w w w . L a w y e r S e r v i c e s . i n


All India Crop Biotech Association of India v/s State of Gujarat

    Appeal No. -------
    Decided On, 09 July 2009
    At, High Court of Gujarat At Ahmedabad
    By, THE HONOURABLE CHIEF JUSTICE MR. K.S. RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE AKIL KURESHI
    For the Appearing Parties: Dilip B. Rana, Harin P. Raval, K.M. Patel, Kamal Trivedi, Rajiv Dhavan, Sangeeta Vishen, Vijay Patel, Advocates.


Judgment Text
K.S. RADHAKRISHNAN, J.


(1) THIS petition has been filed challenging the validity of the provisions of the Gujarat Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of sale Price) Act, 2008, (Gujarat Act 20 of 2008), and also the validity of Notification dated 11. 06. 2008 issued by the State of Gujarat in exercise of powers under Section 12 of the Gujarat Ordinance No. 1 of 2008, as being unconstitutional and void.


(2) GUJARAT Act 20 of 2008, has received the assent of the Governor, and was published in the Official Gazette in September 2008, replacing Gujarat Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale price) Ordinance, 2008.


(3) STATE Government traces its power of legislation to Entry 33, List III (Concurrent List) of the VIIth Schedule of the Constitution of India. Gujarat Act 20 of 2008 was enacted to regulate the supply, distribution, sale and fixation of sale price of cotton. Preamble of Gujarat Act 20 of 2008 states that cotton seeds of certain varieties are not notified under Section 5 of the Seeds Act, 1966, and consequently, no sale of such seeds are regulated under Section 7 of the said Act. Further, it is also stated that cotton seed is not an essential commodity within the meaning of the Essential Commodities Act, 1955, (10 of 1955), as amended by the Essential Commodities (Amendment) Act, 2006, (54 of 2006). Further, it is also pointed out that the provisions of the Seeds (Control) Order, 1983, issued under Section 3 of the Essential Commodities Act, 1955, are not applicable in so far as they relate to cotton seeds with effect from 12th February, 2007, and there are no provisions in the Environment (Protection) Act, 1986, to regulate the supply, distribution and sale of transgenic and genetically modified cotton seeds and to control the sale price of such cotton seeds in the State, and as such, traders in cotton seeds are exploiting poor farmers by collecting exorbitant price. It is also stated in the Preamble that there is no provision to regulate the supply, distribution, sale of cotton seeds and to control the sale price of such cotton seeds in the State, and therefore it has become imperative on the part of the State Government to regulate the supply, distribution and sale of cotton seeds by fixing the sale price in the interests of the farmers in the State. It is under such circumstances, Gujarat Act 20 of 2008 was enacted, the constitutional validity of which is under challenge in the present writ petition.


(4) FIRST petitioner, a society registered under the Societies Registration Act, 1860, is an association of seed producers engaged in production of, inter alia, genetically engineered seeds, including cotton seeds. Rest of the petitioners are also interested in the outcome of this writ petition.


(5) PETITIONERS submit that all cotton seeds are regulated under the provisions of the Seeds Act, 1966, and until February 2007, they were regulated by the provisions of the Essential Commodities Act, 1955, and the Seeds Control Order 1983, issued under the provisions of the Essential Commodities Act, 1955. Further, transgenic cotton seeds are further regulated by the Rules for Manufacture, Use, Import, Export and Storage of Hazardous Micro Organisms/genetically Engineered Organisms or Cells, 1989, framed under the provisions of the Environment Protection Act, 1986. Under the provisions of the said Rules, Genetic Engineering Approval Committee (GEAC) gave approval to various Bt cotton hybrids, commencing from the year 2002. Since then, several Bt. Cotton hybrids have been approved for commercialization by the GEAC. Petitioners submit that there was no order fixing the price of cotton seeds (transgenic or otherwise) under the Essential Commodities Act. Till February 2007, cotton seed was an essential commodity. BG-I cotton hybrids contain Cry 1 Ac gene, whereas BG-II cotton hybrids contain Cry 1 Ac as well as Cry 2 Ab genes. Advantages of BG-II technology over BG-I and conventional cotton hybrids is effective control of bollworm complex, including spodoptera and semi looper, season long protection, reduced number of insecticide sprays and providing superior resistance management ability due to presence of multiple genes having different mode of action of the two proteins. Any Bt cotton hybrid can be commercialised only after approval by GEAC, which is granted after extensive bio-safety and agronomic evaluation.


