sells foodstuff of the kind specified therein and in the locality so specified, in compliance with an order made with reference to clause (f) of sub-section (2), there shall be paid to the seller as the price therefor—

 

(a) where the price can, consistently with the controlled price of the foodstuff, if any, fixed under this section, be agreed upon, the agreed price;

 

(b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;

 

(c) where neither clause (a) nor clause (b) applies, the price calculated with reference to average market rate prevailing in the locality during the period of three months immediately preceding the date of the notification.

 

(iv) For the purposes of sub-clause (c) of clause (iii), the average market rate prevailing in the locality shall be determined by an officer authorised by the Central Government in this behalf, with reference to the prevailing market rates for which published figures are available in respect of that locality or of a neighbouring locality; and the average market rate so determined shall be final and shall not be called in question in any court.]

 

9[(3B) Where any person is required, by an order made with reference to clause (f) of sub-section (2), to sell to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government, any grade or variety of foodgrains, edible oilseeds or edible oils in relation to which no notification has been issued under sub-section (3A), or such notification having been issued, has ceased to be in force, there shall be paid to the person concerned, notwithstanding anything to the contrary contained in sub-section (3), an amount equal to the procurement price of such foodgrains, edible oilseeds or edible oils, as the case may be, specified by the State Government, with the previous approval of the Central Government having regard to—

 

(a) the controlled price, if any, fixed under this section or by or under any other law for the time being in force for such grade or variety of foodgrains, edible oilseeds or edible oils;

 

(b) the general crop prospects;

 

(c) the need for making such grade or variety of foodgrains, edible oilseeds or edible oils available at reasonable prices to the consumers, particularly the vulnerable sections of the consumers; and

 

(d) the recommendations, if any, of the Agricultural Prices Commission with regard to the price of the concerned grade or variety of foodgrains, edible oilseeds or edible oils.]

 

10[(3C) Where any producer is required by an order made with reference to clause (f) of sub-section (2) to sell any kind of sugar (whether to the Central Government or a State Government or to an officer or agent of such Government or to any other person or class of persons) and either no notification in respect of such sugar has been issued under sub-section (3A) or any such notification, having been issued, has ceased to remain in force by efflux of time, then, notwithstanding anything contained in sub-section (3), there shall be paid to that producer an amount therefor which shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to—

 

(a) the minimum price, if any, fixed for sugarcane by the Central Government under this section;

 

(b) the manufacturing cost of sugar;

 

(c) the duty or tax, if any, paid or payable thereon; and

 

(d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar,

 

and different prices may be determined from time to time for different areas or for different factories or for different kinds of sugar.

 

Explanation. —For the purposes of this sub-section, “producer” means a person carrying on the business of manufacturing sugar.]

 

11[(3D) The Central Government may direct that no producer, importer or exporter shall sell or otherwise dispose of or deliver any kind of sugar or remove any kind of sugar from the bonded godowns of the factory in which it is produced, whether such godowns are situated within the premises of the factory or outside or from the warehouses of the importers or exporters, as the case may be, except under and in accordance with the direction issued by the Government:

 

provided that this sub-section shall not affect the pledging of such sugar by any producer or importer in favour of any scheduled bank as defined in clause (e) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934) or any corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), so, however, that no such bank shall sell the sugar pledged to it except under and in accordance with a direction issued by the Central Government.

 

(3E) The Central Government may, from time to time, by general or special order, direct any producer or importer or exporter or recognised dealer or any class of producers or recognised dealers, to take action regarding production, maintenance of stocks, storage, sale, grading, packing, marking, weighment, disposal, delivery and distribution of any kind of sugar in the manner specified in the direction.

 

Explanation. —For the purposes of sub-section (3D) and this sub-section,—

 

(a) “producer” means a person carrying on the business of manufacturing sugar;

 

(b) “recognised dealer” means a person carrying on the business of purchasing, selling or distributing sugar;

 

(c) “sugar” includes plantation white sugar, raw sugar and refined sugar, whether indigenously produced or imported.]

 

(4) If the Central Government is of opinion that it is necessary so to do for maintaining or increasing the production and supply of an essential commodity, it may, by order, authorise any person (hereinafter referred to as an authorized controller) to exercise, with respect to the whole or any part of any such undertaking engaged in the production and supply of the commodity as may be specified in the order such functions of control as may be provided therein and so long as such order is in force with respect to any undertaking or part thereof,—

 

(a) the authorized controller shall exercise his functions in accordance with any instructions given to him by the Central Government, so, however, that he shall not have any power to give any direction inconsistent with the provisions of any enactment or any instrument determining the functions of the persons in-charge of the management of the undertaking, except in so far as may be specifically provided by the order; and

 

(b) the undertaking or part shall be carried on in accordance with any directions given by the authorised controller under the provisions of the order, and any person having any functions of management in relation to the undertaking or part shall comply with any such directions.

