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Africa Cold Storage Pvt Ltd. & Another v/s State of West Bengal & Others

    Writ Petition No. 5236 of 2019

    Decided On, 12 March 2019

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE DEBANGSU BASAK

    For the Appearing Parties: Bikash Ranjan Bhattacharya, Tapas Kumar Ghosh, Tanmoy Chowdhury, Abhratosh Majumder, T.M. Siddiqui, Debasish Ghosh, Advocates.



Judgment Text

1. A Notification dated February 27, 2019 issued by the Agricultural Marketing Department, Government of West Bengal is under challenge in this writ petition.

2. Learned Senior Advocate appearing on behalf of the petitioners submits that, the impugned Notification travels beyond the provisions of the West Bengal Cold Storage (Licensing and Regulations) Act, 1966 when the Notification requires the cold storage to procure potatoes at the given price and in the modalities as stipulated therein. He submits that, the Act of 1966 cannot be read to empower the Licensing Authority to direct carriage of business by a cold storage in any manner. The contents of the impugned notification dated February 27, 2019 so far it purports to do so is beyond the scope of the Act of 1966 and is, therefore, without any basis.

3. Referring to the impugned notification, learned Senior Advocate appearing on behalf of the petitioners submits that, Clause 3 of the notification requires 15% of the total cold storage capacity to be utilized for storage of potatoes. Clause 4 prescribes the Procurement, Operating Agency and Monitoring. It requires a cold storage to keep 20% of the cold storage space reserved for storing of procured potatoes under the Scheme. The Scheme stipulates that, the reserved space that remains unutilised after March 17, 2019 in the South Bengal districts and after March 24, 2019 in the North Bengal districts, would be released. In the event the storage space remains unutilized, no rent for the unutilized space will be borne by the Government. He then refers various other Clauses of the Scheme, such as Clause 7 onwards and submits that, the Scheme requires the cold storage owner to procure Jyoti variety of graded potato of uniform size of the prescribed quantity from prescribed persons at prescribed rates. He submits that, the same tantamounts to interfering with the business of a cold storage owner, which the Act of 1966 does not permit. Moreover, there is no mechanism provided in the Scheme to compensate a cold storage owner in the event the cold storage owner does not receive the procurement price at the time of sale, or suffers a loss due to fall in price. In any event, the cold storage owner cannot be asked to carry on a particular kind of business as sought to be done by the impugned notification.

4. Learned Additional Advocate General appearing on behalf of the State submits that, the licence granted to a cold storage owner under the Act of 1966 is governed by the West Bengal Cold Storage (Licensing and Regulation) Rules, 1967. He refers to Rule 4(k) thereof and submits that, the State Government retains the power to regulate the use of space by issuing appropriate guidelines from time to time depending upon the exigency. In the present case, the State Government received information that, there will be a bumper production of potatoes in the State and in potato producing States. In order to obviate any distress to the farmers of the State growing potatoes and in order to provide a support system to farmers growing potatoes, the Scheme was promulgated. The Scheme was discussed in a meeting with the Cold Storage Owners Association on February 22, 2019. The Association expressed satisfaction as the Scheme stands. He submits that, the Scheme contemplates grant of appropriate compensation to a cold storage owner in the event the cold storage owner suffers any loss in the transaction. He draws the attention of the Court to the various provisions of the Scheme, particularly to Clause 13 onwards which provides for sale of the potatoes. He submits that, Clause 14 provides for calculation for compensation for the weak concerned. Therefore, the apprehension of the petitioners as expressed in the paragraph 23 of the writ petition that, the cold storage owner will suffer loss without any commensurate compensation is misplaced. He submits that, no relief should be granted to the petitioners.

5. The first petitioner enjoys a licence to carry on business as a cold storage. The licence is granted under the provisions of the Act of 1966. The Act of 1966 requires a licensee to comply with directions issued from time to time. Section 19 of the Act of 1966 empowers the Licensing Officer to issue directions. Section 19 of the Act of 1966 is as follows:-

"19. Licence to comply with directions.- Every licensee shall be bound to comply with such direction or order as may be issued to him by the Licensing Officer under this Act and any failure to comply with such direction or order within the period of thirty days shall be deemed to be contravention by the licensee of the provisions of this Act."

