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Parsuram Prasad Parsuram Mahto v. The State Of Bihar & Ors.
Structured Summary of the Opinion (Naresh Kumar Sinha, J.)
Factual and Procedural Background
These two writ petitions were filed by Parsuram Prasad alias Parsuram Mahto: Cr. W.J.C No. 810/93 seeks quashing of confiscation proceedings initiated under Section 6‑A of the Essential Commodities Act (E.C. Act) in E.C. Case No. 59/93‑94 pending before the Collector, Patna; Cr. W.J.C No. 44/94 seeks quashing of criminal proceedings in Special Case No. 11/93 under Section 7 of the E.C. Act pending before the Special Judge (Rural), Patna.
The petitioner is the owner of a daal mill (Parsuram Daal Mill) processing whole pulses into split pulses and selling them wholesale or through commission agents. On 31.7.1993, the Block Supply Officer (respondent No. 2) inspected the mill premises and seized various varieties of pulses. A prosecution report was lodged leading to registration of Mokama P.S. Case No. 123 of 1993 (dated 1.8.1993) under Section 7 of the E.C. Act.
The seizure arose from a raid conducted under verbal orders of the Sub‑Divisional Magistrate involving the Block Supply Officer, the Assistant District Supply Officer and police. Due to an electricity failure the raiding team kept the premises and two godowns under watch overnight and searched on the morning of 1.8.1993. No stock register or price list was displayed. Multiple bags of pulses were found across premises rented from various persons; seized items are listed in Annexure‑1 and the prosecution report in Annexure‑2. A person described as the firm's munshi was apprehended with papers suggesting dealings in wheat, giving rise to suspicion of fictitious names and tax evasion.
The petitioner also filed a copy of the Collector's order dated 23.8.1993 directing show‑cause notice in E.C. Case No. 59/93‑94 for possible confiscation.
Legal Issues Presented
- Whether the criminal proceedings against the petitioner under Section 7 of the Essential Commodities Act (Special Case No. 11/93) should be quashed.
- Whether the confiscation proceedings under Section 6‑A of the Essential Commodities Act (E.C. Case No. 59/93‑94) should be quashed.
- Whether the petitioner, as owner of a daal mill, is a "producer" rather than a "dealer" within the definitions of the Bihar Trade Articles (Licences Unification) Order, 1984 ("Unification Order") and the Bihar Essential Articles (Display of Prices and Stocks) Order, 1977 ("Display Order"), and therefore not subject to obligations imposed on dealers by those Orders.
- Whether the absence of licence fees prescribed by the State under Clause 4(1) read with Schedule IV of the Unification Order renders the Unification Order inapplicable or unenforceable to pulses.
- Whether the Block Supply Officer (respondent No. 2) and/or the Assistant District Supply Officer had authority under Clause 30 of the Unification Order (as modified by G.S.R. 47 dated 7.10.1985) to enter, search and seize in respect of a roller flour/pulses mill where such powers, by that G.S.R., require the rank of Executive Magistrate.
Arguments of the Parties
Petitioner's Arguments (as presented)
- The petitioner is a producer (daal mill owner) and not a dealer; consequently the Unification Order, 1984 and the Display Order, 1977 (made under Section 3 of the E.C. Act) do not apply to him.
- The Block Supply Officer (respondent No. 2) was not competent to conduct the raid or make the seizure in view of Clause 30 of the Unification Order and G.S.R. 47 dated 7.10.1985 which restricts entry/search/seizure powers in respect of roller flour mills (rice/pulses/oil mills) to persons not below the rank of Executive Magistrate.
- Because the State has not prescribed licence fees for pulses as required under Clause 4(1) read with Schedule IV of the Unification Order, the provisions of the Unification Order are unworkable and unenforceable with respect to pulses and therefore pulses cannot be regarded as brought within the purview of that Order.
- Consequently, the criminal prosecution and confiscation proceedings founded on the seizure are illegal and without jurisdiction and should be quashed.
