Isabella Mariam

The High Court of Rajasthan Single Bench of Justice Munnuri Laxman held that drop-in fuel qualifies as a petroleum product under the relevant statutory definitions and is consequently an essential commodity. The Court dismissed two writ petitions seeking relief against seizure and confiscation of drop-in fuel and related conveyances. The petitioners had argued that drop-in fuel, being non-fossil in origin, fell outside the regulatory purview of the Essential Commodities Act, 1955 and the Motor Spirit and High-Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005. The Court found this contention to be without merit, concluding that the chemical nature of the fuel, rather than its source, determined its classification.

Justice Laxman upheld the jurisdiction of authorities to seize and confiscate drop-in fuel sold without requisite authorization, holding that such sale constituted "unauthorized sale" and attracted the consequences under the Control Order and the Essential Commodities Act. The petitions were held to be misconceived. The Court held that the petitioners' failure to obtain prior approval from the Central Government rendered their retail operations impermissible, and accordingly, the writ petitions were dismissed.

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The petitioners in the consolidated writ petitions were M/s. My Own Eco Energy Private Limited and M/s. Shri Bhuriya Baba Fuels. The first petitioner is a company engaged in the manufacture, distribution, and retail of Indizel, described as a Euro-6 compliant drop-in bio-fuel. The second petitioner is a fuel station dealer selling the said fuel through retail outlets.

The core issue before the Court revolved around whether drop-in fuel is subject to regulation under the Essential Commodities Act, 1955 and the Control Order, 2005. The petitioners contended that drop-in fuel is a non-fossil, bio-derived product and, therefore, does not qualify as an essential commodity. They also submitted that drop-in fuel is not covered under the definition of "petroleum" as per the Petroleum and Natural Gas Rules, 1959. Hence, according to them, the regulatory framework underpinning the seizure and confiscation actions initiated against them had no jurisdictional basis.

The petitioners challenged specific actions taken by authorities: the seizure of fuel and vehicles used for its transportation and sale, and confiscation orders issued by the Additional District Collector. The petitioners argued that such actions were based on an erroneous application of laws applicable only to fossil-based petroleum products.

According to the petitioners, Indizel is manufactured through a process that does not involve crude mineral oil, making it chemically distinct from petroleum products listed in the Schedule to the Essential Commodities Act. The petitioners also cited regulatory developments, such as the amendment to Regulation 6A of the Control Order, which they contended allowed for direct sales of bio-fuel under certain circumstances.

The petitioners relied on orders from the Jaipur Bench of the Rajasthan High Court and the Bombay High Court, which, they asserted, restrained coercive actions by authorities in similar matters. They also referred to the National Policy on Bio-fuels, 2018, under which Indizel is said to have been launched. They argued that the policy framework endorsed direct sale through authorized outlets and that their operations complied with those standards.

The respondents—Union of India, various departments of the Government of Rajasthan, and district enforcement authorities—opposed the petitions. They argued that drop-in fuel is chemically a hydrocarbon liquid and thus fits the statutory definition of "petroleum" as provided in the Petroleum Act, 1934. They submitted that the Control Order adopted the definition of petroleum from the 1934 Act and not from the Petroleum and Natural Gas Rules, 1959.

The respondents stated that drop-in fuel is used in internal combustion engines, making it functionally and chemically equivalent to motor spirit. Therefore, its sale was subject to the Control Order. They argued that drop-in fuel fell under Entry 5 of the Schedule to the Essential Commodities Act as a petroleum product.

The authorities contended that the petitioners had neither obtained permission from the Central Government nor complied with the conditions laid down in the Control Order. They stated that Regulation 4 of the Control Order prohibits sale of motor spirit by anyone other than those authorized by the Central Government. Similarly, Regulation 5 sets out the procedure for obtaining such authorization.

Further, they submitted that even under Regulation 6A—inserted via an amendment in 2017—direct sale of bio-diesel (B-100) is permitted only upon meeting blending standards set by the Bureau of Indian Standards and obtaining the necessary authorization. According to the respondents, the petitioners' operations lacked such authorization and therefore constituted an "unauthorized sale."

The respondents asserted that the confiscation and seizure were triggered by violations of the Control Order and constituted lawful administrative action under Section 6A of the Essential Commodities Act. They submitted that drop-in fuel's classification as a hydrocarbon oil rendered it indistinguishable from motor spirit for the purposes of regulatory control.

