Sri Y. Lakshmana Rao

1 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

In the Court of Sessions Judge, Krishna Division,

Machilipatnam

Present: Sri Y. Lakshmana Rao,

Sessions Judge,

Krishna at Machilipatnam

Wednesday, this the 23rd day of June, 2021

Criminal Appeal No.18 of 2021

From which court the Special Judicial Magistrate of First Class :: appeal is preferred for trying Prohibition and Excise Offences,

Machilipatnam.

No. of case in that court:: Crl.MP.No.41/2021 in C.C.113/2016

Kandula Bapuji, S/o. Uma Maheswara Rao, Name and description of :: Hindu, Aged 48 years, R/o. D.No.5/213-1, the Appellant(s) Javvarupeta, Machilipatnam.

Name and description of The State, Sub-Inspector of Police, the Respondent :: Inaguduru PS, Machilipatnam,

Represented by Public Prosecutor, Krishna,

Machilipatnam.

The sentence and law It was ordered that the petition was under which it was imposed :: Dismissed. in the Lower court Whether confirmed, IN THE RESULT, the Criminal Appeal is :: modified or reversed and if ALLOWED SETTING ASIDE the Order of modified the modificationthe learned Judicial First Class Magistrate,

Excise Court, Machilipatnam in

Crl.M.P.No.41 of 2021 in C.C.No.113 of

2016, dated 15.02.2021 in relation to

Crime No.132 of 2014 of Inaguduru Police

Station, Machilipatnam. However, it is directed that the seized stock of

Qts.167.50 kgs of Rice, which is in the custody of the Station House Officer,

Inaguduru police station, shall be returned or delivered to the appellant subject to execution of personal bond by the appellant for a sum of Rs.2,00,000/- (Rupees two lakhs only) to the satisfaction of Station House Officer, Inaguduru Police

Station.

Page 1 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

2 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

Date of Presentation :: 28.05.2021

Date of filing :: 09.06.2021

Date of notice issued :: 09.06.2021

Date of Bail Bond :: - - -

Date of appearance :: - - -

Date of hearing :: 23.06.2021

Date of Judgment :: 23.06.2021

This appeal coming before me on this day for final hearing in the presence of Sri Y. Bala Krishna, Advocate for the Appellant and of Sri V.J.M.Lohiya, Special Public Prosecutor/In-charge Public Prosecutor for the State/Respondent and the matter having stood over for consideration till this day and this court delivered the following:

J U D G M E N T

Appeal was preferred under Sections 454 and 382 of the Code of

Criminal Procedure, 1973 (for brevity ‘the Cr.P.C.,’) challenging the order

dated 15.02.2021 passed by the learned Special Judicial First Class

Magistrate, Excise Court, Machilipatnam (hereinafter referred to ‘Trial

Court’) in Crl.M.P. No.41 of 2021 in C.C.No.113 of 2016 in relation to

Crime No.132 of 2014 of Inaguduru Police Station, whereby and whereunder the petition filed by the appellant under Section 452 of ‘the

Cr.P.C’ was ‘Dismissed’ by rejecting the request for release of the seized stock of Qts.167.50 kgs of Rice to the appellant.

2. Material averments stemming from the appeal are this:

On 19.05.2014 the responde`nt/complainant along with Vigilance and Enforcement Officials and the Assistant Revenue Inspector, Office of the Tahsildar, Machilipatnam had inspected the business premises of the appellant situated at Door No.5/213-1, Sannalavari street, Javvarupeta,

Machilipatnam and seized Qts.53.00 kgs of country made rice and stock of Qts.26.00 kgs of country made rice at go-down bearing No.5/401 at

Chinthachettu Centre, Machilipatnam and further stock of Qts.88.50 kgs in the same go-down premises, totaling a stock of Qts.167.50 kgs on the complaint from the Additional Revenue Inspector, Machilipatnam.

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LAKSHMANA RAO

YADAVALLI

3 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

2.1. The Sub-Inspector of Police, Inaguduru Police Station had registered a case in Crime No.132 of 2014 of Inaguduru Police Station for the offences punishable under Section 420 of the Indian Penal Code, 1860 (for brevity ‘the IPC’) and Section 7-A of Essential Commodities

Act, 1955 (for short ‘the E.C. Act’). The learned Trial Court,

Machilipatnam had taken the case on file and assigned Calendar Case

No.113 of 2016.

2.2. It is the contention of the appellant that he had not committed any illegal act. The appellant is a licensed holder of Kali Rice and General Merchants, Food Grains Licensee bearing Registered

No.245/BDR/2014, issued by the competent authority, District Supply

Officer, Krishna District at Machilipatnam. The witnesses deposed that this type of rice available in the open market with the same quality. The seized stock of rice was covered with plastic gunny bags and did not contain the mark or emblem of FCI and further stated that it was highly impossible to differentiate the PDS rice and the rice available in open market. The seized stock of rice was kept with one Inala Suresh Babu,

Fair Price Shop Dealer of Shop No.6, Machilipatnam for safe custody and as on the date of inspection also the seized stock of rice was with him.

2.3. The learned Trial Court on 07.10.2020 acquitted the appellant in C.C.No.113 of 2016 from the charges holding that the prosecution had failed to establish the case beyond all reasonable doubt.

Therefore, the appellant had filed a petition under Section 452 of ‘the

Cr.P.C.’ seeking a direction to the respondent/police to hand over the seized stock of rice in his favour.

2.4. The learned Trial Court dismissed the petition for release of the seized stock in favour of the appellant on the ground that Section 6-E of ‘the E.C.Act’ clarifies about the bar of jurisdiction. The appellant was

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LAKSHMANA RAO

YADAVALLI

4 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

under the impression that there were no such proceedings under ‘the

E.C.Act’ initiated before the learned Collector (CS) and therefore, the seized stock should be handed over to the appellant because Section 7 of ‘the E.C.Act’ also clarifies that in case, a person charged with prosecution for contravention of the control order is acquitted, the seized stock can be handed over to its owner.

2.5. The appellant filed a petition before the learned Collector (CS) for release of the seized stock of rice in his favour, informing about his acquittal in criminal case and also the impugned order passed by the learned Trial Court who dismissed the petition of the appellant by mentioning the bar clamped under Section 6-E of ‘the E.C.Act’. The learned Collector (CS) vide endorsement in Rc.D1.89/2021, dt.24.04.2021, stated that no proceedings under Section 6-A of ‘the

E.C.Act’ were filed before the Joint Collector and thereby the request of the appellant for release of the seized stock in his favour was rejected.

Hence, the appeal was preferred seeking for a direction to release the seized stock of rice in favour of the appellant by setting-aside the impugned order passed by the learned Trial Court.

3. I have heard the learned counsel for appellant and learned

Special Public Prosecutor/In-charge Public Prosecutor for the State in

Officer’s Residence through ‘Blue Jeans Application’ as per the Circular instructions of the Hon’ble High Court of Andhra Pradesh at Amaravathi in ROC.No.192/SO/2020, dt.21.04.2021, due to Corona Virus (COVID-

19) Pandemic effect. I have also perused the order dt.15.02.2021 passed by the learned Judicial First Class Magistrate, Excise Court,

Machilipatnam in Crl.M.P. No.41 of 2021 in C.C.No.113 of 2016 in relation to Crime No.132 of 2014 of Inaguduru Police Station and the entire material available on record. Thoughtful consideration is bestowed

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LAKSHMANA RAO

YADAVALLI

5 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

to the arguments advanced by the learned counsel for appellant/accused and learned In-charge Public Prosecutor for respondent.

4. Now the points that arise for consideration and determination in this appeal are:

1. Whether the impugned order dt.15.02.2021 passed by the learned Judicial First Class

Magistrate, Excise Court, Machilipatnam in

Crl.M.P.No.41 of 2021 in C.C.No.113 of 2016 in

relation to Crime No.132 of 2014 of Inaguduru Police Station is sustainable either on facts or on law or is it required any interference? If so, on what grounds and to what extent?

2. To what relief?

Point No. 1:-

5. It is the submission of the learned counsel for the appellant that, there can be no gainsaying as per the endorsement of the learned

Collector (CS), there was no initiation of Section 6-A of ‘the E.C.Act’ proceedings by the Vigilance and Enforcement Authorities before the leaned Collector(CS) seeking for confiscation of the seized stock in favour of the Government. Hence, in the absence of such proceedings, the rejection of release of the seized stock infavour of the appellant by the learned Trial Court is wholly unsustainable and impermissible.

6. In view of the orders of the Hon’ble High Court in Ande

Venkata Kutumba and another v. State of Andhra Pradesh and

another vide Criminal Revision Case No.2599 of 2018, dated 23.10.2018, wherein it was held that bar under Section 6-E of ‘the E.C.

Act’ operates only when Section 6-A ‘the E.C.Act’ proceedings are pending before the Collector (CS). Therefore, the order of the learned

Trial Court is liable to be set-aside and the seized stock is required to be released in favour of the appellant.

7. On the other hand, the learned Special Public Prosecutor/In- charge Public Prosecutor submitted that the learned Trial Court dismissed

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LAKSHMANA RAO

YADAVALLI

6 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

the petition filed under Section 452 of ‘the Cr.P.C’ by the appellant, seeking to hand over the seized stock of rice of Qts.167.50 kgs in his favour. Incontrovertibly, as per the endorsement of the learned Collector (CS), there is no petition under Section 6-A of ‘the E.C.Act’ pending

before the learned Collector (CS) for confiscation of the seized stock in

favour of the Government. Therefore, the learned Special Public

Prosecutor/In-charge Public Prosecutor requested this court to pass appropriate orders as per the merits of the case.

8. Indubitably, the Trial Court vide her Orders in Crl.M.P. No.41 of 2021 in C.C.No.113 of 2016, dt.15.02.2021 dismissed the petition which was filed under Section 452 of ‘the Cr.P.C’ requesting to hand over the seized stock of Qts.167.50 kgs of rice in favour of appellant. As seen from the record, it reveals that the learned Trial Court vide Judgment dt.7.10.2020 in C.C.No.113 of 2016, acquitted the appellant for the offence punishable under Section 420 of ‘the IPC’ and also Section 7-A of ‘the E.C.Act’, as the prosecution had failed to prove the guilt of the accused for the said offences beyond all reasonable doubts.

9. On perusal of the endorsement which was made by the learned Collector (CS) vide Rc.D1.89/2021, dt.24.04.2021, it is clear that no proceedings under Section 6-A of ‘the E.C.Act’ are pending on the file of learned Collector (CS) and as such, the learned Collector (CS) rejected the request of the appellant for release of the seized stock in his favour.

Obviously, the learned Collector (CS) cannot pass an order for release of the seized stock in favour of the appellant, when there are no such proceedings under Section 6-A of ‘the E.C.Act’ pending on its file, since

Section 6-E of ‘the E.C.Act’ would come into operation subject to pendency of proceedings under Section 6-A of ‘the E.C.Act’. Therefore, undoubtedly, the remedy available to the appellant against the order

Page 6 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

7 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

passed under Section 452 of ‘the Cr.P.C’ is to file an appeal under

Section 454 and 382 of ‘the Cr.P.C’. Therefore, the appellant had rightly preferred an appeal seeking for release of the seized stock in his favour.

