Login
  • Bookmark
  • PDF
  • Share
  • CaseIQ

M/S. Mewalal Kapildeo Prasad v. The State Of Bihar

Patna High Court
Jan 20, 1978
Important Paras
Please sign up to view Important Paras.
Smart Summary (Beta)

Judgment Summary — Nagendra Pd. Singh, J.

Factual and Procedural Background

This writ application was filed by a petitioner-firm seeking quashing of an order dated 3 May 1975 passed by the District Magistrate, Gopalganj under Section 6A of the Essential Commodities Act, 1955. By that order 189 tins (16 kg each) and 60 tins (4 kg each) of mustard oil found on the petitioner's premises were confiscated and the Sub-divisional Officer was directed to dispose of the articles through the public distribution system and deposit sale proceeds per Government instructions (Annexure 2). An appeal to the Commissioner was dismissed (Annexure 1).

The petitioner contended it had applied for a wholesale dealer's licence on 18 December 1973, the Sub-divisional Magistrate approved the proposal “as proposed” on 15 January 1974, and the petitioner deposited licence fee of Rs. 2,000 by chalan. Although the actual licence was not received, the petitioner continued wholesale edible oil business under a bona fide belief licence would follow; it avers routine inspections occurred, fortnightly stock returns were filed and road permits from the Sales-tax Department were obtained. On 30 October 1974 a raid was conducted, the stock was seized, and both a criminal prosecution and confiscation proceedings were initiated alleging contravention of the Bihar Edible Oil Wholesale Dealer's Licensing Order, 1966.

Confiscation proceedings under Section 6A followed; the petitioner filed a show-cause mentioning its licence application, deposit of fee, returns and road permits and asserted absence of mens rea. The District Magistrate and the Commissioner rejected this defence and upheld confiscation; the petitioner challenged those orders by writ.

Legal Issues Presented

  1. Whether, for the purposes of confiscation under Section 6A of the Essential Commodities Act, 1955, it must be established that the contravention of an order made under Section 3 was intentional (i.e., required mens rea), or whether confiscation can follow even for unintentional contraventions.
  2. Whether the petitioner, who alleges a bona fide belief based on a pending licence application, deposit of licence fee and administrative dealings (inspections, returns, permits), can be held to have contravened the Licensing Order so as to justify confiscation.
  3. Whether, given (i) the amendment history of Section 7 (including the 1967 amendment and its later repeal/restoration by the 1974 amendments/ordinance), the law at the time of the raid (30 October 1974) required proof of mens rea before imposing confiscation under Section 6A.
  4. The direct remedial question: if the confiscation order is quashed and the articles have already been sold, whether the petitioner is entitled to the sale proceeds with interest and on what statutory basis.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner applied for a wholesale dealer's licence on 18.12.1973 and the Sub-divisional Magistrate approved the proposal on 15.1.1974 (“as proposed”).
  • The petitioner deposited licence fee of Rs. 2,000 by chalan and began conducting wholesale business in edible oil under a bona fide belief that the licence would be forwarded.
  • Authorities inspected the petitioner’s records; fortnightly stock returns were filed and checked; road permits were obtained from the Sales-tax Department.
  • When the raid occurred on 30.10.1974 the petitioner had no mens rea to contravene the Licensing Order; any contravention, if at all, was unintentional and based on a reasonable belief that the licence had been granted.

