The State Of Maharashtra vs Maharashtra Hybrid Seeds Co. Pvt. Ltd.

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6564 2019 (Arising out of SLP(C) No.28245 of 2018)

THE STATE OF MAHARASHTRA AND OTHERS ...Appellants

VERSUS

MAHARASHTRA HYBRID SEEDS CO. PVT. LTD. …Respondent

JUDGMENT

R. BANUMATHI, J.

Leave granted.

2. This appeal is preferred against the judgment dated

21.02.2018 passed by the High Court of Judicature at Bombay,

Nagpur Bench in Writ Petition No.8157 of 2017 in and by which the

High Court has allowed the writ petition filed by the respondent- Signature Not Verified Digitally signed by Company thereby ordering the appellant-authorities to de-seal all MADHU BALA Date: 2019.08.22 11:04:05 IST Reason: 1 the godowns of the Company at Dhanora 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 the

Companies Act and is engaged in the business of research,

production, processing, marketing and sale of variety of Hybrid

seeds. According to the respondent-Company, they have already

obtained seeds licences under the provision of the Seeds (Control)

Order, 1983 and the Maharashtra Cotton Seeds (Regulation of

Supply, Distribution, Sale and Fixation of Sale Price) Rules, 2010

and that they are having licence for the storage and sale of such

seeds in the State of Maharashtra. According to the respondent,

the processing of cotton and non-cotton seeds of different varieties

is done by the respondent in its processing unit/plant situated at

Dhanora. All such processed seeds are then stored in the storage

attached to the processing unit at the godown at Dhanora for being

transported to different places.

4. Case of the appellant is that the respondent not having a valid

licence for the processing unit at Dhanora has committed gross

violation of the provisions of the mandate of the Seeds Act, 1966,

Seeds Rules, 1968, Seeds (Control) Order, 1983 and the provisions 2 of the Maharashtra Cotton Seeds (Regulation of Supply,

Distribution, Sale and Fixation of Sale Price) Act, 2009. On

08.12.2017, local police inspected the godown of the respondent

located at Dhanora and noticed suspected seeds of various kinds

stocked and the police informed the concerned authorities of the

agricultural department. On 09.12.2017, the Seed Inspector

inspected the respondent’s godown at Dhanora and noticed huge

quantity of seeds of various kinds stocked in random stakes in

various godowns along with seeds suspected as Roundup Ready

Flex (RRF) Hybrid Cotton. The Plant In-Charge was informed to

furnish the Seed Inspector the information about crop wise, variety

wise and lot wise stock details of the seeds along with stake details

in various godowns. It is stated that on 10.12.2017, Plant In-Charge

submitted the details of crop wise, variety wise and lot wise quantity

out of the total stock of seeds in the godown. According to the

appellant, the details so furnished were incomplete and

indeterminate. The appellant alleges that the Plant In-Charge did

not cooperate towards the written instruction of the Seed Inspector

on the same day. The Seed Inspector therefore issued a notice to

the respondent-Company on 15.12.2017 informing the Plant

Manager that the appellant Company does not have the licence for

storage or sale of the seeds in Dhanora unit and that it has come to

3 their knowledge that the activity of sale is being carried out by

respondent in their godown at Dhanora. In the show-cause notice,

the respondent was asked to provide certain documents and

informed that in case of non-supply of the documents, the godown

and the entire premises at Dhanora would be sealed. The

appellants claim that respondent did not produce the documents

and accordingly, the godown was sealed by executing a panchnama

to prevent further violation of the provisions.

5. Aggrieved by the sealing of the Dhanora godown, respondent

filed Writ Petition No.8157 of 2017 before the High Court of

Judicature at Bombay, Nagpur Bench. The High Court vide interim

order dated 22.12.2017 directed the appellant-authorities to open

the sealed godown after taking a prima facie view and held that

since the requisite sample of the seeds has already been taken and

no purpose would be served in keeping the storage sealed. The

High Court held that packed and labelled seeds were kept in

Dhanora unit only for further transportation and no separate licence

was required to be obtained for storage of seeds in the godown

attached to respondent’s processing unit at Dhanora for such

transportation. The High Court further held that the power of

sealing was not available to the appellant-authorities, especially to

4 seal the storage and keep it sealed indefinitely or till the report of

the samples is received from the laboratory. Being aggrieved, the

appellant-State of Maharashtra has preferred this appeal.

