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CASE NO.: Appeal (crl.)  659 of 2007

PETITIONER: Kailash Prasad Yadav & Anr

RESPONDENT: State of Jharkhand & Anr

DATE OF JUDGMENT: 02/05/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T [Arising out of SLP (Crl.) No. 4144 of 2006]

S.B. SINHA,  J :

       1.      Leave granted.

                2.      Appellants were owners of a truck.  The said truck was hired  for transporation of foodgrains by one Kailash Chand Sahu.  It was allegedly  carrying wheat belonging to the Food Corporation of India.  A confiscation  proceeding was initiated.  An order of confiscation was passed by the  Deputy Commissioner, Sahibganj.  An appeal preferred thereagainst has  been dismissed by the Additional Sessions Judge \026 I, Sahibganj by an order  dated 7.03.2005 passed in Criminal (Confiscation) Appeal No. 32 of 2003.   Appellants filed a writ petition before the Jharkhand High Court which by  reason of the impugned judgment has been dismissed by a learned Single  Judge of the said Court.  

       3.      Mr. H.L. Agrawal, learned senior counsel appearing on behalf  of the appellants, in support of this appeal, would submit that wheat being a  de-controlled item and there being no control whatsoever, either on trading  of wheat or possession or transportation thereof, the impugned judgment  cannot be sustained.

       4.      Mr. B.B. Singh, learned counsel appearing on behalf of the  State, on the other, would submit that the appellants having abetted a fair  price shop dealer who was appointed under the Public Distribution System  (Control) Order, 2001 (for short "the 2001 Order", the impugned order  cannot be faulted with.

       5.      Indisputably, confiscation of goods and the vehicles and vessels  carrying the same amounts to deprivation of property.  Confiscation of an  essential commodity or a truck is permissible only if the provisions of any  order made under Section 3 of the Essential Commodities Act, 1955 (for  short "the Act") are violated.  When a vehicle is used for carrying an  essential commodity, it may be seized and ultimately directed to be  confiscated in terms of Clause (c) of Sub-Section (1) of Section 6-A of the  Act.  Violation of an order made under Section 3 of the Act, therefore, is a  pre-condition for passing an order of confiscation.

       6.      The 2001 Order does not deal with a matter dealing in wheat or  transportation thereof.  "Fair Price Shop" has been defined in Clause 2(k) of  the 2001 Order to mean "a shop, which has been licensed to distribute  essential commodities by an order issued under Section 3 of the Act, to the  ration card holders under the Public Distribution System."  Clause 3  provides for identification of families living below the poverty line.  Clause  4 provides for issuance of ration cards.  Clause 5 deals with scale of issue

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and issue price.  Clause 6 provides for the procedure for distribution of  foodgrains by the Food Corporation of India to the State Government or  their nominated agencies.  Sub-clause (2) of Clause 6 obligates the fair price  shop owners to take delivery of stocks from authorised nominees of the State  Governments to ensure that essential commodities are available at the fair  price shop within first week of the month for which the allotment is made.   Sub-clause (4) thereof obligates the authority or person who is engaged in  the distribution and handling of essential commodities under the Public  Distribution System not to wilfully indulge in substitution or adulteration or  diversion or theft of stocks from central godowns to fair price shop premises  or at the premises of the fair price shop.  Explanation appended thereto  defines "diversion" to mean "unauthorized movement or delivery of  essential commodities released from central godowns but not reaching the  intended beneficiaries under the Public Distribution System".  Clause 9  provides for penalty.  There is no provision for search of a vehicle.  The  power of search is confined to fair price shop or any premises relevant to  transaction of business of the fair price shop.  The power of such authorities  causing a search is confined to Sub-clause (3) of Clause 10 of the 2001  Order to search, seize or remove such books of accounts or stocks of  essential commodities where such authority has reason to believe that these  have been used or will be used in contravention of the provisions of the  Order.

       7.      A valid seizure, as is well known, is a sine qua non for passing  an order of confiscation of property.   

       8.      Unfortunately, this aspect of the matter has not been considered  by any of the authorities and the courts.  The High Court observed:

"From the impugned orders it appears that the  wheat, which were seized, were found kept in FCI  bags duly stitched by the FCI and they were meant  for being distributed to the poor through Public  Distribution System but the same was found being  diverted by the petitioners for the purpose of black  marketing and at the time of raid and seizure no  valid paper was produced by the petitioners  regarding possession of the wheat in question."

       9.      Whether there was any valid paper regarding possession of  wheat was not the subject matter of the confiscation proceeding.  We are  concerned with a vehicle carrying the wheat.  Appellants herein are not  concerned with wheat in question.   

       10.     We have to consider the matter from another angle.  The order  of confiscation is not passed only because it would be lawful to do so.  The  authorities must arrive at a clear finding in regard to the violation made  under Section 3 of the Act.  The issues which have been raised before us  have not been considered either by the Deputy Commissioner or by the  learned Sessions Judge as also by the High Court.  The matter is pending  before the criminal court. We, therefore, do not intend to delve further into  the matter.  Keeping in view the facts and circumstances of this case, we are  of the opinion that it was not a fit case where an order of confiscation could  have been passed.

       11.     Reliance placed by Mr. Singh on Shambhu Dayal Agarwala v.  State of West Bengal and Another [(1990) 3 SCC 549], itself stated the law,  thus:

"6. Section 6-A empowers confiscation of the  seized essential commodity, the package, covering  and receptacle in which the essential commodity  was found and the animal, vehicle or other  conveyance in which such essential commodity

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was carried. The words ’may order confiscation’  convey that the power is discretionary and not  obligatory\005"

       12.     Yet again, in Deputy Commissioner, Dakshina Kannada  District v. Rudolph Fernandes [(2000) 3 SCC 306], whereupon again Mr.  Singh has relied upon, it was held:

"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 \027 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 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\005"

       13.     We do not intend to deal with the question as to whether upon  conclusion of the trial, a case for forfeiture of the vehicle may be passed or  not, being wholly irrelevant at this stage.

       14.     For the reasons aforementioned, the impugned judgments  cannot be sustained, which are set aside accordingly.  The appeal is allowed.