Respondents' Arguments

  • The District Magistrate and the Commissioner treated the 1967 amendment to Section 7 (Essential Commodities (Second Amendment) Act, 1967 — Act 36 of 1967) as removing the requirement of mens rea by stating contravention would be punishable “whether knowingly, intentionally or otherwise”; on that basis they rejected the petitioner’s bona fide defence and upheld confiscation.
  • In support of the approach rejecting the petitioner’s defence, counsel for the State drew attention to Sopana Trimbak Wani v. State of Maharashtra and the authorities relied upon by the respondents including a single judge decision (Indira Devi v. State of Bihar), arguing that the petitioner’s claimed bona fide belief was not a valid defence in the circumstances relied upon by the State.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Nathulal v. State of Madhya Pradesh (AIR 1966 S.C. 43) Held that in the pre-1967 formulation of Section 7 mens rea was an essential ingredient; absence of mens rea required acquittal where not proved. The Court relied on this decision to show that when Section 7 previously omitted the words “whether knowingly, intentionally or otherwise” mens rea was required; the Court held that after the 1974 legislative restoration the Nathulal principle again applied and mens rea had to be established.
Sopana Trimbak Wani v. State of Maharashtra (1977 Criminal Law Journal 337) Cited by State counsel for the proposition that bona fide belief may not always exculpate an accused where permits/authorisations did not in fact permit the challenged act. The Court considered this authority but distinguished it on facts: in Sopana the permits did not authorise export outside the State; the present case's facts were said to be different and more akin to Nathulal.
Indira Devi v. State of Bihar (1974 BLJR 437) Single-judge decision where necessary ingredient of mens rea was found on record in that particular case. The Court noted that Indira Devi was relied upon by respondents but found it factually distinguishable because there mens rea was established on the record; it therefore did not affect the present case.
Kishori Lal Bihani v. The Addl. Collector and District Magistrate, Kanpur (AIR 1969 Allahabad 159) Expressed that Section 6A and Section 7 are in pari materia; similar meaning should be given to the words used in both sections (implicating mens rea in confiscation as well). The Court approved and followed this view to hold that 'contravention' in Section 6A must be read in the same sense as in Section 7 (i.e., requiring mens rea when that is the statutory meaning), and therefore the confiscation order was illegal where mens rea was not established.

Court's Reasoning and Analysis

The Court set out the relevant legislative history of Section 7. Before the 1967 amendment (Act 36 of 1967) Sub-section (1) of Section 7 read simply “If any person contravenes any order made under Section 3…”, and courts had interpreted this to require proof of mens rea (as illustrated by the Supreme Court's decision in Nathulal). The 1967 amendment replaced the language by expressly adding the words “whether knowingly, intentionally or otherwise,” arguably eliminating the mens rea requirement for criminal liability.

Crucially, the Court observed that the 1967 amendment had itself been deleted by the Essential Commodities (Amendment) Ordinance, 1974 and subsequently by the Essential Commodities (Amendment) Act, 1974 (Act 30 of 1974) which restored the earlier wording. Therefore, as of the date of the raid (30 October 1974), the statutory position was that the words “whether knowingly, intentionally or otherwise” were no longer part of Section 7 and the pre-1967 position, as articulated in Nathulal, had been restored.

The Court applied a rule of statutory interpretation that a word used in the same Act should generally be given the same meaning throughout unless the Act indicates otherwise. It reasoned that because both Section 6A (confiscation) and Section 7 (penal sanction) use the concept of “contravention” of an order made under Section 3, and because the two sections are in pari materia, the word “contravention” must bear the same meaning in both sections. Therefore, if mens rea is required for conviction under Section 7 (as per the restored pre-1967 position), the same requirement must inform confiscation proceedings under Section 6A.

Turning to facts, the Court recorded that the petitioner had repeatedly asserted in affidavit and in show-cause particulars that it had applied for a licence, paid the licence fee by chalan, was inspected by authorities, filed returns and had road permits. The respondents' counter-affidavit was described as vague on many factual assertions. Because material factual disputes were not meaningfully contradicted by the State, the Court accepted the petitioner's factual account that it acted under a bona fide belief with a reasonable basis and that the necessary mens rea for contravention was not established.

The Court distinguished the State's reliance on Sopana Trimbak Wani because the facts there concerned permits that did not authorise export and therefore did not support a bona fide defence; and it found Indira Devi inapplicable because that decision turned on mens rea being established on the record. The Court also relied on the single-judge Allahabad decision (Kishori Lal Bihani) supporting the view that Sections 6A and 7 are in pari materia.

Applying these legal principles to the accepted facts, the Court concluded that the confiscation order and the Commissioner’s order affirming it were illegal: the necessary statutory ingredient for exercise of confiscation under Section 6A — namely, a contravention established with mens rea as required under the restored Section 7 — had not been satisfied.

