An Analysis of the Essential Commodities Act, 1955

This PPT provides An Analysis of the Essential Commodities Act, 1955 in Contemporary India

1. An Analysis of The Essential Commodities Act, 1955 in Contemporary India Socio-Economic Offences Submitted to: Submitted By: Ms. Cheshta Dahiya Abheet Mangleek VSLLS 00417703817, IX-A

2. Introduction The Essential Commodities Act was enacted in the year 1955. Essential commodities are those that the Central Government may notify and declare to be an essential commodity for the purpose of this Act.  The fundamental motivation behind The Essential Commodities Act, 1955 is to guarantee that the general public gets the essential commodities without any obstruction with respect to the trade at fair price and quality. It is a socio-economic legislation, which safeguards the interest of common man.

3. Aims and Objectives of the Act The objective of the Act is to provide for the control of production, supply and distribution of, and trade and commerce in, certain commodities, in the interest of general public. Following are the main aims of the Act: Maintaining an uninterrupted supply of essential commodities in the country to ensure their availability at fair prices. Maintaining stable price of the essential commodities. The central government also fixes the maximum retail price for such goods.  Preventing hoarding of essential commodities. Stop black marketing of essential commodities.

4. What constitutes Essential Commodities? The phrase “Essential Commodity” as per the Act means a commodity specified in the Schedule to the Act. (Section 2A) The Central Government may amend it if it is necessary to do so in public interest. Schedule to the Act lists out following commodities- Drugs; fertilizer, whether inorganic, organic or mixed; foodstuffs, including edible oilseeds and 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 seeds. Any other class of commodity which the C entral G overnment may notify from time to time. In Satpal Gupta v. State of Haryana , it was established that cattle and poultry foods are included within the meaning of the ‘foodstuff.

5. Powers of Central Government The Central Government under this Act has 2 broad powers: Power to notify the essential commodities and add or remove the commodities from the Schedule of the Act in public interest. (Section 2A) Power to issue control orders which provide for regulation or prohibition of the production, supply and distribution of, and trade and commerce in, essential commodities in one of the following circumstances: When the government finds that it is necessary and expedient to do in favor of the general public. When they have to secure equitable distribution and availability of these commodities in the market. When they have to secure any specific commodity for the Defense of India.  (Section 3)

6. Powers of Central Government (cont.) Section 3 gives power to the Central Government to issue control orders for the following purposes: To regulate by license, permit or otherwise the production, distribution, supply, storage, transport, acquisition of any essential commodity; To bring under cultivation of any wasteland or arable land; To control the buying and selling price of any essential commodity; To determine entry, search, examine, seizure of any essential commodities; To p rohibit the withholding from sale of any essential commodity, ordinarily kept for sale; To   collect any information or statistics with a view to regulate or prohibit any of the aforesaid matters; and, To  regulate or prohibit any class of commercial and financial transactions relating to foodstuffs.

7. Seizure and Confiscation Section 6A of the Act states that where there is a contravention of any order under section 3 in the pursuance of which an essential commodity is seized, the District Collector may order confiscation of essential commodity, package etc. so seized. No order for confiscation of any essential commodity can be passed against any person without issuing a Show Cause Notice and providing him an opportunity to make his presentation. (Section 6B) Any person aggrieved by any order of confiscation is entitled to appeal to the judicial authority appointed by the government within one month from the date of the communication and the Appellate Court, after hearing the case, may confirm, modify, or annul such an order. (Section 6C)

8. Offences and Penalties As per Section 7 , person who contravenes any order under section 3 , shall be punishable with imprisonment for a term varying from 3 months to 7 years depending upon the offence, or shall also be liable to fine or both as may decided by the court. In addition, the property of the person who contravened the provisions of the Act may also be forfeited. As per Section 8 , any person, who attempts to contravene or abets a contravention of any order made under section 3 shall be deemed to have contravened that order. In the case of offences committed by the companies , the person who committed the offence or person who is in charge shall be held responsible for the offence and punishment shall be given to him accordingly. (Section 10) As per Section 11 the Courts shall take cognizance of offences only on a report in writing of the fact constituting such offence made either by a public servant or any person aggrieved or any recognized consumer association.

