http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: STATE OF UTTAR PRADESH & ANR.

       Vs.

RESPONDENT: M/S.GULSHAN SUGAR & CHEMICALS LTD.

DATE OF JUDGMENT05/05/1995

BENCH: HANSARIA B.L. (J) BENCH: HANSARIA B.L. (J) KULDIP SINGH (J)

CITATION:  1996 AIR   62            1995 SCC  (4) 529  JT 1995 (7)   382        1995 SCALE  (3)600

ACT:

HEADNOTE:

JUDGMENT:                        THE 5TH DAY OF MAY, 1995 Present :           Hon’ble Mr.Justice Kuldip Singh           Hon’ble Mr.Justice B.L.Hansaria Mr.R.C.Verma, Adv. for Mr.R.B.Misra, Adv. for the Appellant.                      J U D G M E N T The following Judgment of the Court was delivered:                    IN THE SUPREME COURT OF INDIA                    CIVIL APPELLATE JURISDICTION                    CIVIL APPEAL NO.5330 OF 1995                (Arising out of SLP(C) No.12786 of 1987) State of Uttar Pradesh                     ...Appellant & Anr.                  Versus M/S. Gulshan Sugar & Chemicals Ltd.      ...Respondents                        J U D G M E N T HANSARIA. J.      The respondent, M/s. Gulshan Sugar & Chemicals Limited, is a  company carrying  on the  business of manufacturing of chemicals. For undertaking the manufacturing work, it has to consume coal,  which is  an essential commodity and attracts the provisions of the Uttar Pradesh Coal Control Order, 1977 (the ’Control Order’), which has been issued under Section 3 of the  Essential Commodities  Act, 1955.  The Government of Uttar Pradesh  vide its  Memo dated  6.6.1985  required  the District Magistrate,  Bulandshahar, to see if any industrial unit was selling unused coal or coal dust improperly; and if so, to  take action,  inter alia,  under clause  15  of  the Control Order. By Memo of 19.9.1985 all District Magistrates of the  State were  required  to  take  action  against  the industrial units  if they  sell or transfer unused coal/coal dust without  obtaining licence  under the provisions of the Control Order. 2. The  respondent challenged  the  validity  of  these  two Government Orders  by filing a petition under Article 226 of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

the Constitution before the Allahabad High Court. A Division Bench of  the High  Court by  its judgment,  which has  been impugned in  this appeal,  held that  the  aforesaid  Orders could not  have been issued and it was further held that the respondent was  not  required  to  obtain  licence  for  the transfer of  the surplus  or rejected coal or coal dust. The legality of  the judgment  has been assailed by the State of Uttar Pradesh in this appeal. 3. There  is no  dispute on  facts. The  same are  that  the respondent consumes  coal for running its factory. Sometimes quality of  coal supplied is not of the kind required by the respondent. The same is therefore, rejected. Further, a huge quantity of  coal dust  is  collected  during  the  storage, loading and  unloading of  coal. Coal  dust is also produced when coal  is broken  into pieces  of  required  sizes.  The rejected  coal  and  the  coal  dust  being  of  no  use  to respondents it  disposes of  the same  without obtaining any licence under the Control Order. 4. On  the aforesaid facts the question for determination is whether licence  as mentioned  in  the  aforesaid  G.Os.  is necessary. The  High Court  has answered  this  question  in negative for  two reasons.  First, the  respondent cannot be said to be "dealer" as defined in clause 2(d) of the Control Order; secondly,  the case  of the  respondent  is  squarely covered by  clause 3(B) of the Control Order. The High Court did not  accept the  contention of the State that because of what has  been provided  in clause  3(A) the  respondent  is required to obtain licence in question. 5. The  learned counsel  for the parties have reiterated the stand which  had been  taken by  the contestants  before the High Court. 6. We  may first note the relevant provisions of the Control Order, which are as below:      2. Definitions:  In  this  Order  unless      there  is   anything  repugnant  in  the      subject or context-                     xxx       xxx       xxx                     xxx       xxx       xxx      (c) "Coal"  means coal,  coke and  other      deravatives  and  includes  slack  coal,      steam coal, soft coke, hard coke or dust      coal of  various  grades  but  does  not      include cinder  and ashes  and  products      and by products of coal;      (d) "Dealer"  means a person carrying on      as  a   principal  or   agent,   whether      separately or  in conjunction  with some      other business,  the business of import,      purchase or storage for sale and sale of      coal, in wholesale and granted a licence      in  Form  ’B’  and  commonly  known  and      herein referred to as ’Coal Agent’ or in      retail and granted a licence in Form ’C’      and  commonly  called  and  referred  to      herein as  ’Coal Depot Holder’, but does      not  include  a  consumer  who  imports,      purchases or  stores coal  for  his  own      use."      3A. "Nothing  in this  Order shall apply      to-      (a) movement of coal under the authority      of the  Coal Commissioner, Government of      India or any other officer acting on his      behalf;      (b) coal moved on Railway account;