10. The learned Trial Court observed that as per the bar provided under Section 6-E of ‘the E.C.Act, it had no jurisdiction to entertain this application. It was also mentioned that the property was not produced

before the learned Trial Court. For better appreciation of the case, in this

context, it is relevant to refer and extract 6-E of ‘the E.C.Act’ that:

“Whenever any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto, or any package, covering or receptacle in which such essential commodity is found, or any animal, vehicle, vessel or other conveyance used in carrying such essential commodity is seized pending confiscation under Section 6-A, the Collector, or, as the case may be, [the State Government concerned under Section 6-C] shall have, and, not withstanding anything to the contrary contained in any other law for the time being in force, shall not have, jurisdiction to make orders with regard to the possession, delivery, disposal, release or distribution of such essential commodity package, covering, receptacle, animal, vehicle, vessel or other conveyance.”

11. A fair reading of the Section 6-E of ‘the E.C.Act’ it can be gleaned that it is only the Collector (CS), but not any authority under any law, shall have the jurisdiction to pass orders with regard to the possession, delivery, disposal, release or distribution of such essential commodity package, covering, receptacle, animal, vehicle, vessel or other conveyance.

12. There is no doubt that when there is express legal bar stipulated in any of the provisions of the Code or legislation, the courts cannot invoke the jurisdiction for passing the orders and the aggrieved party has to approach the right forum. However, whether a particular provision can be made applicable to a given case, has to be examined

Page 7 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

8 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

and upheld by the authority exercising the judicial functions, in a correct perspective and pass appropriate orders.

13. In this context, it is highly appropriate to refer the Judgment, relied on by the learned counsel for the petitioner, of the Hon’ble High

Court of Judicature at Hyderabad for the State of Telangana and the

State of Andhra Pradesh in Ande Venkata Kutumba and another v.

State of Andhra Pradesh and another in Criminal Revision Case No.

2599 of 2018, dt.23.10.2018 wherein, at para Nos.4 and 5 it was held that as under:

“4. Learned counsel for the petitioners submits that since 6(A) proceedings are not pending before the Joint Collector to invoke the provisions under Section 6 (E) of the E.C.Act, no proceedings are initiated under Section 6(A) of the E.C.Act. In such cases, the learned

Magistrate has got jurisdiction to release the property.

Section 6(E) of the E.C. Act bars jurisdiction in certain cases, which reads thus:

“whenever any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto, or any package, covering or receptacle in which such essential commodity is found, or any animal, vehicle, vessel or other conveyance used in carrying such essential commodity is seized pending confiscation under Section 6-A, The Collector, or, as the case may be, shall have, and, not withstanding anything to the contrary contained in any other law for the time being in force, shall not have, jurisdiction to make orders with regard to the possession, delivery, disposal, release or distribution of such essential commodity package, covering, receptacle, animal, vehicle, vessel or other conveyance.”

The above provision makes it clear that only pending confiscation under Section 6-A, the Collector or as the case may be small have, and, notwithstanding anything to the contrary contained in any other law for the time being in force, any court, Tribunal or other authority shall not have jurisdiction to make orders with regard to the possession, delivery, disposal, release or distribution of such essential commodity package, covering, receptacle, animal, vehicle, vessel or other conveyance.

Page 8 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

9 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

“5. In the instance case, the order of the Joint Collector clearly reveals that no 6(A) proceedings are pending. Therefore, the trial court has taken an erroneous view hold that Section 6-E of the E.C.Act bars jurisdiction of the Court for release of the vehicle and stock.

14. Similarly, in this case also, there are no proceedings under

Section 6-A of ‘the E.C.Act’ are pending before the learned Collector (CS), in view of the endorsement of the learned Collector (CS). A careful study of the above Judgment, it could be gleaned that Section 6-E though bars the jurisdiction of any court to pass orders with regard to the possession, delivery, disposal, release or distribution of such essential commodity package, covering, receptacle, animal, vehicle, vessel or other conveyance, it is applicable only when proceedings are pending under Section 6-A of ‘the E.C.Act’.

15. Section 6-E of ‘the E.C.Act’ can be invoked only when there are proceedings pending under Section 6-A of ‘the E.C.Act’ before the

Collector (CS). However, no such proceedings pending before the learned Collector (CS). Therefore, the Court or Tribunal or any authority may pass appropriate orders relating to possession, delivery, disposal, release or distribution of such essential commodity package, covering, receptacle, animal, vehicle, vessel or other conveyance.

16. Ergo, the learned Trial Court took an erroneous view holding that Section 6-E of ‘the E.C.Act’ bars the jurisdiction of the court for release of the vehicle and for release of the seized stock. The seized stock is perishable in nature, for a quite long time it has been in the custody of the authorities. The Cr.P.C., empowers the Magistrate under

Section 452 of ‘the Cr.P.C.,’ to pass appropriate orders for disposal of the property at conclusion of the trial. There is no doubt that the property was not produced before the learned Trial Court at the time of filing of

Page 9 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

10 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

the charge sheet. But the proceedings relating to seizure of the property vide Panchanama, Observation report and sketch of the scene of offence, would have been appended with at the time of filing of charge sheet or much before that i.e., at the time of remanding the appellant/accused to judicial custody.

17. It is apt to refer about Section 457 of ‘the Cr.P.C’ which deals with Procedure to be followed by police upon seizure of property. It mandates that whenever the seizure of the property by police officer is reported to a Magistrate under the provisions of this Code, and such property is not produced before the Criminal Code during an inquiry or trial, the Magistrate may make such order as he or she thinks fit respecting the disposal of such property or the delivery of such property to the person entitled to the possession thereof. Section 457(2) empowers the Magistrate ordering the property to be delivered to the person entitled on such conditions as the Magistrate may think fit.

18. In Ram Prakash Sharma v. State of Haryana AIR 1978

SC 1282 at para No.3 it was held that in the instance of release of

property seized by police but not produced before court, the court has power to release the seized property, but that would not mean that whenever the claimant asks for its return, he should give it back to the person from whom the property has been recovered, especially when the stage of the case is in suspicion, the investigation is not over and charge-sheet has not been laid. The question of release has to be decided on its own merits in each case and the discretion of the court has to be exercised after due consideration of the interests of justice including the prospective necessity of the production of the seized articles at the time of trial.

Page 10 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

11 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

19. In the instant case, though the property was not produced

before the learned Trial Court concerned, yet by way of filing

Mahajaranamas concerned evidencing about the seizure of the property and also arrest of the accused, it is deemed that the seizure of property was reported to the learned Trial Court concerned under the provisions of ‘the Cr.P.C.’ The learned Trial Court ought to have directed the police to let it know whether Section 6-A of ‘the E.C.Act’ proceedings are initiated by the Revenue Officials against the appellant, so that the court may invoke the powers under Section 457 of ‘the Cr.P.C’ or Section 451 of ‘the Cr.P.C’ when the property is produced before the criminal court during any enquiry or trial. However, when property is produced before the court, the court may make such order for proper custody of the property pending conclusion of the enquiry or trial. It is contended that the appellant is the original owner of the property. Further, it is the contention of the appellant that he had not committed any illegal act.

The appellant is a licensed holder of Kali Rice and General Merchants,

Food Grains Licensee bearing Registered No.245/BDR/2014, issued by the competent authority, District Supply Officer, Krishna District at

Machilipatnam. The witnesses deposed that this type of rice available in the open market with the same quality. The seized stock of rice was covered with plastic gunny bags and did not contain the mark or emblem of FCI and further stated that it was highly impossible to differentiate the

PDS rice and the rice available in open market. Furthermore, there is no appeal preferred by the State against the Judgment acquitting the appellant.

20. Virtually, the seized stock was brought to the notice of the learned Trial Court and it is deemed that the property is under the control or seisin of the learned Trial Court, unless proceedings under

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LAKSHMANA RAO

YADAVALLI

12 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

Section 6-A of ‘the E.C.Act’ are pending. The Investigating Officer ought to have produced the property before the learned Trial Court, when there were no proceedings initiated under Section 6-A of ‘the E.C.Act’. As the property was not produced before the learned Trial Court, the court had not passed any order for disposal of the property at the conclusion of the trial. Ironically, even the appellant also had not moved his little finger by filing any application seeking for either interim custody of the property or disposal of the property in accordance with law till the conclusion of the trial. However, interest of the justice would be sub-served if the appellant is directed to execute personal bond for a sum of

Rs.2,00,000/- (Rupees two lakhs only) to the satisfaction of Station

House Officer, Inaguduru Police Station, in the event of Vigilance and

Enforcement officials, Machilipatnam initiates proceedings under Section 6-A of ‘the E.C.Act’.

21. Further, in view of the orders passed by the Hon’ble High

Court in Ande Venkata Kutumba (supra) it can be clearly held that bar under Section 6-E of ‘the E.C.Act’ is not applicable to the court for passing appropriate orders for custody of the property, when there are no proceedings pending under Section 6-A of ‘the E.C.Act’ before the

Collector (CS). Therefore, the order of the learned Trial Court is not sustainable either on facts or on law. Hence, the order is liable to be intervened and set aside. Accordingly, point No.1 is answered in favour of the appellant.

Point No.2:-

22. IN THE RESULT, the Criminal Appeal is ALLOWED SETTING

ASIDE the Order of the learned Judicial First Class Magistrate, Excise

Court, Machilipatnam passed in Crl.M.P.No.41 of 2021 in C.C.No.113 of 2016, dated 15.02.2021 in relation to Crime No.132 of 2014 of

Page 12 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

13 Criminal Appeal No.18 of 2021 Sessions Judge,

Dt: 23.06.2021. Krishna at Machilipatnam.

Inaguduru Police Station, Machilipatnam. However, it is directed that the seized stock of Qts.167.50 kgs of Rice, which is in the custody of the

Station House Officer, Inaguduru police station, shall be returned or delivered to the appellant subject to execution of personal bond by the appellant for a sum of Rs.2,00,000/- (Rupees two lakhs only) to the satisfaction of Station House Officer, Inaguduru Police Station.

Dictated to the Stenographer, transcribed by him, corrected on desktop and pronounced

by me through Blue Jeans Video Conferencing Application on this the 23 rd day of June, 2021.

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

Copy submitted to:-

The Registrar (Judicial), Hon’ble High Court of Andhra Pradesh, Nelapadu, Amaravathi.

