Praxair lndia Private Limited v. ultra vires the provisions of the Act and the Rules

dated 06.01.2016 confirming the above proceedings as illegal and arbitrary and consequently to set aside the same and quash S.T.C.No.14 of 2016 on the file of the I Additional Judicial Irirst Class Magistrate, Sangareddy, Medak District, and to direct the respondents not to interfere with the manufach,ing activity of the petitioner and to pass such other order or orders.

2. Brief facts leading to the filing of the present writ petition are that the petitioner is a private limited company engaged in the manufacture of industrial gases such as Oxygen, Nitrogen, Argon and medicinal gases , .l 2 W.l'.No.16485 of 2016 including Oxygen, having its plant and machinery at Plot No.l,2 & 3, Phasc IV. IDA Patancheru, Medak District. The petitioner manufactures liquefied gases and sells the same as industrial and medicinal gases. The petitioner claim-s to possess the necessary licenses and registrations under the applicable larvs. It is submitted that the products manufactured by the petitioner can be used only for two purposes i.e., either lor industrial purpose by industrial users or for medical purposes lor the institutional USCS

3. lt is suhnlitted that respondent No.3 issued a show cause notice dated 05.03.20 l5 calling upon the petitioner to explain eLs to why it has not obtained registration under the provisions of the Legal Metrology Act, 2009, (for short, 'the Act') and the Legal Metrology (Packaged Commodities) Rulcs, 2011, (for short, 'the Rules') as the petitioner is manufacturing/packing the industrial gases. It was alleged that the petitioner has contravened Section l8 of the Act read r.r'ith Rule 27 of the Rules. l'he pctitioner was also inlormed about the option to get the said offence compoundable under Section 48 of the Act. In response thereto, the petitioner submitted a detailed explanation on 18.04.2015 explaining the process ol manufacture and also objecting to the necessity of registration under the Rules since the petitioner's activity was exempted 3 W.P.No. i6485 of 20 t6 from the applicability of the Rules in terms of Rule 3 of the Rules. However, without considering the said explanation, respondent No.3 has passed the order dated 21.0g.2015 rejecting the claim of exemption by the petitioner by further observing that there was crear cut violation under the packaged commodities Rules. Challenging the said order, the petitioner preferred an appeal before respondent No.2 under Section 50 of the Act, but the same was also dismissed vide orders dated 06.0 t .201 6. Therefore, the petitioner filed the present writ petition. It is submitted that respondent No'3 has also initiated criminar prosecution against the petitioner and its directors in s'T'c'No'r4 of 2016 on the file of the I Additionar Judicial First Class Magistrate, Sangareddy and that the said proceedings are nothing but abuse of process of law since the petitioner was pursuing legal remedies about the appricabirity of the provisions of the Act and the Rures to its establishment. Challenging the order of the appellate authority confirming the order dated 06.0r.2016, the prescnt writ petition has been filed.

4. Learned counsel for the petitioner reiterated the grounds raised in the writ affidavit and submitted that as the gas manulactured by the petitioner is supplied to the industrial and the institutional users and is not for retail sale, it is not governed by the Act and the Rules made )/ l' 4 W.l'.No.16485 of 2016 thereunder. It is specifically mentioned that the petilioner is exempted from the provisions of the Act under Rule 3(b) of the Rules. It is submitted that thc petition,-'r is govemed by the Gas Cylinder Rules. 2004 as amended under Rulcs of -1016 and not under the Act of2009 and the Rules of20l I It is submined that the Department of Consumer A llairs has already clarified that thc said Rules do not apply to the industrial users or institutional use'rs. It is submitted that since the petitioner does not manufacturc or sell the packaged commodities, the requirement of registration unde r Section l8 of the Act read with Rule 27 ol the Rules does not arise and that the petitioner has only to strictly follow the procedure conternplated under the Gas Cylinder Rules, 2004 and the petitioner has bcen lbllowing the same. Thus, the petitioner has challenged the impugncd orders on the grounds that,- (l)No opporlunity of hearing was given by the Appellate Ar-rthoritl,; (2)'lhe c()ntentions of the petitioner have been rejected without giving any reasons; (3)There rs no sale of pre-packaged commodities; and (4) A ll custorners of the petitioner are industries or institutions and there i. no relail trade by the petitioner company and hence ) ) 5 W.P.No.l64E5 of 2016 there is no violation or contravention of any of the provisions of the Act.