(6) PETITIONERS have been carrying on the business of production and sale of Bt cotton seeds in the country. Bt cotton seeds have been sold since 2002 in the State of Gujarat. In Kharif 2007 season, Bollgard-I (BG-I) cotton hybrids seeds were supplied at an MRP of Rs. 750/- per packet of 450 gms. and BG-II cotton hybrids were supplied at an MRP of Rs. 925/- per packet of 450 gms. During Kharif 2006 season, MRP of BG-II was Rs. 1,350/- per packet of 450 gms. Bt cotton hybrids like other crop seeds are being supplied through dealers in the State and there is no scarcity of cotton seeds, and there are numerous cotton seeds/hybrids available in the market, and there is a healthy competition amongst cotton seed producers in the country. National Seed Association of India (NSAI) had discussions with the officials of the State regarding pricing aspect of BG-I and BG-II cotton seed hybrids. State Government was informed of the reduction in BG-I and BG-II cotton seed prices, and also informed that there has been steady increase in all aspects of costs involved in developing, producing and marketing of hybrid Bt cotton seeds as well as in the research and development costs involved in producing better quality hybrids and as a result, seed companies would be required to increase sale price of Bt cotton seeds in order to ensure further investment in research and quality improvement programmes, and also to ensure the sustainability of seed producing farmers. NSAI informed the concerned officials that MRP of single Bt cotton hybrid seeds was proposed to be fixed at Rs. 795/- per packet and MRP of BG-II cotton seeds at Rs. 975/- pre packet. Further discussions were also held with the Department of Agriculture of the State, regarding the pricing policy. On 10. 06. 2008, State Government promulgated the Ordinance No. 1 of 2008, and issued Notification under Section 12 of the Ordinance, whereby maximum sale price of Bt cotton hybrids was fixed at Rs. 650/- per packet of 450 gms. for Bollgard-I (BG-I) and Rs. 750/- for a packet of 450 gms for Bollgard II (BG-II) cotton hybrid seeds. The Ordinance was later replaced by the Act No. 20 of 2008.


(7) PETITIONERS submit that by the Ordinance and the impugned Notification, State Government has fixed an unreasonable and arbitrary price, without looking at any cost factors, or any other relevant factors, such as, benefits accrued, etc. and may also lead to a decline in investments into further research and development, and be a severe deterrent to new seed producers wishing to enter the business. Due to price fixation vide the impugned Notification, per packet financial burden on the seed company would be Rs. 100/- for BG-I, and Rs. 175/- for BG-II. Petitioners, therefore, have come up with the present petition challenging the constitutional validity of the legislation and the Notifications fixing the price of BG-I and BG-II cotton seeds stating that the fixation is irrational, illegal and arbitrary, without taking into consideration of all relevant facts.


(8) HEARD Shri Rajiv Dhavan, learned Senior Counsel appearing for the Petitioners, Shri Kamal B. Trivedi, learned Advocate General appearing for the State, Shri Harin P. Raval, learned Assistant Solicitor General for the Central Government and Shri K. M. Patel, learned Senior Counsel appearing for the Interveners.


(9) SHRI Rajiv Dhavan, learned Senior Counsel for the petitioners submitted that the State Legislature does not have the requisite legislative competence to enact the impugned Act as well as to issue the impugned Notification dated 11. 06. 2008. Learned Senior Counsel submitted that the field of cotton seeds has been occupied by the Parliament by various legislations, namely, Seeds Act, 1966, Seeds Rules, 1968, Essential Commodities Act, 1955 and Seeds Control Order 1983, Environment (Protection) Act, 1986, Rules for Manufacture, Use, Import, Export and Storage of Hazardous Micro Organisms/genetically Engineered Organisms or Cells, 1989, and the Seeds Bill 2004, which is pending before the Parliament. Learned Senior Counsel submitted that above mentioned Acts and Rules provide for comprehensive legislation under Entry 33, List III of the Constitution, and Parliament has potentially occupied the field in respect of all matters of cotton seeds. Learned Senior Counsel referred to the provisions of the Seeds Act, 1966, and Seeds Rules, 1968, with specific reference to the Preamble of the Act of 20 of 2008. Learned Senior Counsel submitted that Seeds Act clearly empowers the Government to notify any kind of cotton seeds for the purpose of regulating its quality. Reference was made to Section 2 (11) (ii) of the Seeds Act and submitted that the said Section mentions `cotton seed', which includes transgenic and other cotton seeds. Learned counsel submitted that though Essential Commodities Act, 2006, omits `cotton seeds' from the schedule, it remains covered under the Act by virtue of Section 2a. Referring to Standing Committee Report of the Consumer Affairs, Food and Public Distribution and the Statement of Objects and Reasons of the Essential Commodities Amendment Act, 2006, learned counsel submitted that Essential Commodities Act, 1955, continues to be an umbrella legislation for the Central Government and the State Governments. Consequently, under sub-section (2) of Section 2a of the Essential Commodities Act, Central Government may, if it is satisfied, can amend the Schedule so as to add a commodity to the said Schedule. Learned counsel, therefore, submits that power is reserved with the Central Government to add any commodity to the Schedule. Learned counsel also referred to the provisions of the Environment Protection Act, and submitted that transgenic cotton seeds are covered by the Rules for Manufacture, Use, Import, Export and Storage of Hazardous Micro Organisms/genetically Engineered Organisms or Cells, 1989, and no seeds can be released into the market without clearance under the Environment Protection Act. Referring to the Preamble of the impugned Act, learned counsel denied the statement that traders are exploiting poor farmers by collecting exorbitant price. On the other hand, he submitted, that the benefits provided to farmers by use of BG-I and BG-II have been ignored. Learned counsel also referred to the institutional machinery for quality control under the Central Acts and licensing provisions under the Essential Commodities Act and performance checks under the Seeds Act and the Rules, and also the enforcement mechanisms and penalties imposed under the Seeds Act, etc.