Copy to:

1. The Judicial First Class Magistrate, Excise Court, Machilipatnam.

2. The Public Prosecutor, Sessions Court, Machilipatnam.

Page 13 of 13 Signature Not Verified

LAKSHMANA RAO

YADAVALLI

1 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

IN THE COURT OF THE SESSIONS JUDGE, KRISHNA DIVISION,

MACHILIPATNAM

PRESENT: - Sri Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM

TUESDAY, THIS THE 2nd DAY OF APRIL, 2019

E.C. APPEAL No.24 of 2019

* * * From which court the appeal is::TheCollector(CS),Krishna, preferredMachilipatnam. No. of the case in that court:E.C P.No.510 of 2017 Name and description of the::Dodda Rama Venkata Siva Koteswara appellantsRao, S/o. Venkata Rathnam, Hindu, Sri Hanuman Traders, Main Road, Vuyyuru, Vuyyuru Mandal, Krishna District. Name and description of the::The Assistant Supply Officer, Circle-3, respondentVijayawada, Represented by the Public Prosecutor, Krishna District, Machilipatnam. The sentence and law under::The learned Collector (CS), Krishna, which it was imposed in theMachilipatnamorderedfor Lower courtconfiscation of 100% worth of seized stock covered by bank guarantee for Rs.98,000/- and imposed a sum of Rs.50,000/- as penalty on the appellant. The confiscated value of seized stock and penalty amount shall be deposited into the Head of Account “1456-Civil Supplies, 800- Other Receipts, 81-Other Items” after appeal time is over. Whether confirmed, modified or::IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMINGthe reversed and if modified the impugned Order passed by the modificationlearned Collector (CS) in E.C.P.No. 510 of 2017, dt.28.12.2018 while REDUCING the confiscation of worth of seized stock covered by bank guarantee for Rs.98,000/- from 100% to 50% and by SETTING-ASIDE the imposition of penalty of Rs.50,000/- ontheappellant.Inthe circumstances of the case there shall be no order as to costs.

DATE ON WHICH

Bail bond if Notice issued byappellantAppellant PresentationFilingcourt to appearhas been letordered toHearing Order respondentout on bailappear 04.02.201908.02.2019---------01.04.201902.04.2019

This appeal is coming before me on 01.04.2019 for final hearing in the presence of Sri K.Sai Mohan Rao, Sri A.Satyanarayana, Advocates for the Appellant and of Sri Kaila Rama Krishna, Public Prosecutor for the State/Respondent and the matter is having stood over for consideration and upon hearing both sides, upon perusing the entire material papers on record, this court delivered the following: Page No.1 of 10 2 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

J U D G M E N T

Appeal is preferred under Section 6-C of the Essential

Commodities Act, 1955 (for brevity ‘E.C. Act’) challenging the validity and correctness of the impugned Order passed by the learned Collector (CS) in E.C.P.No.510 of 2017, dt.28.12.2018 on the report filed under

Section 6-A of the E.C.Act, whereby and whereunder ordered for confiscation of 100% worth of seized stock covered by bank guarantee for Rs.98,000/- besides imposition of penalty of Rs.50,000/-.

2.Compendious summary of the report filed under Section 6-A of the E.C.Act is that there was information by the District Supply

Officer, Krishna about indulging in clandestine business by storing scheduled commodities by some of the Edible Oil Traders of Vuyyuru

Town without license as required under Andhra Pradesh Scheduled

Commodities Dealers (Licensing, Storage and Regulation) Order, 2016 (for brevity ‘Dealers Order, 2016’).

2.1.On 26.09.2017 around 12.00 noon the Assistant Supply

Officer, Circle-III, Vijayawada (hereinafter referred to ‘complainant’) along with Divisional Assistant Supply Officer, Vijayawada proceeded to main centre, Vuyyuru and inspected the business premises of appellant running under the name and style of ‘Sri Hanuman Traders’, situated at main road, Vuyyuru. The complainant asked to furnish Form-B license, stock register, sales and purchase bills.

2.2.The complainant noticed some edible oil liter packets in boxes and loose oil in 15 kgs tins. They physically verified and weighed the different varieties of edible oils available in the shop packed in packets/tins in the shape of liters/kgs and converted into kilograms and found the following quantities of edible oils:

Name of the Quantity (in Rate per

Sl. No. Value (in Rs.)

Commodity Kgs.) kg.

1.P. Oil 61660-0036,960-00

2.Sunflower Oil35570-0024,850-00

3.Rice Bran Oil26480-0021,120-00

Page No.2 of 10 3 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

4.Groundnut Oil17790-0015,930-00 Total: 1412-00 98,860-00 2.3.When the appellant was asked to produce stock register, he stated he had not been maintaining any register. Besides that the appellant had not obtained Form-B license from the competent authority. As such, the inspection of complainant clearly established that appellant was storing edible oils unauthorizedly and doing business without Form-B license as required under Dealers Order, 2016 and thereby violated Clause 2 (H) (iv) and 3 of Dealers Order, 2016. The complainant seized the entire stock in the presence of mediators under the cover of a Mediators Report and handed over to Grandhi Tirumala

Venkateswara Rao, Proprietor of Sri Ramachandra Traders, Vuyyuru,

License No.17/ NZD/2008 for safe custody and submitted a report under

Section 6-A of the E.C. Act to the learned Collector (CS) for confiscation of the entire seized stock to the Government.

3.Upon the representation made by the appellant before the learned Collector (CS) to return the seized stock, the learned Collector (CS) on 13.04.2018, directed the appellant to file bank guarantee for an amount of Rs.98,000/-. On which, the appellant furnished bank guarantee for the said sum and the learned Collector (CS) issued proceedings on 01.06.2018 directing the complainant to release the seized stock in favour of appellant.

4.Pursuant to the report filed under Section 6-A, the learned

Collector (CS) issued notice to the appellant under Section 6-B of the

E.C.Act directing the appellant to submit his representation/written explanation as to why the entire seized stock shall not be confiscated to the state for the lapses made by appellant by storing edible oils unauthorizedly and doing business without obtaining Form-B license and contravening Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016.

Page No.3 of 10 4 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

5.Appellant did not file his written explanation before the learned Collector (CS), but he appeared before the learned Collector (CS) and stated that he is not having Food Grain License and he does not know whether license is essential or not in doing business and pleaded to excuse him and release the bank guarantee.

6.After conducting enquiry into the matter, learned Collector (CS) ordered for confiscation of 100% worth of seized stock covered by bank guarantee for Rs.98,000/- and imposed penalty of Rs.50,000/- on the appellant.

7.Feeling aggrieved by the impugned order passed by the learned Collector (CS), the appellant preferred appeal with the grounds infra: - (1)the impugned Order is contrary to law, weight of evidence and probabilities of case and it is liable to be set-aside; (2)the lower Court ought to have held that the appellant had not contravened Clause 2 (H) (iv) and Clause (3) of Dealers Order, 2016 as the said clause is not applicable; (3)the lower Court ought to have held that the edible oil seeds and Dealers Order was repealed and there is no restriction for storage of edible oils; (4)the lower Court ought to have held as per Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and no contravention has been made out by the appellant; (5)the lower Court was wrong in confiscating the entire bank guarantee and imposing penalty of Rs.5,000/- is highly excessive, harsh and exorbitant and the lower court ought not to have punished with severe penalty; (6)the lower Court ought not to have confiscated the bank guarantee, which is the value of seized stock, without any iota of evidence in respect of clandestine business; (7)the seized edible oils are not scarce commodities and they are freely available in the market; (8)the lower Court went wrong without giving any opportunity to the appellant for engaging an advocate and to submit written explanation on her behalf amounts to violation of principles of natural justice i.e., Audi Alterm Partem i.e., nobody should be condemned unheard.

Page No.4 of 10 5 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

Hence, prayed to allow the appeal by setting-aside the impugned order passed by the learned Collector (CS) in E.C.P.No.510 of 2017, dt.28.12.2018.

8.I have heard the learned counsel for appellant and learned

Public Prosecutor for State and perused the entire material available on record and the impugned Order passed by the learned Collector (CS).

Thoughtful consideration is bestowed to the arguments advanced by learned counsels for both sides.

9.Now the points for determination in this appeal are:-

1.Whether the appellant had violated the conditions of Form-B License, Clause 2 (H) (iv) and 3 of Andhra Pradesh Scheduled Commodities Dealers (Licensing, Storage and Regulation) Order, 2016?

2.Whether the impugned Order in E.C.P.No.510 of 2017, dt.28.12.2018 passed by the learned Collector (CS) is sustainable either on the facts or on the law or it requires interference from this Court? If so, on what ground?

3.To what relief?

10.Learned counsel for the appellant argued that as per

Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and there is no restriction for storage of edible oils. As such, inspection and seizure of stock from the premises of appellant is ultravires and urged to set-aside the impugned order passed by the learned Collector (CS).

11.Per contra, the learned Public Prosecutor argued that the learned Collector (CS) had rightly passed the impugned Order by assessing the case facts; the appellant did not possess Form-B licence and doing business in edible oils unauthorizedly and the said fact was also admitted by the appellant before the learned Collector (CS) subsequent to issuance of Section 6-B of the E.C.Act notice. Hence, prayed to confirm the impugned Order by dismissing the appeal.

Page No.5 of 10 6 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

POINT No.1:

12.Indubitably, stock worth of Rs.98,860/- i.e., 1,412 Kgs of edible oils were seized from the premises of appellant on 26.09.2017.

Doubtless, the appellant as on the date of inspection did not possess any Form-B license to store the seized stock in his possession. The appellant contended that he had no knowledge whether license is essential or not, in doing business. However, mere statement of no knowledge about getting Form-B license in doing business is not a ground to escape from the contravention committed by the appellant.

13.It is apt and relevant to refer Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016, for contravention of which the appellant was found fault, for better adjudication of the appeal on hand:

Clause 2 (H): ‘Dealer’ means any person, firm, association of persons, company, institution, organization engaged in the business of purchase, movement, sale, supply, distribution or storage for sale of any of the commodities specified in Schedule I whether as a wholesaler or retailer or commission agent or producer or manufacturer or importer or exporter and whether or not in conjunction with any other business, and includes his representatives or agent.

(iv)Dealer in respect of edible oil seeds and edible oils: A person, who engages himself in the business of purchase, sale or storage for sale of edible oilseeds or edible oils in quantity of more than five quintals of any one or all edible oils

including hydrogenated vegetable oils taken

together or thirty quintals of any one or all

edible oilseeds including groundnut in shell

taken together, and includes a manufacturer of edible oils, but does not include farmers/ agriculturalists who stores oil seeds for his personal cultivation or seed purpose. Clause 3: Restriction on possession of scheduled commodities by dealers: With a view to ensuring that the scheduled commodities are available in the market and unlimited stocks are not held by the dealers in their business premises without releasing them into the market, so as to have a salutary effect on the prices of scheduled commodities, every dealer shall obtain a license issued by the competent authority and shall not either by himself or by any person on his behalf, store or have in his possession at any point of time the commodities in excess of the quantities specified in Schedule-II to this order.

