Haileyburia Tea Estates Limited v Union of India and Tea Board of India and others

W.P(c).No.17661/2020-G 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE SMT. JUSTICE P.V.ASHA** **WEDNESDAY, THE 23RD DAY OF SEPTEMBER 2020 / 1ST ASWINA, 1942** ## **WP(C).No.17661 OF 2020(G)** ## **PETITIONERS:** **1 HAILEYBURIA TEA ESTATES LIMITED, WILLINGDON ISLAND, COCHIN-682 003, REPRESENTED BY ITS CHIEF MARKETING OFFICER - MR.SHRESHTH DUGAR. 2 SHRESHTH DUGAR, S/O.ASHOK DUGAR, A-081, DLF RIVERSIDE, VYTTILLA, COCHIN-682 019.** **BY ADVS. SRI.JOSEPH KODIANTHARA (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS SRI.P.G.CHANDAPILLAI ABRAHAM SHRI.ALEXANDER JOSEPH MARKOS SHRI.SHARAD JOSEPH KODANTHARA SMT.ZAINAB ZEBAIBRAHIM P.M.** ## **RESPONDENTS:** |**1**|**UNION OF INDIA,**| |---|---| ||**REPRESENTED BY ITS JOINT SECRETARY (PLANTATION),**| ||**MINISTRY OF COMMERCE AND INDUSTRY, DEPARTMENT OF**| ||**COMMERCE, UDYOG BAHVAN, NEW DELHI-110 001.**| |**2**|**THE TEA BOARD OF INDIA,**| ||**14 B.T.M. SARANI, KOLKATA-700 001, REPRESENTED BY**| ||**ITS DEPUTY CHAIRMAN AND REGISTERING AUTHORITY.**| |**3**|**THE CONTROLLER OF LICENSING,**| ||**THE TEA BOARD OF INDIA, 14 B.T.M. SARANI,**| ||**KOLKATA-700 001.**| |**4**|**TEA BOARD OF INDIA REGIONAL OFFICE,**| ||**INDIRA GANDHI ROAD, WILLINGDON ISLAND, COCHIN-682**| ||**003, REPRESENTED BY ITS JOINT CONTROLLER OF**| ||**LICENSING.**| W.P(c).No.17661/2020-G 2 **5** **TEA TRADE ASSOCIATION OF COCHIN, TEA TRADE CENTRE, WILLINGDON ISLAND, KOCHI-682 003, REPRESENTED BY ITS SECRETARY.** **R1 BY SRI.SUVIN R.MENON, CGC R2-4 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR, SC R2-4 BY ADV. SRI.K.JOHN MATHAI R2-4 BY ADV. SRI.JOSON MANAVALAN R2-4 BY ADV. SRI.KURYAN THOMAS R2-4 BY ADV. SRI.PAULOSE C. ABRAHAM R2-4 BY ADV. SRI.RAJA KANNAN R5 BY ADV. SRI.C.K.KARUNAKARAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.09.2020, THE COURT ON 23.09.2020 DELIVERED THE FOLLOWING:** W.P(c).No.17661/2020-G 3 ## **P.V.ASHA, J.** **-----------------------------** **W.P.(C) Nos.17661of 2020** **-----------------------------Dated this the 23rd day of September, 2020b.** ## **J U D G M E N T** 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 2nd respondent, is under challenge in this Writ Petition. The 2nd respondent passed an order suspending Exts.P1 and P2 registration issued to the 1st 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 W.P(c).No.17661/2020-G 4 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 W.P(c).No.17661/2020-G 5 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 W.P(c).No.17661/2020-G 6 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 2nd 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 W.P(c).No.17661/2020-G 7 Writ Petition was disposed of directing the 2nd 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 W.P(c).No.17661/2020-G 8 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: _“(1) M/s Haileyburia Tea Estates Ltd has undoubtedly violated the sanctity of the public auction system under the provisions of the Tea (Marketing) Control Order 2003 and hence if ignored may encourage other stake holders to involve into similar illegal practices or divert certain section of buyers from the auction system. Therefore, the committee proposes prompt action against the seller as deemed fit by the Registering Authority under the provisions of the Tea (Marketing) Control Order 2003 after following the procedure._ _(2) Since the buyers are knowingly and actively involved in the said malpracice, which is a gross violation of clause 6(e) of TMCO 2003, action against the alleged buyers should also be initiated by Tea Board following due procedure.”_ W.P(c).No.17661/2020-G 9 ## Thereafter the 2nd respondent issued Ext.P10 show cause notice ## dated 20.09.2019 stating inter alia as follows: _“And whereas from the findings of the Committee it appears that M/s Haileyburia Tea Estates Ltd has been involved in buying back of its own teas in order to raise the price of its own tea in auction in connivance with some of the buyers registered with the Board which is gross violation of Tea (Marketing) Control Order 2003 r/w Pan India Auction Rules. And whereas it has further been found from the report (Copy enclosed) that M/s Haileyburia Tea Estates Ltd has engaged in repackaging of sold teas after buy back in gross violation of Pan India Auction Rules and also indulged in unfair practices by bidding on behalf of some buyers (by log in on their behalf) to bid its own teas, in gross violation of Tea (Marketing) Control Order,2003 r/w Pan India Auction Rules. And whereas it appears that M/s Haileyburia Tea Estates Ltd as a manufacturer has violated para 5(1)(g) of Tea (Marketing) Control Order,2003 and as a registered buyer has violated para 6(1)(e) and Rule 48 of Pan India Auction Rules.”