M/S. Krishna Trading Company And Others v. State Of Bihar

S. Shamsul Hasan, J.:— This prosecution has been stated on the basis of a report to the Officer-in-charge, Malslami P.S, by Shri M.P Singh, D.S.P (Food) dated 2.4.1974 in which it is stated that in January, 1974, it was found that 17511 big tins of Vanaspati were lying at the station undelivered for days and the consignees of those tins had left them at the station because the Government had taken over distribution of Vanaspati and that the take-over would have affected the irregular manner of sale made by the consignees. Investigation was taken up and in that process sale and stock registers of several wholesale dealers in vanaspati were taken charge of and investigated. One of such dealers was Krishna Trading Company of Maroofganj, P.S Malsalami. After a through check it was found that this firm had shown various sales of vanaspati to various dealers of at various daces. All such sales, which were it transpired, fictitious were as follows:—

(i) 50 big tins of vanaspati were sold to Sajjan Stores of Madhepura on 18.12.73, which sale was denied by the proprietor of Sajjan Stores and was not found entered in his stock register. A written statement of the proprietor of Sajjan Stores was obtained in support of the above fact.

(ii) Sale of 6 tins of vanaspati was shown to Khublal Kesari of Jehanabad holding licence no. 11/67 on 3.12.73 which sale was denied by the said dealer and his stock register did not show any entry to that effect. A statement of Khublal under section 164 of the Code of Criminal Procedure was also taken, in view of the denial of Khublal.

(iii) 5 tins of vanaspati were shown to have been sold to one Ram Prasad Shah of Dinaporo on 1.12.73 and 15 tins on 15.12.73, who held licence no. 1/67. Sales of 7 tins, 10 tins, 10 tins, 10 tins and 10 tins were shown to have been made to one Sheo Dutta of Dinapore on 6.12.73, 6.12.73, 4.12.73, 18.12.73, and 28.12.73, respectively. He was holding licence no. 23/675 tins of vanaspati was shown to have been sold on 6.12.73 to one Jamuna Prasad holding licence no. 6/70. Another 10 tins of vanaspati was shown to have been sold on 15.12.73 to one Mahabir Sah of Dinapore holding licence no. 5/67. All the above sales were denied by the purchaser who made statement u/s 164 Cr. P.C (1), 2 sales of 5 tins each were shown to have been made on 18.12.73 to Chand Mull and Sheo Prasad holding licence nos. 9/67 and 90/67 respectively. On verification it was found that Sheo Prasad was the servant of Chand Mull but he did not hold any licence. Chand Mull accepted to have lifted only 5 tins on that date. Sale of 10 tins of vanaspati was shown to have been made to one Mukteshwar Nath of Dinapore on 18.12.73 holding licence no. 67/67 It was found that his licence no. was 3/7 and not 67/67, which could not be located from the Supply Office. 5 tins of vanaspati were shown to have been sold to Rajkumar on 11.12.73 holding licence no. 68/69. It was found that no person of the name of Rajkumar could be traced in Dinapore town and the licence no. 68/69 could not be located.

2. Statements of all the aforesaid persons were recorded under section 164 of the Code of Criminal Procedure in support of denials of sales made to them by the petitioner firm.

3. On the basis of the aforesaid report a case was instituted under section 7 of the Essential Commodities Act, 1955 (hereinafter to be referred to as ‘the Act’), under sections 465/467/471/420 of the Indian Penal Code and rule 114 of the Defence of India Rules. During the pendeacy of this application charge-sheet was submitted on 30.9.74 against petitioners 2 and 3. It was stated in the charge-sheet as follows:—

“In short the history of the case is that the accused persons sold Vanaspati tins to fictitious persons and thereby earned profit in black market”.

4. In the present application the petitioners seek the quashing of the F.I.R contained in Annexure Subsequently by a supplementary affidavit it has been further prayed that the entire prosecution based on the charge-sheet dated 30.9.74 be also quashed.

