STATE OF MAHARASHTRA AND OTHERS versus MAHARASHTRA HYBRID SEEDS CO. PVT. LTD. on 22 August 2019

924

SUPREME COURT REPORTS

[2019] 12 S.C.R.

ATHE STATE OF MAHARASHTRA AND OTHERS

v.

MAHARASHTRA HYBRID SEEDS CO. PVT. LTD.(Civil Appeal No.6564 of 2019)

BAUGUST 22, 2019

[R. BANUMATHI AND A.S. BOPANNA, JJ.]

Seeds Act, 1966 – Seeds Rules, 1968 – Seeds (Control) Order,1983 – Maharashtra Cotton Seeds (Regulation of Supply,Distribution, Sale and Fixation of sale price) Act, 2009 –CRespondent-Company was processing cotton and non-cotton seedsof different varieties in its unit – According to respondent, all suchprocessed seeds were stored in the storage/godown attached to theprocessing unit for transportation to different places – Case of theappellant was that the respondent not having a valid licence forDstorage or sale of seeds in the said processing unit had committedgross violation of the law – Consequent to which the seed inspectorhad sealed the godowns of the respondent-company – Writ petitionwas filed by the respondent – High Court ordered to de-seal all thegodowns of the respondent Company and held that the packed andlabelled seeds were kept in the unit only for further transportationEand no separate licence was required to be obtained for storage ofseeds in the godown attached to unit for such transportation –Further, High Court held that the power of sealing was not availableto the appellant-authorities – On appeal, held: During the inspectionof the unit, it was found that packaging and labelling machinesFwere kept and respondent was carrying out the operations of“packaging and labelling” in the said unit – As per r. 2(j) of seedsRules, 1968, “processing” does not include operations such as“packaging” and “labelling” – For any activity of labelling andpackaging of the seeds and storing the same, the respondent wasrequired to obtain separate licence under the Seeds Rules, 1968Gand the Maharashtra Cotton Seeds (Regulation of Supply,Distribution, Sale and Fixation of Sale Price) Rules, 2010 –Admittedly, respondent had no licence for its godown either as“storage of seeds” or “sale of seeds” – In the absence of such, theactivity of labelling and packaging of seeds at godown was illegal H

– Insofar as power of sealing of the appellant authorities areconcerned, s.14(1)(e) of the Seeds Act confers vide powers uponthe seed inspector – Since the seed inspector has to ensure that theprovisions of the Act are complied by the person who has obtainedthe licence, in case of non-compliance, in rare and exceptional cases,the seed inspector has power to seal the premises – However, insuch a case he has to record grounds for his belief that how meresearch and seizure may not be sufficient to prevent furthercontraventions – In the facts and circumstances of the case, theaction of the seed inspector and the authorities cannot be said tobe arbitrary – Therefore, judgment of the High Court set aside.

Allowing the appeal, the Court

HELD: 1. Respondent has obtained licence only underthe Factories Act for its unit. Admittedly, the respondent doesnot have licence in Form ‘B’ of Seeds (Control) Order, 1983 tocarry on the business of “dealer in seeds”. The only activitylegally permissible to be conducted by the respondent at itsprocessing plant is “processing of seed”. During inspection, itwas noticed that packaging and labelling machines were kept andrespondent was carrying out the operations of “packaging andlabelling” in the unit. For any activity of labelling and packagingof the seeds and storing the same, the respondent is required toobtain separate licence under the Seeds Rules, 1968 and theMaharashtra Cotton Seeds (Regulation of Supply, Distribution,Sale and Fixation of Sale Price) Rules, 2010. In the absence ofsuch licence, the activity of labelling and packaging qua the seedsand the cotton seeds carried out at its godown attached with unitby the respondent is illegal. [Para 24] [939-A-C]

2. From the search of the godown and also from thestatement of the authorized signatory of the respondent, it wasfound that the respondent was not only carrying out the activityof seed processing in godown; but also carrying on operations of“packing” and “labelling” etc. As per Rule 2(j) of Seeds Rules,1968, “processing” does not include operations such as“packaging” and “labelling”. The activities of the respondentlike packaging, pricing and labelling of various seeds in planttherefore cannot be said to be falling within the meaning of AB

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A“processing” under Rule 2(j) of the Seeds Rules, 1968. The HighCourt erred in brushing aside the materials produced before theHigh Court and the huge quantity of seeds of various kinds foundto have been stocked in random stake in various godowns of theunit. When the authorised signatory present in the plant is saidto have submitted the signed document dated 10.12.2017 statingBthat packed seeds stocked at the unit were ready for dispatchand the seeds are packed for sale, the High Court, erred in sayingthat the seeds packed and labelled are meant for transportationfor which no licence was required. [Para 25] [939-D-F]

3. By a conjoint reading of Sections 14 and 15 of the SeedsCAct and Rule 23 of the Seeds Rules, 1968 and various otherprovisions, it is clear that the Seed Inspector is conferred withwide powers coupled with duties. In terms of Section 14(1)(c) ofthe Seeds Act, 1966, Clause 13(d) of the Seeds (Control) Order,1983 and Section 7(2) of the Maharashtra Cotton SeedsD(Regulation of Supply, Distribution, Sale and Fixation of SalePrice) Act, 2009, the Seed Inspector is empowered to enter andsearch any premises, draw samples, seize or detain the stock ofthe seeds in respect of which he has reason to believe that acontravention of the provisions of the Act has been committed or is being committed. Under Rule 23 of the Seeds Rules, 1968,ESeed Inspector can issue and stop sale order in case the seed inquestion contravenes the provision of the relevant Act and Rules(Form III). The Seed Inspector is empowered to enter and searchany premises or break-open the door or any container, to examineany records, register, documents of the seed dealer and also toFseize the seeds stock(s) and/or records.[Para 32] [943-A-C]

