1981 (1) TMI 290 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the declaration of raw cashewnut as an essential article under the Kerala Essential Articles Control (Temporary Powers) Act, 1961.
2. Validity of the Kerala Raw Cashewnuts (Procurement and Distribution) Order, 1977.
3. Whether raw cashewnut is considered a foodstuff and thus an essential commodity under the Central Essential Commodities Act, 1955.
4. Competence of the State Government of Kerala to regulate raw cashewnut under the Kerala Act.

Issue-wise Detailed Analysis:

1. Validity of the Declaration of Raw Cashewnut as an Essential Article:
The core issue is whether the State Government of Kerala could declare raw cashewnut as an essential article under Section 2(a) of the Kerala Essential Articles Control (Temporary Powers) Act, 1961. The Kerala Act allows the State Government to declare any article, not being an essential commodity as defined in the Essential Commodities Act, 1955 (Central Act), as an essential article. The Supreme Court noted that the Kerala Act does not specify any article as essential but defines "essential article" as any article declared by the Government by notified order, excluding those defined as essential commodities under the Central Act.

2. Validity of the Kerala Raw Cashewnuts (Procurement and Distribution) Order, 1977:
The Order was issued by the State Government of Kerala under Section 3 of the Kerala Act to regulate the procurement and distribution of raw cashewnuts. The Order included provisions such as the prohibition of sale to unauthorized persons, appointment of Co-operative Societies as sub-agents, and other restrictions on processing and distribution. The explanatory note stated that the Order aimed to ensure the maintenance of supplies of raw cashewnuts for continued employment and equitable distribution at fair prices.

3. Whether Raw Cashewnut is Considered a Foodstuff:
The petitioners argued that raw cashewnut is a foodstuff, which is an essential commodity under the Central Act, and thus cannot be declared as an essential article under the Kerala Act. The Court examined the definition of "essential commodity" under the Central Act, which includes "foodstuffs, including edible oilseeds and oils." The Court applied the rule of statutory construction, noscitur a sociis, to interpret "foodstuffs" in a broader sense, including articles consumed by humans after processing. The Court cited several precedents where raw materials used in food production, such as paddy and turmeric, were considered foodstuffs.

4. Competence of the State Government of Kerala:
The Court addressed the argument that the State Government could regulate raw cashewnut as it was used as industrial raw material. However, the Court rejected this contention, stating that the language of Section 2(a)(v) of the Central Act and the purpose of the Central Act indicate that "foodstuffs" should be given a wider meaning. The Court also noted that the Central Act's provisions on essential commodities include those used for industrial purposes or export. The Court concluded that since raw cashewnut is a foodstuff under the Central Act, the Kerala Government lacked the authority to declare it as an essential article under the Kerala Act.

Conclusion:
The Supreme Court quashed the declaration by the Kerala Government that raw cashewnut is an essential article under the Kerala Act and the subsequent Order regulating its procurement and distribution. The Court held that raw cashewnut is a foodstuff and thus an essential commodity under the Central Act, rendering the Kerala Government's actions beyond its legislative competence. The petitions were allowed, and all other contentions, including alleged infringement of fundamental rights, were left open. The Court suggested that any adverse impact on the cashewnut industry and employment could be addressed by appropriate legislative or governmental action under Entry 33 of List III of the Seventh Schedule to the Constitution.