Oil Company & Anr Vs. State of U.P & Ors  INSC 364 (29 July 1998)
Pattanaik, A.P. Misra G.B. Pattanaik, J.
J U D
G E M E N T
appeal by grant of Special Leave is directed against eh judgment dated 2nd September, 1997, of the Allahabad High Court in
civil Misc. Writ Petition No. 28539 of 1997. The Writ Petition had been filed
by the appellant challenging the order dated 14th August, 1997 passed by the
District Supply Officer, Shahjahanpur calling upon the appellant to stop using
the underground tank and dispensing pump unit inter alia on the ground that
there is no embargo either under he provisions of the Petroleum Act and the
Rules frames thereunder or in the licence in form XI which had been granted to
the appellant under the Petroleum Rules not to sell High speed Diesel by using
the underground tank and the pump unit attached to the same. The High Court by
the impugned judgment considered the different provision of the Act and the
Rules as well as the Forms, More particularly, Forms XI and XII and came to
hold that a licensee under Form XI is not entitled to store High Speed Diesel
in an underground tank and sale from the same by using a pump unit. With the
aforesaid conclusion the Writ Application having been dismissed the appellant
has preferred the present appeal.
Chandra, the learned senior counsel appearing for the appellant contends that
an analysis of the relevant provisions of the Act and the Rules will make it
crystal clear that there is no prohibition contained in the licence form, From
XI granted to the appellant from selling high seed diesel from the underground
tank with a hand unit attached to the same and the High Court committed serious
error in arriving at a conclusion that the licence under Form XI does not authorise
the licensee to sell high speed diesel from an underground tank with a hand
unit attached to the same. In order to appreciate the correctness of the
aforesaid submission it would be necessary to examine the relevant provisions
of the Act and the Rules framed thereunder.
expression 'petroleum' has been defined in Section 2 (a) of the Act to mean
thus:- 2(a) 'Petroleum' means any liquid hydrocarbon or mixture of
hydrocarbons, and any inflammable mixture (liquid, viscous or solid) containing
any liquid hydrocarbon" The said 'petroleum' is divided into 3 classes -
class A, B and C and petroleum class B has been defined in class 2(bb) thus:-
"2(bb) - 'Petroleum Class B' means petroleum having a flash -point of twenty-
three degrees Centigrade and above but below sixty-five degrees
not disputed that high speed diesel with which we are concerned in the present
appeal is petroleum Class B.
4 of the Act enables the Central Govt. to make Rules for import, transport and
storage of petroleum.
Section 29 of the Act, Central Govt. has been authorised to make rules in
respect of any matter ancillary to such rules as necessary to protect the
public from danger arising from the import, transport, storage production
refining or blending of petroleum.
7 of the Act provides that no licence is required for transport or storage of
petroleum Class B if the total quantity in possession at any one place does not
exceed 2,500 liters and none of it is contained in a receptacle exceeding one
thousand liters in capacity.
the Rules the expression 'container' has been defined in Rule 2 (vii) to mean a
receptacle for petroleum not exceeding 1,000 liters in capacity.
expression 'form' has been defined in Rule 2(xii) to mean a form in the First
expression 'petroleum in bulk' has been defined in Rule 2(xv) to mean petroleum
contained in a tank irrespective of the quantity of petroleum contained
expression 'tank' has been defined in Rule 2(xxii) to mean a receptacle for
petroleum exceeding 1,000 liters in capacity.
Rule 4, containers exceeding one litre in capacity for petroleum Class A, and
five liters in capacity for petroleum Class B or petroleum Class C, shall be of
a type approved by the Chief Controller.
provides for container for petroleum Class B or Class C and it requires that
such container should be constructed of steel or iron and be of a type approved
by the Chief Controller.
124 provides that every tank of or receptacle for the storage of petroleum in
bulk shall be constructed of iron or steel in accordance with the codes or
specifications approved by the Indian Standards Institution or any other code
or specification approved in writing by the Chief Controller.
Rule 141, licences under the Rules may be granted by the licensing authorities
set forth in the First Schedule in the Forms specified for the purpose and on
payment of a fee specified therein.
4 of the First Schedule prescribes From XI to import and store petroleum Class
B otherwise than in bulk in quantity not exceeding 25,000 liters and the
authority empowered to grant such licences is the District Authority.
