REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.         755              OF 2009 (Arising out of SLP (C) No. 4959 of 2007)

Collector of Ganjam and Anr.  ..Appellants

Versus

Ramesh Chander Padhi  ..Respondent

J U D G M E N T

Dr. ARIJIT PASAYAT, J

1. Leave granted.  

2. Challenge in this appeal is to the judgment of a learned Single Judge

of the Orissa High Court setting aside part of the order imposing fine in lieu

of  confiscation  and directing  the  Collector,  Ganjam to  pass  orders  under

second proviso to Section 6-A(1) of the Essential Commodities Act, 1955

(in  short  the  ‘Act’).  The  writ  petition  was  filed  against  the  order  dated

29.5.2006 of Collector, Ganjam in a proceeding under Section 6-A of the

Act.

3. Facts leading to initiation of the aforesaid case is that on 21.12.2004

while the Marketing Inspector, Jaganathprasad Block, while following the

Sub-Collector, Bhanjanagar during tour to Jaganathprasad Block, found one

bus bearing registration No.OIG-185 parked at the Bus Stand and kerosene

oil was being poured in the oil tank of the bus. Looking at them, both the

driver  and  the  conductor  of  the  vehicle  fled  away.  He  drained  out  the

kerosene  oil  from the  oil  tank  of  the  bus  which  contained  42  liters  of

kerosene, and prepared the sample list by taking 2 liters out of the seized

kerosene oil for its chemical examination. The bus as well as kerosene were

seized and a proceeding bearing EME No.37 of 2004 was initiated against

the respondent and another under Section 6-A of the Act. The proceeding

was  initiated  for  contravention  of  Clause  8  of  Orissa  Kerosene  Control

Order, 1962 read with Clause 3 of Kerosene Control (Restriction on use and

Fixation of Ceiling Price),  1993.   In the  said  proceeding,  the respondent

who is the owner of the bus filed an application for release of the vehicle.

While  deciding  the  aforesaid  application,  the  Collector  concluded  the

proceeding under Section 6-A of the Act and directed confiscation of the

vehicle.  However,  the  Collector  in  view  of  the  provisions  contained  in

Section 6-A of the Act directed the respondent to pay a fine of Rs.20,000/-.  

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4. Stand of the writ petitioner was that while considering the application

for  release  of  the  vehicle,  the  Collector  could  not  have  concluded  the

proceedings under Section 6-A(1) of the Act. It was also pointed out that if

the Collector concluded the proceedings under Section 6-A(1) of the Act,

there was no reason  for him to impose conditions such as payment of fine

of Rs.20,000/-.  With reference to second proviso to section 6-A(1) of the

Act it was submitted that if fine is imposed in lieu of confiscation, the same

shall not exceed the market price of the essential commodities seized. This

plea found favour with learned Single Judge.  

5. In support of the appeal, learned counsel for the appellants submitted

that the true scope and ambit of second proviso to Section 6-A(1) of the Act

has not been kept in view.  

6. There is no appearance on behalf of the respondent in spite of service

of notice.  

7. The true scope and ambit of second proviso to Section 6-A(1) of the

Act  was  examined   by  this  Court  in  Deputy  Commissioner,  Dakshina

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Kannada District v.  Rudolph Fernandes (2000 (3) SCC 306). It was inter-

alia observed as follows:

“4. The short  question involved in these appeals  is  — whether fine in lieu of confiscation contemplated under the  second  proviso  to  Section  6-A(1)  of  the  Essential Commodities Act, 1955 (hereinafter referred to as  “the Act”)  provides for levy of fine on the basis  of  market value of  the confiscated vehicle or on the basis of  the market  price  of  the  essential  commodity  sought  to  be carried  by such  vehicle.  Section  6-A of  the  Act  is  as under:

“6-A  Confiscation  of  essential  commodity.—(1) Where any  essential  commodity  is  seized  in  pursuance  of  an order made under Section 3 in relation thereto, a report of  such  seizure  shall,  without  unreasonable  delay,  be made to  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  may,  if  he thinks  it  expedient  so  to  do,  direct  the  essential commodity  so  seized  to  be  produced  for  inspection before him, and if  he is  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  receptacle  in  which  such essential commodity is found; and (c) any animal, vehicle, vessel or other conveyance used in carrying such essential commodity:

Provided.... Provided  further  that  in  the  case  of  any animal,

vehicle, vessel or other conveyance used for the carriage of  goods  or  passengers  for  hire,  the  owner  of  such animal,  vehicle,  vessel  or  other  conveyance  shall  be

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given an option to pay, in lieu of its confiscation, a fine not exceeding the market price at the date of seizure of the  essential  commodity  sought  to  be  carried  by such animal, vehicle, vessel or other conveyance.”

(emphasis supplied)

5. At the outset it is to be stated that the object of the Act is to deter a person from illegally dealing in an essential commodity and consequently, impose a deterrent penalty against a person dealing in them illegally. While doing so, the law takes care to prevent the owner of any vehicle from aiding or assisting such an illegal activity. As per the Preamble of  the Act,  the Act  is  to  provide,  in  the interest  of  the  general  public,  for  the  control  of  the production,  supply  and  distribution  of,  and  trade  and commerce,  in  certain  commodities.  For  this  purpose, Section 3 empowers the Central Government to provide for regulating or prohibiting the production, supply and distribution  of  the  essential  commodity  and  trade  and commerce therein if the same is considered necessary or expedient inter-alia for maintaining or increasing supply of  any  essential  commodity  or  for  securing  their equitable  distribution  and  availability  at  fair  prices  by passing  an  appropriate  order.  Section  6-A  as  quoted above  provides  for  seizure  and  confiscation  of  the essential  commodity  for  contravention  of  any  order issued under Section 3. Further Section 6-B provides for issuance  of  show-cause  notice  and  the  procedure  for confiscation of the seized essential commodity as well as any  package,  covering  or  receptacle  in  which  the essential  commodity  is  found  or  any  animal,  vehicle, vessel  or  other  conveyance  used  in  carrying  such essential  commodity.  Section  6-C  provides  for  appeal against  the  confiscation  order  and  the  procedure  for return  of  the  confiscated  article  in  case  where  appeal filed against  the confiscation order or the order passed under Section 7 forfeiting the essential commodity is set aside. Thereafter, Section 6-D provides that the order of any  confiscation  under  the  Act  shall  not  prevent  the infliction of any punishment to which the person affected

