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Arvapalli Kotiratnam Vs. State - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtAndhra Pradesh High Court
Decided On
Case NumberCriminal Revn. Case Nos. 508 and 509 of 1972 and Criminal Revn. Petn. Nos. 437 and 438 of 1972
Judge
Reported inAIR1974AP207
ActsAndhra Pradesh Foodgrains Dealers' Licensing Order, 1964; Essential Commodities Act
AppellantArvapalli Kotiratnam
RespondentState
Appellant AdvocateK. Venkataramaiah, Adv.
Respondent AdvocatePublic Prosecutor
Excerpt:
.....contravention of order and so petitioner cannot be punished for non-fulfillment of any condition - licence issued to petitioner found in accordance with order - contravention of any condition of licence is contravention of licence itself and punishable - in respect of above view petition dismissed and matter remitted back to single judge. - - an appeal to the sessions judge, guntur, who is the judicial authority appointed by the state government under section 6c of the act for hearing the appeals, was unsuccessful. 4 .the form of an application for a license and also the form of the licence issued, reissued or renewed are also clearly prescribed. likewise, clause(9) authorises the licensing authority to direct forfeiture of the security deposit made by a dealer if that authority is.....sambasiva rao, j. 1. it is contravention of the conditions of a licence issued under the andhra pradesh foodgrains dealers' licensing order, 1964(hereinafter referred to as the order) contravention of the order itself, so that it becomes punishable under the penal provisions of the essential commodities act? we have to answer this question now.2. a. d. v. reddy and ramachandra raju, jj. answered this question in the negative in their judgment dated 17th july, 1970 in criminal revision cases nos. 585, 679 and 874 of 1969, when this revision case came up before ramachandra raju, j. he felt a doubt about the correctness of the view taken by a. d. v. reddy, j. and himself. he accordingly directed the matter to be posted before a full bench. it was however, referred to a division bench of.....
Judgment:

Sambasiva Rao, J.

1. It is contravention of the conditions of a Licence issued under the Andhra Pradesh Foodgrains Dealers' Licensing Order, 1964(hereinafter referred to as the order) contravention of the order itself, so that it becomes punishable under the penal provisions of the Essential Commodities Act? We have to answer this question now.

2. A. D. V. Reddy and Ramachandra Raju, JJ. answered this question in the negative in their judgment dated 17th July, 1970 in Criminal Revision Cases Nos. 585, 679 and 874 of 1969, When this revision case came up before Ramachandra Raju, J. he felt a doubt about the correctness of the view taken by A. D. V. Reddy, J. and himself. He accordingly directed the matter to be posted before a Full Bench. It was however, referred to a Division Bench of Sambasiva Rao and Ramachandra Raju, JJ. and they by their order dated 13th December, 1973 referred it to a Full Bench. It may be noted that Chinnappa Reddy, J. also doubted the correctness of the opinion of the Division Bench in Criminal Appeal No. 514/70(dated 28th July, 1971).

3. The petitioner is a partner in an enterprise which does business in dhals and other cereals in the name of Sri Venkateswara Dhal Company. It does its business in Narasaraopet town in Guntur District. A Sub-Inspector of Police belonging to the vigilance cell inspected the godowns of the company and verified its stocks on 27-11-1971. He found out not only larger stocks of dhal than those mentioned in the accounts but also that they were stocked in unauthorised godowns. Thereupon, he seized the stocks. He submitted a report to the Collector for action under Sec. 6A of the Essential Commodities Act. The District Revenue Officer, who is authorised to deal with these matters called for an explanation under Section 6B of the Act from the petitioner and after examining the explanation found that the petitioner was stocking Foodgrains in unauthorised godowns in violation of the conditions of the licence and so directed confiscation of the stocks. An appeal to the Sessions Judge, Guntur, who is the judicial authority appointed by the State Government under Section 6C of the Act for hearing the appeals, was unsuccessful. This revision case is against the dismissal of the said appeal.

4. The only legal point that is raised and argued in support of the revision case is the one we have stated at the outset. It is argued by Sri V. Venkataramayya, for the petitioner that conditions of a licence are not part and parcel of the order. They are separate and distinct from the provisions of the actual order. Therefore, contravention of the conditions of the licence cannot be said to be contravention of the provisions of the order.

