HAILEYBURIA TEA ESTATES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The 1st petitioner company has got registration for manufacturing of Tea at its Factory in Semnivalley Estate as per Ext.P1 certificate and registration for conducting the business of buying Tea as per Ext.P2 certificate under the provisions contained in paras.3(4) and 4 respectively of the Tea (Marketing) Control Order, 2003 (hereinafter referred to as 'TMCO, 2003'). Ext.P26 order passed by the 1st respondent in an appeal against Ext.P23 order of the Tea Board - the 2 nd respondent, is under challenge in this Writ Petition. The 2nd respondent passed an order suspending Exts.P1 and P2 registration issued to the 1 st petitioner Company for manufacturing of tea and for conducting the business of buying tea for a period of 3 months, on the ground that it is involved in unfair trade practice. In appeal the 1st respondent reduced the period of suspension from 3 months to one month.

(2.) The 1st petitioner (hereinafter referred to as the 'company') is having three tea estates; one a Tea Factory having Ext.P1 registration for manufacturing Tea, in the Semnivalley estate. It is also having Ext.P2 registration to engage in the business of buying Tea. Thus the Company is engaged in the business of manufacturing, buying and selling of Tea. It is stated that the company has been participating in tea auctions for the last 100 years. The brief facts leading to the impugned order, according to the petitioners, are as follows:

(3.) On the basis of a request from the 5th respondent-Tea Trade Association of Cochin, the 3rd respondent issued Ext.P4 letter dated 14.05.2019 to the Company stating that the actual offering of tea by petitioner's tea factory, in the Cochin Auction Centre was more than the total production of the factory for the years 2017 and 2018. Furnishing the figures with respect to the production, offer and sale for the years 2017 and 2018 and referring to clause 21 of the 'Tea (Marketing) Control Order, 2003' (hereinafter referred to as '2003 Order') it was stated that the excess offering for the respective years was 13067 kg and 68529 kg respectively. It was stated that the company was also engaged in buying considerable amount tea from auctions. It was therefore stated that the statistics on the same would indicate that the petitioner's factory was engaged in certain practices possibly against the provisions in the 2003 order and it may affect the public auction system. The 1st petitioner was asked to furnish its clarifications on the discrepancies within 7 days, failing which action would be initiated under the 2003 Order. The company submitted Ext.P5 reply on 21.06.2019 stating that the manufacturing in the factory and the buying in auction held at the auction centre are totally unconnected; there cannot be any violation of clause 21, which insists sale of a minimum of 50% of the tea manufactured in the factory, at the auction, when the entire tea production was sold at the auction. Pointing out that there is no further case of violation of any specific provision, there was no question of their indulging in any trade practices which would adversely affect the Public Tea Auction system. It was further stated that when their principal buyer, who is a large blender, does not purchase the entire lot at the auction, third parties would be buying the balance; such third parties who are unable to sell it, would sell back their unsold tea to the factory and such tea would be repacked and dispatched to auction under fresh invoice. It was stated that such tea would be the original tea itself with a re-packing and there is no provision either in the 2003 order or otherwise, which restricts the same. It was further stated that the buying of tea at the auction centre was by virtue of its licence for the same and that it was exclusively used for sale as packet tea and in private sales. Furnishing the details of tea bought and sold in private sale, it was stated that the buying of tea does not have any relation to production of tea in the factory and thus the company has not indulged in any practice against 2003 order affecting Public Tea Auction System. On 21.06.2019, the 2 nd respondent issued Ext.P6 e-mail, barring the participation of the 2 manufacturing units under the company - Haileyburia tea factory and Semnivalley tea factory and the Haileyburia Tea Estate having buyers' registration, in the auctions, since the Company failed to furnish its clarification even within the extended time granted to it, until receipt of a satisfactory reply. As per Ext.P7 letter, the petitioner company requested to defer the action stating that the reply was being sent by e-mail also. Aggrieved by the action in Ext.P6 the petitioner approached this Court filing W.P.(C) No. 17137 of 2019. As per Ext.P7 judgment dated 04.07.2019, that Writ Petition was disposed of directing the 2 nd respondent to finalise the enquiry proceedings at the earliest after hearing the company well as the 5th respondent. In the meanwhile, the company was permitted to participate in the auctions after executing a simple bond with the 2nd respondent undertaking to comply with the directions that may be issued in the final order in the enquiry. Pursuant to that, an enquiry was conducted by a committee of 3 members, who were the Director Tea Development, Law Officer of Tea Board and Controller of Licensing, Tea Board. The Committee in its Ext.P9 report submitted on 04.08.2019 found that the company is involved in buying back its own tea purchased by other buyers through auction at a higher price, violating the basic principles of auction system due to illegitimate price fixation in connivance with the buyers; the seller has repackaged the sold lot after buying back of its stock in clear misinterpretation of Rule 48 of Pan India Auction Rules; a few auction buyers of the Company were also actively involved in the price fixation by selling back the purchased tea to the original seller at higher price taking undue advantage by using the public auction system; such activity of the registered auction buyers proves their involvement in unfair trade practices; the buyers alleged to have shared their passwords to the petitioner company which is an unhealthy trade practice, which required further detailed investigation to clean up the public auction system; auctioneers should have been able to differentiate between freshly offered tea and repackaged teas, etc. The recommendations no.1 and 2 of the Committee, which are relevant were the following: