The Center on Monday invoked the Essential Commodities Act, 1955 to divert natural gas to “priority” sectors, with fuel shipments via the Strait of Hormuz now halted due to conflict and with the country’s liquefied natural gas reserves in short supply.
The order, issued by the Ministry of Petroleum and Natural Gas, directed that sectors that directly impact millions of people — piped natural gas (PNG) for households, compressed natural gas (CNG) for vehicles, and liquefied petroleum gas (LPG) production — would get precedence over other sectors that require natural gas.
Subsequently, Union Petrol and Natural Gas Minister Hardeep Singh Puri on Thursday announced a 20% cap on the average monthly commercial LPG supply by oil marketing companies (OMCs), adding that the restriction was to prioritize domestic LPG consumption and ensure no hoarding and black marketing.
Amid various measures in the Essential Commodities Act is a measure that prevents the hoarding of an essential commodity that is usually sold, and has penalties against hoarding or stockpiling essential commodities.
Penalties for hoarding under Essential Commodities Act
Section 3 of the Essential Commodities Act which deals with powers to control production, supply, distribution, etc., of essential commodities, says, “If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defense of India or the efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.”
Under Section 3(2), clause (e) specifically states that the government can by order prohibit “the withholding from sale of any essential commodity ordinarily kept for sale.”
So, what happens when someone contravenes the government’s order?
Section 6A of the Essential Commodities Act states that even before a hoarded is taken to trial, the immediate action taken by the District Collector is the seizure and confiscation of hoarded goods to get them back in the market.
If there is any contradiction of an order made under Section 3, Section 6A allows the District Collector to order the confiscation of: (a) the essential commodity so seized; (b) any package, covering or receptacle in which such essential commodity is found; and (c) any animal, vehicle, vessel or other conveyance used in carrying such essential commodity.
In addition to confiscation, hoarders also face criminal penalties under Section 7.
Under Section 7(1)(a)(ii), those found guilty of hoarding an essential commodity face severe punishment including imprisonment, fines, bans.
Those found guilty of hoarding face a minimum mandatory jail term of 3 months, which can extend up to 7 years.
Further, offenders can also be fined while repeat offenders could face bans on doing trade in that commodity for at least 6 months.
The law does not put a mathematical cap on fines, and the quantum of fines are left to the discretion of magistrates and judges, based on the scale of hoarding, illegal profits made, and the financial capacity of the offender.
