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PETITIONER: STATE OF U.P.

       Vs.

RESPONDENT: O.P. SHARMA

DATE OF JUDGMENT:       06/02/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. HANSARIA B.L. (J) G.B. PATTANAIK (J)

CITATION:  JT 1996 (2)   488        1996 SCALE  (2)356

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      This appeal  by special leave has been placed before us by a reference. The facts are not in dispute. The appellant- State has filed an F.I.R. with allegations as under:           "It  is  submitted  that  Modi      Paints    and     Varnish    Works,      manufactures Varnish  and Paints at      Modinagar.  This   firm  had   been      buying linseed oil and other edible      oils in  large quantities for quite      some time, and had been storing the      same  and   utilizing  it  for  the      manufacture of  paints and varnish.      This  industrial   unit  had   been      buying and  storing the linseed oil      and other  edible oils, and in this      respect the  said  industrial  unit      has not obtained any licence.           The said  industrial unit  had      given an  application for obtaining      a  licence   in  respect  of  their      business for  the purpose  of  said      oils  for  utilizing  the  same  in      paints  and   varnish   but   their      application      was      rejected.      Subsequent to  that also,  the said      industrial  unit  kept  purchasing,      storing and utilizing the said oils      and kept manufacturing said selling      paints and  varnish.  Earlier  also      this firm  had not  made  available      its  records  concerning  stock  of      bills.           To-day  on  4.12.1985  in  the      evening at  about 3.30  p.m. myself

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    Abdul   Qadir,   Senior   Marketing      Inspector,  Modinagar   under   the      direction of  Sri P.K.  Upadhayaya,      Addl. District  Magistrate [Supply]      Ghaziabad  along   with  Sri  Mohan      Singh,  District   Supply  Officer,      Ghaziabad,  Sri   Rameshwar  Dayal,      Supply  Inspector   Modinagar,  Sri      Rais   Ahmad,    Supply   Inspector      Modinagar,   Sri    S.K.    Mishra,      Marketing   Inspector,   Sri   S.K.      Singh,  Marketing   Inspector,  Sri      Anil  Kumar  Srivastava,  Marketing      Inspector,  Modinagar,   Sri   J.R.      Joshi,      Sub-Inspector,      Sri      SamaiSingh,  Constable  No.56,  Sri      Sukhbir   Singh,   Head   Constable      No.53,  Police   Station  Modinagar      etc. inspected the oilstored in the      oil  tankers  of  Modi  Paints  and      Varnish Works, Modinagar. To verify      four tanks  oil stored  in them the      oils stated  by  the  party,  three      samples each  were taken from every      tank total 27 samples and sealed on      the spot  in the  presence  of  the      representatives  of  the  firm  Sri      Kailash Chandra,  Store  Clerk  and      Sri O.P.  Sharma, Factory  Manager,      the stock  register  pertaining  to      the year  1985-86 consisting of 389      pages serially  numbered was  taken      into custody  after the  used pages      signed by  me and  the said Kailash      Chandra. The  stock of  stored  oil      was inspected  on the  basis of the      stock register  and  the  following      quantities of  oil was found stored      in the tanks:      1.   Soyabean oil  843 Qtls. and 57      kgs.      2.   Castor oil  8147 Qtls.  and 45      kgs.      3.   Refined Soyabean  oil 32 Qtls.      & 31 kgs.           The sample  fard was  prepared      of  one   sample  each   from   the      collected samples  and after taking      the signature  of every  one it was      handed over  to the store clerk Sri      Kailash Chandra. The stock register      pertaining to  the year 1984-85 was      taken into custody and according to      it on  4.11.1985 they  had in their      stock 2000  kiloliters  of  linseed      oil stored  with them. According to      the   oil   register   taken   into      custody,  the  aforesaid  unit  had      purchased the refines soyabean oil,      soyabean oil  and linseed  oil, had      stored the  same, utilised the same      for manufacturing  of  varnish  and      paints and sold the said paints and      varnish. The  said oil comes in the      category  of  edible  oils  because

