2025 (11) TMI 498 - HC - Indian Laws

Rule 3 requires manufacturers and dealers to hold licences for manufacture, sale, storage or transport of bricks

Kehar Singh, Rahul Singh, Malkeet Kour, Kapil Singla, Rita Devi, Deepak Choudhary, Jatinder Kumar, Ramneek Singh, Shubam Singh Choudhary, Kanhaya Sharma Versus Union Territory of J&K through its Chief Secretary Govt. of J&K, Civil Secretariat, Jammu, Commissioner/Secretary to Govt. Department of Geology and Mining, Jammu, Inspector General of Police, Jammu, Commissioner State Taxes Department, Jammu, Director Consumer Affairs and Public Distribution Department Jammu. And others.

HC upheld that Rule 3 of the Jammu & Kashmir Brick Kiln (Regulation) Rules, 2017 applies equally to manufacturers and dealers, requiring licences for ... Iinterpretation of Rule 3 of the Jammu and Kashmir Brick Kiln (Regulation) Rules, 2017 - Seizure of vehicles transporting bricks imported from outside the Union Territory of Jammu and Kashmir - imposing penalties under the Jammu and Kashmir Brick Kiln (Regulation) Act, 2010 and the Jammu and Kashmir Brick Kiln (Regulation) Rules, 2017. Whether the licensing requirement under Rule 3 of the Jammu and Kashmir Brick Kiln (Regulation) Rules, 2017 extend to dealers in addition to manufacturers? - HELD THAT:- The Jammu and Kashmir Brick Kiln (Regulation) Rules, 2017 (hereinafter “the Rules”), framed under Section 26 of the Act, elaborate the procedural framework for licensing. Rule 3 explicitly provides that “No manufacturer or dealer shall manufacture, sell, or store bricks except by holding a valid licence issued under these Rules.” The express inclusion of both manufacturers and dealers in this Rule leaves no scope for doubt that the licensing requirement applies equally to both - The regulatory framework is therefore designed to cover the entire chain from manufacture to sale to safeguard public interest, maintain quality standards, and prevent environmental degradation. The licensing system operates as a substantive regulatory instrument rather than a mere procedural formality, ensuring fair competition and economic stability in the local brick industry. Upon a close examination of Section 15 of the Act and Rule 3 of the 2017 Rules, it becomes evident that the alleged inconsistency between the two provisions is illusory. Section 15 uses the expression “no manufacturer or dealer shall sell or offer for sale,” thereby signifying that both categories are subjected to identical statutory obligations. The legislative intent is thus clear both manufacturers and dealers are bound by the same regulatory framework, encompassing not only price restrictions under Section 15 but also the licensing requirements under Rule 3 of the Rules. Accordingly, the argument that Rule 3 imposes an unauthorized or excessive burden on dealers is devoid of merit. This court is of the considered view that legislative intent behind the Brick Kiln (Regulation) Rules, 2017 is to ensure effective control over the entire brick trade chain from manufacture to sale, storage, and distribution. The licensing system serves as a regulatory safeguard to maintain transparency in trade, prevent hoarding and illegal operations, protect the interests of lawful brick producers, and preserve the stability of the local economy. If unregulated import of bricks were to be permitted, it would open avenues for speculative hoarding, black marketing, and dumping of cheap or substandard material from outside the Union Territory, thereby eroding consumer protection and adversely affecting local employment and revenue generation. Therefore, every person engaged in the manufacture, sale, storage, or transportation of bricks is required to obtain a valid licence under Rule . Thus, it can be safely concluded that in addition to manufactures, Rule 3 extends to dealers as well. Whether the Deputy Commissioners, as Licensing Authorities under the Act, were legally empowered to issue and enforce the impugned order? - HELD THAT:- In the present case, the material on record reveals that the Deputy Commissioners of Kathua and Samba, acting in their statutory capacity as Licensing Authorities, issued orders directing seizure of vehicles and consignments found engaged in transportation and sale of bricks without valid licences. The petitioners have not placed any material to demonstrate that such seizures were either actuated by mala fides or effected without adherence to the statutory safeguards. On the contrary, the impugned orders show that the action was taken to curb unlicensed trading activity within the territorial jurisdiction of the concerned districts, thereby ensuring compliance with the Act and the Rules of 2017. This Court finds that