_ Petitioner Company was directed to show cause why action should not be initiated against it in terms of para 5(1)(g) and 6(1)(e) of TMCO 2003 for suspension/cancellation of its Ext.P1 registration for manufacturing and Ext.P2 registration for buying in auction. 4. In Ext.P11 reply the petitioner Company stated that there is no provision either under TOMO 2003 or any other law prohibiting buy back concept and the same cannot be treated as unfair trade practice; there was no allegation that the Company as a buyer had indulged in unfair practice and there is no W.P(c).No.17661/2020-G 10 violation of Rule 48 of Pan India Rules which relates to unsold stocks; if stock offered remained unsold it can be added to the next auction; as there is no violation of Section 30(1) or (3) of the Act, no action can be taken under Section 41 of the Act and the Director Board has as per Ext.P17 resolution dated 20.07.2019, ratified the decision to stop the practice of stock return or buy back. In the objections to the enquiry report it reiterated its stand and stated that TTAC carried the entire proceedings singularly against the petitioner Company due to trade rivalry by some of the members with vested interests, with the intention to destroy the goodwill and business interest of the Company. The Deputy Chairman of the 2nd respondent thereafter personally heard the Managing Director of the petitioner company on 08.01.2020 in presence of the Law Officer and Controller of Licensing. The Deputy Chairman and Licensing Authority thereafter passed Ext.P23 order on 01.07.2020, suspending the factory registration and buyer registration of the petitioner Company for a period of 3 months from 01.07.2020. It was stated that the petitioner Company tried to circumvent the Pan India Auction Rules and indulged in unfair trade practice by resorting to buy its own tea in connivance with some registered W.P(c).No.17661/2020-G 11 buyers; the whole episode only exposes the unethical practices followed by the petitioner Company for its own commercial gain at the cost of transparency and trust on the basis of which the whole edifice tea auction system rests and there was every reason to believe that unfair trade practice as was followed by the petitioner company could not be brushed aside as it can affect the tea marketing system. While disposing of the W.P.(C) No.13753 of 2020 filed against the order Ext.P23, this Court in Ext.P24 judgment dated 09.07.2020 while directing the petitioner to file appeal against Ext.P23 order, ordered that the order of suspension shall be kept in abeyance pending decision on appeal. The appellate authority after hearing the petitioner company and after considering its contentions and taking note of its assurance in the resolution stopping the practice of buy back, reduced the period of suspension to one month. It was found that the petitioner company was found actively involved in buying back its own teas already sold through auction by repacking the same and cataloguing the same at the auction platform; public auction is based on faith and fair play and any action which can destroy this faith in the public auction system needs to be redressed at the outset itself; appellant company being a W.P(c).No.17661/2020-G 12 hundred year old company participating since inception of the auction needs to be supportive of the transparency that the auction platform provides; Rule 21(b) relating to damaged teas/second hand and repackaged teas, lays down that the “salvaged teas conforming to FSSAI parameters shall be separately catalogued in a supplementary catalogue and shall be marked as such in a catalogue; the petitioner company did not act bonafide in purchasing its own tea after being sold through public auction and again selling the same through repacking, cataloguing the same in main catalogue and that the petitioner company has adopted a method which falls under the category of unfair trade practices under para 5(g) and 6(e) of CMCO 2003. 