Rakesh Kumar and Others vs State of U.P.

B.K. Sharma, J.—This is a revision against the judgment and order dated 10.11.1983 passed by Sri M.S. Premi, the then Special Judge, Jhansi in Special Case No. 1 of 1982, State v. Rakesh Kumar and Ors., convicting the accused-revisionists for the offence under Sections 3/7 of the Essential Commodities Act for violation of Clause 3 of the U.P. Foodgrains Dealers (Licensing and Restriction on Hoarding) Order, 1976 and sentencing each one of them to suffer rigorous imprisonment for a period of 3 months each.

Heard the Learned Counsel for the parties.

The prosecution case was that on 7.9.1982 the then S.O. Powayan Sri C.K. Misra (P.W. 1) along with Jagmohan Upadhayay S.I. and Ram Pratap constable who were on patrol duty on Powayan Nigohi Road, noticed that two trucks were going on the Nigohi road from the side of Nawabpur Ganga Market, out of which, the first truck was USR 7111 in which the accused-revisionists were boarded and 106 bags of wheat and 15 bags of paddy were loaded, that the truck was being driven by driver Ram Avtar (P.W. 2), that the truck was stopped and the accusedrrevisionists were called upon to produce their licence as dealer but they failed to show any licence, that the driver told him that the accused-revisionists had told him that they had licence of sale and purchase and that they had purchased the foodgrains from Nawabpur Ganga Market and were taking it to Shahjahanpur, that the S.O. prepared the recovery memo at the spot at 4.15 a.m. and then took the truck to the police station along with the accused persons and on the basis of the recovery memo a check report was prepared and a case under Sections 3/7 of the Essential Commodities Act was registered.

After submission of the charge-sheet, cognizance was taken by the Special Judge and the charges were framed against the accused-revisionists.

At the trial the prosecution examined S.O., C.K. Misra as P.W. 1 and Ram Avtar driver as P.W. 2. C.K. Misra testified to intercepting the truck carrying 106 bags of wheat and 15 bags of paddy and the failure of the accused-revisionists to show dealership licence. He further testified that the driver told him that his truck was loaded from Nawabpur Ganga Market for Saharanpur and that the accused-revisionists were claiming that they were having dealership licence, that the accused-revisionists, however, did not claim having any such licence of dealing in the foodgrains. Ram Avtar P.W. 2, the driver of the truck testified that the accused-revisionists had told him that they had licence for dealing in the foodgrains, that this grain was loaded in the truck from Nawabpur Ganga Market for being carried to Shahjahanpur. In his cross-examination, he stated that the foodgrains were purchased by the accused persons from that market in his presence.

In their statements u/s 313, Code of Criminal Procedure , the accused-revisionists admitted that arrest and the seizure of the foodgrains, but they claimed that the seized grain was the produce of their agricultural land. They examined Hardwari Lal as D.W. 1. He testified that the accused-revisionists never purchased any grain from the Nawabpur Ganga Market, that he was Thekedar and owner of Nawabpur Ganga Bazar, that there is no other Bazar held in that village, that the accused-revisionists had never purchased any grain from the said Bazar. He also testified that the accused-revisionists were cultivators. The accused-revisionists also filed certain extracts of revenue papers to show the existence of their agricultural land.

The learned Special Judge discussed the prosecution evidence and also the oral and documentary evidence led by the defence. He also scrutinised the revenue papers filed by the different accused-revisionists and in the case of Rakesh Kumar accused-revisionist who claimed that 40 bags of seized wheat and 10 bags of seized paddy belonged to him out of the total quantity of grains seized. He came to the conclusion that his father produced wheat in 2.315 acres of land and that from the documents filed, it is not proved that the wheat and paddy being taken by him was the produce of his father�s land. As to Ashok Kumar accused-revisionists he considered his claim that 60 bags of wheat belonged to him and the claim of Ram Phool accused-revisionist that 40 bags of wheat belonged to him and he came to the conclusion that wheat was sown in Khasra jointly owned by Ram Phool, Ashok Kumar and 2 Ors. and that the share of Guljari was 1/2 and the share of these two accused persons, i.e., Ashok Kumar and Ram Phool was 2/3 of .5 acres i.e., about .33 acres, and that in that area of land, 36 quintals of wheat cannot be yielded and as such rejected the defence plea that the seized wheat was produced by the accused-revisionists Ashok Kumar and Ram Phool.