the action of the Deputy Commissioners, being in consonance with Section 12 of the Act and supported by statutory authority, cannot be termed arbitrary or illegal. The impugned directions of the statutory authority of seizure of vehicles and confiscation of bricks besides imposing penalties are, therefore, upheld as lawful measures taken in furtherance of the regulatory object of the Act. Whether registration under the Goods and Services Tax (GST) Act, 2017 exempt the petitioners from the requirement of licensing under the Brick Kiln Act? - HELD THAT:- This Court finds that registration under the GST Act neither dispenses with nor substitutes the requirement of licensing under the Brick Kiln Act. The contention that payment of tax legitimizes the business, even in the absence of a valid licence, would lead to an absurd result effectively allowing tax compliance to override statutory prohibitions or public welfare measures - the plea raised by the petitioners that registration under the GST Act, 2017, exempts them from obtaining a licence under the Jammu and Kashmir Brick Kiln (Regulation) Act, 2010, is wholly misconceived and untenable in law. Whether the writ petition is maintainable in view of the availability of an alternative statutory remedy under the Jammu & Kashmir Brinck Kiln Act, 2010? - HELD THAT:- In the present case, the Brick Kiln (Regulation) Act provides for an administrative hierarchy where grievances against licensing decisions can be addressed. The petitioners have neither applied for a licence nor availed any statutory remedy. Instead, they have directly invoked the extraordinary jurisdiction of this Court. The writ petition is thus premature - This Court does not find any extraordinary circumstance warranting interference at this stage. The petitioners have an adequate statutory remedy available to them. Judicial review cannot be used to bypass administrative procedures unless the impugned action is patently without jurisdiction or in violation of natural justice, neither of which is demonstrated here. Whether the statutory requirement of obtaining a licence for dealing in bricks infringe the petitioners’ fundamental right to carry on trade or business under Article 19(1)(g) of the Constitution? - HELD THAT:- In the instant case, the licensing obligation prescribed under Rule 3 of the 2017 Rules is applicable in equal measure to all dealers engaged in the trade of bricks, irrespective of whether the bricks are manufactured within the Union Territory of Jammu and Kashmir or brought from any other State. The said provision, therefore, does not occasion any preference or discrimination between intra-State and inter-State trade. The restriction is regulatory in character, uniformly applicable, and thus falls within the ambit of reasonable restrictions permissible under the Constitution, being in conformity with the spirit and mandate of Article 303 - Thus, it can be safely concluded that the statutory requirement of obtaining a license for dealing in bricks doesn’t infringe the fundamental right to carry on trade or business under Article 19(1)(g) of the Constitution. Accordingly, the restriction imposed by Rule 3 is a constitutionally permissible regulatory measure under Article 19(6). This court is of the considered view that the Jammu and Kashmir Brick Kiln (Regulation) Act, 2010 and the Rules framed thereunder in 2017 constitute a comprehensive regulatory framework intended to control not only the establishment and operation of brick kilns but also the trade, sale, storage, and distribution of bricks within the Union Territory. The inclusion of the term dealer under Section 2(e) and the express language of Rule 3 clearly manifest the legislative intent to bring both the manufacturers as well as dealers within the fold of the regulation. This court is of the view that the unregulated import of bricks from outside the Union Territory without proper licensing and monitoring would inevitably lead to hoarding, black marketing, and deliberate shortage, thereby disturbing the market equilibrium and causing loss to the local revenue and adverse repercussions on the State economy. Such unchecked inflow would not only undermine the local brick manufacturing sector but would also defeat the regulatory objectives of the Act by promoting clandestine trade. The enforcement of licensing requirements upon dealers thus serves an important economic and administrative purpose in maintaining market stability, ensuring fiscal discipline, and safeguarding legitimate local enterprises. The Deputy Commissioners of Kathua and Samba have been duly notified as the Licensing Authorities under Section 5 of the Act and have acted within the scope of their statutory powers in issuing the impugned orders. The seizures and enforcement measures complained of are regulatory in nature and justified by the statutory mandate. As a necessary corollary, the orders impugned are upheld. Petition dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the licensing requirement under Rule 3 of the Jammu and Kashmir Brick Kiln (Regulation) Rules, 2017 extends to dealers in addition to manufacturers. 