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thereby is  liable  under  the Act.  Therefore,  even if  the essential  commodity  or  the  vehicle  is  confiscated,  the person can be prosecuted and the penalty provided under Section 7 can be imposed. Section 7(1)(a) provides for punishment  to  any  person  who  contravenes  any  order made under Section 3. Section 7(1)(b) and (c) empowers the court  to forfeit  to  the  Government  any property in respect  of which the order  has been contravened or  to forfeit any package, covering or receptacle in which the property is found and also any animal, vehicle, vessel or other conveyance used in carrying the property.  

6. In  the  light  of  the  aforesaid  provisions,  the  second proviso  to  Section  6-A [sic 6-A(1)]  is  required  to  be considered. First it is to be stated that the proviso limits the power of the competent authority to recover fine up to  the  market  price  for  releasing  the  animal,  vehicle, vessel or other conveyance sought to be confiscated. So maximum fine that can be levied in lieu of confiscation should not exceed the market price. For our purpose, the relevant part of the proviso would be “in the case of ... vehicle ... the owner of such ... vehicle ... shall be given an option to pay, in lieu of its confiscation, a fine not exceeding the market price at the date of seizure of the essential  commodity  sought  to  be  carried  by  such  ... vehicle”. Question is — whether fine should not exceed the  market  price  of  the  seized  essential  commodity  or whether  it  should  not  exceed  the  market  price  of  the vehicle.  For this  purpose,  it  appears that  there is  some ambiguity in the section. It is not specifically provided that  in  lieu  of  confiscation  of  the  vehicle  a  fine  not exceeding the market price of the vehicle or of the seized essential  commodity is  to  be  taken as a measure.  Still however, it is difficult to say that the measure of fine is related to the market price of the essential commodity at the  date  of  its  seizure.  It  nowhere  provides  that  fine should  not  exceed  the  market  price  of  the  essential commodity  at  the  date  of  seizure  of  the  vehicle.  The proviso  requires  the  competent  authority  to  give  an option  to  the  owner  of  such  vehicle  to  pay  in  lieu  of

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confiscation a fine not exceeding the market price. What is  to  be  confiscated  is  the  vehicle  and,  therefore,  the measure of fine would be relatable to the market price of the  vehicle  at  the  date  of  seizure  of  the  essential commodity  sought  to  be carried  by such  vehicle.  This would also be consistent with the scheme of Section 7 which  provides  for  levy  of  penalty.  It  empowers  the court trying the criminal case to pass an order forfeiting to the Government any property in respect of which the order  under  Section  3  has  been  contravened.  It  also empowers forfeiture to the Government of any package, covering or receptacle in which the property is found and in  addition  any  animal,  vehicle,  vessel  or  other conveyance used in carrying the commodity. Therefore, not only the essential commodity which is seized is to be forfeited, but the vehicle also could be forfeited to the Government.  Hence,  the  measure  of  fine  which  is required  to  be levied  in  lieu  of  confiscation  under  the second proviso to Section 6-A(1) would be relatable to the  market  price  of  the  vehicle  and  not  of  the  seized essential  commodity.  And,  the  fine  amount  in  lieu  of confiscation  is  not  to  exceed  the  market  price  of  the vehicle on the date of seizure of the essential commodity. That is to say, the limit of such fine would be up to the market price of the vehicle on the relevant date and it is within the discretion  of  the  competent  authority  to  fix such  reasonable  amount  considering  the  facts  and circumstances of each case.  

7. In Shambhu Dayal Agarwala v. State of W.B (1990 (3) SCC 569) after considering the scheme of Sections 6-A and 7 and dealing with the proviso (ii) to sub-section (2) of Section 6-A, this Court observed: (SCC p. 555, para 6)

“Section  6-A,  therefore,  merely  confers power of confiscation and not the power of release, disposal, distribution, etc., except to the limited extent permitted by sub-section (2) thereof. Of course, the second proviso to

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sub-section (1) of  Section 6-A permits  the grant  of  an  option  to  pay,  in  lieu  of confiscation  of  any animal,  vehicle,  vessel or  other  conveyance,  a  fine  equal  to  its market  price  at  the  date  of  seizure.” (emphasis added)

8. As a matter  of fact  in  Shambhu Dayal  Agarwala’s case (supra) (at

para 6) this Court dealt with the position and observed as quoted above.  

9. Learned Single Judge does not appear to have considered the scope

and  ambit  of  second  proviso  to  section  6-A(1)  of  the  Act  in  its  proper

perspective.  

10. Accordingly, we set aside the impugned order and remit the mater to

the High Court to consider the matter afresh in view of what has been stated

in Deputy Commissioner, Dakshina’s case (supra).  

11. The appeal is allowed.    

………………………………….J. (Dr. ARIJIT PASAYAT)

………………………………….J. (ASOK KUMAR GANGULY)

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New Delhi, February 06, 2009

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