Page No.6 of 10 7 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

14.Undeniably, appellant is neither a dealer nor a wholesaler; he is only a retailer; he did not even possess Form-B license to store edible oils. The inspection was conducted at the business premises of appellant, which is situated at Vuyyuru. As per Schedule-II of Dealers

Order, 2016, Vuyyuru town comes under ‘B-Category’, as the said town is with a population of 3 lakhs and more, but less than 10 lakhs. Since the appellant being a retailer is only meant to sell the schedule commodities to consumers directly, but not without possessing Form-B license as prescribed under Clause 3 of Dealers Order, 2016. At the time of inspection, appellant stored 1,412 kgs of edible oils in his possession; he violated the provision of Clause 2 (H) (iv) and Clause 3 of Dealers

Order, 2016. Clause 2 (H) (iv) of the Dealers Order, 2016 ordains that any person, who wants to do business in edible oils with more than 5 quintals shall obtain license from the competent authority.

15.It is not in dispute that the Government of India issued orders vide G.S.R.929 (E), dt.29.09.2016, Department of Consumer

Affairs, M/o Consumer Affairs, Food and Food Public Distribution, GOI, basing on which the State Governments especially the Government of

Andhra Pradesh issued Dealers Order, 2016 imposing Licensing and

Stock limits regulations on edible oils and edible oilseeds and sugar, vide G.O.Ms.No.9 CAF & CS (CS.I) Department, dt.30.05.2017. The

Dealers Order, 2016 will remain in force consequently with the validity of the Central Government Orders issued in G.S.R.929 (supra), dt.29.09.2016 and on subsequent dates issued from time to time by the

Government of India. The Government of India had extended the validity of their orders up to 30.09.2018 in S.O.No.3136(E) dt.27.09.2018 in respect of edible oil and edible oilseeds and up to 28.04.2018 in respect of Sugar vide S.O.No.3422(E), dt.25.10.2017.

16.It is an admitted fact that on 26.09.2017 the inspection was taken place, by that time the Dealers Order, 2016 was very much in

Page No.7 of 10 8 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

force. Possession of 1,412 Kgs of edible oils without obtaining Form-B

License is nothing but contravention under Section 2 (H) (iv) and Clause 3 of the Dealers Order, 2016. As discussed in the preceding paragraph, ignorance in obtaining license to conduct business is not a ground of excuse for taking appropriate action under Dealers Order, 2016. Learned

Collector (CS) having appreciated the facts and circumstances of the case in a correct perspective rightly passed the order of confiscation.

Accordingly, the point No.1 is answered against the appellant.

POINT No.2:

17.In respect of quantum or percentage of confiscation, it is profitable to refer the Judgments of the Hon’ble High Court in Dilip

Kumar, Prop. Adarsh Rice Depot, Secunderabad v. State through

the Inspector of Police, VCCS. Dept., Hyderabad 2004 (1) ALT

(Crl.) 499 (A.P), whereinit was held at para No.8 that variation in stocks in the absence of material that the dealer was indulging in clandestine business does not attract penal provisions so as to order confiscation. However, in Kyasa Narayana v. State of A.P., Rep., by

Public Prosecutor, High Court of A.P., Hyderabad reported in 2013 (3) ALT (Crl.) 170 (A.P) at Para No.9, it was held that the variation of stock or the value thereof can be confiscated, but not entire stock i.e., found in the possession of the mill. The similar view was also expressed in M/s. Chilukuru Balaji ground nut Decortications Mill vs. State of A.P., and another reported in 2013 (3) ALT (Crl.) 189 (A.P) at para No.5 of the judgment.

18.The appellant is a new entrant into the business. The appellant is not a chronic violator of the Dealers Order, 2016. In view of the above circumstances and the three above mentioned Judgments, seizure of whole of the ground stock is found unsustainable and disproportionate to the magnitude of charge framed against the appellant. As per Clause 2 (H) (iv) of Dealers Order, 2016, the

Page No.8 of 10 9 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

permissible variation for storage of edible oils is 5 quintals. After deducting permissible variation from the available physical balance, the excess stored edible oils by the appellant are quintals 9.12 kgs and its value is to be confiscated. The total value of seized stock is Rs.98,860/-.

As such, if 50% worth of seized stock covered by bank guarantee for

Rs.98,000/- were ordered for confiscation, it would have met the ends of justice.

19.Further, the learned Collector (CS) imposed penalty of

Rs.50,000/- on the appellant for contravention of Dealers Order, 2016.

Indeed, Section 6-A of the E.C.Act empowers the learned Collector (CS) only to the extent of either to confiscate or to release the seized stock.

As such, imposition of penalty of Rs.50,000/- on the appellant is unwarranted and it is liable to be set-aside. To that extent the impugned order is required to be interfered and modified. Accordingly, point No.2 is partly answered in favour of the appellant.

POINT No.3:

20.IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMING the impugned Order passed by the learned Collector (CS) in E.C.P.No.

510 of 2017, dt.28.12.2018 while REDUCING the confiscation of worth of seized stock covered by bank guarantee for Rs.98,000/- from 100% to 50% and by SETTING-ASIDE the imposition of penalty of Rs.50,000/- on the appellant. In the circumstances of the case there shall be no order as to costs.

Dictated to the Stenographer, transcribed by him, corrected on

desktop and pronounced by me in open Court on this the 2nd day of April, 2019.

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

APPENDIX OF EVIDENCE

-No oral or documentary evidence has been adduced before this Court by either of the party-

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

Page No.9 of 10 10 E.C.Appeal No.24/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

Copy submitted to:-

The Registrar (Judicial),

Hon’ble High Court of Andhra Pradesh,

NELAPADU.

Copy to:-

1.The Collector (CS), Krishna, Machilipatnam.

2.The Public Prosecutor, Principal District Court, Krishna at Machilipatnam.

// TRUE COPY //

Chief Administrative Officer,

Principal District Court,

Krishna, Machilipatnam.

Page No.10 of 10

1 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

IN THE COURT OF THE SESSIONS JUDGE, KRISHNA DIVISION,

MACHILIPATNAM

PRESENT: - Sri Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM

TUESDAY, THIS THE 2nd DAY OF APRIL, 2019

E.C. APPEAL No.26 of 2019

* * * From which court the appeal is::TheCollector(CS),Krishna, preferredMachilipatnam. No. of the case in that court:E.C P.No.558 of 2017 Name and description of the::Voora Chakravarthi, S/o. Gangadhara appellantsRao, Hindu, Proprietor of Bhargavi General Stores, Vuyyuru, Vuyyuru Mandal, Krishna District. Name and description of the::The Special Deputy Tahsildar (PDS), respondentVuyyuru,KrishnaDistrict, Represented by the Public Prosecutor, Krishna District, Machilipatnam. The sentence and law under::The learned Collector (CS), Krishna, which it was imposed in theMachilipatnamorderedfor Lower courtconfiscation of 100% value of seized stock to the government and imposed a sum of Rs.10,000/- as penalty on the appellant. The confiscated value of seized stock and penalty amount shall be deposited into the Head of Account “1456-Civil Supplies, 800- Other Receipts, 81-Other Items” after appeal time is over. Whether confirmed, modified or::IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMINGthe reversed and if modified the impugned Order passed by the modificationlearned Collector (CS) in E.C.P.No. 558 of2017,dt.29.12.2018while REDUCING the confiscation of value of seized stock from 100% to 25% and by SETTING-ASIDE the imposition of penalty of Rs.10,000/- on the appellant. In the circumstances of the case there shall be no order as to costs.

DATE ON WHICH

Bail bond if Notice issued byappellantAppellantHearing PresentationFilingcourt to appearhas been letordered toOrder respondentout on bailappear 04.02.201908.02.2019---------01.04.201902.04.2019

This appeal is coming before me on 01.04.2019 for final hearing in the presence of Sri K.Sai Mohan Rao, Sri A.Satyanarayana, Advocates for the Appellant and of Sri Kaila Rama Krishna, Public Prosecutor for the State/Respondent and the matter is having stood over for consideration and upon hearing both sides, upon perusing the entire material papers on record, this court delivered the following:

Page No.1 of 9 2 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

J U D G M E N T

Appeal is preferred under Section 6-C of the Essential

Commodities Act, 1955 (for brevity ‘E.C. Act’) challenging the validity and correctness of the impugned Order passed by the learned Collector (CS) in E.C.P.No.558 of 2017, dt.29.12.2018 on the report filed under

Section 6-A of the E.C.Act, whereby and whereunder ordered for confiscation of 100% value of the seized stock to the government besides imposition of penalty of Rs.10,000/-.

2.Contents of the report filed under Section 6-A of the E.C.Act in brief, are that there was information from the villagers about indulging in clandestine business by storing scheduled commodities by some of the Edible Oil Traders of Vuyyuru Town without license as required under Andhra Pradesh Scheduled Commodities Dealers (Licensing, Storage and Regulation) Order, 2016 (for brevity ‘Dealers

Order, 2016’).

2.1.On 31.10.2017 around 2.00 p.m., the Special Deputy

Tahsildar (PDS), Vuyyuru (hereinafter referred to ‘complainant’) along with Assistant Supply Officer, Nuzvid proceeded to Bhargavi General

Stores, Vuyyuru and inspected the business premises, which was run by the appellant. The complainant asked the appellant to furnish Form-B license, stock register, sales and purchase bills.

2.2.The complainant stated that he has been doing kirana shop business since long time and he had not been taken food grain license from competent authority. The complainant found storage of the following stock on ground in respect of edible oils:

Value of the seized Sl. Name of the Quantity stock as per

No. Commodity (in Kgs.) present market

value

1.Palmolin Oil27017820-00

2.Sunflower Oil20516400-00

3.Groundnut Oil919100-00

4.Rice Bran Oil6450-00

Total: 572 43770-00

Page No.2 of 9 3 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

2.3.When the appellant was asked to produce stock register, he stated he had not been maintaining any register. Besides that the appellant had not obtained Form-B license from the competent authority. As such, the inspection of complainant clearly established that appellant was storing edible oils unauthorizedly and doing business without Form-B license as required under Dealers Order, 2016 and thereby violated Clause 2 (H) (iv) and 3 of Dealers Order, 2016. The complainant seized the entire stock in the presence of mediators under the cover of a Mediators Report and handed over to Voora Nagin,

Proprietor of Nagasai Traders, Vuyyuru for safe custody and submitted a report under Section 6-A of the E.C. Act to the learned Collector (CS) for confiscation of the entire seized stock to the Government.

3.Since the seized stock is evaporative in nature, the learned

Collector (CS) issued proceedings on 04.02.2018 directing the complainant to hand over the seized stock to the Tahsildar, Vuyyuru to dispose the seized stock by conducting public auction. Accordingly, on 27.03.2018 the Tahsildar, Vuyyuru conducted public auction and auctioned the seized stock and accrued a sum of Rs.36,325/- towards sale proceeds. The sale was confirmed by the learned Collector (CS) in its proceedings, dt.01.06.2018 and the said sum was deposited in the form of Demand Draft vide No.954231, dt.02.07.2018.