5. Learned Senior Counsel Sri.Joseph Kodianthara argued that in the absence of any rule which prohibits buy back and in the absence of a provision defining unfair trade practice under the TMCO or Pan India Auction Rules, the penalty imposed on the petitioner company is liable to be set aside, in the light of the judgment in _**Hindustan Steel Ltd V State of Orissa:**_ (1969) 2 SCC 627 _:_ AIR :1970 SC 253 and _**Vijay Singh v. State of U.P**_ **:** (2012) 5 SCC 242. It was also argued that the tea which was sold was not damaged or salvaged and hence there is no W.P(c).No.17661/2020-G 13 violation of Rule 21 of Pan India Auction rules. The learned Senior Counsel for the petitioners argued that if at all any action against the company was warranted, there was no reason to suspend the registration of the factory depriving the livelihood of 800 employees. The petitioner Company has been running the business in tea for the last more than hundred years. It was also pointed out that though the buy back was not prohibited or restricted by any of the provisions in the TMCO 2003 or by any other rules, they had already stopped it well before the 2[nd] respondent passed orders. The provisions contained in Rule 15 of the Pan India Rules only relate to damaged or salvaged tea and the tea which was buy bought was the same fresh tea except for a re-packing and the orders were passed without considering any relevant factors. 6. Sri. E.K.Nandakumar, the Learned Senior Counsel for the 2[nd] respondent, and Sri. C.K. Karunakaran, the learned Counsel for the 5[th] respondent, vehemently opposed the contentions raised by the petitioner. On behalf of the 2[nd] respondent it was argued that the order Exts.P23 as well as P26 are passed in accordance with law after conducting an enquiry in which the petitioner participated and also after hearing the W.P(c).No.17661/2020-G 14 petitioner by the Tea Board as well as the appellate authority. It was argued that the 2[nd] respondent is the statutory authority which has to see that the public auction of tea is conducted with due transparency and sanctity and it is duty bound to take action against those who adopt unfair practices. 7. It was argued that the Tea Buyers Association of India had submitted a complaint before the Tea Trade Association of India - the 5[th] respondent, about malpractices being committed in the auction at the instance of the Company; they were selling second hand tea as garden fresh tea; they buy back their own tea from their own auction buyers which is a case of price fixation; the log in ID and password of the buyers are provided to the petitioner company and tea bought by them are sold back to the petitioner; it is stated that certain buyers were also found involved in price fixation by selling back the tea purchased by them at a higher price to the petitioner company and sharing their passwords with it and that they were making undue benefits using the public distribution system, by such unfair practices adversely affecting the online marketing system. Since the 5[th] respondent through its Ethics Committee could not conduct an enquiry into the complaint it had requested the Tea Board to W.P(c).No.17661/2020-G 15 enquire into same. Thereupon the Board initiated proceedings and in the enquiry the petitioner has admitted its sale after buy back. 8. Sri. Nandakumar, the learned Senior Counsel for the 2[nd] respondent, argued that the action of the petitioner company would come under unfair trade practice attracting action under the provisions contained in paras.5(g) and 6(e) and that the 2[nd] respondent is the authority to regulate any action which affects the sanctity of the system of public auction. It was pointed out that the definition of unfair trade practice in Section 2(47) of the Consumer Protection Act can be imported to the present case. According to the 2[nd] respondent, the number of workers in the factory or the 100 years' legacy cannot also have any relevance when it is found to have involved in malpractices and power is conferred on the Tea Board