Essential Commodity Act 1955 (Legal Pedia).pptx

The Essential Commodities Act, 1955 is an important legislation enacted by the Government of India to ensure the smooth supply and regulation of essential goods in the country, particularly during times of scarcity or price fluctuations. The Act empowers the central government to control the production, supply, and distribution of commodities that are considered essential for the welfare of the public.

1. INTRODUCTION Now a days, every person's life depends upon some essential commodities, which are used by them every day. These commodities are the basic requirements to sustain a normal life. Thus, the availability and price of such commodities impose a major effect on the life of the general public. Therefore, to regulate the pricing, production, demand, and supply of these products, The Essential Commodities Act, 1955 plays a major role.

2. HISTORICAL BACKGROUND OF THE ACT

3. OBJECT AND SCOPE OF THE ACT This Act extends to the whole of India. The Act was enacted to ensure the availability of essential commodities to consumers and protect them from the exploitation of unscrupulous traders, therefore, the Act provides rules related to the regulation and control of production, pricing, and distribution of the essential commodities. There are two main aims of this Act: To maintain or increase the supply of these essential commodities, and To secure equitable distribution and availability of these essential commodities.

4. What is an 'essential commodity'? There is no specific definition of essential commodities in the Essential Commodities Act, 1955 Section 2(A) states that an "essential commodity" means a commodity specified in the Schedule of the Act. The Act gives powers to the central government to add or remove a commodity in the Schedule. Ministry of Consumer Affairs, Food and Public Distribution implements the Act.

5. What happens when a commodity is declared essential? If a commodity is declared essential, the government can control the production, supply and distribution of that commodity, and impose a stock limit.

6. What is the amendment in 2020? The amendment introduces a new Subsection (1A) in Section 3. Under this section, the supply of certain foodstuffs can be regulated only under extraordinary circumstances An extraordinary price rise, war, famine, and natural calamity of a severe nature. Earlier, these commodities were not mentioned under Section 3 and reasons for invoking the section were not specified. Amendment also, exempts, certain food processors, value chain participants & exporters subject to limited ceiling. (Also PDS)

7. Under what circumstances can the government impose stock limits? 1955 Act did not provide a clear framework to impose stock limits. Amendment has clauses for stock limiting like war, famine and natural calamity. Amendment also has clause of "price trigger" to counter extraordinary price rise & impose stock limit. Ex: Horticultural produce, a 100% increase in the retail price of a commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower. Nón-perishable agricultural foodstuffs a 50% increase in the retail price of the commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower.

8. ESSENTIAL COMMODITY Sec.2A According to the Essential Commodities Act, essential commodities mean any commodity specified in the schedule. Thus, 7 following commodities are specified in the schedule : Drugs (this is used in the same sense as defined under clause b of Section 3 of the Drugs and Cosmetics Act, 1940); Fertilizers, whether organic, inorganic or mixed; Foodstuffs, including edible oils and its seeds; Hank yarn, made wholly with cotton; Petroleum and its products; Jute, whether in the form of raw or textiles; Seed, whether of fruits and vegetables, cattle fodder, or jute.

9. (b) "drug" includes - Section 3(b) in The Drugs And Cosmetics Act, 1940 ( i ) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; (ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette; (iii) all substances intended for use as components of a drug including empty gelatin capsules; and (iv) such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board

10. NOTIFIED ORDER Sec.2(c) This means an order which is notified in the Official Gazette.

11. SUGAR Sec.2(e) According to the Act, the word sugar includes any form of sugar which contains more than ninety percent of sucrose, including sugar candy, khandsari sugar, bura sugar, crushed sugar, crystalize or powder sugar or the sugar whether in a form of process in a factory or raw produce.

12. LAWS RELATING TO MAINTENANCE OF ESSENTIAL SUPPLIES

13. POWERS OF CENTRAL GOVT. UNDER THE ESSENTIAL COMMODITIES (SECTION 3) The Central Government under this Act have two important powers:

14. POWER TO ISSUE A CONTROL ORDER (SECTION 3)

15. PURPOSES FOR PASSING CONTROL ORDER

16. To determine entry, search, examine, seizure of any essential commodities The Central Government by passing control order may determine entry, search, examination, seizure of: Any conveyance such as aircraft, vessels, vehicles used to carry essential commodity; Any packages, covering or receptacle in which any essential commodity are found or packed; Any book of account and documents which gave the information about any essential commodity.

