Holding

The State may regulate the use of coal but cannot control the bricks produced; provisions of the Order that regulate bricks are ultra vires and are struck down.

Summary

The State of Uttar Pradesh issued the U.P. Coal Control Order, 1977 under Section 3 of the Essential Commodities Act, 1955, requiring licences for brick kilns using slack coal and imposing conditions on the sale, price, size and export of the bricks produced. Brick manufacturers challenged the order, and the Allahabad High Court quashed the provisions that regulated bricks. On appeal, the Supreme Court held that while the State may regulate the use of coal, it cannot control the bricks themselves; therefore, provisions of Paragraph 8 (sub‑para (iv) and the Note) and Paragraph 12 relating to brick size, price, sale and export, as well as the corresponding condition in Form‑D, are ultra vires and are struck down. The remainder of the Order, which pertains solely to coal, remains valid. The appeal was allowed to the extent stated, and no costs were awarded.

Issues considered

Whether the provisions of the U.P. Coal Control Order, 1977 that regulate the sale, price, size and export of bricks produced with slack coal fall within the State's power under Section 3 of the Essential Commodities Act, 1955.
Whether the State can impose licence conditions on brick manufacturers concerning the disposal, sale and distribution of bricks.

Legislation cited

Essential Commodities Act, 1955s. 3

Subjects

Essential commoditiesCoal regulationBrick kilnsLicensingUltra viresSeverabilityPrice controlExport controlState power

Judgment

A STATE OF U.P. AND ORS.
v.
MIS. CHHABRA BRICKS AND TILES MFG. CO.

DECEMBER 8, 1999

B [S.P. BHARUCHA, D.P. WADHWA AND N. SANTOSH HEGDE, JJ.]

U.P. Coal Control Order, 1977:

C Paragraphs 5(b), 8(i) (B), 8(iv), 12, Form-D-Validity of-Applicability
of the Coal Control Order to brick kilns using slack coal-Held, coal being
an essential commodity, the State Government is entitled to regulate its use-
To tl}at extent it is entitled to regulate its use in brick kilns ahd require those
who run brick kilns using coal to obtain licences under the Order-That
power, however, does not extend to the control in any manner of the bricks
D so produced-Provisions of the Order which control not the coal but the
brickslare to be struck down-Sub-para (iv) of Paragraph 8 and the Note
thereto deals, except in clause (a) thereof, entirely with the bricks and to that
extent it is struck down-Paragraph 12 in so far as it applies to the export
, of bricks is also quashed-In regard to para 5(b) and para 8(i) (B) it is made
clear that no condition may be specified or direction issued that relates to
E the sales and distribution of bricks-In so far as licence in Form-D is
concerned, the condition that requires a licensee to comply with general or
special directions issued in regard to the disposal or sale of any stock of
bricks is quashed-Essential Commodities Act. 1955-S.3.

F State of U.P. & Ors. v. Janta In. Udyog & Ors., (1991] Supp. 2 SCC 506,
disapproved.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 173 of 1989.

From the Judgment and Order dated 9.2.1988 of High Court of Allahabad
G in Civil Misc. Writ Petition No. 2886 of 1985.

A.K. Goel, Addi. Adv. General U.P., Saurabh Samsher, Kamalendiu Misra
R.B. Misra, Lakshmi Raman Singh and Amitesh Kumar for the appearing.
parties.

H
190
ST ATE v. CHHABRA BRICKS AND TILES MFG. CO. 191
..
The following Order of the Court was delivered : A
The appeal has been referred to a Bench of three Judges because the
two learned Judges who earlier-heard it were of the opinion that the decision
of this Court in State of V.P. and Ors. v. Janta In. Udyog and Ors., [1991),
Supp 2 SCC 506, required reconsideration.
B
Under appeal is the order of a Division of the High Court at Allahabad
which, following an earlier judgment of the High Court, quashed the provisions
..... of the U.P. Coal Control Order, 1977 insofar as it applied to persons
manufacturing bricks with the aid of slack coal and to brick kilns run by them
for such manufacture of bricks. The order was passed on writ petitions filed
by the manufacturers of bricks who used slack coal in their brick kilns.
c
The U.P. Coal Control Order ("the said Order'') was issued in exercise
of powers conferred by section 3 of the Essential Commodities Act, 1955. It
defined 'bricks' to mean bricks or tiles produced with the aid of slack coal
but did not include firebricks or refractory bricks and tiles. A 'brick kiln' meant D
any kiln in which bricks were manufactured with the aid of coal and the
premises appurtenant thereto. Paragra!Jh 4 of the said Order dealt with licensing
thereunder; it said that no person could import coal or carry on business as
a coal agent or coal depot-holder or run a brick kiln with coal except under
and in accordance with the terms and conditions of a licence issued under
the said Order. Paragraph 5 dealt with the issue of licences and sub-paragraph E·
(b) thereof said that every licence granted or renewed under the said Order,
inter alia, in Form D for running a brick kiln with slack coal would be subject
to the conditions specified therein and such other conditions as the State
Coal Controller or District Magistrate might prescribe from time to time.
Paragraph 8 of the said Order dealt with directions regarding import, purchase, F
sale, storage and distributions; it required the licensee of a brick kiln under
the said Order to comply with any direction that might be issued to him from
time to time by the State Coal Controller or the District Magistrate, inter alia
in respect of the sale and distribution of bricks. Sub-para (iv) of paragraph
8 and the Note thereunder read thus :
G
"(iv) A licensee in Form 'D' or a person running a brick kiln with coal-

(a) shall not utilise or cause to be utilised coal allotted to him or in
stock with him for a purpose other than burning bricks and shall
, ' not divert or transfer any such coal to any other person or any
other brick kiln, even though owned by him, except under a H
192 SUPREME COURT REPORTS (1999) SUPP. 5 S.C.R.

