Holding

A direction refusing licence renewal on the ground of a dealer’s proximity to a government retail outlet is inconsistent with the 1981 statutory order and exceeds the powers conferred by clause 16(6).

Summary

The State of Uttar Pradesh issued executive orders refusing to renew licences of petty diesel dealers whose premises were within five kilometres of a government‑run retail outlet. Daulat Ram Gupta, whose licence was thus refused, challenged the order. The Allahabad High Court set aside the order and directed the authorities to consider his renewal application. On appeal, the Supreme Court examined clause 16(6) of the Uttar Pradesh High Speed Diesel Oil and Light Diesel Oil (Maintenance of Supplies and Distribution) Order, 1981 and held that the statutory order does not contain any provision allowing refusal of renewal on the basis of proximity to a government outlet. Moreover, any direction issued must be consistent with the order and only for the purpose of giving effect to it. The Court found the State’s direction to be inconsistent and beyond the delegated powers, and therefore invalid. The appeals and special leave petitions were dismissed, upholding the High Court’s decision.

Issues considered

Whether the State government or a licensing authority can issue a direction refusing renewal of a licence under clause 16(6) of the 1981 statutory order when the dealer's premises are within five kilometres of a government‑run retail outlet.
Whether such a direction is consistent with the provisions of the statutory order and confined to the purpose of giving effect to that order.

Legislation cited

Essential Commodities Act, 1955s. 3, s. 5

Subjects

Essential commoditiesLicensingDiesel oilStatutory interpretationDelegation of powersAdministrative lawRenewal of licenceInconsistency

Judgment

ST A TE OF U.P. AND ORS.
A
v.
DAULAT RAM GUPTA

MARCH 22, 2002

B (V.N. KHARE AND ASHOK BHAN, JJ.]

U.P. High Speed Diesel Oil and Light Diesel Oil (Maintenance ofSupply
and Distribution) Order, 1981-Clauses 16(6) and 4 with Form 'B' and 'C'-
Sale of High Speed Diesel Oil and Light Diesel Oil in rural areas-Issuance
C ofdirection by State Government oflicensing Authority-With regard to refusal
to renew licences granted to petty dealers under the order if their places of
business are within a radius of 5 Kms, of retail outlet run by the Government
Oil Company-Correctness of-Held, such direction not correct since it is
inconsistent with the provisions of the statutory Order and is not for purpose
D of giving effect to the statutory order.

The question which arose for consideration is whether the State
government or the licensing authority can issue direction for refusal of renewal
of licences granted to petty dealers under sub-clause (6) of clause. 16 of the
U.P. High Speed Diesel Oil and Light Diesel Oil (Maintenance of Supplies
· E and Distribution) Order, l 981 if their places of business are within a radius
of five Kilometers of retail outlet run by a Government oil company.

Dismissing the appeal, the Court

HELD: 1. The provisions of the U.P. High Court Speed Diesel Oil and
F Light Diesel Oil (Maintenance of Supplies and Distribution) Order, 1981 do
not provide for refusal to renew a licence granted under the statutory order,
if the place of business of a licensee falls within a radius of 5 kms, of a
government run retail outlet Further, the statutory order neither expressly
nor by necessary implications prohibit the grant of licence to person or refusal
to renew such a licence if the place of business of such licensee falls within
G the radius of 5 Kms. of a government run retail outlet [846-D-EJ

2.1. statutory order clause 16 sub-clause (6) enables the making of an
order of issuing of direction by the executive. There are two restrictions on
the power of the State Government or a licensing authority while issuing a
general or special direction-firstly, such a direction should not be inconsistent
H 838
STATE v. DAULATRAM GUPTA 839
with the statutory Order and secondly, such direction can be issued only for A
· purposes of giving effect to the provisions of the statutory order.
[844-G-H; 845-AJ

2.2. The direction so issued by the State government or licensing
Authority must be compatible with the provisions of the statutory order. The
State Government or the licensing authority in exercise of delegated powers B
to issue direction cannot make provisions which are inconsistent with the
statutory order. Any direction issued if found not in conformity with the
provisions of the statutory order, the same must be held to be beyond the
enabling provisions of the statutory order. The power to issue directions is

