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PETITIONER: MANIPUR   ADMINISTRATION

       Vs.

RESPONDENT: M. NILA        CHANDRA SINGH

DATE OF JUDGMENT: 29/11/1963

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. GUPTA, K.C. DAS

CITATION:  1964 AIR 1533            1964 SCR  (5) 574

ACT: Manipur Foodgrains Dealers Licensing Order, 1958 cis.  2(a), 3(1)  & 3(2)-Storage of foodgrains-Dealer-Presumption  under cl.  3(2)-Whether  attracts cl.  3(1)-Essential  Commodities Act, 1955 (Act 10 of 1955), s. 7.

HEADNOTE: The  respondent was found storing over 100 mds. of paddy  in his godown without any-licence in violation of cl. 3 of  the Manipur Foodgrains Dealers Licensing Order.  He was  charged with having    committed  an  offence  under- s.  7  of  the Essential Commodities Act.    The respondent’s main  defence was that the paddy was meant  for  the  consumption  of  the members  of his family, which was disbelieved by  the  Trial Magistrate.   The Trial Magistrate held that as a result  of the  provisions  contained  in  cl.  3(2)  of  the  Order  a presumption  arose against the respondent, taking  his  case under  cl.  3(1) of the Order, which in turn  attracted  the provisions  of  cl. 7 of the Order and made  the  respondent liable  under,  s. 7 of the Essential Commodities  Act.   On these findings the Magistrate convicted the respondent under s.  7  of  the  Act.  An appeal by  the  respondent  to  the Sessions  Judge was dismissed.  The respondent then filed  a Revision  Application  to the Judicial  Commissioner,  which succeeded.   The Judicial Commissioner held that the  effect of  the presumption which can be legitimately  raised  under cl.  13(2) of the Order is not that the person against  whom the  said presumption has been drawn is a dealer in  respect of  the said goods; and so, merely oil the strength  of  the said presumption, cl. 3(1) of the Order cannot be attracted. In appeal by special leave, Held:     (i)  Under cl. 2(a) of the Order before  a  person can be said to be a dealer, it must be shown that he carries on  business of purchase or sale or storage for sale of  any of  the commodities specified in the Schedule and that  sale must  be in quantity of 100 minds. or more at any one  time; the  concept  of business in the  context  must  necessarily postulate  continuity of transactions.  A single, casual  or solitary transaction of sale. purchase or storage would  not make a person a dealer. (ii) Cl. 3(2) raises a statutory presumption that the  stock of  100  mds.  or more of specified  goods  found  with  ail

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individual, had been stored by him for the purpose of  sale. After  the  presumption  is  raised  under  cl.  3(2),  some evidence must be led which would justify the conclusion that the store which was made for the purpose of sale was made by the person for the purpose of carrying on the business.  The element  of  business  which is  essential  to  attract  the provisions  of  el. 3(1) is not covered by  the  presumption raised under cl. 3(2). 575 (iii)Cl.  3(2)  may have been deliberately worded so  as  to raise a limited presumption in order to exclude  cultivators who may on occasions be in possession of more than 100  mds. of  foodgrains grown in their fields; the Order,  apparently did.  not  want  to make such possession,  sale  or  storage liable  to be punished under cl. 3(1) read with s. 7 of  the Essential Commodities Act.