6. Learned counsel for the appellants Mr. Katneshwarkar

submitted that no licence was obtained by the respondent-Company

“for storage of seeds” in the godown attached to the processing unit

at Dhanora under the Seeds (Control) Order, 1983 or in Form ‘B’

under Rule 5 of the Maharashtra Cotton seeds (Regulation of

Supply, Distribution, Sale and Fixation of Sale Price) Rules, 2010. It

was urged that the respondent has been operating seed processing

plant at Dhanora and without obtaining a valid licence for the sale,

the seeds were stored in godown attached to it for sale and the

respondent has thus committed violation of the provisions of the

Seeds Act, 1966 and the Seeds (Control) Order, 1983. It was

submitted that the manner of packing and labelling which contains

details of lot number, germination, percentage, purity, MRP, etc.

which is prescribed in Rules 7, 8 and 9 of the Seeds Rules, 1968

indicate that the seeds were packed for Sale and not for

transportation as claimed by the respondent-Company. Learned

counsel contended that the High Court erred in making a distinction

between “storage for sale” and “storage for transportation” and in

5 holding that Company does not need any licence for transportation

of the seeds from the processing unit at Dhanora. The learned

counsel urged that respondent was given permission by the

competent authority to undertake the field trial for ‘Ballgard II x RRF

Cotton Hybrid’ (a prohibited seed) in the year 2010 only for a period

of three years; but the respondent had been storing such seeds

illegally even after expiry of three years’ time period without

applying for any extension in the provided time period. It was urged

that in exercise of powers under Section 14(1)(e) of the Seeds Act,

1966, competent authority has full authority to seal the godown for

violation of the provisions of the Seeds Act, 1966 and to keep it

sealed till the report of the samples is received from the laboratory

for testing.

7. Refuting the above contentions, Mr. V. Giri, learned senior

counsel appearing for the respondent-Company inter-alia submitted

that the respondent has already obtained seed licences under the

provisions of 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 obtained for processing the cotton and non-

cotton seeds at Dhanora unit and those processed seeds are stored

6 in the godown attached to the processing unit only for the purpose

of transporting it to different sale points or storages meant for

putting the seed in the network of marketing. The learned senior

counsel contended that the power of seizure and sealing of the

godown was not available to the Seed Inspector under Section 14

of the Seeds Act, 1966 as claimed by the appellant authorities and

the High Court rightly directed desealing of the godown attached to

the processing unit at Dhanora and the impugned order warrants no

interference.

8. We have carefully considered the submission of both the

counsel and perused the impugned judgment and the relevant

provisions and other materials on record. The following points arise

for consideration in this appeal:-

(i) Whether the High Court was right in saying that the packed seeds kept in Dhanora unit were only meant for transportation and no separate licence was required for such storage for transportation?

(ii) Whether the High Court was right in saying that the power of seizure and sealing the godown is not available to the Seed Inspector?

9. Seed is the basic input for the farmer for successful

agricultural production. Therefore, it is essential to maintain the

7 purity and quality of the seed through various stages of seed

production till the stage of sale. The Government of India had

brought out different legislations to protect the 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

also enacted Maharashtra Cotton Seeds (Regulation of Supply and

Fixation of Sale Prices) Act, 2009 and the rules framed thereunder.

The provisions of Maharashtra Cotton Seeds Act, 2009 are in pari

materia with the Seeds Act, 1966.

