Citation Codes

Equivalent Citations

citation codes

Case Number

Cr. W.J.C No. 152 of 1976

Judges

Shambhu Prasad Singh
S.K Jha, JJ.

Acts

ESSENTIAL COMMODITIES ACT 1955
rule 40 of the Central Excise Rules;

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Smart Summary

Judgment Summary — Confiscation proceeding under Section 6A of the Essential Commodities Act, 1955

Factual and Procedural Background

This is a criminal writ application under Articles 226 and 227 of the Constitution of India, filed by Mr. Balbhadra Prasad Singh and Mr. N.K. Agrawal seeking quashing of a confiscation proceeding under Section 6A of the Essential Commodities Act, 1955. The confiscation proceeding is Confiscation Case No. 8 of 1976 pending before the District Magistrate of Gaya (respondent no. 2), who had issued a show cause notice asking why sugar weighing "36.26.000" quintals seized in a raid conducted on 11 June 1976 by respondent no. 3 should not be confiscated.

After the raid, respondent no. 3 sent a written report (Annexure '1') to the officer-in-charge of Kotwali police station, Gaya, which led to an FIR and registration of a case. Annexure '1' as originally filed was incomplete; the State later filed the omitted portion as Annexure 'A' to its counter-affidavit. The combined report alleges that the petitioner, a licensee under the Bihar Sugar Dealers Licensing Order, 1973, had been allotted and had lifted 134 quintals of sugar but had recorded only 124 quintals in his stock register. The authorities alleged that 10 quintals had been sold in the black market and therefore were not available at the premises during search and seizure. The quantity actually seized at the premises matched the balance shown in the stock register.

One contention initially raised — that no offence was committed because the stock seized tallied with the stock register — was not pressed after the State filed Annexure 'A'. The petitioner therefore sought quashing of the confiscation proceedings and argued various points of law challenging the jurisdiction and propriety of the confiscation action under Section 6A.

Legal Issues Presented

Whether confiscation under Section 6A can be ordered only in respect of that part of the essential commodity in respect of which an offence is committed, or whether the Collector may order confiscation of the essential commodity so seized in general.
Whether the search and seizure were lawful when the officer conducting the search did not record in writing that he had reason to believe a contravention had been, was being, or was about to be committed.
Whether proceedings for confiscation under Section 6A are vitiated if the seized goods are not produced before the Collector before initiating confiscation proceedings.
Whether sugar falls outside the definition of "essential commodity" for the purposes of Section 6A and therefore confiscation proceedings concerning sugar are without jurisdiction.
Whether the seized goods should be released to the petitioner on his furnishing security to the Collector pending the final decision in the criminal case.

Arguments of the Parties

Petitioner's Arguments

Confiscation, if any, could only be ordered in respect of the 10 quintals that were not entered in the stock register and which, according to the State, had already been sold in the black market and were not available for seizure.
Only the offending goods (i.e., the specific quantity in respect of which an offence is committed) can be confiscated; goods lawfully held or which matched the stock register could not be confiscated as a penalty.
The search and seizure were unlawful because the officer did not record that he had reason to believe there had been a contravention, as envisaged by Section 3 and the licensing order's search provisions.
The confiscation proceeding is without jurisdiction because the seized goods were not produced before the Collector before the proceeding was started.
Sugar is not an "essential commodity" as defined by the Act, and thus Section 6A does not apply to confiscation of sugar.
At minimum, the petitioner sought release of the goods on furnishing security to the Collector, to remain so released pending the outcome of the criminal prosecution.

Respondent / State's Position (as reflected in the record)

The State filed the omitted portion of the raid report as Annexure 'A', which alleged that the petitioner had been allotted and lifted 134 quintals but recorded only 124 quintals, implying a shortage of 10 quintals sold on the black market.
The State's factual case was that the quantity found and seized at the premises corresponded to the balance shown in the stock register, and the broader charge related to contravention of licensing conditions (failure to maintain correct accounts).
The State did not concede the legal points raised by the petitioner; instead the record reflects that the State considered confiscation proceedings to be maintainable under Section 6A on the basis of the alleged contravention.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Krishna Prasad v. State of Bihar (1975, Bihar Bar Council Journal 608)	Relied upon by petitioner to support the contention that goods not shown as excess in the stock register should be released; contained observations that contravention occurred only in respect of goods not entered in the stock register.	The Court held the case was not an authority for the proposition that only the offending part of the commodity can be confiscated. The Court declined to accept the observed statement (that contravention related only to unentered goods) as a correct statement of law and distinguished the case on facts (release in that case was based on a concession by State counsel).
Motibhai Fulabhai Patel and Co. v. R. Prasad, Collector of Central Excise, Baroda (A.I.R. 1970 Supreme Court 829)	Considered rule 40 of the Central Excise Rules which permits confiscation of goods in respect of which duty is not paid (and thus precludes confiscation of goods in respect of which duty is paid).	The Court observed that the Motibhai decision on Central Excise rule cannot be taken as authority for limiting confiscation under Section 6A of the Essential Commodities Act to only those goods specifically shown to be in contravention (i.e., it does not support the petitioner's narrow interpretation of Section 6A).
Shambhu Prasad Sah v. The State of Bihar (1976 Bihar Bar Council Journal 444)	Discussed when the Collector can be regarded as "seized with the matter" such that the court's jurisdiction to entertain an application for release is affected; enumerated various stages of a Section 6A proceeding including production of seized goods.	The Court held that while that decision enumerated stages of a proceeding (including production), it did not establish that failure to produce the goods before the Collector necessarily renders confiscation proceedings without jurisdiction.