2. Whether Deputy Commissioners, as notified Licensing Authorities under the Act, were legally empowered to issue and enforce the impugned seizure and prohibitory orders. 3. Whether registration under the Goods and Services Tax Act, 2017 dispenses with or exempts persons from the licensing requirement under the Brick Kiln (Regulation) Act, 2010 and the 2017 Rules. 4. Whether the writ petition is maintainable in view of the alternative statutory remedy/appellate mechanism provided under the Brick Kiln (Regulation) Act, 2010. 5. Whether the statutory requirement of obtaining a licence for dealing in bricks infringes the fundamental right to carry on trade or business under Article 19(1)(g) of the Constitution. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Scope of Rule 3: whether dealers are within licensing requirement Legal framework: Rule 3 of the 2017 Rules provides 'No manufacturer or dealer shall manufacture, sell, or store bricks except by holding a valid licence issued under these Rules.' Section 2(e) of the Act defines 'dealer'. Sections 5-6 deal with appointment of licensing authorities and grant of licences; Rules framed under Section 26 elaborate procedural licensing; Form B addresses licence for manufacture, sale and supply. Precedent treatment: The Court referred to principles on interpreting conjunctions ('and/or') from higher courts to show that legislative drafting can include alternative or cumulative senses depending on context. Interpretation and reasoning: A purposive and textual construction of the Act and Rules shows deliberate inclusion of 'dealer' in the definition and in Rule 3. Section 15 uses the phrase 'no manufacturer or dealer shall sell' indicating parallel obligations. Forms appended to the Rules include Form B for manufacture, sale and supply, which encompasses dealers. The licensing regime is designed to regulate the entire brick trade chain to protect environmental, economic and consumer interests and to prevent unregulated import, hoarding and market distortion. Ratio vs. Obiter: Ratio - Rule 3's explicit language, the definition in Section 2(e), the content of Rule 3 and Form B are determinative; the conclusion that dealers fall within the licensing requirement is a binding part of the Court's decision. Obiter - broader policy observations on market effects and fiscal consequences supplement the ratio but are ancillary. Conclusion: Rule 3 extends to dealers as well as manufacturers; dealers engaged in sale, storage or possession of bricks for sale must obtain a valid licence under the Rules. Issue 2 - Authority of Deputy Commissioners to issue and enforce impugned orders Legal framework: Section 5 empowers Government to appoint licensing authorities and define their territorial limits; Section 12 confers power of inspection, stopping and inspecting vehicles, seizure of bricks; Rule 4 designates Deputy Commissioners as Licensing Authorities within their districts. Precedent treatment: The Court applied standard principles of statutory delegation and the legitimacy of executive officers exercising powers lawfully delegated by statute. Interpretation and reasoning: The Government validly notified Deputy Commissioners as Licensing Authorities under Section 5; Rule 4 expressly assigns that role. Section 12 provides specific enforcement powers including stopping vehicles and seizure where contravention is suspected. The impugned seizure and prohibitory orders were issued in exercise of these statutory powers and, absent material showing mala fides or procedural unfairness, must be treated as lawful regulatory action subject to Article 14 standards of fairness and proportionality. Ratio vs. Obiter: Ratio - Deputy Commissioners, when validly notified, possess the statutory authority to issue and enforce the orders under the Act and Rules; enforcement actions (inspection, seizure) under Section 12 are lawful. Obiter - general remarks on necessity for adherence to principles of fairness and proportionality. Conclusion: Deputy Commissioners were legally empowered to issue and enforce the impugned orders; the seizures and confiscations upheld as regulatory measures taken in furtherance of the statutory scheme. Issue 3 - Effect of GST registration on licensing obligation Legal framework: GST Act is a