Essential commodities Act Sec. 6 A, 7 & Clause 3(2) &(3) of A.P.Pluses (LS &R) Order 2007 - Dealer means - Licence to business - a former is not a dealer - a Former storing his red grams in cold storage for the purpose of sale when market raised and also pledge the same for loan of the Bank, is not a dealer and a - Seizing of his stock is illegal - the orders of authority are illegal and as sessions judge partly allowed the cases , are set aside as a farmer is not a dealer = 2014 ( JANUARY - VOL -1) JUDIS.NIC.IN / JUDIS _ ANDHRA / FILE NAME = 10712

Essential commodities Act Sec. 6 A, 7 & Clause 3(2) &(3) of A.P.Pluses (LS &R) Order 2007 - Dealer means - Licence to business - a former is not a dealer - a Former storing his red grams in cold storage for the purpose of sale when market raised and also pledge the same for loan of the Bank, is not a dealer and a - Seizing of his stock is illegal -  the orders of authority  are illegal and as sessions judge partly allowed the cases , are set aside as a farmer is not a dealer =  
the Petitioners are
not businessmen and a solitary instance of storing foodgrains would not be a
violation of Clause 3 (2) & (3) of A.P.Pulses (LS &R) Order, 2007 and the said
point is no longer res integra as the issue was covered by ratio laid down in
the decisions of Manipur Administration Vs.M.Nila Chandra Singh1 and
M/s.Satyanarayan Balkishan Proprietor, Satyanarayana (Deceased by L.R   
Balkrishnan, Zaheerabad, Medak District Vs.The State of Andhra Pradesh by the 
Deputy Tahsildar, Civil Supllies, Zaheerabad, Medak District 2.=

Before the District Collector as well as before the Sessions Court, a
specific ground was taken that the investigating officers have
mis-construed the provisions of sub-clauses 2 and 3 of Clause 3 of the
A.P.Puleses (Licensing, Storage and Regulation) Order, 2007 which was not at all
applicable to the petitioners who are admittedly neither the dealers nor traders
nor carrying on any business as contemplated under the provisions of said
Control Order.
Clause 3 of A.P. Pulses (Licensing, Storage and Regulation) Order, 2007
reads as follows:-
        LICENSING OF DEALERS:-     
1.      No  person shall carry on business as a dealer or producer or a commission
agent dealing in pulses, except under and in accordance with the terms and
conditions of a licence issued in this behalf by the Licensing Authority.

        Provided that persons taken licences during the period from 23-09-2006 to
28-02-2007 shall invariably take licences afresh under this Order.

2.      For the purpose of this clause, any person who stores in quantity of more
than 10 quintals of one or more of pulses put together at any one time, unless
the contrary is proved be deemed to be carrying on business as a Dealer,
Producer or a Commission Agent dealing in pulses, under this Order.

3.      A separate license shall be obtained by a dealer for each     place of
business and storage point also except in respect of places of purchase.

4.    A producer (Miller)/Commission Agent shall take   wholesale licence from
the licensing authority.
In dealing with the question as to whether the respondent is guilty
under Section 7 of the Essential Commodities Act, it is necessary to decide
whether he can be said to be a dealer within the meaning of Clause 3 of the
Order.  A dealer has been defined by Clause 2 (a) and that definition we have
already noticed.  The said definition shows that before a person can be said to
be a dealer it must be shown that he carries on business of purchase or sale or
storage for sale of any of the commodities specified in the Schedule, and that
the sale must be in quantity of 100 mds, or more at any one time.  It would be
noticed that the requirement is not that the person should merely sell,
purchase, or store the foodgrains in question, but that he must be carrying on
the business of such purchase, sale, or storage and the concept of business in
the context must necessarily postulate continuity of transactions.  It is not a
single casual or solitary transaction of sale, purchase or storage that would
make a person a dealer.  It is only where it is shown that there is a sort of
continuity of one or the other of the said transactions that the requirements as
to business postulated by the definition would be satisfied.  If this element of
the definition is ignored, it would be rendering the use of the word " business"
redundant and meaningless.  It has been fairly conceded before us by Mr.Khanna
that the requirement that the transactions must be of 100 mds. or more  at any
one time governs all classes of dealings with the commodities specified in the
definition. Whether it is a purchase or sale or storage at any one time it must
be of 100 mds, or more.  In other words, there is no dispute before us that
retail transactions of less than 100 mds of the prescribed commodities are
outside the purview of the definition of a dealer.

whether the 
petitioners have stored the foodgrains for the purpose of business or only on a
solitary instance of storage.  
When there is no finding that the petitioners are
carrying on the business of such produce or sale or storage of the redgram, the
seizure of stock and the conviction under the provisions of Essential
Commodities Act cannot be upheld.  