State's Arguments (as described)
- The State's counsel referred to the Bihar Edible Oil and Pulses (Procurement and Processing) Order, 1977, and its definitions (including a definition of "dealer" in Clause 2(b)) to argue regulatory scope in respect of edible oil and pulses; however, the opinion notes the written report alleges contraventions of the Unification Order and the Display Order and not of the Procurement and Processing Order.
- The State suggested that seized papers indicated dealings in wheat and possible tax evasion; the court observed that no wheat bags were seized and that such allegations (if meant to refer to wheat) would concern a different case than that founded on the written report for pulses.
- The State did not file a counter‑affidavit in either petition and did not controvert the petitioner's factual and legal contentions regarding the absence of prescribed licence fees and the competence of the raiding officers.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Hari Oil and General Mills v. The State of U.P., 1987 E.F.R‑211 (Allahabad High Court) | The decision held that the provisions of the U.P. orders (similar in relevant respects to the Unification and Display Orders) were not applicable to and workable on producers. | The court relied on that conclusion as supporting the proposition that producers (such as daal mill owners) are not brought within the obligations imposed on dealers by the Unification and Display Orders; the Allahabad HC decision was noted and its Special Leave Petition was dismissed by the Supreme Court. |
| Om Prakash Bhartia v. The State of Bihar (Cr. W.J.C No. 412 of 1991) — Division Bench, disposed 19.2.1992 | Held that in the absence of licence fees having been prescribed under the Unification Order, 1984, pulses could not be said to have been brought within the purview of that Order. | The court cited this decision (which in turn referred to an earlier 1988 P.L.J.R. decision) as authority for the legal principle that failure to prescribe licence fees under the Unification Order precludes bringing pulses within its regulatory purview; the present court applied this reasoning to the facts before it. |
| 1988 P.L.J.R. 502 (earlier decision of this Court referenced by the Division Bench in Om Prakash Bhartia) | Referenced by the Division Bench as part of a line of authority addressing the effect of absence of prescribed licence fees under the Unification Order. | The present court noted that Om Prakash Bhartia referred to this earlier decision and relied on the conclusion that the absence of prescribed licence fees meant pulses were not within the Unification Order's purview. |
| Shambhu Nath Argawal v. The State of Bihar, 1991 (1) PLJR 462 (Ranchi Bench) | Addressed storage limits fixed by the Government under Clause 2(u) of the Unification Order; the court quashed criminal proceedings where no storage limit had been fixed by the State Government despite the allegation of large storage (467 bags of rice). | The present court noted the decision while observing it was not necessary to decide the storage‑limit question in the present petitions (because the present case did not concern wheat or storage limits fixed for foodgrains). The Shambhu Nath decision was used to illustrate precedent on storage‑limit issues where no limit had been prescribed. |
Court's Reasoning and Analysis
The court's reasoning proceeds from statutory text, administrative orders, factual findings in the prosecution report, and relevant precedents. The analysis follows these principal steps, drawn from the opinion:
- Definitions: The court examined the definitions of "dealer" and "producer" as contained in Clause 2(e) and Clause 2(n) of the Unification Order, 1984 and Section 2(c) of the Display Order, 1977. The Unification Order defines "dealer" and expressly defines "producer" to include a person milling pulses who buys pulses for processing and sells finished products to a wholesaler or through a commission agent; the Display Order defines "dealer" in terms of sale or storage for sale.
- Charging Provisions: The court noted that the substantive charging provisions (Clause 3) of both the Unification Order and the Display Order impose obligations on "dealers" (licensing, display of price and stock lists) but do not cast such obligations upon "producers".
- Application to petitioner: On the facts (petitioner being a daal mill owner who processes pulses and sells to wholesalers/through commission agents), the court concluded the petitioner was a "producer" and not a "dealer" within the meaning of the cited Orders; therefore the provisions of those Orders could not lawfully be invoked against him for the seizure at issue.
- Precedential support: The court relied on the Allahabad High Court decision in Hari Oil (and the dismissal of the related Special Leave Petition) as consistent authority that such Orders were not applicable to producers. It also relied on this Court's Division Bench decision in Om Prakash Bhartia (which referenced a 1988 P.L.J.R. decision) holding that absence of prescribed licence fees under the Unification Order meant pulses were not brought within the Order's purview.