5. It is well settled that the charge-sheet is the report of a public servant within the meaning of section 11 of the Essential Commodities Act and, therefore, it is essential that the fact constituting an offence must at least be stated in the charge-sheet. It is also well settled in view of section 10 of the Essential Commodities Act that when the violation is by a Company, which definition includes a firm, then only such person or persons, who, at the time the contravention was committed, was or were in charge of and responsible to the Company for the conduct of the business of the company, as well as the Company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against. It was, therefore, essential that the charge-sheet should contain the facts required under section 11 of the Essential Commodities Act and as required by section 10 of the said Act, the connection and status of the petitioner vis-a-vis the firm and its administration must be indicated.

6. In this case the petitioners have been mentioned in the charge-sheet but it has not been stated that they were in charge of and responsible to the company or the firm for the conduct of its business. It has not been stated as to how petitioners 2 and 3 were connected with the actual working or conduct of business of the firm, except that it is admitted that they are partners thereof. This is in clear violation of the requirement of section 10 of the Act. The petitioners have been described in the supplementary affidavit dated 12.4.78 as wholesale dealer within the meaning of the Bihar Vanaspati Dealers' Licensing Order, 1967 (hereinafter to be referred to as ‘the Licensing Order’). This admission, however, relates to all the petitioners and it is difficult to ascertain how all the three petitioners could be wholesale dealers, in absence of any averment as to who is the licensee under the particular Order concerned. The F.I.R however, states that bungling in the sale of vanaspati was done by Krishna Trading Company of Maroofganj where in the said firm has been mentioned as an accused and these petitioners 2 and 3 have not been mentioned as accused. In the charge-sheet, however, as I have stated above, the Company has not been mentioned as accused but the two petitioners have been mentioned as such. Legal lacuna, therefore, in satisfying the requirement of section 10 of the Essential Commodities Act has been created by the slight omission on the part of the authority concerned while submitting charge-sheet.

7. It is also well settled that if the licensee is a Company, then the Company most also be prosecuted and in absence of such a prosecution, even those who come within the categories of persons described in Sec. 10 cannot be prosecuted. This has been laid down in an unreported decision of this Court in Crl. Misc. 1871/77, which was disposed of on 19.1.78

8. The net result of the aforesaid discussion is that the charge-sheet is defective for want of compliance of section 10 of the Act and due to the non-prosecution of the firm if it is a licence I may make it clear that if the charge-sheet had not been submitted as required by Sec. 11 of the Act, then there was no justification for quashing the F.I.R which cannot be the basis of cognizance in view of section 11 of the Act and which cannot be looked into for the purpose of taking cognizance.

9. I, however, do not find any merit in the submission that the fact constituting the offence has not been stated in the charge-sheet as required by section 11 of the Act. I have cited the appropriate portion of the charge-sheet above. From that it is clear that the facts constituting the offence have not been stated-sale to fictitious person as such is not permitted in law and an explanation based on law can only be given at the trial even if it based on the absence of mens rea or relience on casus omisus. In this case, therefore, there is sufficient prima facie compliance of section 11 of the Act.

10. Two other points have also been raised while seeking the quashing of the entire proceeding. It is stated that on the allegation as made in the F.I.R and the charge-sheet under the Vanaspati Control Order, 1967, a wholesale dealer was not required to make any investigation or inquiry in regard to the bona fide of the purchaser and the representations made by that purchaser in regard to his being an authorised licensee or in regard to the genuineness of such a purchaser. In that event, if certain sales are made to the purchaser and accordingly entries are made in the books of the whole-sale dealer, but, subsequently if the purchaser concerned denies such purchase or it is ultimately found that the purchaser concerned was or were of fictitious origin and character, no liability can be fastened on the wholesale dealer. If that is done, casus omisus will be supplied by the Court, which cannot be done. In fact, later, the Government itself realising the lacuna in the Licensing Order, promulgated Annexure 2 by which certain fresh instructions were issued, which the wholesale dealer was required to observe during the transaction of sale in order to ensure that the sale was made to a genuine party, who possessed requisite licence and the transaction was not a clandestine one.

