Essential Commodities Act, 1955

Objective of the Act –

To control the –

a) production,

b) supply and

c) distribution of trade and commerce in certain commodities in the interest of the

general public

 To secure equitable distribution of essential commodities in the interest of

the general public
 To make available essential commodities at fair prices in the interest of the
general public

Note – The interest of the general public means the interest of the consuming
public and not the interest of the dealer

Key Features of the Essential Commodities Act, 1955

 Unethical trade practices including hoarding and black-marketing are kept

under regular check.
 It ensures equitable and fair distribution of the essential commodities,
especially during emergency or crisis situation.
 Any commodity can be added or removed from list of essential
commodities by the government if it deems fit in public interest.
 This Act has been invoked most number of times to control the price
rise in any food product. Whenever the price of an essential commodity
rises, the government immediately limits the stock-holding. This ensures
that the essential commodity is not hoarded. On violation of the stock-
holding limit, the government initiates with penalty or imposes
punishment against the violators.
 When the Essential Commodities Act is invoked, any violation of the
provision empowers the State governments to initiate action under this
 Act as well as the Prevention of Black Marketing and Maintenance of
Supplies of Essential Commodities Act (PBMMSEC Act).

What are Essential Commodities?

Definition of Essential Commodities is given under section 2A of the Act.

It defines the “essential commodity” as a commodity specified in the Schedule.

Schedule of the Act –

1) Drugs (here drugs means medicines used for humans and animals);

2) Fertilizer, whether inorganic, organic or mixed;

3) Foodstuffs, including edible oilseeds and oils;

4) Hank yarn made wholly from cotton;

5) Petroleum and petroleum products;

6) Raw jute and jute textiles;

7) (i) seeds of food-crops and seeds of fruits and vegetables;

(ii) Seeds of cattle fodder; and

(iii) Jute seeds.

8) Masks (2 Ply and 3 Ply and N95) and hand sanitizers

Note – CG has the power to add or remove any commodity from the list given in
the schedule. In case of S. Samuel, MD. Harrisons Malayava v. Union of India,
Supreme Court held that Tea is not foodstuff. Anyone who has taken tea would
not say that he has taken or eaten food. Thus tea is not a food.

Authorities responsible to administer the Act –

CG has the power to administer the provisions of the Act by issuing

orders/directions notified in the official gazette and by delegating the authority to
State Governments and administrators of Union Territories.
Essential Commodities Act, 1955 Powers of Central Government to control
production, supply and distribution etc., of essential commodities –

Section 3

A) Power to Issue Orders –

The Central Government can issue order for regulating or prohibiting the
production, supply and distribution of essential commodities and trade and
commerce in the following situations –

a) When it is necessary for maintaining or increasing supplies of any essential

commodity;

b) For securing the equitable distribution and availability of essential commodities

at fair price; or

c) For securing any essential commodity for the defence of India or the efficient
conduct of military operations.

B) Contents of the Order –

Central Government may issue an order which may provide for the following
matters – -

 for regulating the production or manufacture of any essential commodity by

licenses;
 for bringing under cultivation any waste or arable land, whether belonging to
a building or not, for growing of food crops generally or of specified food
crops and for maintaining or increasing the cultivation of food crops
generally, or of specified food crops;
 for controlling the price at which any essential commodity may be bought
or sold.
 for regulating by licences, permits or otherwise the storage, transport,
distribution, disposal, acquisition, use or consumption of any essential
commodity
 for prohibiting the withholding from sale of any essential commodity
ordinarily kept for sale; - 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 as specified in the order.
 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 likely to be detrimental to the public interest;
 for collecting any information or statistics with a view to regulating or
prohibiting any of the aforesaid matters;
 for requiring persons engaged in the production of, or trade and commerce
in, any essential commodity to maintain and produce for inspection such
books, accounts and record relating to their business and to furnish such
information relating thereto as may be specified in the order;
 for the grant or issue of licenses, permits or other documents, the charging of
fees, 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
 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 authorized to make
such entry, search or examination of any article 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;

