PETITIONER:
KHADYA PEYA VIKARETE MALAK SANGH
Vs.
RESPONDENT:
THE CHIEF OFFICER, SANGLI MUNICIPAL COUNCIL & ANR.
DATE OF JUDGMENT19/11/1976
BENCH:
FAZALALI, SYED MURTAZA
CHANDRACHUD, Y.V.
GOSWAMI, P.K.
CITATION:
1977 AIR 527 1977 SCR (2) 139
1977 SCC (1) 455
ACT
Maharashtra Prevention of Food Adulteration Rules,
1962--Appendix (1).Items 1, 7 and 8--Scope of--Hoteliers
selling food to customers visiting them-If--manufacturers
If liable to pay fees both as manufacturers and retailers.
HEADNOTE
Rule 2(d) of the Maharashtra Prevention of Food Adul-
teration Rules. 1962 defines a manufacturer as a person
engaged in manufacturing any article of food for the pur-
poses of trade. Clause (e) defines a. "retail dealer" as a
dealer in any article of food other than wholesale dealer
and cl. (g) defines a "wholesale dealer" as a person engaged
in the business of sale or storage for sale or distribution
of any article of food, for the purposes of resale. Fees
payable by a wholesale dealer or manufacturer for the grant
or renewal of a licence are prescribed in item 1 and those
payable by a retail dealer in items 7 and 8 of Appendix 1.
Members of the appellant association, who are hoteliers
and restaurant keepers prepare articles of food in a part
of their respective premises and sell them to the customers
visiting them. The respondent municipality charged from
members of the association licence fee both under item 1 and
items 7 and 8 of Appendix 1 on the ground that each of them
is both a manufacturer and a retail dealer. The appellant’s
suit for declaration that the municipality had no right to
charge two sets of fees from the members who are essentially
retail dealers and for refund of excess amount realised by
the municipality was dismissed by the trial court. The
first appellate court allowed the appellant’s appeal: but
the High Court on further appeal by the municipality re-
stored the order of the trial court.
Allowing the appeal to this Court.
HELD: The High Court was in error in holding that the
members of the association were covered both by item 1 as
also by items 3 to 8 of Appendix 1. Members of the appellant
association are liable to pay licence fee under items 3 to 8
of Appendix (1) and not under item 1.[148 B-C]
1 (a) Item 1 took within its fold a wholesale dealer or
manufacturer or both. It does not mention of a retail
dealer. Before a trader falls within the purview of item 1
it must be shown that he is either a wholesale dealer or a
manufacturer or both. Where the dominant nature of the
trading activity is neither that of a manufacturer nor a
wholesale dealer but is a retail sale, item 1 would have no
application. The fact that the trader prepares the articles
for selling them to his customers would not make him either
a wholesale dealer or manufacturer. [147H; 148 A-B]
(b) The words ’wholesale dealer’ or ’manufacturer’ in
item 1 will not apply to hoteliers and restaurant-keepers
whose main business is to conduct retail sale of their
articles prepared by them in a part of their premises.
[143G]
(c) The word ’manufacturer’ as defined in r. 2(d) had
been used in the widest possible sense to include not only
manufacture through a laboratory process but also prepara-
tion of an article of food. However liberally the word
’manufacturer’ is construed, it will not include the trading
activity of persons the dominant nature of which is to
supply articles of food prepared or produced by them to
their customers. [143E]
140
2(a) There is no force in the contention that unless the
members of the Association are licensed as manufacturers the
Food Inspector cannot enter for inspection any premises
where the articles are prepared. The question of a trader
obtaining a licence has nothing to do with the statutory
duties of a Food Inspector. The Food Inspector does not
derive his powers from the rules regulating licence of a
trader, but his duties spring from the statutory provisions.
