The hoarding of concentrated oxygen cylinders has been identified as one of the key contributors to the “oxygen crisis” in India's second COVID-19 surge. The alleged racketeering involves procuring oxygen from abroad, waiting for demand to shoot up by holding back the supply, and then selling it to the public at much higher rates.
The Supreme Court, as well as high courts across the country have condemned the “profit-making” attitude of the hoarders at a time of crisis. The courts have been pushing governments to regulate or control oxygen pricing either under the Disaster Management Act or the Essential Commodities Act.
Public outcry and judicial scrutiny demanding strict action have led to raids, confiscations, and promises to “heavily penalise” the “wrong-doers”. But how is the government actually planning to do that? Can a businessman be punished for maximising profit? In the absence of any capped price for oxygen cylinders, can the government proceed towards prosecuting such hoarders?
Where is the Offence?
Subjecting “hoarders of oxygen” to criminal punishment would first require oxygen to be recognised as an essential commodity. The Essential Commodities Act, 1955, allows the government to designate any commodity as “essential” to not only control its price, but also to regulate its sale, storage, distribution, and acquisition.
A person committing an offence under the Essential Commodities Act can be punished with seven years of imprisonment, or fine, or both. The government can also proceed against such a person and the commodity hoarded by him under the Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act. But for these provisions to be invoked, the good must again, first be classified as an essential commodity.
Despite the acute shortage of concentrated oxygen in Delhi, it is still not explicitly notified as an essential commodity under the Essential Commodities Act. Even the Delhi High Court on 6 May had pulled up both the central government and the Delhi government on this issue. “Why aren’t you classifying medical oxygen as an essential commodity,” the court had asked.
At the time of publishing this article, a week after the HC's rap on the knuckles, medical oxygen has still not been designated as an essential commodity,
On 29 June 2020, the National Pharmaceutical Pricing Authority (NPPA) had issued an Office Memorandum (OM) to regulate the price of Pulse Oximeters and Oxygen concentrators. Under that OM, manufacturers and importers were directed that the price of medical devices can’t be raised by more than 10 percent in a year.
On 8 May, a district court in Dwarka, while examining a case of seizure of oxygen cylinders for allegedly hoarding and selling at exorbitant prices, noted that the NPPA’s OM dated 29 June 2020 “does not, in any case, declare Oxygen Concentrators to be Essential Commodity.”
The court further highlighted that the Investigating Officer failed to produce before the court any notification that would allow invoking Sections 3 and 7 of the Essential Commodities Act.
"You Cannot Hide Your Failures"
While the government completely ignored the need to notify concentrated oxygen cylinders as an essential commodity, it was forced from all corners of public and judicial fora to respond to rising cases of hoarding of oxygen cylinders.
The Delhi government responded to the public pressure by making arrests and registering FIRs, without first updating the law to be effective in the present circumstances.
While hearing a case on alleged hoarding of oxygen cylinders, Chief Metropolitan Magistrate Arun Kumar Garg rapped the Delhi government for its misplaced approach towards prosecuting alleged hoarders.
“You cannot first penalise people and then make a law. Can you make them guilty for something which is not an offence just to remain in good books? There is a vacuum. Just for hiding your failures, you can’t run behind people. You can’t create terror.”Arun Kumar Garg, Chief Metropolitan Magistrate
The court pulled up the Delhi government for not creating a law to address oxygen hoarding. The court noted that the market forces of demand and supply would kick in when a government fails to regulate prices. Asking the government as to whether doing business is an offence, the court said:
“There is no law, there is a vacuum, and you don’t want to create a law. You want to abrogate the responsibility. A businessman suddenly seizes such an opportunity. Just because you have to hide your faults, you cannot curtail the fundamental rights of the people.”Arun Kumar Garg, Chief Metropolitan Magistrate
Despite not having clear legal provisions to deal with oxygen cylinders, the Delhi Police is making arrests before conducting investigations. This impinges upon the principles of fair investigation and shows the punitive desperation and clear lack of strategy of the investigating agency.
How to Prosecute Now?
In its failure to successfully invoke the Essential Commodities Act against the alleged oxygen hoarders, the Delhi government is left with provisions under the Epidemics Diseases Act, and Sections 188 and 420 of the Indian Penal Code.
Both the offence under Epidemics Diseases Act and Section 188 of the IPC are bailable offences and lack teeth to effectively tackle the severity of the problem. Even the punishment for these offences is way less compared to that for an offence under Essential Commodities Act. On the other hand, Section 420 of the IPC, which pertains to cheating, would be very hard to prove before the court.
To prove the offence of cheating, the prosecution will have to show that the people who were selling oxygen at higher rates were making a false promise of some “cure” or “higher degree of medical assistance” for charging inflated prices.
However, the cases so far have shown that those selling oxygen at higher prices had purchased the oxygen legally, paying the due custom duty and GST, and did not make any false inducement for an extraordinary cure to justify inflated prices.
The tragic irony is that precious lives have indeed been lost due 'oxygen hoarding', with several families either not being able to access oxygen, or not being able to afford the inflated prices being demanded by the 'hoarders'. And yet, such families may be denied justice, simply because the government was caught napping, again.
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