 

12[***]

 

(5) An order made under this section shall,—

 

(a) in the case of an order of a general nature or affecting a class of persons, be notified in the Official Gazette; and

 

(b) in the case of an order directed to a specified individual be served on such individual—

 

(i) by delivering or tendering it to that individual, or

 

(ii) if it cannot be so delivered or tendered, by affixing it on the outer door or some other conspicuous part of the premises in which that individual lives, and a written report thereof shall be prepared and witnessed by two persons living in the neighbourhood.

 

(6) Every order made under this section by the Central Government or by any officer or authority of the Central Government shall be laid before both Houses of Parliament, as soon as may be, after it is made.

 

STATE AMENDMENTS

 

Bihar. —In section 3,—

 

(i) in sub-section (2), for clause (f), substitute the following clause which shall be deemed always to have been substituted, namely:—

 

“(f) for requiring any person holding in stock, or engaged in the manufacture or production of, or in the business of buying or selling any essential commodity to sell the whole or a specified part of the quantity held in stock or produced or caused to be produced or likely to be manufactured or produced or caused to be produced by him or received or likely to be received by him in the course of the said business, to the Central Government or a State Government or to such other person or class of persons and in such circumstances as may be specified in the order.

 

Explanation .—An order relating to foodgrains made with reference to this clause,—

 

(i) may specify the prices, fixed by the Central/State Government in this behalf, after taking into account the recommendations, if any of the Agricultural Prices Commission and with the prior concurrence of the Central Government as the amount which shall be paid for the foodgrain required to be sold under the order,

 

(ii) may fix or provide for the fixation of the quantity to be sold by a producer with reference to the area under cultivation and the availability of irrigation for production of the particular foodgrain which the order relates, and also fix or provide for the fixation of such quantities on a graded basis having regard to the aggregate area held by or under the cultivation of different producers.”

 

(ii) in sub-section (3), for clause (c), substitute the following clauses which shall be deemed always to have been substituted, namely:—

 

“(c) in the case of foodgrains, where neither clause (a) nor clause (b) applies, the price, if any specified in the said order;

 

(d) where neither clause (a), nor clause (b), nor clause (c) applies, the price calculated at the market rate prevailing in the locality at the date of sale.”

 

(iii) in sub-section (3B), after clause (a), insert the following clause which shall be deemed always to have been inserted, namely:—

 

“(aa) in the case of foodgrains, where no controlled price is fixed by an order made with reference to clause (c) of sub-section (2), the amount specified in the said order made with reference to clause (f) of sub-section (2) for such grade or variety of foodgrains; or”

 

[ Vide Bihar Act 9 of 1978, sec. 3 (w.e.f. 6-9-1978).]

 

Maharashtra. —In section 3,—

 

(a) in sub-section (2), for clause (f), substitute the following clause which shall be deemed always to have been substituted, namely:—

 

“(f) for requiring any person holding in stock, or likely to hold in stock, or engaged in the manufacture or production or processing of, or in the business of buying or selling, any essential commodity, to sell, the whole or a specified part of the quantity of the essential commodity held in stock or likely to be held in stock by him or manufactured or produced or processed or likely to be manufactured or produced or processed by him or received or likely to be received by him in his business of buying or selling to the Central Government or the State Government or to an officer or agent of any Government or to such other person or class of persons and in such circumstances as may be specified in the order.

 

Explanation. —An order made under this clause in respect of foodgrains may fix or provide for fixation of the quantity to be sold by a producer with reference to the nature and extent of his holding or the land revenue payable by him with certain weightages which may be prescribed for certain crops or lands enjoying irrigation or other facilities and also fix or provide for fixation of the quantity to be sold on a graded basis having regard to the size of the holdings of different producers.”

 

(b) In sub-section (3), for clause (c), substitute the following clause which shall be deemed always to have been substituted, namely:—

 

“(c) where neither clause (a) nor clause (b) applies, in the case of foodgrains, the amount, if any, specified in or calculated in accordance with the order made under clause (f) of sub-section (2) read with sub-section (3B), and in the case of any other essential commodity, the price calculated at the market rate prevailing in the locality at the date of sale.”