There is no provision in the rules which in any way prevents
or interferes with the discharge of his duties. [147C-E;
146C]
(b) Apart from the wide powers given to the Food Inspec-
tor by the Statute, Rules framed by the Central Government
confer additional powers on the Food Inspector. The Maha-
rashtra Rules do not contain any provision which in any way
runs counter to either the Central Rules or the Act. The
rules merely contain certain additional provisions regarding
the conditions of licence and additional duties to be per-
formed by the Food Inspector. [147B]
(c) Even assuming that a particular State Government did
not frame any rules under the Act it cannot be said that the
Food Inspector would be absolutely powerless and cannot
exercise effective control. His duties and functions
spring from the parent statute and are not in any way corre-
lated to the additional duties provided for in the rules
framed by the State Government. [147G]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1936. of
1972.
Appeal by Special Leave from the Judgment and Order
dated the 2nd and 3rd day of August, 1971 of the Bombay High
Court in Second Appeal No. 1064 of 1970.
V.M. Tarkunde, S.B. Wad, (Mrs.) J. Wad and AMiss) Manek
Tarkunde for the Appellant.
D. V. Patel, S.C. Pratap and P.H. Parekh for Respondent No.
1 M.N. Shroff for respondent No. 2.
The Judgment of the Court was delivered by
FAZAL ALl. J. This appeal by special leave is directed
against the judgment of the High Court of Bombay dated
August 2/3, 1971 by which the plaintiff’s suit for declara-
tion and injunction has been dismissed. The plaintiff is
an association of hoteliers and restaurant keepers doing
business within the, local limits of Sangli Municipality in
the State of Maharashtra. Under the provision of the
Prevention of Food Adulteration Act, 1954---hereinafter
referred to as ’the Act’--and the rules framed thereunder by
the Maharashtra Government the members of the plaintiff
association were required to take a licence for the business
conducted by them. - The Municipality insisted that the
members of the plaintiff--Association should pay two sets of
fees---one under item 1 and another under items 3 to 8 of
Appendix (1) to the Schedule. These fees were demanded by
the Municipality on the ground that the members were both
manufacturers and retail dealers and were, therefore, liable
to pay fees in both these capacities. The Appendix (1) to
the Schedule was a part of the rules framed by the Maharash-
tra Government under s. 24 of the Act. The plaintiff, howev-
er, contended that the members of the plaintiff-Association
were not liable to pay two fees as they were essentially
retail dealers and would have to pay fees under items 3 to 8
of. the appendix because they could not be said to be either
wholesale dealers or manufacturers. The plaintiff also
141
claimed a declaration that the Municipality had no right to
charge two fees from the plaintiff and also prayed. for an
injunction restraining the Municipality from doing so.
There was a prayer for refund of Rs. 3,990/- being the
excess amount realised by the Municipality from the plain-
tiff. The suit was resisted by the Municipality on the
ground that under the rules framed by the Maharashtra Gov-
ernment, the Municipality was legally entitled to levy two
sets of fees from the plaintiff as indicated above. The
suit was dismissed by the Trial court of the Joint Civil
Judge, Junior Division, Sangli, who held that the plaintiff
was not entitled to the declaration sought for and neither
to, the refund as the Municipality was fully justified in
realising the two sets of fees from the plaintiff.
Against this decision the plaintiff went up in appeal to the
Extra Assistant Judge, Sangli who by his judgment dated
August 27, 1970 reversed the judgment of the Trial Court and
decreed the plaintiff’s suit holding that the plaintiff was
entitled to the declaration sought for as the Municipality.
was not entitled to realise two sets of fees under Appen-
dix (1) referred to above. The. learned Judge also passed
a decree for refund of Rs. 3,990/- in favour of the
plaintiff. The Sangli Municipality went up in second
appeal to the High Court of Bombay which ultimately succeed-
ed and the High Court, agreeing with the view taken by the
Trial Court, dismissed the plaintiff’s suit. Thereafter the
plaintiff obtained special leave from this Court and hence
this appeal.
