Supreme Court Upholds Sealing of Seed Godown for Licence Violations: State of Maharashtra vs. Maharashtra Hybrid Seeds Co. Pvt. Ltd. (22 August 2019)

Date of the Judgment: 22 August 2019
Citation: Civil Appeal No. 6564 of 2019 (Arising out of SLP(C) No. 28245 of 2018)
Judges: R. Banumathi, J., A.S. Bopanna, J.

Can a seed company store processed seeds in a godown attached to its processing unit without a separate license? This was the core question before the Supreme Court in a recent case. The Court examined whether the Seed Inspector has the power to seal a godown for violations of the Seeds Act, 1966. The Supreme Court bench comprising Justices R. Banumathi and A.S. Bopanna delivered the judgment.

Case Background

The Maharashtra Hybrid Seeds Co. Pvt. Ltd. (referred to as the respondent), a company engaged in the research, production, processing, and sale of hybrid seeds, had its godowns at Dhanora sealed by the State of Maharashtra (referred to as the appellant). The state authorities alleged that the company was operating a seed processing unit without a valid license and was storing seeds illegally, violating the Seeds Act, 1966, the Seeds Rules, 1968, the Seeds (Control) Order, 1983, and the Maharashtra Cotton Seeds Act, 2009.

On December 8, 2017, local police inspected the respondent’s godown and found suspected seeds. The Seed Inspector inspected the godown on December 9, 2017, and found a large quantity of various seeds, including suspected Roundup Ready Flex (RRF) Hybrid Cotton. The Plant In-Charge was asked to provide stock details, which the authorities deemed incomplete. A show-cause notice was issued on December 15, 2017, and the godown was sealed due to non-compliance.

Timeline

Course of Proceedings

Aggrieved by the sealing of the Dhanora godown, the respondent filed a writ petition before the High Court of Judicature at Bombay, Nagpur Bench. The High Court issued an interim order on December 22, 2017, directing the appellant authorities to open the sealed godown, observing that the seeds had already been sampled and no purpose would be served by keeping the storage sealed. The High Court held that no separate license was required for storing seeds in the godown attached to the processing unit for transportation. The High Court also held that the power of sealing was not available to the appellant authorities. The State of Maharashtra appealed this decision to the Supreme Court.

Legal Framework

The case revolves around the interpretation and application of several key legal provisions:

• The Seeds Act, 1966: This Act aims to regulate the quality of seeds for sale. Section 7 of the Seeds Act, 1966 states that no person shall 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.
• Section 14 of the Seeds Act, 1966: This section outlines the powers of the Seed Inspector, including the power to enter and search premises, seize records, and exercise other powers necessary for carrying out the purposes of the Act. Specifically, Section 14(1)(c) empowers the Seed Inspector to enter and search any place where they believe an offense has been committed, and Section 14(1)(e) allows them to exercise other necessary powers.
• Section 15 of the Seeds Act, 1966: This section specifies the procedure for taking seed samples for analysis.
• The Seeds Rules, 1968: These rules provide further details on the implementation of the Seeds Act, including definitions and the duties of Seed Inspectors. Rule 2(j) defines “processing” as cleaning, drying, treating, and grading seeds, but specifically excludes packaging and labeling. Rule 23 outlines the duties of a Seed Inspector.
• The Seeds (Control) Order, 1983: This order regulates the sale, export, and import of seeds, requiring a license for such activities. Clause 3 of the Seeds (Control) Order, 1983 states that 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.
• The Maharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Act, 2009: This Act regulates the supply, distribution, sale, and pricing of cotton seeds in Maharashtra.

Arguments

Appellants’ Arguments (State of Maharashtra):

• The respondent did not have a valid license for storing seeds at the Dhanora godown under the Seeds (Control) Order, 1983, or Form ‘B’ under Rule 5 of the Maharashtra Cotton Seeds Rules, 2010.
• The respondent was operating a seed processing plant at Dhanora and storing seeds for sale without a valid license, violating the Seeds Act, 1966, and the Seeds (Control) Order, 1983.
• The manner of packing and labeling of the seeds, which included details like lot number, germination percentage, purity, and MRP, indicated that the seeds were packed for sale and not merely for transportation.
• The High Court erred in distinguishing between “storage for sale” and “storage for transportation,” and in holding that the company did not need a license for transportation of seeds from the processing unit.
• The respondent was given permission for field trials of ‘Ballgard II x RRF Cotton Hybrid’ for three years in 2010, but was illegally storing such seeds even after the expiry of the time period without applying for an extension.
• The competent authority, under Section 14(1)(e) of the Seeds Act, 1966, had the authority to seal the godown for violations and to keep it sealed until the lab report was received.

Respondent’s Arguments (Maharashtra Hybrid Seeds Co. Pvt. Ltd.):

• The respondent had already obtained seed licenses under the Seeds (Control) Order, 1983, and the Maharashtra Cotton Seeds Rules, 2010.
• No separate license was required for processing seeds at the Dhanora unit, and the processed seeds were stored in the godown attached to the processing unit only for transportation to different sale points.
• The Seed Inspector did not have the power to seize and seal the godown under Section 14 of the Seeds Act, 1966, and the High Court rightly directed desealing of the godown.