10. The Preamble of the Seeds Act, 1966, provides “An Act to

provide for regulating the quality of certain seeds for sale, and for

matters connected therewith”. The Statement of Objects and

Reasons explains the methodology for achieving the said objective

of regulating the quality of seeds as under:-

“The methods by which the Bill seeks to achieve the object are:-

(a) constitution of a Central Committee consisting of representatives of the Central Government and the State Government, the National Seeds Corporation and other interests, to advise those Governments on all matters arising out of the proposed Legislation;

(b) fixing minimum standards of germination, purity and other quality factors;

8 (c) testing seeds for quality factors at the seed testing laboratories to be established by the Central Government and the State Government;

(d) creating of seed inspection and certification service in each State and grant of licences and certificates to dealers in seeds;

(e) compulsory labelling of seed containers to indicate the quality of seeds offered for sale; and

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

11. The business of selling, keeping for sale, offering to sell,

bartering or otherwise supplying any seed of any notified kind or

variety other than cotton seeds is regulated by Section 7 of the

Seeds Act, 1966 and it is controlled by the Seeds (Control) Order,

1983. As per Section 7 of the Seeds Act, 1966, no person shall,

himself or by any other person on his behalf, carry on the business

of selling, keeping for sale, offering to sell, bartering or otherwise

supplying any seed of any notified kind or variety unless such seed

conforms to the requirements as may be prescribed under Section

7(a) to 7(d) of the Seeds Act, 1966.

12. Sections 12 and 13 of the Seeds Act enables the State

Government to appoint persons as Seed Analysts and Seed

Inspectors. The State Governments including the Government of

9 Maharashtra through their functionaries of agricultural department

exercises its power to have an effective control over the quality and

quantity aspects of the agricultural inputs. In the State of

Maharashtra, various officers working at 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 of Section 13 of the

Seeds Act, 1966. These Seed Inspectors perform their duties as

Quality Control Inspectors and also exercise powers to regulate the

sale, export, import and storage of the seeds relating to the

respective provisions of the Seeds Act, 1966, Seeds Rules, 1968,

Seeds (Control) Order, 1983 and the provisions of the Maharashtra

Cotton Seeds (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 Seed

Inspector and Section 15 of the Seeds Act provides for the

procedure to be followed by the Seed Inspectors in taking samples.

As per the provision under Section 14(1)(c) of the Seeds Act, 1966,

the Seed Inspectors are empowered to search or inspect the

premises any time, where the Seed Inspectors have reason to

believe that such offence has been committed. As per Section

14(1)(d) of the Seeds Act, the Seed Inspector may examine any

10 record, register, document or any other material object found in any

place and if he has reason to believe that the record, register, etc.,

may furnish evidence of the commission of an offence punishable

under the Act, he may issue a seizure order in Form IV of the Seeds

Rules, 1968 and seize the records. As per Section 14(1)(e) of the

Seeds Act, 1966, the Seed Inspector can exercise such other

powers as may be necessary for carrying out the purposes of this

Act or any rule made thereunder. Section 14(1)(c), (d) and (e) of the

Seeds Act, 1966 reads as under:-

Powers of Seed Inspector 14(1). The Seed Inspector may:-

………..

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

(d) examine any record, register, document or any other material object found in any place mentioned in clause (c) and seize the same if he has reason to believe that it may furnish evidence of the commission of an offence punishable under this Act; and

11

(e) exercise such other powers as may be necessary for carrying out the purposes of this Act or any rule made thereunder.

14. As per Section 14(5) of the Seeds Act, 1966 the provisions of

the Code of Criminal Procedure shall, so far as may be, apply to

any search or seizure under this Section as they apply to any

search or seizure made under the authority of a warrant issued

under Section 98 of the said Code.

15. Section 15 of the Seeds Act stipulates the duties of the Seed

Inspector. As per Section 15(1) of the Seeds Act, whenever an

Inspector intends to take sample of any seed of any notified kind or

variety for analysis, he shall give notice of such intention in writing in

Form IV of the Seeds Rules, 1968 to the person from whose seed

lots he intends to take samples. He shall, as far as possible, call not

less than two persons to be present at the time when he draws

sample(s) and take their signatures in Form VIII of the Seeds Rules,

1968. In terms of Section 15(2) of the Seeds Act, 1966, the Seed

Inspector shall divide the representative sample drawn, into three

equal and identical parts and (a) deliver one sample to the person

from whom it has been taken; (b) send another sample in the

prescribed manner for analysis to the Seed Analysts for the area

12 within which such sample has been taken; and (c) retain the

remaining sample in the prescribed manner for production in case

any legal proceedings are taken or for analysis by the Central Seed

Laboratory under sub-section (2) of Section 16 of Seeds Act, 1966,

as the case may be. Section 15(5) of the Seeds Act provides for the

safeguards regarding the seizure of the stock, record, register, etc.

and after seizure of such record, register and other documents, he

shall as soon as may be, inform the Magistrate and take his orders

as to the custody thereof.