Holding and Implications

Core Ruling: The writ application is allowed; the two impugned orders (Annexures 1 and 2) are quashed.

Direct consequences for the parties: The Court quashed the confiscation order of 3.5.1975 and the Commissioner’s order affirming it. The Court noted the articles had been sold pursuant to the District Magistrate's directions; accordingly, the petitioner is entitled to receive the sale price with reasonable interest, to be calculated in accordance with Sub-section (2) of Section 60 of the Act, and the Court ordered payment accordingly.

Broader legal implication identified by the Court: The Court held that after the 1974 legislative changes the pre-1967 position as to mens rea was restored; therefore both conviction under Section 7 and confiscation under Section 6A require that the contravention be established in a sense that includes mens rea (i.e., where contravention is unintentional and there is a bona fide reasonable belief, confiscation should not follow). The decision thus treats the mens rea requirement as applying to confiscation proceedings under Section 6A by reason of the in pari materia relationship between Sections 6A and 7.

The Court did not state that it was laying down a novel precedent beyond applying the restored statutory wording and established decisions (e.g., Nathulal); it quashed the specific administrative and appellate orders as illegal on the facts and law presented.

Disposition: Application allowed. (Order quashing Annexures 1 and 2 and directing payment of sale price with interest as ordered by the Court.)

Show all summary ...

Nagendra Pd. Singh, J.:— This writ application has been filed on behalf of the petitioner-firm for quashing an order dated 3.5.1975 passed by the respondent-District Magistrate, Gopalganj in purported exercise of the powers conferred on him under Section 6A of the Essential Commodities Act, 1955 (hereinafter referred to as the Act). By that order the respondent-District Magistrate confiscated 189 tins of mustard oil weighing 16 kg. each and 60 tins of mustard oil weighing 4 kg. each, which were found in the premises of the petitioner-firm, taking the view that the petitioner-firm had contravened the provisions of the Bihar Edible Oil Wholesale Dealer's Licensing Order, 1966 (herein after referred to as the said Licensing Order). He also directed the Sub-divisional Officer to dispose of the articles in question through public distribution system and to deposit the sale proceeds according to the Government instructions. A copy of that order is Annexure 2 to the writ application. An appeal filed on behalf of the petitioner before the Commissioner was also dismissed affirming the finding of the respondent-District Magistrate. A copy of that order is Annexurte-1 to the writ application.

2. According to the petitioner, it made an application for wholesale dealer's licence under the provisions of the aforesaid Licensing Order before the authority concerned on 18.12.1973 After due enquiry, a report was submitted to the Sub-divisional Magistrate recommending for grant of the licence. On 15.1.1974, the Sub-divisional Magistrate approved the proposal saying “as proposed”. Thereafter, the petitioner deposited the licence fee of Rs. 2000 for one year, which was accepted after deposit being made through Chalan in the treasury. Actual licence, however, was not granted to the petitioner, but the petitioner-firm started carrying on the business in edible oil as a wholesale dealer because it was told that the licence would be forwarded to it in due course. According to the petitioner, officers of the Supply Department inspected the records of the petitioner-firm as also the relevant registers maintained by the petitioner. Road permits were also granted by the Sales-tax Department for carrying the stock of mustard oil to the premises of the petitioner. The petitioner claims to have filed fortnightly returns showing the position of the stock of mustard oil, which were duly checked by the competent officers of the department periodically. However, on 30.10.1974 a raid was made in the business premises of the petitioner and, for the first time, an objection was taken by the raiding party that the petitioner was carrying on the business in edible oil as a wholesale dealer without a licence. The raiding party during the raid seized the aforesaid stock of mustard oil and filed a criminal case before the Chief Judicial Magistrate, Gopalganj alleging that the petitioner has contravened the provisions of the aforesaid licensing Order as it was carrying on the business in edible oil without licence.

