SCA/5459/1996 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 5459 of 1996 To SPECIAL CIVIL APPLICATION No. 5460 of 1996 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= VADILAL INDUSTRIES LIMITED - Petitioner(s) Versus STATE OF GUJARAT & 1 - Respondent(s) ========================================================= Appearance : MR AC GANDHI for Petitioner(s) : 1, MS MANISHA SHAH for Respondent(s) : 1 - 2. ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI Date : 10/12/2008 COMMON ORAL JUDGMENT These petitions raise similar questions of law and facts and therefore, they are heard together and being disposed of by this common order. SCA/5459/1996 2/5 JUDGMENT One Vadilal Industries Ltd. has challenged the order dated 11.03.1996 passed by the Deputy Secretary (Appeals), Food and Civil Supply Department, Government of Gujarat, by which, while partially allowing the appeal of the petitioner, the Deputy Secretary still imposed confiscation of the goods worth of Rs.1,66,030/- which was 5 % of the total goods seized belonging to the petitioner. The petitioner is engaged in the business of export of ground-nuts. The authorities found discrepancies in the actual stock of the ground-nut shelled and unshelled as compared to the stock reflected in the register. The proceedings under the provisions of the Essential Commodities Act, 1955 (`the Act' for short) were, therefore, initiated by the Collector, Junagadh. The Collector, Junagadh in his order dated 07.07.1995 concluded that against the stock register showing 1,30,495 kg. unshelled ground nuts, there was excess 21,994 kg. He also found that against the register showing 1,93,777 kg of shelled groundnut, there was actual quantity of 1,69,816 kg at the site. In other words, he found that unshelled groundnut was in excess 21,994 kg and shelled groundnut in deficit to the extent of 23,961 kg. He therefore found that the petitioner had breached the provisions of the Gujarat Essential Articles (License Control and Stock Declaration) Order, 1981. He imposed penalty of confiscation of 25 % of the stock seized valued at Rs.8,30,154/-. The petitioner appealed against the said order before the Deputy Secretary, who as noted above, reduced the penalty to the extent of 5 % of the stock register. It is stated by the learned Counsel for the petitioner that during the pendency of the appeal, the seized stock was permitted to be released upon furnishing the bank guarantee. The question that calls for consideration is whether the Secretary SCA/5459/1996 3/5 JUDGMENT was justified in imposing the penalty of confiscation of 5 % of the quantity of the goods valued at Rs.1,66,030/- . Similarly, in Special Civil Application No.5460 of 1996, the same petitioner has challenged the similar order of the Secretary (Appeals), dated 23.01.1996 by which while partially allowing the appeal of the petitioner, the Secretary has reduced the penalty to the extent of 5 % of the seized goods valued of Rs.28,466/-. Since factual background is similar in this petition also, it is not necessary to repeat the same in this order. Having heard learned advocate Mr.A.C.Gadhi for the petitioner and learned AGP Ms.Manisha Shah for the respondents in both these petitions, I find that in the order dated 11.03.1996 passed by the Deputy Secretary (Appeals) which is challenged in Special Civil Application No.5459 of 1996 wherein the Deputy Secretary (Appeals) essentially upheld all the contentions of the petitioner believing that even in the stage of sampling, there were certain inaccuracies. He, in fact, concluded that on the basis of such calculation, it would not be appropriate to confiscate the goods. Before him, it was also contended that ground nuts weighing 16,764 kg which was in small size (inferior quality) was considered as unshelled ground nuts and was accounted in the stock of the shelled groundnuts and not in the unshelled groundnuts. This was the main reason for finding excess stock in unshelled groundnuts and short fall in the stock of shelled groundnuts. This contention was upheld by the Deputy Secretary holding that this quantity of 16,764 kg of inferior groundnuts was not accounted for. Despite this conclusion, he SCA/5459/1996 4/5 JUDGMENT eventually, nevertheless, imposed penalty of 5 % of confiscation of the stock seized. I am unable to see logic behind the conclusion reached towards the end of the order. If the petitioner had demonstrated before the Deputy Secretary as held by him that there was inconclusive proof for discrepancy in the stock and the confiscated quantities and there was no mens rea on the part of the petitioner, thereafter, there was no justification for imposing any penalty. In fact, as noted above, the Deputy Secretary upheld the contention of the petitioner that groundnuts weighing 16,764 kg was not accounted for at all. If this was given benefit as was already been done by the Deputy Secretary, discrepancies in the unshelled and shelled groundnuts would be reduced to only few thousand kilogramme against the total quantity exceeding One Lakh kg in both categories. This coupled with the finding of the Deputy Secretary that the methodology employed was not entirely reliable would convenience me that the penalty of even 5 % was wholly unjustified. Since the facts are similar in Special Civil Application No.5460 of 1996, it is not necessary to discuss them in detail in this order. Suffice it say that for similar reasons, I find that the Deputy Secretary committed error in the said case. In the result, both these petitions are allowed. The impugned orders passed by the Deputy Secretary in each of the petition, are set aside. The bank guarantees furnished by the petitioner shall be discharged. SCA/5459/1996 5/5 JUDGMENT Rule is made absolute. ( Akil Kureshi, J. ) kailash, p.s