(10) LEARNED counsel referred to the decision in Indra Sawhney vs. Union of India (AIR 2000 SC 498) and submitted that the Preamble represents the legislative facts relied upon by the Legislature and the Court can lift the veil of these legislative facts and enquire into their probity. Learned counsel submitted that Parliament has passed legislation under Entry 33 of List 3 of Schedule VII to the Constitution of India dealing with trade and commerce in certain essential commodities, which includes cotton seeds, and the Central Government, therefore, has occupied the field with respect to all the commodities contained in Entry 33, and it is not open to States to enact any law under the same Entry seeking to regulate trade and commerce in those commodities. Seeds Act, 1966, Essential Commodities Act, 1955, and Environment Protection Act, 1986, provide for comprehensive legislations under Entry 33 of List III in VIIth Schedule, and have potentially occupied the field in respect of all matters relating to cotton seeds.


(11) LEARNED counsel submitted that State Legislature, as per Act 20 of 2008, has attempted to usurp the statutory procedures of the Union of India conferred upon it by virtue of provisions of Essential Commodities Act, Seeds Act, Environment Protection Act and the Rules of 1989, and such transgression is unconstitutional, and is liable to be declared so. Learned counsel submitted that all legislative fields are exclusive though under List III Parliament and State Legislature can legislate on various items listed therein. Further, learned counsel submitted that simply because Union of India has not legislated on an area, does not mean that State Legislature, can trench on those areas. Referring to the decision of the Apex Court in Gujarat University Vs. Sri Krishna Mudholkar (AIR 1963 SC 703), learned counsel submitted that the fact that the Union has not legislated, or refrained from legislating to the full extent of its powers, does not invest the State with power to legislate in respect of a matter assigned by the Constitution to the Union. Learned counsel also referred to the principle of pith and substance to which reference was made by the Apex Court in Prem Chand Jain vs. R. K. Chhabra (AIR 1984 SC 12) and State of Bombay Vs. Balsara (AIR 1951 SC 318). Referring to Article 254 of the Constitution of India and the decision of Apex Court in State of Orissa Vs. Tulloch (AIR 1984 SC 1284), learned counsel submitted that the test of two legislations containing contradictory provisions is not, however, the only criterion of repugnancy, for if a competent legislature with a superior efficacy expressly or impliedly evinces by its legislation an intention to cover the whole filed, the enactments of the other legislatures, whether passed before or after, would be overborne on the ground of repugnance. Learned counsel, placing considerable reliance on the decision of the Apex Court in Thirumurga Vs. State of Tamil Nadu and others (1966 3 SCC 15), tried to repel the contention of the State, and submitted that it cannot be said that the test of two legislations containing contradictory provisions is the only criteria of repugnance.


(12) LEARNED counsel also referred to the decision of the Apex Court in Zaverbhai Amaidas Vs. State of Bombay (1955. 1 SCR 799) and highlighted the subject matter test. Reference was also made to decision of the Apex Court in T. Barai v. Henry AH Hoe (1983. 1 SCC 177), and submitted that the power of Parliament will prevail over the State law under Article 254 (1) of the Constitution of India. Learned counsel also referred to the decision of the Apex Court in State of J. K. vs. M. S. Farooqi (1972. 1 SCC 872), and submitted that if the intention of Central legislation is complete, exhaustive or exclusive, then the effect of State legislation on the same subject is limited. Learned counsel also referred to the decision of the Supreme Court in Godvat Pan Masala Products (2004. 7 SCC 68) and submitted that the question whether the field is occupied or not depends on the intention of the legislature and whether it intended co-existence. Learned counsel also referred to the decision of the Supreme Court in Belsund Sugar (1999. 9 SCC 620) and submitted that Essential Commodities Act, 1955, Seeds Act, 1966, Essential Commodities Act, 1955, and Environment Protection Act, 1986, are comprehensive legislations, and the intention of the Parliament, even by amending the Essential Commodities (Amendment) Act, 2006, was to see that State remained as a Consultee by retaining the power of the Central Government on various items under the Schedule, and the intention of the Union of India is clearly reasonable on the provisions of the Act, and hence State Legislature has no power to legislate on the subject matter of cotton seeds, especially when the field is fully occupied by Central legislations. Learned counsel fairly submitted that the power of writ court to examine pricing policy of a State is very limited, and the Court may not undertake a detailed examination of price fixation, but consider if relevant factors have not been taken into account, and if it is a case of hostile discrimination.


