Holding

Confiscation of a vehicle under Section 6‑A of the Essential Commodities Act is valid only if a proven violation of an order made under Section 3 exists; the 2001 Order does not regulate wheat transport and no valid seizure was made, rendering the confiscation order invalid.

Summary

The appellants owned a truck hired to transport wheat belonging to the Food Corporation of India. The Deputy Commissioner, invoking the Essential Commodities Act, 1955, ordered the truck's confiscation, a decision upheld by the Sessions Judge and the Jharkhand High Court. The appellants contended that wheat is a de‑controlled commodity and that the 2001 Public Distribution System (Control) Order does not regulate its transport, so no violation of Section 3 of the Act occurred. The Supreme Court held that confiscation under Section 6‑A is permissible only when there is a clear violation of an order made under Section 3, and that a valid seizure is a prerequisite; the 2001 Order contains no power to search or seize vehicles carrying wheat. Consequently, the Court found no basis for the confiscation order and set aside the lower courts' judgments, allowing the appeal.

Issues considered

Whether confiscation of a vehicle carrying wheat is authorized under the Essential Commodities Act when the 2001 Public Distribution System (Control) Order does not cover wheat or its transportation.
Whether a valid seizure of the commodity is a sine qua non for an order of confiscation under Section 6‑A.
Whether violation of an order made under Section 3 of the Essential Commodities Act is a pre‑condition for confiscation.
Whether the 2001 Order confers power to search or seize a vehicle.

Legislation cited

Essential Commodities Act, 1955s. 3, s. 6-A

Subjects

Essential Commodities Actconfiscationseizurefair price shoppublic distribution systemdecontrolled commodityvehicle seizureproperty deprivation

Judgment

A KAILASH PRASAD YADA V AND ANR.
v.
STATE OF JHARKHAND AND ANR.

MAY2, 2007

B [S.B. SINHA AND MARKANDEY KA TIU, JJ.]

-~
Essential Commodities Act, 1955-ss.3 & 6A(l)(c):

Vehicle carrying wheal belonging lo FCI-Order of confiscation-
c Allegation of State that the vehicle owners abetted a fair price shop dealer
appointed under the 2001 Order-Held: The 2001 Order does not deal with
a matter dealing in wheal or transportation thereof-There is no provision
for search of a vehicle therein---There being no clear finding in regard to
violation of an order made under s.3 of the Act, order of confiscation not
D warranted-Public Distribution System (Controlj Order, 2001.

Appellants owned a truck. The truck was hired for transportation of
foodgrains. It was allegedly carrying wheat belonging to the Food Corporation
of India, when confiscation proceedings was initiated whereafter an order of
confiscation was passed by the Deputy Commissioner. Appeal there against
E
was dismissed by the Sessions Judge. Appellants filed writ petition before
the High Court which too was dismissed.

In appeal to this Court it is contended by the Appellants that wheat being
a de-controlled item and there being no control whatsoever, either on trading
F of wheat or possession or transportati1Jn thereof, the order of confiscation
was not warranted.

The State, on the other hand, contended that the Appellants having
abetted a fair price shop dealer who was appointed under the Public
Distribution System (Control) Order, 2001, the order of confiscation cannot
G be faulted with.
.....
...
Allowing the appeal, the Court

HELD: 1. Confiscation of goods and the vehicles and vessels carrying
the same amounts to deprivation of property. Confiscation of an essential
H
1150
KAILASH PRASADY ADA Vv. STATEOF JHARKHAND 1151

f commodity or a tuck is permissible only if the provisions of any order made A
under Section 3 of the Essential Commodities Act, 1955 are violated. When
a vehicle is used for carrying an essential commodity, it may be seized and
ultimately directed to be confiscated in terms of Clause (c) of Sub-Section
(1) of Section 6-A of the Act. Violation of an order made under Section 3 of
the Act, therefore, is a pre-condition for passing an order of confiscation.
(Para 5] (1152-G-H] B

2. The 2001 Order does not deal with a matter dealing in wheat or
.., transportation thereof. "Fair Price Shop" has been defined in Clause 2(k) o~
the 2001 Order to mean "a shop, which has been licensed to distribute
essential commodities by an order issued under Section 3 of the Act, to the
ration card holders under the Public Distribution System." Clause 9 of the
c
Order provides for penalty. There is no provision for search of a vehicle. The
power of search is confined to fair price shop or any premises relevant to
transaction of business of the fair price shop. The power of such authorities
causing a search is confined to Sub-clause (3) of Clause 10 of the 2001 Order
to search, seize or remove such books of accounts or stocks of essential D
commodities where such authority has reason to believe that these have been
used or will be used in contravention of the provisions of the Order.[Para 6]

