Legal Battles of Essential Commodities Act

Despite natural calamities that are beyond human control there are certain avoidable disasters that occur due to human error/negligence and tend to be more tragic which hampers the intergenerational equity and results in irretrievable damage to the health and environment of the society for future generations. These disasters take place due to pure negligence, contributory negligence, or when certain necessary steps and cautions are not taken while carrying on some essential activities.

Usually, in such circumstances, the aggrieved party has to face some avoidable damage and mishap that takes place due to such manmade disasters. This tragedy is beyond human expectations and has an adverse impact on the financial soundness, social health and upbringing of future generations. Whatever curbs economic equality is considered as a social evil and it needs to be checked even if it is not cured. The scarcity and non-availability of essential commodities fall in this class. Since the development of a country is mainly facilitated by the resilience and dynamism of its legislations and the efficiency in their implementation, it is indeed sine qua, as in recent times, that sluggishness of the executive, menace of bribery and corruption must be curbed for reaping the benefits of the Essential Commodity Law, the achievement of Constitutional goal of distributive justice and balanced equitable national development.

As we all know that India is a diverse and fascinating country and it is also the birthplace of the world’s most ancient cultures. Most of the Indian people still accommodate in rural areas and depend on agriculture for their livelihood. The efforts that India took to overcome the threat of famine and overlooked the early years of independence were tremendous. India’s largest famine was in the year 1943 which took place in West Bengal and had killed 3 million people was the last famine but during that India has faced consequences of the same such as shortage of food as well as that of other essential commodities in the first few decades of independence.

According to Adam Smith “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable”[1]

The Special Rapporteur has concluded that the adequate availability of essential commodities at fair price entails:

“the right to have regular, permanent and unrestricted access, either directly or by means of financial purchases, to quantitatively and qualitative adequate and sufficient foodstuffs (essential commodities) corresponding to the cultural traditions of the people to which the consumer belongs, and which ensures a physical and mental, individual and collective; fulfilling and dignified life free of fear.”[2]

Constitutional Background of the Act

The idea of the socialistic pattern of Indian Society was envisioned by the Drafters of Indian Constitution and they purposely mandated that one of the prime functions of the Govt. should be that to have control over production, supply, distribution etc. of commodities which are essential for the sustenance of life of the people. As per Article 39(b) and (c) of Constitution of India [3]it states that the every Govt should has the fundamental duty to ensure smooth flow of essential commodities to the various regions and should also maintain the availability of the same at fair and reasonable price to the general public for achieving the constitutional goal i.e. of distributive justice, equality, public welfare and to keep an eye and prevent any kind of illegal activity.

In addition to this, they have made the provision for subsidies for certain sections of society as it deems necessary for equitable distribution and sustainable growth of the country because a majority of people are unable to avail them at competitive prices.

The Essential Commodities and the struggle around its enactment

Before coming into existence of the Essential Commodities Act in the year 1955 some control on trade and distribution already prevailed. At the time of World War II some control measures were implemented by the British Colonial Govt. under the Defence of India Rules and after that till 1946 the Essential Supplies (Temporary Powers) Act, 1946 legislation was enacted which was replaced by the Essential Commodities Act, 1955[4]. The Essential Commodities Act, 1955 has undergone several amendments with the main aim and intention to increase the power of the Govt. and the traders.  The Commodities which have been declared as essential under the Act varied and multiplied over the years from 10 items in 1955 to over 60 items in 1990.

Characteristics of Law

Though the Essential Commodities Act printed version is only a few pages in length but a large number of government orders were enacted under the Act. Section 3 of the Act says that if the govt. is

“of the 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 (…), it may, by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.”[5]

As the Essential Commodities Act comes under the Concurrent list it hereby means that both Central and State govt has the power to formulate the order under Section 3 of the Act. There were more than 70 control orders passed by the central govt. relating to different commodities. Along with this, most State Govt. have also passed many control orders. According to the consensus between the traders, lawyers and govt. officials it has been observed that legislation regarding trade and distribution is not only vast but also confusing and unimplementable at the same time even when all the parties cooperate. Because of frequent changes in the order the legislation has also become confusing. Many litigations have been instituted in many States concerning parts of various orders and as a result, High Court formulates such orders by nullifying the previous ones.

In addition to this, the Act is a double-edged piece of legislation. Whenever a contravention has been made under the Act there are two procedures that can be applied. The first one is an administrative procedure which is given under Section 6A to 6C of the Act[6] while the second is prosecution for a criminal offence. The former sections deal with the confiscation of essential commodities and in the latter, a charge sheet can be filed by the enforcing official’s om court and a criminal suit maybe instituted against the trader. In other words, a trader can be held liable for the same offence both in an administrative case as well as a criminal case.