3. On the basis of the seizure of the mustard oil tins a confiscation proceeding was also initiated by the respondent-District Magistrate and the petitioner was asked to show cause as to why those tins of mustard oil should not be confiscated. The petitioner appeared before the respondent-District Magistrate and filed its show-cause in which it stated about its application being filed for a licence on 18.12.1973 as well as the deposit of licence fee by chalan. It also asserted that it was submitting return in accordance with the provisions of the aforesaid Licensing Order and has also got road permit from the Sales-tax Department for bringing mustard oil. On the aforesaid assertion, it was claimed on behalf of the petitioner that there was no mens rea on the part of the petitioner to contravene the provisions of the side Licensing Order and it was carrying on the business under a bona fide belief which was based on a reasonable basis that the licence had been granted in its favour. The said claim was, however, rejected by the District Magistrate as well as by the Commissioner on the view that there has been an amendment of Section 7 in the year 1967 by the parliament as a result whereof it was no more open to the petitioner to take a plea of absence of mens rea and even in cases where the contravention was unintentional the person concerned could be held to have contravened the provisions of any such Licensing Order.

4. To appreciate the reasons given by the two authorities, some legislative history of Section 7 of the Act has to be mentioned. Prior to the amendment of Section-7 of the Act by the Essential Commodities (Second Amendment) Act, 1967 (Act 36 of 1967) Sub-section (1) of Section 7 was as follows:—

“If any person contravenes any order made under Section 3”

then he shall be punishable for different periods mentioned in that section. Questions arose before different courts as to whether the contravention referred to in this Sub-section (1) of Section 7 of the Act covers cases of only intentional contravention with the requisite mens rea or will also cover cases where contraventions are made unintentionally. However, in the case (1) Nathulal v. State of Madhya Pradesh (AIR 1966 S.C 43) the Supreme Court had to deal with the case of a dealer who had been convicted for an offence under Section 7 of the Act, as he had been found to be carrying on business in foodgrains without a proper licence, although it had been found that he had made an application for licence under the Madhya Pradesh Food-grains Dealers Licensing Order, 1958 and had also deposited the requisite licence fee; no intimation to him was seat that his application was rejected. Under the impression that Licence had been granted to him, he purchased foodgrains from time to time and submitted returns to the Licensing authority. His godowns were also checked. In that situation, it was held by the Supreme Court that although no licence had been granted to the accused concerned, mens rea, which is an essential ingredient, had not been proved and on that finding the accused was acquitted holding that he was not guilty. By the aforesaid amending Act (Act 36 of 1967) Sub-section (1) of Section 7 of the Act was amended. The words “if any person contravenes any order made under Section 3” were substituted by the words and figure “If any person contravenes, whether knowingly, intentionally or otherwise, any order made under Section 3”. Perhaps the object of introducing this amendment to cover even the cases where the mens rea was not established, i.e, if the contravention was unintentional. The respondent-District Magistrate and the respondent-Commissioner have held that even if the assertion made on behalf of the petitioner is accepted still it will deem to have contravened the provisions of the Licensing Order because of this amendment in Sub-section (1) of Section 7 saying that even if the contravention was unintentional, the petitioner will be liable to punishment because of the change in law. I must, however, point out that on the relevant date, i.e, on 30.10.1974, when the raid was made the amendment which had been introduced in Sub-section (1) of Section 7 by Act 36 of 1967, itself was deleted by the Essential Commodities (Amendment) Ordinance, 1974, which was public shed in the Central Gazette dated 22.6.1974 This Ordinance was replaced by the Essential Commodities (Amendment) Act, 1974 (Act 30 of 1974) which received the assent of the President on 29.8.1974 The relevant portion of Sub-section (1) was restored as it was prior to its amendment by Act 26 of 1967. The words “whether knowingly, intentionally or otherwise” were deleted. In my opinion, the effect of this amendment will be that since that date the position was restored as it was when the said sub-section was considered by the Supreme Court in the aforesaid Nathulal's case (AIR 1966 S.C 43). In view of this amendment, before an accused person can be held to be guilty for having contravened any provision of the Licensing order, it must be established that he had the necessary mens rea. If, on the other hand, it is found that the contravention was unknowingly and unintentionally, he cannot be held guilty for contravention of any such provision. I have already pointed out that the two authorities have proceeded on the assumption that the contravention was not intentional. The respondent-Commissioner has mentioned in his order that the facts are not in dispute. Even before this Court the petitioner has stated on affidavit about filing of application for grant of licence, the orders passed by the Sub-divisional Officer, deposit of licence fee by chalan and inspection made by the authorities concerned. It has also been stated on behalf of the petitioner about the return having been filed from time to time. The counter-affidavit filed on behalf of the respondents is vague. About many assertion it has been simply stated that the deponent has no knowledge about those facts. About some statements it has been stated in the counter-affidavit that the District Supply Officer had appeared before the Collector on behalf of the State, but for reasons best known to him, he did not disclose the relevant facts. In such a situation, I am left with no option but to accept the assertions made on behalf of the petitioner and to hold that the petitioner was carrying on business in edible oil as a wholesaler under a bona fide belief which has a reasonable basis and the necessary mens rea for the contravention of the provisions of the Licensing Order has not been established. Learned counsel for the State, however, has drawn our attention to a judgment of the Supreme Court in the case of (2) Sopana Trimbak Wani v. State Of Maharashtra (1977 Criminal Law Journal 337) and has submitted that the claim of bona fide belief of the accused person of that case that he was authorised to export foodgrains outside the State was not accepted. The facts of that case are entirely different. In the judgment it was pointed out that the permits, on the basis of which this defence was taken, had been issued to the accused concerned for the purpose of enabling him to sell, but it did not enable him to export the foodgrains outside the State of Maharashtra. The facts of the present case are more or less similar to the facts which were considered by the Supreme Court in the aforesaid case of Nathulal (AIR 1966 S.C 43). The respondents, Commissioner and the District Magistrate, have also placed reliance on the judgment of a learned single Judge of this Court in the case of (3) Indira Devi v. State of Bihar (1974 BLJR 437). In that case the learned Judge of this Court on the materials on the record had held that necessary ingredient of mens rea was established, and, as such, it has no bearing to the facts of the present case.