JUDGMENT: CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 143  of 1962. Appeal from the judgment and order dated December 2, 1961 of the-Judicial  Commissioner’s  Court at Manipur  in  Criminal Revision No. 20 of 1961. B.K. Khanna and R.N. Sachthey, for the appellant. W.S. Barlingay, and A.G. Ratnaparkhi, for the respondent. November 29, 1963.  The Judgment of the Court was  delivered by GAJENDRAGADKAR, J.-The short question of law which arises in this  appeal relates to the construction of cl. 3(2) of  the Manipur  Foodgrains  Dealers Licensing  Order,  1958.   This question arises in this way. The respondent was charged with having committed an offernce punishable under s. 7 of the Essential Commodities Act, 1955 in that on February 9 , 1960, he was found storing 178  Mds. of  paddy in his godown without any licence in violation  of cl.  3 of the said Order.  The case against  the  respondent was  that on February 9, 1960, his godown was  searched  and 178 Mds. of paddy was found stored in it.  This fact was not denied  by the respondent though he pleaded that  the  paddy which was found in his godown was meant for the  consumption of the members of his family who numbered fifteen.  He  also pleaded that out of the stock found in his godown 40 Mds. of paddy  belonged to Lalito Singh, his relation.  The  learned Sub Divisional Magistrate, Bishanpur, who tried the case  of the respondent did not believe his statement that the  stock was meant for the consump- 576 tion  of the members of his family.  He,  however,  believed the evidence of Lalito Singh that. 40 Mds. out of the  stock belonged  to him, and so he passed an order  directing  that out  of the stock which had been attached 40 Mds. should  be released  in favour of Lalito Singh.  In regard to the  rest of  the stock, conclusion the learned trial Magistrate  came to  the that as a result of the provisions contained in  cl. 3(2) of the Order a presumption arose against the respondent and  that  presumption took his case under cl. 3(1)  of  the Order.   That in turn attracted the provisions of cl.  7  of the  Order and made the respondent liable under s. 7 of  the Essential  Commodities Act.  On these findings  the  learned Magistrate convicted the respondent if the offence  charged. He,  however, held that it was not necessary to  direct  the forfeiture  of the paddy and that the ends of Justice  would

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be met if he was fined to Day Rs. 500/- in default to suffer rigorous imprisonment for three months. Against  this  Order the respondent    preferred  an  appeal before  the  learned Sessions Judge at Manipur  The  learned Sessions  Judge substantially agreed the view taken  by  the learned  Magistrate.    He believed the  witnesses  who  had referred  to the circumstances under which the paddy  stored in  the godown of the respondent was recovered, and he  held that  the respondent had been properly convicted under S.  7 of  the  Essential Commodities Act.  The order  of  sentence also was confirmed. The   respondent  then  moved  the  Judicial   Commissioner, Manipur,   by  a  Revision  Application  and  his   Revision Application succeeded.  It appears that before the  present- Revision Application came on for hearing before the  learned Judicial Commissioner he had examined the question of law in regard to the construction of clause 3(2) of the Order in  a group  of revision applications Nos. 7, 11 and 13  of  1961, and  had  pronounced his judgment on June 5, 1961.   He  had held  in  that judgment that the effect of  the  presumption which can be legitimately raised under cl. 3(2) is not  that the person against whom the said 577 presumption  has  been drawn is a dealer in respect  of  the said  goods;  and  so, merely on the strength  of  the  said presumption, clause 3(1) cannot be attracted; following  his earlier  decision the learned Judicial Commissioner  allowed the  respondent’s  Revision Application and  set  aside  the order of conviction and sentence passed against him.  It  is against this order that the Manipur Administration has  come to  this  Court  by  special leave, and  on  behalf  of  the appellant Mr. B.K. Khanna has contended that the view  taken by   the  learned  Judicial  Commissioner  is  based  on   a misconstruction  of cl. 3(2) of the Order.  That is how  the only  question which falls for our decision in  the  present appeal is in regard to the construction of the said clause. At  this  stage,  it would be convenient  to  refer  to  the relevant  provisions  of the Order.  Clause 2(a)  defines  a dealer  as  meaning  a person engaged  in  the  business  of purchase,  sale or storage for sale, of any one or  more  of the foodgrains in quantity of one hundred maunds or more  at any one time.  Clause 2(b) defines foodgrains as any one  or more  of  the foodgrains specified in  the  Order  including products of such foodgrains other than husk and bran.  It is common ground that paddy is one of the foodgrains  specified in Schedule 1. Clause 3 with which we are directly concerned in this appeal reads thus:               "(1)  No person shall carry on business  as  a               dealer except under and in accordance with the               terms  and conditions of a licence  issued  in               this behalf by the licensing authority;               (2)   For  the  purpose of  this  clause,  any               person  who stores any foodgrains in  quantity               of one hundred maunds or more at any one  time               shall,  unless  the  contrary  is  proved,  be               deemed to store the foodgrains for the purpose               of sale." Clause  7 provides that no holder of a licence issued  under this Order shall contravene any of the terms and  conditions of the licence, and if he has been 1 SCI/64-37 578 found  to have contravened them his licence is liable to  be cancelled or suspended.  These are the main provisions  with which we are concerned in the present appeal.