[TABLE] of Submissions:

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the High Court was right in saying that the packed seeds kept in the Dhanora unit were only meant for transportation and no separate license was required for such storage for transportation?
2. Whether the High Court was right in saying that the power of seizure and sealing the godown is not available to the Seed Inspector?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Legal Provisions:

• Section 7 of the Seeds Act, 1966: Regulates the business of selling, keeping for sale, offering to sell, bartering or otherwise supplying any seed of any notified kind or variety.
• Section 14 of the Seeds Act, 1966: Outlines the powers of the Seed Inspector, including the power to enter and search premises, seize records, and exercise other necessary powers.
• Section 15 of the Seeds Act, 1966: Specifies the procedure for taking seed samples for analysis.
• Rule 2(j) of the Seeds Rules, 1968: Defines “processing” of seeds, excluding packaging and labeling.
• Rule 23 of the Seeds Rules, 1968: Outlines the duties of a Seed Inspector.
• Clause 3 of the Seeds (Control) Order, 1983: States that 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.
• Section 5 of the Maharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Act, 2009: Deals with the grant of licenses for cotton seeds.
• Section 12(1) of Maharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Act, 2009: States that no person shall sell or keep in his possession 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.

[TABLE] of Authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on Section 7 of the Seeds Act, 1966 to emphasize the requirement for conforming to prescribed standards for selling seeds.
• The Court interpreted Section 14 of the Seeds Act, 1966 to define the powers of the Seed Inspector, including the power to enter and search premises and exercise other necessary powers.
• The Court referred to Section 15 of the Seeds Act, 1966 to explain the procedure for taking seed samples for analysis.
• The Court used Rule 2(j) of the Seeds Rules, 1968 to clarify that “processing” of seeds does not include packaging and labeling.
• The Court referred to Rule 23 of the Seeds Rules, 1968 to explain the duties of a Seed Inspector.
• The Court relied on Clause 3 of the Seeds (Control) Order, 1983 to explain the requirement of a license for selling, exporting or importing seeds.
• The Court referred to Section 5 of the Maharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Act, 2009 to explain the grant of licenses for cotton seeds.
• The Court relied on Section 12(1) of Maharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Act, 2009 to explain the prohibition on selling misbranded cotton seeds.
• The Court referred to Section 7(2) of the Maharashtra Cotton Seeds (Regulation of Supply, Distribution, Sale and Fixation of Sale Price) Act, 2009 to explain the power to enter, search, and seize the stock of seeds.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure strict compliance with seed regulations to maintain the quality and purity of seeds. The Court emphasized that the Seeds Act, 1966, and related rules and orders are designed to protect farmers and the agricultural sector from substandard seeds. The Court was concerned with the respondent’s activities of packaging and labeling at the Dhanora plant without a proper license, which was considered a violation of the Seeds Act and Rules.

[TABLE] of Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio:

The Court’s reasoning was based on a combination of factual findings (such as the respondent’s activities at Dhanora) and legal interpretations (of the Seeds Act, Rules, and Orders). The legal considerations slightly outweighed the factual aspects in the Court’s decision-making process.

Logical Reasoning:

The Court rejected the High Court’s view that no separate license was required for storage for transportation and that the Seed Inspector had no power to seal the godown. The Court emphasized the importance of strict adherence to the provisions of the Seeds Act, 1966, and the related rules and orders.

The Court stated:

• “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.”
• “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”.”
• “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.”

Key Takeaways

• Seed companies must obtain separate licenses for storing seeds, even if the storage is within the premises of their processing unit.
• The definition of “processing” under the Seeds Rules, 1968, does not include packaging and labeling activities.
• Seed Inspectors have the power to seal premises in exceptional circumstances where there is a contravention of the Seeds Act, 1966, or related rules and orders.
• The power to seal can be exercised only after the Seed Inspector records reasons for his belief as to how and in what manner the provisions of the Seeds Act and the rules made thereunder have been contravened.
• Seed companies must ensure strict compliance with the Seeds Act, 1966, and related rules and orders to avoid penalties and actions such as sealing of premises.

Directions

The Supreme Court set aside the impugned judgment of the High Court. The Court noted that the authorities had already desealed the Dhanora unit of the respondent in compliance with the High Court’s order, and therefore, no further direction was necessary in this regard.

Specific Amendments Analysis

(Not applicable as no specific amendments were discussed in the judgment)

Development of Law

The ratio decidendi of this case is that a seed company requires a separate license for storing seeds, even if the storage is within the premises of their processing unit, and that a Seed Inspector has the power to seal a godown in exceptional circumstances for violations of the Seeds Act, 1966, and related rules and orders. This clarifies the scope of the Seed Inspector’s powers and the licensing requirements for seed storage, which had been interpreted differently by the High Court. This judgment reinforces the importance of strict compliance with seed regulations and provides a clear interpretation of the powers of the Seed Inspector.

Conclusion

The Supreme Court allowed the appeal, setting aside the High Court’s judgment. The Court held that the respondent required a separate license for storing seeds at its Dhanora godown, and that the Seed Inspector had the power to seal the godown for violations of the Seeds Act, 1966, and related rules and orders. This judgment clarifies the licensing requirements for seed storage and the powers of the Seed Inspector, emphasizing the need for strict compliance with seed regulations.