*THE HONOURABLE SRI JUSTICE P.S.NARAYANA +WRIT PETITION NO.26987 of 2007 %31-12-2007 # Md.Mahmood Ali …Petitioner Vs. $ The Deputy Collector and Tahsildar, Hayathnagar, Ranga Reddy District and 2 others. …Respondents !Counsel for the petitioner :Sri V.H.V.R.R.Swamy ^Counsel for respondents : Sri Government Pleader for Civil Supplies. <Gist : >Head Note: ?Cases Referred: 1.1994 (6) SCC 205 2.1996 (2) An.W.R. 441 3 1997(1) ALT 171 (D.B.) 4.1996(3) ALT 673 (D.B.) 5.2000(1) ALT 239 (F.B.) 6.(2000) 3 SCC 306 HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION NO. 26987 of 2007 Date: 31-12-2007 Between: Md.Mahmood Ali ..... PETITIONER AND The Deputy Collector and Tahsildar, Hayathnagar, Ranga Reddy District and 2 others. .....RESPONDENTS HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION No. 26987 of 2007 O R D E R: 1. This Court issued Rule Nisi on 20-12-2007 and heard Sri V.H.V.R.R.Swamy, learned counsel representing the petitioner, and the learned Government Pleader for Civil Supplies at length and at the request of both the counsel, the matter is being disposed of finally. 2. This writ petition is filed praying for issuance of a writ of Mandamus declaring the action of respondents in seizing the lorry bearing No. AP 13-T 5402 dated 14-11- 2007 as null and void and consequently issuance of proceedings under Sections 6-A and 6-B of the Essential Commodities Act, 1955 (for short ‘the Act’) in Case No. A7/828/2007 dated 30-11-2007 served on 13-12-2007 as null and void and to pass other suitable orders. 3. Sri Swamy, learned counsel representing the petitioner, had taken this Court through the contents of the affidavit filed in support of the writ petition and had pointed out to the relevant provisions of the Act and would maintain that on a careful reading of the show cause notice, it is clear that violation of the contract agreement alone had been referred to, even otherwise diversion of the vehicle had been specified as having taken halt at the petrol bunk. The learned counsel in elaboration had pointed out to the relevant portion of the impugned proceedings and also would maintain that what are the contraventions had not been specified. The power of seizure to be exercised when there is only contravention of a particular control order, even otherwise notice to be given to the owner as contemplated under Section 6-B of the Act. The learned counsel also had taken this Court through Section 6-A and Section 3 of the Act as well. The seizure of vehicle would not arise when a Stage-I contractor is said to have contravened the conditions of the agreement. The power of seizure can be exercised only where either the provisions of the Act are contravened or the specific control order as such had been contravened and therefore, the Rice Levy Procurement Order, which is being relied on, is not applicable to the facts of the case at all. The learned counsel also explained what a reasonable belief may mean. The counsel relied on several decisions to substantiate his submissions. 4. The learned Government Pleader for Civil Supplies would maintain that the rice is meant for Public Distribution System and the same was being illegally transported. The power of seizure is there when there is contravention of provisions of the Act referred to above and the relevant control orders. The learned Government pleader for Civil Supplies placed a strong reliance on clauses 20, 7 and 14 of the Rice Levy Procurement Order. Further the learned Government pleader would maintain that if the provisions of Sections 3, 6-A of the Act, carefully read in a way, the present writ petition is a premature one since the show cause notice was issued only in relation to the immediate steps to be take in relation to the essential commodity and hence, the vehicle had not been referred to. The confiscation stage did not reach till now and further the release application of the vehicle had already been moved. Further the counsel would submit that the decisions, relied upon by the counsel for the writ petitioner are distinguishable on facts and are not applicable to the facts of the present case. The leaned counsel also placed reliance on certain decisions. 