Khadya Peya Vikarete Malak Sangh Vs.
The Chief Officer, Sangli Municipal Council & ANR [1976] INSC 291 (19
November 1976)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA
CHANDRACHUD, Y.V.
GOSWAMI, P.K.
CITATION: 1977 AIR 527 1977 SCR (2) 139 1977
SCC (1) 455
ACT:
Maharashtra Prevention of Food Adulteration
Rules, 1962--Appendix (1).Items 1, 7 and 8--Scope of--Hoteliers selling food to
customers visiting them-If--manufacturers If liable to pay fees both as
manufacturers and retailers.
HEADNOTE:
Rule 2(d) of the Maharashtra Prevention of
Food Adulteration Rules. 1962 defines a manufacturer as a person engaged in
manufacturing any article of food for the purposes of trade. Clause (e) defines
a. "retail dealer" as a dealer in any article of food other than
wholesale dealer and cl. (g) defines a "wholesale dealer" as a person
engaged in the business of sale or storage for sale or distribution of any
article of food, for the purposes of resale. Fees payable by a wholesale dealer
or manufacturer for the grant or renewal of a licence are prescribed in item 1
and those payable by a retail dealer in items 7 and 8 of Appendix 1.
Members of the appellant association, who are
hoteliers and restaurant keepers prepare articles of food in a part of their
respective premises and sell them to the customers visiting them. The
respondent municipality charged from members of the association licence fee
both under item 1 and items 7 and 8 of Appendix 1 on the ground that each of
them is both a manufacturer and a retail dealer. The appellant's suit for
declaration that the municipality had no right to charge two sets of fees from
the members who are essentially retail dealers and for refund of excess amount
realised by the municipality was dismissed by the trial court. The first
appellate court allowed the appellant's appeal: but the High Court on further
appeal by the municipality restored the order of the trial court.
Allowing the appeal to this Court.
HELD: The High Court was in error in holding
that the members of the association were covered both by item 1 as also by
items 3 to 8 of Appendix 1. Members of the appellant association are liable to
pay licence fee under items 3 to 8 of Appendix (1) and not under item 1.[148
B-C] 1 (a) Item 1 took within its fold a wholesale dealer or manufacturer or
both. It does not mention of a retail dealer. Before a trader falls within the
purview of item 1 it must be shown that he is either a wholesale dealer or a
manufacturer or both. Where the dominant nature of the trading activity is
neither that of a manufacturer nor a wholesale dealer but is a retail sale,
item 1 would have no application. The fact that the trader prepares the
articles for selling them to his customers would not make him either a
wholesale dealer or manufacturer. [147H; 148 A-B] (b) The words 'wholesale
dealer' or 'manufacturer' in item 1 will not apply to hoteliers and
restaurant-keepers whose main business is to conduct retail sale of their
articles prepared by them in a part of their premises.
[143G] (c) The word 'manufacturer' as defined
in r. 2(d) had been used in the widest possible sense to include not only
manufacture through a laboratory process but also preparation of an article of
food. However liberally the word 'manufacturer' is construed, it will not
include the trading activity of persons the dominant nature of which is to
supply articles of food prepared or produced by them to their customers. [143E]
140 2(a) There is no force in the contention that unless the members of the
Association are licensed as manufacturers the Food Inspector cannot enter for
inspection any premises where the articles are prepared. The question of a
trader obtaining a licence has nothing to do with the statutory duties of a
Food Inspector. The Food Inspector does not derive his powers from the rules
regulating licence of a trader, but his duties spring from the statutory
provisions.
There is no provision in the rules which in
any way prevents or interferes with the discharge of his duties. [147C-E;
146C] (b) Apart from the wide powers given to
the Food Inspector by the Statute, Rules framed by the Central Government
confer additional powers on the Food Inspector. The Maharashtra Rules do not
contain any provision which in any way runs counter to either the Central Rules
or the Act. The rules merely contain certain additional provisions regarding
the conditions of licence and additional duties to be performed by the Food
Inspector. [147B] (c) Even assuming that a particular State Government did not
frame any rules under the Act it cannot be said that the Food Inspector would
be absolutely powerless and cannot exercise effective control. His duties and
functions spring from the parent statute and are not in any way correlated to
the additional duties provided for in the rules framed by the State Government.
[147G]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1936. of 1972.
Appeal by Special Leave from the Judgment and
Order dated the 2nd and 3rd day of August, 1971 of the Bombay High Court in
Second Appeal No. 1064 of 1970.
V.M. Tarkunde, S.B. Wad, (Mrs.) J. Wad and
AMiss) Manek Tarkunde for the Appellant.
