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Rajasthan High Court · body

2005 DIGILAW 1581 (RAJ)

Shah Agro Industries v. State

2005-05-27

PRAKASH PATHAK

body2005
Judgment S.P. Pathak, J.-By this revision petition under Section 397 of the CrPC, the petitioners have prayed for setting aside the order of District Collector dated 18.08.1981 and the order passed by Appellate Committee dated 17.08.1993 and for refund of sale proceeds of the confiscated food grains. 2. The facts, in nut-shell, are that the District Supply Officer, Kota on 19.06.1979 inspected the premises of M/s. Shah Agro Industries and M/s. V.P. Dal and Besan Mills at various places and on physical verification found short quantity of food grains. The firm had neither exhibited the quantity of the stock nor the rate-list. In the stock register of the firm at page 52 in the column of remark the goods were shown to be pledged with Central Bank of India in the name of V.P. Dal and Besan Mills, Kota, which had no licence to store. On inspection of the 1st and 2nd godowns, a lot of foodgrains in the account of M/s. V.P. Dal and Besan Mills was found. The goods was seized. All the goods seized was pledged with Central Bank of India. 3. The Enforcement Inspector lodged a report in police station, Udyog Nagar on 30.08.1979 and the police after investigation submitted challan on 09.04.1980 in the Court of Addl. Chief Judicial Magistrate No. 1, Kota, however, those proceedings were quashed by this Court later on on 12.05.1993 in Criminal Misc. Petition No.1163/1992 and the criminal proceedings came to an end. 4. Likewise, the bank with whom the goods was pledged, also made a complaint to the Central Bureau of Investigation and a case was registered under Section 420 IPC against one of the partners of M/s. V.P. Dal and Besan Mills, Kota to the effect that he had misrepresented the fact that the goods pledged belonged to M/s. V.P. Dal and Besan Mills, while the same belonged to M/s. Shah Agro Industries. The bank also filed a suit before District Court, Kota against M/s. V.P. Dal and Besan Mills and Ors. for recovery of dues amounting to Rs. 14,68,216.15 bearing Civil Suit No. 119/1982 and against M/s. Shah Agro Industries and others bearing Civil Suit No. 55/1982 for recovery of Rs. 11,95,380.17. The petitioners also filed Civil Suit Nos. 64/80 and 58/84 against the bank claiming a sum of Rs. 5,00,000/-and Rs. 1,40,000/-respectively. The matters relating to recovery by bank amounting to Rs. 14,68,216.15 and Rs. 14,68,216.15 bearing Civil Suit No. 119/1982 and against M/s. Shah Agro Industries and others bearing Civil Suit No. 55/1982 for recovery of Rs. 11,95,380.17. The petitioners also filed Civil Suit Nos. 64/80 and 58/84 against the bank claiming a sum of Rs. 5,00,000/-and Rs. 1,40,000/-respectively. The matters relating to recovery by bank amounting to Rs. 14,68,216.15 and Rs. 11,95,380.17 against the petitioners have been compromised and settled before the Debts Recovery Tribunal between the parties by the certificates issued by it on 24.08.1998. 5. The Central Bureau of Investigation, with whom the complaint was filed by the bank, after conducting investigation submitted charge-sheet in the Court of Addl. Chief Judicial Magistrate (CBI Dist., Jaipur) against one Nemichand, partner of M/s. V.P. Dal and Besan Mills, Kota and the learned Magistrate framed charges against him. Against that framing of charges, the said Nemichand filed a Criminal Misc. Petition before this Court bearing No. 72/1987 which came to be decided on 011.1988 with the observation that no case of cheating was made out. 6. On the other side, the Department of District Supply, on the basis of inspection report, finding irregularities on the part of the petitioners, also made report to the Collector under Section 6-A of the Act of 1955 and stated that as the petitioners committed irregularities, the food grains belonging to them was seized. An application for confiscation and disposal of the said goods was also made on 29.07.1980 wherein it was stated that the M/s. Shah Agro Industries violated condition No.3 and 8 of the licence issued to them under the Rajasthan Foodgrains Dealers Licenses Order, 1964 (hereinafter referred to as the order of 1964). It was further stated that petitioner V.P. Dal and Besal Mill had stored more than 10 quintals of foodgrains, and thereby committed violation of Chapter III of the Order 1964, therefore, it is proper that the seized goods be confiscated. 7. Considering the aforesaid facts, notices were issued to the petitioner firms and their partners under Section 6-B of the Act of 1955 by the Collector and as the goods in question was seized from the possession of Central Bank of India, notice was also given to the Manager of Central Bank of India, Kota Branch. 