Essential Commodities Act, 1955 – Economic, Business and Commercial Laws Important Questions

Essential Commodities Act, 1955 – Economic, Business and Commercial Laws Important Questions

Question 1.
Evaluate the efficacy of the Essential Commodities Act, 1955 in controlling the production, supply and distribution of essential commodities in the country. [June 2010 (5 Marks)]
Answer:
1. Protection of Consumer: The Essential Commodities Act, 1955 was enacted to ensure easy availability of essential commodities to the consumers and to protect them from exploitation by unscrupulous traders.

2. Equitable distribution at a fair price: The Act provides for regulation and control of production, distribution and pricing of commodities, which are declared as essential for maintaining or increasing supplies or for securing their equitable distribution and availability at fair prices.

3. Implementation: The Essential Commodities Act, 1955 is being implemented by the State Governments/Union Territories Administrations by availing of the delegated powers under the Act. The State Governments/Union Territories Administrations have issued various Control Orders for regulation, production and distribution of Essential Commodities such as food grains, edible oils, pulses kerosene, sugar etc. The Central Government regularly monitors the action taken by State Governments/Union Territories Administrations to implement the provisions of the Essential Commodities Act, 1955.

4. Commodity covered in essential commodity reviewed and revised: The items declared as essential commodities under the. Essential Commodities Act, 1955 are reviewed from time to time in the light of liberalized economic policies in consultation with the Ministries/ Departments administering the essential commodities and particularly with regard to their production, demand, and supply.

5. Central Government can pass order and regulate: According to Section 3(1), the Central Government may, by order, provide for regulating or prohibiting the production, supply and distribution of an essential commodity, and trade and commerce therein if it is of the opinion that it is necessary or expedient so to do for maintaining or increasing supplies of the commodity or for securing their equitable distribution, and availability at fair prices.

Question 2.
Whether ‘tea’ is foodstuff under the Essential Commodities Act, 1955? Does it have any nutritional value? Discuss in reference to leading case law, if any. [Dec 2015 (3 Marks)]
Answer:
In the leading case, S. Samuel, AID Harrisons Malayava v. Union of India, Supreme Court has held that Tea is not foodstuff, Reasoning: Tea leaves are not eaten. Tea is a beverage produced by steeping tea leaves or buds of the tea plants in the boiled water. Such tea is consumed hot or cold for its flavour, taste and its quality as a stimulant. It does not have any nutritional value. Tea or its beverage does not go into the preparation of any foodstuff. In common parlance, anyone who has taken tea would not say that he has taken or eaten food. Tea neither nourishes the body nor sustain nor promotes growth.

Conclusion – Thus, tea is not a food.

Question 3.
Discuss ‘essential commodities’ under the Essential Commodities Act,1955. [Dec 2016 (5 Marks)]
Answer:
Definition u/s 2(a)
As per Section 2(a) of the Essential Commodities Act, 1955 dealing with Essential commodities declaration, etc. defines the “essential commodity” as to mean a commodity specified in the Schedule.

Essential Commodity [Section 2(a)]: Essential commodity means any of the following classes of commodities:

  • Cattle fodder, including oil cakes and other concentrates
  • Coal, including coke and other derivatives
  • Component parts and accessories of automobiles
  • Cotton and woollen textiles
  • Drugs
  • Foodstuffs, including edible oilseeds and oils
  • Iron and steel, including manufactured products of iron and steel
  • Paper, including newsprint, paperboard and strawboard
  • Petroleum and petroleum products
  • Raw cotton, whether ginned or unpinned and cottonseed
  • Raw jute
  • Any other class of commodity declared by notified order by the Central Government to be an essential commodity as per 7th Schedule to the Constitution

Question 4.
Discuss the power of the Central Government to control the production, supply and distribution of any essential commodity under the Essential Commodities Act, 1955. [June 2015 (5 Marks)]
Answer:
The following are the powers of the Central Government to control the production, supply, distribution, etc. of essential commodities
(a) Power to issue an order: [Section 3(1)]: The Central Government can regulate or prohibit the production, supply and distribution of any essential commodity by order for secure equitable distribution and ensure that such essential commodities are available at fair prices.

  1. when it is necessary or expedient for maintaining or increasing supplies of any essential commodity;
  2. for securing the equitable distribution and availability of essential commodities at a fair price; or
  3. for securing any essential commodity for the defence of India or the efficient conduct of military operations.