(13) LEARNED senior counsel for the petitioners submitted that to the best of petitioners' knowledge the price fixed by the respondents of cotton seed hybrids is not based on any study, market survey or any kind of data whatsoever. Learned counsel submitted that Section 12 of the Act prescribes the manner in which pricing is to be made, and due consideration should be given to statutory requirements, which were brought into force. Relevant considerations and relief aspects were omitted, while undertaking the exercise of price fixation. Learned counsel submitted that distribution, marketing after sales service costs, financial and administration costs, provisions for research and development expenses, claims on performances and other risks in seed business, gene introgression, gene purity testing, cost of regulatory approvals distributed on per packet basis, lower packing charges, lower distributor margins/selling schemes, trait value and VAT/service tax, etc. were clearly omitted, and there has been considerable hurry in issuing the impugned Notification. The Ordinance came to the effect from 10. 06. 2008 and the Notification has been issued on the next day, i. e. , 11. 06. 2008, which indicates no application of mind while fixing the price.


(14) LEARNED Senior Counsel for the petitioners referred to the decision of the Apex Court in Union of India vs. Cynamide India Limited (1987. 2 SCC 720), and submitted that Court shall not totally deny itself the jurisdiction to inquire into the question of pricing, and Court can examine whether relevant considerations have gone in, and irrelevant considerations kept out of the determination of the price. Learned Senior Counsel also referred to the decision of the Apex Court in Premier Automobiles vs. Union of India (1972)4 SCC (Notes) 1 in support of his contention. Learned counsel also made reference to the decision of the Apex Court in M. S. Gill v. CEC (1978 1 SCC 405) and submitted that by the affidavit of 28. 04. 2009, State is bringing information and justification, which was available in June 2008. Learned counsel also submitted that no credit was given to trait value, which is being charged by the technology provider, and State committed an error in not taking into consideration the trait value in fixing the price. Learned counsel submitted that though price is a matter of policy, and it can be examined by judicial review on the ground reasonableness and proportionality as well. Learned counsel submitted that price fixation is a quasi-judicial function, therefore, State has to apply its mind, and Court has to scrupulously examine as to whether State had, in fact, applied its mind. Learned counsel submitted that State Government was carried away by the representation of the Bharatiya Kisan Sangh, and ignored the grievances raised by the petitioners and the Seed Companies. The impugned Notification is, according to learned counsel, ex-proprietary in nature and that the State has tried to thrive on misplaced philanthropy. Learned counsel placed reliance on the decision in the case of Delhi Science Forum vs. Union of India ((1996. 2 SCC 405) in support of his contention.


(15) SHRI Kamal B. Trivedi, learned Advocate General, referred to the Preamble of the Gujarat Act No. 20 of 2008 as well as Statement of Objects and Reasons. Referring to Article 39b of the Constitution of India, he submitted that it empowers the State Government to make suitable statutory provisions, so as to make available the commodities essential to the citizens at fair price. Therefore, in the interest of farming fraternity, and to have free flow of supply, equal distribution and price of all kinds of cotton seeds, including transgenic cotton seeds, and to protect farmers economy, it is expedient and necessary to make suitable statutory provisions, especially when cotton seed was taken out of the purview of the Essential Commodities (Amendment) Act, 2006. Learned Advocate General submitted that Section 12 of the Gujarat Act No. 20 of 2008 empowers the State Government to fix the price and price was fixed in consultation with the Gujarat State Seeds Corporation, after taking into consideration all aspects, including the interest of farmers, and also the views expressed by the National Seeds Association of India. Learned Advocate General submitted that NSAI has not challenged the pricing policy so far. Referring to the meeting held on 22. 04. 2008 and also the discussions held with representatives of various Associations, learned Advocate General submitted that price was fixed taking note of the interests of the Seed companies, farmers associations and in consultation with the Gujarat State Seeds Corporation. Learned Advocate General submitted that while fixing the price of Bt cotton seeds, State Government has taken into consideration the costs incurred for research and development, technology upgradation, etc. , for development of Bt cotton seeds. Learned Advocate General submitted that petitioners had at any point of time not addressed the Government against price fixation. Learned Advocate General also submitted that Gujarat is a major cotton growing State in the country, wherein an area of about 20 lakh hectares of land is under the cultivation of cotton crop, and majority of its sowing area covered for getting cotton crop is being used by those farmers, who have been using Bt cotton seeds.