8. 7. Considering the aforesaid facts, notices were issued to the petitioner firms and their partners under Section 6-B of the Act of 1955 by the Collector and as the goods in question was seized from the possession of Central Bank of India, notice was also given to the Manager of Central Bank of India, Kota Branch. 8. Before Collector, On behalf of prosecution it was stated that on 19.06.1979 on inspection of M/s. Shah Agro Industries, grave irregularities were found as in the stock register of the firm opening balance of wheat and rice was shown to be 5786 quintals and 14751 quintals respectively whereas on physical verification only 3816 Quintals wheat and 76 Quintals of rice was found which was respectively short of wheat 1971 quintals and rice 1399 quintals and notice board showing rate-list and stock was not exhibited which was in violation of condition No. 3 and 8 of the licence issued under the Order of 1964. It was also stated that likewise V.P. Dal and Besan Mills violated Part III of the said Order by stocking more than 10 Quintals of food grains and, therefore, to confiscate the seized goods would be proper. 9. In reply, the Counsel appearing for M/s. Shah Agro Industries, the petitioner, submitted that the stock of the goods as per the record was true and correct and there was nothing wrong in it. It was further submitted that in the case filed by the bank, final report has been filed. 10. In reply of V.P. Dal and Besan Mills, it was submitted that the firm did not carry business in food grains and the firm had neither purchased any goods from anyone nor had sold to any. It was also submitted that as they were having excess bank limit, they had given guarantee for M/s. Shah Agro Industries which is fortified by record and about which on 18.06.1978 it was clarified in the letter written to the bank. 11. On behalf of the bank, it was submitted that all the disputed goods was seized from the custody of bank which was pledged with them and for which the firms had received a huge amount, therefore, they are only entitled to receive the sale price of the goods. 11. On behalf of the bank, it was submitted that all the disputed goods was seized from the custody of bank which was pledged with them and for which the firms had received a huge amount, therefore, they are only entitled to receive the sale price of the goods. In this connection, he drew attention towards Section 76 of the Contract Act, 1872 and the principles annunciated by Honble Supreme Court in a particular case. He requested that if the price of the goods seized was to be recovered from the petitioners M/s. Shah Agro Industries and V.P. Dal and Besan Mills, then the same may be recovered from some other assets. 12. After hearing the parties, District Collector vide its order dated 18.08.1981 confiscated the goods in favour of Govt. and came to the conclusion that as the bank had advanced against the goods pledged with them, after sale of the goods the said amount be paid to the bank and the remaining be deposited in the Govt. Treasury. 13. The petitioners against that order of Collector preferred an appeal under Section 6-C before the Sessions Judge, Kota, who stayed the execution of collectors order vide its order dated 01.09.1981 and later on after hearing counsel on the application moved on behalf of the Bank, directed to deposit the auction amount of seized goods in the bank to be paid to the petitioners in case they succeed. 14. Before the Sessions Court, the Public Prosecutor raised objection regarding jurisdiction of the Court. The objection was rejected by the order of learned Addl. Sessions Judge No. 2, Kota. The State of Rajasthan, against that order of Addl. Sessions Judge dated 09.04.1983 approached this Court through S.B. Criminal Revision Petition No. 348/1983 and this Court in view of Section 2 of the Essential Commodities (Special Provisions) Act, 1981 amendment having come into force on 2nd September 1981 allowed the revision petition and directed the learned Addl. Sessions Judge to send the file to proper authorities for disposal in accordance with law vide its order dated 111.1987 and consequently, the appeal was transferred to the Appellate Committee, Govt. of Rajasthan. 15. The Appellate Committee issued notices to the petitioners as well as to the bank and proceeded with the matter. The appeal was registered under Section 6-Ga of the Act of 1955, and the appellate Committee of Govt. of Rajasthan. 