(b) Power to fix the price of the essential commodity being sold to Government/ State Government
In such a case, the price shall be paid as provided hereunder:
(a) Agree on Price: Where the price can be agreed upon consistently with the controlled price fixed under this section;
(b) Controlled price: Where no such agreement can be reached, the price calculated with reference to controlled price;
(c) Market Price: The price calculated at the market rate prevailing in the locality on the date of sale, where neither clause
(a) nor clause
(b) applies.

(c) Price fixation so as to tackle the emergency situation in a particular locality or region [Section 3(3A)]
Central Government to direct the price at which the foodstuffs in any locality will be sold to the general public. This direction will be issued only when the Central Government is of the opinion that takings such a step is necessary for controlling price rise or preventing the hoarding of any foodstuff in any locality.

(d) Power of Government to Appoint Authorised Controller
Central Government to authorise any person (known as authorised controller) when it is considered necessary for maintaining or increasing the production and supply of essential commodities.

Question 5.
Who is empowered to appoint Authorized Controller? State the functions and liabilities of such Authorized Controller under Essential Commodities Act, 1955. [Dec 2017 (5 Marks)]
Answer:
Power to Appoint Authorized Controller [Section 3(4)]: If the Central Government is of opinion that it is necessary to maintain or increase the production and supply of an essential commodity then it may by Order authorize any person (called authorized controller) to exercise prescribed functions.

Functions of the authorized controller:
Government instruction: The authorized controller shall exercise his functions as per the instructions given by the Central Government.

Direction within Provision: However, he shall not have any power to give any direction inconsistent with the provisions of any law.

Follow the Direction: If the authorized controller gives directions to any undertaking then it is the responsibility of such undertaking to comply with the directions given by the authorized controller.

Responsibility: The person who is responsible to function as manager of the undertaking or part of it complies with such directors.

Question 6.
Mention the provisions of the Essential Commodities Act, 1955 regarding the confiscation of essential commodities seized in contravention of 1 Section 3 of the Act. [Dec 2009 (5 Marks)]
Answer:
Confiscation of Essential Commodity [Section 6A(1)]:
(a) Report to Collector: Where any Essential Commodity is seized as per an Order made u/s 3 then a report of such seizure shall be made to the Collector of the district in which such essential commodity is seized.

(b) Inspection: The Collector may direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a contravention of the Order then he may order confiscation of,
(a) Essential commodity so seized
(b) Package, covering or receptacle in which such essential commodity is found and
(c) Animal, vehicle, vessel or other conveyance used in carrying such essential commodity.

(c) Food Grain: However, no food grains or edible oilseeds seized from a producer shall be confiscated if the same is produced for inspection.

(d) Transporter given option: In the case of any animal, vehicle, vessel or other conveyance the owner of such animal-vehicle etc., shall be given an option to pay in lieu of its confiscation, a fine not exceeding the market price.

Question 7.
Mention the provisions for confiscation of essential commodity seized in contravention of the Essential Commodities Act, 1955. [Dec 2010 (5 Marks)]
Answer:
Confiscation of Essential Commodity [Section 6A(1)]:
(a) Report to Collector: Where any Essential Commodity is seized as per an Order made u/s 3 then a report of such seizure shall be made to the Collector of the district in which such essential commodity is seized.

(b) Inspection: The Collector may direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a contravention of the Order then he may order confiscation of,
(a) Essential commodity so seized
(b) Package, covering or receptacle in which such essential commodity is found and
(c) Animal, vehicle, vessel or other conveyance used in carrying such essential commodity.

(c) Food Grain: However, no food grains or edible oilseeds seized from a producer shall be confiscated if the same is produced for inspection.

(d) Transporter given option: In the case of any animal, vehicle, vessel or other conveyance the owner of such animal-vehicle etc., shall be given an option to pay in lieu of its confiscation, a fine not exceeding the market price.

Question 8.
The distinction between Seizure of an essential commodity & confiscation of an essential commodity under the Essential Commodities Act, 1955. [June 2012 (5 Marks)]
Answer:
Following are the main points of distinction between seizure & confiscation:

Points Seizure Confiscation
Meaning ‘Seizure’ means to take possession contrary to the wishes of the owner of the property. Confiscation means to take possession & ownership contrary to the wishes of the owner of the property.
Stage Seizure is the first stage Confiscation is followed by a seizure. Confiscation is the second stage
Property in goods Property in goods remains with the owner. Property in goods does not remain with the owner.
Disposal of goods Seized goods cannot be disposed of by the Government. Confiscated goods can be disposed of by the Government.
Section A commodity can be seized as per Section 3. Confiscation is as per circum-stances mentioned in Section 6A.