Fixing the Price of Essential commodities during Emergency –

 Section 3(3A) CG has the power to direct the price at which the
foodstuffs in any locality will be sold to general public.
 This direction will be issued only when the Central Government is of
the opinion that takings such Step is necessary for controlling price
rise or preventing the hoarding of any foodstuff in any locality.
 Such order shall be in force for 3 months only For selling specified
foodstuffs in the specified locality, the seller shall be paid price as
follows –
the agreed price, where the price can be agreed upon consistently with
the controlled price fixed under this section;
controlled price: where no such agreement can be reached, the price
calculated with reference to controlled price;
the price calculated at the market rate prevailing in the locality on the
date of sale, where neither of the above points apply

Power to issue a control order (Section 3)

Under this Act, the Central Government has the power to issue control orders.
Such orders provide for regulation and prohibition of essential commodities
scheduled in one of the following circumstances:

 When the government finds that it is necessary and expedient to do in

favor of the general public.
 When they have to secure equitable distribution and availability of these
commodities in the market.
 When they have to secure any specific commodity for the Defence of
India.  
Purposes for passing control order

 To regulate by license, permit or otherwise

The central government by issuing license and permit regulates the production,
distribution, supply, storage, transport, acquisition of any essential commodity.
Therefore the government issue ration/fair price shop license, importing/exporting
license, etc.

 To bring under cultivation of any wasteland or arable land

The Central Government by passing control order may bring any wasteland or
arable land under cultivation for the purpose of growing, maintaining and
increasing cultivation of any general or specific food crop.  

 To control the buying and selling price of any essential commodity

The Central Government may pass any control order to control the buying and
selling price of any essential commodity. This type of control order can be issued: 

 To Improve domestic availability;

 Keep the price at a reasonable level, and
 Regulate the artificial inflation due to hoarding and black marketing

 To determine entry, search, examine, seizure of any essential

commodities
The Central Government by passing control order may determine entry, search,
examination, seizure of: 

 Any conveyance such as aircraft, vessels, vehicles used to carry essential

commodity;
 Any packages, covering or receptacle in which any essential commodity
are found or packed;
 Any book of account and documents which gave the information about
any essential commodity.

 To require any person to do specific works

The central government may pass the control order for required any person who is
engaged in production or business of buying and selling of the essential
commodity to sell whole or any specific part of a commodity held in stock or when
any commodity is likely to receive in future whole or specific part of such
commodity when received to the Central Government or State Government or to
the corporation owned or controlled by the government or to the officer or agent of
the government or to another person or class of person specified thereof.

The Central Government also requires such a person to maintain and produce for
inspection such books, accounts, and records related to his business and furnish
such information specified under the order.

 To  regulate or prohibit any class of commercial and financial

transactions
The Central Government may pass the control order to regulate or prohibit any
class of commercial or financial transactions relating to any foodstuff which is in
the opinion of the authority unregulated and is likely to be detrimental to the
public interest.

Offences and Penalties –

Cognizance of offences – Section 10A notwithstanding anything contained in the

Criminal Procedure Code, 1971, every offence punishable under the Act shall be
cognizable.

Note – A cognizable offence is one, where, under the Criminal Procedure Code or
any other law in force, a police officer may arrest a person without a warrant.

Conditions to be satisfied before Court can take cognizance of any offence

punishable under the Act – Section 11

 there must be a report in writing

 the report must be made by a public servant, or any aggrieved person or any
recognized consumer association.

Prosecution of Public Servants –

Section 15A

If any public servant is accused of any offence alleged to have been committed
by him while acting, in the discharge of his duties, in pursuance of any order
 made under Section 3, no court can take cognizance of such an offence except
with the previous sanction—

A) of the Central Government in the case of a person who is employed in

connection with the affairs of the Union; and
B) of the State Government in the case of a person who is employed in
connection with the affairs of the State

False Statement

Section 9

A person shall be punishable under Section 9

With imprisonment for a term which may extend to 5 years or with fine or with
both for the following offences:

a) when required by any order made under Section 3 to make any statement or
furnish any information, makes any statement or furnishes any information which
is false in any material particular which he knows or has reasonable cause to
believe to be false or does not believe to be true, or

b) makes any such statement as aforesaid in any book, account, record,

declaration, return or other document which he is required by any such order to
maintain or furnish

Offences by Companies –

1) If the person contravening an order under Section 3 is, a company, every person
who, at the time of the contravention, was in charge of, and was responsible to, the
company for the conduct of the business of the company, shall be deemed to be
guilty of the contravention, and shall be liable to be punished accordingly.

2) Any such person, can, however, escape liability if he proves that the
contravention took place without his knowledge or that he exercised all due
diligence to prevent it.