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2024 DIGILAW 1685 (KER)

MUTHOOT FINCORP LTD. v. STATE OF KERALA

2024-12-20

S.MANU

body2024
ORDER : 1. Petitioners are seeking to quash Annexure-A1 complaint filed by the Senior Inspector, Legal Metrology, Manjeri against them before the Judicial First Class Magistrate's Court, Manjeri and consequential proceedings in S.T. No. 152/2019. 2. On 08.11.2018, the Senior Inspector of Legal Metrology conducted a surprise inspection in the premises of Muthoot Fin Corp. Ltd. Manjeri branch. It was found that weight of the ornament pledged by one Smt. Shahida T. was recorded incorrectly in the pledge card. The ornament was a bangle having a total weight of 8.300 grams. However, the bangle was described in the pledge card as below: Gross weight (gram) 8.300 Stone weight (gram) 0.300 (stone wt/other deductions) approx Net weight (gram) 8.000 Approx 3. According to the Senior Inspector, since the bangle did not contain any stones, pearls or the like, the gross weight and net weight of the ornament shall be the same. Annexure-A1 complaint was therefore filed alleging contravention of the provisions of Sections 15 and 30 of the Legal Metrology Act, 2009. It is alleged in the complaint that since the net weight of the ornament was recorded only as 8.000 grams approximately, the firm had the responsibility to return only 8.000 grams to the consumer after the pledge period. In fact, the firm had the responsibility to return 8.300 grams. Also, in case the ornament is lost due to any circumstances, the consumer could claim only the net weight recorded in the pledge card. The authority alleged that the above said action of the Petitioners constitutes an offence under Section 30 of the Legal Metrology Act, 2009. It was also alleged that the firm did not produce the name and address of the partners/directors/proprietors, as the case may be, even on demand and therefore the offence under Section 15, punishable under Section 31 was also attracted. 4. Petitioners approached this Court raising various grounds in support of the prayer to quash the complaint and further proceedings. Stay of further proceedings was granted by this Court by order dated 16.1.2020 for a period of two weeks. The same order was extended from time to time and therefore no further proceedings have happened before the trial court. 5. The learned counsel for the petitioner Mr. Alex M. Scaria submitted that the offences alleged in Annexure-A1 complaint are not sustainable. He contended that the complaint is actually misdirected and frivolous. The same order was extended from time to time and therefore no further proceedings have happened before the trial court. 5. The learned counsel for the petitioner Mr. Alex M. Scaria submitted that the offences alleged in Annexure-A1 complaint are not sustainable. He contended that the complaint is actually misdirected and frivolous. Regarding the alleged offences, he submitted that neither the offence under Section 30 nor the offence under Section 15 read with 31 would lie against the petitioners. The learned counsel submitted that none of the clauses under Section 30 of the Act will be attracted when an ornament is pledged and loan is obtained. He elaborated his contention by arguing that no sale or transfer of an article is involved when an ornament is pledged. He submitted that pledge is a bailment under Section 148 of the Indian Contract Act, 1872. Referring to Section 172 of the Indian Contract Act, he submitted that pledge is defined as bailment of goods as security for payment of a debt or performance of a promise. He therefore submitted that in the peculiar nature of pledge, the transaction would not fall within any of the sub-clauses of Section 30 of the Legal Metrology Act, 2009. He argued that weight of the ornament pledged has relevance only in the matter of identifying the ornament. According to him, when a pledge is made, it is not obligatory on the part of the pawnee to make payment in proportion to the weight of the ornament. Correspondingly the pawnor cannot claim any fixed amount on the basis of the weight of the ornament. Therefore, weight of the ornament has only limited significance when it is pledged and loan is obtained. He also pointed out that the authority has no case that the gross weight was not mentioned in the pledge card. He hence contended that, when the ornament is returned on closure of the transaction or when value is paid in case the ornament is lost, the gross weight will be taken into account and therefore no loss will be caused to the person who pledged the ornament. He explained that even if there is no stone in an ornament, there may be other materials present in the ornament which will make the gross weight more than the actual weight of the metal. He explained that even if there is no stone in an ornament, there may be other materials present in the ornament which will make the gross weight more than the actual weight of the metal. He therefore stated that it is a common practice when ornaments are pledged to show gross weight as also net weight in the records even if no stones are there in the ornament. He hence contended that the officer concerned has proceeded in this case on a totally erroneous premise. 