to suspend or cancel the registration as well as for buying under such circumstances. The contention of respondents 1, 2 and 5 are that when the statutory authorities have after conducting an enquiry and after affording sufficient opportunity of hearing to the petitioner company and on the basis of materials, arrived at a decision in accordance with rules that the petitioner company indulged in activities adversely affecting W.P(c).No.17661/2020-G 16 the system of public auction, this Court is not supposed to interfere with the same under Article 226 of the Constitution of India as judicial review in such matters is very limited as held by the Apex Court in the judgments in _**Bhuvnesh Kumar Dwivedi v. Hindalco Industries Ltd.: (2014) 11 SCC 85 Union of India v. P. Gunasekaran: (2015) 2 SCC 610,** etc._ 9. Pointing out the provisions in Section 64 of the Sale of Goods Act Sri. C. K. Karunakaran, the learned Counsel for the 5[th] respondent, argued that the practice of buying back and sale of the goods after re-packing would be a second sale which is not envisaged at the auction where fresh tea alone has to be put in auction. Section 64(4) and (6) of the Sale of Goods Act read as follows: ## _**“Section 64.**_ ## **Auction sale** .—In the case of a sale by auction— - (1) where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale; - (2) the sale is complete when the auctioneer announces its completion by the fall of hammer or in other customary manner; and, until such announcement is made, any bidder may retract his bid; - (3) a right to bid may be reserved expressly by or on behalf of the seller and, where such right is expressly so reserved, but not otherwise, the seller or any one person on his behalf may, subject to the provisions hereinafter contained bid at the auction; - _**(4) where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any**_ W.P(c).No.17661/2020-G 17 ## _**bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent by the buyer;**_ - (5) the sale may be notified to be subject to a reserved or upset price; _**(6) if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer.”**_ _(emphasis supplied)_ Relying on the judgments in _**SEBI v. Rakhi Trading (P) Ltd:**_ **(2018) 13 SCC 753** , it was argued that the lack of definition for unfair trade practice cannot have any relevance to take action against the petitioner company under para 5(g) and 6(e) of the 2003 order. 10. Having considered the contentions on both sides it is relevant to have a look at paragraph 5(g) and paragraph 6(e) of 2003 order which read as follows: _“5. Cancellation/suspension of Registration of manufacturer: (1) The Registering Authority may, after giving the manufacturer an opportunity of being heard, cancel or suspend the registration on any one or more of the following grounds, namely, (i)xxxx (g) If the Registering Authority has reason to believe that the manufacturer is indulged in unfair trade practices which may adversely affect the marketing system including the public tea auction system._ ## Paragraph 6(e) reads as follows: _“6. Cancellation of suspension of Registration of buyer: (1) The Registering Authority may, after giving the buyer an opportunity of being heard, cancel or suspend the registration on any one or more of the following grounds, namely,_ W.P(c).No.17661/2020-G 18 ## (i)xxxx _(e) If the Registering Authority has reason to believe that the buyer is indulged in unfair trade practices which may adversely affect the marketing system including the public tea auction system.”_ Paragraph 5(2) as well as 6(2) of the 2003 order provide that every order cancelling or suspending a registration shall be in writing and shall specify the reasons for such suspension/cancellation and shall be communicated to the registered manufacturer/buyer forthwith or within seven working days. Rule 21 of Pan India Auction Rules read as follows: _“21. Damaged Teas, second hand and re-packaged teas: (a) Damaged teas (partly/fully damaged) shall not be catalogued and offered for sale in auction_ _(b) Salvaged teas conforming to FSSAI parameters (only chemicals) shall be separately catalogued in a supplementary catalogue and shall be marked as such in the catalogue.”