M/S.Holani
Auto Links Pvt. Ltd Vs. State of Madhya Pradesh [2008] INSC 740 (29 April 2008)
C.K. Thakker & Tarun Chatterjee
CRIMINAL APPAEL NO.207 OF 2002 TARUN CHATTERJEE,J.
1. This appeal is directed against the judgment and order dated 3rd of May,
2001 of the High Court of Madhya Pradesh at Jabalpur in Criminal Revision
No.890 of 2000 whereby the High Court had set aside an order dated 26th of
February, 2000 passed by the Sessions Judge, Sagar, M.P. in Criminal Appeal
No.184 of 1999 who in his turn had set aside an order dated 20th of December,
1999 passed by the Collector, Sagar in so far as he proceeded to include M/s.
Holani Auto Links Pvt. Ltd. (in short the "Appellant Company.")
within the definition of "Dealer" as contained in Clause 2(a) of the
M.P. Essential Commodities (Exhibition of Price & Price Control) Order,
1977 (in short the "Order of 1977") and held them guilty for
violating Clauses 3(1) to 3(3) and 6(1) of the Order of 1977.
2. Brief facts leading to the filing of this appeal are as follows.
The Appellant Company was appointed as a Distributor by Castrol India Ltd.
(in short the "manufacturing company") by entering into an agreement
dated 1st of June, 1998. On 27th of May, 1999, a team headed by Deputy
Collector, Food Department, Sagar, M.P. came to the office premises of the
appellant company for inspection and asked for the records and various
registers and the lists. Before the Deputy Collector and the Members of the
Food Department, Sagar, the representative of the appellant company had
explained that it was only a Distributor and therefore was not required to
maintain all those lists and other things.
However, the Deputy Collector and his team seized around 33344.80 litres of
lubricating oil stored in the premises of the appellant company.
The value of the oil was worth Rs.2,01,840/-. On the basis of such
inspection, the Collector, Sagar on 2nd of June, 1999 issued a show cause
notice to the appellant company and thereafter evidence from both the sides
were adduced and the Collector by his order dated 20th of December, 1999 found
that the appellant company had violated Clauses 3(1) to 3(3) and 6(1) of the
Order of 1977 and, accordingly, he ordered confiscation of the commodities
worth Rs.1,00,000/- out of the commodities seized from the possession of the
appellant company under Section 6(a) of the Essential
Commodities Act, 1955. In the
alternative, it was directed that in case the appellant company wanted the
release of the commodities worth Rs.1,00,000/-, it may deposit Rs.1,00,000/-
instead and get the release of the entire stock of oil. Feeling aggrieved, the
appellant company filed an appeal under Section 6-C of the Essential
Commodities Act,
1955 before the Sessions Judge, Sagar. The learned Sessions Judge, Sagar by
the order dated 24th of February, 2000 had set aside the order of the Collector
and allowed the appeal of the appellant company holding that the appellant
company was not covered by the definition of "Dealer" under the Order
of 1977 and accordingly, it was neither liable to exhibit the price nor was it
required to keep the accounts. Feeling aggrieved by this order of the Sessions
Judge, Sagar, the State of M.P. filed a Criminal Revision No.890 of 2000 before
the High Court and the High Court by the impugned judgment and order dated 3rd
of May, 2001 had allowed the revision case thereby setting aside the order of
the Sessions Judge and restoring the order of the Collector, Sagar. Against
this decision of the High Court, a special leave petition has been filed in
respect of which leave has already been granted.
3. From the factual matrix and in view of the arguments advanced before us,
the following questions need to be decided in this appeal.
(1) Whether the appellant company would fall within the definition of
'Dealer' as contained in Clause 2(a) of the Order of 1977.
(2) Whether the appellant company has violated Clauses 3(1) to 3(3) and 6(1)
of the Order of 1977.
4. Before we answer these questions, it is expedient to give a brief
narrative pertaining to the Order of 1977 and the relevant provisions contained
there under.