3. A valid seizure is a sine qua non for passing an order of confiscation
of property. Unfortunately, this aspect of the matter has not been considered
·- by any of the authorities and the courts. [Paras 7 and 8] (1153-F-G] E

4. Also, the order of confiscation is not passed only because it would be
lawful to do so. The authorities must arrive at a clear finding in regard to the
violation made under Section 3 of the Act. The issues raised before this Court
have not been considered either by the Deputy Commissioner or by the
F
Sessions Judge as also by the High Court. The matter is pending before the
criminal court. Therefore, there is no need to delve further into the matter.
Keeping in view the facts and circumstances of this case, it was not a fit case
where an order of confiscation could have been passed. [Para 10] [1154-B-D]

Shambhu Dayal Agarwala v. State of West Bengal and Anr., [1990] 3 G
r SCC 549 and Deputy Commissioner, Dakshina Kannada District v. Rudolph
~·
Fernandes, [2000] 3 SCC 306, referred to.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 659 of
2007.
H
1152 SUPREME COURT REPORTS [2007] 5 S.C.R.

A From the Final Judgment and Order dated 02.05.2006 of the High Court .,
of Jharkhand at Ranchi in "".rit Petition (Crl.) No. 150 of 2005.

H.L. Agrawal and Gaurav Agrawal for the Appellants.

B.B. Singh and Kumar Rajesh Singh for the Respondents.
B
The Judgment of the Court was delivered by

S.B. SINHA, J. I. Leave granted.

2. Appellants were owners of a truck. The said truck was hired for
c transportation of foodgrains by one Kailash Chand Sahu. It was allegedly
carrying wheat belonging to the Food Corporation of India. A confiscation
proceeding was initiated. An order of confiscation was passed by the Deputy
Commissioner, Sahibganj. An appeal preferred thereagainst has been dismissed
by the Additional Sessions Judgel, Sahibganj by an order dated 7.03.2005
passed in Criminal (Confiscation) Appeal No. 32 of 2003. Appellants filed a
D writ petition before the Jharkhand High Court which by reason of the impugned
judgment has been dismissed by a learned Single Judge of the said Court.

3. Mr. H.L. Agrawal, learned senior counsel appearing on behalf of the
appellants, in support of this appeal, would submit that wheat being a de-
controlled item and there being no control whatsoever, either on trading of
E wheat or possession or transportation thereof, the impugned judgment cannot
be sustained.

4. Mr. B.B. Singh, learned counsel appearing on behalf of the State, on
the other, would submit that the appellants having abetted a fair price shop
dealer who was appointed under the Public Distribution System (Control)
F
Order, 200 I (for short "the 2001 Order", the impugned order cannot be faulted
with.

5. Indisputably, confiscation of goods and the vehicles and vessels
carrying the same amounts to deprivation of property. Confiscation of an
G essential commodity or a truck is permissible only if the provisions of any
_,
order made under Section 3 of the Essential Commodities Act, 1955 (for short ,,.
"the Act") are violated. When a vehicle is used for carrying an essential
commodity, it may be seized and ultimately directed to be confiscated in terms
of Clause (c) of Sub-Section (1) of Section 6-A of the Act. Violation of an
order made under Section 3 of the Act, therefore, is a pre-condition for
H passing an order of confiscation.
KAILASHPRASADYADAV". STATEOFJHARKHAND[S B. SINHA,].] 1153
6. The 200 I Order does not deal with a matter dealing in wheat or A
transportation thereof. "Fair Price Shop" has been defined in Clause 2(k) of
the 200 I Order to mean "a shop, which has been licensed to distribute
essential commodities by an order issued under Section 3 of the Act, to the
ration card holders under the Public Distribution System." Clause 3 provides
for identification of families living below the poverty line. Clause 4 provides B
for issuance of ration cards. Clause 5 deals with scale of issue and issue price.
Clause 6 provides for the procedure for distribution of foodgrains by the
Food Corporation of India to the State Government or their nominated agencies.
Sub-clause (2) of Clause 6 obligates the fair price shop owners to take
delivery of stocks from authorised nominees of the State Governments to
ensure that essential commodities are available at the fair price shop within C
first week of the month for which the allotment is made. Sub-clause (4) thereof
obligates the authority or person who is engaged in the distribution and
handling of essential commodities under the Public Distribution System not
to wilfully indulge in substitution or adulteration or diversion or theft of
stocks from central godowns to fair price shop premises or at the premises
of the fair price shop. Explanation appended thereto defines "diversion" to D
mean "unauthorized movement or delivery of essential commodities released
from central godowns but not reaching the intended beneficiaries under the
Public Distribution System". Clause 9 provides for penalty. There is no provision
for search of a vehicle. The power of search is confined to fair price shop or
any premises relevant to transaction of business of the fair price shop. The E
power of such authorities causing a search is confined to Sub-clause (3) of
Clause I0 of the 200 I Order to search, seize or remove such books of accounts
or stocks of essential commodities where such authority has reason to believe
that these have been used or will be used in contravention of the provisions
of the Order.
F
7. A valid seizure, as is well known, is a sine qua non for passing an
order of confiscation of property.