- Licence fee point: The petitioner pointed out and the court observed that the State had not prescribed licence fees for pulses as required by Clause 4(1) read with Schedule IV of the Unification Order; the State did not contest this fact by counter‑affidavit. The court treated this absence as a basis for concluding the Unification Order could not validly be applied to pulses.
- Competence to seize: The court considered Clause 30(1) of the Unification Order and G.S.R. 47 dated 7.10.1985, which restrict powers of entry, search and seizure in respect of roller flour/pulses/oil mills to officials of the rank of Executive Magistrate or above. The court found no evidence that the Block Supply Officer or the Assistant District Supply Officer who took part in the raid were of the rank of Executive Magistrate; accordingly the raid and seizure were held to be beyond their authority.
- Consequences of illegal seizure: Because the seizure was conducted by persons without the requisite authority and because the petitioner was a producer outside the regulatory obligations of the Orders in question (including on the licence‑fee point), the court found the criminal prosecution and confiscation proceedings initiated on that seizure were not in accordance with law and amounted to abuse of process.
Holding and Implications
Core Ruling: Both writ applications are allowed; the criminal prosecution and the confiscation proceedings are quashed.
Direct effect: The criminal prosecution pending in Special Case No. 11/93 under Section 7 of the E.C. Act and the confiscation proceedings in E.C. Case No. 59/93‑94 under Section 6‑A of the E.C. Act are quashed and set aside as being not in accordance with law.
Broader implications: The opinion reasoned that (a) a daal mill owner acting as a producer falls outside the obligations imposed on "dealers" by the Unification Order, 1984 and the Display Order, 1977; (b) where the State has not prescribed licence fees as mandated, those regulatory provisions cannot be applied to pulses; and (c) statutory or delegated restrictions on who may exercise search/seizure powers (here, the requirement of Executive Magistrate rank under the G.S.R.) must be observed. The opinion does not purport to lay down a novel binding precedent beyond its application to the present facts and relied upon precedents; its immediate practical effect is confined to quashing the contested proceedings against the petitioner.
This summary is confined strictly to the content and holdings as stated in the provided opinion text.
Naresh Kumar Sinha, J.:— Both these writ applications have been filed by Parsuram Prasad alias Parsuram Mahto, one (Cr. W.J.C No. 810/93) for quashing confiscation proceedings initiated under Section 6-A of the Essential Commodities Act vide E.C Case No. 59/93-94 pending in the court of the Collector, Patna and the other (Cr. W.J.C No. 44/94) for quashing the entire criminal proceedings against the petitioner in Special Case No. 11/93 under Section 7 of the E.C Act pending in the court of the learned Special Judge, (Rural), Patna.