4. There is, of course, no express provision empoweringthe Seed Inspector to seal any place, where there is contraventionof the provisions of the Act.But, such power to seal the place isdeemed to be vested with the Seed Inspector in terms of SectionG14(1)(e) of the Seeds Act which empowers the Seed Inspector toexercise such other powers as may be necessary for carrying outthe purposes of the Act or any rule made thereunder. The provisionsof Seeds Act, 1966 and Seeds Rules, 1968 provide for varioussafeguards that the Seed Inspector does not exceed his authority.[Para 33] [943-D-E, G]H

5. The Seed Inspector must be satisfied or has reason tobelieve that an offence under the Act has been committed or isbeing committed and that exercise of such power of sealing isnecessary for carrying out the purposes of the Act or the rulesmade thereunder. Since the exercise of power to seal inexceptional circumstances is only to carry out the purposes ofthe Act or the rules made thereunder, it is necessary that beforethe Seed Inspector proceeds to take action of sealing thepremises, he has to record grounds for his belief as to how and inwhat manner the provisions of the Seeds Act and the rules madethereunder have been contravened and how mere search andseizure may not be sufficient to prevent further contravention.The grounds for his belief so recorded in writing has to be forthwithcommunicated to the Magistrate in terms of Section 15(5) of theSeeds Act, 1966 and also to their immediate official superior. Thiswould ensure that the Seed Inspector does not exceed hisauthority or that power to seal is not misused. [Para 35][944-E-G]

6. In the present case, since the respondent was found tohave stocked genetically modified seed of RRF Hybrid Cottonwhich may include transgenic varieties, for which the approval ofGenetical Engineering Approval Committee is required, is alsonot submitted by the respondent. In that view, the authoritiessearched and inspected the godown but the seed material lyingthere in a voluminous stock was not appropriately segregated/staked and also the information was not furnished to inspectionteam by plant in-charge. Despite constant follow-up in writingand through oral instructions, the plant in-charge did not providestock position of seeds as expected by the Seed Inspector andalso not submitted the certified copy of licence having permissionto stock the seeds at godown. The respondent’s godown wassealed by 07:00 pm on 15.12.2017 after giving sufficientopportunity. In such facts and circumstances of the case, theaction of the Seed Inspector and the authorities in sealing theplant cannot be said arbitrary. [Para 36] [944-H; 945-A-C]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6564of 2019

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AFrom the Judgment and Order dated 21.02.2018 of the High Courtof Judicature at Bombay, Nagpur Bench, Nagpur in WritPetition No.8157 of 2017

Nishant Ramakantrao Katneshwarkar, Anoop Kandari, Advs. forthe Appellants.

B

V. Giri, Sr. Adv., Prashant P., Ms. Suveni Bhagat, Ms. Shivi Sethi,Abhay Kumar, Advs. for the Respondents.

The Judgment of the Court was delivered by

R. BANUMATHI, J.

C1. Leave granted.

2. This appeal is preferred against the judgment dated 21.02.2018passed by the High Court of Judicature at Bombay, Nagpur Bench inWrit Petition No.8157 of 2017 in and by which the High Court has allowedthe writ petition filed by the respondent-Company thereby ordering theDappellant-authorities to de-seal all the godowns of the Company atDhanora which was sealed by the appellant-authorities.

3. Brief facts which led to filing of this appeal are as follows:- Respondent-Company is a registered Company under theCompanies Act and is engaged in the business of research, production,Eprocessing, marketing and sale of variety of Hybrid seeds. According tothe respondent-Company, they have already obtained seeds licences underthe provision of the Seeds (Control) Order, 1983 and the MaharashtraCotton Seeds (Regulation of Supply, Distribution, Sale and Fixation ofSale Price) Rules, 2010 and that they are having licence for the storageFand sale of such seeds in the State of Maharashtra. According to therespondent, the processing of cotton and non-cotton seeds of differentvarieties is done by the respondent in its processing unit/plant situated atDhanora. All such processed seeds are then stored in the storageattached to the processing unit at the godown at Dhanora for beingtransported to different places.G

4. Case of the appellant is that the respondent not having a validlicence for the processing unit at Dhanora has committed gross violationof the provisions of the mandate of the Seeds Act, 1966, Seeds Rules,1968, Seeds (Control) Order, 1983 and the provisions of the MaharashtraCotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of H

Sale Price) Act, 2009. On 08.12.2017, local police inspected the godownof the respondent located at Dhanora and noticed suspected seeds ofvarious kinds stocked and the police informed the concerned authoritiesof the agricultural department. On 09.12.2017, the Seed Inspectorinspected the respondent’s godown at Dhanora and noticed huge quantityof seeds of various kinds stocked in random stakes in various godownsalong with seeds suspected as Roundup Ready Flex (RRF) Hybrid Cotton.The Plant In-Charge was informed to furnish the Seed Inspector theinformation about crop wise, variety wise and lot wise stock details ofthe seeds along with stake details in various godowns. It is stated that on10.12.2017, Plant In-Charge submitted the details of crop wise, varietywise and lot wise quantity out of the total stock of seeds in the godown.According to the appellant, the details so furnished were incomplete andindeterminate. The appellant alleges that the Plant In-Charge did notcooperate towards the written instruction of the Seed Inspector on thesame day. The Seed Inspector therefore issued a notice to the respondent-Company on 15.12.2017 informing the Plant Manager that the appellantCompany does not have the licence for storage or sale of the seeds inDhanora unit and that it has come to their knowledge that the activity ofsale is being carried out by respondent in their godown at Dhanora. Inthe show-cause notice, the respondent was asked to provide certaindocuments and informed that in case of non-supply of the documents,the godown and the entire premises at Dhanora would be sealed. Theappellants claim that respondent did not produce the documents andaccordingly, the godown was sealed by executing a panchnama toprevent further violation of the provisions.