As seen above, the facts of this case .lie within a very
narrow compass and the point involved is a pure question of
law which depends upon the interpretation of certain provi-
sions of the Act and the Rules made by the Maharashtra
Government. Before, however, analysing the provisions of the
Act and the Rules made thereunder it may be necessary to,
state a few admitted facts. It is not disputed that the
appellant is an Association of hoteliers and restaurant
keepers who are engaged in preparing eatables and other
articles of food and selling the same to their customers. It
is also not disputed that by and large, the members of the
plaintiff-association prepare the articles in a part of the
premises where the hotel or restaurant is situated and after
preparing the eatables they sell the same to the customers
visiting those places. There was some controversy on the
question as to the import and ambit of the word "manufac-
ture", but counsel for the appellant did not dispute seri-
ously, and rightly, that for the purpose of this case the
preparation of the articles of food would be included within
the ambit of the term "manufacture". In these circumstances,
therefore, we need not dilate on this point any further.
Mr. V.M. Tarkunde, learned counsel for the appellant,
submitted that as. the main business of the members of the
plaintiff association was retail sale of the articles pre-
pared by them, they were essentially retail sellers and they
could be charged fees only in this capacity. It is thus
contended that the case of the appellant would clearly fall
within the ambit of items 3 to 8 of Appendix (I). It was
vehemently argued that by no stretch of imagination could
the
142
association’s members be charged fees as manufacturers or
wholesale dealers in view of the nature of their trading
activity. The plaintiff also placed reliance on a communi-
cation by the Director of Health to the Municipal Council
expressing his opinion that the Municipality was not justi-
fied in realising two sets of fees from the plain-. tiff’s
members and that they were liable to pay fees only under
items 3 to 8 of Appendix (1). This, however, was merely an
opinion of an Officer and would not carry any weight when we
are interpreting the statutory provisions of the Act and the
Rules.
On the other hand, Mr. D.V. Patel appearing for the
respondent Municipal Council submitted that the trading
activity of the appellant’s members and two separate capaci-
ties--one as manufactures and another as retail dealers,
and, therefore, the Municipality was entitled to realize
fees on both these counts. It was further argued by Mr.
Patel that if the Municipality was not allowed to realise
fees from the appellant’s members as manufacturers, the Food
Inspector appointed by the Municipality would have no
jurisdiction to inspect the premises and check the articles
manufactured by them for the purpose of sale.
We have given our anxious and careful consideration to
the arguments of both the parties and we are clearly of the
opinion that the argument of learned counsel for the appel-
lant is well founded and must prevail. To begin with, the
Rules framed by the Maharashtra Government which were pub-
lished in the Maharashtra Government Gazette dated April 26,
1962, as amended upto date, define "manufacturer" thus:
"’manufacturer’ means a person engaged in manufacturing any
article of food for the purpose of trade;"
"Retail dealer" is defined thus:
"’retail dealer’ means a dealer in any article of food,
other than a wholesale dealer;"
"Wholesale dealer" has been defined as the person engaged in
the business of sale or storage for sale or distribution of
any article of food for the purposes of resale.
Appendix ( 1 ) runs thus:
"Schedule of Licence Fees chargeable under Section 24(2)
of Prevention of Food Adulteration Act, 1954, for licensing
certain trades.
143
Appendix (1)
Fees for the grant or renewal of a licence.
[See rule 5(3) and (4A)]
Sr. Fresh Renewal
No. Category Licence of
Licence
1 2 3 4
Rs. Rs.