The State Government promulgated the Order of 1977 with the prior
concurrence of the Central Government in the exercise of its powers conferred
by Section 3 of the Essential Commodities Act, 1955 (10 of 1955).
In 1998, certain amendments were made in the Order of 1977. Prior to the
amendment of 1998, Clause 2(a) defined 'Dealer' as under: - "Dealer means
a person who carries on the business of selling by retail or wholesale or
storing for sale by retail or wholesale any commodity, whether or not such
business is carried on in addition to any other business, but does not include
a hawker or peddler or an oil company, storage depot or installation wherefrom
no sales are made to made to general public"
The amended definition of the term 'Dealer' now reads as under: -
"Dealer means a person (except the exceptions mentioned below under this
clause) who carries on the business of purchase, sale, or storage for sale, or
processing or manufacturing any of the following essential commodities: -
-
-
-
-
-
-
If dealing with engine oil at any time
in more than 5 (five) kilolitres.
Exceptions.- Following persons or categories of persons are not included in
the above definition of dealer: - i. ii. Any oil company producing or storing
Kerosene, Diesel (High Speed Oil), Petrol (Motor Spirit), cooking gas, or
engine oil in its storage depot or installation wherefrom no sales are made to
general public.
iii. "
We keep it on record that the decision of this appeal shall practically rest
on the interpretation of the amended definition of the term 'Dealer' and the
2nd exception to it as noted hereinabove. We will examine this definition more
elaborately a little later.
The other relevant provisions, which would be required in this appeal are
Clauses 3(1), 3(2), 3(3) and Clause 6(1).
Clause 3 reads as under: -
3. Exhibition of Price List.- (1) Every dealer shall exhibit at the entrance
or some other prominent place of his business premises the price list of
essential commodities held in stock by him for sale.
(2) The price list shall- (a) indicate separately the prices of different
categories or varieties of essential commodities;
(b) bear the signature of the dealer; and (c) be legibly written in Hindi
language and devnagari script.
(3) Every dealer shall prominently exhibit a separate list showing the stock
of different categories or varieties of essential commodities held by him at
the end of the day preceding."
Clause 6(1) of the Order of 1977 is another relevant provision and was also
amended in the year 1998. The amended Clause 6(1), which would be required in
this case reads as under: - "6. Every dealer shall maintain proper
accounts of the purchase and sale of essential commodity showing the price of
purchase, price of sale as the transactions take place, and the balance in
stock on each day on the close of the day."
5. Keeping these provisions in mind, let us now take up the first question,
as noted herein earlier, for our consideration.
The learned senior counsel for the appellant company Mr. V.A. Mohta
vehemently argued before us that the appellant company was appointed as a
Distributor by the manufacturing company through a written agreement, which
clearly prohibited sale of the commodity by the appellant company. The
manufacturing company was the manufacturer of Castrol Oil, which is used as
Engine Oil and the appellant company was keeping the commodities at the
instance of the manufacturing company. Our attention was drawn to clause 10(a)
of the agreement, which provides that the Distributor, being the appellant
company herein, shall not trade in the company's product as a 'Dealer' by
itself or through anyone else. Accordingly, the learned senior counsel Mr.
Mohta submitted that the High Court had erred in holding that the appellant
company was a 'Dealer' when in fact, the appellant company was only the
Distributor who was prohibited to trade in the company's product as a 'Dealer'
either by itself or through anyone else. The learned senior counsel further
argued that the appellant company was merely storing the material on behalf of
the manufacturing company without making any sales to the general public.
Accordingly, he argued that the appellant company would come within the 2nd
exception to the definition of 'Dealer' and that the High Court had erred in
interpreting the definition of the term 'Dealer' and the 2nd exception to it
thereby holding that the appellant company does not fall within the purview of
the said exception.