4.Pursuant to the report filed under Section 6-A, the learned

Collector (CS) issued notice to the appellant under Section 6-B of the

E.C.Act directing the appellant to submit his representation/written explanation as to why the entire seized stock shall not be confiscated to the state for the lapses made by appellant by storing edible oils unauthorizedly and doing business without obtaining Form-B license and contravening Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016.

5.Appellant did not file his written explanation before the learned Collector (CS), but he appeared before the learned Collector

Page No.3 of 9 4 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

(CS) and stated that he has been doing business from long time without obtaining license and pleaded to excuse him and return the sale proceeds arrived out of the auctioned seized stock.

6.After conducting enquiry into the matter, learned Collector (CS) ordered for confiscation of 100% value of the seized stock to the government and imposed penalty of Rs.10,000/- on the appellant.

7.Feeling aggrieved by the impugned order passed by the learned Collector (CS), the appellant preferred appeal with the grounds infra: - (1)the impugned Order is contrary to law, weight of evidence and probabilities of case and it is liable to be set-aside; (2)the lower Court ought to have held that the appellant had not contravened Clause 2 (H) (iv) and Clause (3) of Dealers Order, 2016 as the said clause is not applicable; (3)the lower Court ought to have held that the edible oil seeds and Dealers Order was repealed and there is no restriction for storage of edible oils; (4)the lower Court ought to have held as per Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and no contravention has been made out by the appellant; (5)the lower Court was wrong in confiscating the entire value of the seized stock and imposing penalty of Rs.10,000/- is highly excessive, harsh and exorbitant and the lower court ought not to have punished with severe penalty; (6)the lower Court ought not to have confiscated the entire value of the seized stock, without any iota of evidence in respect of clandestine business; (7)the seized edible oils are not scarce commodities and they are freely available in the market; (8)the lower Court went wrong without giving any opportunity to the appellant for engaging an advocate and to submit written explanation on her behalf amounts to violation of principles of natural justice i.e., Audi Alterm Partem i.e., nobody should be condemned unheard.

Hence, prayed to allow the appeal by setting-aside the impugned order passed by the learned Collector (CS) in E.C.P.No.558 of 2017, dt.29.12.2018.

8.I have heard the learned counsel for appellant and learned

Public Prosecutor for State and perused the entire material available on Page No.4 of 9 5 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

record and the impugned Order passed by the learned Collector (CS).

Thoughtful consideration is bestowed to the arguments advanced by learned counsels for both sides.

9.Now the points for determination in this appeal are:-

1.Whether the appellant had violated the conditions of Form-B License, Clause 2 (H) (iv) and 3 of Andhra Pradesh Scheduled Commodities Dealers (Licensing, Storage and Regulation) Order, 2016?

2.Whether the impugned Order in E.C.P.No.558 of 2017, dt.29.12.2018 passed by the learned Collector (CS) is sustainable either on the facts or on the law or it requires interference from this Court? If so, on what ground?

3.To what relief?

10.Learned counsel for the appellant argued that as per

Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and there is no restriction for storage of edible oils. As such, inspection and seizure of stock from the premises of appellant is ultravires and urged to set-aside the impugned order passed by the learned Collector (CS).

11.Per contra, the learned Public Prosecutor argued that the learned Collector (CS) had rightly passed the impugned Order by assessing the case facts; the appellant did not possess Form-B licence and doing business in edible oils unauthorizedly and the said fact was also admitted by the appellant before the learned Collector (CS) subsequent to issuance of Section 6-B of the E.C.Act notice. Hence, prayed to confirm the impugned Order by dismissing the appeal.

POINT No.1:

12.Indubitably, stock worth of Rs.43,770/- i.e., 572 Kgs of edible oils were seized from the premises of appellant on 31.10.2017.

Doubtless, the appellant as on the date of inspection did not possess any Form-B license to store the seized stock in his possession. The appellant contended that he has been doing kirana shop business since long time. However, mere statement of doing business from long time

Page No.5 of 9 6 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

without getting valid Form-B license is not a ground to escape from the contravention committed by the appellant, when the law is well prescribed to get valid license to do business in edible oils.

13.It is apt and relevant to refer Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016, for contravention of which the appellant was found fault, for better adjudication of the appeal on hand:

Clause 2 (H): ‘Dealer’ means any person, firm, association of persons, company, institution, organization engaged in the business of purchase, movement, sale, supply, distribution or storage for sale of any of the commodities specified in Schedule I whether as a wholesaler or retailer or commission agent or producer or manufacturer or importer or exporter and whether or not in conjunction with any other business, and includes his representatives or agent.

(iv)Dealer in respect of edible oil seeds and edible oils: A person, who engages himself in the business of purchase, sale or storage for sale of edible oilseeds or edible oils in quantity of more than five quintals of any one or all edible oils

including hydrogenated vegetable oils taken

together or thirty quintals of any one or all

edible oilseeds including groundnut in shell

taken together, and includes a manufacturer of edible oils, but does not include farmers/ agriculturalists who stores oil seeds for his personal cultivation or seed purpose. Clause 3: Restriction on possession of scheduled commodities by dealers: With a view to ensuring that the scheduled commodities are available in the market and unlimited stocks are not held by the dealers in their business premises without releasing them into the market, so as to have a salutary effect on the prices of scheduled commodities, every dealer shall obtain a license issued by the competent authority and shall not either by himself or by any person on his behalf, store or have in his possession at any point of time the commodities in excess of the quantities specified in Schedule-II to this order.

14.Undeniably, appellant is neither a dealer nor a wholesaler; he is only a retailer; he did not even possess Form-B license to store edible oils. The inspection was conducted at the business premises of appellant, which is situated at Vuyyuru. As per Schedule-II of Dealers

Order, 2016, Vuyyuru town comes under ‘B-Category’, as the said town is with a population of 3 lakhs and more, but less than 10 lakhs. Since

Page No.6 of 9 7 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

the appellant being a retailer is only meant to sell the schedule commodities to consumers directly, but not without possessing Form-B license as prescribed under Clause 3 of Dealers Order, 2016. At the time of inspection, appellant stored 572 kgs of edible oils in his possession; he violated the provision of Clause 2 (H) (iv) and Clause 3 of Dealers

Order, 2016. Clause 2 (H) (iv) of the Dealers Order, 2016 ordains that any person, who wants to do business in edible oils with more than 5 quintals shall obtain license from the competent authority.

15.It is not in dispute that the Government of India issued orders vide G.S.R.929 (E), dt.29.09.2016, Department of Consumer

Affairs, M/o Consumer Affairs, Food and Food Public Distribution, GOI, basing on which the State Governments especially the Government of

Andhra Pradesh issued Dealers Order, 2016 imposing Licensing and

Stock limits regulations on edible oils and edible oilseeds and sugar, vide G.O.Ms.No.9 CAF & CS (CS.I) Department, dt.30.05.2017. The

Dealers Order, 2016 will remain in force consequently with the validity of the Central Government Orders issued in G.S.R.929 (supra), dt.29.09.2016 and on subsequent dates issued from time to time by the

Government of India. The Government of India had extended the validity of their orders up to 30.09.2018 in S.O.No.3136(E) dt.27.09.2018 in respect of edible oil and edible oilseeds and up to 28.04.2018 in respect of Sugar vide S.O.No.3422(E), dt.25.10.2017.

16.It is an admitted fact that on 31.10.2017 the inspection was taken place, by that time the Dealers Order, 2016 was very much in force. Possession of 572 Kgs of edible oils without obtaining Form-B

License is nothing but contravention under Section 2 (H) (iv) and Clause 3 of the Dealers Order, 2016. As discussed in the preceding paragraph, mere ignorance or conducting business from long time without obtaining valid Form-B license is not a ground of excuse for taking appropriate action under Dealers Order, 2016. Learned Collector (CS) having

Page No.7 of 9 8 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

appreciated the facts and circumstances of the case in a correct perspective rightly passed the order of confiscation. Accordingly, the point No.1 is answered against the appellant.

POINT No.2:

17.In respect of quantum or percentage of confiscation, it is profitable to refer the Judgments of the Hon’ble High Court in Dilip

Kumar, Prop. Adarsh Rice Depot, Secunderabad v. State through

the Inspector of Police, VCCS. Dept., Hyderabad 2004 (1) ALT

(Crl.) 499 (A.P), whereinit was held at para No.8 that variation in stocks in the absence of material that the dealer was indulging in clandestine business does not attract penal provisions so as to order confiscation. However, in Kyasa Narayana v. State of A.P., Rep., by

Public Prosecutor, High Court of A.P., Hyderabad reported in 2013 (3) ALT (Crl.) 170 (A.P) at Para No.9, it was held that the variation of stock or the value thereof can be confiscated, but not entire stock i.e., found in the possession of the mill. The similar view was also expressed in M/s. Chilukuru Balaji ground nut Decortications Mill vs. State of A.P., and another reported in 2013 (3) ALT (Crl.) 189 (A.P) at para No.5 of the judgment.

18.Admittedly, as per the contention of appellant, he has been doing business from long time. The appellant is not a chronic violator of the Dealers Order, 2016. In view of the above circumstances and the above three Judgments seizure of whole of the ground stock is found unsustainable and disproportionate to the magnitude of charge framed against the appellant. As per Clause 2 (H) (iv) of Dealers Order, 2016, the permissible variation for storage of edible oils is 5 quintals. After deducting permissible variation from the available physical balance, the excess stored edible oils by the appellant are quintals 0.72 kgs i.e., 72 kgs and its value only needs to be confiscated. The total value of seized stock is Rs.43,770/- and a sum of Rs.36,325/- was accrued towards sale

Page No.8 of 9 9 E.C.Appeal No.26/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

of seized stock. As such, if 25% value of seized stock were ordered for confiscation, it would have met the ends of justice.

19.Further, the learned Collector (CS) imposed penalty of

Rs.10,000/- on the appellant for contravention of Dealers Order, 2016.

Indeed, Section 6-A of the E.C. Act empowers the learned Collector (CS) only to the extent of either to confiscate or to release the seized stock.

As such, imposition of penalty of Rs.10,000/- on the appellant is unwarranted and it is liable to be set-aside. To that extent the impugned order is required to be interfered and modified. Accordingly, point No.2 is partly answered in favour of the appellant.

POINT No.3:

20.IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMING, the impugned Order passed by the learned Collector (CS) in E.C.P.No.

558 of 2017, dt.29.12.2018 while REDUCING the confiscation of value of seized stock from 100% to 25% and by SETTING-ASIDE the imposition of penalty of Rs.10,000/- on the appellant. In the circumstances of the case there shall be no order as to costs.

Dictated to the Stenographer directly on desktop, corrected and

pronounced by me in open Court on this the 2nd day of April, 2019.

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

APPENDIX OF EVIDENCE

-No oral or documentary evidence has been adduced before this Court by either of the party-

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

Copy submitted to:-

The Registrar (Judicial),

Hon’ble High Court of Andhra Pradesh,

NELAPADU.