9. Nathu Lal v. State of Madhya Pradesh (AIR 1966 SC 43) In this  case , the applicant was the dealer of food grains at Dhar in Madhya Pradesh. He was prosecuted for having in stock 885 maunds and 21/4 seers of wheat without a license for the purpose of sale thereby committed an offence under Section 7 of essential commodities Act, 1995. The appellant pleaded that he did not intentionally contravene the provision of the Act and said that he stored the goods after applying for the license and he was fully convinced by the government authorities that it would be issued to him. It was observed that an offence under Section 7 would be committed only if a person intentionally contravenes the provision of Section 3 of the Act. In this case, the appellant successfully proved that he had no guilty intention at the time of having stored the seized essential commodities. Therefore, he was not prosecuted for this offence. 

10. State of Madhya Pradesh v. Narayan Singh & Ors (1989 AIR 1789) In this   case,  the R espondents were prosecuted for the offence committed under Section 3 and Section 7 of T he Essential C ommodities Act. They were carrying bags of fertilizers in trucks from Indore to Maharashtra. The lorry driver possessed invoice and other records but they did not include a permit issued under  the Fertilizers (Movement C ontrol) Order, 1973 . The Respondents claimed they had no knowledge about the contents of the document so seized. In this case, the mere fact that the Respondents export bags of fertilizers without permit itself does not consider as a valid reason for convicting them in this case. The prosecution also failed to prove that there is any culpable mental state or innocuous purpose involved in the parts of the respondents. Therefore the Supreme Court did not award any punishment to the Respondent for the commitment of the aforesaid offence.

11. Essential Commodities Act, 1955 and COVID-19 On March 13, the Government declared face masks and hand sanitizers as essential commodities for 100 days to boost supply and prevent hoarding of these items in the fight against the  coronavirus  pandemic. This had empowered states to regulate production, distribution and prices of these items as well as crackdown on hoarding and black marketing. Face masks and hand sanitizers have been now kept out of the purview of Essential Commodities Act, 1955 as there is sufficient supply of these items. The Government declared that any offender of the Act shall be liable for an imprisonment of up to 7 years or fine or both . The Government also issued an advisory to the State Governments to invoke the Essential Commodities Act, 1955 for ensuring availability of essential goods.

12. The Essential Commodities (Amendment) Act, 2020 A new Subsection (1A) in Section 3 has been introduced. It takes cereals, pulses, oilseeds, edible oils, onion and potatoes out of the list of essential commodities. It thus removes stockholding limits on these items except under “extraordinary circumstances” such as war and natural calamities. This will attract private investment into the farm sector as it will remove fears of investors of excessive regulatory interference in their business operations. Private investment will be made for creating infrastructure such as cold storage and warehouses and for modernising the food supply chain It will create a competitive market environment and prevent wastage of farm produce that happens due to lack of storage facilities.

13. Why is the 2020 Amendment being opposed? This is one of the three Acts that have seen protests from farmers in parts of the country. The Essential Commodities (Amendment) Act, 2020 is being opposed because: The price limits which have been set for “extraordinary circumstances” are so high that they are likely to never be triggered. Big companies will have the freedom to stock commodities which will mean that they will dictate the terms to farmers, which may lead to less prices for the cultivators. T he Amendment will hurt the farmers and consumers, and will only benefit the hoarders.

14. Conclusion Many see the Essential Commodities Act, 1955 as a justified tool to protect consumers from profiteering by unscrupulous traders. However, unlike modern competition law, the ECA requires no analysis from the government before a Control Order is issued. In effect, it becomes a tool to expropriate traders who may have stored products during harvest to sell during the lean months. The ECA disincentivizes investments in warehouses and storage for crops. Till the time the ECA isn't rejected, the private sector won't approach to put resources into Agri distribution centers. Also, black marketing, bribery and corruption is rampant and a glaring problem in the implementation of orders and directions on essential commodities.  There have been many recommendations to reduce the arbitrariness of the ECA like- the power of the officials under the Act should be reduced, offences should be made bailable, etc. b ut ECA at its core is a draconian law, which discourages people from creating assets in agriculture.

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