Mr. Mohta further argued that the word "its" as used in the 2nd
exception to the definition of 'Dealer' should be given a liberal
interpretation in favour of the appellant company. In support of this
contention, he relied on a decision of this court in the case SCC 613]. Relying
on this decision, Mr. Mohta contended that a liberal approach should be adopted
while interpreting the word "its"
appearing in the 2nd exception to the definition of 'Dealer' under Clause
2(a) of the Order of 1977 and accordingly, the appellant company should also be
given the benefit of this exception. Reliance was also placed in this
connection on the decision of this court in the case of Bangalore Water Supply
& [(1978) 2 SCC 213].
These contentions of Mr. Mohta were contested by the learned counsel
appearing on behalf of the respondent who submitted before us that on a plain
reading of the definition of 'Dealer' and the 2nd exception to it, it is
evident that the exception is applicable only to the oil company and to no one
else.
6. Before we deal with this issue as posed by the learned counsel for the
parties, we may now look at the findings of the High Court on this issue, which
are as under: - "It cannot be disputed that the respondent company was
stocking the Castrol engine oil for sale under an agreement. The Castrol India
Ltd. was the manufacturer of the engine oil and it has sent the oil for storage
with the respondent- company so that it can be sold to various dealers. Once
this fact is realized and it is not disputed that the quantity of the oil was
more than five kilolitres, the respondent-company shall be deemed to be covered
by the main part of the definition of "dealer". The only way the
respondent-company could escape the clutches of the definition of "dealer"
is by relying on exception (2) of Clause 2(a) of the Order of 1977 which has
been reproduced above. The question, therefore, is whether the learned Govt.
Advocate is right in saying that the exception is confined only to the oil
company mentioned therein or would it cover the case of the present
respondent-company which is the distributor under an agreement on behalf of the
company. It cannot be disputed that the agreement shows that from the storage
depot or the installation of the respondent- company, no sale is made to the
general public. The respondent- company had undertaken in its agreement not to
make a sale of the essential commodities stored with it to the general public.
It is, thus, clear that the intention was not to make any sale from the depot
or installation of the respondent-company to general public. However, the use
of the words "in its storage depot or installation" have to be
interpreted. Obviously, the storage depot or installation of the
respondent-company does not belong to the Castrol Company.
Therefore, strictly speaking the respondent-company is not covered by
exception to the definition of "dealer" given in the Order of 1977.
It has been further contended on behalf of the respondent- company that
spirit of the entire order is to control the prices of a commodity and the
exhibition of the prices required to be made under the order is for the purpose
that a customer must get the correct value of the commodity covered by the
Order of 1977.
Therefore, an extended meaning should be given to the exception particularly
when its violation is confiscatory in nature.
It is very difficult to accede to this contention for the reason firstly
that the respondent- company is relying on an exception to the definition of
"dealer". It must fall strictly within the exception. Secondly, the
intention of the legislature is very clear by enacting exception 2 to Clause
2(a) of the Order of 1977. It meant only to except the oil company producing or
storing the commodities mentioned in the exception. No other person was meant
to be covered by the exception. The respondent is not an oil company.
Otherwise, the definition of "dealer" is quite broad. It may be that
the persons like the present respondent should be exempted from operation of
the order in case they do not sell the oil to general public, but the
legislature in its wisdom has not done so. This court cannot fill in the gap by
giving an altogether different meaning to the exception which is not manifested
by it. The use of the words "engine oil in its storage depot or
installation wherefrom no sales are made to the general public" refer to
the Oil Company. This is clear by the use of the word "its". The
contention of the learned counsel for respondent that this court should
mitigate a rigour of definition by reading it down to include a
"dealer" like the respondent- company cannot be accepted."
Let us now look at the ingredients of the definition of 'Dealer' as
contained in Clause 2(a).
A dealer means a person who carries on the business of: - 1) purchase, or 2)
sale or ;
3) storage for sale; or 4) processing; or 5) manufacturing.
6) If dealing with engine oil at any time in more than 5 (five) kilolitres.