           Consequently, the orders in Crl.A.Nos.66, 67, 68 and 69 of 2009,
dated 10-08-2009 confirming the orders passed by the 1st Respondent dated 29-05-
2009 are set aside and the writ petitions are allowed.  No order as to costs.
With regard to the bank guarantees furnished by the petitioners pursuant to the
interim orders of this Court on 25-08-2009, the 1st respondent shall release them to the petitioners.

2014 ( JANUARY - VOL -1) JUDIS.NIC.IN / JUDIS _ ANDHRA / FILE NAME = 10712

THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY        

W.P.Nos.17684 of 2009 AND BATCH  

03-01-2014

Tolusuri Guravaiah and others.. Petitioners

The Collector and District Magistrate and others.. Respondents


Counsel for the petitioners: Sri P.Kamalakar

Counsel for respondents : Government Pleader for Civil Supplies

<Gist :

>Head Note :

?Citations:AIR 1964 Supreme t 1533
           1971 (1) AWR 254


HON'BLE SRI JUSTICE A.RAMALINGESWARA RAO          

W.P.Nos.17684, 18041, 18074 and 18084 of 2009

C O M M O N  O R D E R:


        These four petitions are disposed of by a common order in view of the
commonality of the facts and law involved in these cases.

        It is stated by the petitioners that they are all agriculturists having
lands in their respective villages.  They are raising crops and selling the
agricultural produce and thereby eking out their livelihood.  During the year
2008, they raised red gram crop and realized good yield of red gram. Since the
market at that time was not encouraging, they stored their agricultural produce
in the godown of Central Ware Housing Corporation (CWC) at Throvagunta Village,
Ongole Mandal with a view to dispose of the same when the market conditions
improve.  The particulars of the agricultural produce deposited by them was
entered in the registers of the CWC authorities.

        While so, the 2nd respondent along with his officers inspected the godown
on 28-07-2008 at 6 PM and seized the red gram stock stored in the godown.  The
2nd respondent without conducting any enquiry and without verification of
records under panchanama booked cases under Section 6-A of the Essential  
Commodities Act, 1955  ( for short " the Act").     
Thereafter, the petitioners filed a petition before
the 1st respondent along with documentary evidence showing the extents of land
owned by them and pattadar passbooks in respect of the said lands and requested 
to release the seized stock of red gram.  Subsequently, they also filed a
petition on 18-08-2008 to summon the Bank Manager to give evidence in support of
their contention that they are agriculturists. The 1st respondent heard the
arguments of Counsel for the petitioners on 04-02-2009 but without properly
appreciating the facts of the case passed an order on 29-05-2009 ordering
confiscation of the seized stock.    
Challenging the said order of the 1st
respondent, the petitioners filed appeals in Crl.A.Nos.66, 67, 68 and 69 of 2009
in the Court of Sessions Judge at Ongole.
The learned Sessions Judge, on an
erroneous view of law and facts dismissed the appeals by order dated 10-08-2009
confirming the order of 1st respondent.  
These writ petitions were filed
challenging the orders of learned Sessions Judge confirming the orders of 1st
respondent.

        In all these cases neither a counter affidavit was filed on behalf of the
respondents nor the learned Government Pleader for the respondents was present
on 26-12-2013 when the case was called nor on 27-12-2013 when the case was
heard.   Heard Sri E.Manohar, learned Senior Counsel for the petitioners.