6. Section 29 of the Act of 1966 empowers the State Government to make rules for carrying out the purposes of the Act of 1966. Section 29 of the Act of 1966 is as follows:-

29. Power to make rules.-

(1) The State Government may, by notification in the Official Gazette, make rules for carrying out the purposes of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-

(a) any matter which, under any provision of this Act, either expressly or by implication, is required to be prescribed or to be provided for by rules;

(b) the granting of licences by the Licensing Officer to persons entitling them to act as weighers, measurers, samples and grades of any agricultural produce stored or to be stored in a cold storage including the manner of making applications, fees to be paid, and qualifications necessary, for the purpose, the period of validity, the method of obtaining renewal together with the fees to be paid for such renewal, or the grounds of cancellation, of such licences, and the facilities to be granted and the authorities to be exercised by the holders of such licences;

(c) priority to be allowed to co-operative societies for storing their agricultural produce in a cold storage."

7. The Act of 1966 was promulgated in the public interest to provide for licensing, supervision and cold storage in West Bengal and to deal with the matters incidental thereto, as would appear from the preamble of the Act of 1966.

8. Rule 4(k) of the West Bengal Cold Storage (Licensing and Regulation) Rules 1967 is as follows:-

"(k) The State Government shall regulate the use of space in the cold storage by issuing guidelines from time to time depending upon the exigencies, such as, demands for space, quantum of yield etc."

9. The preamble of the Act of 1966 read with Sections 19, 29 of the Act of 1966 and the Rule (k) of the Rules of 1966, in my view, allows the State Government to regulate the utilization of space of a cold storage. A cold storage owner is bound to comply with the directions issued by the Licensing Officer in view of the provisions of Section 19 of the Act of 1966. Such is the condition of the grant of licence in favour of a cold storage owner. Any legitimate direction relating to any affair of a cold storage can be issued by the Licensing Officer under Section 19 of the Act of 1966. In a given case, the Licensing Officer can issue direction as to utilization of the space within a cold storage. He can, in public interest, require a cold storage to allow a space of the cold storage to be used for a particular purpose. In a given case, the Licensing Officer can issue direction to the cold storage to store such material at such period after procuring the same at such manner and price as prescribed. In the present case, the impugned notification seeks to regulate a portion of the available space in a cold storage. A Licensing Officer is entitled to do so under Section 19 of the Act of 1966.

10. So far as the Clause 4 of the impugned Notification is concerned to the extent that, it is silent as to any compensation being paid in the event of unutilized space reserved is concerned, in my view, since the State Government has the power to regulate utilization of the space in a cold storage, the question of compensation need not be gone into at this stage. In an individual case should a cold storage owner suffer any damages by virtue of the impugned notification so far as the utilization of space in terms of Clause 4 is concerned, it is open to such individual cold storage owner to take appropriate legal action for recovery of damages.

11. The Scheme requires a cold storage owner to procure a specified variety of potato, of specified specification, at the specified rate and store it for a specified period. The methodology of procurement is prescribed. The impugned notification also provides for the financial assistance to be rendered to a cold storage requiring the same. It provides for security of the loan that may be availed of by a cold storage owner to implement the provisions of the impugned notification. The impugned notification also contains clauses, which contemplate that, a situation may arise where a cold storage owner may be required to sell the procured potato at a price less than the price at which it procured the same. Therefore, the impugned notification takes into account any anticipated loss that may occur to a cold storage owner when acting in terms of the impugned notification.

12. The impugned notification was issued on February 27, 2019. It records the reasons for doing

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the same. It states that, due to bumper production of potatoes in the State and reports of good crop of potatoes in other potato producing States, there would be a glut in the potato market resulting in severe decrease in the prices. Essentially, the impugned notification seeks to provide a minimum support price to a farmer producing potatoes. At the same time, it takes into consideration the loss that may occasion to a cold storage owner while implementing the terms of the impugned notification. The impugned notification is in public interest. It seeks to protect farmers and at the same time provides for offsetting any loss that a cold storage owner may suffer while acting in terms of the scheme. 13. In such circumstances, I find no reason to interfere with the impugned notification. 14. W.P. 5236 (W) of 2019 is disposed of without any order as to costs. 15. Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities.
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