Essential Commodities Act: What does the law say on the penalties for hoarding LPG?

The Centre on Monday invoked the Essential Commodities Act, 1955, to divert natural gas to "priority" sectors, as the West Asia conflict halted fuel shipments through the Strait of Hormuz. The move aims at maintaining an uninterrupted supply as the country's liquefied natural gas reserves are 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 Minister for Petroleum and Natural Gas 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 prioritise domestic LPG consumption and ensure no hoarding and black marketing.

Among various clauses in the Essential Commodities Act is a measure that prevents the hoarding of an essential commodity that is usually sold freely, and has penalties to curb hoarding or stockpiling.

Penalties for hoarding under Essential Commodities Act

Section 3 of the Essential Commodities Act, which deals with powers to control production, supply and distribution 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 defence 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 hoarder 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 contravention 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 and bans.

Those found guilty of hoarding face a minimum mandatory jail term of three months, which can extend up to seven years.

Further, offenders can be fined, while repeat offenders could face a ban on trading in that commodity for at least six months.

The law does not put a mathematical cap on fines, and the quantum of fines is left to the discretion of magistrates and judges, based on the scale of hoarding, illegal profits made, and the financial capacity of the offender.