1. Wholesale dealer or manufacturer
or both (other than those covered by
Appendix (2) 30 20
2. Hawker or itinerant vendor or both 3 1
3. Retail dealer with annual turnover
upto Rs. 1,000 3 1
4. Retail dealer with annual turnover
exceeding Rs.1,000 but not
exceeding Rs. 5,000 5 2
5. Retail dealer with annual turnover
exceeding 5,000 but not
exceeding Rs. 10,000 10 3
6. Retail dealer with annual turnover
exceeding Rs.10,000 but not
exceeding Rs.15,000 15 5
7. Retail dealer with annual turnover
exceeding Rs.15,000 but not
exceeding Rs. 25,000 20 10
8. Retail dealer with annual turnover
exceeding Rs.25,000 25 15
There cannot be the slightest doubt that the. word "manufac-
turer" as defined in el. (d) of r. 2 had been used in the
widest possible sense so as to, include not only manufac-
ture through a laboratory process but also preparation of an
article of food. In our opinion, however liberally the
word "manufacture" may be construed, it will not in-
clude the trading activity of persons, the dominant nature
of which is to supply articles of food prepared or produced
by them to their customers. In other words, where the bulk
of food articles sold by the restaurant-keepers are prepared
by them in what may be reasonably called a part of the
premises of the restaurant where the articles are sold, the
preparation of manufacture of those articles is incidental
or ancillary to the retail sale, the dominant purpose of the
trading activity being sale of food articles by retail.
We, therefore, think that the words. "wholesale dealer" or
"manufacturer" in item 1 of Appendix (1) will not apply to
hoteliers and restaurant-keepers whose main business is to
conduct retail sale of their articles prepared by them in
what may be termed a part of the same premises.
It was, however, argued by Mr. Patel that if this view
is taken, it would debar the Food Inspector from inspecting
the premises where the articles of food are prepared and
checking the same inasmuch as under the conditions of the
licence, the Food Inspector his to maintain certain stand-
ards and norms and-comply with certain conditions in the
process of preparation of the articles. We are, however,
unable to find any provision in the Act which in any way
prevents the Food Inspector from making routine inspection
and cheek of persons whe-
144
ther licensed or not. This will be clear from an analysis
of the various provisions of the Act which we shah show
presently. It seems to us that the Food Inspector being a
creature of the parent statute, namely, the Prevention of
Food Adulteration Act, 1954 being referred to as ’the Act’
has got an independent statutory status, whose duties and
functions are defined by the Act itself. The powers of the
Food Inspector are derived from and flow from the statute
itself. It is a different matter that under the Rules framed
by the Government of a State the food Inspector may be
entrusted with certain additional duties but that does not
take away the statutory powers possessed by the Food Inspec-
tor. To begin with, s. 2(xi) of the Act defines "premises"
thus:
"’premises’ include any shop, stall, or place where any
article of food is sold or manufactured or stored for sale;"
A perusal of this definition would manifestly reveal that
"premises" include any place where any article of food is
sold or manufactured or stored irrespective of the question
whether the manufacturer or the seller is licensed or not.
The word "premises" does not contain any limitation so as to
confine it only to those premises which are licensed.
Section 7 of ,the Act contains an express prohibition pre-
venting any person from manufacture or sale of any adulter-
ated article of food.
The relevant provision of s. 7 runs thus:
"No person shall himself or by any person on his
behalf manufacture for sale, or store, sell or distribute--
(i) any adulterated food;
(ii) any misbranded food;
(iii) any article of food for the sale of
which a licence is prescribed, except in
accordance with the conditions of the
licence;
(iv) any article of food the sale of
which is
for the time being prohibited by the
Food
(Health Authority in the interest of
public
health;
(v) any article of food in contravention of
any other provision of this Act or of
any rule made thereunder, or
(vi) any adulterant."
This provision also does not contain any restriction of
limitation and takes within its fold any person whether
licensed or not who manufactures, stores or sells any adul-
terated food. Clause (iii) of s. 7 no doubt makes sale of
any article of food without a licence an offence but clause
(i) is independent of clause (iii). Clause (iv)
145
of s. 7 authorises the Food (Health) Authority to prohibit
the sale of any article of food in the interest of public
health. Section 9 of the Act is the provision for appoint-
ment of Food Inspectors and may be extracted thus:
"9. Food Inspectors.--(1) The Central
Government or the State Government may, by
notification in the Official Gazette,
appoint such persons as it thinks fit, having
the prescribed qualifications to be Food
Inspectors for such local areas as may be
assigned to them by the Central Government or
the State Government, as the case may be:
Provided that no person who has any
financial interest in the manufacture, import
or sale of any article of food shall be
appointed to be a food inspector under this
section.