11. It was also submitted that Vanaspati has been described in clause 2(2) of the Licensing Order, which is as follows:—

“Vanaspati means any vegetable oil subject to a process of hydrogenation in any form or any preparation thereof for cooking purpose containing not less than 50 per cent of hydrogenated vegetable oil.”

12. It does not appear from the F.I.R that the Vanaspati that was the subject-matter of this prosecution was the same Vanaspati that has been defined in the Licensing Order, because, it does not say that the particular Vanaspati contains not less than 50 per cent of the hydrogenated vegetable oil. In support of the 2 general proposition learned cousel for the petitioners placed a passage from the case of the C.I.T Madras v. T.V Sundram Iyangar (P.) Ltd. . 1976 1 SCC 77., which is as follows:—

“Consequently penal statutes have to be construed strictly in the sense that if there is a reasonable interpretation, which will avoid the penalty, that interpretation ought to be adopted where the legislature imposes a penalty. The words imposing it must be clear and distinct.”

13. The proposition stated in this decision does not arise in this case, there is no conflict of interpretation involved. The clause and section are clear and their application is undoubted, the only difference being the stage of the case when they could come to the benefit of the petitioners.

14. In dealing with the first point it is appropriate to place the relevant passages of the Vanaspati Control Order, 1967. Clause 3 thereof reads thus:

“(i) No person shall carry on business in vanaspati either wholesale or retail after 30 days from the commencement of this Order, except in accordance with the terms and conditions of licence issued in this behalf by the Licensing Authority.

(ii) A separate licence shall be necessary for each place of business.” Clauses 9, 10 and 11 of the said control order are to the following effect:—

“9.(1) The Licensing Authority may by order regulate the distribution, disposal, sale, use and consumption of Vanaspati within his jurisdiction subject to any general or special orders of the State Government in this behalf.

(2) The licensee, shall not sell Vanaspati at rates higher than those fixed from time to time—

(a) by the producer; or

(b) by the Central Government in exercise of any power conferred by law.

10. No dealer shall unless previously authorised by the licensing authority or any Officer authorised by the State Government withhold from sale or refuse to sell vanaspati.

11. Every dealer shall display at a conspicuous part of premises where he carries on his business, the price list and stock position of each variety of vanaspati held by him in stock for sale in a manner so as to be easily accessible for consultation by any person.”

15. It is clear from reading of these clauses that the wholesaler is not required to verify the genuineness of the party making the purchase and he cannot withhold from sale or refuse to sell vanaspati to any person if a purchaser comes and demands to make the purchase. The conditions of the licence, which are relevant for the purpose of our enquiry, are condition no. 6, 7, 8 and 9 and they are as follows:—

“6. The licensee shall not—

(i) enter into any transaction involving purchase, sale or storage for sale of vanaspati in a speculative manner prejudicial to the maintenance and easy availability of supplies of vanaspati in the market; or

(ii) withhold from sale, supplies of vanaspati ordinarily kept for sale; or

(iii) charge, in respect of sales of vanaspati made by him, a margin or profit in excess of the rate prevailing in the market at the time of sale or at a rate in excess of any maximum rate of margin fixed for wholesale transaction in vanaspati by a representative body of vanaspati dealers for the locality concerned.

7. The licensee shall issue to every customer correct receipt or invoice as the case may be giving his own name, trading name, address and licence no. and year as well as the name and address of the customer and showing the date of sale, the quantity sold, the rate at which sold and total price charged and shall kept a duplicate of the same available for inspection by the Licensing Authority or any officer authorised by the State Government in this behalf.

8. The licensee shall comply with any general or special directions issued by the Licensing Authority or any officer authorised by the State Government from time to time, in regard to the storage or disposal of any stocks of vanaspati held by him in regard to the maintenance of any other records or reference as required by the Licensing Authority or any officer authorised by the State Government.

