SOCIO ECONOMIC OFFENCES��UNIT-1�HOARDING AND PROFITEERING

SOCIO ECONOMIC OFFENCES��UNIT-1�HOARDING AND PROFITEERING��

1. SOCIO ECONOMIC OFFENCES
UNIT-1
HOARDING AND PROFITEERING
Topic 1.3
The Prevention of Black Marketing and
Maintenance of Supplies of Essential
Commodities Act, 1980
Ms. Anjali
Assistant Professor
DME Law School
[email protected]

2. Objective and Learning Outcome
•To understand Black marketing, Hoarding and
Profiteering.
•Case laws related to it
•Need for the Act

3. Suggested Readings
•The Prevention of Black Marketing and Maintenance
of Supplies of Essential Commodities Act, 1980

4. What is Black Marketing?
•Black Marketing is an exchange of goods and services which
takes place outside the reach of government agencies.
•Black marketing has at its base a shortening of supplies
because black market flourishes best when the availability of
commodities is rendered difficult.
•It has a definite tendency to disrupt supplies when scarcity
exists or scarcity is created artificially by hoarding to attain
illegitimate profits. Indulging in black marketing is conduct
which is prejudicial to the maintenance of supplies.

5. Mode of transaction
•The goods and services involved in these transactions may be illegal, i.e
dealing in those goods and services which are prohibited by law, for
example, prohibited drugs, prostitution, counterfeit currency, trafficking
in human etc.
•There can be a transaction of legal commodities and services in a
prohibited manner. For example, dealing in impermissible quantity,
essential medicines and equipments etc.
•Black marketers involved in these transactions are motivated to earn
profits and evade tax.
•The impact of Black marketing on economy is always negative and
devastating because these activities are not recorded and taxes are not
paid.

6. What is Hoarding and Profiteering?
•The term ‘Hoarding’ can be defined as the purchase of a commodity with
the intention to sell it in future at a higher price when it is understock or not
available in the market. Eg. Storing goods and creating shortage in market
•The word ‘hoard’ in the context means ‘to amass and deposit in secret and
so as to create scarcity of the commodities in the market and vitally affect
the maintenance of services and supplies essential to the community’.
•This is an act of creating illegitimate monopoly over the market and taking
undue advantage of people who are helpless and have no other option but
to purchase the commodity from the hoarder.
•Hoarding and Black marketing are interrelated as the persons involved in
hoarding purchase large quantity of basic or essential goods and sell it in
the black market at extremely high prices when goods are high in demand.
•Eg. During the COVID-19 pandemic- hoarding of oxygen concentrators and
medicines created panic shortage.

7. •Profiteering 
is a term which is used for the
act of making a
 huge profits by unethical
methods. eg. Rise in price during emergency,
covid –pandemic, price fixing, anti competitive
agreements etc.

8. Laws in India to prevent hoarding
Many laws exist in India to deal with such unfair practices such
as
•Indian Penal code (1860)
•Essential Commodities Act (1955)
•Drugs and Cosmetics Act (1940)
•Prevention of Black-marketing and Maintenance of Supplies
of Essential Commodities Act (1980)
•Legal Metrology (Packaged Commodities) Rules
•Disaster Management Act (2005)
•Epidemic Act (1897)

9. The Prevention of Black Marketing and Maintenance of
Supplies of Essential Commodities Act, 1980
•This
 law was enacted with an object to
provide for detention in certain cases for the
purpose of prevention of black marketing and
maintenance of supplies of commodities
essential to the community and for matters
connected therewith.

10. Important Provisions
•Section 3 
of this act empowers the government officials of the rank of District
Magistrate, Police commissioner, or a Secretary of the State government to pass
preventive detention order of any person who is acting in any manner prejudicial
to the maintenance of supplies of commodities essential to the community. This
Act allows for preventive detention of any person who could be either themselves
committing as well as the detention of any person instigating someone else to
commit an offence under the Essential Commodities Act, 1955.
•Section 6 
of this act provides that any detention order made under section 3 shall
not be invalid or inoperative by the reason that the person was detained outside
the limits of the territorial jurisdiction of the Government or officer making the
order, or that the place of detention of such person is outside the said limits.
•Section 13 
provides that the maximum period for which any person may be
detained in pursuance of any detention order shall be six months from the date of
detention; Provided that nothing contained in this section shall affect the power of
the appropriate Government to revoke or modify the detention order at any
earlier time.

11. •However, for the application of any provision of this act with
respect to a particular commodity, it is necessary that such
commodity is declared to be an “essential commodity” by the
government under the Essential Commodities Act, 1955.
•Eg. On March 31, 2020, the
 National Pharmaceutical Pricing
Authority, issued an order
 stating that medical devices would now
be classified as ‘drugs’, and will be regulated under the Drugs
Pricing Control Order, 2013 read with the Essential Commodities
Act, 1955.
•Through this order, the maximum retail price of the medical
devices was monitored by prohibiting any person from increasing
the maximum retail price of any drug by more than 10% of the
maximum retail price during preceding twelve months.
Disobedience of this order may result in penalty upon such person
who may be a manufacturer, importer or any other person.

12. Landmark Judgements
•Delhi High Court
  in
Bram Health Care Private Ltd. v. Union
of India 
had directed that all the medicinal supplies and
equipment are to be sold at either maximum retail price or
below such price. The HC also observed while acknowledging
huge demand of oxygen, essential medicine, medical
equipment and the unethical practices surrounding it, that it
was the time to fix the maximum retail price of these medical
supplies for proper management and treatment of covid.
Court also issued certain directions regarding the
overcharging of ambulance services and other essential
services.

13. Manisha Chauhan v. Govt. (NCT of Delhi)
•Delhi High Court asked the Central
government as well as the Delhi government
not to wait for court orders for taking strict
action against hoarding and black marketing
of medicines and medical equipment needed
for COVID-19 patients. Petitioner in this case
had sought setting up of fast-track courts to
deal with the cases of hoarding and black
marketing of covid essential medical supplies.

14.  Anu Pant v. State of Uttarakhand
•The High Court of Uttarakhand called for affixing of QR Codes
on Remdesivir packets. The Court was of the opinion that it is
the constitutional mandate and the moral duty of the State to
protect its people from the pandemic. The State must provide
real-time critical information to its citizen. The state could not
act in a reckless manner during this situation.
•The Court issued a number of directions to the State
government, and also urged the government to motivate
those people who have recovered to donate their plasma.
Further, it stated that in case any pharmacist is discovered to
be hoarding, or selling Remdesivir over the permissible price,
the concerned Drug Inspector shall take action against the
concerned pharmacist, but strictly in accordance with law.

15. Next Topic
•Weights and Measures