5. We find that the material portions of the order itself furnish a conclusive answer to this question. We will begin with clause 3 which enjoins that no person shall carry on business as a dealer except under and in accordance with the terms and conditions of the licence issued in this behalf by the licensing authority. Thus, the importance of a licence and the obligations of a dealer to do his business according to its terms and conditions are proclaimed in unequivocal terms. A licence is thus made an integral and essential part of the control system postualted by the order. Indeed it is difficult to conceive how control of food granis could be implemented without a licence prescribing the terms and conditions of the manner in which business should be carried on. Clause 3 does this in no uncertain terms. Once again the same importance is assigned to a licence under cl. 4 . The form of an application for a license and also the form of the licence issued, reissued or renewed are also clearly prescribed. The application should be made in Form-A and the licence should be issued in Form-B. This requirement not only emphasises the importance of a licence, but what is more significant in the present context is it makes the licence and its terms and conditions as stated in Form-B as an essential part of the order. It is very pertinent to note that the two forms are given in Schedule II to the order. Schedule I enumerates the Foodgrains, as defined in clause 2(b) and to which the order applies. It is immediately seen that without Schedule 1 the order itself becomes wholly incomplete and ineffective, Likewise, without Schedule II which contains the form of the licence with its terms and conditions, the order cannot be enforced. The form of the licene, its terms and conditions, the order cannot be enforced. The form of the licence, its terms and conditions are therefore, treated by the order as one of its crucial parts. It would also be pertinent to note that Form-B purports to have been made in consonance with clause 4(3). In fact all the important aspects o the order centre round the licence, what a person should do to obtain a licence and what a requirements he should comply with. Clause 6 requires a dealer to make a deposit of security when he applies for a licence. Clause(7) confers power on the licensing authority to refuse licences in certain circumstances. In clauses 7-A, 7-B, 7-C and 7-D the duties and responsibilities of a licence holder are stated. Then clause 8 declares that no holder of licence shall contravene any of the terms or conditions of the licence and if he does so, his licence may be cancelled or suspended, that too, without prejudice to any other action that may be taken against him. Likewise, clause(9) authorises the licensing authority to direct forfeiture of the security deposit made by a dealer if that authority is satisfied that the licensee has contravened any of the conditions of the licence. Sub-cl.(d) of clause 11(1) empowers the licensing authority or any other officer authorised by the State Government to seize and remove stocks of Foodgrains and other vehicles etc. used in carrying on the business in Foodgrains, if there is a contravention of not only the provisions of the order but also of the conditions of the licence. Contravention of the conditions of a licence is thus put on par with contravention of the other provisions of the order and is subjected to penalties, which could not have been the case had the conditions of the licence not been considered as part and parcel of the order. It is thus manifest from those provisions of the order that a licence with its terms and conditions is an essential part of the order and also that their contravention is subjected to penalties of more than one type. Even if it be considered for argument's sake that a licence is not part of the order, its contravention will become publishable nonetheless under the provisions of the order.

6. We will now refer to a few material provisions of the Essential Commodities Act of 1955 which lead to the same result. The Act is the basic source of power for the order and similar control orders relating to essential commodities. Section 3 which confers power to control production, supply, distribution etc., of essential commodities and to issue orders for these purposes, specifies in sub-sec.(2) the guidelines, according to which such orders can be made. Clause(a) referes to regulation by licences, permits or otherwise of the production or manufacture of any essential commodity. Clause(d) deals with regulation by licences, permits or otherwise of the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity. Clause(I)(ii) provides for the grant or issue of licences, permits etc., and the requirements like deposits, security deposits etc, Clause(I) enables an order issued under Section 3 to contain provisions for entry, search etc., of business premises. Section 6A prescribes the procedure for confiscation of Foodgrains etc. while Section 6B lays down that a show cause notice should be issued before confiscation of Foodgrains and Section 6C provides for appeals against orders of confiscation. Then comes Section 7, relaing to penalties. It is no doubt true that penalties are imposed under it for contravention of an order made under Section 3 only. What we have stated above would unmistakably show that licences, with their terms and conditions, are components of the order and contraventions thereof are made punishable under the said order.

7. It is thus seen that the Essential Commodities Act itself postulates licences being integral parts of control orders and laying conditions thereunder regulating search, transport, distribution, disposal , acquisition, use of consumption of any controlled essential commodity. In the light of these provisions, it is futile to contend that a licence issued under the order is not a part of it and contravention of its terms and conditions is not contravention of the control order.