5. The learned counsel lor the petitioner has also drawn the attention of this Court to the invoices flled along with the Writ Petition to demonstrate that the petitioner is selling gas in the quantities required by the customers in their cylinders and not any standard weight cylinders. Therefore, in addition to his claim that the customers are industrial and institutional customers and that the sale is as per customized requirement,.he further submitted that some of the customers are also themselves manufacturers of various other gascs and therefore, there is no retai I trade with them.

6. Learned Govemment Pleader for Civil Supplies, on the other hand, relied upon the averments made in the counter affidavit filed by respondent No.3 and submitted that the District lnspector, Legal Metrology, Sanga Reddy inspected the manufacturing premises of the petitioner at Patancheru, Medak District on 05.03.2015 and found that the petitioner's firm is carrying on the business of manufacture/packing of industrial/medical gases without obtaining registration of manufacturers and packers from the Department of Legal Metrology and ) I I I -) r.:1r 6 W.l'.No.16485 of 2016 therclbre, a casc \\'as registered by respondent No.3 under Rule 27 of the Rules rcad with Sections 18 and 36 of the Act. It is subrnitted that principles ol natural .iustice have been followed by issuing a notice to the petitioner on 05.03.20l5 and after consideling the pctitioner's explanation dt. I8.04.2015. reply dt.21.08.2015 was given informing the petitioner that it is a case of clear cut violation under the packaged comrnodities rules. lt is submitted that the appeal filed by the petitioner undcr Section 50( I ) of the Act has been disposed of vide orders dt.06.01.2016 basing on the facts and circumstances of the case and in the interest of .ltrstice and equity. It is submitted that though there was a provision of compounding the offence under Section 48 ol'the Act within a period lrf six months, the petitioner has not come forward to do so and hence thcre wns no alternative to respondent No.3 except to file a case in thc Courl ol- law and therefore, a criminal case has been filed against thc petitroncr in the Additional Judicial First Class Magistrate at Sanga Reddy. N4edak District on 03.09.2015 which was registered as S.T.(l.No. I4 01'l0l 6. It is submitted that the petitioner's contention that it supplies gas onlv to the industrial and institutional custorners is not correct as it also supplies gas to the distributors, such as Sasirekha [gencies, Sevcn Ilills Oxygen Company, Siddivinayaka lndustrial 7 W.P.No.l6485 ol20l6 Gases, S.R. Trading, etc., who are selling the above gas to the consumers. Therefore, according to the learned Govemment Pleader, the petitioner is also involved in retail trade of gases and is therefore govemed by the Act and the impugned proceedings of respondent No.3 and respondent No.2 are within their jurisdiction. As regards the amendments made to the definitions of industrial consumer' and 'institutional consumer' and their applicability to the case on hand, it is submitted that amendments were made on 14.05.2015, whereas the case was registered on 05.03.2015 and therefore, pre-amended provisions would apply in this case.

7. The learned Govemment Pleader has referred to Rule 27 of the Rules in support of his contention that the petitioner requires registration under the Legal Metrology Act

8. An additional counter affidavit has also been filed by respondent No.3 to the effect that exemption provided in sub-rule (b) of Rule 3 ol the Rules would apply only to the extent of the provisions of Chapter II comprising Rules 3 to 23, whereas Rule 27, which is in Chapter VI, is appticable to the petitioner company ) 8 W.P.No.I64E5 of 2016

9. I{aving lcgard to the rival contentions and the material on l'ecord, this ('ourt linds that the lollowing points fall for consideration in this Writ I'etition. ( l) Whether there was any breach of principles of natural justice?; (2)Whether there was sale of pre-packaged commodities?; and, (3)Whether the petitioner is exempted from registration under Rule 27 ol-the Legal Metrology (Packaged Commodities) Rules, 201 1?

