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Sec 3 (Central Govt Powers) & Sec 4, Essential Commodities Act 1955

Section 3 of Essential Commodities Act 1955. Powers to control production, supply, distribution, etc., of essential commodities.―

(1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.

(2) Without prejudice to the generality of the powers conferred by sub-section (1), an order made thereunder may provide―

 (a) for regulating by licences, permits or otherwise the production or manufacture of any essential commodity;

 (b) for bringing under cultivation any waste or arable land, whether appurtenant to a building or not, for the growing thereon of food-crops generally or of specified food-crops, and for otherwise maintaining or increasing the cultivation of food-crops generally, or of specified food-crops.

 (c) for controlling the price at which any essential commodity may be bought or sold;

 (d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of, any essential commodity;

 (e) for prohibiting the withholding from sale of any essential commodity ordinarily kept for sale;

 (f) for requiring any person holding in stock, or engaged in the production, or in the business of buying or selling, of any essential commodity,―

    (a) to sell the whole or a specified part of the quantity held in stock or produced or received by him or,
    (b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him,

to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order.

Explanation 1.―An order made under this clause in relation to foodgrains, edible oilseeds or edible oils, may, having regard to the estimated production, in the concerned area, of such foodgrains, edible oilseeds and edible oils, fix the quantity to be sold by the producers in such area and may also fix, or provide for the fixation of, such quantity on a graded basis, having regard to the aggregate of the area held by, or under the cultivation of, the producers.

Explanation 2.―For the purpose of this clause, “production” with its grammatical variations and cognate expressions includes manufacture of edible oils and sugar;

(g) for regulating or prohibiting any class of commercial or financial transactions relating to foodstuffs which, in the opinion of the authority making the order, are, or, if unregulated, are likely to be, detrimental to the public interest;

(h) for collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters;

(i) for requiring persons engaged in the production, supply or distribution of or trade and commerce in, any essential commodity to maintain and produce for inspection such books, accounts and records relating to their business and to furnish such information relating thereto, as may be specified in the order;

(ii) for the grant or issue of licences, permits or other documents, the charging of fees therefore, the deposit of such sum, if any, as may be specified in the order as security for the due performance of the conditions of any such licence, permit or other document, the forfeiture of the sum so deposited or any part thereof for contravention of any such conditions, and the adjudication of such forfeiture by such authority as may be specified in the order;

(j) for any incidental and supplementary matters, including, in particular, the entry, search or examination of premises, aircraft, vessels, vehicles or other conveyances and animals, and the seizure by a person authorised to make such entry, search or examination,—
     (i) of any articles in respect of which such person has reason to believe that a contravention of the order has been, is being, or is about to be committed and any packages, coverings or receptacles in which such articles are found;
      (ii) of any aircraft, vessel, vehicle or other conveyance or animal used in carrying such articles, if such person has reason to believe that such aircraft, vessel, vehicle or other conveyance or animal is liable to be forfeited under the provisions of this Act;
     (iii) of any books of accounts and documents which in the opinion of such person, may be useful for, or relevant to, any proceeding under this Act and the person from whose custody such books of accounts or documents are seized shall be entitled to make copies thereof or to take extracts therefrom in the presence of an officer having the custody of such books of accounts or documents.

(3) Where any person sells any essential commodity in compliance with an order made with reference to clause (f) of sub-section (2), there shall be paid to him the price therefore as hereinafter provided:―
  (a) where the price can, consistently with the controlled price, if any, fixed under this section, be agreed upon, the agreed price;
  (b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;
  (c) where neither clause (a) nor clause (b) applies, the price calculated at the market rate prevailing in the locality at the date of sale.

(3A) (i) If the Central Government is of opinion that it is necessary so to do for controlling the rise in prices or preventing the hoarding, of any food-stuff in any locality, it may, by notification in the Official Gazette, direct that notwithstanding anything contained in sub-section (3), the price at which the food-stuff shall be sold in the locality in compliance with an order made with reference to clause (f) of sub-section (2) shall be regulated in accordance with the provisions of this sub-section.
(ii) Any notification issued under this sub-section shall remain in force for such period not exceeding three months as may be specified in the notification.
(iii) Where, after the issue of a notification under this sub-section, any person sells foodstuff of the kind specified therein and in the locality so specified, in compliance with an order made with reference to clause (f) of sub-section (2), there shall be paid to the seller as the price therefor―
 (a) where the price can, consistently with the controlled price of the foodstuff, if any, fixed under this section, be agreed upon, the agreed price;
 (b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;
 (c) where neither clause (a) nor clause (b) applies, the price calculated with reference to average market rate prevailing in the locality during the period of three months immediately preceding the date of the notification.
(iv) For the purposes of sub-clause (c) of clause (iii), the average market rate prevailing in the locality shall be determined by an officer authorised by the Central Government in this behalf, with reference to the prevailing market rates for which published figures are available in respect of that locality or of a neighbouring locality; and the average market rate so determined shall be final and shall not be called in question in any court.