Copy to:-

1.The Collector (CS), Krishna, Machilipatnam.

2.The Public Prosecutor, Principal District Court, Krishna at Machilipatnam. // TRUE COPY // chief Administrative Officer,

Principal District Court,

Krishna, Machilipatnam.

Page No.9 of 9

1 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

IN THE COURT OF THE SESSIONS JUDGE, KRISHNA DIVISION,

MACHILIPATNAM

PRESENT: - Sri Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM

TUESDAY, THIS THE 2nd DAY OF APRIL, 2019

E.C. APPEAL No.25 of 2019

* * * From which court the appeal is::TheCollector(CS),Krishna, preferredMachilipatnam. No. of the case in that court:E.C P.No.511/2017 Name and description of the::Doredla Vijaya Durga Bhavani, W/o. appellantsSambasiva Rao, Hindu, Proprietor of Doredla Krishna Murthy Departmental Stores, Bhogendrudu veedhi, Vuyyuru, Vuyyuru Mandal, Krishna District. Name and description of the::The Assistant Supply Officer, Circle-3, respondentVijayawada, Represented by the Public Prosecutor, Krishna District, Machilipatnam. The sentence and law under::The learned Collector (CS), Krishna, which it was imposed in theMachilipatnamorderedfor Lower courtconfiscation of entire bank guarantee to the government and imposed a sum of Rs.50,000/- as penalty on the appellant. The confiscated value of seized stock and penalty amount shall be deposited into the Head of Account “1456-CivilSupplies,800-Other Receipts, 81-Other Items” after appeal time is over. Whether confirmed, modified or::IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMINGthe reversed and if modified the impugned Order passed by the modificationlearned Collector (CS) in E.C.P.No. 511 of2017,dt.28.12.2018while REDUCING the confiscation of entire bank guarantee to 50% and by SETTING-ASIDE the imposition of penalty of Rs.50,000/- on the appellant. In the circumstances of the case there shall be no order as to costs.

DATE ON WHICH

Bail bond if Notice issued byappellantAppellant PresentationFilingcourt to appearhas been letordered toHearing Order respondentout on bailappear 04.02.201908.02.2019---------01.04.201902.04.2019

This appeal is coming before me on 01.04.2019 for final hearing in the presence of Sri K.Sai Mohan Rao, Sri A.Satyanarayana, Advocates for the Appellant and of Sri Kaila Rama Krishna, Public Prosecutor for the State/Respondent and the matter is having stood over for consideration and upon hearing both sides, upon perusing the entire material papers on record, this court delivered the following:

Page No.1 of 9 2 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

J U D G M E N T

Appeal is preferred under Section 6-C of the Essential

Commodities Act, 1955 (for brevity ‘E.C. Act’) challenging the validity and correctness of the impugned Order passed by the learned Collector (CS) in E.C.P.No.511 of 2017, dt.28.12.2018 on the report filed under

Section 6-A of the E.C.Act, whereby and whereunder ordered for confiscation of entire bank guarantee besides imposition of penalty of

Rs.50,000/-.

2.Material averments stemming from the report filed under

Section 6-A of the E.C.Act is that there was information by the District

Supply Officer, Krishna about indulging in clandestine business by storing scheduled commodities by some of the Edible Oil Traders of

Vuyyuru Town without license as required under Andhra Pradesh

Scheduled Commodities Dealers (Licensing, Storage and Regulation)

Order, 2016 (for brevity ‘Dealers Order, 2016’).

2.1.On 26.09.2017 around 12.00 noon the Assistant Supply

Officer, Circle-III, Vijayawada (hereinafter referred to ‘complainant’) along with Divisional Assistant Supply Officer, Vijayawada proceeded to main centre, Vuyyuru and inspected the business premises of appellant running under the name and style of ‘Dhoredla Krishna Murthy

Departmental Stores’, situated at Bhogendrudu veedhi, main road,

Vuyyuru. The complainant asked to furnish Form-B license, stock register, sales and purchase bills.

2.2.The complainant noticed some edible oil liter packets in boxes and loose oil in 15 kgs tins. They physically verified and weighed the different varieties of edible oils available in the shop packed in packets/tins in the shape of liters/kgs and converted into kilograms and found the following quantities of edible oils:

Name of the Quantity (in Rate per

Sl. No. Value (in Rs.)

Commodity Kgs.) kg.

1.Sunflower Oil103875-0077,850-00

2.P.Oil14960-008,940-00 Total: 1187-00 86,790-00 Page No.2 of 9 3 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

2.3.When the appellant was asked to produce stock register, she stated she had not been maintaining any register. Besides that the appellant had not obtained Form-B license from the competent authority. As such, the inspection of complainant clearly established that appellant was storing edible oils unauthorizedly and doing business without Form-B license as required under Dealers Order, 2016 and thereby violated Clause 2 (H) (iv) and 3 of Dealers Order, 2016. The complainant seized the entire stock in the presence of mediators under the cover of a Mediators Report and handed over to D.Krishna Murthy,

Kirana shop, Main centre, Vuyyuru, License No.15/NZD/2008 for safe custody and submitted a report under Section 6-A of the E.C. Act to the learned Collector (CS) for confiscation of the entire seized stock to the

Government.

3.Upon the representation made by the appellant before the learned Collector (CS) to return the seized stock, the learned Collector (CS) on 26.04.2018, directed the appellant to file bank guarantee for an amount of Rs.86,000/-. On which, the appellant furnished bank guarantee for the said sum and the learned Collector (CS) issued proceedings on 01.06.2018 directing the complainant to release the seized stock in favour of appellant.

4.Pursuant to the report filed under Section 6-A, the learned

Collector (CS) issued notice to the appellant under Section 6-B of the

E.C.Act directing the appellant to submit her representation/written explanation as to why the entire seized stock shall not be confiscated to the state for the lapses made by appellant by storing edible oils unauthorizedly and doing business without obtaining Form-B license and contravening Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016.

5.Appellant did not file her written explanation before the learned Collector (CS), but she appeared before the learned Collector (CS) and stated that she is not having Food Grain License and she does

Page No.3 of 9 4 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

not know whether license is essential or not in doing business and pleaded to excuse her and release the bank guarantee.

6.After conducting enquiry into the matter, learned Collector (CS) ordered for confiscation of entire bank guarantee and imposed penalty of Rs.50,000/- on the appellant.

7.Feeling aggrieved by the impugned order passed by the learned Collector (CS), the appellant preferred appeal with the grounds infra: - (1)the impugned Order is contrary to law, weight of evidence and probabilities of case and it is liable to be set-aside; (2)the lower Court ought to have held that the appellant had not contravened Clause 2 (H) (iv) and Clause (3) of Dealers Order, 2016 as the said clause is not applicable; (3)the lower Court ought to have held that the edible oil seeds and Dealers Order was repealed and there is no restriction for storage of edible oils; (4)the lower Court ought to have held as per Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and no contravention has been made out by the appellant; (5)the lower Court was wrong in confiscating the entire bank guarantee and imposing penalty of Rs.50,000/- is highly excessive, harsh and exorbitant and the lower court ought not to have punished with severe penalty; (6)the lower Court ought not to have confiscated the bank guarantee, which is the value of seized stock, without any iota of evidence in respect of clandestine business; (7)the seized edible oils are not scarce commodities and they are freely available in the market; (8)the lower Court went wrong without giving any opportunity to the appellant for engaging an advocate and to submit written explanation on her behalf amounts to violation of principles of natural justice i.e., Audi Alterm Partem i.e., nobody should be condemned unheard.

Hence, prayed to allow the appeal by setting-aside the impugned order passed by the learned Collector (CS) in E.C.P.No.511 of 2017, dt.28.12.2018.

8.I have heard the learned counsel for appellant and learned

Public Prosecutor for State and perused the entire material available on

Page No.4 of 9 5 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

record and the impugned Order passed by the learned Collector (CS).

Thoughtful consideration is bestowed to the arguments advanced by learned counsels for both sides.

9.Now the points for determination in this appeal are:-

1.Whether the appellant had violated the conditions of Form-B License, Clause 2 (H) (iv) and 3 of Andhra Pradesh Scheduled Commodities Dealers (Licensing, Storage and Regulation) Order, 2016?

2.Whether the impugned Order in E.C.P.No.511 of 2017, dt.28.12.2018 passed by the learned Collector (CS) is sustainable either on the facts or on the law or it requires interference from this Court? If so, on what ground?

3.To what relief?

10.Learned counsel for the appellant argued that as per

Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and there is no restriction for storage of edible oils. As such, inspection and seizure of stock from the premises of appellant is ultravires and urged to set-aside the impugned order passed by the learned Collector (CS).

11.Per contra, the learned Public Prosecutor argued that the learned Collector (CS) had rightly passed the impugned Order by assessing the case facts; the appellant did not possess Form-B license and doing business in edible oils unauthorizedly and the said fact was also admitted by the appellant before the learned Collector (CS) subsequent to issuance of Section 6-B of the E.C.Act notice. Hence, prayed to confirm the impugned Order by dismissing the appeal.

POINT No.1:

12.Indubitably, stock worth of Rs.86,790/- i.e., 1,187 Kgs of edible oils were seized from the premises of appellant on 26.09.2017.

Doubtless, the appellant as on the date of inspection did not possess any Form-B license to store the seized stock in her possession. The appellant contended that she had no knowledge whether license is essential or not, in doing business. However, mere statement of no

Page No.5 of 9 6 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

knowledge about getting Form-B license in doing business is not a ground to escape from the contravention committed by the appellant.

13.It is apt and relevant to refer Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016, for contravention of which the appellant was found fault, for better adjudication of the appeal on hand:

Clause 2 (H): ‘Dealer’ means any person, firm, association of persons, company, institution, organization engaged in the business of purchase, movement, sale, supply, distribution or storage for sale of any of the commodities specified in Schedule I whether as a wholesaler or retailer or commission agent or producer or manufacturer or importer or exporter and whether or not in conjunction with any other business, and includes his representatives or agent.

(iv)Dealer in respect of edible oil seeds and edible oils: A person, who engages himself in the business of purchase, sale or storage for sale of edible oilseeds or edible oils in quantity of more than five quintals of any one or all edible oils

including hydrogenated vegetable oils taken

together or thirty quintals of any one or all

edible oilseeds including groundnut in shell

taken together, and includes a manufacturer of edible oils, but does not include farmers/ agriculturalists who stores oil seeds for his personal cultivation or seed purpose.

Clause 3: Restriction on possession of scheduled commodities by dealers: With a view to ensuring that the scheduled commodities are available in the market and unlimited stocks are not held by the dealers in their business premises without releasing them into the market, so as to have a salutary effect on the prices of scheduled commodities, every dealer shall obtain a license issued by the competent authority and shall not either by himself or by any person on his behalf, store or have in his possession at any point of time the commodities in excess of the quantities specified in Schedule-II to this order.