_ 11. In the judgment in _**Hindustan Steel Ltd's case**_ _(supra),_ relied on by the learned Senior Counsel, in support of the contention that penalty cannot be imposed in the absence of a specific provision defining unfair trade practice, the Apex Court was considering a case where penalty was ordered against a contractor for non payment of tax which in turn was for nonregistration as dealer under Orissa Sales Tax Act. In paragraph 8 W.P(c).No.17661/2020-G 19 ## it was held as follows: _“8. Under the Act penalty may be imposed for failure to register as a dealer — Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out.”_ The circumstances and provisions under which penalty was interferred within the _**Hindustan Steel Company**_ 's case ( _supra_ ) are not comparable to the present case where suspension is ordered on a finding that the public auction system was adversely affected on account of the method adopted by the petitioner company. The public auction involves the sellers, buyers, brokers and ultimately the public itself; whereas in _**Hindustan Steel**_ 's case the only stake holders are the petitioner and the Government. Moreover, para 5(g) and 6(e) provide for the circumstances under which the 2[nd] respondent can suspend or W.P(c).No.17661/2020-G 20 cancel the registration. Therefore,the judgment in c _**Hindustan Steel's**_ case would not apply to the factual circumstances of the present case. 12. In the judgment in **Vijay Singh v. State of U.P : (2012) 5 SCC 242,** relied on by the learned Senior Counsel, the Apex Court was considering a case where integrity certificate was withheld in the case of an employee, on the ground that he did not record the past criminal history of the accused delinquent in writing though it was not a penalty enumerated in the rules governing disciplinary action. The Apex Court held that such a punishment was outside the purview of the statutory rules and hence is a nullity and cannot be enforced. Heavy reliance was placed on paras.20 to 22 of the judgment which read as follows: _**“** 20. Unfortunately, a too trivial matter had been dragged disproportionately which has caused so much problem to the appellant. There is nothing on record to show as to whether the alleged delinquency would fall within the ambit of misconduct for which disciplinary proceedings could be initiated. It is settled legal proposition that (sic it cannot be left to) the vagaries of the employer to say ex post facto that some acts of omission or commission nowhere found to be enumerated in the relevant rules is nonetheless a misconduct. [See Glaxo Laboratories (I) Ltd. v. Presiding Officer and A.L. Kalra v. Project and Equipment Corpn. of India Ltd.]_ _**21.** Undoubtedly, in a civilised society governed by the Rule of Law, the punishment not prescribed under the statutory rules cannot be imposed. Principle enshrined in criminal jurisprudence to this effect is prescribed in the legal maxim nulla poena sine lege which means that a person should not be made to suffer penalty except for a clear breach of existing law._ W.P(c).No.17661/2020-G 21 _22. In S. Khushboo v. Kanniammal this Court has held that a person cannot be tried for an alleged offence unless the legislature has made it punishable by law and it falls within the offense as defined under Sections 40, 41 and 42 of the Penal Code, 1860, Section 2(n) of the Code of Criminal Procedure, 1973, or Section 3(38) of the General Clauses Act, 1897. The same analogy can be drawn in the instant case though the matter is not criminal in nature.”_ It was also found that the recording of history sheet, while conducting investigation was not at all required. It is settled law that a punishment which is not enumerated in the standing orders or the service rules governing disciplinary action shall not be awarded on an employee. In the present case, penalty is ordered in a totally different scenario, which cannot have any comparison with employee-employer relationship or in matters governed by the Indian Penal Code or other criminal proceedings. I am of the view that there cannot be any parity between an employee or workman, who is governed by the service rules/standing orders governing disciplinary action and a manufacturer/buyer who is participating in public auction and governed by Tea (Marketing) Control order 2003, either in the matter of misconduct or in the matter of awarding/imposing punishment/penalty. The provisions in criminal law also cannot be imported in such cases. 