6. The learned counsel further submitted that the offence under Section 15 of the Act read with Section 31 is also not attracted. He, in this regard submitted that the Senior Inspector has no case that any documents, registers or records were directed to be produced under the provisions of the Act or Rules. Hence, there was no occasion for any violation of the provisions of Section 31 of the Act. He also highlighted that the 2nd petitioner herein has been cited in Annexure-A1 complaint as a witness, though the same employee is arrayed as the 2nd accused in the case. He hence pointed out that the complaint is liable to be quashed solely on the ground that it militates against the protection guaranteed under Article 20(3) of the Constitution. He further contended that allegations in the complaint are totally vague. No specific averments and allegations are available in the complaint as against the petitioners. He then submitted that the complaint is liable to be quashed also for being totally vague. 7. Mrs. Nima Jacob, the learned Public Prosecutor submitted that the contentions of the petitioners cannot be accepted. She referred to Clause (b) of Section 30 of the Legal Metrology Act and submitted that rendering any service by weight would fall within the ambit of the provision. She therefore asserted that pledging of a gold ornament will definitely fall within the scope of the provisions of Section 30(b). She submitted that when the actual gross weight of the article pledged is not accepted and acknowledged, the consumer may suffer loss if the article is later sold for the failure to repay the debt or if the same is lost. She therefore submitted that the practice of wrongly recording the weight of the ornament pledged cannot be permitted and it surely violates the provisions of the Legal Metrology Act. She therefore submitted that the practice of wrongly recording the weight of the ornament pledged cannot be permitted and it surely violates the provisions of the Legal Metrology Act. She also pointed out that the offence under Section 31 is alleged on account of the failure to provide necessary details. She hence submitted that the Crl. M.C. is only to be dismissed. 8. Relevant provisions of the Legal Metrology Act are extracted hereunder for ready reference: “15. Power of inspection, seizure, etc. (1) The Director, Controller or any legal metrology officer may, if he has any reason to believe, whether from any information given to him by any person and taken down in writing or from personal knowledge or otherwise, that any weight or measure or other goods in relation to which any trade and commerce has taken place or is intended to take place and in respect of which an offence punishable under this Act appears to have been, or is likely to be, committed are either kept or concealed in any premises or are in the course of transportation: (a) enter at any reasonable time into any such premises and search for and inspect any weight, measure or other goods in relation to which trade and commerce has taken place, or is intended to take place and any record, register or other document relating thereto. (b) seize any weight, measure or other goods and any record, register or other document or article which he has reason to believe may furnish evidence indicating that an offence punishable under this Act has been, or is likely to be, committed in the course of, or in relation to, any trade and commerce. (2) The Director, Controller or any legal metrology officer may also require the production of every document or other record relating to the weight or measure referred to in sub-section (1) and the person having the custody of such weight or measure shall comply with such requisition. (3) Where any goods seized under sub-section (1) are subject to speedy or natural decay, the Director, Controller or legal metrology officer may dispose of such goods in such manner as may be prescribed. (4) Every search or seizure made under this section shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizures.” “30. (4) Every search or seizure made under this section shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizures.” “30. Penalty for transactions in contravention of standard weight or measure: Whoever: (a) in selling any article or thing by weight, measure or number, delivers or causes to be delivered to the purchaser any quantity or number of that article or thing less than the quantity or number contracted for or paid for. (b) in rendering any service by weight, measure or number, renders that service less than the service contracted for or paid for. (c) in buying any article or thing by weight, measure or number, fraudulently receives, or causes to be received any quantity or number of that article or thing in excess of the quantity or number