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1965 DIGILAW 160 (MP)

STATE OF MADHYA PRADESH v. LAXMINARAYAN AGRAWAL

1965-12-13

A.R.YADAV, K.L.PANDEY

body1965
JUDGMENT A. P. Sen, J. :- The State of Madhya Pradesh has filed this appeal against an order of acquittal passed by the Magistrate First Class, Raipur, dated 13th December 1965, acquitting the respondent of the charge that he had committed a breach of Clause 3(1) of the Madhya Pradesh Foodgrains Dealers Licensing Order, 1958 (hereinafter referred to as the 'Order'), which is an offence punishable under Section 7 of the Essential Commodities Act, 1955 (hereinafter referred to as the 'Act') on the ground that the breach by him of its provisions was without any dishonest intention. 2. The facts giving rise to this appeal briefly stated, are these : The respondent who was previously carrying on business under the name and style of "Messrs. Gopal Dal Mills, Raipur" had been licensed as a dealer, under Clause 3(1) of the Order for the financial year 1960-61. That licence was, however, cancelled w.e.f. 13th April 1961 and admittedly neither had it been renewed nor the respondent had any licence to deal in foodgrains for the year subsequent thereto. Nevertheless, he imported 4 wagon loads of gram Dal weighing 923 quintals from Morena and Bhopal between the 5th and 13th January 1965, under 6 different railway receipts. After having placed orders for these purchases, the respondent applied to the Collector on 31st December 1964 for the issue of a licence as a dealer. In the meanwhile, when the consignments reached Raipur, he endorsed the relative railway receipts to Messrs. Ramswaroop Mohanlal Khandelwal, who are licensed as a dealer for the sale of his foodgrains by them as his commission agents, and they, accordingly, sold the same paid him the sale proceeds thereof after deducting their usual commission. During an investigation held on 20th January 1965, the Food-Inspector, Raipur discovered that the respondent was dealing in foodgrains without a licence and that the entire stock of 923 quintals of gram Dal imported by him had been sold in the commission agency of Messrs. Ramswaroop Mohanlal Khandelwal. Thereupon, he lodged a complaint against the respondents for having committed a breach of clause 3(1) of the order. 3. Ramswaroop Mohanlal Khandelwal. Thereupon, he lodged a complaint against the respondents for having committed a breach of clause 3(1) of the order. 3. Even though the learned Magistrate has found that the respondent in relation to the transactions in question came within the definition of a "dealer" as contained in Clause 3(1) of the Order, he has, nevertheless, acquitted him of the offence charged on the ground that on being apprised that his original licence had not been renewed, the respondent had taken the step of instructing his suppliers at Morena and Bhopal, not to despatch the goods but as the consignment had, in the meanwhile, been already sent, he did not take delivery of the goods but instead endorsed the railway receipts to a licensed dealer. Following the decision in Nathulal v. State to Madhya Pradesh, 1965 MPLJ 832 : ( AIR 1966 SC 43 ) the learned Magistrate held that the respondent had not acted with any guilty intention, and so far as the receipt of the sale proceeds by him from the endorses was concerned, he observed that such receipt from the commission agents was in the usual course of dealings. 4. The order of acquittal must be set aside on the short ground that even though Mens rea is an essential ingredient of an offence under Section 7 of the Act as held by their Lordships of the Supreme Court in Nathulal's case 1965 MPLJ 832 : ( AIR 1966 SC 43 ) (supra), the breach of Clause 3(1) of the order by the respondent, in the circumstances, necessarily involved a guilty mind on his part. That provision reads : "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." In Nathulal's case, 1965 M.P.L.J. 832 = ( AIR 1966 SC 43 ) the facts were entirely different. There, the dealer had made an application for the grant of a licence and had purchased foodgrains from time to time, after furnishing returns to the licensing authority on the belief that the licence would be issued to him in due course and the fact that the licensing authority did not communicate to him any rejection of his application confirmed his belief in that behalf. In that case, their Lordships were concerned with a storage of foodgrains by the dealer within the prescribed limits under a bona fide belief that he could legally do so. That is not the case here. The respondent had deliberately contravened the clause 