In regard to Parmeshwar Dayal accused-revisionist, he found that he claimed that he owned 1.53 acres of land, that there were 4 brOrs. and wheat was grown by them in 2.6 acres and in the area of 2.62 acres paddy was grown and that the share of Parmeshwar Dayal accused-revisionist was only l/4th in the total area 2.62 acres of land. He observed that none appeared from his side to say that after meeting the needs of his family, he could spare 15 bags of wheat and 5 bags of paddy for sale. He, therefore, rejected the plea that the said recovered wheat and paddy were grown by the accused persons.

In the case of Updesh Kumar accused-revisionist, he recorded that this accused claimed 16 bags of wheat out of the seized bags to be his. He found that the revenue papers showed that his father Hardwari had 1.5 acres of land. He observed that Hardwari did not enter the witness box to depose about the yield of his land and that he could spare 15 bags of wheat for sale. He, therefore, concluded that he did not agree with the claim of this accused-revisionist that 15 bags of wheat out of the seized grain was the yield of the agricultural land of his father. In fact, he even doubted that the revenue papers filed by him related to his father.

He also noted that there was no mark of identification on the bags of seized foodgrains to show that it belonged to 5 different persons and observed that it appeared more probable that they were jointly owned by the accused-revisionists. The defence plea was that the accused-revisionists were not dealers and that in order to prove that they were dealers, a chain of transaction should be proved and a solitary instance cannot make them foodgrains dealers.

Certain authorities were cited before him but he discarded all of them and consequently convicted and sentenced the accused-revisionists as aforesaid.

The relevant provisions of the U.P. Foodgrains Dealers (Licensing and Restriction of Hoarding) Order, 1976 may be placed on record for proper appreciation of the legal position in this case. Clause 2(c) defines the term dealers in the following words :

(c) �dealer� means a person engaged in the business of purchase, sale or storage for sale, of any one of the foodgrains in a quantity of ten quintals or more at any one time or in a quantity of fifty ten quintals or more of all foodgrains taken together, but does not include the Food Corporation of India or the Uttar Pradesh State Food and Essential Commodities Corporation or any other Corporation established by the Central Government for development of seeds or a person who -

(i) stores any foodgrains produced by him by personal cultivation, and

(ii) does not engage in the business of purchase or sale of foodgrains.

There is provision for issue of licence to dealers who were of two kinds, namely, retailers and whole sellers. Admittedly, the accused-revisionists did not hold any licence issued under clauses 3 and 4 of the said Control Order. The position is that if the accused-revisionists or any of them are dealers within the meaning of the term dealer as defined In this Control Order, then they must be held to have violated the clauses of the Control Order. The second part of the definition of the term dealer means that person who stores any foodgrains produced by him by personal cultivation and does not engage in the business of purchase and sale of foodgrains would not be included in the definition.

We have seen that in the case of Rakesh Kumar accused-revisionists, the learned Special Judge rejected his claim that the grain claimed by him was the yield of his father�s land and in the case of Ashok Kumar and Ram Phool accused-revisionists, he rejected their claim that the wheat claimed by them was the produce of their land and in the case of Parmeshwar Dayal, accused-revisionist, he rejected the claim that the recovered wheat and paddy was grown by him taking the stand that this quantity could not be spared for sale after meeting the needs of the family and similar view was taken by him in the case of Updesh Kumar accused-revisionist also. In my view, the learned Special Judge mis-directed himself. There is no escape from the proposition that unless the prosecution is able to show that the accused-revisionists were engaged in the business of purchase or sale or storage for sale of grain beyond the permissible quantity given in the definition, they cannot be held to be dealer and if they cannot be held to be dealer, then they could not be held liable for not taking licence in clauses 3 and 4 of the Control Order.

