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Nagarmal Tekriwal v. State Of Bihar .
Factual and Procedural Background
On May 28, 1966, Bhola Prasad Mandal, Supply Inspector, Pethargama, accompanied by other officials, searched a godown owned by the appellant, Nagarmal Tekriwal. The officers found and seized 45 quintals of rice, 90 quintals of paddy, 5.50 quintals of grains, 3 quintals of wheat, 1 quintal of arhar, and 207 quintals of khesari. Alleging that the appellant had stored food-grains in violation of Clause 3 of the Bihar Foodgrains Dealer’s Licensing Order, 1956, he was prosecuted under Section 7 of the Essential Commodities Act.
The Munsif Magistrate, First Class, convicted the appellant and sentenced him to six months’ rigorous imprisonment, additionally ordering forfeiture of the seized food-grains to the State. The Sessions Judge, Santhal Parganas, dismissed the appellant’s appeal, and the High Court summarily rejected his revision petition. The present judgment arises from a special-leave appeal before the Supreme Court of India.
Legal Issues Presented
- Whether the statutory presumption under paragraph 3(2) of the Bihar Foodgrains Dealer’s Licensing Order—deeming a person who stores food-grains to be a dealer—could be invoked against an individual who claims to be an agriculturist.
- Whether the conviction was sustainable when the appellant asserted and sought to prove that the stored food-grains were grown by him on leased agricultural land.
Arguments of the Parties
Appellant's Arguments
- The appellant is an agriculturist who cultivated 80–90 bighas of land and therefore falls within the class expressly excluded from the statutory presumption found in paragraph 3(2).
- Reliance was placed on Manipur Administration v. M. Nila Chandra Singh, (1964) 5 SCR 574, to contend that “carrying on business” requires a series of sales transactions; mere possession or storage does not suffice.
- Documentary evidence (unregistered lease deeds and rent receipts) and corroborating oral testimony established lawful cultivation and ownership of the food-grains.
The opinion does not contain a detailed account of the respondent’s arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Manipur Administration v. M. Nila Chandra Singh (1964) 5 SCR 574 | The phrase “carrying on business” under the Essential Commodities Act implies continuity—a course of conduct involving multiple transactions. | The Court acknowledged the principle but considered it unnecessary to apply because the appellant had proved his status as an agriculturist, thereby negating the statutory presumption altogether. |
Court's Reasoning and Analysis
The Supreme Court focused on the statutory presumption contained in paragraph 3(2) of the Licensing Order. That provision deems anyone who stores food-grains to be a dealer “unless the contrary is proved,” but expressly excludes bona-fide consumers and agriculturists. The Court reasoned as follows:
- Assessment of Documentary Evidence: Although the lease deeds produced by the appellant were unregistered and thus inadmissible as evidence of title under the Registration Act, they could still be considered in criminal proceedings for the collateral purpose of showing possession and cultivation.
- Credibility of Oral Testimony: Witnesses testified that the appellant and his brother cultivated 80–90 bighas of land. The lower courts rejected this testimony as “interested,” but the Supreme Court found no intrinsic reason to disbelieve it, noting that proximity of witnesses (“next door neighbour”) alone is insufficient grounds for rejection.
- Failure of Prosecution to Displace the Exemption: Once credible evidence of agricultural activity was produced, the burden lay on the prosecution to show that the appellant was not an agriculturist. That burden was not met.
- Inapplicability of Dealer Presumption: Because the appellant qualified as an agriculturist, the statutory presumption that storage equates to business activity could not be drawn. Without that presumption, the essential legal element—carrying on business as a dealer—remained unproved.
Holding and Implications
APPEAL ALLOWED; CONVICTION AND SENTENCE SET ASIDE. The Supreme Court cancelled the appellant’s bail bonds and quashed the forfeiture order. Proceeds from any sale of the seized food-grains are to be returned to the appellant.
Implications are confined to the parties: the judgment underscores that documentary evidence, even if formally inadmissible for want of registration, may still be considered in criminal proceedings for collateral purposes, and it reiterates that agriculturists are outside the statutory presumption applied to food-grain dealers. No new legal precedent of broader application was explicitly set.
M. Hidayatullah, C.J— On May 28, 1966, Bhola Prasad Mandal, Supply Inspector Pethargama with other officers searched a godown belonging to Nagarmal Tekriwal (appellant) and found stored therein 45 quintals of rice, 90 quintals of paddy, 5.50 quintals of grains, 3 quintals of wheat, one quintal Arhar and 207 quintals of Khesari together with weighing a licence under the Bihar Foodgrains Dealer's Licensing Order, 1956, he was prosecuted under Section 7 of the Essential Commodities Act for violation of clause 3 of the order. He was convicted by the Munsif Magistrate, First Class and sentenced to undergo rigorous imprisonment for six months. The foodgrains found in his possession were also ordered to be forfeited to the State. He appealed unsuccessfully to the Sessions Judge, Santhal Parganas, Dumka and his revision in the High Court was summarily dismissed. He now appeals by special leave granted by this Court.
