http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: DAKSHINA KANNADA DISTRICT

       Vs.

RESPONDENT: RUDOLPH FERNANDES

DATE OF JUDGMENT:       29/02/2000

BENCH: M.B.Shah, B.N.Kirpal

JUDGMENT:

     Shah, J.

     C.A.No.3214  of  1989 In this appeal, a Matador  (Mini Lorry) carrying 44 bags of cement was intercepted and seized by   the  Bajpe  Police,   Dakshina  Kannada  on  22.8.1983. Proceedings  under  Section  6A of the  Act  were  initiated before  the Deputy Commissioner.  During the pendency of the proceedings,  the respondent applied for interim release  of vehicle  and the same was granted by order dated 1.9.1983 on his  furnishing  a  bank guarantee of Rs.  one  lakh.   That order was challenged by the respondent before the High Court of  Karnataka at Bangalore in W.P.  No.16668 of 1983 on  the ground  that  imposition of such condition was  illegal  and onerous.   The learned Single Judge after considering second proviso  to Section 6A(1) held that the words market price occurring  in  the  section relate only  to  the  essential commodity  sought to be carried.  According to the  learned Judge  the proviso gives a concession to the owner to avert confiscation  by paying fine not exceeding the market  price prevalent  on  the  date  of its seizure  of  the  essential commodity.   According to the learned Judge if option is to pay  a  fine equivalent to the market price of  the  vehicle then  there  is  no necessity to give  such  option.   Owner instead  of paying a fine equivalent to the market price can as  well  think of purchasing a new or fresh  vehicle.   He, therefore,  directed  release of the vehicle  accepting  the Bank  Guarantee  to  the  extent of  Rs.500/-  only.   Being aggrieved  the State preferred an appeal before the Division Bench of the High Court in WA No.2248 of 1983 which was also dismissed by the impugned order dated 22.3.1988.

     C.A.  Nos.  5074-75 of 1989

     In  these appeals, two transport vehicles belonging to the respondents carrying paddy were seized by the Police for the   alleged   contravention  of   Food   Control   Orders. Applications  were filed before the Deputy Commissioner  for release  of  said  vehicles.  By order dated  16.2.1989  the Deputy Commissioner passed an order directing the release of the  vehicles in question on their furnishing Bank Guarantee in  a  sum  of  Rupees three lakhs  each.   That  order  was challenged before the High Court of Karnataka by filing writ petition  Nos.   3563  and  3579 of 1989.   The  High  Court following  its  earlier  decision in Rudolph  Fernandes  vs. Deputy  Commissioner,  D.K.   [1984  (1)  Kar.   L.J.   200] (C.A.No.3214/89  before  us) allowed the writ petitions  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

reduced  the fine amount to rupees 10,000/- each.  Both  the orders are challenged before us in these appeals.  The short question involved in these appeals is  whether fine in lieu of  confiscation  contemplated under the second  proviso  to Section 6A(1) of the Essential Commodities Act, 1955 (herein after 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  under:  - to be carried by such vehicle.  Section 6A of  The Act is as 6A.  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 owners of  such  animal, vehicle,  vessel,  or  other conveyance 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  animal, vehicle, vessel or other conveyance. (emphasis supplied)

     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 Central Government to provide for regulating  or prohibiting  the  production,  supply  and  distribution  of 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  6A  as  quoted  above   provides  for  seizure  and confiscation of essential commodity for contravention of any order  issued under Section 3.  Further Section 6B  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  essential commodity  is found or any animal, vehicle, vessel or  other

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

conveyance  used  in  carrying   such  essential  commodity. Section  6C  provides  for appeal against  the  confiscation order and the procedure for return of 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  6D  provides that  the order of any confiscation under The Act shall  not prevent the infliction of any punishment to which the person affected  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 animal, vehicle, vessel or other  conveyance used in carrying the property.

     In  the light of aforesaid provisions, second  proviso to  Section 6A 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, relevant part of proviso would  be in  the case of vehiclethe owner of suchvehicle 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  suchvehicle. 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  vehicle  a fine not exceeding  the  market price of the vehicle or of the seized essential commodity is to  be taken as measure.  Still however, it is difficult  to say  that 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 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 confiscation a fine not exceeding the market price.  What is  to be confiscated is the vehicle and, therefore, 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  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, measure of fine which is required to be levied in lieu of confiscation under second proviso to Section  6A(1) would be relatable to the market price of the vehicle and not of the seized essential commodity.  And, the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

fine  amount  in lieu of confiscation is not to  exceed  the market  price  of  the  vehicle on the date  of  seizure  of essential  commodity.   That is to say, 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.

     In Shambhu Dayal Agarwala v.  State of West Bengal and another1  after considering the scheme of Sections 6A and  7 and  dealing  with  the proviso (ii) to sub-section  (2)  of Section 6A, this Court observed:  -

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

     Lastly  we  would mention that in the  impugned  order dated  22nd  March  1998, the High Court in support  of  its reasoning  referred  to  a similar provision  under  Section 115(2)  of  the  Customs  Act,   1962,  which  provides  for confiscation  inter  alia  of  vehicle   used  as  means  of transport  in  smuggling  of any goods or  carriage  of  any smuggled  goods  which is as under:- 115.  Confiscation  of conveyance. (1)

     (2)  Any  conveyance  or  animal used as  a  means  of transport  in the smuggling of any goods or in the  carriage of  any  smuggled  goods shall be  liable  to  confiscation, unless  the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner himself,  his agent, if any, and the person in charge of the conveyance or animal 1[***]:

     Provided  that  where any such conveyance is used  for the  carriage of goods or passengers for hire, the owner  of any  conveyance  shall be given an option to pay in lieu  of the  confiscation of the conveyance a fine not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be.

     Explanation.In  this  section, market  price  means market price at the date when the goods are seized.

     The  Court  observed that though the language  of  the aforesaid  proviso is clear, the idea sought to be  conveyed under  the proviso to Section 6A(1) of the Act appear to  be the  same.  In our view, the analogy drawn by the High Court is  erroneous because the proviso specifically mentions that where any such conveyance is used as a means of transport in the smuggling of goods, the owner of any conveyance is to be given  an  option to pay in lieu of the confiscation of  the conveyance,  a  fine not exceeding the market price  of  the goods which are sought to be smuggled.  Explanation provides that  market  price means market price at the date when  the goods  are  seized.   As  against this,  Section  6A  second proviso  does  not  refer to payment of fine  not  exceeding market  price  of  the   essential  commodity  but  apparent

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

reference  is  a fine not exceeding the market price of  the vehicle  sought  to  be  confiscated.  This  appears  to  be obvious  because  in case where market price of  the  seized essential commodity is more than the price of the conveyance then  owner of the conveyance would not come forward to take it back if he is asked to pay something more than its market price.   Similarly,  when  the market price  of  the  seized vehicle  is  much more than of the essential  commodity,  it cannot  be  said that instead of confiscation it  should  be released  at  a price which is less than its  market  price. Further  it is required to be noted that under Section 6B(2) no  order  confiscating vehicle or other conveyance  can  be passed  if  the  owner  proves to the  satisfaction  of  the competent  authority  that  it  was  used  in  carrying  the essential commodity without his knowledge or connivance.

     In  the  result,  the  appeals  are  allowed  and  the impugned  orders  holding that measure of imposing  fine  in lieu  of confiscation under second proviso to Section 6A  of the  Essential Commodities Act would be the market price  of the  essential  commodity  seized are set  aside.   However,       considering  the fact that since vehicles are  already released,   no   further   directions    are   required   to confiscation.   be  given with regard to the fine amount  in lieu of Ordered accordingly.  No costs.