5. Aggrieved by the sealing of the Dhanora godown, respondentfiled Writ Petition No.8157 of 2017 before the High Court of Judicatureat Bombay, Nagpur Bench. The High Court vide interim order dated22.12.2017 directed the appellant-authorities to open the sealed godownafter taking a prima facie view and held that since the requisite sampleof the seeds has already been taken and no purpose would be served inkeeping the storage sealed. The High Court held that packed and labelledseeds were kept in Dhanora unit only for further transportation and noseparate licence was required to be obtained for storage of seeds in thegodown attached to respondent’s processing unit at Dhanora for suchtransportation. High CThe High Court further held that the power ofsealing was not available to the appellant-authorities, especially to seal A

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Athe storage and keep it sealed indefinitely or till the report of the samplesis received from the laboratory. Being aggrieved, the appellant-State ofMaharashtra has preferred this appeal.

6. Learned counsel for the appellants Mr. Katneshwarkarsubmitted that no licence was obtained by the respondent-Company “forBstorage of seeds” in the godown attached to the processing unit atDhanora under the Seeds (Control) Order, 1983 or in Form ‘B’ underRule 5 of the Maharashtra Cotton seeds (Regulation of Supply,Distribution, Sale and Fixation of Sale Price) Rules, 2010. It was urgedthat the respondent has been operating seed processing plant at Dhanoraand without obtaining a valid licence for the sale, the seeds were storedCin godown attached to it for sale and the respondent has thus committedviolation of the provisions of the Seeds Act, 1966 and the Seeds (Control)Order, 1983. It was submitted that the manner of packing and labellingwhich contains details of lot number, germination, percentage, purity,MRP, etc. which is prescribed in Rules 7, 8 and 9 of the Seeds Rules,D1968 indicate that the seeds were packed for Sale and not fortransportation as claimed by the respondent-Company. Learned counselcontended that the High Court erred in making a distinction between“storage for sale” and “storage for transportation” and in holding thatCompany does not need any licence for transportation of the seeds from the processing unit at Dhanora. The learned counsel urged that respondentEwas given permission by the competent authority to undertake the fieldtrial for ‘Ballgard II x RRF Cotton Hybrid’ (a prohibited seed) in theyear 2010 only for a period of three years; but the respondent had beenstoring such seeds illegally even after expiry of three years’ time periodwithout applying for any extension in the provided time period. It wasFurged that in exercise of powers under Section 14(1)(e) of the SeedsAct, 1966, competent authority has full authority to seal the godown forviolation of the provisions of the Seeds Act, 1966 and to keep it sealed tillthe report of the samples is received from the laboratory for testing.

7. Refuting the above contentions, Mr. V. Giri, learned senior Gcounsel appearing for the respondent-Company inter-alia submitted thatthe respondent has already obtained seed licences under the provisionsof the Seeds (Control) Order, 1983 and the Maharashtra Cotton Seeds(Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Rules,2010. It was submitted that no separate licence is required to be obtainedfor processing the cotton and non-cotton seeds at Dhanora unit andH

those processed seeds are stored in the godown attached to the processingunit only for the purpose of transporting it to different sale points orstorages meant for putting the seed in the network of marketing. Thelearned senior counsel contended that the power of seizure and sealingof the godown was not available to the Seed Inspector under Section 14of the Seeds Act, 1966 as claimed by the appellant authorities and theHigh Court rightly directed desealing of the godown attached to theprocessing unit at Dhanora and the impugned order warrants nointerference.

8. We have carefully considered the submission of both the counseland perused the impugned judgment and the relevant provisions andother materials on record. The following points arise for consideration inthis appeal:-

(i) Whether the High Court was right in saying that the packedseeds kept in Dhanora unit were only meant fortransportation and no separate licence was required for suchstorage for transportation?

(ii) Whether the High Court was right in saying that the power ofseizure and sealing the godown is not available to the SeedInspector?

9. Seed is the basic input for the farmer for successful agriculturalproduction. Therefore, it is essential to maintain the purity and quality ofthe seed through various stages of seed production till the stage of sale.The Government of India had brought out different legislations to protectthe quality of seeds namely the Seeds Act, 1966, Seeds Rules, 1968,Seed (Control) Order, 1983 and other policies. In order to ensure supply,distribution and sale of cotton seeds, the State of Maharashtra has alsoenacted Maharashtra Cotton Seeds (Regulation of Supply and Fixationof Sale Prices) Act, 2009 and the rules framed thereunder. The provisionsof Maharashtra Cotton Seeds Act, 2009 are in pari materia with theSeeds Act, 1966.

10. The Preamble of the Seeds Act, 1966, provides “An Act toprovide for regulating the quality of certain seeds for sale, and formatters connected therewith”. The Statement of Objects and Reasonsexplains the methodology for achieving the said objective of regulatingthe quality of seeds as under:- A

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A“The methods by which the Bill seeks to achieve the objectare:- (a) constitution of a Central Committee consisting ofrepresentatives of the Central Government and the StateGovernment, the National Seeds Corporation and otherBinterests, to advise those Governments on all matters arisingout of the proposed Legislation; (b) fixing minimum standards of germination, purity and otherquality factors;

(c) testing seeds for quality factors at the seed testingClaboratories to be established by the Central Government andthe State Government; (d) creating of seed inspection and certification service in eachState and grant of licences and certificates to dealers in seeds; (e) compulsory labelling of seed containers to indicate the qualityof seeds offered for sale; and D

(f) restricting the export, import and inter-State movement ofnon-descript seeds.”