It will be useful to refer here to the authority Manipur Administration Vs. M. Nila Chandra Singh, . relating to the Manipur Foodgrains Dealers Licensing Order, 1958. In this Control Order, clause 2(a), defined a dealer as meaning a person engaged in the business of purchase, sale or storage for sale of any one or more of the foodgrains in quantity of one hundred mounds or more at any one time. Clause 3 of the said Control Order 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 mounds or more at any one time shall, unless, the contrary is proved, be deemed to store the foodgrains for the purpose of sale.

Clause (7) provides that no holder of licence issued under this Order shall contravene any of the terms and conditions of the licence.

In that case the judicial commissioner held that the effect of the presumption which can be legitimately raised under clause 3(2) is not that the person against whom the said presumption has been drawn is a dealer in respect of the said goods ; and so, merely on the strength of the said presumption, sub-clause 3(1) cannot be attracted. This view was challenged by the Manipur Administration before the Apex Court. The Apex Court observed as follows :

There is no doubt, as Mr. Khanna has contende�d that if clause 3(2) which is in the nature of a deeming provision provides for fiction, we ought to draw the fiction to the maximum extent legitimately, permissible under the words of the clause. Mr. Khanna contends that the effect of clause 3 is that as soon as it is shown that the Respondent had stored more than 100 mds. of paddy he must be deemed to have stored the said foodgrains for the purpose of sale ; and his argument is that in drawing a statutory presumption under this clause, it is necessary to bear in mind that this presumption is drawn for the purpose of sub-clause (1) of clause 3. Therefore, it is argued that it would be defeating the purpose of clause 3(2) if the view taken by the learned Judicial Commissioner is upheld and the presumption raised under clause 3(2) is not treated as sufficient to prove the charge against the Respondent.

(7) In dealing with the question as to whether the Respondent is guilty u/s 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.

There is no doubt that if a person carries on a business as described by clause 2(a) and does it without obtaining a licence as required by clause 3(1) he would be guilty u/s 7 of the Essential Commodities Act. In this connection, clause 3(2) raises a statutory presumption. It is no doubt a rebuttable presumption which is raised by this provision. If it is shown by a person with whom a storage of more than 100 mds. of one or the other of the prescribed foodgrains is found that the said storage was referable to his personal needs or to some other legitimate cause unconnected with and distinct from the purpose of sale, the presumption would be rebutted, in case, of course, the explanation given and proved by the person is accepted by the Court as reasonable and sufficient. What does this presumption amount to? It amounts to this and nothing more that the stock found with a given individual of 100 or more maunds of the specified foodgrains had been stored by him for the purpose of sale. Having reached this conclusion on the strength of presumption, the prosecution would still have to show that the store of the foodgrains for the purpose of sale thus presumed was made by him for the purpose of carrying on the business of store of the said foodgrains. The element of business which is essential to attract the provisions of clause 3(1) is thus not covered by the presumption raised under clause 3(2). That part of the case would still have to be proved by the prosecution by other independent evidence. It may be that this part of the case can be proved by the prosecution by showing that store of 100 mnds. or more of the foodgrains was found with the said person more than once. How many times it should be necessary to prove the discovery of such a store with the said person, is a matter which we need not decide in the present case. All that is necessary to be said in connection with the presumption under clause 3(2) in this case is that after the presumption is raised under it. some evidence must be led 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.

In the case of M. Subba Rao Vs. State of Orissa, , relating to Orissa Foodgrain Dealers Licensing Order, 1959 where clause 3(2) provided for presumption (though rebuttable) from storage in quantity beyond a limit that the person shall be deemed to store the foodgrain for the purpose of sale, the learned single Judge of Orissa High Court relying on the said authority of Apex Court, held that even after reaching the conclusion on the strength of this presumption, the prosecution will still have to show that the storage was made for the purpose of carrying on the business of sale of the said foodgrains. This view was endorsed by a Division Bench of Orissa High Court in the case of Ramji Prasad Gupta Vs. The State, , relating to Orissa Foodgrain Dealers Licensing Order, 1964 as it stood before amendment of 9.1.1965. The clause about presumption was later amended on 9.1.1965 to say that storage of grain beyond a certain quantity at anyone time, unless the contrary is proved be deemed to be a dealer. It came up for interpretation before the Orissa High Court in the case of Gour Chandra Gouda and Another Vs. The State,