D. V. Patel, S.C. Pratap and P.H. Parekh for
Respondent No.
1 M.N. Shroff for respondent No. 2.
The Judgment of the Court was delivered by
FAZAL ALl. J. This appeal by special leave is directed against the judgment of
the High Court of Bombay dated August 2/3, 1971 by which the plaintiff's suit
for declaration and injunction has been dismissed. The plaintiff is an
association of hoteliers and restaurant keepers doing business within the,
local limits of Sangli Municipality in the State of Maharashtra. Under the
provision of the Prevention of Food Adulteration Act, 1954---hereinafter
referred to as 'the Act'--and the rules framed thereunder by the Maharashtra Government
the members of the plaintiff association were required to take a licence for
the business conducted by them. The Municipality insisted that the members of
the plaintiff--Association should pay two sets of fees---one under item 1 and
another under items 3 to 8 of Appendix (1) to the Schedule. These fees were
demanded by the Municipality on the ground that the members were both
manufacturers and retail dealers and were, therefore, liable to pay fees in
both these capacities. The Appendix (1) to the Schedule was a part of the rules
framed by the Maharashtra Government under s. 24 of the Act. The plaintiff,
however, contended that the members of the plaintiff-Association were not
liable to pay two fees as they were essentially retail dealers and would have
to pay fees under items 3 to 8 of the appendix because they could not be said
to be either wholesale dealers or manufacturers. The plaintiff also 141 claimed
a declaration that the Municipality had no right to charge two fees from the
plaintiff and also prayed. for an injunction restraining the Municipality from
doing so.
There was a prayer for refund of Rs. 3,990/being
the excess amount realised by the Municipality from the plaintiff. The suit was
resisted by the Municipality on the ground that under the rules framed by the
Maharashtra Government, the Municipality was legally entitled to levy two sets
of fees from the plaintiff as indicated above. The suit was dismissed by the
Trial court of the Joint Civil Judge, Junior Division, Sangli, who held that
the plaintiff was not entitled to the declaration sought for and neither to,
the refund as the Municipality was fully justified in realising the two sets of
fees from the plaintiff.
Against this decision the plaintiff went up
in appeal to the Extra Assistant Judge, Sangli who by his judgment dated August
27, 1970 reversed the judgment of the Trial Court and decreed the plaintiff's
suit holding that the plaintiff was entitled to the declaration sought for as
the Municipality.
was not entitled to realise two sets of fees
under Appendix (1) referred to above. The. learned Judge also passed a decree
for refund of Rs. 3,990/in favour of the plaintiff. The Sangli Municipality
went up in second appeal to the High Court of Bombay which ultimately succeeded
and the High Court, agreeing with the view taken by the Trial Court, dismissed
the plaintiff's suit. Thereafter the plaintiff obtained special leave from this
Court and hence this appeal.
As seen above, the facts of this case .lie
within a very narrow compass and the point involved is a pure question of law
which depends upon the interpretation of certain provisions of the Act and the
Rules made by the Maharashtra Government. Before, however analysing the
provisions of the Act and the Rules made there under it may be necessary to,
state a few admitted facts. It is not disputed that the appellant is an
Association of hoteliers and restaurant keepers who are engaged in preparing
eatables and other articles of food and selling the same to their customers. It
is also not disputed that by and large, the members of the
plaintiff-association prepare the articles in a part of the premises where the
hotel or restaurant is situated and after preparing the eatables they sell the
same to the customers visiting those places. There was some controversy on the
question as to the import and ambit of the word "manufacture", but
counsel for the appellant did not dispute seriously, and rightly, that for the
purpose of this case the preparation of the articles of food would be included
within the ambit of the term "manufacture". In these circumstances,
therefore, we need not dilate on this point any further.
Mr. V.M. Tarkunde, learned counsel for the
appellant, submitted that as. the main business of the members of the plaintiff
association was retail sale of the articles prepared by them, they were
essentially retail sellers and they could be charged fees only in this
capacity. It is thus contended that the case of the appellant would clearly
fall within the ambit of items 3 to 8 of Appendix (I). It was vehemently argued
that by no stretch of imagination could the 142 association's members be
charged fees as manufacturers or wholesale dealers in view of the nature of
their trading activity. The plaintiff also placed reliance on a communication
by the Director of Health to the Municipal Council expressing his opinion that
the Municipality was not justified in realising two sets of fees from the
plain-. tiff's members and that they were liable to pay fees only under items 3
to 8 of Appendix (1). This, however, was merely an opinion of an Officer and
would not carry any weight when we are interpreting the statutory provisions of
the Act and the Rules.