11. The business of selling, keeping for sale, offering to sell,Ebartering or otherwise supplying any seed of any notified kind or varietyother than cotton seeds is regulated by Section 7 of the Seeds Act, 1966and it is controlled by the Seeds (Control) Order, 1983. As per Section7 of the Seeds Act, 1966, no person shall, himself or by any other personon his behalf, carry on the business of selling, keeping for sale, offeringto sell, bartering or otherwise supplying any seed of any notified kind orFvariety unless such seed conforms to the requirements as may beprescribed under Section 7(a) to 7(d) of the Seeds Act, 1966.

12. Sections 12 and 13 of the Seeds Act enables the StateGovernment to appoint persons as Seed Analysts and Seed Inspectors.The State Governments including the Government of Maharashtra throughGtheir functionaries of agricultural department exercises its power to havean effective control over the quality and quantity aspects of theagricultural inputs. In the State of Maharashtra, various officers workingat state level, district level, sub-division level and taluka level are by virtue of their post have been notified as the Seed Inspectors in terms ofSection 13 of the Seeds Act, 1966. These Seed Inspectors performtheir duties as Quality Control Inspectors and also exercise powers toregulate the sale, export, import and storage of the seeds relating to therespective provisions of the Seeds Act, 1966, Seeds Rules, 1968, Seeds(Control) Order, 1983 and the provisions of the Maharashtra CottonSeeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price)Rules, 2010 etc.

13. Section 14 of the Seeds Act provides for the powers of SeedInspector and Section 15 of the Seeds Act provides for the procedure tobe followed by the Seed Inspectors in taking samples. As per the provisionunder Section 14(1)(c) of the Seeds Act, 1966, the Seed Inspectors areempowered to search or inspect the premises any time, where the SeedInspectors have reason to believe that such offence has been committed.As per Section 14(1)(d) of the Seeds Act, the Seed Inspector mayexamine any record, register, document or any other material objectfound in any place and if he has reason to believe that the record, register,etc., may furnish evidence of the commission of an offence punishableunder the Act, he may issue a seizure order in Form IV of the SeedsRules, 1968 and seize the records. As per Section 14(1)(e) of the SeedsAct, 1966, the Seed Inspector can exercise such other powers as maybe necessary for carrying out the purposes of this Act or any rule madethereunder. Section 14(1)(c), (d) and (e) of the Seeds Act, 1966 readsas under:- Powers of Seed Inspector 14(1). The Seed Inspector may:-

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(c) enter and search at all reasonable times, with such assistance,if any, as he considers necessary, any place in which he has reasonto believe that an offence under this Act has been or is beingcommitted and order in writing the person in possession of anyseed in respect of which the offence has been or is beingcommitted, not to dispose of any stock of such seed for a specificperiod not exceeding thirty days or, unless the alleged offence issuch that the defect may be removed by the possessor of theseed, seize the stock of such seed; A

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A(d) examine any record, register, document or any other materialobject found in any place mentioned in clause (c) and seize thesame if he has reason to believe that it may furnish evidence ofthe commission of an offence punishable under this Act; and (e) exercise such other powers as may be necessary for carryingBout the purposes of this Act or any rule made thereunder.

14. As per Section 14(5) of the Seeds Act, 1966 the provisions ofthe Code of Criminal Procedure shall, so far as may be, apply to anysearch or seizure under this Section as they apply to any search or seizuremade under the authority of a warrant issued under Section 98 of theCsaid Code.

15. Section 15 of the Seeds Act stipulates the duties of the SeedInspector. As per Section 15(1) of the Seeds Act, whenever an Inspectorintends to take sample of any seed of any notified kind or variety foranalysis, he shall give notice of such intention in writing in Form IV ofDthe Seeds Rules, 1968 to the person from whose seed lots he intends totake samples. He shall, as far as possible, call not less than two personsto be present at the time when he draws sample(s) and take theirsignatures in Form VIII of the Seeds Rules, 1968.In terms of Section15(2) of the Seeds Act, 1966, the Seed Inspector shall divide therepresentative sample drawn, into three equal and identical parts and (a)Edeliver one sample to the person from whom it has been taken; (b) sendanother sample in the prescribed manner for analysis to the Seed Analystsfor the area within which such sample has been taken; and (c) retain theremaining sample in the prescribed manner for production in case anylegal proceedings are taken or for analysis by the Central Seed LaboratoryFunder sub-section (2) of Section 16 of Seeds Act, 1966, as the case maybe. Section 15(5) of the Seeds Act provides for the safeguards regardingthe seizure of the stock, record, register, etc. and after seizure of suchrecord, register and other documents, he shall as soon as may be, informthe Magistrate and take his orders as to the custody thereof.

16. Rule 23 of Seeds Rules, 1968 provides for the “duties of aSeed Inspector” in addition to the duties specified by the Seeds Act.As per Rule 23(a) of the Seeds Rules, the Seed Inspector shall inspectas frequently as may be required by certification agency all places usedfor growing storage or sale of any seed of any notified kind or variety.