Distinction as per Essential Commodities Act, 1955: In the context of the Essential Commodities Act, 1955, it could be seen that an essential commodity that has been seized could be confiscated. Therefore, confiscation is an action posterior to the seizer of the essential commodity. A commodity that cannot be seized cannot be confiscated.

Question 9.
Distinguish between ‘seizure’ and ‘confiscation’ of an essential commodity under the Essential Commodities Act, 1955. [June 2016 (5 Marks)}
Answer:
Following are the main points of distinction between seizure & confiscation:

Points Seizure Confiscation
Meaning ‘Seizure’ means to take possession contrary to the wishes of the owner of the property. Confiscation means to take possession & ownership contrary to the wishes of the owner of the property.
Stage Seizure is the first stage Confiscation is followed by a seizure. Confiscation is the second stage
Property in goods Property in goods remains with the owner. Property in goods does not remain with the owner.
Disposal of goods Seized goods cannot be disposed of by the Government. Confiscated goods can be disposed of by the Government.
Section A commodity can be seized as per Section 3. Confiscation is as per circum-stances mentioned in Section 6A.

Distinction as per Essential Commodities Act, 1955: In the context of the Essential Commodities Act, 1955, it could be seen that an essential commodity that has been seized could be confiscated. Therefore, confiscation is an action posterior to the seizer of the essential commodity. A commodity that cannot be seized cannot be confiscated.

Question 10.
A reasonable opportunity is required to be provided to the person concerned before confiscation of his commodity or vehicle, etc., under the Essential Commodities Act, 1955. Elaborate the statement in the light of relevant legal provisions and decided case law. [Dec. 2012 (5 Marks)}
Answer:
Issue of show-cause notice before confiscation [Section 6B]; Before | passing an order for confiscation, the owner of the essential commodity, package, covering, receptacle, animal, vehicle, vessel or the person from whom it is seized is required to be given a notice in writing informing him j of the grounds on which it is proposed to confiscate the above goods.

Such a person should also be given an opportunity of making a representation in writing within a reasonable time. This is not sufficient for the owner to prove that the vehicle carried the essential commodity without his knowledge or concurrence. He must also prove that the vehicle was used without the knowledge, or concurrence of the person in charge of the vehicle. In addition, he must prove that not only he but also the person in charge of the vehicle had taken all reasonable and necessary precautions against such use. [Shai Rahhimv. The State of Andhra]

Question 11.
Explain in brief the procedure for seizure and confiscation of essential commodities under the Essential Commodities Act, 1955. [Dec 2014 (5 Marks)]
Answer:
Brief Explanation of Confiscation and Seizure: The Essential Commodities Act envisages two independent proceedings against a person charged with contravention of the provisions of the Act. Under Section 6A, the Collector can confiscate the seized commodity. Confiscation of essential commodities is a sharp weapon that the Act has provided to the Central Government u/s 6A of the Act.

The Act uses the expressions ‘confiscation’ and ‘seizure’ in Section 6A and under this section a commodity which has been seized in pursuance of an order u/s 3 can be confiscated under the circumstances mentioned in Section 6A.

In the context of the Essential Commodities Act, it could be seen that an essential commodity that has been seized, could be confiscated. Therefore, confiscation is an action posterior to the seizure of the essential commodity. A commodity that has not been seized cannot be confiscated. The seizure itself does not imply confiscation.

Report to Collector: Section 6A provides that where any essential commodity is seized u/s 3, a report of such seizure shall be made to the Collector.

Production of Seized Commodity: The Collector at his discretion, may direct for the production of the seized commodity before him and if he is satisfied that there has been a contravention of the order he may pass an order for confiscation of the essential commodity so seized.

Sale of the Confiscated Commodity [Section 6A(2)]: On receiving seizure or inspection report of any essential commodity if the Collector is of the opinion that the essential commodity is subject to speedy and natural decay he may order the same to be sold:

  1. At the controlled price or
  2. By public auction.

However, if the retail sale price of any such essential commodity has been fixed by the Central or State Government then the Collector may order to sell it at a fair price through any shops for equitable distribution and availability at fair prices of such essential commodity.