3(1) of the Order, by dealing in a scheduled foodgrain without holding a licence therefore. No other conclusion than this is possible from the circumstances appearing. Not only he placed orders for the supply of 923 quintals of gram Dal from merchants at Morena and Bhopal but the entire quantity of the same imported by him was sold under his instructions, by his commission agents and the sale proceeds were duly recovered by him. We have no manner of doubt that the purchase of such a huge quantity of the foodgrain was not for the mere purpose of storage for his own consumption, but the purchases were in the course of his intention to carry on his trade as a dealer in foodgrains. This conclusion of ours stands reinforced by the subsequent sales effected by the commission agents on his behalf. 5. The learned counsel for the respondent strenuously contends, on the strength of their Lordships' decisions in Manipur Administration v. Nila Chandra Singh, AIR 1964 SC 1533 and of the Orissa High Court in M. Subha Rao v. State of Orissa, AIR 1968 Orissa 27, that a bulk purchase of 923 quintals of gram Dal would not per se amount to carrying on any business transaction of purchase and sale of the foodgrains in question and, therefore, the respondent was not a "dealer" within the meaning of clause 3(1) of the Order. We are unable to accept the contention which is wholly unfounded. 6. In AIR 1964 SC 1533 (supra), their Lordships were dealing with a single, solitary or causal transaction of storage of foodgrains, and in that context they observed : "It would be noticed that the requirement is not that the person should merely sell, purchase or store the foodgrains in question, 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 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 requirements 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" * * * * "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." In that case, their Lordships held that mere storage of foodgrains would not make the person storing the same a dealer without any independent evidence to show that such storage was for the purpose of carrying on business. On the principles enunciated by their Lordships, the respondent clearly fell within the mischief of cl. 3(1) of the Order because there was a continuity of transactions on his part. His was not a causal or solitary transaction of purchase but of distinct and separate transactions of purchases from different dealers at Morena and Bhopal. Furthermore, the foodgrains so procured by him were disposed of through his commission agents by several transaction in retail and wholesale (See, P.W. 2 Ramswaroop). The sales effected by the commission agents were undoubtedly for and on behalf of the respondent who was their principal. The decision in M. Subha Rao's case, AIR 1966 Orissa 27 (supra), is equally inapplicable. There also, there was no element of business present. 7. We are unable to appreciate the submission of the learned counsel that the mere indenting of foodgrains in bulk in anticipation of a grant of licence or the endorsements of the railway receipts in question to a licenced dealer, would not tantamount to carrying on of business of purchase and sale of the foodgrains by the respondent. A person who is granted a licence in terms of cl. 3(1) of the Order is alone entitled to carry on business of a dealer. Now, the indenting of a bulk consignment of 4 wagon-loads cannot be but for the purpose of trade. A person who is granted a licence in terms of cl. 3(1) of the Order is alone entitled to carry on business of a dealer. Now, the indenting of a bulk consignment of 4 wagon-loads cannot be but for the purpose of trade. It can hardly be asserted that the purchase in question by the respondent was for his own consumption. Similarly, the endorsing of the relative railway receipts by him was in the course of business dealings. Not only the initial purchases were made by him directly with the supplying dealers but the eventual sales were also effected by him, through the commission agency of another. We are of the view that both the constituent parts of the definition of a "dealer" as contained in cl. 3(1) of the Order, were present in the case. 8. The appeal, therefore, succeeds and is allowed. The order of acquittal passed by the learned Magistrate is hereby set aside and instead, the respondent is convicted under S. 7 of the Essential Commodities Act, 1955, for having committed a breach of cl. 3(1) of the Madhya Pradesh Foodgrains Dealers Licensing Order, 1958, and is sentenced to undergo rigorous imprisonment for a period of 4 months. Appeal allowed.