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    soyabean oil  and refined  soyabean      oil are such oils in which the food      can be cooked. In this way the said      unit has  utilised the  edible oils      in the  manufacture of  paints  and      varnish  in   illegal  manner   and      without obtaining any licence.           In this  way the said unit and      the owner  of the  said unit  [Modi      Industrial   Unit]    Sri   Kailash      Chandra, Store  Clerk,  Om  Prakash      Sharma, Factory  Manager  and  Modi      Paints and Varnish Works, Modinagar      have violated  the clause  4 of the      U.P.   Oil   Seeds   and   Oilseeds      Products  Control  Order  1966  [as      amended upto date] Government Order      1284/XXIX-E-C-L-112[US]/77    dated      8.3.1977 which  is published in the      U.P. Gazette  dated 8th  March 1977      and G.O.  No.4500/XXIX-Section 8-22      Oil/82 dated 29.10.1982 and Clauses      2, 3,  and 6  of Pulses  Edible Oil      Seed  and   Edible   Oil   [Storage      Control]  Order  1977  [as  amended      upto date]  which is  a  punishable      offence under  Section 3/7  of  the      Essential Commodities Act, 1955.           Therefore  register   a   case      against all  the aforesaid  persons      and  take   necessary  action.  The      copies  of   recovery   memos   and      Supurdginama are  enclosed herewith      accordingly  the  entire  aforesaid      stored oil  has been  given in  the      custody  of   Sri   Nand   Kishore,      General Manager,  Modi  Industries,      Modinagar and  the sample  seal and      the nine  sealed samples along with      two stock registers are accordingly      being handed  over  by  me  in  the      police station."      The respondent  filed Criminal  Misc. Petition No.15985 of 1985  in the  High Court of Allahabad. The learned single Judge of  the High  Court by  order dated  January  7,  1986 quashed the  F.I.R. holding  that as per the case set out in the counter-affidavit, the respondent was not engaged in the sale or  purchase of  the oil  seeds; he has been engaged in the manufacture  of paints  and varnishes.  Therefore, he is not a  dealer in  oil seeds  or edible oil covered under the U.P. Oilseeds  and Oil-seeds  Products Control  Order,  1966 (for  short,  the  ’Order’].  Accordingly,  the  prosecution against the  respondent is  not in  accordance with law. The application was  accordingly  allowed  and  the  F.I.R.  was quashed. Thus this appeal by special leave.      The term  "dealer" has  been defined in clause 2 [g] of the Order thus:      "[g]  ‘Dealer’   means   a   person      engaged in the business of purchase      or sale  or storage for sale of oil      seeds -  and oilseeds products, but      does   not    include   the   [Food      Corporation of India] the U.P. Food      and      Essential      Commodities      Corporation or  a dealer who stocks

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    less than  5 quintals  of  oils  or      less than  10 quintals of oil seeds      or less than 25 quintals".      No dealer  shall occupy  or  set  up  any  premise  for purchase or  sale or  storage for sale of oil-seeds and oil- seeds products,  except under  and in  accordance  with  the terms of  a licence  granted by the Regional Food Controller under the Order.      Another  Order,  viz.,  Pulses,  Edible  Oil-seeds  and Edible  Oils  [Storage  Control  Order],  1977  was  issued. "Dealer" under  clause 2  [f] thereof was defined to mean "a person engaged  in the business of purchase, sale or storage for sale  of any  pulses, edible  oil seeds  or edible oils, whether or  not in  conjunction with  any other business and includes his representative or agent". Clause 3 thereof also provides the  mandatory requirement  of obtaining licence by dealers with the following language:      "3.    Licensing    of    dealers:-      Notwithstanding anything  contained      in  any   State  Orders  after  the      expiration of  a period  of fifteen      days from  the coming into force of      this clause,  no person shall carry      on business  as a  dealer in pulses      or in  edible oilseeds or in edible      oils except under and in accordance      with the  terms and conditions of a      licence granted under a State Order      if the  stocks of  pulses or edible      oilseeds  or  edible  oils  in  his      possession  exceed  the  quantities      specified below :      (i) Pulses        10 quintals for                    all pulses taken                    together.      (ii) Edible oils    5 quintals for           including      all edible           hydrogenated   oils including           vegetable      hydrogenated           oils           vegetable oils                          taken together      (iii)Edible oil-   30 quintals of           seeds including   all edible           groundnut in     oilseeds.           shell."      Clause 4  imposes restriction  on possession of pulses, edible oil-seeds  and edible  oils. No dealer shall, after a period of  fifteen days  from the  coming into force of this clauses either  by himself  or by  any person on his behalf, store or  have in  his possession at any time pulses, edible oil seeds  or  edible  oils  in  excess  of  the  quantities specified thereunder.  The  quantities  specified  or  stock limits - maximum and minimum - have been prescribed.      Admittedly, the  respondent does  not have  any licence issued under  either of  the Orders.  Both the Orders issued under Section  3 of  the Essential  Commodities Act regulate "possession  of"   ant  "dealing   in"  of   the   essential commodities for  equitable distribution at fair price or for supply to the consumers. The question, therefore is: whether the respondent  is a  dealer within the meaning of either of the Orders?  The case  of the  respondent is  that since  he stored 843  quintals and  57  kgs.  of  soyabean  oil,  8147 quintals and  45 kgs  of castor  oil and  32 quintals and 51 kgs. of refined soyabean oil for the purpose of manufacturer of paints  and varnish,  he is not a dealer. That contention

