Tracking Legal Developments.

Gauhati High Court Upholds Mandatory BIS Marking for Phenol , Melamine

Guwahati: The Gauhati High Court has dismissed a petition filed by Century Plyboards (I) Ltd. and its division, challenging the Union of India's recommendation to bring the raw materials Phenol and Melamine under the mandatory Bureau of Indian Standards (BIS) marking scheme. Justice KaushikGoswami , presiding over the case (WP(C)/9219/2019), ruled that the decision is a policy matter taken in the larger public interest and is not subject to judicial interference unless found to be arbitrary, irrational, or illegal in its decision-making process.

The petitioners, Century Plyboards , a manufacturer of plywood and panel products using Phenol and Melamine as key raw materials, largely imported, had challenged the recommendation made during an Expert Committee Meeting on April 22, 2019, arguing it was an abuse of power, violated international trade obligations under the WTO Agreement on Technical Barriers to Trade (TBT), and was intended to benefit domestic producers by restricting imports.

Background of the Challenge

Century Plyboards contended that Phenol and Melamine are industrial inputs with no consumer interface and should not be subject to mandatory BIS marking under Sections 16 and 17 of the BIS Act, 2016. They alleged that the move lacked scientific basis, was not preceded by proper risk assessment regarding public health, safety, environment, or national security, and was primarily driven by the interests of domestic producers like Deepak Phenol ics Ltd. to curb imports. They argued this violated the TBT Agreement's principle that technical regulations should not create unnecessary obstacles to international trade and must serve legitimate objectives.

Arguments Presented

Dr. A. Saraf , learned Senior Counsel for the petitioners, emphasized that while India could regulate trade, such regulations, when applied to imports, must be consistent with the TBT Agreement and based on legitimate objectives, not merely protectionism. He highlighted the lack of documented risk assessments by the respondents and pointed to minutes suggesting the decision was linked to supporting domestic investment and addressing alleged unfair trade practices by foreign exporters. He cited several Supreme Court precedents on judicial review of administrative actions and the interpretation of statutes in harmony with international treaties.

Mr. K. Gogoi, learned CGC, representing the Union of India and others, and Mr. P.P. Sharma, learned Senior Counsel for the intervener (Deepak Phenol ics Ltd.), countered that the mandatory BIS marking was a legitimate measure permissible under Section 16 of the BIS Act for public interest, protection of human health, safety, environment, prevention of unfair trade practices, and national security. They argued that stakeholder consultations were held and that there was sufficient evidence of potential hazardous impacts from impurities in these chemicals, especially given their use in products like pharmaceuticals ( Phenol ) or potentially added to food (Melamine). They asserted that the TBT Agreement allows for measures necessary to achieve legitimate objectives and that importing countries can specify their own testing requirements. Both stressed that the decision was a policy matter within the executive's domain, where judicial interference should be minimal.

Court's Analysis and Decision

Justice Goswami , after considering the arguments and perusing the relevant provisions of the BIS Act, 2016, and BIS Rules, 2018, acknowledged that the intervener (Deepak Phenol ics Ltd.) had the right to address the Court in support of the respondents' case.

The Court noted that Section 16 of the BIS Act empowers the Central Government to mandate the use of a Standard Mark in the public interest for specific reasons including health, safety, environment, unfair trade practices, or national security, after consulting the Bureau. Rules 22-30 outline the procedure for establishing and notifying Indian Standards, involving proposal, deliberation by technical committees, circulation of drafts, and final adoption.

Reviewing the meeting minutes and affidavits, the Court found that the Central Government had initiated action under Section 16, citing objectives related to quality improvement, health, environment, national security, and preventing unfair trade practices. Stakeholder consultations, including with industry associations like FIPPI (of which the petitioner is a member), were held where views were considered. The respondents specifically averred having sufficient evidence of hazardous impurities and potential health risks, particularly for Phenol used in pharma/cosmetics and Melamine potentially added to food.

Crucially, the Court characterized the decision to mandate BIS standards for Phenol and Melamine as "essentially a policy decision." Citing precedents from the Supreme Court (including Federation of Railway Officers Association , Film Festivals , Silppi Constructions Contractors ) and other High Courts ( Global Excess of Gujarat HC, All India HDPE/PP Woven Fabrics Manufactures Association of Karnataka HC), the Court reiterated the limited scope of judicial review over governmental policy decisions. Courts, it held, do not act as appellate authorities on policy wisdom or suitability, but examine the legality and decision-making process.

Applying these principles, the Court found that the government's decision was taken in consultation with stakeholders and based on justifications related to public health and safety, which are legitimate objectives under both the BIS Act and the TBT Agreement. The argument that it was solely for the benefit of domestic producers was rejected, as the standard would apply universally. The competence of the Joint Secretary under Section 16 was also upheld.

"Thus, I am of the considered opinion that the impugned recommendation and directions thereof for use of standard mark in relation to the two raw materials in question is made in the larger public interest," the judgment stated. The Court concluded it could not interfere with the soundness or wisdom of a policy taken by experts in larger public interest and lacked the expertise to decide technical/scientific issues.

Finding no illegality, irrationality, or arbitrariness in the decision-making process, the Court dismissed the writ petition. Any interim orders previously passed stand vacated, allowing the government to proceed with the Quality Control Orders that had been notified on the WTO TBT website but held in abeyance.

The judgment underscores the principle of judicial restraint in matters of government policy, particularly those involving technical expertise and public interest considerations like health and safety standards.