- derived from sub-clause (6) of Clause 16 of the statutory order and a delegatee
on whom such a power is conferred is required to act within the framework
of the authority conferred by the statutory order. In the instant case the
direction issued by the licensing authority that the licence of the respondent
C

shall not be renewed on the premise that his place of business falls within a
radius of 5 kms, of retail outlet of a Government run oil company being not
in conformity with the provisions of the statutory order, it must be held to be D
inconsistent to the provisions of the statutory order.
[1145-C-D-E-FJ

2.3. The power of the State Government or the specified authorities,
the provisions empowering them to issue directions to dealers could be
exercised only to give effect to the provisions of the statutory order and further E
to effectuate the object behind the statutory order if the object is discernible
in the statutory order. The nature of directions which could be issued under
the enabling provisions contained in sub-clause (6) of Clause 16 of the statutory
order, is only for purpose of giving effect to the statutory order and not
otherwise. The conditions of grant of licence and its renewal are the essential F
features of the statutory order and in guise of issuing directions, the State
Government or a licensing authority cannot supplant the provisions of the
statutory order but can supplement it only with a view to give effect to the
provisions of the statutory order. The State Government or the licensing
authority while giving effect to the provisions of the statutory order is not
authorised to amend the statutory order by issuing directions. Once the G
enabling provisions restrict the power of issuing direction only for giving effect
to the provisions of the statutory order, the nature and extent of direction
which the State Government or any authority specified therein are empowered
' to issue is confined to the area which is marked out by the statutory order.
In the instant case the licensing authority while issuing the direction that the H
840 SUPREME COURT REPORTS [2002] 2 S.C.R.

A respondent's licence shall not be renewed on the premise that his place of
business falls within a radius of 5 kms, of a retail outlet of government run
oil company has, in fact, purported to amend the conditions of renewal of
Licence granted under the statutory order which was not permissible under
sub-clause (6) of Clause 16 of the statutory order inasmuch as the same was
B not for purpose of giving effect to the statutory order. [845-F-G-H; 846-A-C)

Dau/at Ram Gupta, v. State of UP. and Ors., (1996) ALJ, 212 referred
to.

CIVIL APPEAL JURISDICTION: Civil Appeal No., 2339 of2002.
c From the Judgment and Order Dated 28.3.200 l of the Allahabad
High Court in C.M.W.P. No. 11399 of 2001.

WITH

D C.A.Nos. 2340, 2341, 2342 of2002 and S.L.P. (C) Nos. 5082, 5085,
5087, 5089, 5091, 5092 5094 and 5095 of 2002.

A.B. Rohtagi, S. Markandaya, Ashok K. Srivastava, Ms. C. Markandaya,

-
Kamlendra Misra and, Ms. Feroze Bano for the appearing parties.

E The Judgment of the Court was delivered by : .
V.N. KHARE, J. Leave granted in S.L.P.(Civil) Nos. 472/2002,
473/2002, 13106/200 l and 2908/2002.

The short question which falls for our consideration in this group of
F appeals is whether the State government or the licensing authority can issue
direction for refusal of renewal of licences granted to petty dealers under the
U.P. High Speed Diesel Oil and Light Diesel Oil (Maintenance of Supplies
and Distribution) Order, 1981 (hereinafter referred to as the ('statutory order')
if their places of business are within a radius of five kilometers ofretail outlet
G run by a government oil company.

Since common question of fact and law is involved in this group of
.
.A..

appeals, learned counsel for the parties have advanced arguments in Special · ' -

Leave Petition (Civil) No. 472/2002. Therefore, we propose to notice the
facts which have given rise to Civil Appeal No. 2339/2002 (arising out of
H S.L.P (Civil) No. 472/2002.
STATEv. DAULATRAM GUPTA [V.N. KHARE,J.] 841

