Dakshina
Kannada District Vs. Rudolph Fernandes [2000] INSC 96 (29 February 2000)
M.B.Shah,
B.N.Kirpal
Shah,
J.
C.A.No.3214
of 1989 In this appeal, a Matador (Mini Lorry) carrying 44 bags of cement was
intercepted and seized by the Bajpe Police, Dakshina Kannada on 22.8.1983.
Proceedings
under Section 6A of the Act were initiated before the Deputy Commissioner.
During the pendency of the proceedings, the respondent applied for interim
release of vehicle and the same was granted by order dated 1.9.1983 on his
furnishing a bank guarantee of Rs. one lakh. That order was challenged by the
respondent before the High Court of Karnataka at Bangalore in W.P. No.16668 of 1983 on the ground that imposition of
such condition was illegal and onerous. The learned Single Judge after
considering second proviso to Section 6A(1) held that the words market price
occurring in the section relate only to the essential commodity sought to be
carried. According to the learned Judge the proviso gives a concession to the
owner to avert confiscation by paying fine not exceeding the market price
prevalent on the date of its seizure of the essential commodity. According to
the learned Judge if option is to pay a fine equivalent to the market price of
the vehicle then there is no necessity to give such option. Owner instead of
paying a fine equivalent to the market price can as well think of purchasing a
new or fresh vehicle. He, therefore, directed release of the vehicle accepting
the Bank Guarantee to the extent of Rs.500/- only. Being aggrieved the State
preferred an appeal before the Division Bench of the High Court in WA No.2248
of 1983 which was also dismissed by the impugned order dated 22.3.1988.
C.A.
Nos. 5074-75 of 1989 In these appeals, two transport vehicles belonging to the
respondents carrying paddy were seized by the Police for the alleged
contravention of Food Control Orders.
Applications
were filed before the Deputy Commissioner for release of said vehicles. By
order dated 16.2.1989 the Deputy Commissioner passed an order directing the
release of the vehicles in question on their furnishing Bank Guarantee in a sum
of Rupees three lakhs each. That order was challenged before the High Court of
Karnataka by filing writ petition Nos. 3563 and 3579 of 1989. The High Court
following its earlier decision in Rudolph Fernandes vs.
Deputy
Commissioner, D.K. [1984 (1) Kar. L.J. 200] (C.A.No.3214/89 before us) allowed
the writ petitions and reduced the fine amount to rupees 10,000/- each. Both
the orders are challenged before us in these appeals. The short question
involved in these appeals is whether fine in lieu of confiscation contemplated
under the second proviso to Section 6A(1) of the Essential Commodities Act,
1955 (herein after referred to as The Act) provides for levy of fine on the
basis of market value of the confiscated vehicle or on the basis of the market
price of the essential commodity sought under: - to be carried by such vehicle.
Section 6A of The Act is as 6A. Confiscation of essential commodity (1) Where
any essential commodity is seized in pursuance of an order made under section 3
in relation thereto, a report of such seizure shall, without unreasonable
delay, be made to the collector of the district or the Presidency town in which
such essential commodity is seized and whether or not a prosecution is
instituted for the contravention of such order, the Collector may, if he thinks
it expedient so to do, direct the essential commodity so seized to be produced
for inspection before him, and if he is satisfied that there has been a
contravention of the order may order confiscation of (a) the essential
commodity so seized;
(b) any
package, covering or receptacle in which such essential commodity is found; and
(c) any animal, vehicle, vessel or other conveyance used in carrying such
essential commodity:
PROVIDED
PROVIDED FURTHER that in the case of any animal, vehicle, vessel or other
conveyance used for the carriage of goods or passengers for hire, the owners of
such animal, vehicle, vessel, or other conveyance shall be given an option to
pay, in lieu of its confiscation, a fine not exceeding the market price at the
date of seizure of the essential commodity sought to be carried by such animal,
vehicle, vessel or other conveyance. (emphasis supplied) At the outset it is to
be stated that the object of The Act is to deter a person from illegally
dealing in an essential commodity and consequently, impose a deterrent penalty
against a person dealing in them illegally. While doing so, the law takes care
to prevent the owner of any vehicle from aiding or assisting such an illegal
activity.
As per
the preamble of the Act, the Act is to provide, in the interest of the general
public, for the control of the production, supply and distribution of, and
trade and commerce, in certain commodities. For this purpose, Section 3
empowers Central Government to provide for regulating or prohibiting the
production, supply and distribution of essential commodity and trade and
commerce therein if the same is considered necessary or expedient inter alia
for maintaining or increasing supply of any essential commodity or for securing
their equitable distribution and availability at fair prices by passing an
appropriate order.
Section
6A as quoted above provides for seizure and confiscation of essential commodity
for contravention of any order issued under Section 3. Further Section 6B
provides for issuance of show cause notice and the procedure for confiscation
of the seized essential commodity as well as any package, covering or
receptacle in which essential commodity is found or any animal, vehicle, vessel
or other conveyance used in carrying such essential commodity.
Section
6C provides for appeal against the confiscation order and the procedure for
return of confiscated article in case where appeal filed against the
confiscation order or the order passed under Section 7 forfeiting the essential
commodity is set aside. Thereafter, Section 6D provides that the order of any
confiscation under The Act shall not prevent the infliction of any punishment
to which the person affected thereby is liable under The Act. Therefore, even
if the essential commodity or the vehicle is confiscated, the person can be
prosecuted and the penalty provided under Section 7 can be imposed. Section 7(1)(a)
provides for punishment to any person who contravenes any order made under
Section 3. Section 7(1)(b) and (c) empowers the Court to forfeit to the
government any property in respect of which the order has been contravened or
to forfeit any package, covering or receptacle in which the property is found
and also animal, vehicle, vessel or other conveyance used in carrying the
property.