5 of the said Schedule prescribes Form XII for storing petroleum in tank or
tanks and the Chief controller or Controller of Explosives authorised in this
behalf by the Chief Controller is the authority empowered to grant licence.
from the aforesaid provisions of the Act and the rules it would be appropriate
to notice the order called the U.P. High Speed Diesel Oil and Light Diesel Oil
(Maintenance of Supplies and Distribution) Order, 1981, framed by the State
Govt. under the provisions of Essential Commodities Act. Under the aforesaid
order 'Dealer' has been defined in Section 2(d) to mean - " 2 (d) -
'dealer' means a person engaged in the business of purchase, sale or storage
for sale of High Speed Diesel Oil or Light Diesel Oil or both but does not
include an oil company." Retailer has been defined in Section 2(i) to mean
thus- " 2 (I) - 'retailer' means a dealer who is not a wholesaler.
has been defined in Section 2(n) thus:- "wholesaler' in the case of Light
Diesel Oil means a dealer who deals in a light diesel oil exceeding 100 liters
in a single transaction and in the case of High Speed Diesel Oil a dealer who
sells High Speed Diesel Oil by means of dispensing pumps." Section 3 of
the aforesaid order prohibits carrying on business as a dealer except under and
in accordance with the terms and conditions of a licence granted under the
Order. A licence under the order is granted in Form C and would subject to the
conditions specified therein as is apparent from Section 4(b) of the order.
provides 4 columns required to be filled up while granting a licence. Correctness
of the submission Mr. Sudhir Chandra, learned senior counsel appearing for the
appellant has to be examined in the light of the aforesaid provisions. There is
no dispute that the appellant has been granted a licences in Form, XI for
import and storing of petroleum Class B otherwise than in bulk, in quantity not
exceeding 25,000 liters. From the definition of the expression 'container' in
Rule 2(vii) and 'tank' in Rule 2(xxii) it is apparent that a receptacle for
petroleum upto 1,000 litre is called a 'container' and a receptacle exceeding
1,000 litre is called a 'container' and a receptacle exceeding 1,000 liters in
capacity is called a 'tank'. From the expression 'petroleum in bulk' defined in
Rule 2(xv) read with the definition of tank in Rule 2(xxii) it is crystal clear
that whenever petroleum more than 1,000 liters is contained in a receptacle
then it must be held to be petroleum in bulk irrespective of the quantity of
petroleum contained therein.
other words in a container whether 1,001 liters is stored or 10,000 liters is
stored it would be a 'petroleum in bulk' within the ambit of Rule 2(xv).
in mind the aforesaid analysis if the First Schedule and the forms of licence
contained therein are examined then From XI can be held to be meant for
importing and storing petroleum Class B otherwise than in bulk of a total
quantity not exceeding 25000 liters. In other words the holder of a licence in
Form XI can store petroleum Class B in different containers each of which would
not exceed 1000 liters in capacity and subject to a total quantity of 25000
liters. when such licensee stores the petroleum Class B in a tank meaning
thereby in excess of 1000 liters then it would be a case of storage of
petroleum in bulk and for such storage licence is required to be obtained in
Form XII and the authority empowered to grant such licences is the Chief
Controller or a Controller empowered to grant such licence is the Chief
Controller or a Controller of explosives authorised in this behalf by the chief
Controller. The appellant being a licensee for importing and storing petroleum
Class B in Form XI is not entitled to store the same in tank as that would be a
storage of petroleum in bulk and for such storage licence in Form XII to be
granted by the Chief Controlled or a Controller of Explosives authorised by
such Chief Controller is required. Since the appellant does not possess the licence
in Form XII, was not entitled to store the High Speed Diesel in an underground
tank and sale from the same by using of pump unit. the conclusion of the High
Court, therefore, does not suffer from any illegality to be interfered with by
Chandra, the learned senior counsel appearing for the appellant in course of
his submissions contended, that in interpreting a particular provision like the
one with which we are concerned in the present case the courts should adopt the
principles of purposive interpretation as indicated in the decision of this
Court in Forest Range Officer & Ors. etc. vs. P. Mohammed Ali & Ors. etc.
1993 (3) Suppl. supreme Court Cases 627, and if the purpose behind the
provisions of the Act and the Rules of the licence form thereunder a purpose of
which are required to be achieved, namely, the safety measures to deal with
highly inflammable to article is borne in mind, it would be appropriate to hold
that the High Speed Diesel can be stored in an underground tank which is the
safest mode of storage.
have not been persuaded to accept this submission inasmuch as the Rules itself
provide for different types of licences conferring authority on different
persons to grant such licences. The Act or the Rules do not prohibit storage of
High Speed Diesel in quantity more than 1000 liter in an underground tank but
what is necessary in such a case is that the licence has to be obtained in Form
XII from the Chief Controller the appellant admittedly being a licensee on Form
XI granted by the District Magistrate cannot claim to be entitled to store High
Speed Diesel in an underground tank and sale from the same as that would be a
storage of petroleum in bulk and it would be a contravention of the terms and
conditions of licence itself. We have, therefore, no hesitation to reject the
aforesaid submission or Mr. Sudhir Chandra, learned senior counsel appearing
for the appellant.
view of our aforesaid conclusion it is not necessary to examine the effect of
the provisions of the UP High Speed Diesel Oil and Light Diesel Oil
(Maintenance of Supplies and Distribution), Order, 1981, framed by the State
Govt. under the provisions of Essential Commodities Act, though there cannot be
a dispute that the State Govt. by such orders can regulate the storage and
supply of the High Speed Diesel and put restrictions and conditions as authorised
under the State Order.
aforesaid premises, the appeal fails and is dismissed. But in the circumstances
there will be no order as to costs.