Earlier, the sale of Light Diesel Oil and High Speed Diesel Oil in the A
State of U.P. was governed by an Act known as 'U.P. Motor Spirit, Diesel
Oil and Alcohol (Imposition of Tax) Act, 1939 enacted by provincial legislature
of the then united provinces. Subsequently, the Parliament enacted the Essential
Commodities Act, 1955 (hereinafter referred to as 'the Act') with a view to
provide, in the interest of general public, for the control of the production,
supply and distribution of, and trade and commerce, in certain commodities. B
It is not disputed that the sale of High Speed Diesel Oil and Light Diesel Oil
is one of the essential commodities which is governed by the Act. Section 3
- -< of the Act provides that if the Central Government is of the opinion that it
is necessary or expedient so to do for maintaining or increasing supplies of
any essential commodity or for securing their equitable distribution and C
availability at fair prices, it may, by order, provide for regulating or prohibiting
the production, supply and distribution thereof and trade and commerce therein.
Sub-section (2) thereof provides that without prejudice to the generality of
the powers conferred by sub-section(!), an order amongst other things, may
provide for regulating by licences, permits or otherwise the storage, transport,
·distribution, disposal or consumption of any essential commodity. Section 5 D
of the Act provides that the Central government may, by notified order,
direct that the power to make orders or issue notifications under Section 3
shall, in relation to such matters and subject to such conditions, if any, as
may be specified in the direction, be exercisable by a State government or
any officer or such authorities subordinate to the State government, as may E
be specified in the direction.

After passing of the Act, the government of U.P. felt that in the absence
of retail outlets for sale of Diesel Oil in rural areas, the consumers, specially
the farmers have to face considerable hardship in carrying out their agricultural
operations and, therefore, it took decision to grant licelfces to petty dealers F
in rural areas to sell Diesel Oil. It is in the aforesaid background, the State
government ofU.P. framed the statutory order, in exercise of power delegated
to it under the Act.

The respondent herein was granted a licence for sale of Diesel Oil
under the stat'tttory order. The said licence was being renewed from time to G
time. On 25.11.1981, the government of U.P. by an executive order directed
that no license for retail sale of Diesel Oil granted under the statutory order
shall be renewed ifthe place of business of such licensee falls within a radius
of 5 kms. of the government run retail outlets. The said executive order dated
25.l l.1981 was challenged by means of writ petitions before the High Court H
842 SUPREME COURT REPORTS [2002] 2 S.C.R.

A of Judicature at Allahabad. It is alleged that by a judgment and order dated
14.5.1989, the High Court allowed the writ petition, inter alia, holding that
the impugned executive order dated 25.11.1981 placed an unreasonable
restriction on the fundamental right of the petty dealers and that the said
executive order could not be passed without hearing the licensee affected
B thereby.

Aggrieved, the State of U.P. challenged the aforesaid judgment by
means of special leave petitions in this Court. However, on 16.9.1987, the
Government ofU.P. issued another identical executive order imposing similar
restrictions during pendency of the special leave petitions before this Court.
C This Court disposed of special leave petition No. 8742/1981 and the connected
special leave petitions in view of the fact that the impugned executive order
was superseded by a fresh executive order dated 16.9.1987, without expressing
any opinion on merits, leaving all the contentions open to any fresh writ
petition that may be filed by an aggrieved licensee before the High Court.

D In the year 1988, the petty dealers who had licences under the statutory
order and which were not being renewed in view of the executive order dated
16.9.1987, filed another fresh set of writ petitions challenging the executive
order dated 16.9.1987. On 7.3.1995;a Division Bench of Allahabad High
Court in the case of Daulat Ram Gupta v. State of UP. and Ors., (1996) ALJ, I

212 allowed the writ petitions and quashed the executive order dated 16.9.1987. l-
E Despite the said decision, the government issued another executive order in
1997 on the same pattern and lines which was earlier set aside by the High
Court. The said executive order of 1997 came to be superseded by another
order dated 4.1.2001. Paras 1 and 2 of the order runs as under:

"I. The object and aim of the government is that arrangement be
F made with respect to those places, which are far away from regular
diesel retail outlet of oil companies, that their demands be met
conveniently from the adjoining places arid for the sake of it the petty
dealers of high speed diesel be appointed in the districts under the
provisions of Uttar Pradesh High Speed Diesel Oil (Maintenance of
G Supply and Distribution) Order, 1981.

