The Rice Millers Association of Gondia in Maharashtra filed a writ petition in the Bombay High Court (Nagpur Bench) challenging the validity of clause (b) of regulation 4 of the FSS (Licensing and Registration of Food Businesses) Regulations, 2011 and wanted the same to be quashed.
Learned counsel for the petitioner argued that the said clause was ultra vires of section 31 and 92 of the FSS Act 2006. He argued that
- the power to frame a regulation under the said Act was limited to supporting the legislation and could not override it or replace the substantive provision of the Act.
- setting a limit of annual turnover of Rs.12 lakhs to identify small scale businesses was arbitrary
- the licensing or registering authority should decide on the size of a business of individual basis since there were a large number of food businesses and items.
Counsel for respondent Union of India and others including FSSAI submitted that
- regulation 4 (b) is in accordance with the Act and in no way amounts to derogation of the substantive provision of the Act
- the figure of Rs.12 lac as annual turnover was reached after a conscious and studious exercise and objections from the public at large were invited before taking a decision
Honourable Judge upheld the Union of India and FSSAI and others and opined that
- vide section 92 of the FSS Act 2006 the Food Authority was empowered to make regulations and the said regulation was made in the exercise of powers vested in the Food Authority to do so
- the limit of Rs.12 lakhs as annual turnover for identifying small scale businesses was found to be reasonable
- that the plea to identify businesses on an individual basis lacked merit
The section of the Regulation 4 (b) of the food Safety and Standards (Licensing and Registration of Food Businesses) Regulations 2011 is that
- b) Such other food businesses including small scale or cottage or such other industries relating to food businesses or tiny food businesses with an annual turnover not exceeding Rs.12 lac and/or whose
(i) Production capacity of food (other than milk and milk products and meat and meat products) does not exceed 100 kg/liter per day or
(ii) Procurement or handling and collection of milk is up to 500 liters of milk per day or
(iii) Slaughtering capacity is of 2 large animals or 10 small animals or 50 poultry birds per day or less
Section 31 (1) and (2) of the Food Safety and Standards Act, 2006 reads
31. Licensing and registration of food business:
(1) No person shall commence and carry out any food business except under license.
(2) Nothing contained in sub-section (1) shall apply to petty manufacturers who himself manufactures or sells any article of food or a petty retailer , hawker, itinerant vendor or a temporary stall holder or small scale or cottage or such other industries relating to food business or tiny food business operator; but they shall register themselves with such authority and in such manner as may be specified by regulations without prejudice to the availability of safe and wholesome food for human consumption or affecting the interests of the consumers.
Section 92 of the Act provides for an enabling power to the Food Authority to make regulations. From the reading of the above it is clear that by virtue of section 92 Food Authority has been empowered by the Parliament to make regulations in respect of the subjects mentioned in section 92 itself. There is no dispute that the subject in question falls in the said provision of Section 92 and therefore the Food Authority is vested with powers to make regulations including the regulation in question.
- The next question is about framing of Regulations in relation to clause 4 (b) providing for annual turnover of Rs.12 lac. The Judge said that perusal of Sub-section (1) of 31 clearly shows that no person can carry on food business except under a license. So the blanket prohibition on carrying on business is valid and one will have to obtain a license.
- Sub-section (2) while there is exemption of carrying on food business as petty retailer, hawkers, temporary stall holders, small scale or cottage food business. The Parliament did not define what the small scale or cottage industry would be. The regulations were thus required to be framed in accordance with the enabling powers under Section 92. The Regulating Authority for that purpose invited objections from the public and thereafter considered the sum of Rs.12 lakhs as an appropriate figure for the purpose of exemption sunder sub-section (2) for small scale industries. Had there been no regulation provided by the regulating Authority it would have meant that the small scale industry, doing the business of about Rs.50 crores or Rs.100 crores would also fall within the category of exemption in the absence of a Regulation. The Regulation has been formed with a view to give relief to the petty vendors or retailers or temporary stall holders. Even then annual turnover of Rs.12 lac was imposed as a limit which is quite reasonable and proper. It cannot be said at all that the Regulatory Authority has overreached the provision of the Act in the form of regulations or defined as what is a small scale industry.
- The petition that each case be decided by the Registering or Licensing Authority to find out what is a small scale industry or cottage industry cannot be allowed to be left at the discretion of a single officer and hence the Regulatory Authority has rightfully put the annual turnover of Rs. 12lakhs in regulation 4(b) and does not overreach any of the provisions of the Act.