9. The licensee shall not refuse to sell or withhold from sale any vanaspati in his possession in such quantities, at such times to such persons and in such manner, as the Licensing Authority or any officer authorised by the State Government may, by written order, direct.”

16. From the conditions of the licence, quoted above, it is clear that the sale cannot be withheld, excess cannot be charged and every customer shall be issued correct receipt of invoice giving his name, trading name and address, licence number and the year as well as the name and address of the customer showing the date of sale, quantity sold, rate charged, and the licensee shall also comply with any general or special directions given by the authorities, who will also be entitled to regulate the sale, etc. by written order from time to time. It does not say any where that the wholesale licensee will be required to verify the correctness of the details of information given by the customer at the time of purchase. Annexure 2, as stated above, came into existence on 15.3.74, that is, after this occurrence, and it has not been shown by the State that there was similar instruction in vogue when this occurrence took place. This Annexure 2 has been issued by the Collector giving certain directions both to the wholesale dealers and the retailers so as to ensure that the sales are made to genuine parties and to protect against clandestine sale by the whole sale dealer.

17. It is correct that casus omisus cannot be supplied by the Court and that can only be done by statute or statutory action. It is not the function of the Court to repair the blunders that are found in legislations nor is it the function of the Court to fill up the gap by a process of judicial interpretation. I am, however, not inclined to treat this as a point of merit for the purpose of quashing the trial. This point could be raised before an appropriate forum and on an appropriate occasion which is not the present one. Since determination of question of facts are involved and consideration of the defence case will become essential, this stage is inappropriate for the consideration of these matters. The question of absence of mens rea, which arises in this case, can only be examined at the trial.

18. The second point, in my view, has no substance at all. Firstly, the petitioners have been described in the supplementary affidavit as wholesale dealers within the meaning of the Vanaspati Control Order, 1967, and they are holding licence thereunder. They are transacting business undoubtely under the said Order and at no time has it ever been asserted that as they are dealing in Vanaspati, that does not come within the definition of ‘vanaspati’ as defined in the Vanaspati Control Order and they are not subjected to any control of the Government under that order. Secondly, the description of vanaspati it sent in regard to the fact that it must not contain Jess than 50 per cent of hydrogenated vegetable oil is more a description for the purpose of adulteration and quality then for the purpose of application of the Control Order. Learned counsel for the petitioner has relied on a decision of the Supreme Court in the State of Maharashtra v. Hansraj Depan Parle Oil Centre . 1977 2 SCC 216.. That case was after the party had been tried and acquitted. The accused in that trial hat challenged that what was being sold was not vanaspati within the meaning of items 15 and 16 schedule I of the Maharastra Scheduled Articles (Display and Marking of Prices) Order, 1966. The defence of the accused was that they were selling hydrogenated oil or vegetable ghee or vegetable oils and not vanaspati. It this case no such situation arise at this stage. It has been held in the State of Bihar v. Bhagirath Sharma . 1973 2 SCC 257. (as has been held in the earlier decision) that a dealer must know with reasonable certainty and must have a fair warning as to what his obligation is and what act of commission or omission on his part would constitute a criminal offence. All this, however is very relevant when a trial proceeds and the prosecution is required to prove that the offence relates actually to the commodity, which has been described in the Vanaspati Control Order, 1967. In view of what I have stated above, the charge-sheet is quashed as far as these petitioners are concerned due to the non-compliance of the requirements of section 10 of the Essential Commodities Act.

19. In the result, the application is allowed and the charge-sheet in question, as far as it relates to these petitioners, is quashed. It will be open to the authorities concerned and the Court to proceed in accordance with law.

20. Before I part with the judgment I would like to draw the attention of the authorities concerned that they would be well advised to keep the legal situation in mind when such prosecutions are launched and such cases are investigated. Copy of the judgment may be sent to the concerned Departments of the Government, i.e, the Inspector-General of Police and the Food Commissioner.