16. Rule 23 of Seeds Rules, 1968 provides for the “duties of a

Seed Inspector” in addition to the duties specified by the Seeds Act.

As per Rule 23(a) of the Seeds Rules, the Seed Inspector shall

inspect as frequently as may be required by certification agency all

places used for growing storage or sale of any seed of any notified

kind or variety. As per Rule 23(e) of the Seeds Rules, the Seed

Inspector shall maintain a record of all inspections made and action

taken by him in the performance of his duties including the taking of

samples and the seizure of stocks and submit copies of such record

to the Director of Agriculture or the certification agency as may be

directed in this behalf. Rule 23(g) of the Seeds Rules enables the

13 institution of the prosecutions in respect of any breaches of the Act

or the Rules.

Seeds (Control) Order, 1983

17. The inclusion of seeds as an essential commodity item under

the Essential Commodities Act, 1955 has brought the Seeds

(Control) Order. In terms of the Seeds (Control) Order, 1983, a

person carrying on the business of selling, exporting and importing

of seeds needs to obtain a licence. The licence provided to a seed

dealer remains valid only 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 different seeds.

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 can

carry on the business of selling, exporting or importing seeds at any

place except under and in accordance with the terms and conditions

of licence granted to him in Form ‘B’ under Clause 5 of the said

order. As per Clause 4 of the Seeds (Control) Order, 1983, “Every

person desiring to obtain a licence for selling, exporting or importing

14 seeds shall make an application in duplicate in Form ‘A’ together

with a fee of rupees fifty for licence to licensing authority.” Clause 5

of the Seeds (Control) Order, 1983 states that “The licensing

authority may, after making such enquiry as it thinks fit, grant a

licence in Form ‘B’ to any person who applies for it under clause

4……..When the licensing authority refuses to grant licence to a

person who applies for it under clause, he shall record his reasons

for doing so.” Licence to carry on the business of a dealer in seeds

is granted as per Form ‘B’ of the Seeds (Control) Order, 1983 which

reads as under:-

FORM ‘B’ (See clause 5)

LICENCE TO CARRY ON THE BUSINESS OF A DEALER IN SEEDS

Licence No.____________ Date:

Subject to the provisions of the Seeds (Control) Order, 1983 and 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.

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

Date: _____________ Seal:

Licensing Authority State of ____________

15 Terms and conditions of licence

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

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

(iii) This licence comes into force with immediate effect and shall be valid upto ____________ unless previously cancelled or suspended.

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

(v) The licencee shall give every facility to the licensing authority or any other officer acting under his Authority for the purpose of inspecting his stock in any shop, depot or godown or other place/places used by him for the purpose of storage, sale or export of seeds. [emphasis 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’ states that “where the business of

selling/exporting/importing seeds is intended to be carried on at

more than one place, a separate licence should be obtained for

each such place.” The object of the licences and such requirements

to carry on the business of “sale of seeds” and “storage of seeds” at

specific places as mentioned in the licence is that the locations of

sale and storage of seeds be known to the Seed Inspector and be

subject to the inspection and operation of the related laws.

16

20. In terms of the Seeds (Control) Order, 1983, the respondent is

having “licence for sale” at three places namely:– (i) Plot No.301,

Chinar Heights, Pune, Maharashtra; (ii) Akola Z.P. Primary Teachers

Cooperative Credit Society Building, Akola; and (iii) B4, Industrial

Estate, Taluka Jalna, Maharashtra. The respondent also has

licences for storage in 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 is obligated to conduct business of

“sale of seeds” and “storage of seeds” only at the places as

mentioned in the licence so that the locations of sale and

storage as mentioned in the licence obtained by the respondent

is subject to the operation of the related laws.