(3B) Where any person is required, by an order made with reference to clause (f) of sub-section (2), to sell to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government, any grade or variety of foodgrains, edible oilseeds or edible oils in relation to which no notification has been issued under sub-section (3A), or such notification having been issued, has ceased to be in force, there shall be paid to the person concerned, notwithstanding anything to the contrary contained in sub-section (3), an amount equal to the procurement price of such foodgrains, edible oilseeds or edible oils, as the case may be, specified by the State Government, with the previous approval of the Central Government having regard to―
 (a) the controlled price, if any, fixed under this section or by or under any other law for the time being in force for such grade or variety of foodgrains, edible oilseeds or edible oils;
 (b) the general crop prospects;
 (c) the need for making such grade or variety of foodgrains, edible oilseeds or edible oils available at reasonable prices to the consumers, particularly the vulnerable sections of the consumers; and
 (d) the recommendations, if any, of the Agricultural Prices Commission with regard to the price of the concerned grade or variety of foodgrains, edible oilseeds or edible oils.

(3C) Where any producer is required by an order made with reference to clause (f) of sub-section (2) to sell any kind of sugar (whether to the Central Government or to a State Government or to an officer or agent of such Government or to any other person or class of persons) whether a notification was issued under sub-section (3A) or otherwise, then, notwithstanding anything contained in sub-section (3), there shall be paid to that producer only such amount as the Central Government may, by order, determine, having regard to—

 (a) the fair and remunerative price, if any, determined by the Central Government as the price of sugarcane to be taken into account under this section;
 (b) the manufacturing cost of sugar;
 (c) the duty or tax, if any, paid or payable thereon; and
 (d) a reasonable return on the capital employed in the business of manufacturing of sugar:

 Provided that the Central Government may determine different prices, from time to time, for different areas or factories or varieties of sugar:

 Provided further that where any provisional determination of price of levy sugar has been done in respect of sugar produced up to the sugar season 2008-2009, the final determination of price may be undertaken in accordance with the provisions of this sub-section as it stood immediately before the 1st day of October, 2009.

Explanation I.— For the purposes of this sub-section,—
 (a) “fair and remunerative price” means the price of sugarcane determined by the Central Government under this section;
 (b) “manufacturing cost of sugar” means the net cost incurred on conversion of sugarcane into sugar including net cost of transportation of sugarcane from the purchase centre to the factory gate, to the extent it is borne by the producer;
 (c) “producer” means a person carrying on the business of manufacturing sugar;
 (d) “reasonable return on the capital employed” means the return on net fixed assets plus working capital of a producer in relation to manufacturing of sugar including procurement of sugarcane at a fair and remunerative price determined under this section.

Explanation II.―For the removal of doubts, it is hereby declared that the expressions “fair and remunerative price” referred to in clause (a), “manufacturing cost of sugar” referred to in clause (b) and “reasonable return on the capital employed” referred to in clause (d), of this sub-section do not include the price paid or payable under any order or any enactment of any State Government and any price agreed to between the producer and the grower or a sugarcane growers' co-operative society.

(3D) The Central Government may direct that no producer, importer or exporter shall sell or otherwise dispose of or deliver any kind of sugar or remove any kind of sugar from the bonded go downs of the factory in which it is produced, whether such godowns are situated within the premises of the factory or outside or from the warehouses of the importers or exporters, as the case may be except under and in accordance with the direction issued by the Government:

 Provided that this sub-section shall not affect the pledging of such sugar by any producer or importer in favour of any scheduled bank as defined in clause (e) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934) or any corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), so, however, that no such hank shall sell the sugar pledged to it except under and in accordance with a direction issued by the Central Government.