Court's Reasoning and Analysis

The Court proceeded methodically from statutory text and licensing conditions to address each contention.

Textual interpretation of Section 6A: The Court quoted Section 6A and read the provision plainly. It concluded that the section permits the Collector, if satisfied that there has been a contravention of an order under Section 3, to order confiscation of "the essential commodity so seized" without any textual limitation to only that portion in respect of which a specific offence is proved. The Court interpreted the phrase "in relation thereto" as referring to the essential commodity which is the subject matter of the Section 3 order, not as a limitation to the exact portion that was directly the subject of a proved offence.

On the argument that only offending goods can be confiscated: The Court rejected the petitioner's narrow construction. It reasoned that if only the specific goods in respect of which an offence is committed could be confiscated, black marketing by a licensee would render confiscation impossible because the offending goods would typically no longer be available for seizure. The Court found such an interpretation absurd and contrary to legislative purpose.

On the effect of licensing conditions and account-keeping: The Court noted that licences under the Bihar Dealers' Licensing Order require maintenance of daily registers of receipts, deliveries and opening/closing stock, with the burden on the licensee to prove reasonable cause for non-compliance. Failure to maintain correct accounts constitutes contravention of a condition of the licence and of the order itself, and thus the contravention can be in respect of the entire stock and not merely the quantity omitted from the register.

On search and seizure (Section 3 reason-to-believe): Although the officer conducting the search did not record in writing that he had reason to believe a contravention had occurred, the Court held that on the facts of the case — where allegations of incorrect account-keeping were not entirely baseless and the State supplemented the report with Annexure 'A' — the absence of a written record of the officer's reasons did not render the search and seizure illegal.

On production of seized goods before the Collector: The Court observed that Section 6A states the seized goods "may be produced" before the Collector; it does not make production a mandatory precondition to initiating confiscation proceedings. The Court therefore found no jurisdictional defect merely because proceedings were started before formal production of the goods.

On whether sugar is an "essential commodity": The Court rejected the petitioner's argument that sugar is not an essential commodity. It explained that the statutory definition of "essential commodity" includes foodstuffs and that sugar is undeniably a foodstuff; a separate definition of "sugar" in the Act does not exclude it from being an essential commodity.

On release on security pending criminal proceedings: The Court held that permitting release on security would defeat the purpose of Section 6A by allowing confiscation proceedings to remain dormant until criminal proceedings concluded. The remedy for an acquittal would be return of the goods or their value; that possibility does not justify suspending confiscation proceedings by release on security in the circumstances of the case.

Holding and Implications

Holding: The petition was dismissed. The Court held that the confiscation proceedings under Section 6A were within jurisdiction and not liable to be quashed on the grounds advanced by the petitioner. In the words of the judgment, the "application fails and is dismissed."

Implications:

The direct effect is that the confiscation proceeding (Confiscation Case No. 8 of 1976) before the District Magistrate of Gaya remains undisturbed and the petitioner's request for release of the seized sugar on security pending criminal proceedings was refused.
The Court, by its textual reading of Section 6A and its application to licensing requirements, rejected a narrow rule that only the exact portion of goods in respect of which an offence is proved may be confiscated. The opinion emphasized that failure to maintain statutory accounts constitutes contravention of the licence and can render the entire seized stock liable to confiscation.
This opinion does not identify or assert any broader new precedent beyond the Court's interpretation and application of Section 6A and the licensing provisions; the immediate consequence is limited to denial of the relief sought by the petitioner in this proceeding.

Disposition: Application dismissed.

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Narendra Kumar v. The State Of Bihar

Shambhu Prasad Singh & S.K Jha, JJ.:— In this criminal writ application under Articles 226 and 227 of the Constitution of India, Mr. Balbhadra Prasad Singh and Mr. N.K Agrawal, who has followed him, have raised some interesting questions of law. The application has been filed for quashing of the confiscation proceeding under Section 6A of the Essential Commodities Act, 1955 (hereinafter referred to as ‘the Act’), in Confiscation case no. 8 of 1976, pending before the District Magistrate of Gaya, respondent no. 2, who has issued a show cause notice to the petitioner, why sugar weighing 36.26.000 quintals seized in course of a raid conducted on 11th of June, 1976, by respondent no. 3, be not confiscated.