 

(c) for sub-section (3B), substitute the following sub-section which shall be deemed always to have been substituted, namely:—

 

“(3B) where, by an order made with reference to clause (f) of sub-section (2), any person is required to sell any grade or variety or foodgrains, edible oilseeds or edible oils to the Central Government or a State Government or an officer or agent of such Government or a corporation owned or controlled by such Government or to a person or class of persons specified in the order, and either no notification in respect of such foodgrains, edible oilseeds or edible oils has been issued under sub-section (3A) or any such notification having been issued, has ceased to remain in force by efflux of time then, notwithstanding anything contained in sub-section (3), there shall be paid to the person concerned an amount determined by the Central Government or the State Government, as the case may be,—

 

(a) having regard to the Controlled price, if any, fixed under this section or by or under any law for the time being in force for such grade or variety of foodgrains, edible oilseeds or edible oils, or

 

(b) having regard to the prices recommended by the Agricultural Prices Commission for the concerned essential commodity, where no controlled price in relation to such commodity, has been fixed by or under any law for the time being in force.”

 

[ Vide Maharashtra Act 1 of 1976, sec. 3(c) (w.r.e.f. 12-11-1975).]

 

Orissa. —In section 3,—

 

(a) in sub-section (2), for clause (f), substitute the following clause which shall be deemed always to have been substituted, namely:—

 

“(f) for requiring any person holding in stock or engaged in the manufacture or production of, or in the business of buying or selling, any essential commodity to sell the whole or a specified part of the quantity held in stock or manufactured or produced or caused to be produced or likely to be manufactured or produced or caused to be produced by him or received or likely to be received by him in the course of the said business, to the Central Government or a State Government or to an officer or agent of such Government or to such other person or class of persons and in such circumstances as may be specified in the order.

 

Explanation .—An order relating to foodgrains made with reference to this clause,—

 

(i) may specify the prices, fixed by the State Government in this behalf, after taking into account the recommendations, if any, of the Agricultural Prices Commission and with the prior concurrence of the Central Government, as the amount which shall be paid for the foodgrain required to be sold under the order,

 

(ii) may fix or provide for the fixation of the quantity to be sold by a producer with reference to the area under cultivation and the availability of irrigation for production of the particular foodgrain to which the order relates, and also fix or provide for the fixation of such quantities on a graded basis having regard to the aggregate area held by or under the cultivation of different producers.”

 

(b) in sub-section (3), for clause (c), substitute the following clauses which shall be deemed always to have been substituted, namely:—

 

“(c) in the case of foodgrains, where neither clause (a) nor clause (b) applies, the price, if any, specified in the said order;

 

(d) where neither clause (a) nor clause (b), nor clause (c) applies, the price calculated at the market rate prevailing in the locality at the date of sale.”

 

(c) in sub-section (3B), after clause (i), insert the following clause which shall be deemed always to have been inserted, namely:—

 

“(ia) in the case of foodgrains, where no controlled price is fixed by an order made with reference to clause (c) of sub-section (2), the amount specified in the said Order made with reference to clause (f) of sub-section (2) for such grade or variety of foodgrains; or”

[ Vide Orissa Act 8 of 1976, sec. 2 (w.e.f. 29-3-1976).]

 

Uttar Pradesh. —In section 3,—

 

(i) in sub-section (2), in clause (f), for Explanation 1 , substitute the following Explanation , namely:—

 

Explanation 1 .—An order made under this clause in relation to rice, having regard to the milling capacity of a rice mill, fix the quantity to be sold by the licensed miller and may also fix or provide for the fixation of such quantity on a graded basis.”

 

[ Vide Uttar Pradesh Act 16 of 1978, sec. 3 (2).]

 

(ii) in sub-section (3), for clause (c), substitute the following clauses which shall be deemed always to have been substituted, namely:—

 

“(c) in the case of foodgrains, where neither clause (a) nor clause (b) applies, the amount, if any, specified in the said order made with reference to clause (f) of sub-section (2);

 

(d) where neither clause (a), nor clause (b), nor clause (c) applies, the price calculated, at the market rate prevailing in the locality at the date of sale.”

 

[ Vide Uttar Pradesh Act 18 of 1975, sec. 3 (b).]

 

(iii) in clause (f) as substituted by the Central Amendment (Act 92 of 1976), after Explanation 1 , insert the following Explanation , namely:—

 

Explanation 1A .—An order made under this clause in relation to rice may having regard to the milling capacity of a rice mill, fix the quantity to be sold by the licenced miller and may also fix or provide for the fixation of such quantity on a graded basis.”

 

[ Vide Uttar Pradesh Act 16 of 1978 (w.e.f. 27-4-1978).]

 

COMMENTS

 

Award of Gas Agency in the defence category

 

The purpose of obtaining the eligibility certificate from the Director-General of Resettlement in defence services is obviously with a view to identify suitable candidates in the defence category for being considered for selection and appointment for award of gas agency. The candidate who has been certified to be covered in the defence category and fulfilling the required income limit cannot lose his eligibility merely because certificate was not obtained pursuant to a particular advertisement and for a particular location; Sunil Dutt v. Chief Regional Manager, HPC Ltd ., AIR 2004 SC 157.