8. Unfortunately, this aspect of the matter has not been considered by
any of the authorities and the courts. The High Court observed:
G
"From the impugned orders it appears that the wheat, which were
seized, were found kept in FCI bags duly stitched by the FCI and they
were meant for being distributed to the poor through Public Distribution
System but the same was found being diverted by the petitioners for
the purpose of black marketing and at the time of raid and seizure no H
1154 SUPREME COURT REPORTS [2007] 5 S.C.R.

A valid paper was produced by the petitioners regarding possession of
the wheat in question."

9. Whether there was any valid paper regarding possession of wheat
was not the subject matter of the confiscation proceeding. We are concerned
with a vehicle carrying the wheat. Appellants herein are not concerned with
B wheat in question.

10. We have to consider the matter from another angle. The order of
confiscation is not passed only because it would be lawful to do so. The
J.
authorities must arrive at a clear finding in regard to the violation made under
Section 3 of the Act. The issues which have been raised before us have not
c been considered either by the Deputy Commissioner or by the learned Sessions
Judge as also by the High Court. The matter is pending before the criminal
court. We, therefore, do not intend to delve further into the matter. Keeping
in view the facts and circumstances of this case, we are of the opinion that
it was not a fit case where an order of confiscation could have been passed.
D
11. Reliance placed by Mr. Singh on Shambhu Dayal Agarwala v. State
of West Bengal and Anr., [I 990] 3 SCC 549, itself stated the law, thus:

"6. Section 6-A empowers confiscation of the seized essential
commodity, the package, covering and receptacle in which the essential
E commodity was found and the animal, vehicle or other conveyance in
which such essential commodity was carried. The words 'may order
confiscation' convey that the power is discretionary and not
obligatory ........ "

12. Yet again, in Deputy Commissioner, Dak.shina Kannada District v.
F Rudolph Fernandes, [2000] 3 SCC 306, whereupon again Mr. Singh has relied )
upon, it was held:

"6. In the light of the aforesaid provisions, the second proviso to
Section 6-A [sic 6-A(l )] is required to be considered. First it is to be
stated that the proviso limits the power of the competent authority to
G recover fine up to the market price for releasing the animal, vehicle,
vessel or other conveyance sought to be confiscated. So maximum
fine that can be levied in lieu of confiscation should not exceed the
market price. For our purpose, the relevant part of the proviso would
be "in the case of ... vehicle ... the owner of such ... vehicle ... shall
be given an option to pay, in lieu of its confiscation, a fine not
H
KAILASHPRASADYADAVv. STATE OF JHARKHAND[S.B. SINHA,J.] 1155

exceeding the market price at the date of seizure of the essential A
commodity sought to be carried by such ... vehicle". Question is
whether fine should not exceed the market price of the seized essential
commodity or whether it should not exceed the market price of the
vehicle. For this purpose, it appears that there is some ambiguity in
the section. It is not specifically provided that in lieu of confiscation B
of the vehicle a fine not exceeding the market price of the vehicle or
of the seized essential commodity is to be taken as a measure. Still
however, it is difficult to say that the measure of fine is related to the
market price of the essential commodity at the date of its seizure. It
nowhere providt:s that fine should not exceed the market price of the
essential commodity at the date of seizure of the vehicle. The proviso C
requires the competent authority to give an option to the owner of
such vehicle to pay in lieu of confiscation a fine not exceeding the
market price. What is to be confiscated is the vehicle and, therefore,
the measure of fine would be relatable to the market price of the
vehicle at the date of seizure of the essential commodity sought to be
carried by such vehicle ............." D

13. We do not intend to deal with the question as to whether upon
conclusion of the trial, a case for forfeiture of the vehicle may be passed or
not, being wholly irrelevant at this stage.

14. For the reasons aforementioned, the impugned judgments cannot E
be sustained, which are set aside accordingly. The appeal is allowed.

B.B.B. Appeal allowed.