contracted for or paid for. (d) in obtaining any service by weight, measure or number, obtains that service in excess of the service contracted for or paid for, shall be punished with fine which may extend to ten thousand rupees, and, for the second or subsequent offence, with imprisonment for a term which may extend to one year, or with fine, or with both. 31. Penalty for non-production of documents, etc. - Whoever, being required by or under this Act or the rules made thereunder to submit returns, maintain any record or register, or being required by the Director or the Controller or any legal metrology officer to produce before him for inspection any weight or measure or any document, register or other record relating thereto, omits or fails without any reasonable excuse, so to do, shall be punished with fine which may extend to five thousand rupees and for the second or subsequent offence, with imprisonment for a term which may extend to one year and also with fine.” 9. The submission of the learned counsel for the petitioner that no sale or transfer is involved and that no service is offered by weight, measure or number in a pledge and therefore the provisions of Section 30 of the Act are not attracted is not sustainable in my view. Clause (b) of Section 30 deals with rendering any service by weight, measure or number. Whoever renders that service less than the service contracted for or paid for is liable under Section 30(b). Clause (b) of Section 30 deals with rendering any service by weight, measure or number. Whoever renders that service less than the service contracted for or paid for is liable under Section 30(b). The learned counsel for the petitioner is partly correct in his contention that, in a pledge there may be no obligation on the part of the Pawnee to advance amounts proportionate to the weight or value of the article pledged. However, that does not mean that a person advancing the amount would be unconcerned about the value of the article which essentially depends upon its weight. No prudent person will advance amounts, receiving articles by way of security, that are less valuable than the amount advanced. Therefore, the weight of the article is definitely a material factor. Hence, it cannot be said that the provisions of Section 30(b) are not attracted in a transaction involving pledging of ornaments. In my considered view, transactions involving the pledge of ornaments as security for loans would fall within the ambit of Section 30(b) of the Legal Metrology Act. Contention of the petitioners to the contrary is rejected. However the provision can be considered to have been breached only when the accused while “rendering any service by weight, measure or number, renders that service less than the service contracted for or paid for.” 10. Therefore, what needs to be examined in this case is as to whether by the act of recording the net weight of the ornament pledged as less than the gross weight, the petitioners have rendered the service less than the service contracted for or paid for. The consumer had not raised any grievance that it affected the expected service in any manner. Even the Senior Inspector has no such case. In the facts of this case, it is to be noted that the gross weight of the ornament was also stated in the relevant document by the petitioners. Copy of the pledge card is produced along with Annexure-A1 complaint. Gross weight of the ornament is shown as 8.3 grams in the said document. It is true that net weight is shown as 8.00 grams. Copy of the pledge card is produced along with Annexure-A1 complaint. Gross weight of the ornament is shown as 8.3 grams in the said document. It is true that net weight is shown as 8.00 grams. In the reply dated 23.1.2019 to the show-cause notice dated 14.1.2019, submitted by the 2nd petitioner to the Senior Inspector, Legal Metrology, the 2nd petitioner had stated that the gold ornaments tendered in pledge are not brought by the borrowers in showroom conditions and the same may contain impurities on account of casual and continued use which may add up to the weight of the ornament and it cannot be separated to assess the accurate weight of gold. The learned counsel for the petitioner, in this connection submitted that in case the ornament happens to be sold for realising the dues, any amount in excess of the actual dues received will have to be paid to the borrower, following the mandatory guidelines. In case of loss of the ornament also the financial institution will be liable to make good the loss, and the liability in such a situation will be to make payment corresponding to the gross weight. In the facts of the case at hand, he submitted that the transaction involving the ornament, which was examined during the inspection was closed and the ornament was returned. In these factual circumstances, I am of the view that, despite the legal contention of the petitioners being found incorrect, the offence under Section 30(b) would not lie against the petitioners. I have proceeded to analyse the issue referring to Clause (b) of Section 30, though no clause is specifically mentioned in the complaint, for the reason that the learned Public Prosecutor argued that the said clause is attracted in this case. As selling or buying is not involved, clauses (a) and (c) also would not come to play. In the facts of the case, clause (d) also can have no relevance. 