13. Though unfair trade practice is not defined in TMCO W.P(c).No.17661/2020-G 22 2003, as pointed out by Sri. Nandakumar, the definition given for it in Consumer Protection Act, 2019, starts as follows: _“2. Definitions.—In this Act, unless the context_ _otherwise requires,_ _(1)xxxxx_ _(47) “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely—xxxx”_ In this case the company itself has admitted the buy back method adopted by it, though it is stated that it has stopped that practice after the enquiry report was submitted and Ext.P23 order was passed by the 2[nd] respondent. The petitioner is challenging Ext.P26 order. In Ext.P26 order the 1[st] respondent found that the action of the petitioner Company in buying back its own tea, which was sold at the auction and selling it again after repacking it and cataloguing it at the auction platform, was not bonafide and it affected the sanctity and credibility of the public auction system which is based on good faith and fair play, and that such action amounts to unfair trade practice. Paragraphs 5 and 6 of TMCO empowers the registering authority to cancel and suspend the registration, when it has reasons to believe that the activities W.P(c).No.17661/2020-G 23 of a registrant may affect the online marketing system as well as the public tea auction systems. Therefore, a practice adopted by the registrant adversely affecting the system can be termed as unfair trade practice. 14. It is also relevant to note the judgment in _**SEBI v. Rakhi Trading (P) Ltd:**_ **(2018) 13 SCC 753** , where the dictum laid down in the judgment in _**SEBI**_ **v.** _**Kanaiyalal Baldevbhai Patel:**_ **(2017)15 SCC 1** was reiterated, wherein the Apex Court considered the contention as to absence of definition of unfair trade practice. In _**Rakhi Trading Company**_ 's case, SEBI took action against traders and brokers in NSE. Buying and selling of contracts were found to have been done within a gap of few seconds between the same parties through the same set of brokers, and that manipulative device was used for synchronization of trades which were found to be fraudulent/fictitious in nature. It was found that the traders had executed synchronized/reversal trades, in violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, and Securities and Exchange Board of India (Stockbrokers and Sub-Brokers) Regulations, 1992, and was imposed with a penalty of W.P(c).No.17661/2020-G 24 Rs.1,08,00,000/- under Section 15-HA of the SEBI Act, 1992. The Regulations did not contain any provisions defining “unfair trade practices”. It was held as follows in para 30 and 31 of the ## judgment: _**“30.** We are unable to agree with the arguments of the learned Senior Counsel appearing for Rakhi Trading. Regulation 4(1) in clear and unmistakable terms has provided that “no person shall indulge in a fraudulent or an unfair trade practice in securities”. In SEBI v. Kanaiyalal_ _Baldevbhai Patel[:] , it has been held by this Court that a trade practice is unfair if the conduct undermines the ethical standards and good faith dealings between the parties engaged in business transactions. To quote: (SCC pp. 22 & 31, paras 31 & 60)_ _“31. Although unfair trade practice has not been defined under the regulations, various other legislations in India have defined the concept of unfair trade practice in different contexts. A clear-cut generalised definition of the “unfair trade practice” may not be possible to be culled out from the aforesaid definitions. Broadly, trade practice is unfair if the conduct undermines the ethical standards and good faith dealings between parties engaged in business transactions. It is to be noted that unfair trade practices are not subject to a single definition; rather it requires adjudication on caseto-case basis. Whether an act or practice is unfair is to be determined by all the facts and circumstances surrounding the transaction. In the context of this regulation a trade practice may be unfair, if the conduct undermines the good faith dealings involved in the transaction. Moreover the concept of “unfairness” appears to be broader than and includes the concept of “deception” or “fraud”._ _* * *_ _60. Coupled with the above, is the fact, the said conduct can also be construed to be an act of unfair trade practice, which though not a defined expression, has to be understood comprehensively to include any act beyond a fair conduct of business including the business in sale and purchase of securities. However the said question, as suggested by my learned Brother, Ramana, J. is being kept open for a decision in a more appropriate occasion as the resolution required presently can be made irrespective of a decision on the said question.”