Sandeep Industries v. State of Rajasthan — 1996 DIGILAW 359 (RAJ)

Honble TIBREWAL J., – The above petitions are being disposed of jointly as the subject matter and question of law involved in them is same and identical. (2). The crucial question which requires consideration and decision in the matter is : "Whether the owner of the assential commodities, ordered to be confiscated by the Collector under Sec. 6-A of the Essential Commodities Act, 1955 (hereinafter to be referred to as the Act), is entitled to the return of the same in case the criminal prosecution instituted against him under Sec. 7 of the Act in relation to the same goods ends by his discharge or acquittal? In other words, what is the effect on confiscation proceedings taken under Sec. 6-A or 6-C of the Act and any order passed therein if criminal prosecution instituted in relation to the same goods comes to an end by discharge or acquittal of the accused? (3). The facts giving rise to the above question are not much in dispute and the same may be stated. Petitioners business premises were inspected on September 29, 1994 by the Enforcement Staff, which included Additional District Supply Officer (ADSO), Jai- pur. The inspecting party seized 1436 tins of the `Deshi-Ghee and 72 tins of Umang Branch `Deshi Ghee weighing 22,620 Kg. in all. The stock register of the firm was also checked and seized by the inspecting party. It is alleged that certain irregularities were noticed to have been committed by the petitioners violating clauses 15 and 16 of the Rajasthan Trade Articles (*Licensing and Control) Order, 1980 (for short the Order of 1980). The ADSO, after seizure of the goods, reported the same to the District Collector for taking confiscation proceedings. The case was ultimately decided by the Additional District Magistrate No. 2, Jaipur, who ordered confiscation of the seized goods on September 13, 1995 in exercise of power under Sec. 6-A of the Act on being satisfied of contravention of Clauses-15, 16 and 17 of the Order of 1980, Clause 4 of the Pulses, Edible OIl-seeds and Edible Oils (Storage Control) Order, 1977 and the provisions of the Rajasthan Imported Food Stuffs (Regulation of District and Prohibition of Unauthorized Sale) Order, 1986. The petitioner challenged this order by filing an appeal before the Food Committee constituted U/s 6-C of the Act. The petitioner challenged this order by filing an appeal before the Food Committee constituted U/s 6-C of the Act. The Appellate Authority decided the appeal on 20th December, 1995 and while setting aside the order of confiscation, remanded the case to decide it afresh on the question of confiscation after notice to the petitioners in light of the judgment. In S.B. Criminal Revision Petition No. 55/96, this order is being challenged by the petitioners. (4). Apart from the confiscation proceedings, the ADSO also lodged a report at Police Station, Jhotwara, Jaipur, on October 7, 1994, whereupon Crime No. 425/94 was registered under Section 3/7 of the Act. On completion of investigation, the police came to the conclusion that violation of any of the aforesaid Orders was not committed by the petitioners, hence, a negative report, which is popularly known as `Final Report (FR) was submitted before the Special Court (E.C. Cases), Jaipur. After notice, the learned Judge of the Special Court, by a speaking order dated, October 13, 1995, accepted the Final Report of June 27, 1995, holding that no violation of any of the provisions of the aforesaid Orders, namely, the Rajasthan Trade Articles (Licensing & Control) Order, 1980, Pulses Edible Oil Seeds and Edible Oils (Storage Control) Order, 1977 and the Rajasthan Imported Food Stuffs (Regulation of Distribution and Prohibition of Unauthorized Sale) Order, 1986, was committed by the petitioners. The offence under section 420 I.P.C., too, was held not to have been committed by the petitioners. The learned Judge, therefore, held that the seized goods were not liable to be forfeited to the State Government under Section 7(1)(b) of the Act and it was observed that the seized goods shall be released to the petitioners subject to the decision in the appeal against the order confiscating goods. Being aggrieved by this part of the order, the petitioners have filed S.B. Criminal Misc. Petition No. 74/96 under Section 482 of the Code of Criminal Procedure. (5). Shri Narendra Jain, learned counsel for the petitioners, contended that after the discharge of the petitioners and express finding in criminal case that no contravention of any Order made under Section 3 of the Act has been committed by them, the confiscation proceedings do not survive and the petitioners are entitled to the return of the seized goods. (5). Shri Narendra Jain, learned counsel for the petitioners, contended that after the discharge of the petitioners and express finding in criminal case that no contravention of any Order made under Section 3 of the Act has been committed by them, the confiscation proceedings do not survive and the petitioners are entitled to the return of the seized goods. Learned counsel contended that for initia- tion of confiscation proceeding and also for passing an order of confiscation, the condition precedent is that there should be contravention