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

    (c)  movement   of  coal  under  and  in      accordance with  a Military  Credit Note      on Defence Account;      (d) movement  of coal  meant for the use      of any  Central Government Department or      Corporation or  under Central Government      quota  or   under  sponsoring   by   any      authority not  under the  administrative      control of the State Government;           Provided that such coal is consumed      entirely  by   the  Industry,   Railway,      Central   Government    Department    or      Corporation or any other person for whom      it is moved; as the case may be, for its      own use;           Provided  further  that  except  in      sofar as transfer or sale of coal to any      other consumer  of  the  same  category,      affected  with  the  permission  of  the      sponsoring   authority    or   competent      departmental authority, is concerned, if      any of  the above  consumers  wishes  to      sell any  part of  the coal,  surplus to      his requirement,  to other users thereof      in Uttar  Pradesh he  shall do  so  only      after obtaining  the permission from the      District  Magistrate   of  the  District      where coal is stored and if the users or      any user,  to whom this coal is proposed      to  be   sold,  is  working  in  another      district the District Magistrate of that      district and further shall intimate full      particulars of  such sale to the or both      the   District   Magistrates   concerned      immediately after, such sale.      (B) The provisions of clauses 4 to 10,14      and 16  hereof, shall not apply to steam      coal  and   hard  coke   for  industrial      consumption.                           (Emphasis supplied) 7. The  High Court  held the respondent not to be dealer for two reasons:  (i) it  does not carry on the business of sale or storage  for sale;  and (ii) it being a consumer of coal, it would  not be a dealer because of what has been mentioned in the last part of the definition of dealer. The contention of the  appellant before  the High  court that  carrying  on business of  sale etc.  is not necessary to be regarded as a dealer because  of  the  expression  "in  conjunction  with" finding place  in the  definition, was  rejected by the High Court. According  to us,  this expression  as placed  in the definition clause cannot mean that to become dealer one need not carry  on business,  because mention has been made about "in conjunction  with" to  make it clear that carrying on of business may  be either  separately or along with some other business; but business it has to be. 8. The  High Court,  in taking the view it did, has referred to the  decision of  this Court  in  Manipur  Administration v.Nila  Chandra,   AIR  1964   SC  1533,   in  which,  while interpreting the  meaning of  the word  business as  finding place in  Manipur Foodgrains  Dealer Licencing Order, it was held that  mere selling  of articles  or storing of the same would not  make it  a business,  as this  concept postulates continuity of  transaction. It  was  stated  that  a  casual solitary transaction would not make a person a dealer. There being nothing  on record  to show if there was continuity in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

transactions of  sale of  coal dust  or rejected coal by the respondent, we agree with the High Court that the respondent was not in the business of sale or storage for sale of coal. What  has   been  stated  in  the  concluding  part  of  the definition of  "dealer" also  lends assurance  to  the  view taken by the High Court. 9. Having  been satisfied that there is nothing on record to show if  the respondent  was in  the  business  of  sale  or storage for sale of coal, it is not necessary to express our views on  the second  reason of  the High Court in accepting the case  of the  respondent. We  dismiss the  appeal on the limited ground that the respondent could not be proved to be in the  aforesaid business. We leave open the legal question covered by the second reason. 10. In  the facts  and circumstances of the case, we make no order as to costs.