10. For the l)urposc ol- ready reference and clarity, the relevant provisions of the Legal Metrology Act, 2009 and the Legal Metrology (Packaged (iorrnrodities) Rules, 2011 are reproduced hereunder ''Sctliott 2. DcJinilions. In this Act, unles: lhe context rlhe rw i.te t tLluirt'.t. (l).. I're-pLttkagcd comntodill" meons a commodity which vithoul the putchurr bting pre.sent is placed in a package of v,hatever nolure. y,ltLtlpr :tuletl or not, so thal the product con/oitted therein hos a pt a-.lL,lcrntined quuntily. ' . Secliott I ll. Declaratiorts on pre-packaged commodilies.- (l) No person :holl ntunultt'turc. putk sell, import, distribute, deliver, offer, expose or pLsstss ./itr salL utty pre-putkttgetl commodity unless such package is in .suchl slandc,rrl quulltities or nuntber antj bears thereon such declaralions and pttrtictrltrs irr .:uclt tnnnL'r' u.s ntuy be prascribed. " / ! 9 w.P.No.l64E5 ol20l6 "Section 36. Penalty lor selling, elc., of non-slandard packages.- (l) Whoever manufactures, packs, imports, sells, distributes, delivers or olheru,ise transJbrs, olfers, exposes or possesses.for sale, or causes to be sold, distributed, delivered or olherwise transferred, ofiered, exposed /br sttle any pre-packaged commodity which tloes not conform to the declarations on the package as proviclcd in this Act, shall be punished with./ine which may exlend to twenty-five thousand rupees, for the secontl offence, wilh fine which may exlend to fifty thousand rupees and for the subsequent ofence, with fine which shall not be less than fifty thousand rupees bul which may extend to one ktkh rupees or with imprisonmenl for a term which may exlend lo one year or v,ith both. (2) Whoever manufuclure,s or packs or imporls or causas to be manufactured or packed or imporled, any pre-packtged contmodity, u,ith error in net quonlity os may be prescribed shall be punished Y'ithJine whith shull not be less than ten thousand rupees bul which may extend to fifty thousand rupees and for the second and suhsequenl offence, with fine which may extenl to one lakh rupees or with imprisonment for a lerm v'hich may extend to one year or with both. " "Section 50. Appeak. (l) Subject to the provisions of sub-section (2), an appeal shall lie,-- (r) o) Q) (3) On receipt of any such appeal, the appellate authority shall, after giving the parties to the appeal, a reasonable opportuniry of being heard and after making such inquiry as it deems proper, make such order, as it may think fit, confirming, modifiing or ). \l / l0 W.P.No.16485 of 2016 revarsing tlL daLi.\iot1 or order uppealctl agoinsl or may send back lhe cttst v itlt :uclt tlirectiott as it mdy think fit for a .fre.;h decision or ordtr afit'r tukitt,g utltlitionol cridente, if nect.;sary. " Chapter Il ol the R lle.\ '' Rule 3. .lpplicatiotr of Chapte r.-The provisions o-f lhis chopler shull not upply trt fu) pat:kug,,: of comntodilies containing quantity of tnorc than 25 kiktgrt rtt or 25 litrt. (h) tcntent. ./brtili:er ond ctgricultural .farn produce sold in hugs ub01,g -\l) l{ilogrant lnd (c) put'kui4tJ Lttntmodities nrcunt .fbr induslriol consltmer.t or ittsl it uli, tnul con.\u zrs ' Chapler Itl Ltf the littlt.s ''Rule 27. Regislratiotr of mflnulocturers, packers and imporlers. (l) Every indivitltrul, /irn, Ilindu undivided lamilv, society, .:ompany or corporoliotl who or trhit'h pt (-pocks or imports any commodit.v for sale, dislribulion or dclrtary :;hull nuka an upplicalion, uccompanied hy afee o.f rupee.s Jirc lruntlrt,l. ttt thc Drrector or the ()onlrollt'r for lhe registration of his or it.s name utr,l trtntplerc oddress, und cvery such application shall be nruclc. (, in the ctt.tt ol tn upplicunt prc-pocking or imporling a )) commodily on lha d(ttt t)f Lonlttttncemcnt ol' lhese rules, .l'ithin o period of ninely dut.: fi'orn stu:h (ommen(enrcnl; or (i, in the ca.se tl anv upplicanl u,ho or u,hich commences prelrdcking or inprting t)i dnr (omnlodi,, u/icr thc commencemenl of these rules, I \ W.P.No.16485 of 2016 within ninety days from lhe date on which he or it conmencu such pre-packing. (2) Every application refbrred in sub-rule (1) shall contain the follou'ing parliculurs. namcly: ' (") (b) the nume qfthe applicant, the complete address of the premises at which the pre-packing or import of one or more commodilies is made by the applicant; and @ the name of the contmodity or commodities pre-packed or imported by the applicant. Explunation.--ln this sub-rule, 'complele address' has the meaning assigned to it in thc explanation lo sub-rule (l) of rule 10. (3) For making any alteration in the registralion cerlificate issuetl undcr sub-rule (1), a Jae of rupees one hundred shall be paid by the concarned manufacturer or packer or importer lo the Direclor or Conlroller. (1) On reccipl oJ the application made under sub-rule (l), the Director or Controller, u'ho shall he the Registering Aulhority, shall (o) o) if the applicalion is not complele in all respects, return the same lo the applicant within a period of seven vtorking dalts from lhe date of rece ipt of the application: if the applicalion is complele in all respects, regisler the applicant ond granl a registration certifcate to the opplicant to that elfect. " l ) ) t2 W.P.No 16485 of 2016