 The only point raised by the learned Senior Counsel is that the Petitioners are
not businessmen and a solitary instance of storing foodgrains would not be a
violation of Clause 3 (2) & (3) of A.P.Pulses (LS &R) Order, 2007 and the said
point is no longer res integra as the issue was covered by ratio laid down in
the decisions of Manipur Administration Vs.M.Nila Chandra Singh1 and
M/s.Satyanarayan Balkishan Proprietor, Satyanarayana (Deceased by L.R   
Balkrishnan, Zaheerabad, Medak District Vs.The State of Andhra Pradesh by the 
Deputy Tahsildar, Civil Supllies, Zaheerabad, Medak District 2.
     
        It appears that the 2nd respondent received information that some traders
were illegally storing huge stock of pulses in the names of some farmers of
surrounding villages and hence he went to CWC, Throvagunta village, Ongole
Mandal on 28-07-2008 and the Manager of CWC produced the Stock Register,   
Depositors Register and ledger for verification.  From the record, he noticed
that the farmers stored the red gram stock in the CWC godown.  The 2nd
respondent appears to have noticed that the stored red gram was more than the
yield from their agricultural lands and thus came to the prima facie opinion
that they have contravened the provisions of Clause 3 (2) and (3) of A.P.Pulses
(Licensing, storage and Regulation) Order, 2007 (Order) and hence seized the
available stock under a cover of panchanama and handed over the same to Manager, 
CWC for interim safe custody and filed report under Section 6-A of the Act with
request to 1st respondent to initiate 6-A proceedings against the respondents therein.

 Subsequently, an interim disposal order was passed by the 1st respondent.
Aggrieved by the same, the petitioners filed W.P.No.18136 of 2008 and batch and
the same was disposed of by a common order on 21-08-2008 with some observations.
Aggrieved by the order of the learned single Judge, the petitioners filed
W.A.No.944 of 2008 and batch and the same were disposed of on 29-08-2008
directing the 1st respondent to give notice to the persons whose names were
revealed as owners of the red gram stock at the time when the red gram had been
seized and after hearing them and making a preliminary/summary enquiry, the 1st
respondent was directed to take fresh decision. It was also further directed to
conclude the enquiry after hearing the concerned persons within six weeks from
that day and appropriate order be passed.  It was also ordered that the stock of
red gram, which does not belong to any of the appellants/ petitioners in respect
of which no claim has been made by any other farmer, may be dealt with by the
Collector in accordance with law.   Accordingly, the order of the learned single
Judge and the interim order of the Collector were set aside.  Thereafter, the
1st respondent took up the enquiry and verified the individual holdings of the
petitioners.  The 1st respondent also enquired the bankers who sanctioned loans
to the farmers.  The 1st respondent observed that the farmers belong to various
villages and they stored their produce in Throvagunta which is far away from
their villages, even though there were some Cold Storages nearer to their
villages and it gave rise to suspicion that the traders were involved in the
whole exercise.  He also came to the opinion that by not inspecting and by not
ensuring proper documentation the banks had deliberately aided and abetted the
traders for hoarding their stocks which in turn caused price rise which affected
lakhs of consumers. The banks have not scrupulously followed the guidelines of
RBI by extending loans to benami traders under the provisions of pledge loan
scheme.  The 1st respondent also noted the written arguments filed on behalf of
the petitioners herein and negatived the contention that they raised
redgram in their lands as well as leased lands and in the lands of their
relatives on the ground that they have not produced any registered lease
agreement or any credible documentary evidence in support of their claims.  With
regard to the claim petitions filed by the petitioners along with certificates
issued by the concerned Village Revenue Officers, the 1st respondent opined that
the reports of the VROs and Tahsildar concerned were varying with each other and
VROs were not competent to issue certificates to the petitioners herein directly
that they have raised red gram which were produced before him.   Thereafter, he
took handbook of Statistics pertaining to the year 2008 in the District and
based on the statistics he came to the conclusion that the petitioners
contravened the provisions of A.P.Pulses (Licensing, Storage & Regulation)
Order, 2007 and accordingly ordered for confiscation of some quantity of seized
stocks of red gram where there was no evidence of their ownership of the lands
from the petitioners in favour of the Government by order dated 29-05-2009.

        In view of the said order, as already stated above, the petitioners
preferred Criminal Appeal Nos.68 of 2009 and batch before the Court of Sessions
Judge, Prakasham Division at Ongole.