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As per Rule 23(e) of the Seeds Rules, the Seed Inspector shall maintaina record of all inspections made and action taken by him in theperformance of his duties including the taking of samples and the seizureof stocks and submit copies of such record to the Director of Agricultureor the certification agency as may be directed in this behalf. Rule 23(g)of the Seeds Rules enables the institution of the prosecutions in respectof any breaches of the Act or the Rules.

Seeds (Control) Order, 1983

17. The inclusion of seeds as an essential commodity item underthe Essential Commodities Act, 1955 has brought the Seeds (Control)Order. In terms of the Seeds (Control) Order, 1983, a person carryingon the business of selling, exporting and importing of seeds needs toobtain a licence. The licence provided to a seed dealer remains validonly for three years from the date of its issue which can be later renewed.The seed dealer has to display the stock position (opening and closing)on daily basis along with the list indicating prices or rates of differentseeds.

18. As per Clause 2(c) of the Seeds (Control) Order, 1983,“Dealer” means a person carrying on the business of selling,exporting or importing seeds, and includes an agent of a dealer.”As per Clause 3 of the Seeds (Control) Order, 1983, no person cancarry on the business of selling, exporting or importing seeds at anyplace except under and in accordance with the terms and conditions oflicence granted to him in Form ‘B’ under Clause 5 of the said order. Asper Clause 4 of the Seeds (Control) Order, 1983, “Every person desiringto obtain a licence for selling, exporting or importing seeds shallmake an application in duplicate in Form ‘A’ together with a fee ofrupees fifty for licence to licensing authority.” Clause 5 of the Seeds(Control) Order, 1983 states that “The licensing authority may, aftermaking such enquiry as it thinks fit, grant a licence in Form ‘B’ toany person who applies for it under clause 4……..When the licensingauthority refuses to grant licence to a person who applies for it underclause, he shall record his reasons for doing so.” Licence to carry onthe business of a dealer in seeds is granted as per Form ‘B’ of the Seeds(Control) Order, 1983 which reads as under:- AB

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SUPREME COURT REPORTS

FORM ‘B’

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(See clause 5)

LICENCE TO CARRY ON THE BUSINESS OF ADEALER IN SEEDS

Licence No.____________

Date:

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Subject to the provisions of the Seeds (Control) Order, 1983and to the terms and conditions of this Licence Shri/M/s__________________ is hereby granted licence to sell, export,import and store for the said purposes of seeds.

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2. The liencee shall carry on the aforesaid businessat _____________(Place for storage and place for sale)___________ (Tehsil or District)_________________

Date: _____________

Seal:

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Licensing Authority

State of ____________

Terms and conditions of licence

(i) The licence shall be displayed at a prominent and conspicuousplace in a part of the business premises open to the public.

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(ii) The holder of the licence shall comply with the provisions ofthe Seeds (Control) Order, 1983 and the notifications issuedthereunder and for the time being in force.

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(iii) This licence comes into force with immediate effect and shallbe valid upto ____________ unless previously cancelled orsuspended.

(iv) The holder of the licence shall from time to time report to thelicensing authority any change in the premises where he car-Gries on his business of sale, export, import or storage for thesaid purposes of seeds.

(v) The licencee shall give every facility to the licensingauthority or any other officer acting under his Author-ity for the purpose of inspecting his stock in any shop, H

STATE OF MAHARASHTRA v. MAHARASHTRA HYBRIDSEEDS CO. PVT. LTD. [R. BANUMATHI, J.]

depot or godown or other place/places used by him forthe purpose of storage, sale or export of seeds. [em-phasis added]

19. By combined reading of the above provisions of the Seeds(Control) Order, 1983 and Form ‘B’, it is clear that for obtaining licence,the applicant has to furnish “place for storage” and “place for sale”.The dealer’s licence is obtained in Form ‘A’. Note 1 of Form ‘A’ statesthat “where the business of selling/exporting/importing seeds isintended to be carried on at more than one place, a separate licenceshould be obtained for each such place.” The object of the licencesand such requirements to carry on the business of “sale of seeds” and“storage of seeds” at specific places as mentioned in the licence is thatthe locations of sale and storage of seeds be known to the Seed Inspectorand be subject to the inspection and operation of the related laws.

20. In terms of the Seeds (Control) Order, 1983, the respondent ishaving “licence for sale” at three places namely:– (i) Plot No.301, ChinarHeights, Pune, Maharashtra; (ii) Akola Z.P. Primary TeachersCooperative Credit Society Building, Akola; and (iii) B4, Industrial Estate,Taluka Jalna, Maharashtra. The respondent also has licences for storagein three places namely:– (i) B4, Industrial Estate, Taluka Jalna,Maharashtra; (ii) Survey No.164 3c 2b 4b 1c 4, Taluka Haveli, Pune,Maharashtra; and (iii) C/o M/s Ambar Corporation Plot No.TA81,Godown No.2,3,4 Mide, Taluka Akola, Maharashtra. The respondent isobligated to conduct business of “sale of seeds” and “storage ofseeds” only at the places as mentioned in the licence so that thelocations of sale and storage as mentioned in the licence obtainedby the respondent is subject to the operation of the related laws.

21. Admittedly, the respondent has no licence for its godown atDhanora either as “storage of seeds” or “sale of seeds”. Case of therespondent is that Dhanora plant is only a processing unit where theyare carrying on only processing of seeds and the seeds are stored onlyfor the purpose of processing the seeds and there is no requirementunder the Seeds Act, 1966 and the Seeds (Control) Order, 1983 forobtaining the licence. The word “processing” is explained in Rule 2(j)of the Seeds Rules, 1968 which reads as under:- “2. Definitions: -

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938SUPREME COURT REPORTS

Aj. “Processing” means cleaning, drying, treating, grading andother operations which would change the purity and germinationof the seed and thus requiring re-testing to determine the qualityof the seed, but does not include operations such aspackaging and labelling.”