11. ln this case, the respondents have issued a show-cause notice on

05.03.2015 thar thc pctitioncr has contravened Section 18 ol the Act read with Rulc 17 of thc Rules and thus committed an offence punishable under Section 36 of the Act. For Section l8 to be applicable, the petitioner has to be manufhcturing, packing, selling, importing, distributing. delivering, offering, exposing or possessing for sale any pre-packaged conrmoditv in standard quantities or number and they should bear such cleclarations and parliculars in such manner as may be prescribed and Section 36 refers to penalty fbr selling o1'such non- standard packagcs. As can be seen from the abovc definition, 'pre- packaged comrnodity' has bcen dellned as a commodity which without the purchaser bcing preserrt is placed in a package ol w,hatever nature, whether sealed or not. so that the product contained therein has a pre- determined quantitv

12. In this casc, the petitioner is admittedly manuf'acturing gas and storing thc sanre tn large cylinders/containers or c()mpaftments and whenever custollers approach the petitioner, thc petitioner is supplying gas in the cylindcrs supplied by the purchaser in the volume required by , them. )Therefore. the presence of the purchaser or the demand of the II 13 W.P.No.164E5 of 2016 purchaser is very much evident in the invoices placed belore the petitioner. The purchasers are not purchasing the cylinders of standard units or standard sizes or volumes, but the cylinders are being supplied by the purchasers to the petitioner for filling with the required gas. Therefore, this Court is of the opinion that there is no pre-packaged commodity which can be picked up by the purchaser.