The Court began by noting the central issue: "whether drop-in fuels fall under the category of essential commodities and, if so, whether the Control Order, 2005 is applicable to the fuel manufactured by the petitioner-Company and marketed through various firms as dealers."

On the statutory scheme, the Court stated: "A reading of Section 2A of the Essential Commodities Act it makes clear that any commodity specified in the Schedule is treated as an essential commodity." Entry 5 of the Schedule explicitly mentions "petroleum and petroleum products" as essential commodities.

Regarding the definitions, the Court relied on the Petroleum Act, 1934, which defines petroleum as "any liquid hydrocarbon or mixture of hydrocarbons, and any inflammable mixture (liquid, viscous or solid) containing any liquid hydrocarbon." The Control Order, 2005, in turn, defines "motor spirit" as "any hydrocarbon oil, excluding crude mineral oil, which meets the requirements of Bureau of Indian Standards specification number IS 2796."

The Court recorded that "hydrocarbons are organic compounds made up of only hydrogen and carbon atoms" and can be "components of fossil fuels, bio-fuels, and many plastics." It further noted that "drop-in fuels are liquid fuels sourced from biomass or other reliable sources that can be used as direct substitutes for conventional petroleum-based fuels like gasoline and diesel."

On the chemical equivalence of drop-in fuel, the Court stated: "Both conventional fuels and non-conventional fuels like drop-in fuel contain organic compounds made up of hydrogen and carbon. Drop-in fuels also fall within the definition of petroleum and petroleum products as defined under the Petroleum Act and the Control Order, 2005."

Dismissing the petitioners' reliance on the Petroleum and Natural Gas Rules, the Court observed: "The definition adopted under those Rules was not adopted in the Control Order, 2005. On the contrary, the definition adopted in the Petroleum Act was incorporated into the Control Order."

The Court found that: "The classification is based on the chemical composition of hydrocarbons, not on the source from which such hydrocarbon compounds are derived." Consequently, "the argument of the learned counsel for the petitioners that drop-in fuel is not an essential commodity and is not required to comply with the provisions of the Control Order, 2005, has no merit and is hereby rejected."

Addressing the issue of authorization, the Court stated: "The sale of Motor Spirit, as per Regulations 4 and 5, can only be carried out after obtaining appropriate authorization from the Central Government." It also recorded that "any act without authorization attracts the actions contemplated under the Control Order, 2005, as well as the provisions of the Essential Commodities Act."

Regarding the specific facts of the case, the Court held: "The petitioner-Company does not hold a license to sell directly to consumers, and its action of selling drop-in fuel directly to consumers through retail outlets amounts to non-compliance with Regulations 3, 4, and 5 of the Control Order, 2005."

On the legality of the confiscation action, the Court stated: "The impugned confiscation proceedings clearly reflect that the authorities found the drop-in fuels did not meet the prescribed criteria and suspected adulteration. Such action cannot be said to be without jurisdiction."

The Court clarified that prior judicial decisions cited by the petitioners were not applicable to the current case, noting: "The issue in the present case is different, and it is not the case of the respondents that direct sale cannot be done. Direct sale... can only be carried out after obtaining authorization from the Central Government, as required under Regulations 4 and 5."4

The Court conclusively held: "This Court finds that the writ petitions are misconceived and they are liable to be dismissed."

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It recorded that "the argument of the learned counsel for the petitioners that drop-in fuel is not an essential commodity and is not required to comply with the provisions of the Control Order, 2005, has no merit and is hereby rejected."

Accordingly, the Court ordered that "both the writ petitions are dismissed." It further stated: "In the circumstances, no order as to costs."

All pending interlocutory applications were also disposed of, with the Court recording: "Pending interlocutory applications, if any, shall stand disposed of."

Advocates Representing the Parties:

For the Petitioners: Ms. Simran Mehta, Advocate; Mr. Falgun Buch, Advocate; Mr. Gopal Krishna Chhangani, Advocate; Mr. Suniel Purohit, Advocate

For the Respondents: Mr. Nitesh Mathur, Additional Government Counsel

Case Title: M/s. My Own Eco Energy Private Limited v. Union of India & Ors. (Connected with M/s. Shri Bhuriya Baba Fuels v. Union of India & Ors.)

Neutral Citation: 2025: RJ-JD:28349

Case Number: S.B. Civil Writ Petition No. 6796/2025 and S.B. Civil Writ Petition No. 1031/2025

Bench: Justice Munnuri Laxman