7. Having examined the findings of the High Court in the impugned judgment
in the light of the definition of 'Dealer' and the 2nd exception to it, as
reproduced herein earlier, we agree with the views expressed by the High Court
that the appellant company falls within the definition of 'Dealer' and will not
be saved from the rigor of the provisions by taking shelter of the 2nd
exception to it. Let us first see if the appellant company is covered by the
main part of the definition of 'Dealer'. As noted hereinabove, for this, a
person must carry on the business of purchase or sale of commodities etc. From
the above definition, it also emerges that mere storage will not suffice so as
to fall within the definition of 'Dealer'. The storage must be for sale as is
clear from the expression 'storage for sale'. In this case, the learned senior
counsel for the appellant company has argued that the commodities were only
stored with the appellant company and there was no sale to the general public.
However, from the agreement entered into by the appellant company with the
manufacturing company, we find certain clauses, which give the clear impression
that the appellant company was carrying on the business of purchase and sale
and that it was not a mere storage depot of the manufacturing company but all
the transactions were carried on a principal to principal basis. Some of the
relevant clauses are as under: - "AND WHEREAS the Distributor has
approached the Company to purchase in wholesale quantities the products
processes by or on behalf of the Company 2.The Distributor shall place purchase
orders/indents from time to time on the Company with regard to the quantity of
the products which the Distributor desires to purchase from the Company.
3.The Distributor shall purchase the products at the rates which will be
fixed by the Company from time to time.
4. Sales Tax, Excise and other taxes if any levied on delivery of the
products to the Distributor shall be borne by the Distributor as an extra
charge.
5. It is expressly agreed that the basis of all transactions between the
Company and the Distributor in pursuance of this agreement shall be on a
principal to principal basis and that nothing in this agreement shall
constitute or be deemed to constitute either party as the agent of the other.
8(d) The Distributor undertakes that in respect of supplies to be made by it
to the distributors customers/dealers, it shall not charge prices exceeding the
prices recommended by the Company."
Therefore, considering the fact that more than 5 kilolitres of engine oil
was found in the premises of the appellant company and reading the agreement as
a whole, in particular, the clauses quoted hereinabove, we have no doubt in our
mind that the appellant company squarely falls within the main part of the
definition of 'Dealer'. In this view of the matter, we affirm the findings of
the High Court that the appellant company is covered by the main part of the
definition of 'Dealer'.
8. The significance, if any, of the argument of the learned senior counsel
for the appellant company that 'no sales were made to the general public' will
be considered by us later. In this context, let us first see if the appellant
company falls within the 2nd exception to the definition of 'Dealer'. The 2nd
exception provides that 'Any oil company producing or storing Kerosene, Diesel
(High Speed Oil), Petrol (Motor Spirit), cooking gas, or engine oil in its
storage depot or installation wherefrom no sales are made to the general
public' shall not fall with in the definition of dealer.
The reasons given by the High Court in support of its finding that the
appellant company does not fall within the purview of this exception are that
first, this exception applies only to the Oil company and secondly, the use of
the term 'its' in the exception means that the storage depot or installation
should belong to the oil company and not any storage depot or installation. The
learned senior counsel for the appellant company argued that an extended
meaning should be given to this exception and that the High court has given
unwarranted importance to the term 'its'.
We have already noted the two decisions of this court relied upon by the
learned senior counsel for the appellant company in support of this submission
herein earlier. In this regard, we would say that admittedly, the appellant
company is not an oil company, which in this case is Castrol India Ltd.
(manufacturing company). The 2nd exception, as rightly held by the High Court,
applies only to an oil company.
By this we mean that what is exempted through this provision is the Oil
company if it satisfies the ingredients laid down in that exception and not the
storage depot or installation. It is not the case of the appellant company that
it is an Oil company and therefore should be covered by this exception.
The appellant company is only trying to establish that it is merely a
storage depot or installation wherefrom no sales were made to the general
public and therefore, although, it did not belong to the oil company, it should
nevertheless be given the benefit of this exception. We are unable to agree
with this submission of the learned senior counsel for the appellant company.