        Learned Sessions Judge framed two points for consideration as follows:-
        1.  Whether the impugned common order of the Collector (CS) confiscating
entire seized stock of red gram belongs to appellants 2 to 4, 6 to 8, 12 and 13
( R.2 to R.4, R.6 to R.8, R.12 and R.13) and part of the stock of appellants 1,
5, 9, 10 and 11 (R.1, R.5, R.9, R.10 & R.11) is unsustainable and requires
interference by this Court while sitting in appeal?   If so, with what
observations regarding the so-called claim of them of yield from cultivation of
the respective lands by the respective appellants owned or on lease kept in the
godown and raised loans by pledge of stock?

2. To what result?
     
        The learned Sessions Judge, considered the decisions reported in 2008 (3)
Law Summary 106, 1977 Crl.L.J. 1800, AIR 1963 SC 2000, 1989 (2) SCC 258 and 2002    
(6) ALD 389 with regard to the scope of enquiry under Section 6A of the Act and
the circumstances under which the proceedings of the nature taken against the
petitioners should be considered.  The learned Sessions Judge also considered
the written arguments of the appellants.  Thereafter the individual quantities
of the yield in respect of each of the farmer was considered and the appeal was
ultimately partly allowed by modifying the order of 1st respondent confining the
confiscation to major portion of quantity seized.

        Before the District Collector as well as before the Sessions Court, a
specific ground was taken that the investigating officers have
mis-construed the provisions of sub-clauses 2 and 3 of Clause 3 of the
A.P.Puleses (Licensing, Storage and Regulation) Order, 2007 which was not at all
applicable to the petitioners who are admittedly neither the dealers nor traders
nor carrying on any business as contemplated under the provisions of said
Control Order.  This crucial point was overlooked by the 1st respondent as well
as the learned Sessions Judge.

        Clause 3 of A.P. Pulses (Licensing, Storage and Regulation) Order, 2007
reads as follows:-
        LICENSING OF DEALERS:-     
1.      No  person shall carry on business as a dealer or producer or a commission
agent dealing in pulses, except under and in accordance with the terms and
conditions of a licence issued in this behalf by the Licensing Authority.

        Provided that persons taken licences during the period from 23-09-2006 to
28-02-2007 shall invariably take licences afresh under this Order.

2.      For the purpose of this clause, any person who stores in quantity of more
than 10 quintals of one or more of pulses put together at any one time, unless
the contrary is proved be deemed to be carrying on business as a Dealer,
Producer or a Commission Agent dealing in pulses, under this Order.

3.      A separate license shall be obtained by a dealer for each     place of
business and storage point also except in respect of places of purchase.

4.    A producer (Miller)/Commission Agent shall take   wholesale licence from
the licensing authority.


                An identical clause came up for consideration before the Hon'ble
Supreme Court in Manipur Administration Vs.M.Nila Chandra Singh (1 supra).  In
that case, the respondent therein was charged for having committed an offence
punishable under Section 7 of the Essential Commodities Act, 1955 on the ground
that on February, 9, 1960 he was found storing 178 Mds of paddy in his godown
without any license in violation of clause 3 of the said Order.  The learned
Sub-Divisional Magistrate, Bishenpur did not accept the plea of the respondent
that stock was meant for the consumption of the members of his family and
accordingly convicted the respondent of the offence charged.  Against the said
order, the respondent preferred appeal before the learned Sessions Judge at
Manipur who confirmed the order of sentence.  The respondent then moved the
Judicial Commissioner, Manipur by filing Revision application and said Revision
application was allowed.  Against the same, Manipur Administration preferred
Criminal Appeal before the Hon'ble Supreme Court.  While dealing with the
contentions of Manipur Administration that the order of the Judicial
Commissioner was passed on mis-conception of clause 3  (2) of the Order, the
Supreme Court extracted the said clause for the purpose of deciding the case and
it reads as follows:-
"(1) No person shall carry on business as a dealer except under and in
accordance with the terms and conditions of a licence issued in this behalf by
the licensing authority;

(2) For the purpose of this clause, any person who stores any foodgrains in
quantity of one hundred maunds or more at any one time shall, unless the
contrary is proved, be deemed to store the foodgrains for the purpose of sale."