5. Now one question, which is still to be answered, is as to whether the principle which is applicable for criminal trial is also applicable to a proceeding for confiscation under Section 6A of the Act. By a reference to Section 6A it will appear that the condition precedent to the exercise of the jurisdiction by the Collector is that there has been a contravention of the order made under Section 3 of the Act and the articles in question have been seized in accordance with the provisions of any such order. Sub-section (1) of Section 7, which is the penal provision, also says that a person shall be punishable if he has contravened any order made under Section 3. Therefore, for confiscation as well as for conviction it must be established that the person concerned has contravened any order made under Section 3. It is a well settled rule of interpretation that a word occurring in the same Act is usually to be given the same meaning unless a different intention is expressed by the provisions of the Act. As such, the word ‘contravention’ has to be interpreted in Section 6A and in Section 7 to mean that the provision of any order framed under Section 3 of the Act has been contravened intentionally. On the other hand, if it is found that the contravention was unintentional and the person concerned had taken all reasonable care and was carrying on the business in a bona fide manner, then, in my view, even for Section 6A of the Act, it has to be interpreted that in the eye of law there has been no contravention so as to visit the dealer with the consequences of confiscating the articles which had been seized. A similar view has been expressed by a learned single Judge of Allahabad High Court in the case of (4) Kishori Lal Bihani v. The Addl. Collector and District Magistrate, Kanpur (AIR 1969 Allahabad 159). The learned Judge has rightly pointed out, if I can say so with respect, that Section 6A and Section 7 are in pari materia, and, as such, the same meaning is to be given to the words used in the two sections. The result is that it has to be held that the order of confiscation passed by the respondent-District Magistrate, which has been affirmed by the respondent-Commissioner, is illegal because the necessary ingredient of Section 6A has not been established. As such, there is an error apparent on the face of the record and the two orders have been passed in violation of the provisions of the Act, which has caused substantial injury to the petitioner.

6. In the result, I allow this writ application and quash the two orders in question, contained in Annexures 1 and 2. We are informed that the articles in question have been sold as directed by the District Magistrate. In such a situation, the petitioner is entitled to get the price along with reasonable interest thereon to be calculated in accordance with the provision of Sub-section (2) of Section 60 of the Act, and I order accordingly.

7. Shivanugrah Narain, J.:— I agree.

Application allowed.