Disposal of sale proceeds of confiscated goods [Section 6A(3)]: Where any essential commodity is sold as aforesaid then the sale proceeds after deduction of the selling expenses shall be paid to the owner or person from whom it is seized in the following circumstances:
(a) Where no order of confiscation is ultimately passed by the Collector;
(b) Where an appeal is decided in favour of such person;
(c) Where a concerned person is acquitted in a prosecution.

Question 12.
Explain Seizure and Confiscation under the Essential Commodities Act, 1955. [Dec 2018 (3 Marks)]
Answer:
Confiscation of Essential Commodity [Section 6A(1)]:
(a) Report to Collector: Where any Essential Commodity is seized as per an Order made u/s 3 then a report of such seizure shall be made to the Collector of the district in which such essential commodity is seized.

(b) Inspection: The Collector may direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a contravention of the Order then he may order confiscation of,
(a) Essential commodity so seized
(b) Package, covering or receptacle in which such essential commodity is found and
(c) Animal, vehicle, vessel or other conveyance used in carrying such essential commodity.

(c) Food Grain: However, no food grains or edible oilseeds seized from a producer shall be confiscated if the same is produced for inspection.

(d) Transporter given option: In the case of any animal, vehicle, vessel or other conveyance the owner of such animal-vehicle etc., shall be given an option to pay in lieu of its confiscation, a fine not exceeding the market price.

Question 13.
Write a short note on Men’s rea under the Essential Commodities Act, 1955. [June 2010 (3 Marks)]
Answer:
Mens Rea ingredient of offence: It was held by the Supreme Court that men’s rea or guilty mind is an ingredient of the offence punishable under the Essential Commodities Act, 1955 ie. an intentional contravention of an order made u/s 3, is an essential ingredient of an offence u/s 7. [Nathulal v. State of Madhya Pradesh]

Bona Fide: In other words, if the dealer did believe bona fide that he could store the food grains, without infringing any order u/s 3, there could be no contravention u/s 7.

Intention and Object of the Act: Men’s rea by necessary implication may be excluded from a statute only where it is absolutely clear that the implementation of the object of the Statute would otherwise be defeated. The nature of men’s rea that would be implied in a Statute creating an offence depends on the object of the Act and the provisions thereof.

Hariprasad Rao vs. State: In Hariprasad Rao v. State, it was observed that unless a Statute either clearly or by necessary implication rules out men’s rea as a constituent part of a crime, an accused cannot be found guilty of an offence against the criminal law unless he has got a guilty mind. Therefore, men’s rea is an essential ingredient of an offence u/s 7 of the Act.

Presumption of culpable mind: Section IOC provides for a presumption of culpable mental state, which includes intention, motive, knowledge of a fact and the belief in a fact. It is now provided that in any prosecution for an offence under the Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of the mental state. Accused can prove opposite: It is open to the accused to prove that he had no such mental state with respect of the act committed by him.

Question 14.
Write a short note on: Applicability of concept of mens rea under the Essential Commodities Act, 1955. [June 2011 (3 Marks)]
Answer:
Mens Rea ingredient of offence: It was held by the Supreme Court that mens rea or guilty mind is an ingredient of the offence punishable under the Essential Commodities Act, 1955 ie. an intentional contravention of an order made u/s 3, is an essential ingredient of an offence u/s 7. [Nathulal v. State of Madhya Pradesh]

Bona Fide: In other words, if the dealer did believe bona fide that he could store the food grains, without infringing any order u/s 3, there could be no contravention u/s 7.

Intention and Object of the Act: Mens rea by necessary implication may be excluded from a statute only where it is absolutely clear that the implementation of the object of the Statute would otherwise be defeated. The nature of mens rea that would be implied in a Statute creating an offence depends on the object of the Act and the provisions thereof.

Hariprasad Rao vs. State: In Hariprasad Rao v. State, it was observed that unless a Statute either clearly or by necessary implication rules out mens rea as a constituent part of a crime, an accused cannot be found guilty of an offence against the criminal law unless he has got a guilty mind. Therefore, mens rea is an essential ingredient of an offence u/s 7 of the Act.