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In dealing with the point raised by Mr. Khanna before us, it is  necessary  to  bear in mind that clause  3  in  question ultimately imposes a penalty on the offender and as such, it is  in  the  nature of a penal  clause.   Therefore,  it  is necessary  that it must be strictly construed.  There is  no doubt,  as Mr. Khanna has contended, that if cl. 3(2)  which is  in  the  nature of a deeming provision  provides  for  a fiction, we ought to draw the fiction to the maximum  extent legitimately permissible under the words of the clause.  Mr. Khanna contends that the effect of cl. 3 is that as soon  as it  is  shown that the respondent had stored more  than  100 mds.  of  paddy he must be deemed to have  stored  the  said foodgrains for the purpose of sale; and his argument is that in drawing a statutory presumption under this clause, it  is necessary to bear in mind that this presumption is drawn for the  purpose  of sub-clause (1) of cl. 3. Therefore,  it  is urged that it would be defeating the purpose of cl. 3(2)  if the  view  taken  by the learned  Judicial  Commissioner  is upheld,  and  the presumption raised under cl. 3(2)  is  not treated  as  sufficient  to prove  the  charge  against  the respondent. In dealing with the question as to whether the respondent is guilty  under s. 7 of the Essential Commodities Act,  it  is necessary  to decide whether he can be said to be  a  dealer within the meaning of cl. 3 of the Order.  A dealer has been defined  by  cl. 2(a) and that definition  we  have  already noticed.  The said definition shows that before a person can be  said to be a dealer it must be shown that he carries  on business  of purchase or sale or storage for sale of any  of the commodities specified in the Schedule, and that the sale must be in quantity of 100 mds. or more at any one time.  It would be noticed that the requirement is not that the person should  merely  sell, purchase or store  the  foodgrains  in question, 579 but  that  he  must  be carrying on  the  business  of  such purchase,  sale, or storage, and the concept of business  in the   context  must  necessarily  postulate  continuity   of transactions.   It  is  not a  single,  casual  or  solitary transaction  of sale, purchase or storage that would make  a person a dealer.  It is only where it is shown that there is a  sort  of  continuity  of one or the  other  of  the  said transactions that the requirement as to business  postulated by  the definition would be satisfied.  If this  element  of the definition is ignored, it would be rendering the use  of the word ’business’ redundant and meaningless.  It has  been fairly conceded before us by Mr. Khanna that the requirement that the transaction must be of 100 mds. or more at any  one time  governs all classes of dealings with  the  commodities specified  in the definition.  Whether it is a  purchase  or sale  or storage at any one time it must be of 100  mds.  or more.   In other words, there is no dispute before  us  that retail transactions of less than 100 mds. of the  prescribed commodities  are outside the purview of the definition of  a dealer. The   forms  prescribed  by  the  Order  support  the   same conclusion.  The form for making an application for  licence shows  that  one of the cloumns which the applicant  has  to fill  requires him to state how long the applicant has  been trading  in foodgrains, and another column requires  him  to state the place or places of his business.  Similarly,  Form B  which  prescribes  the licence  shows  that  the  licence authorises the licence-holder to purchase, sell or store for sale, the foodgrains specified in the licence, and clause  2 of  the  licence says that the licensee shall carry  on  the