of an Order made under Section 3 of the Act. It was further contended that confiscation proceedings are quasi-criminal in nature and they are always subject to decision in criminal prosecutions, if any. In other words, the contention is that decision of Criminal Court finally governs the fate of the confiscated goods. If the criminal case in respect of contravention of the same provision of the Order in respect of which confiscation proceeding is initiated, ends by discharge or acquittal of the accused, the effect of the same would be that confiscation, proceedings cannot survive and inspite of any order of confiscation, the owner of the seized goods shall be entitled to the return of the same or its price as the case may be. (6). On the other hand, the learned Public Prosecutor, seriously contended that confiscation proceedings and criminal prosecution of the accused are independent of each other and confiscation proceedings can be initiated even without launching prosecution of the accused, as such, any order of discharge or acquittal of the accused by a Criminal Court shall have no effect on the confiscation proceedings. Then, it was contended that an order discharging the accused is not his acquittal and the effect of accepting Final Report by the Special Judge, at the most, is that no criminal prosecution is launched against him. He, therefore, contended that the order of the Special Court to release the seized goods subject to any order in confiscation proceeding is valid in law and calls for no interference by this Court. (7). After giving deep and careful consideration to the above submissions, I am of the view that submissions made by Shri Jain, learned counsel for the petitioners, have force and deserve to be accepted for the reasons to be given here- inafter. (8). The Essential Commodities Act was enacted in the year 1955. (7). After giving deep and careful consideration to the above submissions, I am of the view that submissions made by Shri Jain, learned counsel for the petitioners, have force and deserve to be accepted for the reasons to be given here- inafter. (8). The Essential Commodities Act was enacted in the year 1955. Undoubtedly, it is a social legislation with a dominant object of ensuring equitable distribution of essential commodities as defined and notified under the provisions of the Act. It contains stringent provisions for deprivation of both liberty and property. Section-3 of the Act empowers Central Government to issue orders for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein, if it is of the opinion that it is necessary or expedient so to do for maintaining or increase supplies of any essential commodity or for securing their equitable distribution or for securing any essential commodity for the defence of India or the efficient conduct of military operations. On delegation by the Central Government, such power can be exercised by the State Government also. Contravention of a provision of any order made under Section 3 of the Act is punishable under Section 7, which provides penalty of imprisonment and also forfeiture of the property to the Government in respect of which the Order is contravened. Forfeiture can also be ordered in respect of any packing, covering or receptacle in which the property is found and any animal., vehicle, vessel or other conveyance used in carrying the property. (9). Initially, the Act did not provide any provision for confiscation of the esse ntial commodity seized, section 6A to 6-D were introduced by the amending Act No. 25 of 1986 to make administration of the Act more effective. The confiscation proceedings are undertaken on the basis that contravention of the provision of an Order made under Section 32 of the Act is committed. Such proceedings are not in the nature of proceedings of prosecution for a criminal offence but are quasi-crimi nal in character for a limited purpose, namely, for confiscation or release of the seized goods. It may be observed that initiation of proceedings under Section-6A does not debar a criminal prosecution. Such proceedings are not in the nature of proceedings of prosecution for a criminal offence but are quasi-crimi nal in character for a limited purpose, namely, for confiscation or release of the seized goods. It may be observed that initiation of proceedings under Section-6A does not debar a criminal prosecution. Section 7 provides for forfeiture of essential commodities to the State Government, if on conclusion of criminal trial it is found that an order made U/s. 3 of the Act has been contravened or violated by the accu- sed. The power of forfeiture under section-7 can be exercised on completion of the trial, which is a time consuming factor, as such, the provisions relating to confiscation of the goods were incorporated in the Act for regulating in public welfare the equitable distribution of essential commodities. (10). Section 6A of the Act states that whenever any essential commodity is seized for contravention of an Order made under Section-3 of the Act, it shall be reported to the Collector of the District or the Presidency town in which such essential commodity is seized. The section empowers the Collector to confiscate the essential commodity so seized, package, covering