_ _(emphasis supplied)_ _**31.** Having regard to the fact that the dealings in the stock exchange are governed by the principles of fair play and_ W.P(c).No.17661/2020-G 25 _transparency, one does not have to labour much on the meaning of unfair trade practices in securities. Contextually and in simple words, it means a practice which does not conform to the fair and transparent principles of trades in the stock market. In the instant case, one party booked gains and the other party booked a loss. Nobody intentionally trades for loss. An intentional trading for loss per se, is not a genuine dealing in securities. The platform of the stock exchange has been used for a non-genuine trade. Trading is always with the aim to make profits. But if one party consistently makes loss and that too in pre-planned and rapid reverse trades, it is not genuine; it is an unfair trade practice. Securities market, as the 1956 Act provides in the Preamble, does not permit “undesirable transactions in securities”. The Act intends to prevent undesirable transactions in securities by regulating the business of dealing therein. Undesirable transactions would certainly include unfair practices in trade. The SEBI Act, 1992 was enacted to protect the interest of the investors in securities. Protection of interest of investors should necessarily include prevention of misuse of the market. Orchestrated trades are a misuse of the market mechanism. It is playing the market and it affects the market integrity.”_ 15. I am of the view that in the light of the dictum laid down in the aforesaid judgment, the contention that penalty cannot be imposed in the absence of definition of unfair trade practice is unsustainable. The judgment in _**Hindustan Steel Company**_ 's case ( _supra_ ) or in _**Vijay Singh'**_ s case would not therefore help the petitioner. 16. The order Ext.P26 is seen to have been passed with due application of mind on each of the contentions raised by the petitioner after affording sufficient opportunity to the petitioner company to defend at each of the stages. Taking note of the assurance in Ext.P17 resolution it has reduced the suspension from three to one month. It is settled law that the scope of W.P(c).No.17661/2020-G 26 judicial review in such matters is very limited under Article 226 of the Constitution of India, as held by the Apex Court in innumerable judgments of the Apex Court as well as this Court. In the judgment in _**Sarvepalli Ramaiah v. District Collector, Chittoor: (2019) 4 SCC 500,**_ the Apex Court while upholding the order passed by the District Collector refusing **ryotwari** patta to the appellant, held as follows: _“40. Administrative decisions are subject to judicial review under Article 226 of the Constitution, only on grounds of perversity, patent illegality, irrationality, want of power to take the decision and procedural irregularity. Except on these grounds administrative decisions are not interfered with, in exercise of the extraordinary power of judicial review._ _xxx_ _43. Judicial review under Article 226 is directed, not against the decision, but the decision-making process. Of course, a patent illegality and/or error apparent on the face of the decision, which goes to the root of the decision, may vitiate the decision-making process. In this case there is no such patent illegality or apparent error. In exercise of power under Article 226, the Court does not sit in appeal over the decision impugned, nor does it adjudicate hotly disputed questions of fact.”