2. It appears that respondent no. 3, after conducting the raid sent a written report (Annexure ‘1’) to the officer in-charge of Kotwali police station, Gaya, on the basis of which a formal F.I.R has been drawn up and a case registered. Annexure ‘1’ does not contain the complete report of respondent no. 3, and that portion of it which has been left out, has been filed on behalf of the State as Annexure ‘A’ to their counter-affidavit. The report read as a whole shows that the petitioner, who is a licensee under the Bihar Sugar Dealers Licensing Order, 1973, was allotted and lifted 134 quintals of sugar, but entered only 124 quintals in his stock register. According to the authorities, the petitioner has sold in black market 10 quintals of sugar, which he has not entered in his stock register and which was also not available in his business premises at the time of the search and seizure. What was seized was the quantity of sugar, which was found in the business premises of the petitioner at the time of the search and which tallied with the balance shown in the stock register.

3. A point has been taken in the petition that in view of the fact that the stock of sugar found in the business premises of the petitioner tallied with the balance of sugar as shown in the stock register, the petitioner had committed no offence. However, in view of the filing of Annexure ‘A’ by the State this point has not been pressed.

4. It has been contended on behalf of the petitioner in the first instance that confiscation if at all could be ordered only in respect of the 10 quintals of sugar, which was not found entered in the stock register, and as according to the case of the State itself that has already been sold in the black market and not available for seizure, the sugar, which was seized and in respect of which no offence was committed could not be confiscated. According to learned counsel for the petitioner, it is the offending goods which can be confiscated and no other goods as a matter of penalty. In order to appreciate this contention, it is necessary to quote Section 6A of the Act. The section reads as follows:—

“Where any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto, it may be produced, without any unreasonable delay, before the Collector of the district or the Presidency town in which such essential commodity is seized and whether or not a prosecution is Instituted for the contravention of such order, the collector, if satisfied that there has been a contravention of the order, may order confiscation of—

“(a) the essential commodity so seized;

(b) any package, covering or receptable in which such essential commodity is found, and

Provided that without prejudice to any action which may be taken under any other provision of this Act, no food grains or edible oilseeds seized in pursuance of an order made under Section 3 in relation thereto from a producer shall, if the seized foodgrains or edible oilseeds have been produced by him, be confiscated under this section.

5. A plain reading of the section does not show that only that part of the essential commodity in respect of which the offence is committed can be confiscated. When any essential commodity is seized and the Collector is satisfied that there has been a contravention of the order i.e the order made under Section 3 in relation to the essential commodity, he may order confiscation of the essential commodity so seized. The expression “in relation thereto”, in our opinion, means in relation to the essential commodity which is the subject matter of the order under Section 3, it does not and cannot mean only that part of the essential commodity in respect of which an offence is committed. If that would have been the intention of the framers of the Act, they would have used the expression “in respect of which an offence is committed” somewhere in the section.

6. Reliance has been placed on behalf of the petitioner on a decision of a learned single Judge of this court in the case of (1) Krishna Prasad v. State of Bihar (1975, Bihar Bar Council Journal, 608). In that case certain goods which were not shown as excess in the stock register were ordered to be released on the basis of concession made by learned counsel appearing for the State. The case, therefore, is not an authority for the proposition that part of the essential commodity in respect of which an offence is not committed cannot be confiscated. However, our attention was drawn to certain observations made in that judgment, where it was emphasised that contravention of the order concerned had taken place only in respect of such goods which were not entered in the stock register. We are not inclined to accept that observation as correct statement of law. Orders issued under Section 3 of the Act invariably provide that each dealer should obtain a licence and no holder of a licence issued under the order or his agent or servant or any person acting on his behalf shall contravene any of the terms and conditions of the licence. The forms of licences appended to the order provide that a licensee shall maintain a register of daily accounts showing correctly the opening stock on each day; the quantities received on each day showing the place from where and the source from which received; the quantities delivered or otherwise removed on each day showing the places of destination; and the closing stock on each day; and that he should complete his accounts for each day on the day to which they relate, unless prevented by reasonable cause the burden of proving which shall be upon him. Thus the licensees are required to maintain correct account in respect of matters referred to above. In the Instant case, we are concerned with the Bihar Dealers' Licensing Order, 1963, clause 3 of which provides for licensing of dealers, Clause 7 for contravention of conditions of licence and Form ‘B’ of the schedule to the Order prescribed the form of the licence with terms and conditions thereof. In our opinion, a licensee who does not maintain correct account of the stocks commits contravention of one of the conditions of the lincence and thus also of the order in respect of the entire stock and not only in respect of the quantity, which is not entered in the stock register. He contravenes the order by not maintaining correct account and thus makes him self liable to be punished under Section 7 of the Act.