In the
light of aforesaid provisions, second proviso to Section 6A is required to be
considered. First it is to be stated that the proviso limits the power of the
competent authority to recover fine up-to the market price for releasing the
animal, vehicle, vessel or other conveyance sought to be confiscated. So
maximum fine that can be levied in lieu of confiscation should not exceed the
market price. For our purpose, relevant part of proviso would be in the case of
vehiclethe owner of suchvehicle shall be given an option to pay, in lieu of its
confiscation, a fine not exceeding the market price at the date of seizure of
the essential commodity sought to be carried by suchvehicle.
Question
is whether fine should not exceed the market price of the seized essential
commodity or whether it should not exceed the market price of the vehicle. For
this purpose, it appears that there is some ambiguity in the Section. It is not
specifically provided that in lieu of confiscation of vehicle a fine not
exceeding the market price of the vehicle or of the seized essential commodity
is to be taken as measure. Still however, it is difficult to say that measure
of fine is related to the market price of the essential commodity at the date
of its seizure. It nowhere provides that fine should not exceed market price of
the essential commodity at the date of seizure of the vehicle. The proviso
requires the competent authority to give an option to the owner of such vehicle
to pay in lieu of confiscation a fine not exceeding the market price. What is
to be confiscated is the vehicle and, therefore, measure of fine would be
relatable to the market price of the vehicle at the date of seizure of the
essential commodity sought to be carried by such vehicle. This would also be
consistent with the scheme of section 7 which provides for levy of penalty. It
empowers the Court trying the criminal case to pass an order forfeiting to the Government
any property in respect of which the order under Section 3 has been contravened
It also empowers forfeiture to the Government any package, covering or
receptacle in which the property is found and in addition any animal, vehicle,
vessel or other conveyance used in carrying the commodity.
Therefore,
not only the essential commodity which is seized is to be forfeited, but the
vehicle also could be forfeited to the Government. Hence, measure of fine which
is required to be levied in lieu of confiscation under second proviso to
Section 6A(1) would be relatable to the market price of the vehicle and not of
the seized essential commodity. And, the fine amount in lieu of confiscation is
not to exceed the market price of the vehicle on the date of seizure of
essential commodity. That is to say, limit of such fine would be up-to the
market price of the vehicle on the relevant date and it is within the
discretion of the competent authority to fix such reasonable amount considering
the facts and circumstances of each case.
In Shambhu
Dayal Agarwala v. State of West Bengal and another1 after considering the
scheme of Sections 6A and 7 and dealing with the proviso (ii) to sub-section
(2) of Section 6A, this Court observed: - Section 6-A, therefore, merely
confers power of confiscation and not the power of release, disposal,
distribution, etc., except to the limited extent permitted by sub-section (2)
thereof. Of course, the second proviso to sub-section (1) of Section 6A permits
the grant of an option to pay, in lieu of confiscation of any animal, vehicle,
vessel or other conveyance, seizure. a fine equal to its market price at the
date of (emphasis added) Lastly we would mention that in the impugned order
dated 22nd March 1998, the High Court in support of its reasoning referred to a
similar provision under Section 115(2) of the Customs Act, 1962,
which provides for confiscation inter alia of vehicle used as means of
transport in smuggling of any goods or carriage of any smuggled goods which is
as under:- 115. Confiscation of conveyance. (1) (2) Any conveyance or animal
used as a means of transport in the smuggling of any goods or in the carriage
of any smuggled goods shall be liable to confiscation, unless the owner of the
conveyance or animal proves that it was so used without the knowledge or
connivance of the owner himself, his agent, if any, and the person in charge of
the conveyance or animal 1[***]:
Provided
that where any such conveyance is used for the carriage of goods or passengers
for hire, the owner of any conveyance shall be given an option to pay in lieu
of the confiscation of the conveyance a fine not exceeding the market price of
the goods which are sought to be smuggled or the smuggled goods, as the case
may be.
Explanation.In
this section, market price means market price at the date when the goods are
seized.
The
Court observed that though the language of the aforesaid proviso is clear, the
idea sought to be conveyed under the proviso to Section 6A(1) of the Act appear
to be the same. In our view, the analogy drawn by the High Court is erroneous
because the proviso specifically mentions that where any such conveyance is
used as a means of transport in the smuggling of goods, the owner of any
conveyance is to be given an option to pay in lieu of the confiscation of the
conveyance, a fine not exceeding the market price of the goods which are sought
to be smuggled. Explanation provides that market price means market price at
the date when the goods are seized. As against this, Section 6A second proviso
does not refer to payment of fine not exceeding market price of the essential
commodity but apparent reference is a fine not exceeding the market price of
the vehicle sought to be confiscated. This appears to be obvious because in
case where market price of the seized essential commodity is more than the
price of the conveyance then owner of the conveyance would not come forward to
take it back if he is asked to pay something more than its market price. Similarly,
when the market price of the seized vehicle is much more than of the essential
commodity, it cannot be said that instead of confiscation it should be released
at a price which is less than its market price.
Further
it is required to be noted that under Section 6B(2) no order confiscating
vehicle or other conveyance can be passed if the owner proves to the
satisfaction of the competent authority that it was used in carrying the
essential commodity without his knowledge or connivance.
In the
result, the appeals are allowed and the impugned orders holding that measure of
imposing fine in lieu of confiscation under second proviso to Section 6A of the
Essential
Commodities Act would be the market price of the essential commodity seized
are set aside. However, considering the fact that since vehicles are already
released, no further directions are required to confiscation. be given with
regard to the fine amount in lieu of Ordered accordingly. No costs.
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