The next important characteristic of law deals with the burden of proof. It has been embodied under Section 14 of the Act[7] which states that whenever a person is liable for making any contravention of an order under the Act then the burden of proof is on the accused. The Essential Commodities Act came into force in 1955 and since then various amendments have made to the Act. The amendment which came in the year 1967 had increased both minimum and maximum punishment. Another amendment was made in the year 1971 which authorised the seizure of coverings, vehicles and animals used for the transport of offending goods. Again in 1974 an amendment was passed which made the crimes under the Essential Commodities Act non-bailable which means that bail can no longer be claimed and can only be obtained from the judicial courts.

In 1981 a more stringent amendment was made to the Act which again made it difficult to obtain bail and prescribed 3 months of minimum imprisonment for any offence committed under the Act. This amendment had an adverse effect as it totally changed the procedure for appeal after the confiscation of commodities when an appeal was made to the judiciary to an appeal which will be made to the Govt. and thereby set up a special court which deals with the Essential Commodities cases in order to enhance efficiency.

Enactment, legislators and traders

Just like many other legislations that were introduced in post-independent India, the main aim for enacting the Essential Commodities Act was to lay down the legal framework of a new type of development that was based on equality and social justice. The main purpose of enacting this Act was to prohibit malpractices in trade and to secure an equitable distribution of essential commodities. As a result of this, the makers thought to enact a stringent law to achieve these objectives. When the Bill was discussed in the Parliament, one of the advocates quoted that:

“If we are all agreed that a certain amount of control is necessary for the proper distribution of essential commodities in the country, then what is the use or what is the purpose in making the law so loose that the people who violate or the people who break these laws can escape under one or other of the legal quibbles”[8]

However, all the members of the Parliament were not in its favour and therefore they argued that experience with controls which were enacted during World War II and afterward were quite unsatisfactory and they made the following observation to make it more clear:

“The moment you want to make any particular goods go out of public view in the market, you must bring them under control. If you bring them under control, the goods or materials suddenly disappear.”[9]

“I oppose the Bill tooth and nail (…). We have just got rid of controls and the country is feeling very much relieved after the control is taken away. Today, things are cheaper and the poor man can live. (…) If this Bill is passed, it would do a great injustice to the poor classes and the national income as a whole.”[10]

Still, no attempt was made to cancel the Bill and to withdraw the control orders on trade and distribution. The main aim of the discussion was not to approve or disapprove the Bill but the specific features of the law that need to be determined. The main question that was part of the discussion was whether it is feasible to make the Essential Commodities Act stricter than another piece of legislation. Some members of the Parliament were in favour and contented that the crimes under the Essential Commodity should be dealt with more rigidly because it affects the whole society of essential goods, not an individual alone. While those who were against it argued that usual norms of equity and jurisprudence should be applied. One of the advocates of the Bill put it:

“What is it that we want? Do we want strict enforcement of the control orders so that the distribution of controlled commodities may be equitable and in accordance with the law, or do you want to allow a certain amount of laxity in the administration? Do you want to allow, by a theoretical adherence or allegiance to the principle of jurisprudence, a practical injustice to be committed to society? That is the fundamental question that has got to be answered.”[11]

From the time when the Essential Commodities Act was passed, it was considered and regarded as a piece of punishment and therefore had a deterrent effect. This is because traders are regarded as potential criminals whose activities should be restricted to prevent a much greater loss to society. The EC Act is clearly meant as a weapon in the fight against these “hoarders [and] marketers who are playing hell with the lives of millions of people”, “these maneaters [who] are too cunning and always escape through the lacunae in the law”.[12] The controversy of the original law and the justification of the amendment is on the basis of this argument: Many traders will indulge in hoarding and black marketing which are anti-social and anti-national activities when there would be no control and punishment regarding the same. So, to deal with these problems the Govt. should be armed with tough instruments.

Redefining Essential Commodities Act

On 22nd September, Parliament passed the Essential Commodities (Amendment) Bill, 2020 with the main aim to deregulate the commodities such as cereals, pulses, oilseeds, edible oils, onions and potatoes.