B22. According to the appellants, when the initial inspection wasconducted by the Seed Inspector in the godown of the respondent situatedat Dhanora, huge quantity of seeds of various kinds were stocked inrandom stakes in various godowns. Roundup Ready Flex (RRF) HybridCotton seeds were also found stocked in various godowns. It is statedthat the quantity and kinds of specific seed/variety could not be assessedCand categorized easily to undertake the seed sampling for quality analysisand hence, the plant in-charge was immediately informed to furnish theinformation about crop wise, variety wise and lot wise stock details ofthe seeds along with the stock details in various godowns. Case of theappellants is that the plant in-charge did not cooperate towards the writtenDinstructions of the Seed Inspector on the same day. It is stated that on10.12.2017, the plant in-charge submitted details of crop wise, lot wiseand variety wise quantity out of the total stock of seeds in godown; butthe same was not godown wise and stake wise which according to theappellants was incomplete and indeterminate to the Seed Inspector toproceed further. According to the appellants on 15.12.2017, a warningEletter was issued towards sealing of the godown in the presence of thepolice. As seen from the counter filed before the High Court in the writpetition, these documents have been produced before the High Court asannexures.

23. Case of the appellants is that, on search of respondent’s godownF”at Dhanora, it was found to have many lots of seeds were “packedand “labelled” there. According to the appellants, at the time ofinspection, photographs taken by appellant No.3 show that there werelabelling and packaging machines installed by the respondent at itsDhanora processing plant and also the huge quantity of finished productsGpacked and labelled were found stored. In the counter affidavit filedbefore the High Court, it is stated that the authorized signatory of therespondent present at Dhanora plant has submitted a signed documentdated 10.12.2017 stating that the packed seeds stocked at Dhanora isready for dispatch and standard seeds stock is available there to bepacked for sale.H

24. Respondent has obtained licence only under the Factories Actfor its Dhanora unit. Admittedly, the respondent does not have licence inForm ‘B’ of Seeds (Control) Order, 1983 to carry on the business of“dealer in seeds” in Dhanora. The only activity legally permissible tobe conducted by the respondent at Dhanora processing plant is“processing of seed”. During inspection, it was noticed that packagingand labelling machines were kept and respondent was carrying out theoperations of “packaging and labelling” in Dhanora unit. For any activityof labelling and packaging of the seeds and storing the same, therespondent is required to obtain separate licence under the Seeds Rules,1968 and the Maharashtra Cotton Seeds (Regulation of Supply,Distribution, Sale and Fixation of Sale Price) Rules, 2010. In the absenceof such licence, the activity of labelling and packaging qua the seeds andthe cotton seeds carried out at Dhanora godown by the respondent isillegal.

25. From the search of the godown at Dhanora and also from thestatement of the authorized signatory of the respondent, it was foundthat the respondent was not only carrying out the activity of seedprocessing at Dhanora godown; but also carrying on operations of“packing” and “labelling” etc. As per Rule 2(j) of Seeds Rules, 1968,“processing” does not include operations such as “packaging” and“labelling”. The activities of the respondent like packaging, pricing andlabelling of various seeds at Dhanora plant therefore cannot be said tobe falling within the meaning of “processing” under Rule 2(j) of theSeeds Rules, 1968. The High Court erred in brushing aside the materialsproduced before the High Court and the huge quantity of seeds of variouskinds found to have been stocked in random stake in various godowns ofDhanora unit. When the authorised signatory present in the Dhanoraplant is said to have submitted the signed document dated 10.12.2017stating that packed seeds stocked at the unit were ready for dispatchand the seeds are packed for sale, the High Court, in our view, erred insaying that the seeds packed and labelled are meant for transportationfor which no licence was required.

26. As pointed out earlier, as per Rule 2(j) of the Seeds Rules,1968, “processing” does not include operations such as packaging andlabelling and this significant aspect was not kept in view by the HighCourt. As the respondent claims that Dhanora plant is only a processingunit, the respondent cannot carry on the activities of packaging, selling, A

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Apricing, labelling of various seeds under pretext of processing. Unlessthe licence is obtained for the Dhanora unit where huge quantity ofseeds was found stocked, it cannot be subject to inspection with respectto related laws. Appellants-authorities rightly observed that therespondent has contravened the provisions of clause 3 of the Seeds(Control) Order, 1983 and Section 11 of the Maharashtra Cotton SeedsB(Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Act,2009 and Maharashtra Cotton Seeds (Regulation of Supply, Distribution,Sale and Fixation of Sale Price) Rules, 2010. The High Court erred indrawing the distinction between “storage for sale” and “storage fortransportation” and holding that no licence was required forCtransportation of packed seeds.