2. Regular diesel retail outlet fully fulfils the need of the consumers
in all the directions and even it remains financially autonomous too.
Therefore, petty diesel dealers be appointed at the place more than
the distance of 5 k.m. through road from the regular diesel retail
H outlet (away from national highway and national road).
STATEv. DAULATRAM GUPTA [V.N. KHARE, J.] 843

Although the said executive order did not provide for refusal to renew licence A
granted under the statutory order, yet curiously enough, the District Supply
Officer, Bareilly, by letter dated 1.3.200 I informed the respondent herein
that since his retail outlet of Diesel Oil falls within a radius of 5 kms. of a
retail outlet run by the government oil company, therefore his licence for
retail vend of Diesel Oil shall not be renewed. It is against the said order, the
respondent herein filed a petition under Article 226 of the Constitution before B
the High Court. The High Court relying upon the decisions in Dau/at Ram
Gupta v. State of UP. and Ors., (supra) and in Writ Petition No. 10574/2001
decided on 22.3.2001 set aside the order refusing to renew the licence and
directed the appellants herein to entertain and consider the respondent's
application for renewal of licence, irrespective of th.e alleged aforesaid C
restrictions contained in the government order dated 4.1.2001. Consequently,
the Writ Petition was allowed, and it is against the said judgment and order
of the High Court, the State of U.P. has preferred these appeals and special
leave petitions.

Learned counsel appearing for the appellant assailed the impugned D
judgment, inter alia, on the ground that under sub-clause (6) of Clause 16 of
the statutory order, it is permissible for the State government to issue an
executive order or direction for non-renewal of licence of any petty dealer if
his place of business falls within a radius of 5 kms. of a retail outlet of a
government run oil company. Learned counsel appearing for the respondent E
supported the judgment of the High Court.

On the argument of learned counsel for the parties, the question that
arises for consideration is whether the District Supply Officer could refuse to
renew the licence granted under the statutory order, ifthe licensee's place of
business falls or situated within a radius of 5 kms. of the retail outlet of a F
government run oil company.

It is not disputed that the method of grant of licence as well as the
conditions of licence and its renewal are provided in the statutory order
framed under the Essential Commodities Act. Clause 2(d) of the statutory
order provides that 'dealer' means a person engaged in the business of G
purchase, sale or storage for sale of High Speed Diesel Oil or Light Diesel
Oil or both but does not include an oil company. Clause 2(h) of the statutory
order provides that the 'licensee' means a dealer holding a licence granted
under the provisions of this Order. Clause 4 of the statutory order further
provides that for grant or renewal of a licence an application in Form 'B' H
844 SUPREME COURT REPORTS [2002] 2 S.C.R.

A attached to the Order, shall be given to the licensing authority. Every licence
granted or renewed under this Order shall be in Form 'C' and shall be subject
to the conditions specified therein. Clause 8 of the statutory order further
-
provides that the licensing authority may, for reasons to be recorded in writing,
suspend or cancel any licence if it is satisfied that the licensee has contravened
any provisions of this order or the conditions of the licence or any direction
B issued thereunder. It is not disputed that the respondent was granted licence
under the statutory order. Form 'B' attached to the statutory order does not
show that the licence to vend Diesel Oil can be refused if the applicant has
place of business within the radius of 5 kms. of a retail outlet. Similarly,
neither Clause 4 nor Form 'C' attached to the statutory order provides that ~--

c no licence shall be renewed if the place of business of a licencee falls within
a radius of 5 kms. of a government retail outlet.

It is, therefore, manifest from the provisions of the statutory order that
in so far as conditions of grant of licence for sale of Diesel Oil and its
renewal are concerned, the statutory order is a complete code in itself and
D there is no provision in the statutory order under which a licensing authority
could refuse to renew a licence if licensee's place of business falls within a --""
radius of 5 kms. of a government run retail outlet.
"'r
Coming to the main argument as to whether such an order or direction
could be issued either by the State government or licensing authority under
E sub-clause (6) of Clause 16 of the statutory order, it is necessary to look into
the provisions of sub-clause (6) of Clause 16 of the statutory order which
runs as under:

"(6) Every dealer shall comply with the general or special directions
,>-
not inconsistent with this order that may be given to him in writing
F by the State Government, the Commissioner, Food and Civil Supplies
or the Collector for the purpose of giving effect to the provisions of
this Order and any contravention of such directions shall be deemed
to ·a contravention of this Order."