21. Admittedly, the respondent has no licence for its godown at

Dhanora either as “storage of seeds” or “sale of seeds”. Case of

the respondent is that Dhanora plant is only a processing unit where

they are carrying on only processing of seeds and the seeds are

stored only for the purpose of processing the seeds and there is no

requirement under the Seeds Act, 1966 and the Seeds (Control)

Order, 1983 for obtaining the licence. The word “processing” is

17 explained in Rule 2(j) of the Seeds Rules, 1968 which reads as

under:-

“2. Definitions: -

…….

j. “Processing” means cleaning, drying, treating, grading and other operations which would change the purity and germination of the seed and thus requiring re-testing to determine the quality of the seed, but does not include operations such as packaging and labelling.”

22. According to the appellants, when the initial inspection was

conducted by the Seed Inspector in the godown of the respondent

situated at Dhanora, huge quantity of seeds of various kinds were

stocked in random stakes in various godowns. Roundup Ready

Flex (RRF) Hybrid Cotton seeds were also found stocked in various

godowns. It is stated that the quantity and kinds of specific

seed/variety could not be assessed and categorized easily to

undertake the seed sampling for quality analysis and hence, the

plant in-charge was immediately informed to furnish the information

about crop wise, variety wise and lot wise stock details of the seeds

along with the stock details in various godowns. Case of the

appellants is that the plant in-charge did not cooperate towards the

written instructions of the Seed Inspector on the same day. It is

stated that on 10.12.2017, the plant in-charge submitted details of

18 crop wise, lot wise and variety wise quantity out of the total stock of

seeds in godown; but the same was not godown wise and stake

wise which according to the appellants was incomplete and

indeterminate to the Seed Inspector to proceed further. According

to the appellants on 15.12.2017, a warning letter was issued

towards sealing of the godown in the presence of the police. As

seen from the counter filed before the High Court in the writ petition,

these documents have been produced before the High Court as

annexures.

23. Case of the appellants is that, on search of respondent’s

godown at Dhanora, it was found to have many lots of seeds were

“packed” and “labelled” there. According to the appellants, at the

time of inspection, photographs taken by appellant No.3 show that

there were labelling and packaging machines installed by the

respondent at its Dhanora processing plant and also the huge

quantity of finished products packed and labelled were found

stored. In the counter affidavit filed before the High Court, it is stated

that the authorized signatory of the respondent present at Dhanora

plant has submitted a signed document dated 10.12.2017 stating

that the packed seeds stocked at Dhanora is ready for dispatch and

standard seeds stock is available there to be packed for sale.

19

24. Respondent has obtained licence only under the Factories Act

for its Dhanora unit. Admittedly, the respondent does not have

licence in Form ‘B’ of Seeds (Control) Order, 1983 to carry on the

business of “dealer in seeds” in Dhanora. The only activity legally

permissible to be conducted by the respondent at Dhanora

processing plant is “processing of seed”. During inspection, it was

noticed that packaging and labelling machines were kept and

respondent was carrying out the operations of “packaging and

labelling” in Dhanora unit. For any activity of labelling and

packaging of the seeds and storing the same, the respondent 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

absence of such licence, the activity of labelling and packaging qua

the seeds and the cotton seeds carried out at Dhanora godown by

the respondent is illegal.

25. From the search of the godown at Dhanora and also from the

statement of the authorized signatory of the respondent, it was

found that the respondent was not only carrying out the activity of

seed processing 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

20 as “packaging” and “labelling”. The activities of the respondent

like packaging, pricing and labelling of various seeds at Dhanora

plant therefore cannot be said to be falling within the meaning of

“processing” under Rule 2(j) of the Seeds Rules, 1968. The High

Court erred in brushing aside the materials produced before the

High Court and the huge quantity of seeds of various kinds found to

have been stocked in random stake in various godowns of Dhanora

unit. When the authorised signatory present in the Dhanora plant is

said to have submitted the signed document dated 10.12.2017

stating that packed seeds stocked at the unit were ready for

dispatch and the seeds are packed for sale, the High Court, in our

view, erred in saying that the seeds packed and labelled are meant

for transportation for 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

and labelling and this significant aspect was not kept in view by the

High Court. As the respondent claims that Dhanora plant is only a

processing unit, the respondent cannot carry on the activities of

packaging, selling, pricing, labelling of various seeds under pretext

of processing. Unless the licence is obtained for the Dhanora unit

where huge quantity of seeds was found stocked, it cannot be

subject to inspection with respect to related laws. Appellants-

21 authorities rightly observed that the respondent has contravened the

provisions of clause 3 of the Seeds (Control) Order, 1983 and

Section 11 of the Maharashtra Cotton Seeds (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 in

drawing the distinction between “storage for sale” and “storage for

transportation” and holding that no licence was required for

transportation of packed seeds.