(16) LEARNED Advocate General submits that there is no illegality in issuing the Notification dated 11. 06. 2008 and the same had to be issued in public interest so as to arrest the exorbitant price demanded by the seed companies. Learned Advocate General submitted that since cotton seed was omitted from the provisions of Essential Commodities Act, the prices of Bt cotton shot up phenomenally, putting the farmers at the mercy of the seed companies. Hence, there was extreme urgency on the part of the State Government to promulgate the Ordinance and issue the Notification to control the price rise.


(17) LEARNED Advocate General submitted that the State Government is competent to enact such a law and the power can be traced to Entry No. 33 in the List III of VIIth Schedule. Learned Advocate General submitted that both the legislations, i. e, Central enactments as well as the Gujarat Cotton Seeds Act can operate together so long as there is no repugnancy between the two. Learned Advocate General submitted that there is no inconsistency between the Gujarat Cotton seeds Act on the one hand and the Seeds Act, 1966 and the Rules framed thereunder on the other hand. Gujarat Cotton Seeds Act lays down detailed provision with reference to varieties of cotton seeds in the matter of supply, distribution, sale, fixation of sale price and matters connected therewith, whereas provisions of Seeds Act, 1966 and Seeds Rules 1968 deal with only those kind and variety of seeds, which are notified under Section 5 of the Seeds Act, 1966.


(18) LEARNED Advocate General submitted that Environment (Protection) Act, 1986 and the Rules of 1989 provide for comprehensive legislation relating to environment protection as well as storage of hazardous and genetically modified organisms, which includes Bt cotton seeds, and that Gujarat Cotton Seeds Act purporting to regulate Bt cotton seeds in its scope of regulation of trade and commerce of the cotton seeds, is not contrary to the provisions of the aforesaid enactments. Learned Advocate General submitted that GEAC has granted approval under Rule 10 of the 4s of 1989 in respect of Bt cotton seeds, which suggests that Bt cotton seeds are not hazardous genetically engineered organisms. Learned Advocate General submitted that Essential Commodities Act and Seeds Act are referrable to Entry 33, List III of 7th Schedule and the same are presently not applicable to Bt cotton seeds and hence no question arises of any repugnancy between the State Act on the one hand and the Essential Commodities Act and Seeds Act on the other.


(19) LEARNED Advocate General submitted that there is always a presumption in favour of the constitutionality of a statute and the burden is upon him, who attacks it, to show that there has been a clear transgression of the constitutional principles. In support, learned Advocate General referred to several decisions of the Apex Court. Learned Advocate General submitted that in order to prove repugnancy, two conditions must be fulfilled, i. e. , the State law and Union law must operate on the same field and one must be repugnant or inconsistent with the other. Learned Advocate General submitted that in the case of concurrent list there could be legislation on the same subject by both the Central legislation and the State legislation, and there might be some overlapping or incidental encroachment on one over the other, and if it is not within the permissible limits, one might become repugnant and they would operate within the spheres occupied by each of them. Learned Advocate General submitted that the State legislation is intended to serve as subsidiary or supplementary to Central legislation on the same subject or it may even be for effectuating the very intention of Central legislation, without in any way competing or conflicting with the Central legislation on the subject. Learned Advocate General also elaborately dealt with various decisions relied upon by the learned counsel appearing for the petitioners and tried to distinguish all those decisions and submitted that on facts as well as on law they would not apply to the instant case.


(20) SHRI K. M. Patel, learned counsel appearing for the intervenors, submitted that Section 12 of the impugned Act empowers the State Government to fix maximum sale price after taking into consideration the cost of production, trait value and other related factors. He has submitted that price is fixed based on costing worked out by public sector undertaking. State Government has also taken into consideration the trait value and other relevant factors and no cost input element including profits is left out from consideration. Learned counsel submitted that price fixation is purely a policy matter and do not fall within the domain of judicial review. Learned counsel submitted that Entry 14 of List II is relating to agriculture, including agricultural education and research, protection against pests and prevention of plant diseases, and if given comprehensive broad meaning, it would include the power of the State legislature to make available seeds for agricultural purposes at reasonable rates. Entry 26 deals with trade and commerce within the State subject to provisions of Entry 33 of List III. Reference was also made to Entry 27, which deals with production, supply and distribution of goods subject to provisions of Entry 33 of List III. Learned counsel submitted that Entries in VIIth Schedule demarcating the legislative powers have to be given broad and general meaning and they are not to be interpreted as definitions in statutes, and all ancillary and subsidiary subjects are to be treated as part of the main entry. Learned counsel submitted that price was fixed after taking into consideration the interest of all seed companies, farmers and others, and hence, there is no justification in interfering with the Notification issued by the State Government fixing the price for cotton seeds and hence the constitutional validity of the Act is upheld.