or receptacle in which essential commodity is found and any animal, vehicle, vessel or other conveyance used in carrying such essential commodity, if he is satisfied that there has been a contravention of an Order made under Section 3 of the Act. Sub- section (2) further empowers of the Collector to order the essential commodity to be sold at control price or by public auction if it is subject to speedy and natural decay or it is otherwise expedient in the public interest so to do. A bare perusal of Section 6A (1) makes two things clear, namely; that confiscation of essential commodity is at the discretion of the Collector and the Collector must be satisfied, before ordering confiscation, that there has been a contravention of an Order made under Section 3 of the Act. So, contravention of an Order made under Section 3 is a condition precedent for ordering confiscation under Section 6A. So, contravention of an Order made under Section 3 is a condition precedent for ordering confiscation under Section 6A. Then sub-section (3) of sec- tion 6A provides : "(3) Where any essential commodity is sold, as aforesaid, the sale proceeds thereof after deduction of the expenses of any such sale or auction or other incidental expenses relating thereto, (a) where no order of confiscation is ultimately passed by the Collec tor, (b) Where an order passed in appeal under sub-section (1) of Section 6-C so require; or (c) Where in a prosecution instituted for the contravention of the Order in respect of which an order of confiscation has been made under this section, the person concerned is acquitted. be paid to the owner thereof or the person from whom it is seized." (11). Section 6-C makes provision of an appeal against an order of confiscation passed under Section 6-A. Sub-section (2) of Section 6-C, then, provides that if an order passed under Section 6A is modified or annulled by the appellante authority, or wherein a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been made under Section 6A, the person concerned is acquitted and in either case, it is not possible for any reason to return the essential commodity seized, such person shall, except as provided by sub-section (3) of section 6-A, be paid the price therefor as if the essential commodity had been sold to the Government with reasonable interest calculated from the date of seizure of the essential commodity. The method for determination of the price is also provided in the Section. (12). A perusal of the above provisions makes it crystal clear that contravention of an order made under Section 3 of the Act is a condition precedent for initiation of confiscation proceedings and also for ordering confiscation of the seized goods. In other words, if any such Order is not contravened by the owner of the goods then confiscation proceedings cannot survive and the goods cannot be ordered to be confiscated. In other words, if any such Order is not contravened by the owner of the goods then confiscation proceedings cannot survive and the goods cannot be ordered to be confiscated. Sub-section (2) of Section-6C lays down two conditions under which the essential commodity seized shall be returned or price therefor shall be paid to the owner-(i) when an order of confiscation is modified or annulled in appeal by the appellate authority under Section 6C of the Act or (ii) when the prosecution instituted against the owner for contravention of the Order in respect of which the order of confiscation has been made under Section 6A has ended in acquittal. In case, any of the aforesaid two conditions is satisfied, the owner is entitled to the return of the seized commodity or the price therefor with reasonable interest if the essential commodity has been sold. This proposition of law is not disputed by the learned counsel appearing for the parties. (13). In background of the above factual and legal aspects, the core of the question is : What is the effect on the confiscation proceedings and the order of confiscation, as a result of the order of Criminal Court discharging the accused holding that no Order made under Section 3 of the Act is contravened by him. (14). No doubt, Section 6A and 6C speak about acquittal of the accused of the charge of contravening an order in respect of which confiscation proceedings are initiated for the return of the seized essential commodity or payment of the price therefor. The expression `acquittal indicates termination of criminal prosecution against the accused and the effect of acquittal is that the offence is not committed by him. In fact, it means a judicial discharge from an accusation. The effect of acqui- ttal under Section 7 of the Act is that the order made under Section 3 of the Act is not contravened by the accused. The logic behind the return of the seized goods or payment of price therefor on acquittal of the accused is that contravention of the order made under Section 3 of the Act, which is also a condition precedent for confiscation has not been committed by him. The logic behind the return of the seized goods or payment of price therefor on acquittal of the accused is that contravention of the order made under Section 3 of the Act, which is also a condition precedent for confiscation has not been committed