K.D. Sharma, J.
1. This is an application under Section 482, Cr.P.C. filed by Champa Lal for quashing the order of the Chief Judicial Magistrate, Bali, dated 4th August, 1977, whereby cognizance of an offence under Section 3 read with Section 7 of the Essential Commodities Act, hereinafter referred to as the Act, was taken against the petitioner.
2. The relevant facts giving rise to this application may be briefly stated as follows : The petitioner is a partner in a firm known as M/s. Lalita Hardware Bhandar, Phalna. Shri Bhanwar Lal is the other partner of this firm. The firm deals in hardware, colour, paints glassware, sanitary goods, building material, cement ware etc. On 9th June 1976, at about 10 5 a.m., Shyamlal, Inspector, inspected the god own of the firm upon receiving a credible information that Bhanwar Lal, partner to the firm had sold away 5 bags of cement of Chetak Factary to Govind Ram at the rate of Rs. 24/, per bag and obtained a sum of Rs. 100/-, as part payment there of Upon checking of the godown the Inspector found 35 bags of cement therein. The said firm had no licence for dealing in cement The Inspector, therefore, seized 35 bags together with the 5 bags sold away by Bhanwar Lal in black-market. The Inspector also recovered the currency-notes of Rs. 100/-. from Bhanwar Lal, a partner of the firm, which he had taken from Govind Ram as part payment of the price of 5 bags. The Inspector prepared a seizure memo in the presence of motbirs and entrusted the 40 bags to the custody of Popat Lal son of Laxmi Chand on 'Superdnama ' A report of that seizure was made to Superintendent o' Police who sent the papers to the Station House Officer Bali, for registration of a criminal case under Section 3 read with Section 7 of the Act. On receipt of the papers, the Incharge. Police Station, Bali, registered a criminal case under the aforesaid offence and took up usual investigation into the matter. After collecting other necessary evidence, the Station House Officer, Bali filed a charge-sheet against Bhanwar Lal for the offence punishable Under Section 3 read with Section 7 of the Act in the court of the Chief Judicial Magistrate, Bali. The learned Chief Judicial Magistrate, Bali, perused the papers submitted by the police along with the challan and after hearing the Assistant Public Prosecutor and the learned Counsel appearing on be half of Bhanwar Lal accused, passed an order on 4th August, 1977 that a charge be framed against Bhanwar Lal under Section 3 read with Section 7 of the Act and cognizance be taken against Champa Lal partner and also against the firm M/S. Lalit Hardware Bhandar. Phalna, for the aforesaid offence. Aggrieved by this order, Champa Lal has invoked inherent jurisdiction of this Court by way of an application under Section 482, CrPC as stated above.
3. I have carefully gone through the record and heard Mr. M.C. Bhandari. learned Counsel for the petitioner and Mr. D L. Mehta, Public Prosecutor, for the State. It was contended by Mr. M.C Bhandari, learned Counsel for the petitioner that the Chief Judicial Magistrate committed a grave error in taking cognizance of the offence against the petitioner in the absence of any prima-facie materials on the record to show that he knew of the sale of 5 bags of cement by Bhanwar Lal at a price higher than the controlled price In support of his above contention, he relied upon an authority of the Supreme Court State of Madras v. C.V. Farekh : 1971CriLJ418 , wherein the following observations were made by their Lordships on the point in issue:
In order to justify conviction of the respondents, evidence was needed to show that they knew of the sale or were parties to it. No such evidence was available. On this ground, the High Court set aside the conviction of the two respondents The order of the High Court is obviously correct No evidence on the record has been pointed out from which it could be infered that the two respondents had any knowledge of the sale which was manoeuvred by Kamdar and Vallabhdas Thacker, nor is there evidence to show that they took am part in the negotiations for sale, or in the sale itself Consequently, it is clear that their conviction was not justified.