(21) SHRI Harin P. Raval, learned Asst. Solicitor General appearing for the Central Government, placing reliance on the counter affidavit filed by the 5th respondent pointed out that consequent upon removal of cotton seeds from the essential commodities list vide Essential Commodities (Amendment) Act, 2006, effective from 12. 02. 2007 the cotton seeds, including Bt cotton seeds, have been left out of the purview of regulatory and quality mechanism under Seeds (Control) Order, 1983. However, it was pointed out that the Union of India has initiated the proposal for restoration of cotton seeds in the list of essential commodities, after ascertaining the views of the major cotton growing States.


(22) WE may at the outset point out that indisputably the item `cotton seeds' was taken out of the purview of the Essential Commodities Act, with effect from 12. 02. 2007 and hence it was left out of the regulatory and quality control mechanism of the Seeds (Control) Order, 1983. Provisions of the Seeds Act, 1966, in their application to the State of Gujarat regulate the quality of seeds notified in the said Act. For the past few years, in view of the substantial change of pattern of agriculture, particularly in usage of seeds, the provisions of the said Act were found to be inadequate for enforcement in respect of quality of cotton seeds and regulation of trade of non-notified cotton varieties research hybrid varieties, etc. , and as a result, it was noticed that the entire economy of farmers was adversely affected. Due to the amendment of Essential Commodities Act, 1955, cotton seeds was deleted from the Schedule of the Act, with the result, traders dealing in cotton seeds used to hike prices, including transgenic cotton seeds, leading to exploitation of farmers, particularly in respect of scarce type of cotton seeds, causing unjustified burden towards seeds cost, which is essential and vital input in the process of agriculture.


(23) COTTON seed was treated as an essential commodity under the Essential Commodities Act, 1955, till it was amended by Act No. 54 of 2006. Since it was originally included in the Essential Commodities Act, 1955, all provisions of Essential Commodities Act and the Rules made thereunder and the Seeds Control Order 1983 were applicable to cotton seeds. By virtue of Section 3 of Essential Commodities Act, 1955, power was conferred on the State Government to control production, supply and distribution of essential commodities. Sub-section (2) of Section 3 says that without prejudice to the generality of the powers conferred by sub-section (1), an order made thereunder may provide for controlling the price at which essential commodity may be bought or sold. Sub-section (2) of Section 3 also conferred powers on the Central Government to regulate, by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of, any essential commodity. In other words, there was effective control of the Central Government and the machinery provided under the Essential Commodities Act, so as to control the price of cotton seeds. After the Act No. 54 of 2006, Section 2a reads as follows: "2a (1) For the purposes of this Act, "essential commodity" means a commodity specified in the Schedule. Subject to the provisions of sub-section (4), the Central Government may, if it is satisfied that it is necessary so to do in the public interest and for reasons to be specified in the notification published in the Official Gazette, amend the schedule so as to add a commodity to the said Schedule"


(24) SECTION 2a of the Essential Commodities Act, therefore, empowers the Central Government, if it is satisfied and if it is necessary to do so in the public interest and for reasons to be specified in the notification, amend the schedule so as to add a commodity to said Schedule. Essential Commodities (Amendment) Bill 2005, was presented to Lok Sabha on 11. 02. 2006 by the Standing Committee on Food, Consumer Affairs and Public Distribution 2005-06. Reference may be made to paragraph C. 1. 4 of the Report:


"the list of essential commodities has been reviewed from time to time with reference to the production and supply of these commodities and in the light of economic liberalization. The number of items declared as essential has come down to 15 at present from 70 in the year 1989. A conference of Chief Ministers on "wto and Agriculture" held on 21. 05. 2001 reviewed the provisions of the said act in the context of removal of restrictions on movement and stocking of food and agricultural produce, wherein it was decided to form a Committee of Central Minister-in-charge of Agriculture, Commerce and Industry, Finance, Consumer Affairs, Food and Public Distribution, Rural Development and deputy Chairman (Planning Commission) as also the Chief Ministers of Andhra Pradesh, Karnataka, Orissa, Assam, Uttar Pradesh, Punjab, Madhya Pradesh, Haryana, West Bengal, Kerala and Maharasthra. Review of the list of Essential Commodities and Control Orders to ensure free movement of agricultural produce was one of the terms of reference of the Committee. The Committee decided that the restrictions on movement of all agricultural commodities should be removed and that the said Act may continue as an umbrella legislation for the Union Government and the State Governments to use when needed but that a progressive dismantling of controls and restrictions was also required. Paragraph E. 1. 14 of the Report also reads as under: "e. 1. 14 At the same time, the Committee hope and trust that the Government will use the discretion of adding or removing any commodity from the list of Essential Commodities judiciously keeping in view the interest of the general public and only in situations like war and natural calamity and when there is scarcity or non-availability of that commodity which cannot be tackled through normal trade channels requiring government's intervention. The Committee desire that this provision should be inserted into the Act at a suitable place. "