by him. On the same analogy, if the accused is discharged from accusation made under the Act in criminal prosecution with categorical finding that no order, made under Section 3 of the Act, is contravened or violated by him, it shall have the same effect as that of an acquittal for the purpose of confiscation proceedings or passing an order to confiscate the seized goods. After a finding that no Order made under the Act has been violated or contra- vened by the accused, the basis for continuation of confiscation proceedings or for passing an order of confiscation of the seized goods disappears and the very jurisdiction of the concerned authorities to proceed with confiscation proceedings comes to an end. In case where confiscation of the goods has been ordered under Section 6A, the appellate authority is also under statutory obligation to return the seized goods to the owner or the value therefor. This interpretation will promote justice and effectuate the object behind the statute which requires violation or contravention of an Order made under Section 3 of the Act for initiation of confiscation proceeding. I would like to make it clear that the view expressed by me is restricted in respect of those cases where an order of discharge is passed by the Criminal Court, holding that no Order made under Section 3 of the Act is contravened by the accused. No opinion is being expressed by me where discharge order is passed on any other ground. (15). The matter may be judged from another angle also. As stated earlier, confiscation proceedings are quasi-criminal in nature and the inquiry before the confiscating authority is of a summary nature. The authorities empowered to decide the question of confiscation under Section 6A or 6C are bound by the decision of a Criminal Court. (15). The matter may be judged from another angle also. As stated earlier, confiscation proceedings are quasi-criminal in nature and the inquiry before the confiscating authority is of a summary nature. The authorities empowered to decide the question of confiscation under Section 6A or 6C are bound by the decision of a Criminal Court. Once a criminal Court holds that no contravention or violation of any order made under Section 3 of the Act is committed by the accused while discharge or acquitting him of the offence, the authorities under Section 6A or 6C while deciding the question of confiscation cannot take a different view and hold that contravention of the Order is committed by the accused. This is not permissible under the law, though, the confiscation proceedings and criminal prosecution of the accused may be technically independent of each other. (16). Under Section 452 Cr.P.C., the normal rule is that in case the accused is discharged or acquitted in an offence relating to property, the Court must restore property to him, if any, recovered from his possession. In case, where ownership and possession are not in dispute, it would be fair and equitable to return the seized commodity to the owner in the event of an acquittal or discharge. Justice and reason constitute general legislative intent in every piece of legislation. The intention of legislature could only be to promote the standard of justice and propriety. It is plain by the language of Section 6A and 6C that for an order of confiscation of an essential commodity it is necessary and a condition precedent that there should be contravention of an Order made under Section 3 of the Act. Therefore, the order of discharge of the accused by a competent criminal court after holding that no Order made under Section 3 of the Act has been contravened, will carry the same meaning as that of an acquittal deployed in Section 6A or 6C of the Act. Any other interpretation would lead to contradiction and absurdity. (17). Therefore, the order of discharge of the accused by a competent criminal court after holding that no Order made under Section 3 of the Act has been contravened, will carry the same meaning as that of an acquittal deployed in Section 6A or 6C of the Act. Any other interpretation would lead to contradiction and absurdity. (17). The Kerala High Court in C. Unni vs. State of Kerala (1) dealing with the scope of Section 6C (2) of the Act observed (at page 585) as under : "The Scheme of the Act appears to be that though proceedings for confiscation by the Collector and Criminal Prosecution for contravention of the Order in respect of which an order of confiscation has been made under Section 6A are independent and parallel proceedings, acquittal in the prosecution will amount to annulling the confiscation order." (18). In Shri Krishna Oil and General Merchants and Commission Agents, Revulapaiems vs. State of Andhra Pradesh (2) High Court has observed under (At page 176) : "But when once a criminal prosecution is launched under Section 7 of the Act for the contravention of the Order and the Criminal Court finds the person not guilty of any contravention and acquits him it would be against justice and equity to allow the order of confiscation of the seized stock to stand. Section 7 is comprehensive and pena ises the contravention of any Order under Section 3 of the Act. The orders under Section 6A of the Act are only quasi-judicial in nature. It is well settled that