15. The Appellate Committee issued notices to the petitioners as well as to the bank and proceeded with the matter. The appeal was registered under Section 6-Ga of the Act of 1955, and the appellate Committee of Govt. of Rajasthan constituted under Section 6-Ga and 6-Da after considering the matter thoroughly and relying on precedents vide its order dated 17.08.1993 allowed the appeal partly and set aside the order confiscating peddy 5696 bags, rice (broken) 28 bags and rice 92 bags taken from the godowns of M/s. Shah Agro and ordered that as the said goods at the relevant time was pledged with Central Bank of India, the auction price of said goods be returned with interest to the Central Bank of India. The appeal in respect of the confiscated goods of M/s. B.P. Dal and Besan Mills was dismissed. 16. Aggrieved, the petitioners have approached this Court by filing the present revision petition under Section 397 CrPC against the order dated 17.08.1993 passed by the Appellate Committee. 17. The case of the petitioners is that petitioners M/s. Shah Agro Industries and M/s. V.P. Dal and Besan Mills are sister concerns and in these firms some of the partners are same and all the partners are in relation. According to them the proprietor of these two firms and godowns etc. is their another sister concern M/s. Shah Gawar Gum Industries who had given two rice mills for milling rice to M/s. Shah Agro Mills and one Dal Mill to M/s. V.P. Dal and Besan Mills. 18. It is further case of the petitioners that in the months of May and June 1979 M/s. Shah Agro Industries pledged the goods with Central Bank of India 5816 bags of rice including 3892 bags of its own limit and other bags of rice and paddy in the limit of V.P. Dal and Besan Mills though the goods remained in the godown of M/s. Shah Agro Industries. According to them this arrangement of pledging the goods was made because M/s. Shah Agro Industries had already pledged the goods of its own limit sanctioned by the bank and on account of financial necessity the goods belonging to it was pledged in the limit of M/s. V.P. Dal and Besan Mills without transferring the ownership keeping it in the godown of M/s. Shah Agro Industries itself . 9.19. 9.19. It is also the case of petitioners that M/s. V.P. Dal and Besan Mills had not done even a single transaction of foodgrain, therefore, it does not come within the definition of Dealer and whatever goods was pledged in its name by M/s. Shah Agro Industries was shown in the stock-register of M/s. Shah Agro Industries in remark column to have been pledged in the name of M/s. V.P. Dal and Besan Mills. 10.20. It was contended by learned counsel for the petitioners that the petitioners having been acquitted of the offence under Section 3/7 of the Act of 1955, the authorities had no right to confiscate the goods or keep its sale proceeds and they are bound to return the same to them. A reference to Section 6-C of the Act of 1955 was made in this connection. The learned counsel stressed on the word “acquitted” and submitted that it has to be taken in wider sense. He also contended that the order of the Appellate Committee is cryptic as it has taken the view that the goods belonged to M/s. V.P. Dal and Besan Mills. Learned counsel further contended that the leaned Collector and the Appellate Committee have passed the orders without application of mind and have not stated reasons for confiscation which make the orders illegal. According to him, the authorities below should have made proper enquiry before passing an order of payment to the bank as to whether there was any amount payable to the bank by the petitioners or not and having failed to do so the orders passed by them are liable to be quashed and set aside and the sale proceeds is liable to be refunded to the petitioners with interest. 121. Learned Public Prosecutor supported the order passed by Appellate Committee and submitted that the dispute is between bank and the petitioners, therefore, he has nothing to say in the matter. 122. The learned counsel appearing on behalf of the bank submitted that various matters of litigation between bank and the petitioners including the suits filed by petitioners against bank have been settled amicably and no suit or proceeding except the present one is pending between the parties. 122. The learned counsel appearing on behalf of the bank submitted that various matters of litigation between bank and the petitioners including the suits filed by petitioners against bank have been settled amicably and no suit or proceeding except the present one is pending between the parties. This position has not been disputed by the counsel appearing for the petitioners and he also confirmed that no civil or criminal matter is pending in the present matter either against the petitioners or its partners or any civil suit or proceedings filed by the petitioners against the respondent or for that matter between anybody else. Mr. Khandelwal also submitted that even if any amount, which the bank say to be theirs, then after deducting the same the