The Bill amended the Essential Commodities Act, 1955 and by the way of amendment added a new subsection to Section 3 i.e. Subsection 1(A). To make it clearer, it can be said that after the amendment, certain foodstuffs such as cereals, pulses, oilseeds, edible oils, the potato will be supplied and regulated only in extraordinary circumstances i.e. when there is an extraordinary price rise, in the case on war, famine and natural calamity that is of severe nature. To give effect to this amendment, it takes away the above-mentioned commodities from the purview of Section 3(1) which deals with the power of central govt. to control production, supply, distribution, etc. of essential commodities. These commodities earlier were not given under Section 3(1) and reasons for invoking the section were not specified at all. The amendment further states 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…”[13]

First of all, it is important to know how the term “essential commodity” is defined under the Act. The term essential Commodity has not been defined under the Act. Section 2(A) of the Act states that “essential commodity” means a commodity specified in the Schedule of the Act.[14]

The Act also gives certain powers to the Central Govt. to add or remove the commodity which is declared as an essential commodity under the Schedule of the Act and where the Centre feels it necessary to declare an item as an essential commodity it can do so in consultation with the State Govt.

The Ministry of Consumer Affairs, Food and Public Distribution made a statement and said that at present the Act only contains seven commodities that have been declared as essential under the Act which is as follows:

Drugs, fertilisers, whether inorganic, organic or mixed; foodstuffs including edible oils; hank yarn made wholly from cotton; petroleum and petroleum products; raw jute and jute textiles; seeds of food-crops and seeds of fruits and vegetables, seeds of cattle fodder, jute seed, cotton seed.[15]

The govt. has the power to control the production, supply and distribution of that commodity and impose a stock limit on those which has been declared essential under the Act.

Secondly, it is also important to know why was this amendment passed? Was there any need felt by the people?

The answer to this question was that since the Act was passed in the year 1955 when the country was going through the situation of scarcity of foodstuffs because there has been a low level of food grain production. As a result of this, the country depended on imports to feed the population. At that time the main reason for passing the Act was to prevent hoarding and black marketing so that it would not have any adverse effect on the interest of the public. But with the change in time, the situation has also changed. It was observed by the Ministry of Consumer Affairs, Food and Public Distribution System the production of wheat has increased 10 times from that of 1955 and that of rice has also increased by four times while that of pulses has also increased by 2.5 times. It means that India has now become the exporter of several agricultural products rather than being an importer.

Thirdly, what will be the impact of these amendments?

The Parliament has made such an amendment with the expectation that it would be able to attract private investment in the value chain of the commodities which have been removed from the Schedule. As we all know the Act has been passed with the main aim to prevent hoarding and black marketing and to protect the interest of the general public but now with the passing of the amendment it would be difficult to invest in the agricultural sector. As of now, the private sector has always hesitated in investing in cold chains and storage facilities because most of the commodities were covered by the Essential Commodities Act.

Conclusion

India used to face scarcity of resources like food, grains, vegetables, and the government has entered the same under essential commodities act at that time because our country was not in that position in which today we are even there was food scarcity at large at that time. So, the government made this amendment to remove these things from essential commodities because today our country is well developed and not facing those old problems. But the amendments were opposed by the farmers as it takes powers from farmers in case of fixing the price of crops. Now with these amendments the agency will fix the price so that farmers will not by themselves fix any price which they used to do earlier.

References

  1. https://www.civilsdaily.com/news/redefining-essential-items-why-it-was-needed-and-who-it-will-impact/
  2. Analysis of Essential Commodities Act, International Journal of Advanced Educational Research
  3. https://www.thehindu.com/opinion/editorial/farm-gate-in-focus-the-hindu-editorial-on-move-to-amend-essential-commodities-act/article31609782.ece
  4. Food Policy and Essential Commodities Act, Jos E Mooij, Institute of Social Studies, the Hague
  5. https://indianexpress.com/article/explained/simply-put-redefining-essential-items-6608203/

[1] Smith, A., The Wealth of Nations edited by R.H. Campbell and A.S. Skinner, The Glasglow edition of the Works and Correspondence of Adam Smith, Vol. 2a, P.456 (1976)

[2] A/HRC/7/5, (para 17)

[3] The Constitution of India, 1949

[4] Jain, 1964

[5] Section 3 Essential Commodities Act, 1955

[6] Essential Commodities Act, 1955

[7] Ibid

[8] Lok Sabha Debate dated 21 March 1955, 2777

[9] Lok Sabha Debate dated 5th March 1955, 1302

[10] Lok Sabha Debate dated 21st March 1955; 2783/4

[11] Lok Sabha Debate dated 21st March 1955; 2780

[12] From the preamble to the 1974 Amendment.

[13] Section 3, Essential Commodities Act, 1955

[14] Section 2(A) Essential Commodities Act, 1955

[15] Schedule to Essential Commodities Act, 1955

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