the order passed by a quasi-judicial authority should be subject to the Order of the judicial authority. Therefore, when once Criminal Court finds a person not guilty of contravention of an order made under S. 3 of the Act, that find (sic) a judicial authority supersedes or annuls the satisfactory (sic) a quasi-judicial authority that the person was guilty of contravention of an order and ordering confiscation of the seized stocks." (19). The Madras High Court in Jerome De Silva vs. Regional Transport Authority (3) has held as under : "That the finding and orders of the Criminal Court should be treated as conclusive in a proceeding before a quasi-judicial tribunal. The Madras High Court in Jerome De Silva vs. Regional Transport Authority (3) has held as under : "That the finding and orders of the Criminal Court should be treated as conclusive in a proceeding before a quasi-judicial tribunal. The order of confiscation passed by the Collector is quasi-judicial in na- ture and the finding of contravention of the order is not conclusively based as it is an expediency policy necessitating speedy and prompt action." (20). In M/s. Hind Tyres vs. State of Rajasthan (4) a learned Single Judge of this Court (Dwarka Prasad, J., as he then was) has taken a similar view thus : "Of course, if no criminal prosecution is launched under Section 7 for the alleged contravention of the Order for which the order of confiscation was passed, then the order passed under Section 6-A (1) or the order passed by the judicial authority on appeal under Section 6-A (1), as the case may be, would become final as relating to the ques- tion of confiscation of such essential commodities. But if a criminal prosecution is launched in respect of the contravention of the Order which confiscation has been made, then the decision of the criminal Court in such proceedings would govern the ultimate fate of the confiscated goods. The reason is obvious as already discussed above, that the proceedings under Sec. 6-A relating to the confiscation of the seized essential goods are quasi-criminal in nature and the Collector is authorized to pass such an order of confiscation under Sec. 6A(1) in a summary manner; while the criminal prosecution for the very same contravention under Sec. 7 of the Act ensures a regular criminal trial wherein the criminal court necessarily has to follow the elaborate procedure prescribed in the Code of Criminal Procedure." (21). In Vinod Kumar Rai vs. The State of Bihar and others (5) an identical question was considered by the Patna High Court. In that case, confiscation proceedings were initiated in relation to the essential commodity and an F.I.R. was also lodged at the Police Station. The Police after investigation submitted a final report, which was accepted by the Special Judge who discharged the accused. The seized articles were released to the accused by the police, but still the Collector proceeded with the confiscation proceedings and passed an order of confiscation. The Police after investigation submitted a final report, which was accepted by the Special Judge who discharged the accused. The seized articles were released to the accused by the police, but still the Collector proceeded with the confiscation proceedings and passed an order of confiscation. When he was about to execute the order, the petitioner filed a writ petition under Articles 226 and 227 of the Constitution of India for quashing of Collectors order confiscating the goods. Accepting the argument of the learned counsel that discharge of the accused by the Special Court amount to his acquittal for the purpose of confiscation proceedings, it was held : "I find substance in the above argument of the learned counsel for the petitioner. When the accused has been discharged after acceptance of the final report submitted by the police and the seized essential commodity has been released in his favour in consequence of his discharge there remains nothing to confiscate or to execute an order of confiscation. The entire exercise of power by the Collector would be in vaccum. In such circumstances discharge amounts to acquittal for all prescribed purposes as far as the above provision of the Essential Commodities Act is concerned." (22). From the above discussion, it follows that where a prosecution under Section 7 of the Act for contravention of an Order made under Section 3, ends in acquittal or discharge with a finding that there has been no contravention of such order the satisfaction recorded under Section 6A in respect of the alleged contravention stands annulled or obliterated by the finding of the criminal court that there was no contravention committed. In such a situation, the confiscation proceedings, dis-appears. The petitioners; therefore, are entitled to the return of the seized goods. The order of the Special Judge putting rider to the return/release of the goods to the effect that it would be subject to the decision of appellate authority in the appeal under Section 6C of the Act, as well as, the order of the appellate autho- rity remanding confiscation proceedings to the Collector are not sustainable in the eye of law and they are hereby set aside. (23). The result is that both the petitions are allowed as indicated above.