2. The petitioner claims to be the owner of a Daal Mill, namely, Parsuram Daal Mill. He produces split pulses from the whole pulses and sells it to the wholesale dealers and/or through commission agents. An inspection was made in the Daal Mill premises of the petitioner by Block Supply Officer-respondent no. 2 on 31.7.1993 and different varieties of pulses were seized and criminal proceedings were initiated on the basis of a prosecution report lodged by respondent no. 2 for the alleged violation of the provisions of Bihar Trade Articles (Licences Unification) Order, 1984 (hereinafter referred to as ‘the Unification Order’) and the provisions of Bihar Essential Articles (Display of Prices and Stocks) Order, 1977 (hereinafter referred to as ‘the Display Order’). Xerox copy of the seizure list and prosecution report have been enclosed as Annexures-1 and 2 of Cr. W.J.C No. 44 of 1994. From perusal of Annexure-2 which is addressed to the Officer-in-charge, Mokama Police Station by Sri Lallan Singh, Block Supply Officer on the basis of which Mokama P.S Case No. 123 of 1993 dated 1.8.1993 under Section 7 of the E.C Act was registered, it appears that under the verbal orders of the Sub-Divisional Magistrate, Sri Singh along with the Assistant District Supply Officer and Sub Inspector of Police along with police force raided the business premises of Parsuram Daal Mill located at Goshala Road, Mokama. No sooner they reached the business premises, there was failure of electricity and as such the business premises as also two different godowns were kept under watch for the whole night. The search began in the morning on 1.8.1993 No stock register or price list were found displayed in any part of the business premises. The mill was found in the rented premises of the house of Sato Singh and one Mithilesh Singh and while 62 bags of Masoor Daal and 73 bags of Khara Masoor were found in the portion of the house of Sato Singh, 114 bags of Masoor Daal were found in the portion of the house belonging to Mithilesh Singh, in course of search of another godown on the Goshala Road, in the house of one Shaligram Singh, 34 bags of Masoor, 8 bags of Arhar Khara and 28 bags each containing 50 kgs., of Arhar Daal were found. In the third godwn of Goshala Road, from the house of Sri Rajiv Kumar, 52 bags of Masoor Daal were found. The articles were seized in the presence of the witnesses vide Seizure List (Annexure-1 series). Sri Prem Chand, said to be the Munshi of the petitioner's firm, was found running away with certain papers. On being apprehended, the papers were recovered from him suggesting that the firm was also dealing with the purchase and sale of wheat. This arose the suspicion of the raiding party that the firm had entered into business transactions in fictitious name and was evading tax on a big scale.
3. Along with Cr. W.J.C No. 810 of 1993, the petitioner has annexed copy of the seizure list in respect of 62 bags of Masoor Daal each containing 90 kgs, 73 bags of Khara Masoor each containing 80 kgs. A copy of the order dated 23.8.1993 passed by the Collector, Patna in E.C Case No. 59/93-94 has also been filed directing issue of notice to the petitioner to show cause why the articles seized may not be confiscated.
4. Learned counsel appearing in support of both the writ petitions argued that the criminal prosecution of the petitioner and the confiscation preceedings in respect of the articles seized were all illegal and without jurisdiction. He argued that the petitioner who was a Daal Mill owner, had not violated the provisions of any Order issued under Section 3 of the E.C Act, namely, the provisions of Unification Order, 1984 and the Display Order, 1977. It was also argued that the Block Supply Officer-respondent no. 2 was not competent to make the seizure in view of Clause 30 of the Unification Order and, the criminal proceeding initiated on the basis of such illegal seizure, is illegal and without jurisdiction. Learned counsel, in support of his contention that the petitioner was a producer and not a dealer and the provisions of the Unification Order and Display Order were not attracted in his case as they were applicable and workable or dealers only, referred to relevant provisions of the Orders.
5. The relevant provisions of the Unification Order and Display Order therefore needs to be noticed. The Bihar Trade Articles (Licences Unification) Order, 1984 defines ‘dealer’ under Clause 2 (e) and ‘producer’ under Clause 2(n) which are as follows:—
“2(e)— “dealer” means a person, a firm, an association of persons or a Co-operative Society other than a National and State level Co-operative Society, engaged in the business of purchase, sale or storage for sale of any trade articles whether or not in conjunction with any other business, includes his representative or agent but does not include—
(i) A person who holds or is in possession of agriculture land under any tenure or any capacity and on which he raises or has raised crop of foodgrains, oilseeds or whole pulses;
(ii) A manufacturer of sugar;
(iii) Hawkers engaged in the purchase and sale of non-controlled cloth.
“2(n)“producer” means a person carrying on the business of milling any of the pulses or expelling, extracting or manufacturing or refining any edible oil;
(i) By buying pulses or oilseeds for being processed by himself and selling the finished products to a wholeseller or through a Commission Agent, or
(ii) By doing any of the processes of milling, expelling, extracting or manufacturing or refining on behalf of another.”
6. Under the Bihar Essential Articles (Display of Prices and Stocks) Order, 1977, the definition of ‘dealer’ is contained in Section 2(c) which reads as follows:—
“2(c)- “Dealer” means a person who deals in the sale or storage for sale either wholesale or retail of any of the articles mentioned in Schedule I and II and includes agent or representative or Arhatiya.”