Admittedly, the term 'its' refers to the installation or storage depot of the
oil company and we would desist from giving the same an extended meaning for
two reasons. First, as rightly held by the High Court, an exception must be
construed strictly and in that view of the matter, we cannot interpret the same
to add something to it by implication. Secondly and in our view, more
importantly, by doing that, we would be ignoring the clear intention of the
legislature. This is because if we compare the erstwhile definition of
'Dealer', as reproduced herein earlier, with the amended definition, it is
pellucid that the intention of the legislature was to exclude people like the
appellant company from the purview of the exception. We may add here that we
may have accepted the contention of the appellant company if the definition of
'Dealer' had not been amended in 1998 in the manner indicated herein earlier.
We may also have given an extended meaning to the term "its" but this
would militate against the clear intention expressed by the legislature by
bringing about the said amendment. This was not the case in the two decisions
of this court relied upon by the learned senior counsel for the appellant
company and in fact, in those decisions, the language of the Act permitted
liberal interpretation. For this reason, these two authorities cannot be of any
help to the appellant company. It is true that no sales were made from the
storage depot of the appellant company to the general public. But from a plain
reading of clause 8(d) of the agreement, as quoted herein earlier, it is
apparent that sales were made by the appellant company to its
customers/dealers. The agreement clearly shows that the appellant company,
although termed as a Distributor, essentially did what 'Dealers' do. The terms
'Dealer' and 'Distributor' can be used interchangeably. However, we should not
engage ourselves in the discussion whether any difference does exist between
the two. Instead, we should try to see the substance of what was happening in
the premises of the appellant company. From the agreement, it is clear that the
appellant company, as noted hereinabove, was purchasing the commodities from
the manufacturing company, stocking them for sale and selling them to its
customers/dealers and was not merely storing them as alleged.
Therefore, the appellant company was not merely storing the commodities but
purchasing the commodities, selling it at the price prescribed by the
manufacturing company and also earning profit, by whatever name called.
9. Let us now take up the second question for our consideration. If we look
at Clauses 3(1), 3(2), 3(3) and 6(1) of the order of 1977, the clear
requirement is that for their violation, one must be a 'Dealer' as defined in
Clause 2(a). In this view of the matter and having come to the conclusion that
the appellant company is a 'Dealer', by whatever name called, the High Court
and the Collector had rightly held that the appellant company had violated the
said clauses. The reason given by the Sessions Judge for holding the appellant
company not liable cannot be accepted because we find from the judgment of the
Sessions Judge that it has relied on wrong definitions to reach that
conclusion. The Sessions judge relied on the definition of "Trader"
as given in M.P. Govt. Department of civil Supply of Food and Protection of
Consumer, Ministry Ballabha Bhawan Bhopal Notification No.
F.one/26/98/29/1 dated 10.9.98. The definition of 'Trader' and the
exceptions to it are different from the definition of 'Dealer' and its
exceptions. We are only concerned with the amended definition of 'Dealer' in
this appeal and as noted herein above, after comparing the erstwhile definition
of 'Dealer' and the amended definition of 'Dealer', it is pellucid that the
intention of the legislature was to exclude people like the appellant company
from the purview of the exception. Faced with this situation, the learned
senior counsel for the appellant company argued that the principle of Mens Rea
should be applied in this case and it should be held that since the appellant
company had no intention to sell the commodities, it should not be held guilty.