 

Ban on manufacture of skimmed milk powder is illogical

 

The ban imposed on manufacture of skimmed milk powder from skimmed milk during the season when milk is available in abundance and when there is no ban on manufacture of ghee, khoya, paneer, was held wholly illogical, irrational and arbitrary on the point that it is not logical on the face of it and further more skimmed milk powder can be reconverted to milk unlike the other by-products such as paneer, khoya, etc.; Daily Foods v. Union of India , AIR 1993 Del 278.

 

Kerosene dealership

 

In the case of wholesale kerosene dealership the parties to the agreement are the dealer and the petrol company and the State Government and any of its officials are complete strangers to that agreement. Further as in case of a dealership under the public distribution system a wholesale dealer of kerosene oil must obtain a wholesale kerosene dealer’s licence under the unification order and on the basis of that licence alone he can carry on the wholesale business in kerosene. The grant and revocation of licence is regulated by the provisions of the unification order and a licence issued under the unification order can by no means be cancelled by directions contained in executive instructions; Veena Devi v. State of Bihar , AIR 2004 Pat 113.

 

Public Distribution System

 

It was found that most of the existing sub-wholesalers reside at far off places, i.e., 30 to 80 kms. away from the residential places and it has become difficult on their part to go to their depots at regular intervals. The Collector after taking into consideration all the various factors, recommended the appointment of opposite parties as sub-wholesalers. The State Government on due consideration accordingly appointed them as sub-wholesalers. Further, the petitioners have no inherent right to get a particular quota. The aim and purpose of Public Distribution System is that a common man should get the essential commodities easily and any inconvenience caused to him is against the system; Manas Ranjan Das v. State of Orissa , AIR 2004 Ori 62.

 

———-

1. Extended to Goa, Daman and Diu with modifications by Regulation 12 of 1962, sec. 3 and Sch., to Dadra and Nagar Haweli by Regulation 6 of 1963, sec. 2 and Sch. I and to Lakshadweep and Amindivi Islands by Regulation 8 of 1965, sec. 3 and Sch., to the State of Sikkim (w.e.f. 7-1-1976), vide S.O. 28(E), dated 7th January, 1976.

 

This Act has been amended in Maharashtra by Maharashtra Act 71 of 1976, in Orissa by Orissa Act 8 of 1976, in Uttar Pradesh by Uttar Pradesh Acts 9 of 1974, 18 of 1975, 39 of 1975 and 16 of 1978.

 

2. Ins. by Act 36 of 1967, sec. 3(a) (w.e.f. 30-12-1967).

 

3. Subs. by Act 92 of 1976, sec. 3(a)(i), for clause (f) (w.e.f. 2-9-1976). Earlier clause (f) was substituted by Act 28 of 1957, sec. 2 (w.e.f. 17-9-1957).

 

4. The words “or cotton textiles” omitted by Act 54 of 2006, sec. 4 (w.e.f. 12-2-2007).

 

5. Ins. by Act 17 of 1961, sec. 2(a) (w.e.f. 10-5-1961).

 

6. Subs. by Act 66 of 1971, sec. 2(i), for clause (j) (w.e.f. 23-12-1971). Earlier clause (j) was amended by Act 17 of 1961, sec. 2(b) (w.e.f. 10-5-1961).

 

7. Subs. by Act 92 of 1976, sec. 3(a)(ii), for sub-clause (iii) (w.e.f. 2-9-1976).

 

8. Ins. by Act 13 of 1957, sec. 2 (w.e.f. 4-6-1957).

 

9. Subs. by Act 92 of 1976, sec. 3(b) (w.e.f. 2-9-1976). Earlier sub-section (3B) was inserted by Act 25 of 1966, sec. 2 (w.e.f. 3-9-1966) and was amended by Act 66 of 1971, sec. 2(ii) (w.e.f. 23-12-1971), by Act 30 of 1974, sec. 3 (w.r.e.f. 22-6-1974).

 

10. Ins. by Act 36 of 1967, sec. 3(c) (w.e.f. 30-12-1967).

 

11. Ins. by Act 37 of 2003, sec. 2 (w.r.e.f. 14-6-1999).

 

12. Sub-sections (4A), (4B) and (4C) as inserted by Act 14 of 1967, sec. 2 (w.e.f. 1-4-1967) ceased to have effect from 31st day of March, 1968, vide Act 14 of 1967, sec. 1(2).

 

 

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