7. The charging provision of the Unification Order under Clause 3 and charging provision of the Display order under Clause 3 cast an obligation upon a dealer to follow the provisions of the Unification Order and Display Order but no such obligation is cast upon the producer either under the provisions of Unification Order or the Display Order. Clause 3 of the Unification Order says that no dealer shall after the commencement of the Order carry on business of purchase, sale or storage for sale of any of the trade articles mentioned in Schedule I except under and in accordance with the terms and conditions of licence issued in this behalf by the Licensing Authority under the provisions of this Order. Clause 3 of the Display Order says that every dealer shall before commencement of the Order carry on business displaying at a conspicuous place near the entrance of his business premises the following which includes a list of prices and stocks of all those articles mentioned in Schedule I in which he deals.
8. Learned counsel for the petitioner, in support of his contention that the petitioner who was a producer and not a dealer was not required to take licence or display the stock and the relevant provisions of the Unification Order and Display Order were not attracted in his case as he was not a dealer has referred to a decision of Allahabad High Court. Learned counsel for the petitioner submitted that the definition of producer and dealer in the U.P Essential Commodities (Display of Prices and Stocks and Control of Supply and Distribution) Order, 1977 and U.R Oilseeds (Product Control) Order, 1966 (Licences Order) were similar to those contained in the Unification Order and Display Order and a Division Bench of Allahabad High Court has occasion to consider a similar question in the case of Hari Oil and General Mills v. The State of U.P reported in 1987 E.F.R-211. The photo copy of the aforesaid decision was filed in course of hearing. The court came to the conclusion that the provision of the aforesaid orders were not applicable to and workable on the producers. The judgment of the Allahabad High Court was challenged before the Hon'ble Supreme Court in S.L.P No. 14242 of 1986 and Special Miscellaneous Writ Petition No. 6288 of 1986 and other cases and the Special Leave Petition was dismissed.
9. Another ground urged on behalf of the petitioner is that the provisions of the Unification Order, 1984 are unworkable and unenforceable so far trade articles pulses are concerned on account of the State Government's failure to prescribe licences fee as required under Clause 4(1) read with Schedule IV of the Unification Order, 1984. It was pointed out that till this date, no licence fee has been prescribed by the State Government for trade articles pulses. No counter affidavit was filed on behalf of the State in either of the two writ petitions and learned counsel appearing for the State has not been able to controvert the aforesaid stand taken on behalf of the petitioner. Learned counsel for the petitioner referred to a number of decisions of this Court including one in Om Prakash Bhartia v. The State of Bihar (Cr. W.J.C No. 412 of 1991) disposed of on 19.2.1992 by a Division Bench of this Court, copy of which is Annexure-3. The Division Bench referred to an earlier decision of this Court reported in 1988 P.L.J.R 502 and held that “in the absence of licences fee having been prescribed under the Unification Order, 1984, the pulses cannot be said to have been brought within the purview thereof”. In the circumstances, the Court quashed the criminal investigation against the petitioner initiated on the basis of a first information report alleging certain irregularities committed by the petitioner in relation to pulses.
10. Learned counsel for the petitioner referred to the provisions of Clause 30(1) of the Unification Order, 1984 in support of his contention that the Block Supply Officer, the informant of the criminal case, was not competent to raid the Daal Mill of the petitioner and seize the stocks of pulses. Clause 30 vests Block Supply Officer, Assistant Marketing Officer, Supply Inspector and any Police Officer not below the rank of Sub-Inspector or any other person empowered by the Government amongst other with powers of entry, search and seizure etc. but as provided by G.S.R 47 dated 7.10.1985, such power in respect of roller flour mills (rice mills, pulses mills and oil mills) is not vested to any one below the rank of Executive Magistrate. There is no evidence on the record that the Block Supply Officer-respondent no. 2 or the Assistant District Supply Officer were of the rank of Executive Magistrate or above. The premises of the petitioner were admittedly of a Daal Mill and under Clause 30(1) of the Unification Order, 1984, no person below the rank of Executive Magistrate could have entered it for the purpose of search and seizure. In the circumstances, it was agrued that the criminal prosecution of the petitioner and the confiscation proceedings in respect of the stock of pulses seized, were bad and illegal. On behalf of the State, nothing was produced to show that the Block Supply Officer or the Assistant District Supply Officer were not below the rank of Executive Magistrate. It being so, the raid in the Daal mill and seizure of the articles were bad, illegal and without jurisdiction and no criminal prosecution or confiscation proceedings on the basis of such illegal seizure can be held to be valid.