8. Despite this indisputable position, the doubt relaing to the question arose out of the decision of A. D. V. Reddy and Ramachandra Raju, JJ, in Criminal Revision Cases Nos. 585, 679 and 874 of 1969(Andh Pra), taking the contrary view. While reaching this conclusion, the learned Judges only followed certain observations made by the Supreme Court in East India, Commrl. Co. Ltd., v. Collector of Customs, Calcutta : 1983(13)ELT1342(SC) and Boothalinga Agencies v. Poraiswami Nadar; : [1969]1SCR65 . It may be noted here that in Crl. R. C. Nos. 121 and 122 of 1969(Andh Pra); Sharfudding Ahmed J. by his order, dated 14-4-1970 held that violation of a condition of the licence of a control order was not punishable under Section 7 of the Essential Commodities Act, as that section contemplates punishment only in cases of a violation of any order made under Section 3 of the Act. The learned Judge followed the latter Supreme Court decision which we have referred to above. We will, therefore consider to what extent the observations of the Supreme Court would support the said conclusion.

9. It is no doubt true that there are certain observations in both the decisions of the Supreme Court, which taken out of their context and read without the aid of the facts in those cases, would lead to such a conclusion. In the first of the two cases, the appellant company applied for the grant of a licence to import some fluorescent tubes and fixtures. The application mentioned that the goods were required for the Company's own use. On that basis a licence was issued with the condition that the goods were to be used only for the consumption as raw material or accessories in the licensee's factory and that no portion thereof should be sold to any person. The Chief Controller of Imports directed the seizure of the goods on information that they had been sold to various parties by the licensee. A criminal prosecution was also launched against the Director of the Company under Section 5 of the Imports and Exports(Control) Act, 1947. The prosecution failed and the High Court in a revision against the discharge of the accused held that the section penalised only a contravention of an order made or deemed to have been made under the said Act, but did not penalise contravention of the conditions of licence issued under the Act or issued under a statutory order made under the Act and dismissed the revision. The Collector of Customs then called upon the appellant to show cause why the proceeds realised by the sale of the seized goods should not be confiscated. Once again the ground stated for the proposed confiscation was the appellant-company had sold the goods contrary to the conditions of the licence. The company challenged this in a writ petition which was dismissed by the High Court. It was this order that was taken to the Supreme Court in appeal. While reversing the view of the High Court that the writ petition was not maintainable, the Supreme Court further held that inasmuch as the notification dated 1st July, 1943 did not impose condition in the matter of issuing a licence under the specified rule, there was no infringement of the order issued under Section 3, of the Imports and Exports Control Order, 1947, but there was merely a violation of the condition of the licence. This conclusion was rested on the ground that the notification did not provide for a condition in the licence that subsequent to the import the goods should not be sold. Further the notification empowered the licensing authority to impose conditions from an administrative point of view. Consequently the condition against from an administrative point of view. Consequently the condition against alienation included in the licence could not be called a condition imposed from an administrative point of view, as it clearly affected the rights of the licensee.

10. The facts stated above which form the background for the decision of the Supreme Court have no similarity at all with the circumstances of the present case. There the basis order, which authorised issuance of licences did not contain or specify any conditions to be imposed in the licence. It was left to the licensing authority as to what conditions were to be imposed. That was why the order contained in the notification empowered the concerned authority to impose conditions from an administrative point of view. Since the condition imposed was neither an administrative one nor the consequences of the main order itself, Subba Rao, J.(as he then was) delivering the majority view of the Supreme Court held that 'infringement of a condition in the licence not to sell the goods imported to third parties not to sell the goods imported to third parties is not an infringement of the order and, therefore, the said infringement does not attract Section 167(8) of the Sea Customs Act'. In the instant case, the terms and conditions of the licence are in so many prescribed in Form B of Schedule II to the order and so the rule stated in the above case does not apply here.

11. Now coming to the later decision of the Supreme Court, viz., Boothalinga Agencies case, : [1969]1SCR65 , it was also under the Imports and Exports Control Act, 1947. The appellant was importing Chicory for the purpose of his business of manufacturing and sale of coffee, under actual user's licence issued by the Government. There was an agreement of sale between the licensee-appellant and the respondent, under which the respondent claimed to have paid some amounts. A suit was filed on the basis of this contract and one of the principles defenses to it was that the contract was illegal and void for the reason that sale of imported goods was repugnant to the terms of the licence and was consequently a contravention of the notification itself within the meaning of Section 5 of the Imports and Exports Control Act.

