DINESH KUSHWAHA vs STATE OF M P & ORS.

The petitioner has filed the present writ petition challenging the order dated 03/05/2011 passed by Sessions Judge, Raisen in Criminal Appeal No.50/2011 thereby upholding the order dated 02/02/2011 passed by the Collector in Case No.28/B-121/Collector/2010-11.

The petitioner is a company engaged in the manufacturing, marketing, distribution and sale as well as export of its various products like ketchup, sauces, fruit products, canned products, jams etc under its various trade marks and brand. The petitioner-company has many factories throughout India to carry out conversion of fruit juice and pulp for manufacture of finished products. Sugar is used as a principal raw material in the manufacture of above product. The raw materials purchased by the petitioner are never sold in their original form for a profit in the market. In other words, the petitioner-company does not indulge in the trade of buying and selling sugar for profit in the open market. The raw materials including sugar purchased by the petitionercompany undergoes a rigorous test against stringent quality parameters so as to ensure that there is no infringement of any provisions of the Prevention of Food Adulteration Act. The food products like jam, jelly, squash, ketchup etc have a high sugar content in the range of 15-65%. In the year 2008, the petitioner faced unprecedented demand of its products. The petitioner, therefore, entered into an agreement with Godrej Harshey Ltd., Mandideep to use its factory at Mandideep to carry out conversion of fruit juice and pulp into manufacture of finished products. As per the terms of the agreement, the petitioner was to apply raw materials to Godrej Hershey Ltd. for conversion to the finished products.

In keeping with its policy of procurement of quality goods, stringent testing and stocking of adequate supplies, the petitioner delivered a stock of sugar to Godrej Hershey Limited. On 28/08/2009 the stock of this factory stood at 350 tons of sugar. In addition, 572 tones of sugar were stocked by the petitioner in Bajrang Warehouse situated at Mandideep. On 13/07/2009, the Government of India, Ministry of Consumer Affairs, Food and Civil Supplies, issued notification authorizing the State Government to fix the stock holding and turn over limits of sugar in the States. In consequence thereof, the State Government made an order for licensing the control of the sugar trade in the State known as ''the M.P. State Sugar Traders (Licensing and Control) Order, 2009''. The order defining a ''Trader'' as a person carrying on the business of purchase, selling or distributing sugar not more than 20 quintals at a time or intend to trade accordingly. On 22/08/2009, the Ministry of Consumer Affairs, Food and Public Distribution issued notification under Section 3 of Essential Commodities Act, 1955 whereby the Central Government directed that no person, establishment or industrial unit using or consuming more than 10 qunitals of sugar per month as a raw material for production or consumption or use, in any manner, could keep in stock, at any time, sugar exceeding 15 days of such use or consumption. The order also contains the clause that it would come into force after 20 days of its publication in the official gazette and would remain in force for a period of six months.

On 28/08/2009 respondent No.3 inspected factory of Godrej Hershey Limited at Mandideep where 350 tons of the petitioner''s sugar was stored. He calculated that the factory would consume 254.4 tons of sugar in 15 days time and, therefore, vide notification Annexure-P/5, this stock was validly held. However, remaining 95.5 tons of sugar, he held that it was beyond the quantity as specified in notification. On the same day i.e. 28/08/2009 respondent No.3 inspected the Bajrang Warehouse and seized the entire stock of 572 tons of sugar owned by the petitioner. Thereafter on 08/09/2009, the Government of India, Ministry of Consumer Affairs, Food and Public Distribution issued instructions to the Secretaries, Food and Civil Supplies/Sugar of all the States/U.T. Administration about imposition of stock limit on large consumers of sugar. By this letter, it was stated that it had come to the notice of the Central Government that some large consumers, using sugar as a raw material were maintaining large inventories, therefore, the period of notification has been extended by eight days. Respondent No.3 thereafter initiated proceeding for confiscation of sugar as contemplated under Section 6-A of the Essential Commodities Act, 1955. By order dated 02/02/2011 respondent No.2 held the petitioner-company to be a ''trader'' as defined in the order and ordered confiscation of 677.5 tons of sugar. Being aggrieved by this order, the petitioner had filed an appeal in the Court of Session at Raisen. The Sessions Judge, Raisen upheld the order passed by the Collector. Being aggrieved by that order, the petitioner has filed the present writ petition.

The respondents have filed their reply and stated that on 28/08/2009 respondent No.3 inspected the factory of Godrej Hershey Limited at Mandideep where 350 tons of sugar was stored. On the same day respondent No.3 inspected the Bajrang Warehouse and seized the entire stock of 572 tons of sugar owned by the petitioner. Thus, the total quantity of sugar was comes to 922 Metric tons (MT). They have further stated that as per gazette notification dated 22/08/2009 it has been specifically submitted that no person, establishment or industrial unit using or consuming more than 10 quintals of sugar per month as a raw material for production or consumption or used in any manner shall keep in stock at any time sugar exceeding 15 days of such use or consumption. Thus, the average or consumption of sugar by a person, establishment or industrial unit exceeds 10 quintals or not shall be determined by a certificate issued by a Charter Accountant whereas the petitioner-company annual consumption when calculated, it comes to 254.5 MT which is impermissible as per notification dated 22/08/2009. The commodity "sugar" is defined in Section 2 of the Essential Commodities Act, 1955 whereby stocking of sugar amounts to illegal holding of the essential commodity and it can be very well assumed that it is done for the purpose of black marketing. The sugar seized from the possession of the petitioner-company indicates that for the purpose of black marketing such huge quantity of sugar is being stored by the petitioner-company. As per gazette notification and various instructions of the Central Government as well as State Government, it is clear that quantum has been fixed that certain amount of sugar can be carried at a time by a particular person or industrial unit and if that limit is exceeded, it amounts to illegal storage and promote black marketing, thus, it is liable to be seized by the respondents and there is no illegality or perversity in the order passed by the respondents. In the light of the aforesaid submissions, the respondents have submitted that the petition may be dismissed.