27. Let us make a brief reference to the Maharashtra CottonSeeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price)Act, 2009 which is in pari materia of Seeds Act, 1966 insofar as thecotton seeds. Section 5 of the Maharashtra Cotton Seeds (Regulation ofDSupply, Distribution, Sale and Fixation of Sale Price) Act, 2009 dealswith grant of licence for cotton seeds. Every person, who has obtainedlicence under Section 11 of the Maharashtra Cotton Seed Act, 2009,shall sale cotton seeds in accordance with the requirement of theMaharashtra Cotton Seed Rules, 2010. As per Section 12(1) ofMaharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale andEFixation of Sale Price) Act, 2009, no person shall sale or keep in hispossession for sale any cotton seed which is misbranded. Section 7(2)of the Maharashtra Cotton Seeds (Regulation of Supply, Distribution,Sale and Fixation of Sale Price) Act, 2009 provides for the entry, search any premises and draw samples, detain or seize the stock of seeds, if heFhas reason to believe that any person dealing in trade of cotton seed hascontravened any of the directions issued by the Controller or that thequality of the cotton seed supplied by such person is of suspicion natureor that any person is about to commit an offence in respect of cottonseed. The proforma Form ‘A’ specified under Rule 4 of the MaharashtraCotton Seed Rules, 2010 requires to specifically mention the place ofGbusiness as place of sale and place of storage. Form ‘B’ specified underRule 5 of the Maharashtra Cotton Seed Rules, 2010 consist of specificterms and condition Nos.3 and 4 mandates the licence holder to informthe controller any change in the place where he is carrying on the businessof sale or storage of cotton seed.H

28. Case of the appellants is that the respondent has violated Section12(2)(g) of Maharashtra Cotton Seeds (Regulation of Supply, Distribution,Sale and Fixation of Sale Price) Act, 2009 by keeping in their possessionthe cotton seeds for sale which is misbranded. According to the appellants,reliable information was received that the genetically modified seedmaterial of Roundup Ready Flex (BGII RR Flex) Cotton Hybrid areavailable at respondent’s godown at Dhanora which requires theregistration of Genetical Engineering Approval Committee (GEAC). Itis in this context, the search was conducted in the respondent’s premiseson the basis of verified information and inspection was undertaken.Respondent stocked genetically modified seed of RRF Hybrid Cottonfor which the approval of Genetical Engineering Approval Committee(GEAC) is required. According to the appellants, the respondent did notsubmit the valid subsisting permission granted to them by GEAC for thestock of “Roundup Ready Flex (BGII RR Flex) Cotton Hybrid” kept atDhanora godown. The respondent has produced the document dated24.06.2010 stating that the respondent has got the permission from GEACto undertake confined BRL II field trial of “Bollgard II × Roundup ReadyFlex (BGII RR Flex) Cotton Hybrid”; the said permission granted byGEAC was only for a period of three years. The respondent has notproduced the permission granted by GEAC beyond 2013. As per theguidelines issued by GEAC in this regard towards conducting confinedfield trials of regulated genetically engineered (GE) plant, GE materialsshould have been burnt or specific permission from GEAC is required tokeep it with them. The permission obtained by the respondent in theyear 2010 to undertake field trial of “Bollgard II × Roundup Ready Flex(BGII RR Flex) Cotton Hybrid” cannot be treated as a permission toretain GE material even after the evaluation by GEAC was terminated.

29. The respondent has only obtained the licence under theFactories Act. For labelling and packaging of cotton seeds, the respondentwas required to have a separate licence granted under Section 11 of theMaharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale andFixation of Sale Price) Act, 2009 and Rule 4 of the Maharashtra CottonSeeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price)Rules, 2010. Without such licence, the activity of labelling and packagingcarried out at Dhanora godown by the respondent was illegal. This wasall the more so, when the respondent stocked RRF Cotton Hybrid. TheHigh Court erred in brushing aside the material brought before the High A

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ACourt as to the alleged storing of “Roundup Ready Flex (BGII RR Flex)Cotton Hybrid” at Dhanora godown.

30. The High Court held that under Section 14 of the Seeds Act,power of sealing was not available to the appellants to seal the storageof seeds at Dhanora and such action on the part of the appellants is inBbreach of the procedure prescribed under Section 15 of the Seeds Act.The High Court further held that if on examination, the report of theanalysts disclose “misbranding”, the penalty can be imposed or theoffences can be registered for that purpose as provided under theprovisions of the Seeds Act but there is no power vested in the appellantsto seal the godown and to continue to keep it sealed indefinitely or till theCreport of the samples is received from the laboratory. The correctnessof the findings of the High Court that the Seed Inspector does not havethe power to seal the godown till the report of the samples is receivedfrom the laboratory, has to be examined in the light of the variousprovisions of the Seeds Act, 1966, Seeds Rules, 1968, Seeds (Control)DOrder, 1983, Maharashtra Cotton Seeds (Regulation of Supply,Distribution, Sale and Fixation of Sale Price) Act, 2009 and theMaharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale andFixation of Sale Price) Rules, 2010.

31. As discussed earlier, Section 14(1)(c) of the Seeds ActEempowers the Seed Inspector to enter and search any place in which hehas reason to believe that an offence under the Act has been or is beingcommitted. Section 14(1)(e) of the Seeds Act empowers the SeedInspector to exercise such powers as may be necessary for carrying outthe purpose of the Act or any rule made thereunder. Clause 13(d) of theSeeds (Control) Order, 1983 also provides that the Seed Inspector mayFseize or detain any seed in respect of which he has reason to believethat a contravention of the Order has been committed or is beingcommitted. As per Section 14(3) of the Seeds Act, the power conferredupon the Seed Inspector includes power to break-open any premiseswhere any seed of the notified kind or variety may be kept for sale inGcase, the owner or any person in occupation of the premises, in spite ofbeing present, refuses to open the door even upon the request made bythe Inspector and also to break-open any container in which any seed ofany notified kind or variety may be contained. As per Section 15(5) ofthe Seeds Act, 1966, when Seed Inspector seizes any record, register,documents or any other material, he should inform the Magistrate andHtake his order for which he can use Form IV.