(25) ABOVE report and other attending circumstances would clearly indicate that Parliament has consciously omitted cotton seeds from the definition of `essential commodities'. In fact clause (a) Section 2 was omitted in the Act No. 54 of 2006. Section 2a clearly says that for the purpose of Essential Commodities Act, "essential commodity" is a commodity which is specified in the Schedule. Once a commodity is not included in the Schedule, it will not be an essential commodity within the meaning of Essential Commodities Act, and therefore the provisions of the Essential Commodities Act as well as the provisions of Seed Control Order, 1985, would not apply. Consequently, Central Government left with no power to control prices of cotton seeds which do not figure in the Schedule to the Act. Consequently, Order 2 (1) of Seeds Control Order rendered inapplicable to cotton seeds. `seeds' means as defined in the Seeds Act, 1966. Seeds Act though defines cotton seeds under Section 2 (11) (ii), the same would not apply in case of Seeds Control Order 1983, since cotton seeds was taken out of purview of Essential Commodities Act. Consequently, there was no obligation on the part of the dealers to display stock price list of cotton seeds as per order 8 of Seeds Control Order, 1983 and hence there was no machinery either under the Essential Commodities Act or under the Seeds Control Order 1983, to control price of cotton seed. Consequently, field of legislation originally occupied by the Central legislation was left open and hence State Legislature got power to legislate on cotton seeds.


(26) SEEDS Act, 1966, is an Act enacted by the Parliament to provide for regulating the quality of certain seeds for sale. Section 5 of the Seeds Act, 1966, says that if the Central Government after consultation with the committee, is of opinion that it is necessary or expedient to regulate the quality of seed of any kind or variety to be sold for purposes of agriculture, it may, by notification in the official gazette, declare such kind or variety to be a notified kind or variety, for the purposes of that Act, and different kinds or varieties may be notified for different States or for different areas thereof. Sub-section (9) of Section 2 refers to `notified kind or variety', in relation to any seed, means any kind or variety thereof notified under Section 5. Admittedly, Bt cotton seed has never been notified by issuance of any such notification under Section 5 of the Seeds Act so far, and hence variety of Bt. Cotton seeds does not stand covered by the Seeds Act. Section 6 of the Seeds Act deals with power of the Central Government to specify minimum limits of germination and purity, etc. and has nothing to do with the pricing of cotton seeds. Section 7 deals with regulation of sale of seeds of notified kinds or varieties. No person shall himself or by any other person on his behalf carry on the business of selling keeping, for sale, offering to sell, bartering or otherwise supplying any seed of any notified kind or variety of cotton seeds. Seeds Act also does not deal with any licensing provision. Section 13 of the Seeds Act empowers the State Government to appoint suitable persons as Seed Inspectors. Environment Protection Act, 1986, has also nothing to do with the fixation of price of cotton seeds, which was enacted for protection and improvement of environment and for matters connected therewith. Rules for Manufacture, Use, Import, Export and Storage of Hazardous Micro Organisms/genetically Engineered Organisms or Cells, 1989 have been framed in exercise of powers conferred under Section 8 of the Environment Protection Act, 1986, mainly with a view to protect the environment.


(27) ABOVE facts would clearly indicate that cotton seeds are not covered by any Central legislation so as to regulate supply, distribution, sale and fixation of sale price of cotton seeds, especially when cotton seed is not an essential commodity within the meaning of Essential Commodities Act, 1955, amended by Act No. 54 of 2006, and the provisions of Seeds Control Order 1983 issued under Section 3 of the Essential Commodities Act, 1955, are not applicable in so far as they relate to cotton seeds with effect from 12. 02. 2007, and there is no provision in the Essential Commodities Act or the Environment Protection Act to regulate supply, distribution and sale of transgenic and genetically modified cotton seeds and to control the sale price of such cotton seeds in the State.


(28) LEARNED Senior Counsel for the petitioners tried to project the intention theory that the Union of India have always intended to retain its powers to control the quality and prices as far as cotton seeds are concerned. In our view, the intention is otherwise, that is to exclude cotton seeds from the purview of Essential Commodities Act and other controls by the Central Government. Legislature was well aware of the consequences of exclusion of cotton seeds from the purview of Essential Commodities Act and has consciously omitted cotton seeds from the purview of the Essential Commodities Act, evidently to give more room for State Legislatures to step in, depending upon the situation in each State. Constitution bestows power on the Central and States to enact laws subject of which falls under the Concurrent List. When the Centre makes a law for the whole country on a matter, in the Concurrent List, a State may also make, if necessary, supplementary laws on that matter to provide for specific circumstances within that State. Problems and conditions may vary from State to State, requiring diverse approach suited to the peculiar situation prevailing. Justification given by learned counsel so as to project the intention of the Parliament to cover the entire field, even with regard to pricing of cotton seed, in our view, cannot be accepted, because if that was the intention of the Union, it would not have omitted cotton seeds from the purview of the Essential Commodities Act.