A written authority from the District Magistrate;
(b) shall sell the whole or a specified part of his stock of bricks
produced with the aid of slack coal to a person as may be
specified in a permit issued in that behalf of the District
Magistrate and addressed to him;
B (c) shall manufacture with the aid of slack coal bricks of such sizes
as may be fixed by the District Magistrate and shall further sell
them at such prices as may be fixed by the District Magistrate
for different sizes and classes of bricks.
Note.---For the purpose of this sub-clause, the District Magistrate
c may, subject to any direction of the State Government by general or
special order fvc--

(a) the sizes of which bricks with the aid of slack coal are to be
manufactured; and
D (b) the maximum price at which different classes of such bricks may
be sold to the public in general and in bulk to construction
agencies in the public section particular by any person, such
price, being based on the estimated cost of, manufacture of such
bricks plus reasonable margin of profit thereon :

E Provided that different prices may be fixed in respect of different
classes and sizes of such bricks for different localities in the district
having regard to different circumstances pertaining thereto."

Para 12 of the said Order dealt with the export of coal and bricks and stated
that no person could export, cause to be exported or offer for export coal or
F bricks produced with the aid of slack coal from within the State without
obtaining the prior written permission of the State Coal Controller. Form Din
the said Order prescribed the form of the licence for running a brick kiln.
Clause (4) of the conditions thereof required the licensee to comply with
general or special directions issued by the State Coal Controller or the licensing
G authority from time to time with regard to, inter alia, the disposal and sale of
any stock of bricks.

In the case of Janta Jn. Udyog this Court considered whether the State
of U.P. was competent to insist that brick manufacturers should take out a
licence for using coal for the purposes of manufacturing bricks. In a short '.
H order this Court held that the State Government could not impose a licence
STATE v. CHHABRA BRICKS AND TILES MFG. CO. 193
on the mamifacturers of bricks for the purposes ofusing coal for firing bricks. A
The High Court, in a judgment delivered on 22nd December, 1983 in the
case of Mis. Soni Bricks Trading Company v. State of U.P., dealt with the
provisions of the said Order in some detail and came to the conclusion that
the said Order had to be quashed to the extent it applied to persons
manufacturing bricks with the aid of slack coal and to brick kilns being run B
by them for the manufacture of bricks in that manner. It said that there was
no doubt that coal being an essential commodity, the State Government was
within its powers to ensure that it was not misused or its availability at a fair
.. price was not put in jeopardy. Since brick kiln owners were only consumers
of coal and not dealers, all the provisions that were applicable to dealers, C
particularly those with respect to movement, sale, price, etc. could not be
made applicable to brick kiln owners as bricks were not an essential commodity.
It was, however, open to the State Government to make adequate provisions
for ensuring that the coal issued for the purpose ·either under a permit or
otherwise was not misused, but those provisions had to be made separately
with this sole objective in view. The said Order insofar as it regulated the D
distribution, import, export and price, etc. of coal was severable as regards its
application to brick kiln owners who manufactured bricks with the aid of slack
coal. That being so, the said Order was not struck down in its entirety but
.. was allowed to continue to apply to coal dealers and to regulate other matters
relating to the supply and availability of coal.
E
The order that is presently impugned followed the earlier High Court
r. judgment just re~erred to.

Coal being an essential commodity, the State Government is certainly
entitled to regulate its use. To that extent it is entitled to regulate its use in F
brick kilns and require those who run brick kilns using coal to obtain licences
under the said Order. The earlier order of this Court in the case of Janta In.
Udyog does not, ~herefore, lay down the law correctly. That power, however,
does not extend to lhe control in any manner of the bricks so produced. All
that is requisite_ fo;; the purposes of control of coal is that there should be
no misuse of coal in-the production of bricks. The bricks themselves can be G
freely disposed of. -

With this hi mind, it is necessary to identify and strike down those
provisions of the{ said Order which con.trol not the coal but the bricks. In
regard to para S(b) and in para 8(i)(b), it is necessary to make it clear that no
.,.. . condition may: be specified or direction issued that relates to the sale and H
194 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A distribution of bricks. Sub-para (iv) of para 8 and the Note thereto, which we
have extracted above deals, except in clause (a) thereof, entirely with bricks
and to that extent, paragraph 8 must be quashed. Paragraph 12, insofar as it
applies to the export of bricks, must also be quashed. Insofar as the licence
in Form Dis concerned, the condition that requires a licensee to comply with
B general or special directions issued in regard to the disposal or sale of any
stock of bricks is quashed.

The appeal is allowed to the extent aforestated. No order as to costs.

R.P. Appeal allowed.