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aforesaid  business at the place indicated in  the  licence. Similarly,  Form C which pertains to stocks shows  that  the particulars  of the godown where stocks are held have to  be indicated and the quantity sold and delivered as well as the quantity  sold  but  not delivered  have  to  be  separately described.   These Forms, therefore, support the  conclusion that a dealer who comes within the definition prescribed  by clause 2(a) should be carrying on the business of purchase, 580 sale  or storage, and that would exclude solitary or  single cases of sale, purchase or storage. Bearing in mind this necessery implication of the definition of the word "dealer". let us proceed to inquire whether  the respondent’s  case  falls  under  cl.  3(1).   Clause   3(1) prohibits  persons  from  carrying on  business  as  dealers except under and in accordance with the terms of the licence issued  to them.  In other words, whoever wants to carry  on the business of a dealer must obtain a licence.  There is no doubt that if a person carries on a business as described by cl 2(a) and does it without obtaining a licence as  required by cl. 3(1), he would be guilty under s. 7 of the  Essential Commodities  Act.   In this connection, cl.  3(2)  raises  a statutory   presumption.   It  is  no  doubt  a   rebuttable presumption  which  is raised by this provision.  If  it  is shown by a person with whom a storage of more than 100  mds. of  one or the other of the prescribed foodgrains  is  found that  the said storage was referrable to his personal  needs or  to  some  other legitimate cause  unconnected  with  and distinct from the purpose of sale, the presumption would  be rebutted,  in  case, of course, the expla-nation  given  and proved by the person is accepted by the Court as  reasonable and  sufficient.  What does this presumption amount to?   It amounts to this and nothing more that the stock found with a given  individual  of 100 or more maunds  of  the  specified foodgrains  had been stored by him for the purpose of  sale. Having  reached  this  conclusion on  the  strength  of  the presumption,  the prosecution would still have to show  that the  store  of the foodgrains for the purpose of  sale  thus presumed was made by him for the purpose of carrying on  the business  of store of the said foodgrains.  The  element  of business which is essential to attract the provisions of cl. 3(1) is thus not covered by the presumption raised under cl. 3(2).   That part of the case would still have to be  proved by the prosecution by other independent evidence.  It may be that this part of the case can be proved by the  prosecution by showing 581 that  store of 100 mds. or more of the foodgrains was  found with  the  said person more than once.  How  many  times  it should  be necessary to prove the discovery of such a  store with  the said person, is a matter which we need not  decide in  the present case.  All that is necessary to be  said  in connection with the presumption under cl. 3(2) in this  case is  that  after  the presumption is raised  under  it,  some evidence  must  be led which would  justify  the  conclusion that,  the store which was made for the purpose of sale  was made  by  the  person for the purpose  of  carrying  on  the business. Mr.  Khanna  contends that in construing the effect  of  cl. 3(2)  we  must  remember  that  this  clause  makes   direct reference  to cl. 3(1), and that no doubt is true;  but  the fact that cl. 3(2) directly refers to cl. 3(1) does not help to widen the scope of the presumption which is allowed to be raised by it.  The presumption would still be that the store is made for the purpose of sale, and that presumption  would

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be  drawn  for the purpose of cl. 3(1).  That  is  the  only effect of the relevant words in cl. 3(2) on which Mr. Khanna relies. Mr.  Khanna then urges that if the Legislature had  intended that after drawing the presumption about the storage for the purpose of sale, the prosecution should still have to  cover some  further ground and lead additional evidence  to  prove that  the  said  store  had been made  for  the  purpose  of business  of storage, then the statutory  presumption  would really serve no useful purpose.  There may be some force  in this contention.  But, on the other hand, in construing  cl. 3(2), it would not be open to the Court to add any words  to the  said  provision;  and  in  fact  as  we  have   already indicated, the words reasonably construed cannot justify the raising of a presumption would take in the requirement as to business  which  is one ingredient-of the  definition  of  a dealer.   There,,fore,  we do not think  that  the  argument urged by Mr. Khanna about the general policy underlying  cl. 3(2)  can assist his contention in view of the  plain  words used by cl 3(2) itself. 582 It  appears that cl. 3(2) may have been deliberately  worded so  as  to raise a limited presumption in order  to  exclude cases  of cultivators who may on occasions be in  possession of  more than 100 mds. of foodgrains grown in their  fields. If a cultivator produces more than 100 mds. in his fields or otherwise   comes  into  possession  of  such  quantity   of foodgrains once in a year and casually sells them or  stores them,  the  Order  apparently  did not  want  to  make  such possession, sale or storage liable to be punished under  cl. 3(1)  read  with  s. 7 of  the  Essential  Commodities  Act. However that may be, having regard to the words used in  cl. 3(2),  we are unable to hold that the Judicial  Commissioner was  wrong  in  coming to the conclusion that  cl.  3(2)  by itself  would  not  sustain the prosecution  case  that  the respondent  is a dealer under cl. 3(1); and that  inevitably means   that  the  charge  under  s.  7  of  the   Essential Commodities  Act is not proved against him.  That being  so, we  must  hold  that the order of acquittal  passed  by  the Judicial Commissioner is right. The appeal accordingly fails and is dismissed. Appeal dismissed.