(2) Every Food Inspector shall be
deemed to be a public servant within the
meaning of Section 21 of the Indian Penal
Code and shall be officially subordinate to.
such authority as the Government appointing
him may specify in this behalf."
Section 10 of the Act contains the powers, duties and func-
tions of the Food Inspectors. The relevant portion of this
statutory provision may be extracted thus:
"10. Powers of Food Inspectors.--
(1 ) A food inspector shah have power-
(a) to take samples of any article of food
from--
(i) any person selling such article;
(ii) any person who. is in the course of
conveying, delivering or preparing to deliver
such article to a purchaser or consignee;
(2) Any food inspector may enter and
inspect any place where any article of food is
manufactured, or stored for sate, or stored
for the manufacture of any other article of
food for sale, or exposed or exhibited for
sale or where any adulterant is manufactured
or kept, and take samples of such article of
food or adulterant for analysis;
(4) If any article intended for food
appears to any food inspector to be
adulterated or mis-branded, he may seize and
carry away or keep in the safe custody of the
vendor such article in order that it may be
dealt with as hereinafter provided and he
shall, in either case, take a sample of such
article and submit the same for analysis to
public analyst;
11--1458SCI/76
146
It would be seen that sub-ss. (2) and (4) of s. 10 clearly
empower the Food Inspector without any restriction or limi-
tation to enter and inspect any place where any article of
food is manufactured, or stored for sale, or exposed or
exhibited for sale and inspect the article for the purpose
of finding out whether or not the article is adulterated.
Sub-section (4) of s. 10 empowers the Food Inspector even to
seize any adulterated or misbranded article and carry away
the same and keep it ’in safe custody. It is, therefore,
clear whether an activity is licensed or not, the place
where the activity is carried on is always subject to in-
spection by the Food Inspector under the provisions of s.
10. Section 16(1) clauses (c) and (d) particularly provide
for penalties and punishment for any person who prevents a
Food Inspector either from taking a sample or from exercis-
ing any power conferred on him by the Act. Thus it is plain
that the question of a trader obtaining a licence or not has
absolutely nothing to do with the statutory duties which a
Food Inspector has to perform and any person whether he is
licensed or not would be liable to penalties under the Act
if he tries to prevent or interfere in the due discharge of
the duties by the Food Inspector. Section 23 of the Act is
the provision which empowers the Central Government to make
rules in order to carry out the provisions of the
Act. Clause (c) of s. 16(1) provides for laying down
special provisions for imposing rigorous control over
the production, distribution and sale of any article
and clause (g) authorises the Central Government to
define the conditions of sale or conditions for li-
cence of sale of any article of food in the interest of
public State Government to make rules for the purpose of
giving effect to the provisions of the Act. Clause (a) of
sub-s. (2) of s. 24 empowers the State Government to define
the powers and duties of the Food (Health) Authority. The
section also contains provisions for levy of a fee. It is
under this provision that the Maharashtra Rules were made by
the Government. The Central Rules, namely, the Prevention
of Food Adulteration Rules, 1955, framed under s. 23 of the
Act also contain provisions defining the duties of a Food
Inspector. The relevant part of r. 9 of the Central Rules
may be extracted thus:
"9. Duties of Food Inspector.--It shall
be the duty of the food inspector
(a) to inspect as frequently as may be
prescribed by the Food (Health) Authority or
the local authority all establishments
licensed for the manufacture, storage or sale
of an article of food within the area assigned
to him;
(f) to make such enquiries and
inspections as may be necessary to detect the
manufacture, storage or sale of articles of
food in contravention of the Act or rules
framed thereunder;
(h) when so authorised by the health
officer, having jurisdiction in the local area
concerned or the Food (Health) Authority, to
detain imported packages which he has reason
147
to suspect contain food, the import or sale of
which is prohibited;
Thus it is clear that apart from the wide powers given to
the Food Inspector by the statute itself, even the Central
Rules framed by the Central Government confer additional
powers on the Food Inspector. The Maharashtra Rules referred
to above do not contain any provision which in any way runs
counter to either the Central Rules framed by the Central
Government or the provisions of the Act. The rules merely
contain certain additional provisions regarding the condi-
tions of licence and certain other additional duties to be
performed by the Food Inspectors.