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was accepted  by the High Court. We find that the High Court is wholly  incorrect in  that construction.  It is seen that the dealer  means  a  person  engaged  in  the  business  of purchase or  sale or  storage for  sale of oil-seeds or oil- seeds products. The exemption from the Order is given to the Food Corporation  of India  and the  U.P. Food and Essential Commodities Corporation  as they are public undertakings for regulating distribution  of essential  commodities. They are not dealer  under the  Orders. Any  other dealer  who stocks quantity less  than the  minimal prescribed under the Orders need not obtain licence. Even a person who is engaged in the business of  purchasing oils or oil seeds for the purpose of using them  in another commercial products is a dealer under the definitions  referred to hereinabove, when he stores the quantity in excess of the limits prescribed by the Orders.      This controversy  is no  longer res integra.In State of A.P. v.  Abdul Bakhi  & Bros.  [(1964) 7  SCR 764], a three- Judge Bench  of this  Court considered  a  similar  question having arisen  under the  Hyderabad General  Sales Tax  Act, 1950. The  respondent was  carrying on  business of  tanning hides and  skins and  selling the  tanned skins.  He kept in stores a  total quantity of tanning barks. He contended that since he  was not  dealing in  them but  stored them for the purpose of  manufacture, he could not be held to be a dealer and that,  therefore, he  is not liable to pay the sales tax on its  turnover. This Court had rejected the contention and held that  when a  person is  buying or selling a commodity- specified in  the Rule  for  use  as  finished  products  in another commercial  use, he  is engaged  in the  business of buying, selling  or supplying that commodity and, therefore, he is a dealer within the meaning of that Act.      In  view  of  the  specific  definitions  contained  in clauses 2 [g] and 2 [f] of the respective Orders there is no doubt to  conclude that  he is a dealer under the respective Orders. Since he had not obtained a licence, he is liable to be proceeded with in accordance with law. ’      Dr. Ghosh,  learned senior  counsel appearing  for  the respondent, contended  that though the respondent had sought for licence,  the licence  had not  been given  to him  and, therefore, he  cannot be  proceeded with.  He  also  further contended  that   the  F.I.R.   does  not  contain  all  the ingredients of  the offence  and, therefore,  the High Court was right  in quashing  the  F.I.R.  It  is  seen  that  the complaint is self-explanatory and has specifically mentioned about the storage of oil and oil seeds without licence under the respective  Orders. It is not in dispute that the F.I.R. did mention  that he  purchased and  kept in store the above quantity. Thus  the ingredients have been specified. Whether he has applied for licence or not, we are not concerned with that controversy in this case.      The question  then is:  whether the High Court is right in its exercise of inherent power under Section 482 Cr.P.C.? This Court  in State  of Himachal Pradesh v. Pirthi i & Anr. [Crl. A.  1752 of 1995] decided on November 30, 1995 held as under:      "It is  thus settled  law that  the      exercise of  inherent power  of the      High Court  is an  exceptional one.      Great care  should be  taken by the      High  Court   before  embarking  to      scrutinize     the      FlR/charge-      sheet/complaint.    In     deciding      whether the  case is rarest of rare      cases to scuttle the prosecution in      its inception,  it first has to get