11. Learned Counsel appearing for the State, in course of argument, referred to the provisions of Bihar Edible Oil and Pulses (Procurement and Processing) Order, 1977. Clause 2(b) of the said Order defines “dealer” 10 mean a person who whether for commission, remuneration or otherwise, carries on the business of purchase, sale or storage for sale of any one or more varieties of edible oil and pulses in question exceeding five quintals at any one time and includes any person who carries on the business of purchase or storage of any one or more of scheduled oil seeds, scheduled pulses for crushing or processing them in quantities exceeding five quintals at any one time; Clause 2(e) is to the effect that the ‘pulses’ mean Urad, Moong, Arhar, Masoor, Lobia, Rajmaha, Gram or any other daal whether whole or split with or without husk. It was argued on behalf of the petitioner that the written report alleged contravention against the petitioner of the provisions of the Unification Order, 1984 and Display Order, 1977 and not of the provision of any Control Order including the Bihar Edible Oil and Pulses (Procurement and Processing) Order, 1977. Otherwise also, it is not the case of the prosecution that the petitioner would be described as a ‘dealer’ under Clause 2(d) of the aforesaid Order. There was some argument at the bar on the question whether on the allegations made, the petitioner had committed any contravention of any Order in respect of wheat. Counsel for the petitioner vehemently denied the contention put forward on behalf of the State that the written report also discloses that the petitioner was dealing in the sale and purchase of wheat. Admittedly, not a single bag of wheat was recovered and seized in course of the raid of the business premises and godowns. According to the written report, some papers had been seized suggesting deals in the fake name of the firms in respect of wheat and the written report specifically alleged that evasion of tax on big scale had been committed. There is no dispute that the criminal case in question has been registered against the petitioner for violation of Orders issued under Section 3 of the E.C Act. If the petitioner was alleged to be evading tax on large scale on account of sale, that would be a subject matter of another case and not covered by the written report of the present case on the basis of which criminal investigations are pending. In this view of the matter, it is not necessary to consider the arguments advanced on behalf of the parties with regard to fixing a storage limit for foodgrains such as rice and wheat by the State Government in respect of Cities described as Clauses A, B and C. In that connection, counsel for the petitioner referred to a decision of Ranchi Bench of this Court in Shambhu Nath Argawal v. The State of Bihar, 1991 (1) PLJR 462. The court while dealing with a case in which 467 bags of rice were found in the business premises of the petitioner, had referred to Clause 2(u) of the Unification Order, 1984 which refer to storage limit fixed by the Government from time to time. The court, in view of the fact that no storage limit had been fixed by the State Government, had quashed the criminal proceedings against the petitioner despite the allegation made that he was found storing 467 bags of rice in his business premises. As already observed earlier, it is not necessary to decide this question for the petitioner does not appear to have been prosecuted for violation of the Unification Order or Display Order in respect of wheat.
12. In view of what has been stated above, it appears that the petitioner was a Daal Mill owner and hence a producer and not dealer within the meaning of the Unification Order, 1984 and Display Order, 1977 and hence no case of contravention of the provisions of the said Orders can be made against him. Moreover, respondent no. 2 had no authority to raid and seize the bags of pulses and hence the criminal prosecution of the petitioner as also the confiscation proceedings in respect of the articles seized, are not in accordance with law and are abuse of the process of court. Both the writ applications are, therefore, allowed and the criminal prosecution as also the confiscation proceedings are hereby quashed.
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