On the other hand, Mr. D.V. Patel appearing
for the respondent Municipal Council submitted that the trading activity of the
appellant's members and two separate capacities--one as manufactures and
another as retail dealers, and, therefore, the Municipality was entitled to
realize fees on both these counts. It was further argued by Mr. Patel that if
the Municipality was not allowed to realise fees from the appellant's members
as manufacturers, the Food Inspector appointed by the Municipality would have
no jurisdiction to inspect the premises and check the articles manufactured by
them for the purpose of sale.
We have given our anxious and careful
consideration to the arguments of both the parties and we are clearly of the
opinion that the argument of learned counsel for the appellant is well founded
and must prevail. To begin with, the Rules framed by the Maharashtra Government
which were published in the Maharashtra Government Gazette dated April 26,
1962, as amended up to date, define "manufacturer" thus:
"'manufacturer' means a person engaged
in manufacturing any article of food for the purpose of trade;"
"Retail dealer" is defined thus:
"'retail dealer' means a dealer in any
article of food, other than a wholesale dealer;" "Wholesale
dealer" has been defined as the person engaged in the business of sale or
storage for sale or distribution of any article of food for the purposes of
resale.
Appendix ( 1 ) runs thus:
"Schedule of Licence Fees chargeable
under Section 24(2) of Prevention of Food Adulteration Act, 1954, for licensing
certain trades.
143 Appendix (1) Fees for the grant or
renewal of a licence.
[See rule 5(3) and (4A)] Sr. Fresh Renewal
No. Category Licence of Licence 1 2 3 4 Rs. Rs.
1. Wholesale dealer or manufacturer or both
(other than those covered by Appendix (2) 30 20
2. Hawker or itinerant vendor or both 3 1
3. Retail dealer with annual turnover upto
Rs. 1,000 3 1
4. Retail dealer with annual turnover
exceeding Rs.1,000 but not exceeding Rs. 5,000 5 2
5. Retail dealer with annual turnover
exceeding 5,000 but not exceeding Rs. 10,000 10 3
6. Retail dealer with annual turnover
exceeding Rs.10,000 but not exceeding Rs.15,000 15 5
7. Retail dealer with annual turnover
exceeding Rs.15,000 but not exceeding Rs. 25,000 20 10
8. Retail dealer with annual turnover
exceeding Rs.25,000 25 15 There cannot be the slightest doubt that the. word
"manufacturer" as defined in el. (d) of r. 2 had been used in the
widest possible sense so as to, include not only manufacture through a
laboratory process but also preparation of an article of food. In our opinion,
however liberally the word "manufacture" may be construed, it will
not include the trading activity of persons, the dominant nature of which is to
supply articles of food prepared or produced by them to their customers. In
other words, where the bulk of food articles sold by the restaurant-keepers are
prepared by them in what may be reasonably called a part of the premises of the
restaurant where the articles are sold, the preparation of manufacture of those
articles is incidental or ancillary to the retail sale, the dominant purpose of
the trading activity being sale of food articles by retail.
We, therefore, think that the words. "Wholesale
dealer" or "manufacturer" in item 1 of Appendix (1) will not
apply to hoteliers and restaurant-keepers whose main business is to conduct
retail sale of their articles prepared by them in what may be termed a part of
the same premises.
It was, however, argued by Mr. Patel that if
this view is taken, it would debar the Food Inspector from inspecting the
premises where the articles of food are prepared and checking the same inasmuch
as under the conditions of the licence, the Food Inspector his to maintain
certain standards and norms and-comply with certain conditions in the process
of preparation of the articles. We are, however, unable to find any provision
in the Act which in any way prevents the Food Inspector from making routine
inspection and cheek of persons whether licensed or not. This will be clear
from an analysis of the various provisions of the Act which we shah show
presently. It seems to us that the Food Inspector being a creature of the
parent statute, namely, the Prevention of Food Adulteration Act, 1954 being
referred to as 'the Act' has got an independent statutory status, whose duties
and functions are defined by the Act itself. The powers of the Food Inspector
are derived from and flow from the statute itself. It is a different matter
that under the Rules framed by the Government of a State the food Inspector may
be entrusted with certain additional duties but that does not take away the
statutory powers possessed by the Food Inspector. To begin with, s. 2(xi) of
the Act defines "premises" thus:
"'premises' include any shop, stall, or
place where any article of food is sold or manufactured or stored for
sale;" A perusal of this definition would manifestly reveal that
"premises" include any place where any article of food is sold or
manufactured or stored irrespective of the question whether the manufacturer or
the seller is licensed or not.
The word "premises" does not
contain any limitation so as to confine it only to those premises which are
licensed.