13. Chapter Vl of the Rules provides for registration of manufacturers, packers and importers and Rule 27 prescribes the procedure for the satne. Rule 2(bb) dehnes 'industrial consumer' and Rule 2(bc) defines 'institutional consumer' as under: "Rule 2(bh): "industrial crtnsumer" means the consumer who buys packaged commodities directly.frorn the manufacturer or front an importer or.fntm wholesalc dealer for use by thal industry and the package shall have declaration 'not.frtr retail sale'-" "Rule 2(bc): 'institulional consumer" means lhe instittttion u,hich buys packaged commodities bearing a declarotion 'not for relail solc', dirtctly Ji'om the munufitcturer or from an imporler ot from wholesala dealer Jbr use by that instilulion and not for commerciul or lrade purposes. " Chapter II ofthe Rules prescribes the provisions applicable to packages intended for retail sale and Rule 3 provides for exemptions from the ) ) I l4 W.P.No.l6485 of20l6 I I provisions of the said Chapter and Clause (c) thereof provides that packaged comrnodities rneant fbr industrial consumcrs or institutional consumers are L'xempt from the provisions of the Act

14. 'I'hercfbre. unless and until the petitioner falls rvithin the definition of 'retail seller' and does not f-all within thc exemption under Rule 3(c) of thc Rules, it shall require registration under Rule 27 of the Rules. As seen liorn tlre invoices submitted by the petitioner,, the petitioner IS supplying the gas to the industrial and institutional customcrs and sonre of them rnay also be distributors. l'he distributors, in tum, may crlga.cc themselves in retail trade and in that case, it would be the burden of the distributors to register themselvcs under the Legal Metrology (Packagcd Cornmodities) Rules, 201 I and not the wholesale supplier. Therelbre, this Court is of the opinion that the petitioner does not require registration under Rule 27 of the Legal Metrology (Packaged Comrnodities) Rulcs, 201 I

15. Irurther', as seen li<rnr Section 50 of the Act which provides for appeals. Sub-section (3) thereunder prescribes that the appellate authority shall, atier giving the parties to the appeal. a reasonable of being heard and aflcr rnaking such inquiry as it deems Oopportunity 1 / w1 I To, 15 W.P.No.1fl85 of 2016 proper, make such order, as it may think fit, confirming, modiffing or reversing the decision or order appealed against or may send back the case with such direction as it may think fit for a fiesh decision or order after taking additional evidence, if necessary. In this case, it is an admitted fact that no opportunity of hearing was given to the petitioner before passing the appellate order. It is therefore in clear violation of the provisions of the Act

16. Therefore, both on merits as well as on the ground of violation of principles of.natural justice, the petitioner has to succeed.

17. The Writ Petition is accordingly allowed and the impugned orders dt.21.08.2015 and dt.06.01.2016 are set aside and consequently, S.T.C. No.l4 of 2016 on the file of the I Additional Judicial First Class Magistrate, Sanga Reddy, Medak District is quashed.

18. Pending miscellaneous petitions, if any, in this Writ Petition including W.V.M.P.No.264I of 2026 (I.A.No.1 of 2026) shall stand closed. No order as to costs. //TRUE COPY// SD/.L. LAKSHMI BABU ASSISTANT REGISTRAR CTION OFFICER I I

1. The Principal Secretary, State of Telangana, Consumer Affairs Food and Civil Supplies Dept, Secretariat, Hyderabad.

2. The Controller of Legal Metrology, Telangala State, No. 209, P.W.D. Buildings,Gandhinagar, Hyderabad - 500 800

3. The lnspector of Legal Metrology, Sangareddy District, Medak,Telangana --:..: ,'.:-'. I I i 4 One CC to SRI V M.IM.CHARY, Advocate. IOPUC] 5 Two CCs to GP FOR CIVIL SUPPLIES, High Court for the State of Telangana. [OUT] I

6. Two CD Copies BSK BS I I i I i I i I l I I I I I I i I I I i i I I I I ( t I HIGH COURT DATED:1810212025 \ \ F" ( I lHE S },r ( ) { t,t,. r^HF t1a ORDER WP.No.16485 of 2016 ALLOWING THE WRIT PETITION WITHOUT COSTS L"h 1v1