7. In the said decision of Krishna Prasad v. State of Bihar reference was made to a decision of the Supreme Court in the case of (2) Motibhai Fulabhai Patel and Co. v. R. Prasad, Collector of Central Excise, Baroda (A.I.R 1970 Supreme Court 829) learned Judges of the Supreme Court in that case were considering rule 40 of the Central Excise Rules; which provides confiscation of goods in respect of which duty is not paid. Obviously, under that rule goods in respect of which duty is paid cannot be confiscated and, therefore, that decision of the Supreme Court cannot be an authority for the proposition that under Section 6A of the Act only such goods can be coufiscated which are not entered in the stock register as observed in the said case of Krishna Prasad v. State of Bihar, by the learned single Judge of this Court.

8. Section 3 of the Act, Inter alia, lays down that orders under that section may provide for search and seizure of any article in respect of which the person conducting the search or making the seizure has reason to believe that contravention of the order has been or is being or is about to be committed. Clause 9 of the order provides for search and seizure. It has been pointed out by learned counsel appearing on behalf of the petitioner that there is nothing on the record to indicate that the officer conducting the search and seizure had reason to Believe that there was any contravention of the provisions of this order or of the conditions of any licence issued thereunder. True it is that the officer conducting the search and making the seizure has not recorded that he had reasons for such a belief: but on the facts of the instant case when we find that the allegation that correct accounts were not maintained by the petitioner, cannot be said to be entirely baseless, the search and seizure cannot be held to be illegal on the ground that the authority concerned has not put in writing that he had reasons for such a belief.

9. In the instant case the confiscation proceeding is only in respect of the essential commodities seized and on a reading of the plain language of Section 6A of the Act, for the reasons stated earlier, in our opinion, there can be no doubt that the proceeding is not without jurisdiction and not liable to be quashed on that account. If the contention of learned counsel that a proceeding for confiscation can be started only in respect of such part of the goods in respect of which an offence is committed is to be accepted, then in case of black marketing by a licensee there can be no confiscation proceeding; for the goods in respect of which the offence is committed will not be available with him for seizure or confiscation. Acceptance of such a contention will lead to absurd results, and such a contention, therefore, cannot be accepted.

10. It was further argued on behalf of the petitioner that as the seized goods were not produced before the Collector the proceeding for confiscation was without jurisdiction. Section 6A of the Act merely lays down that the goods seized ‘may be produced.’ It does not lay down that ‘it must be produced’ before a proceeding for confiscation is started. We do not think, therefore, that the proceeding is vitiated, for it has been started before the production of the goods. In this connection our attention has been drawn to another decision of a learned single Judge of this Court in the case of (3) Shambhu Prasad Sah v. The State of Bihar (1976 Bihar Bar Council Journal 444). That decision deals with the question when the Collecter can be held to be “seized with the matter” so as to bar the jurisdiction of the court under the Essential Commodities (Bihar Third amendment) Ordinance No. 123 of 1976 to entertain an application for release of the goods. It enumerates various stages of the proceedings as envisaged under Section 6A of the Act. According to us, merely because it states that production of the seized goods is also one of the stages of the proceeding, it does not lay down that the proceeding will be without jurisdiction, if it is started unless the seized goods are produced.

11. Learned, counsel appearing on behalf of the petitioner has also contended that entire confiscation proceeding is without jurisdiction as sugar is not an essential commodity. In support of this contention he has placed reliance on the definition of “essential commodity” in Section 2(a) of the Act and that of ‘Sugar’ in Section 2(e) of the Act. According to learned counsel “essential commodity” and “sugar” are defined separately, sugar is not an essential commodity. We do not find it possible to accept this contention. According to definition “essential commodity” includes foodstuffs and sugar is undoubtedly a foodstuff. Simply because sugar is defined separately in the Act, it does not follow that it is not an essential commodity.

12. Lastly, it has been urged by learned counsel for the petitioner that at any rate the goods should be released on the petitioner's furnishing security to the satisfaction of the Collector and they should remain so released till the final decision in the criminal case pending against the petitioner. Passing of such an order, will vitiate the entire purpose for which Section 6A has been enacted. It will lead to the confiscation proceeding remaining dormant until the decision of the criminal case. If the petitioner is acquitted of the criminal charge, then certainly he will be entitled to the return of sugar or its price. On the facts and in the circumstances of the case we do not think that the seized goods should be released to the petitioner on furnishing security.

13. In the result, the application fails and is dismissed.

Application dismissed

Narendra Kumar v. The State Of Bihar

Judgment Summary — Confiscation proceeding under Section 6A of the Essential Commodities Act, 1955

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Respondent / State's Position (as reflected in the record)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Narendra Kumar v. The State Of Bihar

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