THE HON’BLE SRI JUSTICE K.G. SHANKAR Crl.R.C.No.1699 of 2004 Date: 24.06.2011 Between: Kota Narasimha Rao … Petitioner AND State, Inspector of Police, VCCSD, Cuddapah, Rep.by Public Prosecutor, High Court, Hyderabad. … Respondents THE HON’BLE SRI JUSTICE K.G. SHANKAR Crl.R.C.No.1699 of 2004 ORDER: The revision petitioner is the Manager of Sri Sai Manikanta Traders, Kadapa. The Vigilance Department inspected the shop of the revision petitioner on 10.02.2000. They found variation of 200.25 quintals of paddy, 40.50 quintals of rice bran and 287.37 quintals of raw rice as shortage between the book balance and the ground balance. The Vigilance Department also found excess stock of 37 quintals of broken rice. Considering that the petitioner violated the Condition No.3 of Andhra Pradesh Scheduled Commodities Dealers (Licencing and Distribution) Order, 1982 (‘Control Order 1982’ for short) and Clause 16 (2) of A.P. Rice Procurement (Levy) Order, 1984 (‘Control Order 1984’ for short), the entire stock found in the shop worth Rs.14,17,405/- was seized. The Proceedings u/s.6-A of the Essential Commodities Act were initiated against the revision petitioner. The learned District Collector, after hearing the counsel for the revision petitioner held that the petitioner was guilty of violating the provisions of Control Order, 1982. He ordered for confiscation of 10% of the seized stock. 2. The petitioner, thereafter, preferred an appeal u/s.6-C of the Essential Commodities Act before the Principal Sessions Judge, Kadapa. The learned Sessions Judge confirmed the orders of the learned District Collector. He did not interfere with the confiscation order recorded by the District Collector. Hence, this revision. 3. It is the case of Sri J. Janaki Rami Reddy, learned counsel for the petitioner that the petitioner did not commit any violation of the Control Order and that the confiscation is improper. 4. Two charges were levelled against the petitioner by the District Collector. The charges were violating Condition No.3 of Control Order 1982 and contravening Clause 16 (2) of the Control Order, 1984. Through the order dated 18.05.2003, the learned District Collector found the revision petitioner guilty of violating Control Order 1982. There was no finding regarding the violation of Clause 16 (2) of the Control Order 1984. I, therefore, consider that the learned District Collector found the revision petitioner not guilty of violating of the provisions of the Control Order 1984. My consideration, therefore, is only regarding the violation of the provisions of the Control Order, 1982 by the revision petitioner. 5. The question is whether the revision petitioner violated the provisions of Clause (3) of Control Order, 1982. Inter alia, the learned counsel for the petitioner contended that there was variation between the ground balance and the book balance, since stock stored in another room was not verified by the Vigilance Authorities at the time of the inspection of the shop of the petitioner. The learned District Collector as well as the learned Principal Sessions Judge rejected this contention on the ground that the Vigilance Department would have verified such a room containing the stock. Added to it, neither the mediators report bore the fact that there was another room containing stock nor did the revision petitioner sign the mediator’s report declaring that stocks were available in another room. I, therefore, have no hesitation to agree with the observations of the learned District Collector and the learned Principal Sessions Judge that the defence of the petitioner that there was stock in another room and that had the stock in another room being considered, there would not have been any violation or the violation would have been within permissible limits was not sustainable. 6. Added to it, this is not a simple case where there is shortage of stock. This is a case where the petitioner was found to be in possession of excess stock of 37 quintals of broken rice apart from shortage of paddy, rice bran and raw rice. Stock being stored in another room would supply the necessary answer for the revision petitioner by way of explanation for the shortage of stock. But, it cannot furnish any cogent explanation for the excess stock. I, therefore, deem it appropriate to reject the contention of the learned counsel regarding the explanation offered by the petitioner in respect of variation in stocks. 7. The learned counsel for the petitioner drew my attention to the order of the Government of Andhra Pradesh, Food Civi Supplies & Consumer Affairs (CS. 1 (2) Department, in Memo No.961/CS.1(2)/2002, dated 27.03.2002 stating that Control Order 1982 applies to pulses only and did not apply to other commodities. The learned counsel for the petitioner contended that for the excess stock or shortage of stock relating to the rice or raw rice, paddy and rice bran, Control Order, 1982 has no application. It is pertinent to notice that the Memo issued by the Civil Supplies Department was in March 2002. The ride in the present case was on 10.02.2000. By 20.12.2000 it would appear that Control Order 1982 was not in force for rice and rice products also. It was only in the year 2002 that the Control Order was confined to pulses only. Consequently, the petitioner cannot be exempted from liability on the ground that the rice and rice products found with the petitioner do not form part of Control Order, 1982 and that the petitioner consequently was not guilty of violating Condition No.3 of the Control Order, 1982. The charge cannot be set-aside on the ground that the memo exempted rice products from the purview of the Control Order, 1982. 