Section 7 of ,the Act contains an express
prohibition preventing any person from manufacture or sale of any adulterated
article of food.
The relevant provision of s. 7 runs thus:
"No person shall himself or by any
person on his behalf manufacture for sale, or store, sell or distribute-(i) any
adulterated food;
(ii) any misbranded food;
(iii) any article of food for the sale of
which a licence is prescribed, except in accordance with the conditions of the
licence;
(iv) any article of food the sale of which is
for the time being prohibited by the Food (Health Authority in the interest of
public health;
(v) any article of food in contravention of
any other provision of this Act or of any rule made thereunder, or (vi) any
adulterant." This provision also does not contain any restriction of
limitation and takes within its fold any person whether licensed or not who manufactures
stores or sells any adulterated food. Clause (iii) of s. 7 no doubt makes sale
of any article of food without a licence an offence but clause (i) is
independent of clause (iii). Clause (iv) 145 of s. 7 authorises the Food
(Health) Authority to prohibit the sale of any article of food in the interest
of public health. Section 9 of the Act is the provision for appointment of Food
Inspectors and may be extracted thus:
"9. Food Inspectors.--(1) The Central
Government or the State Government may, by notification in the Official
Gazette, appoint such persons as it thinks fit, having the prescribed
qualifications to be Food Inspectors for such local areas as may be assigned to
them by the Central Government or the State Government, as the case may be:
Provided that no person who has any financial
interest in the manufacture, import or sale of any article of food shall be
appointed to be a food inspector under this section.
(2) Every Food Inspector shall be deemed to
be a public servant within the meaning of Section 21 of the Indian Penal Code and
shall be officially subordinate to.
such authority as the Government appointing
him may specify in this behalf." Section 10 of the Act contains the
powers, duties and functions of the Food Inspectors. The relevant portion of
this statutory provision may be extracted thus:
"10. Powers of Food Inspectors.-(1 ) A
food inspector shah have power(a) to take samples of any article of food from-(i)
any person selling such article;
(ii) any person who. is in the course of
conveying, delivering or preparing to deliver such article to a purchaser or
consignee;
(2) Any food inspector may enter and inspect
any place where any article of food is manufactured, or stored for sate, or
stored for the manufacture of any other article of food for sale, or exposed or
exhibited for sale or where any adulterant is manufactured or kept, and take
samples of such article of food or adulterant for analysis;
(4) If any article intended for food appears
to any food inspector to be adulterated or mis-branded, he may seize and carry
away or keep in the safe custody of the vendor such article in order that it
may be dealt with as hereinafter provided and he shall, in either case, take a
sample of such article and submit the same for analysis to public analyst;
11--1458SCI/76 146 It would be seen that
sub-ss. (2) and (4) of s. 10 clearly empower the Food Inspector without any
restriction or limitation to enter and inspect any place where any article of
food is manufactured, or stored for sale, or exposed or exhibited for sale and
inspect the article for the purpose of finding out whether or not the article
is adulterated.
Sub-section (4) of s. 10 empowers the Food
Inspector even to seize any adulterated or misbranded article and carry away
the same and keep it 'in safe custody. It is, therefore, clear whether an
activity is licensed or not, the place where the activity is carried on is
always subject to inspection by the Food Inspector under the provisions of s. 10.
Section 16(1) clauses (c) and (d) particularly provide for penalties and
punishment for any person who prevents a Food Inspector either from taking a
sample or from exercising any power conferred on him by the Act. Thus it is
plain that the question of a trader obtaining a licence or not has absolutely
nothing to do with the statutory duties which a Food Inspector has to perform
and any person whether he is licensed or not would be liable to penalties under
the Act if he tries to prevent or interfere in the due discharge of the duties
by the Food Inspector. Section 23 of the Act is the provision which empowers
the Central Government to make rules in order to carry out the provisions of
the Act. Clause (c) of s. 16(1) provides for laying down special provisions for
imposing rigorous control over the production, distribution and sale of any
article and clause (g) authorises the Central Government to define the
conditions of sale or conditions for licence of sale of any article of food in
the interest of public State Government to make rules for the purpose of giving
effect to the provisions of the Act. Clause (a) of sub-s. (2) of s. 24 empowers
the State Government to define the powers and duties of the Food (Health)
Authority. The section also contains provisions for levy of a fee. It is under
this provision that the Maharashtra Rules were made by the Government. The
Central Rules, namely, the Prevention of Food Adulteration Rules, 1955, framed
under s. 23 of the Act also contain provisions defining the duties of a Food
Inspector. The relevant part of r. 9 of the Central Rules may be extracted
thus:
"9. Duties of Food Inspector.--It shall
be the duty of the food inspector (a) to inspect as frequently as may be
prescribed by the Food (Health) Authority or the local authority all
establishments licensed for the manufacture, storage or sale of an article of
food within the area assigned to him;
(f) to make such enquiries and inspections as
may be necessary to detect the manufacture, storage or sale of articles of food
in contravention of the Act or rules framed there under;
(h) when so authorised by the health officer,
having jurisdiction in the local area concerned or the Food (Health) Authority,
to detain imported packages which he has reason 147 to suspect contain food,
the import or sale of which is prohibited;
Thus it is clear that apart from the wide
powers given to the Food Inspector by the statute itself, even the Central
Rules framed by the Central Government confer additional powers on the Food
Inspector. The Maharashtra Rules referred to above do not contain any provision
which in any way runs counter to either the Central Rules framed by the Central
Government or the provisions of the Act. The rules merely contain certain
additional provisions regarding the conditions of licence and certain other
additional duties to be performed by the Food Inspectors.