Learned senior counsel for the petitioner submitted that the petitioner is not a "trader" as defined under M.P. Sugar Traders (Licensing and Control) Order, 2009 (hereinafter referred to as ''the Order of 2009''). As the petitioner is not carrying on any business of purchase or selling of sugar, the petitioner -company is using the sugar in its factory as one of the raw material. Learned senior counsel also submitted that the notification dated 22/08/2009 would not be applicable in the case of the petitioner because the said notification has been issued in the gazette on 22nd August, 2009 and as per the said notification, the said order shall come into force after 21st day of its publication in the official gazette i.e. w.e.f. 12/09/2009. This notification was further clarified while issuing instructions on 08/09/2009 and this period was extended for a period of six months thereof as such the notification will come into effect on 19/09/2009. Learned senior counsel also submitted that in the present case a raid was conducted in the petitioner-company on 20/08/2009 i.e. prior to coming into force of the notification dated 22/08/2009 and, therefore, the said notification would not be applicable in the case of the petitioner. In the light of the aforesaid submissions, learned senior counsel for the petitioner submitted that the order passed by the Collector as well the Sessions Court deserves to be set aside.

On the other hand, learned Panel Lawyer appearing on behalf of respondents No.1 and 2 supports the order passed by both the Courts below and submitted that there is concurrent findings recorded by both the Courts below which do not call for any interference.

I have heard learned counsel for the parties and perused the record as well as the order passed by both the Courts below. The petitioner is a company engaged in manufacturing, marketing, distribution and sales as well as export of its various products like Ketchup, Sauces, Fruit Products, Canned Products, Jams etc. For carrying out conversion of fruit juice and pulp for manufacturing of finished produces, the sugar is used as principal raw material. The petitioner buys all raw materials including sugar and consumes the same by using them exclusively in the manufacture/conversion of aforesaid food products. In the year 2008, the petitioner has entered into an agreement with Godrej Hershey Limited, Mandideep to carry out the conversion of fruit juice and pulp into manufacture of finished products. As per terms of the agreement, the petitioner was to supply raw materials to Godrej Hershey Limited for conversion. Accordingly, the petitioner company delivered a stock of sugar to Godrej Hershey Limited. The State Government has made an order for licensing and control of the sugar trade in the State as Control Order 2009. Order No.2 sub clause (a) defines the word trader which reads as under : "(a) "Trader" means a person carrying on a business or purchase, selling or distributing Sugar nor more than 20 quintals at a time or intends to trade accordingly but does not includes any industrial unit which is involved in the manufacturing or production of Sugar and which is registered or licensed under the Industrial Development and Regulation Act, 1951."

As per the said order, "trader" means a person carrying on the business or purchase, selling or distributing Sugar not more than 20 quintals at a time. Thus, from the above definition, the "trader" means a person who carry on a business or purchase, selling or distributing sugar nor more than 20 quintals. In the present case, the petitioner is not carrying on any business or purchase, selling or distributing sugar but the petitioner company is using the sugar as a raw material, therefore, the petitioner-company does not fall within the definition of "trader".

The Ministry of Consumer Affairs, Food and Public Distribution issued a notification dated 22/08/2009 in exercise of powers conferred under Sub-section (1) of Section 3 of the Essential Commodities Act whereby it has been directed that no person, establishment or industrial unit using or consuming more than ten quintals of sugar per month as a raw material for production or consumption or use, in any manner, shall keep in stock, at any time, sugar exceeding fifteen days of such use or consumption. Thus, as per the said notification, a person, establishment or industrial unit is not permissible to keep more than 10 quintals of sugar per month as raw material. Order No.2 of the said explanation provides that said notification shall come into force after twenty days after publication in the official gazette and remain in force for a period of six months. Thus, this notification came into force w.e.f. 12/09/2009. This notification was further clarified by the department by issuing a circular on 08/09/2009. Clause-5 and 6 of the said clarification reads as under : "5. After considering the representations and keeping in view the poblic interest of ensuring adequate sugar supply and control on prices, the Central Government has decided to extend the period of twenty days as mentioned in the notification to twenty eight days. As such, the notification will come into effect on 19/09/2009. A copy of notification is annexed (Annexure-II).

It is also clarified that the existing notification dated 16/07/2009 regarding stockholding and turnover limits applies to dealers and traders in sugar including importers who import for the purpose of selling in India. It does not apply to industrial units/establishments who import for the purpose of their own consumption or use."

As per the said clause, the period of 20 days as mentioned in the notification has been extended to 28 days and the said notification was came into force w.e.f.19/09/2009. Thus, the restriction of ten quintals of the sugar would be applicable w.e.f. 19/09/2009. As stated above, factory of the petitioner was inspected on 28/08/2009 i.e. prior to coming into force of the notification as well as clarification issued by the department and, therefore, these notifications would not be applicable in the case of the petitioner and, therefore, the order of the Collector as well as the order passed by the Sessions Court are contrary to the notifications issued by the department and are liable to be set aside.

Accordingly, the writ petition is allowed. The impugned orders are hereby set aside.