Atlas Cycle Industries Ltd. vs. The State of Haryana

Facts

A sudden inspection in 1964 revealed that the appellant company acquired 60.03 metric tons of iron sheets at prices exceeding the maximum legal price, violating the Iron and Steel (Control) Order, 1956. Based on this the appellant was charged under Section 120B IPC and Section 7 of the Essential Commodities Act, 1955. The appellant argued procedural errors in adopting the order, over as the government failed to place the relevant Control Order and price notification before Parliament which was required under Section 3(6) of the Act, and claimed a lack of mens rea. The appellant also invoked article 14 of the constitution, alleging discriminatory prosecution as the sellers were not charged. The Special Magistrate and Punjab-Haryana High Court dismissed their claims, holding that the non-compliance with Section 3(6) was not fatal error to the case. Therefore, an appeal was filed against the order of High Court before the Supreme Court.

Key Takeaways for Students

Legal Issue

• Whether the failure to lay the Control Order and Notification before Parliament as required under Section 3(6) of the Essential Commodities Actinvalidates the prosecution of the appellant under?
• Whether the prosecution was discriminatory under Article 14, as the suppliers of the iron sheets were not prosecuted?

Holding

The Supreme Court held that Sub-section (6) of Section 3 of the Essential Commodities Act, 1955, is directory in nature, and not mandatory. Hence, its non-compliance does not nullify the Iron and Steel (Control) Order, 1956. Accordingly, the failure to lay the notification fixing the maximum selling prices of iron and steel before both Houses of Parliament does not invalidate the notification. The Court rejected the appellants’ claim of lack of mens rea, relying on evidences showing that the appellants sought to increase production and profits. The Court also found no violation of Article 14, stating that the non-prosecution of the suppliers was due to lack of sufficient evidence against them.

Final Decision Appeal dismissed

Ratio

The Court identified two key factors for considering a provision as directory: (1) the lack of consequences for non-compliance, and (2) the potential public inconvenience if government actions were invalidated. It emphasized that laying provisions serve to ensure legislative oversight, and their specific forms can vary based on the desired level of control. The procedural requirements deemed directory do not invalidate actions taken by subordinate authorities.