Thus an analysis of these provisions would
plainly reveal that the Food inspector does not derive his powers from the
Rules regulating licence of a trader, but the fountain of his authority flows
from the, statutory provisions itself. There is no provision in the Rules which
in any way prevents or interferes with the discharge of the duties of a Food
Inspector. The power to inspect and check is a plenary power which has been
conferred on the Food Inspector by the statute itself and no rule made by the
Government can ever interfere with this power. In these circumstances, it is
difficult to accede to the contention of Mr. Patel that unless the members of
the plaintiffassociation are licensed as manufacturers also, it will not be
possible for the Food Inspector to inspect and check the premises where the
articles are prepared. The Act is a social piece of legislation meant to
control and curb adulteration of articles of food and being in the interest of
public health it has to be liberally construed and no limitations can be
inferred on the powers of the Food Inspector whose primary duty is to see that
the 'adulterated articles are neither manufactured, nor stored, nor sold. For
these reasons, therefore, the main contention of Mr. Patel on this score is
overruled.
The contention of counsel for the respondent
regarding powers of the Food Inspector may be tested from another angle of
vision on the touchstone of practical reality.
Suppose a particular State Government does
not choose to frame any Rules at all under the provisions of the parent Act
(the Prevention of Food Adulteration Act), can it be argued with any show of
force that in such cases the Food Inspector would become absolutely powerless
and wholly ineffective The answer must be in the negative, because it is
manifest that the duties and functions of the Food Inspector spring from the
parent statute and are not in any way co-related to the additional duties
provided for in the Rules which may be framed by the State Government. Thus
even from this point of view, the argument put forward by the respondent fails.
Coming now to. the Appendix (1),itself, it
would appear that item 1 and items 3 to 8 postulate two different contingencies.
Item 1 takes within its fold wholesale dealer or manufacturer or both. There is
no mention of a retail dealer in this item. Thus before a trader falls within
the purview of item 1 of Appendix (1), it must be shown that he is either a
wholesale dealer or a manufacturer or both. We have already pointed out that
where the dominant nature of the trading activity of a 148 person is neither
that of a manufacturer nor as a wholesale dealer, but he is engaged in retail
sale', item 1 would have no application. The mere fact that the trader prepares
the articles for the purpose of selling the same to his customers would not
make him either a wholesale dealer or a manufacturer. In the first place, the
appellant's members cannot be wholesale dealers because there is nothing to
show that they deal in articles for the purpose of re-sale. On the other hand,
the nature of their trading activity is one of retail sale. In these
circumstances the case of the appellant clearly falls within items 3 to 8 of
Appendix (1).
The High Court was, therefore, in error in
taking the view that the case of the appellant was covered both by item 1 as
also items 3 to 8 of Appendix (1) and was, therefore, not justified in
reversing the judgment of the Extra Assistant Judge.
On a consideration, therefore, of the facts
and circumstances of the case, we are clearly of the opinion that in the
instant case the members of plaintiff-association who are mostly
restaurant-keepers conducting the business of retail sale, the preparation of
the articles being merely an ancillary activity, are liable to pay .the licence
fee under items 3 to 8 of Appendix (1) and not under item 1 of the Appendix (1)
to the Schedule. The plaintiff is, therefore, entitled to the declaration
sought for and is also entitled to the refund of Rs. 3,990/-.
We, therefore, allow this appeal, set aside
the judgment of the High Court, decree the plaintiff's suit and restore the
judgment and decree of the Extra Assistant Judge. In the peculiar circumstances
of this case, there will be no order as to costs.
P.B.R. Appeal allowed.
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