27. Let us make a brief reference to the Maharashtra Cotton

Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale

Price) Act, 2009 which is in pari materia of Seeds Act, 1966 insofar

as the cotton seeds. Section 5 of the Maharashtra Cotton Seeds

(Regulation of Supply, Distribution, Sale and Fixation of Sale Price)

Act, 2009 deals with grant of licence for cotton seeds. Every

person, who has obtained licence under Section 11 of the

Maharashtra Cotton Seed Act, 2009, shall sale cotton seeds in

accordance with the requirement of the Maharashtra Cotton Seed

Rules, 2010. As per Section 12(1) of Maharashtra Cotton Seeds

(Regulation of Supply, Distribution, Sale and Fixation of Sale Price)

Act, 2009, no person shall sale or keep in his possession for sale

any cotton seed which is misbranded. Section 7(2) of the

22 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 he has reason to believe that any person dealing in trade of cotton

seed has contravened any of the directions issued by the Controller

or that the quality of the cotton seed supplied by such person is of

suspicion nature or that any person is about to commit an offence in

respect of cotton seed. The proforma Form ‘A’ specified under Rule

4 of the Maharashtra Cotton Seed Rules, 2010 requires to

specifically mention the place of business as place of sale and

place of storage. Form ‘B’ specified under Rule 5 of the

Maharashtra Cotton Seed Rules, 2010 consist of specific terms and

condition Nos.3 and 4 mandates the licence holder to inform the

controller any change in the place where he is carrying on the

business of sale or storage of cotton seed.

28. Case of the appellants is that the respondent has violated

Section 12(2)(g) of Maharashtra Cotton Seeds (Regulation of

Supply, Distribution, Sale and Fixation of Sale Price) Act, 2009 by

keeping in their possession the cotton seeds for sale which is

misbranded. According to the appellants, reliable information was

received that the genetically modified seed material of Roundup

Ready Flex (BGII RR Flex) Cotton Hybrid are available at

23 respondent’s godown at Dhanora which requires the registration of

Genetical Engineering Approval Committee (GEAC). It is in this

context, the search was conducted in the respondent’s premises on

the basis of verified information and inspection was undertaken.

Respondent stocked genetically modified seed of RRF Hybrid

Cotton for which the approval of Genetical Engineering Approval

Committee (GEAC) is required. According to the appellants, the

respondent did not submit the valid subsisting permission granted to

them by GEAC for the stock of “Roundup Ready Flex (BGII RR

Flex) Cotton Hybrid” kept at Dhanora godown. The respondent has

produced the document dated 24.06.2010 stating that the

respondent has got the permission from GEAC to undertake

confined BRL II field trial of “Bollgard II × Roundup Ready Flex (BGII

RR Flex) Cotton Hybrid”; the said permission granted by GEAC was

only for a period of three years. The respondent has not produced

the permission granted by GEAC beyond 2013. As per the

guidelines issued by GEAC in this regard towards conducting

confined field trials of regulated genetically engineered (GE) plant,

GE materials should have been burnt or specific permission from

GEAC is required to keep it with them. The permission obtained by

the respondent in the year 2010 to undertake field trial of “Bollgard II

× Roundup Ready Flex (BGII RR Flex) Cotton Hybrid” cannot be

24 treated as a permission to retain GE material even after the

evaluation by GEAC was terminated.