11. The Senior Inspector had issued show-cause notice dated 14.1.2019 to the 2nd petitioner. In the said notice, the 2nd petitioner was specifically directed to furnish the name and address of the partners/directors/proprietors as the case may be. In the second show cause issued on 22.4.2019 also this direction was repeated. The 2nd petitioner furnished a reply on 23.1.2019 referring to the first show cause notice. In the said notice, the 2nd petitioner was specifically directed to furnish the name and address of the partners/directors/proprietors as the case may be. In the second show cause issued on 22.4.2019 also this direction was repeated. The 2nd petitioner furnished a reply on 23.1.2019 referring to the first show cause notice. The 2nd petitioner denied the imputations in the show-cause notice, but did not furnish the names and address of the partners/ directors/proprietors. Hence, the learned Public Prosecutor contended that the petitioners are liable for penalty under Section 31 of the Legal Metrology Act. 12. Section 31 is a penal provision. Hence, strict interpretation is the rule to be followed in analysing the provision. Careful reading of Section 31 shows that what has been made liable for penalty under the said provision are the failure/omission without reasonable excuse, in complying with the following matters: (i) to submit returns, maintain any record or register by the persons required to do so under the provisions of the Act or the Rules made thereunder. (ii) to produce for inspection before the Director or the Controller or any legal metrology officer, any weight or measure or any document, register or other record relating thereto. 13. In Annexure-A1 complaint, the allegation in support of the imputation regarding the offence under Section 31 of the Act is to the effect that the firm did not produce the name and address of the partners/directors/proprietors, even on demand. There is no case that any return, weight or measure or any document, register or other record was omitted to be produced despite being required to do so. What was demanded was an information. It is clear from the provisions of Section 31, as analysed above, that it does not cover within its fold mere furnishing of information. Hence, the offence under Section 31 is not attracted in this case. 14. It is to be noticed that the allegation in AnnexureA1 complaint is that the omission by the petitioners constitutes an offence under Section 15 and punishable under Section 31 of the Legal Metrology Act, 2009. Section 15 of the Act deals with power of inspection, seizure, etc. It confers powers on the officers for inspection, seizure, etc. The said provision is not penal in nature. Therefore, the assertion in Annexure-A1 complaint that the omission of the accused “constitutes an offence under Section 15” is fallacious. 15. Section 15 of the Act deals with power of inspection, seizure, etc. It confers powers on the officers for inspection, seizure, etc. The said provision is not penal in nature. Therefore, the assertion in Annexure-A1 complaint that the omission of the accused “constitutes an offence under Section 15” is fallacious. 15. In Annexure-A1 complaint, though the facts leading to the filing of the complaint are narrated, there are no specific allegations against anyone. I find that the contention of the learned counsel for the petitioner, that the complaint is vague is correct. Regarding the offences also, the allegation is not specific. 16. Section 30 of the Legal Metrology Act, 2009 deals with four categories of distinct and different violations under clauses (a) to (d). Hence while alleging violations of the provisions of Section 30, the prosecuting authority should clearly state as to which clause under Section 30 is attracted. Imputing that Section 30 was violated is not sufficient as the same is too general and vague. 17. I find considerable force in the contention of the petitioners that citing of the 2nd accused as a witness in the complaint militates against the guarantee under Article 20(3) of the Constitution of India. The said defect is certainly fatal. 18. For the reasons deliberated above, I find that Annexure-A1 complaint does not satisfy the rudimentary standards recognized in criminal law for sustaining a prosecution. Annexure-A1 complaint and all proceedings on the basis of the same are abuse of the process of court. Therefore, Annexure-A1 complaint and the proceedings in S.T. No. 152/2019 on the files of the Judicial First-Class Magistrate's Court, Manjeri are quashed in exercise of the powers of this Court under Section 528 of Bharatiya Nagarik Suraksha Sanhita, 2023. 19. Crl. M.C. is allowed as above.