fiscal statute concerned with levy and collection of tax; Brick Kiln Act is a regulatory statute imposing licensing as condition precedent to lawful conduct of the activity. Precedent treatment: The Court relied on the well-settled distinction between fiscal registration and sector-specific regulatory authorisation, and on the principle that tax compliance does not confer legality for otherwise prohibited or unlicensed activity. Interpretation and reasoning: GST registration evidences tax compliance but does not confer authority to undertake activities that are otherwise subject to licensing; the two enactments operate in distinct and non-overlapping fields (taxation vs regulation). Treating GST registration as a substitute for licensing would allow tax compliance to override statutory prohibitions and regulatory safeguards, an absurdity inconsistent with legislative intent. Ratio vs. Obiter: Ratio - GST registration does not exempt persons from obtaining licences required by the Brick Kiln Act/Rules. Obiter - policy rationale emphasising distinct objectives of taxation and regulation. Conclusion: GST registration does not dispense with the requirement of obtaining a licence under the Brick Kiln Act and the 2017 Rules. Issue 4 - Maintainability of writ petition given alternative statutory remedy Legal framework: Section 20 provides an appeal against decisions of licensing authorities to an Appellate Authority within prescribed time; doctrine of exhaustion of statutory remedies governs use of writ jurisdiction. Precedent treatment: The Court applied established administrative law principle that when an efficacious statutory remedy exists, parties must ordinarily exhaust it before invoking extraordinary jurisdiction under Article 226. Interpretation and reasoning: Petitioners did not apply for licence, did not avail the statutory appellate mechanism, and directly invoked writ jurisdiction. No exceptional circumstances were shown that would justify bypassing prescribed remedies; the Act provides an adequate remedy and appeal process. Judicial discipline and legislative intent favour exhaustion of remedies unless action is patently without jurisdiction or mala fide, which was not demonstrated. Ratio vs. Obiter: Ratio - writ petition is premature and not maintainable in absence of exhaustion of statutory remedies. Obiter - comments on need for invoking writ jurisdiction only in exceptional cases. Conclusion: The writ petition is premature and not maintainable insofar as statutory remedies under the Act were not availed; petitioners should pursue the appellate remedy provided by Section 20. Issue 5 - Constitutionality: whether licensing requirement violates Article 19(1)(g) Legal framework: Article 19(1)(g) guarantees right to practice any profession, carry on any occupation, trade or business; Article 19(6) permits reasonable restrictions in the interest of the general public; Article 303 prohibits preference/discrimination between States but allows reasonable regulation consistent with uniformity. Precedent treatment: The Court referenced established tests for reasonableness of restrictions (nature/purpose/extent) and cited authority on balancing individual rights against public interest. Interpretation and reasoning: Licensing serves legitimate public interests - environmental protection, land use control, consumer protection, market stability and prevention of hoarding/black marketing. The restriction is regulatory, not prohibitory; it applies uniformly to all dealers irrespective of origin of bricks, so it does not discriminate between States. The licensing requirement is narrowly tailored and proportionate to the governmental objectives; thus it falls within the scope of permissible restrictions under Article 19(6). Ratio vs. Obiter: Ratio - licensing requirement does not infringe Article 19(1)(g) as it is a reasonable restriction under Article 19(6). Obiter - broader policy observations about protecting local industry and market equilibrium. Conclusion: The licensing obligation is constitutionally valid and does not violate the fundamental right to carry on trade or business under Article 19(1)(g). Cross-references and final consolidation Interpretative conclusions on Issue 1 (scope of Rule 3) underpin conclusions on Issues 2-5: dealers fall within the licensing regime; Deputy Commissioners lawfully exercise enforcement powers; GST registration does not excuse non-compliance; statutory appeal must be exhausted; and licensing is a reasonable restriction under Article 19(6). The Court's holdings on these interconnected matters form the operative ratio sustaining the validity and enforceability of the Brick Kiln regulatory framework as applied to dealers.