8. The petitioner was found to be in shortage of several stocks vis-à-vis book balance. He was also found to be in excess possession of broken rice. The learned counsel for the petitioner contended that even if there was difference in the book balance and the ground balance of the stock with the petitioner, mere difference of book balance and ground balance is not per se violation of the provisions of Control Order, 1982. 9. The charge levelled against the petitioner as charge No.1 is that the petitioner was in possessions of excess stock and shortage of stock of various varieties of rice and that the petitioner violated the Condition No.3 of Control Order, 1982, as he did not properly maintain the account books. 10. In N. Nagendra Rao & Co. v. State of A.P.[1] relied upon by the revision petitioner, the Supreme Court observed that rice seized by the Vigilance Department would be liable to be confiscated if the Collector is satisfied about the violation of Control Orders. The learned Public Prosecutor contended that not only the District Collector but the learned Principal Sessions Judge, Kadapa also considered that the petitioner violated the provisions of Control Order and that the confiscation order consequently is correct. However, the learned Public Prosecutor also proceeded on the presumption that the there was a ride and that there was variation between the stocks. This assumption is correct. On facts, there is no violation of the Control Order. At the outset, I agree with the contention of the learned Public Prosecutor that the petitioner was found to be in possession of the stock in respect of which there is variation between the book balance and the ground balance. The learned Public Prosecutor also proceeded on the assumption that the possession is tantamount to violation of the Control Order. The Supreme Court, however, held in the cited case that confiscation is permissible only when the Control Orders are violated which would be a question of fact. 11. In the present case, as already noticed, there is variation between the book balance and the ground balance. However, curiously, there is no allegation in the charge No.1 that the shortage was on account of the petitioner indulging in clandestine purchase or sale of essential commodity, nor was there a charge that the petitioner was indulging in black marketing. 12. In Dilip Kumar v. State[2] Dalva Subramanyam, J., observed that the confiscation of commodities merely on the ground that there are variances between the book balance and the ground balance is not sustainable unless there is specifically finding that the dealer was indulging in clandestine transaction of essential commodities. The learned Public Prosecutor contended that there was a clear finding by both the learned District Collector as well as by the Principal Sessions Judge that the petitioner was indulging in clandestine transactions. The finding of the learned District Collector and the learned District Sessions Judge in this regard cannot be accepted where there was no charge that the petitioner was indulging in clandestine business. As already pointed out, charge No.1 does not allege either that the petitioner was indulging clandestine transaction or was indulging in black marketing. In view of the judgment of the High Court of A.P., it is evident that confiscation is permitted if it is established that the variation was on account of either clandestine transaction or with a view to indulge in black market. 13. I, therefore, am constrained to agree with the contention of the learned counsel for the petitioner that the prosecution failed to show that the petitioner was indulging in black marketing in the absence of a specific charge and proof in that regard. 14. Where there was no charge, the question of proof that the petitioner was indulging clandestine transaction does not arise, so much so, the variation cannot be treated as violation of Condition No.3 of Control Order 1982. The finding of the learned District Collector and the learned Principal District Judge are not that the petitioner was indulging in clandestine transaction. The order of confiscation therefore is liable to be set aside. 15. Accordingly, this petition is allowed. It is found that the prosecution failed to establish that the petitioner is indulging in clandestine transactions and that the petitioner violated the terms and conditions of Control Order 1982. The confiscation consequently is bad. The orders of the District Collector and confirmed by the Principal Sessions Judge consequently are set aside. _______________ K.G. SHANKAR, J Date: 24.06.2011 Isn [1] AIR 1994 SC 2663 [2] 2004 (1) ALD (Crl.) 360 (AP)