29. The respondent has only obtained the licence under the

Factories Act. For labelling and packaging of cotton seeds, the

respondent was required to have a separate licence granted under

Section 11 of the Maharashtra Cotton Seeds (Regulation of Supply,

Distribution, Sale and Fixation of Sale Price) Act, 2009 and Rule 4

of the Maharashtra Cotton Seeds (Regulation of Supply,

Distribution, Sale and Fixation of Sale Price) Rules, 2010. Without

such licence, the activity of labelling and packaging carried out at

Dhanora godown by the respondent was illegal. This was all the

more so, when the respondent stocked RRF Cotton Hybrid. The

High Court erred in brushing aside the material brought before the

High Court 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

storage of seeds at Dhanora and such action on the part of the

appellants is in breach of the procedure prescribed under Section

15 of the Seeds Act. The High Court further held that if on

examination, the report of the analysts disclose “misbranding”, the

penalty can be imposed or the offences can be registered for that

25 purpose as provided under the provisions of the Seeds Act but there

is no power vested in the appellants to seal the godown and to

continue to keep it sealed indefinitely or till the report of the samples

is received from the laboratory. The correctness of the findings of

the High Court that the Seed Inspector does not have the power to

seal the godown till the report of the samples is received from the

laboratory, has to be examined in the light of the various provisions

of the 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 and the

Maharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale

and Fixation of Sale Price) Rules, 2010.

31. As discussed earlier, Section 14(1)(c) of the Seeds Act

empowers the Seed Inspector to enter and search any place in

which he has reason to believe that an offence under the Act has

been or is being committed. Section 14(1)(e) of the Seeds Act

empowers the Seed Inspector to exercise such powers as may be

necessary for carrying out the purpose of the Act or any rule made

thereunder. Clause 13(d) of the Seeds (Control) Order, 1983 also

provides that the Seed Inspector may seize or detain any seed in

respect of which he has reason to believe that a contravention of

the Order has been committed or is being committed. As per

26 Section 14(3) of the Seeds Act, the power conferred upon the Seed

Inspector includes power to break-open any premises where any

seed of the notified kind or variety may be kept for sale in case, the

owner or any person in occupation of the premises, in spite of being

present, refuses to open the door even upon the request made by

the Inspector and also to break-open any container in which any

seed of any notified kind or variety may be contained. As per

Section 15(5) of the Seeds Act, 1966, when Seed Inspector seizes

any record, register, documents or any other material, he should

inform the Magistrate and take his order for which he can use Form

IV.

32. By a conjoint reading of Sections 14 and 15 of the Seeds Act

and Rule 23 of the Seeds Rules, 1968 and various other provisions,

it is clear that the Seed Inspector is conferred with wide powers

coupled with duties. In terms of Section 14(1)(c) of the Seeds Act,

1966, Clause 13(d) of the Seeds (Control) Order, 1983 and Section

7(2) of the Maharashtra Cotton Seeds (Regulation of Supply,

Distribution, Sale and Fixation of Sale Price) Act, 2009, the Seed

Inspector is empowered to enter and search any premises, draw

samples, seize or detain the stock of the seeds in respect of which

he has reason to believe that a contravention of the provisions of

the Act has been committed or is being committed. Under Rule 23

27 of the Seeds Rules, 1968, Seed Inspector can issue and stop sale

order in case the seed in question contravenes the provision of the

relevant Act and Rules (Form III). The Seed Inspector is empowered

to enter and search any premises or break-open the door or any

container, to examine any records, register, documents of the seed

dealer and also to seize the seeds stock(s) and/or records.