14.Undeniably, appellant is neither a dealer nor a wholesaler; she is only a retailer; she did not even possess Form-B license to store edible oils. The inspection was conducted at the business premises of appellant, which is situated at Vuyyuru. As per Schedule-II of Dealers

Order, 2016, Vuyyuru town comes under ‘B-Category’, as the said town is with a population of 3 lakhs and more, but less than 10 lakhs. Since the appellant being a retailer is only meant to sell the schedule

Page No.6 of 9 7 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

commodities to consumers directly, but not without possessing Form-B license as prescribed under Clause 3 of Dealers Order, 2016. At the time of inspection, appellant stored 1,187 kgs of edible oils in her possession; she violated the provision of Clause 2 (H) (iv) and Clause 3 of Dealers

Order, 2016. Clause 2 (H) (iv) of the Dealers Order, 2016 ordains that any person, who wants to do business in edible oils with more than 5 quintals shall obtain license from the competent authority.

15.It is not in dispute that the Government of India issued orders vide G.S.R.929 (E), dt.29.09.2016, Department of Consumer

Affairs, M/o Consumer Affairs, Food and Food Public Distribution, GOI, basing on which the State Governments especially the Government of

Andhra Pradesh issued Dealers Order, 2016 imposing Licensing and

Stock limits regulations on edible oils and edible oilseeds and sugar, vide G.O.Ms.No.9 CAF & CS (CS.I) Department, dt.30.05.2017. The

Dealers Order, 2016 will remain in force consequently with the validity of the Central Government Orders issued in G.S.R.929 (supra), dt.29.09.2016 and on subsequent dates issued from time to time by the

Government of India. The Government of India had extended the validity of their orders up to 30.09.2018 in S.O.No.3136(E) dt.27.09.2018 in respect of edible oil and edible oilseeds and up to 28.04.2018 in respect of Sugar vide S.O.No.3422(E), dt.25.10.2017.

16.It is an admitted fact that on 26.09.2017 the inspection was taken place, by that time the Dealers Order, 2016 was very much in force. Possession of 1,187 Kgs of edible oils without obtaining Form-B

License is nothing but contravention under Section 2 (H) (iv) and Clause 3 of the Dealers Order, 2016. As discussed in the preceding paragraph, ignorance in obtaining license to conduct business is not a ground of excuse for taking appropriate action under Dealers Order, 2016. Learned

Collector (CS) having appreciated the facts and circumstances of the

Page No.7 of 9 8 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

case in a correct perspective rightly passed the order of confiscation.

Accordingly, the point No.1 is answered against the appellant.

POINT No.2:

17.In respect of quantum or percentage of confiscation, it is profitable to refer the Judgments of the Hon’ble High Court in Dilip

Kumar, Prop. Adarsh Rice Depot, Secunderabad v. State through

the Inspector of Police, VCCS. Dept., Hyderabad 2004 (1) ALT

(Crl.) 499 (A.P), whereinit was held at para No.8 that variation in stocks in the absence of material that the dealer was indulging in clandestine business does not attract penal provisions so as to order confiscation. However, in Kyasa Narayana v. State of A.P., Rep., by

Public Prosecutor, High Court of A.P., Hyderabad reported in 2013 (3) ALT (Crl.) 170 (A.P) at Para No.9, it was held that the variation of stock or the value thereof can be confiscated, but not entire stock i.e., found in the possession of the mill. The similar view was also expressed in M/s. Chilukuru Balaji ground nut Decortications Mill vs. State of A.P., and another reported in 2013 (3) ALT (Crl.) 189 (A.P) at para No.5 of the judgment.

18.The appellant is not a chronic violator of the Dealers Order, 2016. In view of the above circumstances and the three above mentioned Judgments, seizure of whole of the ground stock is found unsustainable and disproportionate to the magnitude of charge framed against the appellant. As per Clause 2 (H) (iv) of Dealers Order, 2016, the permissible variation for storage of edible oils is 5 quintals. After deducting permissible variation from the available physical balance, the excess stored edible oils by the appellant are quintals 6.87 kgs and its value is to be confiscated. The total value of seized stock is Rs.86,790/-.

As such, if 50% worth of seized stock covered by bank guarantee for

Rs.86,000/- were ordered for confiscation, it would have met the ends of justice.

Page No.8 of 9 9 E.C.Appeal No.25/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

19.Further, the learned Collector (CS) imposed penalty of

Rs.50,000/- on the appellant for contravention of Dealers Order, 2016.

Indeed, Section 6-A of the E.C.Act empowers the learned Collector (CS) only to the extent of either to confiscate or to release the seized stock.

As such, imposition of penalty of Rs.50,000/- on the appellant is unwarranted and it is liable to be set-aside. To that extent the impugned order is required to be interfered and modified. Accordingly, point No.2 is partly answered in favour of the appellant.

POINT No.3:

20.IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMING the impugned Order passed by the learned Collector (CS) in E.C.P.No.

511 of 2017, dt.28.12.2018 while REDUCING the confiscation of entire bank guarantee to 50% and by SETTING-ASIDE the imposition of penalty of Rs.50,000/- on the appellant. In the circumstances of the case there shall be no order as to costs.

Dictated to the Stenographer, directly on desktop, corrected and

pronounced by me in open Court on this the 2nd day of April, 2019.

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

APPENDIX OF EVIDENCE

-No oral or documentary evidence has been adduced before this Court by either of the party-

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

Copy submitted to:-

The Registrar (Judicial),

Hon’ble High Court of Andhra Pradesh, NELAPADU.

Copy to:-

1.The Collector (CS), Krishna, Machilipatnam.

2.The Public Prosecutor, Principal District Court, Krishna at Machilipatnam. // TRUE COPY //

Chief Administrative Officer,

Principal District Court,

Krishna, Machilipatnam.-

Page No.9 of 9

1 E.C.Appeal No.27/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

IN THE COURT OF THE SESSIONS JUDGE, KRISHNA DIVISION,

MACHILIPATNAM

PRESENT: - Sri Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM

TUESDAY, THIS THE 2nd DAY OF APRIL, 2019

E.C. APPEAL No.27 of 2019

* * * From which court the appeal is::TheCollector(CS),Krishna, preferredMachilipatnam. No. of the case in that court::E.C P.No.601 of 2017 Name and description of the::GrandhiVenkataBabuji, appellantsS/o.RaghavendraRao,Hindu, Proprietor of Grandhi Rajya Lakshmi Kirana Merchants, Vuyyuru, Vuyyuru Mandal, Krishna District. Name and description of the::The Special Deputy Tahsildar (PDS), respondentVuyyuru,KrishnaDistrict, Represented by the Public Prosecutor, Krishna District, Machilipatnam. The sentence and law under::The learned Collector (CS), Krishna, which it was imposed in theMachilipatnamorderedfor Lower courtconfiscation of 100% value of seized stock to the government. The confiscated value of seized stock and penalty amount shall be deposited into the Head of Account “1456-Civil Supplies, 800-Other Receipts, 81- Other Items” after appeal time is over. Whether confirmed, modified or::IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMINGthe reversed and if modified the impugned Order passed by the modificationlearned Collector (CS) in E.C.P.No. 601 of2017,dt.28.12.2018while REDUCING the confiscation of value of seized stock from 100% to 40%. In the circumstances of the case there shall be no order as to costs.

DATE ON WHICH

Bail bond if Notice issued byappellantAppellant PresentationFilingcourt to appearhas been letordered toHearing Order respondentout on bailappear 04.02.201908.02.2019---------01.04.201902.04.2019

This appeal is coming before me on 01.04.2019 for final hearing in the presence of Sri K.Sai Mohan Rao, Sri A.Satyanarayana, Advocates for the Appellant and of Sri Kaila Rama Krishna, Public Prosecutor for the State/Respondent and the matter is having stood over for consideration and upon hearing both sides, upon perusing the entire material papers on record, this court delivered the following:

J U D G M E N T

Appeal is preferred under Section 6-C of the Essential

Commodities Act, 1955 (for brevity ‘E.C. Act’) challenging the validity

Page No.1 of 9 2 E.C.Appeal No.27/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

and correctness of the impugned Order passed by the learned Collector (CS) in E.C.P.No.601 of 2017, dt.28.12.2018 on the report filed under

Section 6-A of the E.C.Act, whereby and whereunder ordered for confiscation of 100% value of the seized stock to the government .

2.Contents of the report filed under Section 6-A of the E.C.Act in brief, are that there was information from the villagers about indulging in clandestine business by storing scheduled commodities by some of the Edible Oil Traders of Vuyyuru Town without license as required under Andhra Pradesh Scheduled Commodities Dealers (Licensing, Storage and Regulation) Order, 2016 (for brevity ‘Dealers

Order, 2016’).

2.1.On 15.11.2017 around 11.30 a.m., the Special Deputy

Tahsildar (PDS), Vuyyuru (hereinafter referred to ‘complainant’) along with Assistant Supply Officer, Nuzvid proceeded to Grandhi

Rajyalakshmi Kirana Merchants, Sivalayam Street, Vuyyuru and inspected the business premises, which was run by the appellant. The complainant asked the appellant to furnish Form-B license, stock register, sales and purchase bills.

2.2.The complainant stated that he does not have food grain license and has been doing kirana shop business without obtaining license from the competent authority. The complainant found storage of the following stock on ground in respect of edible oils:

Value of the seized Sl. Name of the Quantity stock as per

No. Commodity (in Kgs.) present market

value

1.Palmolin Oil59237,830-00

2.Sunflower Oil23118,480-00

3.Groundnut Oil12210,980-00

4.Rice Bran Oil413,075-00

Total: 986 70,365-00

2.3.When the appellant was asked to produce stock register, he stated he had not been maintaining any register. Besides that the appellant had not obtained Form-B license from the competent

Page No.2 of 9 3 E.C.Appeal No.27/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

authority. As such, the inspection of complainant clearly established that appellant was storing edible oils unauthorizedly and doing business without Form-B license as required under Dealers Order, 2016 and thereby violated Clause 2 (H) (iv) and 3 of Dealers Order, 2016. The complainant seized the entire stock in the presence of mediators under the cover of a Mediators Report and handed over to Voora Nagin,

Proprietor of Nagasai Traders, Vuyyuru for safe custody and submitted a report under Section 6-A of the E.C. Act to the learned Collector (CS) for confiscation of the entire seized stock to the Government.

3.Since the seized stock is evaporative in nature, the learned

Collector (CS) issued proceedings on 22.11.2017 directing the complainant to hand over the seized stock to the Tahsildar, Vuyyuru to dispose the seized stock by conducting public auction. Accordingly, on 08.12.2017 the Tahsildar, Vuyyuru conducted public auction and auctioned the seized stock and accrued a sum of Rs.61,435/- towards sale proceeds. The sale was confirmed by the learned Collector (CS) in its proceedings, dt.05.02.2018 and the said sum was deposited in the

State Treasury under vide challan No.14807, dt.23.02.2018.