Presumption of culpable mind: Section IOC provides for a presumption of culpable mental state, which includes intention, motive, knowledge of a fact and the belief in a fact. It is now provided that in any prosecution for an offence under the Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of mental state. Accused can prove opposite: It is open to the accused to prove that he had no such mental state with respect of the act committed by him.

Question 15.
uMens rea is an essential ingredient of an offence punishable under the Essential Commodities Act, 1955. [Dec 2013 (5 Marks)]
Mens Rea ingredient of offence: It was held by the Supreme Court that mens rea or guilty mind is an ingredient of the offence punishable under the Essential Commodities Act, 1955 ie. an intentional contravention of an order made u/s 3, is an essential ingredient of an offence u/s 7. [Nathulal v. State of Madhya Pradesh]

Bona Fide: In other words, if the dealer did believe bona fide that he could store the food grains, without infringing any order u/s 3, there could be no contravention u/s 7.

Intention and Object of the Act: Mens rea by necessary implication may be excluded from a statute only where it is absolutely clear that the implementation of the object of the Statute would otherwise be defeated. The nature of mens rea that would be implied in a Statute creating an offence depends on the object of the Act and the provisions thereof.

Hariprasad Rao vs. State: In Hariprasad Rao v. State, it was observed that unless a Statute either clearly or by necessary implication rules out mens rea as a constituent part of a crime, an accused cannot be found guilty of an offence against the criminal law unless he has got a guilty mind. Therefore, men’s rea is an essential ingredient of an offence u/s 7 of the Act.

Presumption of culpable mind: Section IOC provides for a presumption of culpable mental state, which includes intention, motive, knowledge of a fact and the belief in a fact. It is now provided that in any prosecution for an offence under the Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of mental state. Accused can prove opposite: It is open to the accused to prove that he had no such mental state with respect of the act committed by him.

Question 16.
“Mens rea is an essential ingredient of an offence punishable under the Essential Commodities Act, 1955”. Discuss with case law. [June 2015 (5 Marks)]
Answer:
Mens Rea ingredient of offence: It was held by the Supreme Court that mens rea or guilty mind is an ingredient of the offence punishable under the Essential Commodities Act, 1955 ie. an intentional contravention of an order made u/s 3, is an essential ingredient of an offence u/s 7. [Nathulal v. State of Madhya Pradesh]

Bona Fide: In other words, if the dealer did believe bona fide that he could store the food grains, without infringing any order u/s 3, there could be no contravention u/s 7.

Intention and Object of the Act: Mens rea by necessary implication may be excluded from a statute only where it is absolutely clear that the implementation of the object of the Statute would otherwise be defeated. The nature of mens rea that would be implied in a Statute creating an offence depends on the object of the Act and the provisions thereof.

Hariprasad Rao vs. State: In Hariprasad Rao v. State, it was observed that unless a Statute either clearly or by necessary implication rules out mens rea as a constituent part of a crime, an accused cannot be found guilty of an offence against the criminal law unless he has got a guilty mind. Therefore, mens rea is an essential ingredient of an offence u/s 7 of the Act.

Presumption of culpable mind: Section IOC provides for a presumption of culpable mental state, which includes intention, motive, knowledge of a fact and the belief in a fact. It is now provided that in any prosecution for an offence under the Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of mental state. Accused can prove opposite: It is open to the accused to prove that he had no such mental state with respect of the act committed by him.

Question 17.
Comment on the presumption of culpable mental state. Who can avoid such presumption of culpable mental state as stated under the Essentia] Commodities Act, 1955? [June 2017 (5 Marks)]
Answer:
Confiscation of Essential Commodity [Section 6A(1)]:
(a) Report to Collector: Where any Essential Commodity is seized as per an Order made u/s 3 then a report of such seizure shall be made to the Collector of the district in which such essential commodity is seized.

(b) Inspection: The Collector may direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a contravention of the Order then he may order confiscation of,
(a) Essential commodity so seized
(b) Package, covering or receptacle in which such essential commodity is found and
(c) Animal, vehicle, vessel or other conveyance used in carrying such essential commodity.

(c) Food Grain: However, no food grains or edible oilseeds seized from a producer shall be confiscated if the same is produced for inspection.

(d) Transporter given option: In the case of any animal, vehicle, vessel or other conveyance the owner of such animal vehicle etc., shall be given an option to pay in lieu of its confiscation, a fine not exceeding the market price.

Economic, Business and Commercial Laws Questions and Answers

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