Mr. M.C. Bhandari further argued that liability for the aforesaid offence cannot be saddled on Champa Lal in this' case because there is no contravention of the Rajasthan Cement (Licencing and Control) 'Order', 1974. hereinafter referred to as the Order, by the firm itself. Mr. D.L. Mehta, learned Public Prosecutor, on the other hand, argued that the learned Chief Judicial Magistrate congnizance of the offence under Section 3 read with Section 7 of the Act against the firm also, as is evident from his order written in the order-sheet dated August 4, 1977 and so it cannot be said that the contravention of the Order was not by the firm itself, He, however, could not succeed in refuting the argument of Mr. M.C. Bhandari that there is no material on the record from which it could be inferred that Champa Lal also was aware of the sale of 5 bags bf cement by Bhanwar Lal partner to Govind Ram at a price higher than the controlled price of the cement or that he played any role in the negotiation of the sale or was a party to the sale itself.
4. I have considered the rival contentions. It is not disputed before me that Champa Lal was one of the partners of the firm, M/s Lalit Hordwae Bhandar, Phalna, at, the relevant time. There is prima facie material on the record to show that on the date of the inspection by the Inspector, the firm had 35 bags of cement in its godown (besides 5 bags of cement, which ,were sold away to Govind Bam at a price higher than the controlled Price without having a valid licence issued in this behalf by the Licensing Authority under the Order Clause 3 of the aforesaid Order clearly lays down that : 'On and after the date of coming into force of this Order, no person shall carry on the business as a stockiest except under and in accordance with the terms and conditions of licence issued in this behalf by the licensing authority. It appears prima facie that in the absence of any valid licence, the firm was not authorised to deal in, cement and contravene the aforesaid provisions of the Order. It cannot, therefore, be said at this stage that there were no sufficient grounds before the learned Chief Judicial Magistrate Bali, for taking cognizance against the firm for, an offence punishable, under Section 3 read with Section 7, of the Act, read with, Clause 3 of the Order. Section 10 of the Act farther lays down that if an Order made under Section 3 of the. Act is contravened by a Company which includes firm also, within its definition, every person who at the time the contravention was committed was in charge & was responsible to the Company' for the conduct of the business of the Company as well as the Company shall be deemed to be guilty of the contravention & shall be liable to be proceeded against and punished accordingly. The proviso to Sub-section (1) of Section 10, however, provides that if the person is able to show that contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention, he will not be held guilty for contravention Hence, the learned Chief Judicial Magistrate committed no error in taking cognizance against Champa Lai, who is another partner of the firm. However, it will be Open for Champa Lal petitioner to show that the contravention took place without his knowledge or that he exercised all due diligence to pie vent it. At this, initial stage it is not open for him to contend that he cannot be proceeded against for the contravention ,of the Order by the firm of which he was a partner and was prima-facie in charge and was responsible to the firm for the conduct of the business of the firm as well as the firm. It will, not be out of place to mention that there is no prima-facie material on the record to show that Champa Lal had (knowledge of the sale of 5 bags of cement to Govind Ram at a price t higher than(he controlled price of the cement or that he played any role in negotiating the sale or was a party to the sale itself Hence, in the absence of such material, liability for sale of 5 bags of cement to Govind Ram by Bhanwar Lal partner of the firm at a price higher than the controlled price of the cement cannot be saddled on him.
5. Consequently, the application under Section 482, Cr.P.C. is partly accepted and it is held that in the absence of any material on the record to show that Champa Lal was aware of sale of 5 bags of cement by Bhanwar Lal to Govind Ram at a price higher than the controlled price of the cement, he cannot he made liable and proceeded againt for the offence alleged to have been committed by Bhanwar Lai. However, in view of the express provisions of Section 10 of the Essential Commodities Act, he was rightly proceeded against for contravention of the Rajasthan Cement (Licensing Control) Order, 1974, by the firm of which he was a partner, and was prima facie in charge and was responsible to the firm for the conduct of its business as well, as firm. The application under Section 482, Cr.P.C. is therefore, decided accordingly. It is, however, made clear that it will be open for the petitioner to show that his case falls under the proviso to Sub-section (1) of Section 10 of the Essential Commodities Act, 1955.