32. By a conjoint reading of Sections 14 and 15 of the Seeds Actand Rule 23 of the Seeds Rules, 1968 and various other provisions, it isclear that the Seed Inspector is conferred with wide powers coupledwith duties. In terms of Section 14(1)(c) of the Seeds Act, 1966, Clause13(d) of the Seeds (Control) Order, 1983 and Section 7(2) of theMaharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale andFixation of Sale Price) Act, 2009, the Seed Inspector is empowered toenter and search any premises, draw samples, seize or detain the stockof the seeds in respect of which he has reason to believe that acontravention of the provisions of the Act has been committed or isbeing committed. Under Rule 23 of the Seeds Rules, 1968, Seed Inspectorcan issue and stop sale order in case the seed in question contravenesthe provision of the relevant Act and Rules (Form III). The Seed Inspectoris empowered to enter and search any premises or break-open the dooror any container, to examine any records, register, documents of theseed dealer and also to seize the seeds stock(s) and/or records.

33. There is, of course, no express provision empowering the SeedInspector to seal any place, where there is contravention of the provisionsof the Act. But Section 14(1)(e) of the Seeds Act confers wide powersupon Seed Inspector to “exercise such other powers as may benecessary for carrying out the purposes of the Seeds Act or anyrule made thereunder”. Rule 13 of the Seeds Rules provides for therequirements to be complied with by a person carrying on the businessas referred to under Section 7 of the Seeds Act. Since the Seed Inspectoris to ensure that the person who obtained licence is carrying on businessin accordance with the provisions of the Act, in case of non-compliancewith the provisions of the Seeds Act and the Seeds Rules, in rare andexceptional cases, the Seed Inspector has power to seal the premiseswhere the exigencies of the situation require such sealing to carry outthe purposes of the Seeds Act or the Seeds Rules thereunder. Suchpower to seal the place is deemed to be vested with the Seed Inspectorin terms of Section 14(1)(e) of the Seeds Act which empowers theSeed Inspector to exercise such other powers as may be necessaryfor carrying out the purposes of the Act or any rule made thereunder.The provisions of Seeds Act, 1966 and Seeds Rules, 1968 provide forvarious safeguards that the Seed Inspector does not exceed his authority.In view of various safeguards provided under the Seeds Act, 1966 andother provisions in case the Seed Inspector proceeds to exercise hispowers for sealing the godown, it is necessary to ensure necessary A

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Asafeguards so that the Seed Inspector does not exceed his authority ormisuse his power.

34. The sine qua non of Section 14(1)(c) of the Seeds Act -”toenter and search in places at all reasonable times” is that the SeedInspector must have “reason to believe that an offence under theBSeeds Act has been or is being committed”. The expression “hasreason to believe that an offence under the Seeds Act has been or isbeing committed….” implies a belief arrived at after consideration ofthe available materials with the sense of responsibility. For entering andsearch of any place, the statute stipulates “reason to believe that anoffence under the Act has been or is being committed”, “Reason toCbelieve” means that the belief must have been arrived at judicially afterconsidering all the materials and on prima-facie satisfaction of theauthority concerned. Section 26 of the Penal Code defines that “a personis said to have “reason to believe” a thing, if he has sufficient causeto believe that thing but not otherwise.” Since the “sealing ofDpremises” is a drastic step, such power can be exercised only in rareand exceptional cases and only on satisfaction of the Seed Inspectorthat such power of sealing is necessary to carry out the purposes of theSeeds Act or the rules made thereunder.

35. The Seed Inspector must be satisfied or has reason to believeEthat an offence under the Act has been committed or is being committedand that exercise of such power of sealing is necessary for carrying outthe purposes of the Act or the rules made thereunder. Since the exerciseof power to seal in exceptional circumstances is only to carry out thepurposes of the Act or the rules made thereunder, it is necessary thatbefore the Seed Inspector proceeds to take action of sealing the premises,Fhe has to record grounds for his belief as to how and in what manner theprovisions of the Seeds Act and the rules made thereunder have beencontravened and how mere search and seizure may not be sufficient toprevent further contravention. The grounds for his belief so recorded inwriting has to be forthwith communicated to the Magistrate in terms ofGSection 15(5) of the Seeds Act, 1966 and also to their immediate officialsuperior. This would ensure that the Seed Inspector does not exceed hisauthority or that power to seal is not misused.

36. In the present case, since the respondent was found to havestocked genetically modified seed of RRF Hybrid Cotton which mayHinclude transgenic varieties, for which the approval of Genetical Engineering Approval Committee is required, is also not submitted bythe respondent. In that view, the authorities searched and inspected thegodown but the seed material lying there in a voluminous stock was notappropriately segregated/staked and also the information was notfurnished to inspection team by plant in-charge. Despite constant follow-up in writing and through oral instructions, the plant in-charge did notprovide stock position of seeds as expected by the Seed Inspector andalso not submitted the certified copy of licence having permission tostock the seeds at godown located at Dhanora. The respondent’s godownwas sealed by 07:00 pm on 15.12.2017 after giving sufficient opportunity.In such facts and circumstances of the case, the action of the SeedInspector and the authorities in sealing the plant at Dhanora cannot besaid arbitrary.

37. The finding of the High Court that seeds were stored inDhanora unit and no licence was required for storage of seeds fortransportation is set aside. The finding of the High Court that the SeedInspector does not have the power to seal the godown and seizure is notin consonance with the provisions of the Seeds Act, 1966, Seeds Rules,1968 and Seed (Control) Order, 1983 and the same is liable to be setaside. In compliance of the order of the High Court dated 22.12.2017,the authorities have already desealed the Dhanora unit of the firstrespondent and no further direction is necessary in this regard.

38. In the result, the impugned judgment of the High Court is setaside and the appeal is allowed.

Ankit Gyan

Appeal allowed.

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