2. The defence of the appellant was that he was an agriculturist and that the foodgrains were grown by him on the lands he had taken on lease from various parties. In support of his defence, he produced both documentary and oral evidence. The documentary evidence consisted of certain lease deeds executed by him and his brother in favour of the lessors. Oral evidence showed that he and his brother were in possession of 80-90 bighas of land on which paddy and other foodgrains found in his possession, were grown.
3. The case proceeded against him on the basis of the presumption under para 3 of the Order. It may be read here:
“Licensing of wholesale and retail dealers.— (1) No person shall carry on business as a whole-sale dealer or retail dealer except under and in accordance with the terms and conditions of a licence issued in this behalf by licensing authority.
(2) For the purpose of this clause, any person other than a bona fide consumer or an agriculturist, who stores any foodgrains in any quantity shall, unless the contrary is proved, be deemed to store the foodgrains for the purpose of sale.”
It was held that as he had stored foodgrains above the permitted quantities for a wholesale dealer, he would be regarded as a wholesale dealer within the order. The defence before us again is that he is an agriculturist and is not liable to the penalty under the law, because the presumption in his case cannot be drawn. It is also submitted that his case that he was an agriculturist stands completely proved in this case.
4. The learned Magistrate rejected the documentary evidence on the ground that the lease deeds were not registered and were not admissible in evidence under Section 49 of the Registration Act. The learned Sessions Judge did not accept this ground: at least he did not say anything about it. He held that such documents could be brought into existence at any time and were thus not reliable. Both the Magistrate and the Sessions Judge did not accept the evidence of the witnesses on the ground that they were interested in the appellant.
5. Mr B.P Singh, in arguing the case has drawn our attention to a ruling of this Court in Manipur Administration v. M. Nila Chandra Singh (1964) 5 SCR 574 and contended that the appellant cannot be regarded as doing business as a dealer unless a series of transactions by him of sale were proved against him. The ruling does say that the words “carrying on the business” in the context of the Act postulate a course of conduct and continuity of transactions. The ruling may not be applicable in certain circumstances, as for example where even a single transaction can be demonstrated to be in the course of business. Carrying on of business may be found in one instance or more, depending upon the circumstances of the case.
6. However, in the present matter we need not worry about the carrying on of business, because in our opinion, the appellant has successfully proved that he is an agriculturist and the presumption under para 3(2) of the order cannot be drawn against him. That para expressly excludes bona fide consumers and agriculturists from the presumption to be drawn from proof of storage only. It is obvious that sub-para speaks of storage for sale as a dealer although the words “as a dealer” are not there, because storage has reference to business as a dealer and that is the essence of the Order. The fiction in the second sub-para must be carried to its logical conclusion. In the present case, the appellant produced a number of lease deeds in which leases of various parcels of land are shown to have been granted to him. He also produced receipts of payment of lease money and he cited witnesses who deposed on oath that he and his brother cultivated 80-90 bighas of land. No doubt the lease deeds are not registered, but for the purpose of criminal proceedings, we have to see whether they are genuine or not and whether an inference of innocence can be based upon them. In our judgment they served the collateral purpose of showing that the lands about which the witnesses spoke orally were held by him for purposes of cultivation. If that be so, then, he is an agriculturist and it is easy to see that the evidence which was brought forward of witnesses deposing orally was not concocted to set up a false defence. Indeed no adequate reasons were given for rejecting the testimony of witnesses. The learned Magistrate rejected the testimony of one witness on the ground that he is the next door neighbour and has a “soft corner for him”. We do not know why the evidence of the next door neighbour should be rejected; it can only be rejected if there is something intrinsically wrong with that evidence. The total circumstances in the case show that the appellant was in fact carrying on agricultural operations. He executed a number of lease-deeds, produced receipts and proved by oral evidence that he was an agriculturist. In his case, therefore, the presumption under para 3(2) could not be drawn. If the presumption is not drawn, then the case against him stands unproved because of the exemption which agriculturists enjoy.
7. On the whole, we are satisfied that his conviction was improperly reached. We allow the appeal and set aside his conviction. His bail bonds are cancelled. The order of forfeiture of foodgrains is also set aside. We are informed that the foodgrains were sold. If any money has been recovered by sale of the foodgrains, it shall be handed over to the appellant.
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