17. To require any person to do specific works The central government may pass the control order for required any person who is engaged in production or business of buying and selling of the essential commodity to sell whole or any specific part of a commodity held in stock or when any commodity is likely to receive in future whole or specific part of such commodity when received to the Central Government or State Government or to the corporation owned or controlled by the government or to the officer or agent of the government or to another person or class of person specified thereof. The Central Government also requires such a person to maintain and produce for inspection such books, accounts, and records related to his business and furnish such information specified under the order.

18. To regulate or prohibit any class of commercial and financial transactions The Central Government may pass the control order to regulate or prohibit any class of commercial or financial transactions relating to any foodstuff which is in the opinion of the authority unregulated and is likely to be detrimental to the public interest.

19. To require any person to do specific works The central government may pass the control order for required any person who is engaged in production or business of buying and selling of the essential commodity to sell whole or any specific part of a commodity held in stock or when any commodity is likely to receive in future whole or specific part of such commodity when received to the Central Government or State Government or to the corporation owned or controlled by the government or to the officer or agent of the government or to another person or class of person specified thereof. The Central Government also requires such a person to maintain and produce for inspection such books, accounts, and records related to his business and furnish such information specified under the order.

20. To regulate or prohibit any class of commercial and financial transactions The Central Government may pass the control order to regulate or prohibit any class of commercial or financial transactions relating to any foodstuff which is in the opinion of the authority unregulated and is likely to be detrimental to the public interest.

21. PRICE CONTROL UNDER THE ESSENTIAL COMMODITIES ACT,1955 [SECTION 3(3)] commodity shall be determined as: Where any person sells any essential commodity in compliance of the order made under Section 3, the price of that essential

22. FIXING THE PRICE OF ESSENTIAL COMMODITIES DURING AN EMERGENCY (SECTION 3А) The Central Government, when finds necessary to control the emergency situation, may issue a notification regarding the selling price of any foodstuff in any locality. The price of such food-stuff would be determined according to the following rule: If the foodstuff constantly falls under the category of controlled price and the parties have already agreed upon it then the price is calculated according to that agreement. If there is no such agreement related to the foodstuff can be reached then the price is calculated with reference to the controlled price. When there is a situation where condition 1 and condition 2 do not apply then the price of such foodstuff is calculated according to the average market rate prevailing in the locality. The notification issued under this Section shaii remain in force for 3 months only.

23. PAYMENT OF PROCUREMENT PRICE (SECTION 3B) When there is no aforesaid notification issued regarding the price of any food crop, edible oilseeds or edible oils the price of such would be determined after keeping in the mind: The controlled price, fixed under this law or any other law for the time being in force such food crop, edible oilseeds or edible oil; The general crop prospects; The need for such grade or variety; Recommendation of the Agriculture Price Commission.

24. FIXING A PRICE FOR SUGAR TO BE PAID TO THE PRODUCER (SECTION 3C) When there is no aforesaid notification issued regarding the price of sugar, then the price of sugar would be determined after considering the following: The price of sugarcane The manufacturing cost The duty and tax The reasonable return to the business and manufacturers However, it is provided that the government may from time to time decide different prices for different areas, factories, and varieties of sugar.

25. PRICE MONITORING CELL (PMC) The Price Monitoring Cell, appointed by the Central Government, tracks the prices of essential commodities like rice, wheat, dal, sugar, tea, potatoes, onions, and milk. Its responsibilities include predicting future prices, analyzing price trends, and providing feedback to help policymakers shape future policies. In case of shortages, the cell implements market intervention schemes to offer temporary relief to consumers. Currently, the cell monitors the prices of 22 essential commodities across 114 markets in four regions: East, West, North, and South of the country.

26. POWER TO APPOINT AUTHORIZED CONTROLLER [SECTION 3(4)] The Central Government has the power to authorize any person to undertake powers and functions for maintaining or increasing the production, supply and equal distribution of any essential commodity. The authorized controller empowered only to exercise such power and function which may be provided in the undertaking. Thus the authorized controller empowered would continue his function as long as such order remains in force.

27. ISSUANCE AND SERVICE OF CONTROL ORDERS UNDER (SECTION 3(5)) The control orders which are issued by the government is notified in the following manner: 1. If the order is directed to the general public, it will be notified in the Official Gazette, and 2. If the order is directed to a specific person, it will be served to such individual: by delivering and tendering it to that specific person, or if it cannot be so delivered or tendered, it can be served by affixing it on the outer side or any other conspicuous part of the premises in which such person lives. A written report thereof shall also be prepared and witnessed by two persons living in the neighborhood.

