Hoarding And Black Marketing – Undefined And Unchecked Wrongful Gains In A Time Of Acute Crisis To Be Tested Morally Or, Legally?

Legal regime in India

The Indian Legal system is well equipped, and has been honed over many years. However, in this unprecedented Pandemic situation, it has been put to test and has braved incredible duress in the past year. To control miscreants and regulate the market in such times, various legislations have been in the limelight. The Essential Commodities Act of 1955, is for the control of production, supply, and distribution of certain commodities. The Act does not deal with the term "black marketing" but section 7 prescribes for penalty on violation of government notification issued under section 3. Schedule to the Act includes "drugs" as essential commodity. "Drug" is defined under section 3 of Drug and Cosmetic Act of 1940 to include "medical devices". This Act was enacted to regulate import, manufacture and distribution of drugs in India.

The 29^th Law Commission Report of 1966 recommended incorporating socio-economic offences including profiteering, black marketing, and hoarding, in Indian Penal Code in a separate chapter. The report mentioned that the question of black market arises only after the prices are fixed by the government. Similarly, offence of hoarding any article is committed only when its more than what is permitted under the law. Necessarily, black-marketing and hoarding cannot take place in respect of a commodity when its supply position is comfortable, and when, no restrictions are placed. Such restrictions are usually imposed, when necessary, under specific enactments, and the circumstances bound to vary with the commodity and the position prevailing at the time. This report placed reliance on the Australian Black-Marketing Act (49 of 1942) and West Bengal Black Marketing Act 1948 which are now repealed. Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980, was enacted but did not provide for definition of black marketing. Section 3(1) provides that authorities have power to detain a person "with a view to preventing him from acting in any manner prejudicial to the maintenance of supplies of commodities essential to the community it is necessary so to do, make an order directing that such person be detained". The National Security Act of 1980 under Section 3(2) gives similar power to the Central Government or the State Government, if the act is in any manner prejudicial to the security of the State, apart from being prejudicial to the maintenance of Public order or to the maintenance of supplies and services essential to the community. The phrase "acting in any manner prejudicial to the maintenance of supplies of commodities essential to the community" has been addressed by the Supreme Court in several cases while deciding on the validity of detention orders passed under the Act.

In order to more effectively deal with persons indulging in hoarding and black-marketing and profiteering in essential commodities, the Central Government enacted the Essential Commodities (Special Provisions) Act, 1981, which came into force on 1^st September, 1982. Special provisions by way of amendment to the principal Act were made for a temporary period providing summary trial of offences under the Essential Commodities Act , constitution of special courts, enhancement of sentence and making the offences as cognizable and non bailable and providing for stricter provisions for grant of bail. By virtue of Section 1(3) and as indicated in the preamble to the Act, the same was to be valid for a period of 15 years from the date of commencement and thus, the Act which came into force on 1st September, 1982 remained in force only till 31stAugust, 1997. In a PIL before Delhi High Court, in May,2021, court has issued notice to the Union Health Ministry and Delhi Govt on a plea which also seeks setting up of fast track courts to deal exclusively with cases of black marketing and hoarding of medicines and equipment. The Prevention of Hoarding and Profiteering Bill, 2010 – section 2 (b) defined "hoarding" as accumulating essential goods or stocks intended for sale to consumers with a view to cornering such goods so as to create their artificial scarcity and to raise their selling prices thereafter.

Laws applicable by virtue of the pandemic situation:

The Epidemic Act, 1897 was enacted to enable better prevention of spread of Dangerous Diseases. Under the Act, authorities can take "Special Measures" and prescribe such regulations. This becomes relevant when seen in consonance with the above statutes since most Essential Commodities currently are Medical Commodities, meant to provide respite to persons suffering from aggravated symptoms of Covid-19. Items like Medicines, masks, Oxygen Cylinders and concentrators scarce not only because of increased demand but also because of various widespread incidents of hoarding. These Acts are usually seen along-with National Disaster Management Act, 2005 which was created for effective handling and management during disasters and other incidents related, which include a global pandemic.

Administrative Shortfall or Exceptional Circumstances?

Despite a robust legal regime on paper, the Indian administration has struggled with the issue of "Hoarding" and "Black Marketing" since the pandemic has started, be it manufacture and sale of fake sanitizers and masks or scarce Medicines and Oxygen supplies. According to reports, over 300 FIRs have been registered alleging hoarding and black-marketing. While some gain traction in public discourse, other instances get lost in the myriad. However, it is a folly to think such instances are limited to India. As reported on Interpol's website, under Operation Pangea XIII in March of 2020, counterfeit facemasks, substandard hand sanitizers and unauthorized antiviral medication were all seized, by the police, customs, and health regulatory authorities from 90 countries in a collective action against the illicit online sale of medicines and medical products. This exercise has resulted in over 120 arrests worldwide.

The Delhi High Court issued directions on 02.05.2021 in the case of Bram Health Care Private Ltd. V/s Union of India that none of the equipment or medicines used in treatment of Covid 19 should be sold at prices above MRP. Directions were also issued regarding several malpractices pertaining to black marketing, hoarding and overcharging for some essential services such as ambulances etc. On 12th May, 2021, Delhi High Court observed that its high time that MRP of Oxygen Concentrator and other equipment in demand for Covid treatment, is fixed. Several other High Courts have issued similar directions in the respective States. Such directions and more stringent laws and proactive approach at the central level towards curbing such unethical and illegal activities, is need of the hour. Appropriate orders/directions should be issued fixing/capping MRP of all necessary medicines and equipment at the earliest possible. What is required is, for the government to deal with each of the issues at an individual level by issuing orders, circulars or notifications, even if time bound, to ensure that the prevalent law is appropriately enforced and wherever there exists a void in the price control mechanism, the same should be taken care of at the earliest.

Apart from increasing the gulf between have and have nots, black marketing and hoarding are directly proportional to social loss and at a time of global pandemic it indirectly adds to emotional loss too.