Case Note & Summary
The dispute arose from two Government Orders issued by the State of Uttar Pradesh requiring District Magistrates to take action against industrial units selling or transferring unused coal or coal dust without obtaining a licence under the Uttar Pradesh Coal Control Order, 1977. The respondent, a company manufacturing chemicals, consumed coal for its operations and disposed of rejected coal and coal dust that were of no use to it without any licence. The respondent challenged the validity of the two memos dated 6 June 1985 and 19 September 1985 before the Allahabad High Court under Article 226 of the Constitution. The High Court held that the orders could not have been issued and that the respondent was not required to obtain a licence for transfer of surplus or rejected coal or coal dust. The State of Uttar Pradesh appealed to the Supreme Court by special leave. The core legal question was whether the respondent was a 'dealer' as defined in clause 2(d) of the Control Order, which required a person to carry on the business of import, purchase or storage for sale and sale of coal. The State argued that the expression 'in conjunction with' in the definition meant that carrying on business of sale was not necessary, while the respondent contended that it was a consumer and did not carry on business of sale or storage for sale, and was excluded from the definition by the concluding part of clause 2(d). The Supreme Court considered the definition and the meaning of 'business', holding that the expression 'in conjunction with' did not remove the requirement of business but only clarified that business could be carried on separately or along with some other business. The Court referred to Manipur Administration v. Nila Chandra, AIR 1964 SC 1533, which held that mere selling or storing does not constitute business, as business implies continuity of transactions and not a casual solitary transaction. There was no evidence on record to show continuity in the respondent's transactions of sale of coal dust or rejected coal. The Court thus agreed with the High Court that the respondent was not in the business of sale or storage for sale of coal. The Court found it unnecessary to express any opinion on the second reason given by the High Court, namely that the respondent's case was squarely covered by clause 3(B) of the Control Order. The Supreme Court dismissed the appeal on the limited ground that the respondent could not be proved to be in the business of sale or storage for sale of coal, and left open the legal question covered by the second reason. No order as to costs was made. The final decision favored the respondent, confirming that no licence was required under the Control Order for the disposal of rejected coal and coal dust in the absence of business activity.
Headnote
A) Essential Commodities - Dealer Definition - Business of Sale or Storage for Sale Necessary - Uttar Pradesh Coal Control Order, 1977 Clause 2(d) - The dispute concerned whether a consumer manufacturing chemicals, who disposed of rejected coal and coal dust without a licence, was a dealer. The Court held that the definition of dealer requires carrying on business of import, purchase or storage for sale and sale of coal, whether separately or in conjunction with other business. The expression 'in conjunction with' did not remove the requirement of business but only clarified that business could be carried on along with another business. Held that the respondent, being only a consumer with no evidence of business of sale, was not a dealer and hence no licence was required (Paras 6-8). B) Essential Commodities - Business Continuity - Casual or Solitary Transaction Not Business - Uttar Pradesh Coal Control Order, 1977 Clause 2(d) - The Court referred to Manipur Administration v. Nila Chandra, AIR 1964 SC 1533, where it was held that mere selling or storing does not constitute business, which requires continuity of transaction. On the record, there was no evidence of continuity in transactions of sale of coal dust or rejected coal by the respondent. Held that the respondent was not in the business of sale or storage for sale of coal, so the appeal was dismissed and the question under clause 3(B) was left open (Paras 8-9).
Issue of Consideration
Whether the respondent, a consumer of coal for manufacturing chemicals, was required to obtain a licence under the Uttar Pradesh Coal Control Order, 1977 before disposing of rejected coal or coal dust; and whether the respondent fell within the definition of 'dealer' under clause 2(d) of the Order.
Final Decision
The Supreme Court dismissed the appeal and made no order as to costs. The Court held that the respondent could not be proved to be in the business of sale or storage for sale of coal, and therefore was not a 'dealer' under clause 2(d) of the Uttar Pradesh Coal Control Order, 1977. The legal question whether the respondent's case was covered by clause 3(B) was left open.
Law Points
- A person must carry on business of import
- purchase or storage for sale and sale of coal to be a dealer under clause 2(d) Uttar Pradesh Coal Control Order
- 1977
- 'in conjunction with' does not eliminate business requirement
- business implies continuity of transactions
- casual solitary transaction does not make a dealer
- consumer who imports
- purchases or stores coal for own use excluded from dealer definition
- no licence required for disposal of surplus/rejected coal or coal dust absent business