_ 17. When the competent authorities, on the basis of materials before it coupled with admission of the petitioner company, were satisfied that the practice adopted by the registrant was adversely affecting the faith in the public auction system, and that the 100 years' experience of the petitioner company ought to have been supportive for adding to the faith W.P(c).No.17661/2020-G 27 and transparency of the system and found it appropriate to invoke para 5(g) and 6(e) of the TMCO 2003, this Court would not be justified in interfering with the same. Though it was argued by the learned Senior Counsel for the petitioner that suspension of manufacturing registration was unwarranted, I am of the view that this Court is not supposed to substitute the decision of respondents 1 or 2, as the question whether one registration need alone be cancelled or both the registration should be cancelled is also a matter within the realm of the statutory authorities. At any rate, the activity of buy back and selling at auction involves both the registrations. Accordingly, this Writ Petition is dismissed. Sd/- **(P.V.ASHA, JUDGE)** **rtr/** **.** W.P(c).No.17661/2020-G 28 ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** - **EXHIBIT P1 TRUE COPY OF THE REGISTRATION CERTIFICATE DATED 13.07.1984 GRANTED UNDER SECTION 3 OF THE TEA (MARKETING) CONTROL ORDER 1984.** - **EXHIBIT P2 TRUE COPY OF THE REGISTRATION CERTIFICATE DATED 10.03.2014 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 4 OF THE TEA (MARKETING) CONTROL ORDER.** - **EXHIBIT P3 TRUE COPY OF THE TEA (MARKETING) CONTROL ORDER, 2003.** - **EXHIBIT P4 TRUE COPY OF THE LETTER DATED 14.05.2019 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER.** - **EXHIBIT P5 TRUE COPY OF THE REPLY DATED 21.06.2019 OF THE PETITIONERS.** - **EXHIBIT P6 TRUE COPY OF THE LETTER DATED 21.06.2019 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER.** - **EXHIBIT P7 TRUE COPY OF THE LETTER DATED 21.06.2019 ISSUED BY THE 1ST PETITIONER TO THE 2ND RESPONDENT.** - **EXHIBIT P8 TRUE COPY OF THE JUDGMENT DATED 04.07.2019 PASSED BY THIS HONOURABLE COURT IN WPC NO.17137/2019.** - **EXHIBIT P9 TRUE COPY OF THE REPORT OF THE ENQUIRY COMMITTEE DATED 04.08.2019.** - **EXHIBIT P10 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 20.09.2019 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER.** - **EXHIBIT P11 TRUE COPY OF THE REPLY DATED 26.10.2019 FILED BY THE 1ST PETITIONER BEFORE THE 2ND RESPONDENT.** - **EXHIBIT P12 TRUE COPY OF THE FURTHER REPLY DATED 02.11.2019 FILED BY THE 1ST PETITIONER BEFORE THE 2ND RESPONDENT.** W.P(c).No.17661/2020-G 29 - **EXHIBIT P13 TRUE COPY OF THE COMMENTS DATED 14.10.2019 TO EXHIBIT P9 ENQUIRY REPORT FILED BY THE 1ST PETITIONER BEFORE THE 2ND RESPONDENT.** - **EXHIBIT P14 TRUE COPY OF THE LETTER DATED 22.11.2019 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER.** - **EXHIBIT P15 TRUE COPY OF THE LETTER DATED 27.11.2019 WITHOUT ANNEXURES ISSUED BY THE 1ST PETITIONER TO THE 2ND RESPONDENT.** - **EXHIBIT P16 TRUE COPY OF THE LETTER DATED 10.01.2020 ISSUED BY THE PETITIONERS.** - **EXHIBIT P17 TRUE COPY OF THE EXTRACT OF THE MINUTES OF MEETING DATED 20.07.2019.** - **EXHIBIT P18 TRUE COPY OF THE RECORD OF PERSONAL HEARING DATED 27.04.2020 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONERS.** - **EXHIBIT P19 TRUE COPY OF THE PRINTOUT OF EMAIL DATED 28.04.2020 ISSUED BY THE 2ND RESPONDENT THROUGH THE 3RD RESPONDENT TO THE PETITIONERS.** - **EXHIBIT P20 TRUE COPY OF THE LETTER DATED 13.05.2020 ISSUED BY THE 1ST PETITIONER.** - **EXHIBIT P21 TRUE COPY OF THE LETTER DATED 25.05.2020 ISSUED BY THE MANAGING DIRECTOR OF THE PETITIONERS TO THE 2ND RESPONDENT.** - **EXHIBIT P22 TRUE COPY OF THE LETTER DATED 05.06.2020 ISSUED BY THE PETITIONERS TO THE 1ST AND 3RD RESPONDENTS.** - **EXHIBIT P23 TRUE COPY OF THE ORDER DATED 01.07.2020 PASSED BY THE 2ND RESPONDENT.** - **EXHIBIT P24 TRUE COPY OF THE JUDGMENT DATED 09.07.2020 OF THIS HONOURABLE COURT IN WPC NO.13753 OF 2020.** - **EXHIBIT P25 TRUE COPY OF THE ARGUMENT NOTE FILED BY THE PETITIONERS.** - **EXHIBIT P26 TRUE COPY OF THE IMPUGNED ORDER DATED 20.08.2020 ISSUED BY THE 2ND RESPONDENT.** - **EXHIBIT P27 TRUE COPY OF THE PRINT OUT OF EMAIL DATED 21.08.2020 OF THE 1ST RESPONDENT.** W.P(c).No.17661/2020-G 30 **EXHIBIT P28** **EXHIBIT P29** **TRUE COPY OF THE LETTER DATED 21.08.2020 OF THE 2ND RESPONDENT.** **TRUE COPY OF THE LETTER DATED 21.08.2020 OF THE PETITIONERS.**