Relying on the aforementioned authority of the Apex Court, the learned Single Judge of Orissa High Court held that on a mere solitary detection of possession without any further evidence that such storage was as a part of his business as a dealer, the accused cannot be held to have contravened the Licensing Order and that a single transaction of storage for sale will not constitute a business so as to bring the petitioners within the mischief of Section 7 of the Act.

Then in the case of the The State Vs. Munafkha Lukmankha Pathan, , similar observations were made relying on the said Apex Court authority considering the provisions of the Maharashtra Foodgrain Dealers Licensing Order, 1963 which were similar to those interpreted in the case of Subha Rao aforesaid.

In the case of Lakshmi Narain v. State of U.P. XVIII (1981) ACC 84, which related to the Price Display and Control of Supply and Distribution Order, 1975, also the said Apex Court authority was followed.

I may refer to Abdul Sattar v. State XVI (1979) ACC 282, which related to U.P. Foodgrains Dealers Licensing Order, 1964. In that case 55 rice bags were recovered from a truck in which the applicant and Ors. were sitting. The definition of the term �dealer� in the said Control Order, 1964 was the same as in the Control Order violated in the present case. The learned Judge observed :

Now if on the allegations made by the prosecution case, it can be said that the applicant was storing the aforesaid bags of Bansmati, that may constitute contravention of sub-clause (1) of clause 3 of the Order and the conviction recorded by the Court below against him in that case might stand.

Then after referring to Corpus Juris Secundum and other books, on interpretation of the term �storage�, the learned Single Judge further observed :

In view of the meanings assigned to the words �store� and �storage� in the aforesaid books it should be held that the word �store� is not synonymous with the word �transport�. In the instant case the prosecution case was that 55 bags of Bansmati rice were being carried in a truck by the applicant and three Ors.. While on these allegations it may be possible to say that the applicant was transporting more than 10 quintals of grain it cannot be said that he was storing more than 10 qtls of grain within the meaning of subclause (2) of clause 3 of the Order. In other words, the presumption of sub-clause (2) of clause 3 of the Order will not apply to the applicant.

This authority is of help in the present case where also the grain was seized from a truck in which the revisionists were also present. This act cannot be called storage for sale and so they were not liable.

Furthermore, even assuming for a moment that the act of transport of grain could be construed an act of storage for sale, still there is nothing from the side of prosecution to show a chain of transactions that may give rise to the inference that it was a business of purchase, sale or storage for sale in which they were engaged. It is immaterial whether the accused-revisionists had shown or not that the grains recovered from their possession was produced by them by personal cultivation. The failure to show that the case falls in the second part of the definition of dealer would not mean that the first part of the definition got attracted and established and a case of contravention of clause 3 stood made out.

It may be that Ram Avtar (P.W. 2), the driver of the truck stated in his cross-examination that 1-1/2 years before the occurrence, he had carried the grain of the accused-revisionists from Bhatura. But this casual and vague statement cannot be taken at its face value. Moreover, even taking it as such, it would not help the prosecution to establish that the accused-revisionist were carrying on a business as contemplated in the Control Order.

For the reasons aforesaid, the revision is allowed. The judgment and order dated 10.11.1983 passed by the learned Special Judge cannot be sustained for a moment and is consequently, set aside and Rakesh Kumar, Ram Phool, Ashok Kumar, Parmeshwar Dayal and Updesh Kumar accused-revisionists are acquitted of the offences u/s 3/7 of the Essential Commodities Act. They are on bail from this Court. They need not surrender to it. Their bail bonds are cancelled and sureties discharged.

Registry to send a copy of this judgment and order to the learned Special Judge concerned at once for compliance in the records. Compliance report shall be submitted to this Court within 15 days from today.