Thus an analysis of these provisions would plainly
reveal that the Food inspector does not derive his powers
from the Rules regulating licence of a trader, but the
fountain of his authority flows from the, statutory provi-
sions itself. There is no provision in the Rules which in
any way prevents or interferes with the discharge of the
duties of a Food Inspector. The power to inspect and check
is a plenary power which has been conferred on the Food
Inspector by the statute itself and no rule made by the
Government can ever interfere with this power. In these
circumstances, it is difficult to accede to the contention
of Mr. Patel that unless the members of the plaintiff-
association are licensed as manufacturers also, it will not
be possible for the Food Inspector to inspect and check the
premises where the articles are prepared. The Act is a
social piece of legislation meant to control and curb adul-
teration of articles of food and being in the interest of
public health it has to be liberally construed and no limi-
tations can be inferred on the powers of the Food Inspector
whose primary duty is to see that the ’adulterated articles
are neither manufactured, nor stored, nor sold. For these
reasons, therefore, the main contention of Mr. Patel on this
score is overruled.
The contention of counsel for the respondent regarding
powers of the Food Inspector may be tested from another
angle of vision on the touchstone of practical reality.
Suppose a particular State Government does not choose to
frame any Rules at all under the provisions of the parent
Act (the Prevention of Food Adulteration Act), can it be
argued with any show of force that in such cases the Food
Inspector would become absolutely powerless and wholly
ineffective The answer must be in the negative, because it
is manifest that the duties and functions of the Food In-
spector spring from the parent statute and are not in any
way co-related to the additional duties provided for in the
Rules which may be framed by the State Government. Thus
even from this point of view, the argument put forward by
the respondent fails.
Coming now to. the Appendix (1),itself, it would appear
that item 1 and items 3 to 8 postulate two different contin-
gencies. Item 1 takes within its fold wholesale dealer or
manufacturer or both. There is no mention of a retail dealer
in this item. Thus before a trader falls within the purview
of item 1 of Appendix (1), it must be shown that he is
either a wholesale dealer or a manufacturer or both. We
have already pointed out that where the dominant nature of
the trading activity of a
148
person is neither that of a manufacturer nor as a wholesale
dealer, but he is engaged in retail sale’, item 1 would
have no application. The mere fact that the trader prepares
the articles for the purpose of selling the same to his
customers would not make him either a wholesale dealer or a
manufacturer. In the first place, the appellant’s members
cannot be wholesale dealers because there is nothing to show
that they deal in articles for the purpose of re-sale. On
the other hand, the nature of their trading activity is one
of retail sale. In these circumstances the case of the
appellant clearly falls within items 3 to 8 of Appendix (1).
The High Court was, therefore, in error in taking the view
that the case of the appellant was covered both by item 1 as
also items 3 to 8 of Appendix (1) and was, therefore, not
justified in reversing the judgment of the Extra Assistant
Judge.
On a consideration, therefore, of the facts and circum-
stances of the case, we are clearly of the opinion that in
the instant case the members of plaintiff-association who
are mostly restaurant-keepers conducting the business of
retail sale, the preparation of the articles being merely an
ancillary activity, are liable to pay .the licence fee under
items 3 to 8 of Appendix (1) and not under item 1 of the
Appendix (1) to the Schedule. The plaintiff is, therefore,
entitled to the declaration sought for and is also entitled
to the refund of Rs. 3,990/-.
We, therefore, allow this appeal, set aside the judgment
of the High Court, decree the plaintiff’s suit and restore
the judgment and decree of the Extra Assistant Judge. In
the peculiar circumstances of this case, there will be no
order as to costs.
P.B.R. Appeal
allowed.
149