28. EFFECT OF THE ORDER MADE UNDER SECTION 3 (SECTION 6)

29. DISPOSAL OF SALE PROCEEDS OF CONFISCATED GOODS (SECTION 6A)

30. Before any order for the confiscation of essential commodities, packages, coverings, receptacles, animals, vehicles, vessels, or other conveyances can be made, the owner or the person from whom the goods were seized must be given a Show Cause Notice .

31. AN APPEAL AGAINST CONFISCATION ORDER (SECTION 6C) 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.

32. OFFENCES BY THE COMPANY (SECTION10) When the above offences are committed by any company. Then every person who is in charge or responsible for the conduct and business of the company is held guilty for the offences and is liable for the punishment. For the purpose of this Section, the term 'company' generally includes a body corporate, a firm, or any other association of individuals. However, it is provided that when any person liable for punishment successfully proved that the contravention has been taken place without his knowledge and he exercised due diligence at the time of contravention to prevent it then he would not become liable for any punishment for such offence.

33. OFFENCES AND PENALTIES UNDER THE ACT COGNIZANCE OF OFFENCES (SECTION 10A AND SECTION 11)  A  cognizable offence  is one where a police officer has the authority to arrest the accused without needing a warrant. This is in accordance with the  Criminal Procedure Code ( CrPC )  or any other applicable law and start an investigation without waiting for a magistrate's approval. .

34. OFFENCES AND PENALTIES UNDER THE ACT BURDEN OF PROOF IN CERTAIN CASES (SECTION 14) Under this Act, it is said that the burden of proof shall always lie upon the person who possesses any essential commodity without having any lawful authority or permit or license.

35. PROSECUTION OF ACTION TAKEN UNDER THE ACT (SECTION 15)

36. COGNIZANCE OF OFFENCES AGAINST THE PUBLIC SERVANTS (SECTION 15A) When any public servant alleged to have committed any offence while discharging of his duty given under Section 3 of this Act, In that case, the Court of law can take cognizance, only after taking sanction from the Central Government, or state government under whose authority such a person is employed.

37. PENALTIES (SECTION 7) There are different kinds of penalties imposed upon different kinds of offenses OFFENCES PENALTIES Contravene the order made under clause (h) and (i) of the Sub-Section(2) Imprisonment for a term which may extend to 1 year with fine Contravene the other orders except above two. Imprisonment not less than 3 months which may extend up to 7 years with fine Fails to comply with the direction given under clause (b) of Sub-Section (4) with fine Imprisonment not less than 3 months which may extend up to 7 years If any person convicted for offences under Section Sub-clause (ii) of clause (a) of Sub-Section (1) or under Sub-Section (2) again convicted on the same provision Imprisonment not less than 6 months which may extend up to 7 years with fine If the offences convicted under Sub-clause (ii) of clause (a) of Sub-Section (1) or under Sub-Section (2) does not cause any substantial harm to any individual or the general public. Imprisonment for the term of 3 months or 6 months whichever is required as per the case.

38. PRESUMPTION OF CULPABLE MENTAL STATE (SECTION 10C) The culpable mental state means having a mala-fide intention under which any person commits offences. Under this Act, the Court always presumes that the culpable mental state exists at the time of commitment of every offence. However, the defense has to prove that he does not have any such intention. So we can conclude that at earlier the burden of proof is always upon the prosecution. In the Essential Commodities Act, 1955 the culpable mental state of any person shall be presumed under the following two situations.

39. NATHU LAL V. STATE OF MADHYA PRADESH (AIR 1966 SC 43) This case established the importance of the concept of mens rea (Guilty Mind) under the Essential Commodities Act, 1996 Facts In this case, the applicant was the dealer of food grains at Dhar in Madhya Pradesh. He was prosecuted for having in stock 885 mounds 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, he 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.

40. STATE OF MADHYA PRADESH V. NARAYAN SINGH & ORS (1989 AIR 1789) In this case, the respondents who were lorry driver, cleaners and coolie were prosecuted for the offence committed under Section 3 and Section 7 of the essential commodities 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 Control) Order, 1973. However, the accused did not deny the fact that they transport bags of fertilizers in their respective lorries and intercepts the lorries at Sendhwa sales tax barrier but said that they had no knowledge about the contents of the document so seized.

41. CONCLUSION The Essential Commodities Act, 1955 is one of the important laws of the country that applies for the protection of the interest of the general public. Under this Act, the Central Government possesses a wide range of powers to control the production and supply of essential commodities. Under this Act, the Central Government controls the price of the confiscated or seized essential commodities. All these powers are necessary to maintain the market.