(29) LEARNED Senior Counsel for the petitioners further submitted that the Central Government still retains its power under Section 2a of the Essential Commodities Act to bring in cotton seed within the Schedule. Learned counsel is right, Central Government can always do so, in the event of which, unless until State legislation receives the assent of President, the Central legislation will prevail. But, we cannot act on a mere contingency or possibility. Contingency or possibility of Central Government amending the Schedule to bring in cotton seeds again in exercise of powers conferred under Section 2a of the Essential Commodities Act, is not a ground to strike down a legislation. On the contrary, as things stand today, by deleting cotton seeds from the purview of Essential Commodities Act, Parliament has evinced its intention to leave the field open to the State legislatures to legislate on cotton seeds. The decisions cited by the learned Senior Counsel for the petitioners on intention theory on facts will not apply, especially when we have found that the Centre has expressed the intention to leave it to State to legislate. The test l

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aid down in Tulloch and Thirumurga will not apply to the facts of this case. Parliament has not evinced any interest to cover the whole field, on the other hand, we have already indicated that the intention was to leave it to the State to control the quality of cotton seeds and its pricing. We are also not prepared to accept the contention that the State's role is only that of a Consultee. When Parliament has omitted cotton seed from the purview of Essential Commodities Act and when there is no mechanism to control the prices of cotton seed, then the State cannot remain as a mute spectator. State has to step in in public interest to arrest the rise in price. (30) WE are also not impressed with the argument of learned Senior Counsel on pricing policy. Law is well settled that court should be slow in interfering with pricing policy. Learned Senior Counsel has referred to various decisions, which have to be appreciated in the facts and circumstances of this case. Petitioner-organization, as such, did not raise any objection with regard to price fixation. Objections were raised only by NSAI, which represents a large number of seed companies, and they were heard before fixing the price for the Bt cotton hybrid seeds. NSAI has not made any complaint with regard to pricing policy or challenged the constitutional validity of the Act or the Notification issued fixing the prices. Petitioners claim to be some of the members of that Association, but, in our view, they cannot independently challenge the pricing policy as such and contend that price was not properly fixed. We are not prepared to accept the contention that there was non-application of mind while exercising powers under Section 12 of the Gujarat Act No. 20 of 2008. Relevant materials were taken into consideration while price was fixed for cotton seeds. (31) WE find price of Bt cotton seed has been fixed by the Gujarat Seeds Corporation after consulting farmers' associations as well as seed companies represented by their associations and on the basis of available materials placed before the Corporation and the State Government. Learned Senior Counsel for the petitioners submitted that the impugned Notification was issued hurriedly. We have already indicated that after omission of cotton seed by Act No. 54 of 2006, for the last two years or so, there was no control over the price of Bt cotton seeds, therefore, price of Bt cotton seeds shot up, leaving farmers at the mercy of seed companies. Hence, there was extreme necessity of issuing a notification for controlling the price rise. The mere fact that Notification was immediately issued after issuance of Ordinance does not mean that it was issued without application of mind. On the other hand, we may indicate that the interest of the farmers, seed companies and others were taken into consideration before the Notification was issued. All the same, if petitioners or the seed companies have any further grievance, they can always place the same before the Government and it can always change its policies on pricing. We, therefore, find no reason to strike down the Notification dated 11. 06. 2008 fixing the price of Bt cotton seeds. (32) COMMISSIONER (Seeds), Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation, New Delhi, has filed an affidavit stating that consequent upon removal of cotton from essential commodities list vide the Essential Commodities (Amendment) Act, 2006 (No. 54 of 2006) dated 26. 12. 2006 effective from 12. 02. 2007, cotton seeds, including Bt. Cotton have been left out of the purview of regulatory and quality control mechanism under Seeds (Control) Order, 1983. All the same, it is stated in the affidavit that respondent no. 5 has initiated the proposal for restoration of cotton seeds in the list of essential commodities after obtaining views of major cotton growing States for consideration of the competent authority on which an appropriate view can be taken after the conclusion of the process of General Elections to the Parliament as the Model Code of Conduct has now come into force. We find from the affidavit that the same is at a proposal stage, its outcome cannot be predicted. (33) IN the circumstances, the challenge against the constitutional validity of the Act cannot stand, so also the Notification issued thereunder. Writ petition lacks merit and the same is dismissed. In the facts and under the circumstances, there shall be no order as to costs. Civil Application stands disposed of accordingly.
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