2015 (9) TMI 1737 - SC - Central Excise

Jurisdiction - competent authority to take disciplinary action either by cancellation or suspension of the licence of a S.K. Oil agent appointed in a district outside the Calcutta - date of effect of order of cancellation or suspension of licence in terms of Paragraph 9 of the West Bengal Kerosene Control Order - whether it will be effective on the date of passing of the said order or when the said order is communicated to the concerned party? HELD THAT - The Control Order was brought into force on 26.6.1968 in exercise of powers conferred by Sub-section 1 of Section 3 of the Essential Commodities Act 1955 read with Clauses (d) (e) (h) and (j) of Sub-section 2 of that Section and Section 7(1) of the said Act and the Order No. 26(11)-Com.Genl/66 dated 18th June 1966 feeling the necessity and expediency for proper maintenance of supplies and for securing the equitable distribution and availability at fair prices of kerosene in West Bengal - the power conferred on the Director and the District Magistrate are different for the Director is a higher authority and the rule clothes him with more authority. Needless to say the said paragraph has to be read in juxtaposition with other paragraphs. It is clear from paragraph 5 that the Director alone is authorised to grant a licence to an agent whereas a dealer s licence can be granted either by the Director or by the District Magistrate. Sub-para 3 of Paragraph 5 of the Control Order is also indicative of the fact that the agent operates at a larger scale than the dealer. An agent can sell supply or transfer kerosene to a dealer holder of a permit or delivery order and no other person. If it is held that the order would become a nullity it really does not serve the purpose of the Control Order. On the contrary it frustrates it and therefore the interpretation placed by the High Court on Paragraph 9 in juxtaposition with Paragraph 10 to treat the order has null and void is neither correct nor sound. It is desirable that the authority shall pass an order within 30 days from the date of show cause. Be it noted that there are two contingencies when the show cause is issued for violation or when an order of suspension is passed. There can be no trace of doubt that the order will take effect from the date when it is served. The order unless it is served definitely neither the agent nor the dealer would suspend its activities or obey any order for he has not been communicated. It is concluded that the High Court has erroneously interpreted Paragraph 9 and 10 of the Control Order and that is why it has arrived at an erroneous conclusion - appeal allowed.

Summary

Issues Involved:
1. Jurisdiction of the Director of Consumer Goods to issue a show cause notice and impose penalties.
2. Timeframe for passing and communicating an order under Paragraph 9 of the West Bengal Kerosene Oil Control Order, 1968.
3. Consequences of not passing and communicating the order within the prescribed period.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Director of Consumer Goods:
The primary issue was whether the Director of Consumer Goods had the authority to issue a show cause notice and impose penalties on the Respondent, who was an agent licensed to operate in the district of Burdwan. The Division Bench of the High Court concluded that the Director did not have jurisdiction, as the authority to cancel or suspend a license under Paragraph 9 of the Control Order was vested in the District Magistrate having jurisdiction over the area where the agent operated. The Supreme Court, however, interpreted Paragraphs 5, 6, 7, and 9 of the Control Order to conclude that the Director, who granted the license, also had the authority to suspend or cancel it. The Court emphasized that an agent operates on a larger scale than a dealer and that the Director, being the higher authority, was logically and reasonably the competent authority to take such actions.

2. Timeframe for Passing and Communicating an Order:
The Division Bench of the High Court held that the order under Paragraph 9 of the Control Order must be passed and communicated within 30 days from the date of serving the show cause notice. The Supreme Court agreed that an order must be communicated to be effective but clarified that the requirement to pass an order within 30 days does not mean it must also be communicated within that period. The Court emphasized that the order becomes effective upon communication, and the limitation period for appeal starts from the date of communication, not the date of the order.

3. Consequences of Not Passing and Communicating the Order within the Prescribed Period:
The Division Bench had set aside the Director's order on the grounds that it was communicated beyond the 30-day period, thus rendering it null and void. The Supreme Court disagreed, stating that such an interpretation would frustrate the purpose of the Control Order. The Court held that the order passed within 30 days but communicated later remains valid and effective from the date of communication. The Supreme Court emphasized a purposive construction of the Control Order, ensuring that the legislative intent and the objectives of equitable distribution and availability of kerosene at fair prices were not defeated.

Conclusion:
The Supreme Court allowed the appeal, set aside the Division Bench's judgment, and granted the Respondent liberty to prefer an appeal within the prescribed period before the State Government. The Court clarified that the Director of Consumer Goods had the jurisdiction to issue the show cause notice and impose penalties, and the order passed within 30 days but communicated later was valid and effective from the date of communication. The Court's interpretation ensured that the Control Order's purpose and legislative intent were upheld.