(3E) The Central Government may, from time to time, by general or special order, direct any producer or importer or exporter or recognised dealer or any class of producers or recognised dealers, to take action regarding production, maintenance of stocks, storage, sale, grading, packing, marking, weighment, disposal, delivery and distribution of any kind of sugar in the manner specified in the direction.

Explanation.―For the purposes of sub-section (3D) and this sub-section,―
 (a) “producer” means a person carrying on the business of manufacturing sugar;
 (b) “recognised dealer'' means a person carrying on the business of purchasing, selling or distributing sugar;
 (c) “sugar” includes plantation white sugar, raw sugar and refined sugar, whether indigenously produced or imported.

(4) If the Central Government is of opinion that it is necessary so to do for maintaining or increasing the production and supply of an essential commodity, it may, by order, authorize any person (hereinafter referred to as an authorized controller) to exercise, with respect to the whole or any part of any such undertaking engaged in the production and supply of the commodity as may be specified in the order such functions of control as may be provided therein and so long as such order is in force with respect to any undertaking or part thereof,―
  (a) the authorized controller shall exercise his functions in accordance with any instructions given to him by the Central Government, so, however, that he shall not have any power to give any direction inconsistent with the provisions of any enactment or any instrument determining the functions of the persons in-charge of the management of the undertaking, except in so far as may be specifically provided by the order; and
  (b) the undertaking or part shall be carried on in accordance with any directions given by the authorised controller under the provisions of the order, and any person having any functions of management in relation to the undertaking or part shall comply with any such directions.

(5) An order made under this section shall,―
  (a) in the case of an order of a general nature or affecting a class of persons, be notified in the Official Gazette; and
  (b) in the case of an order directed to a specified individual be served on such individual―
     (i) by delivering or tendering it to that individual, or
     (ii) if it cannot be so delivered or tendered, by affixing it on the outer door or some other conspicuous part of the premises in which that individual lives, and a written report there of shall be prepared and witnessed by two persons living in the neighbourhood.

(6) Every order made under this section by the Central Government or by any officer or authority of the Central Government shall be laid before both Houses of Parliament, as soon as may be, after it is made.


Section 4 of Essential Commodities Act 1955. Imposition of duties on State Governments, etc.―

An order made under section 3 may confer powers and impose duties upon the Central Government or the State Government or officers and authorities of Central Government or State Government, and may contain directions to any State Government or to officers and authorities thereof as to the exercise of any such powers or the discharge of any such duties.








Extra Notes for Readers

(1) Sub-section (3A) of section 3 was inserted by Act 13 of 1957, s. 2 (w.e.f. 4-Jun-1957).

(2) Clause (ii) [before clause (j)] of sub-section 2 of section 3 was inserted by Act 17 of 1961.

(3) In sub-section (1) of section 3 - the words "or for securing any essential commodity for the defence of India or the efficient conduct of military operations" - were inserted by Act 36 of 1967 (w.e.f. 30-Dec-1967).

(4) Clause (j) of sub-section 2 of section 3 was substituted by Act 66 of 1971 (w.e.f. 23-Dec-1971).

(5) Modifications by Act 92 of 1976
 o sub-clause (iii) of clause (j) of sub-section 2 of section 3 was substituted;
 o clause (f) of sub-section 2 of section 3 was substituted;
 o sub-section (3B) of section 3 was substituted;

(6) Sub-sections 3D and 3E along with Explanation thereafter in Section 3 of this Act were inserted by Essential Commodities (Amendment) Act 2003 (Act No. 37 of 2003) (w.r.e.f. 14-Jun-1999).

(7) In clause (g) of sub-section 2 of Section 3 - after the words "transactions relating to foodstuffs" - the words “or cotton textiles” were omitted by Essential Commodities (Amendment) Act 2006 (Act No. 54 of 2006) (w.e.f. 12-Feb-2007).

(8) Sub-section 3C (along with Explanations) of Section 3 of this Act was substituted by Essential Commodities (Amendment and Validation) Act, 2009 (Act No. 36 of 2009) (w.e.f. 1-Oct-2009).

(9) In sub-section 3C of Section 3 of this Act, the existing Explanation numbered as Explanation I and Explanation II was inserted by Essential Commodities (Amendment) Act 2010 (Act No. 35 of 2010) (w.e.f. 1-Oct-2009).

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