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Legislations, The Law

The Coffee Act, 1942

This article provides a brief overview of the regulations on the coffee industry in India. The Coffee Act, 1942 provides for constitution of a board, regulation on sale, produce, registration, fixation of sale along with penalties for non-compliance with the provisions.

By: Meghna Rana

Board

  • As per section 4, the Indian Coffee Market Expansion Board is constituted mainly for the implementation of the act. 
  • Not more than 33 members– a chairman, three Members of Parliament, and remaining members maybe persons representing the coffee industry, interest of labor or consumer, etc.  
  • This board exists with perpetual succession and the common seal making it a separate entity gives the power to acquire and hold property as well as sue and be sued in its name.
  • The accounts of the board including the funds, their expenditure, etc. are liable for inspection under section 45. 

The high court of Karnataka1, held that this board comes within the ambit of Article 12 of the constitution, so a petition filed under section 226 in cases of exercising statutory powers.

Funds Maintained By The Board

There are two types of funds:

  • The General Fund includes all the fees collected by the board. It is used to be spent on certain costs and expenses under section 31(2).
  • Pool Fund includes the proceeds from the sale of coffee by the board from the surplus pool. After spending for specific purposes under section 32(2), the remaining amount is to be transferred to the general fund. 

Ex-gratia payments may also be made for the employees engaged in storing and marketing coffee out of the pool fund.2

Registration Of Owners Of Coffee Estates

  • As per section 14, all the owners of coffee plants have to register their estate within one month of becoming the owner. 
  • The registration continues to be force unless and until it is canceled by the registering officer. 
  • If the owner fails to register then the punishment of a fine up to ₹1000 besides ₹500 per month of non-registration may be imposed under section 35.

Sale Of Coffee

  • If uncured coffee is to be sold then as per section 24 a license has to be obtained from the board but the sale should be under the free sale quota3 fixed for the estate. 

The free sale quota as per section 22 is fifty percent of the probable total production of the estate in a year which may also be changed.

  • As per section 25, the product above the free sale quota has to be delivered to the board which is added to the surplus pool, but the exemption is given if the free sale quota isn’t fixed or the production quantity is small. 

If the owner does not deliver the surplus to the board, then it may be seized by an officer with a warrant under section 38-B. If cured4 coffee is being sold then the curing establishment5 has to obtain a license under section 28.

Endnotes:

  1. Ramesh Enterprises v Coffee Board 1984 SCC OnLine Kar 186
  2. Coffee Board Employees’ Association v A.C. Shiva Gowda & Ors. (1992) 1 SCC 500
  3. Section 3(h)-  Act 23 of 1994, w.e.f. 14-1-1994: “free sale quota means that portion, stated in terms of bulk or weight, of the whole of the coffee produced by the estate in the year, which a registered estate is permitted under this Act to sell.”
  4. Section 3(d) of Act 7 of 1942: “curing means the application to raw coffee of mechanical processes other than pulping for the purpose of preparing it for marketing.”
  5. Section 3(e) of Act 7 of 1942: “curing establishment means any place to which raw coffee is sent by a registered owner for curing, and includes any estate which the Board may declare to be a curing establishment for the purposes of this Act.”

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