After considering the said Clause, the Supreme Court held as follows:

         " In dealing with the question as to whether the respondent is guilty
under Section 7 of the Essential Commodities Act, it is necessary to decide
whether he can be said to be a dealer within the meaning of Clause 3 of the
Order.  A dealer has been defined by Clause 2 (a) and that definition we have
already noticed.  The said definition shows that before a person can be said to
be a dealer it must be shown that he carries on business of purchase or sale or
storage for sale of any of the commodities specified in the Schedule, and that
the sale must be in quantity of 100 mds, or more at any one time.  It would be
noticed that the requirement is not that the person should merely sell,
purchase, or store the foodgrains in question, but that he must be carrying on
the business of such purchase, sale, or storage and the concept of business in
the context must necessarily postulate continuity of transactions.  It is not a
single casual or solitary transaction of sale, purchase or storage that would
make a person a dealer.  It is only where it is shown that there is a sort of
continuity of one or the other of the said transactions that the requirements as
to business postulated by the definition would be satisfied.  
If this element of
the definition is ignored, it would be rendering the use of the word " business"
redundant and meaningless. 
 It has been fairly conceded before us by Mr.Khanna
that the requirement that the transactions must be of 100 mds. or more  at any
one time governs all classes of dealings with the commodities specified in the
definition. 
Whether it is a purchase or sale or storage at any one time it must
be of 100 mds, or more.  
In other words, there is no dispute before us that
retail transactions of less than 100 mds of the prescribed commodities are
outside the purview of the definition of a dealer.
     
          The Supreme Court further held that Clause 3 (3) raises a statutory
presumption when the stock is found with any individual having 100 mds or more
of specified foodgrain is meant for sale.  In addition to the said presumption
the prosecution has to show that the store of foodgrains was for the purpose of
carrying on business. The element of business which is essential to attract the
provisions of Clause 3 (1) is thus not covered by the presumption raised under
Cl. 3(2).   It was held that if the presumption is raised under the said clause
some evidence must be lead, which would justify the conclusion that the store,
which was made for the purpose of sale, was made by the person for the purpose
of carrying on the business.  The Court opined that clause 3(2) was deliberately
worded so as to raise a limited presumption in order to exclude cases of
cultivators who may on occasions be in possession of more than 100 maunds of 
foodgrains grown in their fields.  If a cultivator produce more than 100 mds. in
his fields or otherwise comes into possession of such quantity of foodgrains
once in a year and casually sells them or stores them, the Order apparently did
not want to make such possession, sale or storage liable to be punished under
Clause 3 (1) read with Section 7 of the Essential Commodities Act.  Accordingly
it upheld the order of Judicial Commissioner.  This Court in M/s.Satyanarayan
Balkishan's case cited supra 2 considered clause 3 of the A.P. Order, 2007 and
followed  the Judgment of the Hon'ble Supreme Court cited supra.  It was held
that it is not a solitary instance of storage or sale or even an occasional or
sporadic actions of storage or sales that would amount to carrying on business,
but a course of conduct of either storage or sale that would lead to inference
that he is dealing in them.  
Ultimately it was held that single instance of
storing of foodgrains here would not constitute "carrying on business" and would
not attract the provisions of clause 3 of the 'Foodgrains Dealers' Licensing
Order, for the contravention of which the penalty of confiscation as provided
under Section 6-A of the Act is attracted.

           In the instant case also neither the 1st respondent nor the learned
Sessions Judge considered this aspect of the matter and examined
whether the 
petitioners have stored the foodgrains for the purpose of business or only on a
solitary instance of storage.
When there is no finding that the petitioners are
carrying on the business of such produce or sale or storage of the redgram, the
seizure of stock and the conviction under the provisions of Essential
Commodities Act cannot be upheld.  

           Consequently, the orders in Crl.A.Nos.66, 67, 68 and 69 of 2009,
dated 10-08-2009 confirming the orders passed by the 1st Respondent dated 29-05-
2009 are set aside and the writ petitions are allowed.  No order as to costs.
With regard to the bank guarantees furnished by the petitioners pursuant to the
interim orders of this Court on 25-08-2009, the 1st respondent shall release them to the petitioners.

        Pending miscellaneous petitions, if any, in these Writ Petitions shall
stand closed in consequence.  No order as to costs.
_____________________________  
JUSTICE A.RAMALINGESWARA RAO        
Date: 03-01-2014.

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