A perusal of sub-clause {6) shows that. it enables the making of an
G
order or issuing of direction by the executive. In exercise of that power, the
State government, the Commissioner, Food and Civil Supplies or the Collector
are empowered to issue a general or special direction to any dealer, which is ~
not inconsistent with the provisions of the statutory order, only for giving
effect to the provisions of the statutory order. Thus, there are two restrictions '•'
H on the power of the State government or a licensing authority while issuing
-
STATEv. DAULATRAMGUPTA [Y.N. KHARE, J.] 845

a general or special direction - firstly, such a direction should not be A
inconsistent with the statutory order and secondly, such direction can be
issued only for purposes of giving effect to the provisions of the statutory
order. In that view of the matter any direction issued under sub clause (6) of
Clause 16 must show' that it complies with the description of delegation of
power to issue directions.
B
In Black's Law Dictionary the expression 'inconsistent' means lack_ing
consistency; not compatible with. Viewed in this light, the nature and extent
of power the State government or a licensing authority possessed under sub-
clause (6) is to issue directions only in conformity with the statutory order.
In other words, the direction so issued by the State government or licensing C
authority must be compatible with the provisions of the statutory order. The
State Govt. or the licensing authority in the exercise of delegated powers to
issue direction cannot make provisions which are inconsistent with the statutory
order. Since the power to issue directions by the State government or any
other specified authorities must not be inconsistent with the statutory order,
any direction issued if found not in conformity with the provisions of the D
statutory order, the same must be held to be beyond the enabling provisions
of the statutory order. It must be remembered that the power to issue directions
is derived from sub-clause (6) of Clause 16 of the statutory order and a

.. delegatee on whom such a power is conferred is required to act within the
framework of the authority conferred by the statutory order. Since the direction E
issued by the licensing authority that the licence of the respondent shall not
be renewed on the premise that his place of business falls within a radius of
5 kms. of retail outlet of a government run oil company being not in conformity

- with the provisions of the statutory order, it must be held to be inconsistent
to the provisions of the statutory order.
F
Coming to the second restriction on the power of the State government
or the specified authorities, the provisions empowering them to issue directions
to dealers could be exercised only to give effect to the provisions of the
statutory order and further to effectuate the object behind the statutory order
if the object is discernable in the statutory order. The nature of directions G
which could be issued under the enabling provisions contained in sub-clause
(6) of Clause 16 of the statutory order, is only for purposes of giving effect
to the statutory order and not otherwise. The conditions of grant of licence
and its renewal are the essential features of the statutory order and in guise
of issuing directions, the State government or a licensing authority cannot
supplant the provisions of the statutory order, but can supplement it only with H
846 SUPREME COURT REPORTS [2002) 2 S.C.R.

A a view to give effect to the provisions of the statutory order. The State ~
government or the licensing authority while giving effect to the provisions of
the statutory order is not authorised to amend the statutory order by issuing
directions. Once the· enabling provisions restrict the power of issuing direction
only for giving effect to the provisions of the statutory order, the nature and
extent of direction which the State government or any authority specified
B therein are empowered to issue is confined to the area which is marked out
by the statutory order. In the present case what we find is that the licensing
authority while issuing the direction that the respondent's licence shall not be
)>.-.-
renewed on the premise that his place of business falls within a radius of 5
kms. of a retail outlet of government run oil company has, in fact, purported
C to amend the conditions of renewal of licence granted under the statutory
order which was not permissible under sub-clause (6) o(,Clause 16 of the
statutory order.

We have already noticed that the provisions of the statutory order do
not provide for refusal to renew a licence granted under the statutory order,
-D if the place of business of a licensee falls within a radius of 5 kms. of a
government run retail outlet. Further, the statutory order neither expressly
nor by necessary implications prohibit the grant of licence to a person or
refusal to renew such a licence if the place of business of such licensee falls
within the radius of 5 kms. of a government run retail outlet. In that view of
E the matter, the direction/order issued by th~ licensing authority refusing to
renew the licence of the respondent was inconsistent with the provisions of
the statutory order inasmuch as the same was not for purposes for giving
effect to the statutory order and, therefore, such a direction/order could not
have given effect to, while considering the renewal of licence of the respondent
herein.
F
For the aforesaid reasons, we are in agreement with the view taken by
the High Court. Consequently, we do not find any merit in these appeals and
the special leave petitions which are, accordingly, dismissed. There shall be
no order as to costs.

G N.J. Appeals and Petitions dismissed.