remaining amount of the sale proceeds deposited in the bank be paid to them. Learned counsel admitted that first charge is always of the respondent bank as per the settled position of law. 123. In view of above submissions made before me, it appears that the litigation which took place between the parties has come to an end. 14.24. It is also apparent from the order of this Court dated 12th May 1993 passed in S.B. Criminal Misc. Application No. 1163/92 that the proceedings before the Addl. Chief Judicial Magistrate No. 1, Kota relating to petitioners in Criminal Case No. 608/83, State vs. Shankarlal & Ors., were quashed for the reason that inspite of directions issued by this Court no progress was shown in the trial and the accused were denied expeditious trial. 125. Be that as it may, according to the learned counsel for respondent bank after satisfying the dues of the bank towards petitioners and their partners, if the rest amount of sale proceeds deposited in the bank is ordered to be paid to the petitioners, the bank has no objection. 126. Now this takes me to consider as to whether under the provisions of Section 6-C(2) of the Act of 1955 the petitioners are entitled to any amount when the proceedings have been quashed. For convenience, Section 6-C (2) is reproduced below:- “Section 6-C(2). 126. Now this takes me to consider as to whether under the provisions of Section 6-C(2) of the Act of 1955 the petitioners are entitled to any amount when the proceedings have been quashed. For convenience, Section 6-C (2) is reproduced below:- “Section 6-C(2). Where an order under Section 6-A is modified or annulled by the judicial authority or where in a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been made under Section 6-A, 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 6A, be paid the price thereof as if the essential commodity had been sold to the Government with reasonable interest calculated from the day of the seizure of the essential commodity and such price shall be determined- .(i) in the case of foodgrains, edible oil seals or edible oil, in accordance with the provisions of Sub-Section (3-B) of Section 2; .(ii) in the case of sugar, in accordance with the provisions of Sub-section (3-C)of Section 3; and (iii) in the case of any other essential commodity, in accordance with the provisions of Sub-section (3) of Section 3.” Sub-Section (2) of Section 6-C reveals that when the accused is acquitted of the charge then he is entitled for the goods confiscated or the value thereof as the case may be. 27. In the instant case, it was the contention of the learned Counsel for the petitioners that since the criminal proceedings have been quashed, therefore, it should be held that the petitioners have been acquitted of the charge. I do not find myself in agreement with the submission of the learned Counsel that since the proceedings have been quashed the petitioners should be deemed to have been acquitted of the charge. By that, it cannot be said that the petitioners or for that matter their partners have been acquitted but in the peculiar facts and circumstances this much can be assumed that the proceedings were quashed for the reasons that inspite of directions issued by this Court to decide the proceedings early the same could not be disposed off and taking into consideration the right of the accused having been denied to expeditious trial for no fault of theirs, the proceedings were quashed. 28. 28. In my opinion, in such circumstances it should be presumed that though no criminal case is pending now against the petitioners but they have not been acquitted after trial and no verdict of acquittal has been recorded against them. Since no criminal litigation is pending against the petitioners, therefore, the goods confiscated and an order for the refund of bank dues having been passed by the Collector and ultimately the impugned order having been passed by the Committee dated 17.08.1993 in respect of petitioner No. 1 to the effect that remaining amount to be given to the firm, the same treatment is required to be given in respect of petitioner No. 2 also and consequently both the petitioners are entitled to the refund of the amount of sale proceeds after adjustment of their dues towards bank. 29. In the result, I partly allow the revision petition and while upholding the order of confiscation of the petitioners goods to be just, reasonable, and proper, I direct that the amount of sale proceeds deposited in the bank pertaining to the goods of petitioners after adjustment of dues of the respondent bank against the petitioners shall be paid to them in accordance with law, if any. To that extent, the order of appellate authority is modified. 30. The revision petition stands disposed of accordingly.