12. While dealing with this question, the Supreme Court noted the amendment of Section 5. The unamended section penalised the contravention of any order made or deemed to have been made under the Act. The notification issued under the Act authorised the licensing officer to impose one or more conditions prescribed by that order. It is thus manifest that the licensing officer could impose those conditions in the license which he thought necessary in the circumstances of the case. Then, if the licensee contravenes the conditions imposed under the licence, the Supreme Court held that it was difficult to hold that it was not merely a contravention of the conditions of the licence but also there was a contravention of the terms of notification and the provisions of Section 5. The date of the breach of the condition of the licence was material and that was before the amendment of Section 5. While expressing this view, the Supreme Court followed its earlier decision in East India Commercial Company Ltd. v. The Collector of Customs, Calcutta : 1983(13)ELT1342(SC) . It is easily seen that the relevant order under consideration before the Supreme Court did not specify the terms and conditions necessarily to be imposed in the license, while in the case before us those terms and conditions are prescribed by the order itself.

13. At the same time, it is very essential to note another part of the same decision which considered the contention put forward on behalf of the appellant that in any event the Imports Control Order, 1955 had come into force on December 7, 1955 and the performance of the contract became illegal as well founded. This argument was upheld as well founded. As the disposed imported chicory arrieved in the Madras port on 13th December, 1955, it was governed by the provisions of the Imports Control Order, 1955, which came into force on 7th December, 1955. There was an amendment in 1960 to certain provisions of Imports and Exports Control Act, 1947, whereunder by Section 4 of the Amending Act, the words 'or any conditions of a licence granted under any such order' were introduced after the clause 'any order made or deemed to have been made under this Act.' Clause 3 of the Imports Control Order, 1955 prohibited import of goods except in accordance with a licence issued by specified authorities, Clause 5 authorised imposition of conditions under which goods could be imported. The said clause in sub-clause(iii) specifically provided that certain conditions stated therein should be deemed to be conditions of every licence. Sub-clause(iv) enjoined upon the licensee to comply with all the conditions imposed or deemed to be imposed under the said clause. In the light of this sub-clause the Supreme Court held that the sale of the imported goods would be a direct contravention, even thought the contract was enforceable on 26th of November, 1955 when it was entered into. Its performance however, became impossible or unlawful after 7th December, 1955 on which day the control order came into force. There is, therefore no doubt that if the provisions of the order impose certain terms and conditions while granting a licence and the licence has been issued in accordance therewith, any breach of those conditions would be contravention of the order itself. The second decision thus is no authority for the proposition which is sought to be emphasised before us by the learned counsel for the petitioner.

14. The Division Bench in Cr. R. C. Nos. 585, 679 and 874 of 1969(Andh Pra.) merely took into account the observations of the Supreme Court and did not consider them in the light of the circumstances of those cases. We must, therefore, hold that the rule stated by the Division Bench is not correct. In the light of the specific provisions of the order in question and the admitted fact that the licence issued to the petitioner is fully in accordance with Form B in Schedule II of the order, it is unmistakable that contravention of any of these terms and conditions is contravention of the order itself and is liable to be punished under the order and the provisions of the Essential Commodities Act, 1955.

15. We may here notice a decision of a Single Judge of the Mysore High Court in S. Kariappa v. State, AIR 1971 Mys 7 =(1971 Cri LJ 72), which has expressed the same view after distinguished the two Supreme Court decisions.

16. In the result, we answer the question in the affidavit, and overrule to this extent the decisions of A. D. V. Reddy and Ramachandra Raju, JJ. in Cri. R. C. Nos. 585, 679 and 874 of 1969(Andh Pra) and that of Sharfuddin Ahmed J. in Cri R. C. Nos. 121 and 122 of 1969(Andh Pra).

17. Now, the Criminal Revision case will go before a learned single Judge for disposal on its merits.

ORDER

18. Now it is reported that the prosecution instituted against the petitioners in C. C. Nos. 158 and 159 of 1972 on the file of the Additional Munsif Magistrate, Narasaraopet with regard to the contravention of the A. P. Food Grains Dealer's Licensing Order, 1964 in respect of which the order of confiscation has been made under Section 6A ended in the acquittal of the petitioners by an order dated 19th October, 1973, in which case as provided under Section 6A ended in the acquittal of the petitioners by an order dated 19th October, 1973, in which case as provided under Section 6C(2) of the Essential Commodities Act the petitioners are entitled to the Essential Commodity seized. It is said that at the time of the seizure the goods were entrusted to the petitioners after obtaining a bond to produce the same whenever entrusted to the petitioners after obtaining a bond to produce the same whenever required. Now, as the commodity seized is not liable to be confiscated, the bonds executed by the petitioners are directed to be cancelled. The criminal revision cases are allowed and the confiscation order is set aside.

19. Order accordingly.


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