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    into the grip of the matter whether      the  allegations   constitute   the      offence. It must be remembered that      FIR is  only an  initiation to move      the machinery  and  to  investigate      into cognizable  offence. After the      investigation is  conducted and the      charge-sheet    is     laid     the      prosecution produces the statements      of  the  witnesses  recorded  under      Section 161  of the Code in support      of the  charge-sheet. At that stage      it is not the function of the Court      to weigh  the pros  and cons of the      prosecution  case  or  to  consider      necessity of  strict compliance  of      the provisions which are considered      mandatory and  its effect  of  non-      compliance. It  would be done after      the trial  is concluded.  The Court      has to  prima facie  consider  from      the averments  in the  charge-sheet      and the  statements of witnesses on      the  record   in  support   thereof      whether court could take cognizance      of the  offence, on  that  evidence      and proceed further with the trial.      If it  reaches a conclusion that no      cognigisable offence is made out no      further act could be done except to      quash the charge sheet. But only in      exceptional cases,  i.e. in  rarest      of  rare   cases   of   mala   fide      initiation of  the  proceedings  to      wreak private  vengeance process of      criminal is  availed of in laying a      complaint or  FIR itself  does  not      disclose  at   all  any  cognisable      offence - the court may embark upon      the   consideration   thereof   and      exercise the power.           When the  remedy under Section      482 is  available, the  High  Court      would be  loath and  circumspect to      exercise  its  extraordinary  power      under Article 226 since efficacious      remedy under  Section  482  of  the      Code is  available. When  the Court      exercises its  inherent power under      Section 482 the prime consideration      should only be whether the exercise      of   the power  would  advance  the      cause of  justice or it would be an      abuse of  the process of the court.      When investigating  officer  spends      considerable time  to  collect  the      evidence  and  places  the  charge-      sheet  before  the  Court,  further      action   should   not   be   short-      circuited by  resorting to exercise      inherent power to quash the charge-      sheet.  The  social  stability  and      order requires  to be  regulated by      proceeding against  the offender as      it  is   an  offence   against  the

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    society as  a whole.  This cardinal      principle should  always be kept in      mind    before    embarking    upon      exercising  inherent   power.   The      accused  involved  in  an  economic      offence destablises the economy and      causes  grave   incursion  on   the      economic  planning  of  the  Stats.      When the  legislature entrusts  the      power  to  the  police  officer  to      prevent organized commission of the      offence or offences involving moral      turpitude or crimes of grave nature      and are  entrusted  with  power  to      investigate    into  the  crime  in      intractable terrains  and secretive      manner    in    concert,    greater      circumspection and care and caution      should be  born in mind by the High      Court   when   it   exercises   its      inherent  power.   Otherwise,   the      social order  and security would be      put in  jeopardy and to grave risk.      The accused  will have field day in      establishing  the  economy  of  the      State  regulated under the relevant      provisions.      In State  of Bihar v. Rajendra Agrawalla [Crl. A. No.66 of 1996] decided on January 18, 1996, this Court observed as under:      "It has  been held by this Court in      several  cases  that  the  inherent      power of  the court  under  Section      482  of   the  Code   of   Criminal      Procedure should  be very sparingly      and cautiously  used only  when the      court comes  to the conclusion that      there would  be manifest  injustice      or there  would  be  abuse  of  the      process of the court, if such power      is not  exercised. So  far  as  the      order of cognizance by a Magistrate      is concerned,  the  inherent  power      can   be    exercised   when    the      allegations    in     the     First      Information Report or the complaint      together with  the other  materials      collected   during    investigation      taken at  their face  values do not      constitute the  offence alleged. At      that stage  it is  not open for the      court either  to shift the evidence      or appreciate the evidence and come      to the  conclusion  that  no  prima      facie case is made out."      In Mushtaq  Ahmad v.  Mohd. Habibur Rehman Faizi & Ors. [JT 199 (1) 656] this Court held as under:      "... According  to  the  complaint,      the   respondents    had    thereby      committed  breach   of   trust   of      Government money. In support of the      above  allegations   made  in   the      complaint  copies   of  the  salary      statements of  the relevant periods      were produced. In spite of the fact

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    that   the    complaint   and   the      documents annexed  thereto  clearly      made out  a, prima  facie, case for      cheating,  breach   of  trust   and      forgery, the  High Court  proceeded      to  consider  the  version  of  the      respondents  given   out  in  their      petition filed  under Section  482,      Cr.P.C.  vis-a-vis   that  of   the      appellant  and   entered  into  the      debatable area of deciding which of      the version  was true,  - a  course      wholly impermissible...".      We accordingly  hold that  the High Court has committed grave error  of law  in quashing  the F.I.R.  The High Court should be loathe to interfere at the threshold to thwart the prosecution exercising its inherent power under Section 482, Cr.P.C. or  under Articles  226 and 227 of the Constitution, as the  case may  be, and  allow the  law to  take  its  own course.      The appeal  is accordingly  allowed. The  order of  the High Court  is set  aside. Investigating Officer is directed to complete  the investigation  within four  weeks from  the date of  the receipt of this order and the appropriate Court would dispose of the case within six months therefrom.