4.Pursuant to the report filed under Section 6-A, the learned

Collector (CS) issued notice to the appellant under Section 6-B of the

E.C.Act directing the appellant to submit his representation/written explanation as to why the entire seized stock shall not be confiscated to the state for the lapses made by appellant by storing edible oils unauthorizedly and doing business without obtaining Form-B license and contravening Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016.

5.Appellant did not file his written explanation before the learned Collector (CS), but he appeared before the learned Collector (CS) and stated that he has been doing business without obtaining license and pleaded to excuse him and return the sale proceeds arrived out of the auctioned seized stock.

Page No.3 of 9 4 E.C.Appeal No.27/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

6.After conducting enquiry into the matter, learned Collector (CS) ordered for confiscation of 100% value of the seized stock to the government.

7.Feeling aggrieved by the impugned order passed by the learned Collector (CS), the appellant preferred appeal with the grounds infra: - (1)the impugned Order is contrary to law, weight of evidence and probabilities of case and it is liable to be set-aside; (2)the lower Court ought to have held that the appellant had not contravened Clause 2 (H) (iv) and Clause (3) of Dealers Order, 2016 as the said clause is not applicable; (3)the lower Court ought to have held that the edible oil seeds and Dealers Order was repealed and there is no restriction for storage of edible oils; (4)the lower Court ought to have held as per Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and no contravention has been made out by the appellant; (5)the lower Court was wrong in confiscating the entire value of the seized stock is highly excessive, harsh and exorbitant; (6)the lower Court ought not to have confiscated the entire value of the seized stock, without any iota of evidence in respect of clandestine business; (7)the seized edible oils are not scarce commodities and they are freely available in the market; (8)the lower Court went wrong without giving any opportunity to the appellant for engaging an advocate and to submit written explanation on her behalf amounts to violation of principles of natural justice i.e., Audi Alterm Partem i.e., nobody should be condemned unheard.

Hence, prayed to allow the appeal by setting-aside the impugned order passed by the learned Collector (CS) in E.C.P.No.601 of 2017, dt.28.12.2018.

8.I have heard the learned counsel for appellant and learned

Public Prosecutor for State and perused the entire material available on record and the impugned Order passed by the learned Collector (CS).

Thoughtful consideration is bestowed to the arguments advanced by learned counsels for both sides.

Page No.4 of 9 5 E.C.Appeal No.27/2019,Sessions Judge,

Dt: 02.04.2019.Krishna, Machilipatnam.

9.Now the points for determination in this appeal are:-

1.Whether the appellant had violated the conditions of Form-B License, Clause 2 (H) (iv) and 3 of Andhra Pradesh Scheduled Commodities Dealers (Licensing, Storage and Regulation) Order, 2016?

2.Whether the impugned Order in E.C.P.No.601 of 2017, dt.28.12.2018 passed by the learned Collector (CS) is sustainable either on the facts or on the law or it requires interference from this Court? If so, on what ground?

3.To what relief?

10.Learned counsel for the appellant argued that as per

Schedule-II of Dealers Order, 2016 up to 3 metric tons of storage of edible oils is permissible and there is no restriction for storage of edible oils. As such, inspection and seizure of stock from the premises of appellant is ultravires and urged to set-aside the impugned order passed by the learned Collector (CS).

11.Per contra, the learned Public Prosecutor argued that the learned Collector (CS) had rightly passed the impugned Order by assessing the case facts; the appellant did not possess Form-B licence and doing business in edible oils unauthorizedly and the said fact was also admitted by the appellant before the learned Collector (CS) subsequent to issuance of Section 6-B of the E.C.Act notice. Hence, prayed to confirm the impugned Order by dismissing the appeal.

POINT No.1:

12.Indubitably, stock worth of Rs.70,365/- i.e., 986 Kgs of edible oils were seized from the premises of appellant on 15.11.2017.

Doubtless, the appellant as on the date of inspection did not possess any Form-B license to store the seized stock in his possession. The appellant contended that he has been doing kirana shop business without obtaining license. However, mere statement of doing business without getting valid Form-B license is not a ground to escape from the contravention committed by the appellant, when the law is well

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prescribed to get valid license to do business in edible oils beyond the permissible limits.

13.It is apt and relevant to refer Clause 2 (H) (iv) and Clause 3 of Dealers Order, 2016, for contravention of which the appellant was found fault, for better adjudication of the appeal on hand:

Clause 2 (H): ‘Dealer’ means any person, firm, association of persons, company, institution, organization engaged in the business of purchase, movement, sale, supply, distribution or storage for sale of any of the commodities specified in Schedule I whether as a wholesaler or retailer or commission agent or producer or manufacturer or importer or exporter and whether or not in conjunction with any other business, and includes his representatives or agent.

(iv)Dealer in respect of edible oil seeds and edible oils: A person, who engages himself in the business of purchase, sale or storage for sale of edible oilseeds or edible oils in quantity of more than five quintals of any one or all edible oils

including hydrogenated vegetable oils taken

together or thirty quintals of any one or all

edible oilseeds including groundnut in shell

taken together, and includes a manufacturer of edible oils, but does not include farmers/ agriculturalists who stores oil seeds for his personal cultivation or seed purpose.

Clause 3: Restriction on possession of scheduled commodities by dealers: With a view to ensuring that the scheduled commodities are available in the market and unlimited stocks are not held by the dealers in their business premises without releasing them into the market, so as to have a salutary effect on the prices of scheduled commodities, every dealer shall obtain a license issued by the competent authority and shall not either by himself or by any person on his behalf, store or have in his possession at any point of time the commodities in excess of the quantities specified in Schedule-II to this order.

14.Undeniably, appellant is neither a dealer nor a wholesaler; he is only a retailer; he did not even possess Form-B license to store edible oils. The inspection was conducted at the business premises of appellant, which is situated at Vuyyuru. As per Schedule-II of Dealers

Order, 2016, Vuyyuru town comes under ‘B-Category’, as the said town is with a population of 3 lakhs and more, but less than 10 lakhs. Since the appellant being a retailer is only meant to sell the schedule

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commodities to consumers directly, but not without possessing Form-B license as prescribed under Clause 3 of Dealers Order, 2016. At the time of inspection, appellant stored 986 kgs of edible oils in his possession; he violated the provision of Clause 2 (H) (iv) and Clause 3 of Dealers

Order, 2016. Clause 2 (H) (iv) of the Dealers Order, 2016 ordains that any person, who wants to do business in edible oils with more than 5 quintals shall obtain license from the competent authority.

15.It is not in dispute that the Government of India issued orders vide G.S.R.929 (E), dt.29.09.2016, Department of Consumer

Affairs, M/o Consumer Affairs, Food and Food Public Distribution, GOI, basing on which the State Governments especially the Government of

Andhra Pradesh issued Dealers Order, 2016 imposing Licensing and

Stock limits regulations on edible oils and edible oilseeds and sugar, vide G.O.Ms.No.9 CAF & CS (CS.I) Department, dt.30.05.2017. The

Dealers Order, 2016 will remain in force consequently with the validity of the Central Government Orders issued in G.S.R.929 (supra), dt.29.09.2016 and on subsequent dates issued from time to time by the

Government of India. The Government of India had extended the validity of their orders up to 30.09.2018 in S.O.No.3136(E) dt.27.09.2018 in respect of edible oil and edible oilseeds and up to 28.04.2018 in respect of Sugar vide S.O.No.3422(E), dt.25.10.2017.

16.It is an admitted fact that on 15.11.2017 the inspection was taken place, by that time the Dealers Order, 2016 was very much in force. Possession of 986 Kgs of edible oils without obtaining Form-B

License is nothing but contravention under Section 2 (H) (iv) and Clause 3 of the Dealers Order, 2016. As discussed in the preceding paragraph, mere ignorance or conducting business from long time without obtaining valid Form-B license is not a ground of excuse for taking appropriate action under Dealers Order, 2016. Learned Collector (CS) having appreciated the facts and circumstances of the case in a correct

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perspective rightly passed the order of confiscation. Accordingly, the point No.1 is answered against the appellant.

POINT No.2:

17.In respect of quantum or percentage of confiscation, it is profitable to refer the Judgments of the Hon’ble High Court in Dilip

Kumar, Prop. Adarsh Rice Depot, Secunderabad v. State through

the Inspector of Police, VCCS. Dept., Hyderabad 2004 (1) ALT

(Crl.) 499 (A.P), whereinit was held at para No.8 that variation in stocks in the absence of material that the dealer was indulging in clandestine business does not attract penal provisions so as to order confiscation. However, in Kyasa Narayana v. State of A.P., Rep., by

Public Prosecutor, High Court of A.P., Hyderabad reported in 2013 (3) ALT (Crl.) 170 (A.P) at Para No.9, it was held that the variation of stock or the value thereof can be confiscated, but not entire stock i.e., found in the possession of the mill. The similar view was also expressed in M/s. Chilukuru Balaji ground nut Decortications Mill vs. State of A.P., and another reported in 2013 (3) ALT (Crl.) 189 (A.P) at para No.5 of the judgment.

18.Admittedly, as per the contention of appellant, he has been doing kiran shop business. The appellant is not a chronic violator of the

Dealers Order, 2016. In view of the above circumstances and the three above mentioned Judgments, seizure of whole of the ground stock is found unsustainable and disproportionate to the magnitude of charge framed against the appellant. As per Clause 2 (H) (iv) of Dealers Order, 2016, the permissible variation for storage of edible oils is 5 quintals.

After deducting permissible variation from the available physical balance, the excess stored edible oils by the appellant are quintals 4.86 kgs and its value only needs to be confiscated. The total value of seized stock is Rs.70,365/- and a sum of Rs.61,435/- was accrued towards sale of seized stock. As such, if 40% value of seized stock were ordered for

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confiscation, it would have met the ends of justice. To that extent the impugned order is required to be interfered and modified. Accordingly, point No.2 is partly answered in favour of the appellant.

POINT No.3:

19.IN THE RESULT, E.C. Appeal is DISMISSED CONFIRMING the impugned Order passed by the learned Collector (CS) in E.C.P.No.

601 of 2017, dt.28.12.2018 while REDUCING the confiscation of value of seized stock from 100% to 40%. In the circumstances of the case there shall be no order as to costs.

Dictated to the Stenographer directly on desktop, corrected and

pronounced by me in open Court on this the 2nd day of April, 2019.

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

APPENDIX OF EVIDENCE

-No oral or documentary evidence has been adduced before this Court by either of the party-

Sd/- Y. LAKSHMANA RAO,

SESSIONS JUDGE,

KRISHNA, MACHILIPATNAM.

Copy submitted to:-

The Registrar (Judicial),

Hon’ble High Court of Andhra Pradesh,

NELAPADU.

Copy to:-

1.The Collector (CS), Krishna, Machilipatnam.

2.The Public Prosecutor, Principal District Court, Krishna at Machilipatnam. // TRUE COPY // chief Administrative Officer,

Principal District Court,

Krishna, Machilipatnam.

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