33. There is, of course, no express provision empowering the

Seed Inspector to seal any place, where there is contravention of

the provisions of the Act. But Section 14(1)(e) of the Seeds Act

confers wide powers upon Seed Inspector to “exercise such other

powers as may be necessary for carrying out the purposes of the

Seeds Act or any rule made thereunder”. Rule 13 of the Seeds

Rules provides for the requirements to be complied with by a person

carrying on the business as referred to under Section 7 of the

Seeds Act. Since the Seed Inspector is to ensure that the person

who obtained licence is carrying on business in accordance with the

provisions of the Act, in case of non-compliance with the provisions

of the Seeds Act and the Seeds Rules, in rare and exceptional

cases, the Seed Inspector has power to seal the premises where

the exigencies of the situation require such sealing to carry out the

purposes of the Seeds Act or the Seeds Rules thereunder. Such

power to seal the place is deemed to be vested with the Seed

28 Inspector in terms of Section 14(1)(e) of the Seeds Act which

empowers the Seed Inspector to exercise such other powers as

may be necessary for carrying out the purposes of the Act or any

rule made thereunder. The provisions of Seeds Act, 1966 and

Seeds Rules, 1968 provide for various safeguards that the Seed

Inspector does not exceed his authority. In view of various

safeguards provided under the Seeds Act, 1966 and other

provisions in case the Seed Inspector proceeds to exercise his

powers for sealing the godown, it is necessary to ensure necessary

safeguards so that the Seed Inspector does not exceed his authority

or misuse his power.

34. The sine qua non of Section 14(1)(c) of the Seeds Act -“to

enter and search in places at all reasonable times” is that the Seed

Inspector must have “reason to believe that an offence under the

Seeds Act has been or is being committed”. The expression “has

reason to believe that an offence under the Seeds Act has been or

is being committed….” implies a belief arrived at after consideration

of the available materials with the sense of responsibility. For

entering and search of any place, the statute stipulates “reason to

believe that an offence under the Act has been or is being

committed”, “Reason to believe” means that the belief must have

been arrived at judicially after considering all the materials and on

29 prima-facie satisfaction of the authority concerned. Section 26 of the

Penal Code defines that “a person is said to have “reason to

believe” a thing, if he has sufficient cause to believe that thing but

not otherwise.” Since the “sealing of premises” is a drastic step,

such power can be exercised only in rare and exceptional cases

and only on satisfaction of the Seed Inspector that such power of

sealing is necessary to carry out the purposes of the Seeds Act or

the rules made thereunder.

35. The Seed Inspector must be satisfied or has reason to believe

that an offence under the Act has been committed or is being

committed and that exercise of such power of sealing is necessary

for carrying out the purposes of the Act or the rules made

thereunder. Since the exercise of power to seal in exceptional

circumstances is only to carry out the purposes of the Act or the

rules made thereunder, it is necessary that before the Seed

Inspector proceeds to take action of sealing the premises, he has to

record grounds for his belief as to how and in what manner the

provisions of the Seeds Act and the rules made thereunder have

been contravened and how mere search and seizure may not be

sufficient to prevent further contravention. The grounds for his belief

so recorded in writing has to be forthwith communicated to the

Magistrate in terms of Section 15(5) of the Seeds Act, 1966 and

30 also to their immediate official superior. This would ensure that the

Seed Inspector does not exceed his authority or that power to seal

is not misused.

36. In the present case, since the respondent was found to have

stocked genetically modified seed of RRF Hybrid Cotton which may

include transgenic varieties, for which the approval of Genetical

Engineering Approval Committee is required, is also not submitted

by the respondent. In that view, the authorities searched and

inspected the godown but the seed material lying there in a

voluminous stock was not appropriately segregated/staked and also

the information was not furnished to inspection team by plant in-

charge. Despite constant follow-up in writing and through oral

instructions, the plant in-charge did not provide stock position of

seeds as expected by the Seed Inspector and also not submitted

the certified copy of licence having permission to stock the seeds at

godown located at Dhanora. The respondent’s godown was 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 Seed

Inspector and the authorities in sealing the plant at Dhanora cannot

be said arbitrary.

37. The finding of the High Court that seeds were stored in

Dhanora unit and no licence was required for storage of seeds for

31 transportation is set aside. The finding of the High Court that the

Seed Inspector does not have the power to seal the godown and

seizure is not in consonance with the provisions of the Seeds Act,

1966, Seeds Rules, 1968 and Seed (Control) Order, 1983 and the

same is liable to be set aside. In compliance of the order of the

High Court dated 22.12.2017, the authorities have already desealed

the Dhanora unit of the first respondent and no further direction is

necessary in this regard.

38. In the result, the impugned judgment of the High Court is set

aside and the appeal is allowed.

………………………..J. [R. BANUMATHI]

………………………..J. [A.S. BOPANNA] New Delhi;

August 22, 2019

32