He relied on wherein it was held that an offence under Section 7 of the Essential
Commodities Act, for breach of Section 3 of the Madhya Pradesh Food grains
Dealers Licensing Order, 1958, necessarily involved a guilty mind as an
ingredient of the offence. It was further held in that decision that
considering the scope of the Act, it would be legitimate to hold that an
offence under Section 7 of the Act was committed by a person if he
intentionally contravened any order made under Section 3 of the Act and that
the object of the Act would be best served and innocent persons would also be
protected from harassment if Section 7 was so construed. Mr. Mohta strongly
relied on the remarks made by the High Court in paragraph 8 of the impugned
judgment to the effect that no sales were made by the appellant company to the
general public. From the clauses of the agreement, as quoted herein above, and
in view of our discussions made hereinabove, we must come to the conclusion
that the appellant company was at least indulging in the activity of purchase
and sale of lubricant oil. In Nathulal's case [supra], the dealer had made an
application for a licence under the order of 1958 and was under a bona fide
impression that the licence had been issued to him though not actually sent to
him and since the rejection of the licence was not communicated to him, he had
stored the food grains in his godown. In these circumstances, it was held that
since he had not intentionally contravened the provisions of Section 7 of the
Act, he should be held not guilty. This case is distinguishable on facts from
our case. Let us now see if the appellant company in the instant case had any
such bona fide impression. It is the averment of the appellant company that it
had applied for a licence and it is not in dispute that the appellant company
did not get any licence under that order. It was claimed by the appellant
company that its application was pending.
Therefore, it would be wrong to say that the appellant company had any bona
fide impression in this case that it was granted a licence.
10. Even otherwise, as regards the finding in the impugned judgment that the
goods were not sold to the general public, relying on which the learned senior
counsel for the appellant company has contended before us that it was not
selling goods to the general public but was only an authorized distributor of
the commodity to the traders, we would make two points.
First, the definition of 'Dealer' does not specify that to be a 'Dealer',
the goods must be sold to the general public. Secondly, if we look at the 2nd
exception to the definition of 'Dealer', it says that an Oil company producing
or storing kerosene diesel etc. in its storage depot or installation wherefrom
no sales are made to the general public would not be a 'Dealer'. With regard to
this exception, we have already noted herein earlier that this exception
applies only to the Oil company.
Admittedly, the appellant company is not an oil company and neither is it
the case of the appellant company that it is an oil company.
Therefore, looking at the main part of the definition of 'Dealer', it is
pertinent to note that it nowhere requires as one of its ingredients that to be
a 'Dealer', the commodities should be sold to the general public. The very idea
of 'sale to the general public' finds mention for the first time in the 2nd
exception. Does that mean that we should include this aspect i.e. 'sale to the
general public' as an ingredient of the main definition. We are afraid that it
is not permissible for us to do that. In this regard, we may note that the
function of a proviso or an exception is that it qualifies the generality of
the main enactment by providing an exception and taking out as it were from the
main enactment a portion which but for the proviso would fall within the main
enactment.
Ordinarily it is foreign to the proper function of the proviso to read it as
providing something by way of an addendum. In Madras &
Municipality [AIR 1944 PC 71], it was held as under: - "Except as to
cases dealt with by it, a proviso has no repercussion on the interpretation of
the enacting portion of the section so as to exclude something by implication
which is embraced by clear words in the enactment."
Further, as stated by Lord Watson, if the language of the enacting part of
the statute does not contain the provisions which are said to occur in it, you
cannot derive these provisions by implication from a proviso." [See
Assurance Co., (1897) AC 647, p. 652 (H.L.)] The reason behind giving the above
cases on interpretation of provisos and exceptions is to drive home the point
that in the present case, admittedly, a 'Dealer' may be any person, whether he
sells commodities to the general public or not. It is only the exception, which
provides that an oil company storing its goods in its storage depot or installation
wherefrom no sales are made to the general public shall not be a 'Dealer'.
'Sale to general public' therefore cannot be taken to be an ingredient of the
main definition and the exception is applicable only to an oil company. In the
present case, the appellant company was selling commodities to its customers or
dealers, may be not to the general public, but in view of the last preceding
discussion, this argument of the learned senior counsel for the appellant
company does not hold any water. Furthermore, the exception, as noted herein
earlier applies only to the oil company and on this count also, the appellant
company cannot claim the benefit of the exception.
11.For the reasons aforesaid, this appeal is dismissed. There will be no
order as to costs.
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