Century Plyboards (I) Ltd. And Anr. Vs Union of India And 5 Ors. (Gauhati High Court)
Gauhati High Court has reinforced the Central Government’s authority to mandate quality control standards for raw materials, dismissing a challenge brought by Century Plyboards (I) Ltd. and Cent Ply. The petitioners had contested the government’s decision to bring ‘Phenol’ and ‘Melamine’ under mandatory certification by the Bureau of Indian Standards (BIS).
The dispute arose after the Union of India decided to implement compulsory BIS certification for these two raw materials, following recommendations from an Expert Committee under the BIS Act, 2016. Century Plyboards argued that this measure constituted an abuse of government power and should be revoked.
The petitioners raised several points, including the contention that while international trade agreements like the Agreement on Technical Barriers to Trade (TBT) allow for regulatory objectives like protecting public health and safety, they should not create unnecessary barriers to international trade. They claimed no proper study on public health, safety, or environmental impact was conducted before imposing the standards.
It was also argued that the products were used industrially, not directly by consumers, and that industrial grade phenol or melamine posed no risk to public health for pharmaceutical or human consumption uses, nor did their import risk national security. The petitioners expressed concerns that the mandatory certification could distort free competition, potentially leading to price fixing that would disadvantage users and primarily benefit domestic manufacturers. Furthermore, they questioned the authority of the Joint Secretary, Department of Chemicals and Petrochemicals, to enforce mandatory BIS certification, suggesting the Secretary, Ministry of Commerce, was the appropriate official.
The Gauhati High Court examined the objectives of the BIS Act, noting its aims to protect consumers from substandard products and promote standardization. The court highlighted provisions within the Act that empower the Central Government to issue directions to the Bureau for invoking technical barriers when deemed necessary for public interest, protection of human, animal or plant health, safety of the environment, prevention of unfair trade practices, or national security. The court also noted the statutory process involving draft standards and stakeholder consultations.
Considering the evidence presented by the Union of India, the court acknowledged the potential hazardous impact of impurities in phenol and melamine. It was noted that phenol is used in pharmaceuticals and cosmetics where strict impurity control is vital, and melamine, despite industrial uses, has a history of illegal addition to food, posing serious health risks. Based on these findings, the court concluded that the government is indeed empowered under public policy to set higher quality standards to protect health and prevent unfair practices.
The court found that due process was followed, including stakeholder consultations and notification of the draft order on the World Trade Organisation (WTO) website, aligning with international transparency norms.
Addressing the TBT Agreement and the General Agreement on Tariffs and Trade (GATT), the court determined that establishing minimum quality standards applicable equally to both domestically manufactured and imported goods is consistent with these agreements and serves a legitimate public interest purpose. Such measures, the court reasoned, do not inherently favour domestic producers when applied uniformly.
The court characterised the decision to mandate BIS standards as a “policy decision” of the government. It reiterated the principle that courts, under Article 226 of the Constitution, should not interfere with policy decisions unless the decision-making process is found to be arbitrary or irrational, acknowledging the executive’s expertise in such matters.
Finally, the court confirmed the competence of the Joint Secretary of the Department of Chemicals and Petrochemicals to issue directions for compulsory BIS standard marks under the relevant provisions of the BIS Act.
Finding no illegality or arbitrariness in the government’s decision-making process, the High Court dismissed the writ petition.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