5. The petitioner is the owner of the lorry bearing No. A.P.13-T 5402. Sri Sashidrar Reddy is the stage-I transport contractor, who hired the vehicle of the petitioner for the purpose of transport of rice from depot FCI Cherlapally, Ranga Reddy District to the MLS point Ramanthapur on a rent of Rs.1,000/-. On 14-11-2007 stage-I contractor loaded the lorry with stocks of PDS rice of 153.65 quintals and dispatched the lorry at 4.30 P.M. and the same was seized by the respondent on 14- 11-2007 at 6.00 PM. at Peda Amberpet village, National High Way No.9. At the time of seizure, the lorry was halted near petrol bunk. The first respondent seized the vehicle, conducted panchanama and submitted report under sections 6-A (1) of the Essential Commodities to second respondent on 17-11-2007. He alleged that the driver of the lorry with a mala fide intention diverted the rice meant for Public Distribution System into black market and at present the lorry has been kept in Hayatnagar Police Station. The first respondent seized the lorry and handed over the same to the Hayatnagar police and as on today, no orders had been passed. It is also stated that the petitioner filed an application to second respondent-Joint Collector, Ranga Reddy District, Hyderabad praying for release of lorry bearing No.AP 13-T 5402 on 27-11-2007. As the second respondent cannot initiate proceedings under Section 6- A of the Act and as there is no contravention of any of the control orders made under Section 3 of the Act, the second respondent has no power or authority to confiscate the seized rice as the rice belongs to the Government and the petitioner being the owner of the vehicle transporting the vehicle from FCI Godown to Ramanthapur MLS point. Several decisions also had been relied upon in this regard and appropriate releifs had been prayed for as already specified above in the present writ petition. 6. The report under Section 6-A (1) of the Act reads a hereunder: Report under Section 6-A (1) of Essential Commodities Act, 1955 1. Section of law contravened : Contravention of provisions of the E.C. Act 1955 and the AP PDS (Control) Order, 2001. 2. Date of Inspection : 14-11-2007 3. Date of 6-A report : 17-11-2007 4. Name of the Inspecting Officers : 1. Sri A.Nagendra, Dy.Collector & Tahsildar,Hayathnagar Mandal, R.R.District. 5. Name of the respondent : 1. Sri Md.Fareed, Driver of the Lorry bearing No.AP 13 T 5402 2. Sri Md.Mahamood, Owner of the Lorry bearing No. AP 13 T 5402 3. Sri P.Shashidar Reddy, Stage-I, Transport Contractor, R.R.District. 6. Property seized : 1. 315 bags @ 49 Kgs each of PDS rice Total: 153,65 Qtls Rs.1,38,000/- 2. Lorry bearing No. AP 13 T 5402worth of Rs.3,00,000/- -------------------- Rs.4,38,000/- -------------------- 7. Whether the seized property has : Handed over the seized rice been shifted and the address of the stocks to Smt.N.Nagalaxmi, person with whom it is kept for Asst.Gr-II incharge of MLS safe custody Point, Hayathnagar and handed over the empty lorry bearing No.AP 13 T 5402 to the Station House Officer, Hayatnagar for Safe custody until further orders received from the Collector(CS), R.R. District. 8. Records Seized : --- 9. Name of the Panchas : 1. Sri Jurka Yadaiah, S/o. gandaiah Age 42 Yrs., R/o 1-121,Kuntloor, Occ: Business. 2. Sri Kodanda Rajendra Prasad, S/o Swamy, Age: 30 Yrs., R/o 4-7-44, Hayatnagar, Occ:Pvt.Employee. 3. Sri Padi Chandu, S/o.Lingamaiah, Age 25Yrs., R/0 4-7-36, Hayathnagar, Occ:Labour. 10. Name of the witnesses : 1.Sri K.Venkatesh 2. Sri N.Laxmaiah 11. Facts of the case : In the Court of the Collector (CS): Rangareddy District. Sir, On receipt of credible information about diversion and illegal transportation of FCI Rice meant for Public Distribution System on the National Highway leading to Vijayawada and as per the instructions received from the Joint Collector-II, Ranga Reddy District. I, along with the Assistant Supply Officer, Circle-II, Uppal, Circle-III, Saroornagar and the Deputy Tahsildar (Enf), Hayathnagar and Ibrahimpatnam have proceeded to Pedda amberpet village of Hayathnagar Mandal on 14-11-2007 at about 6.00 PM and summoned the above mediators. After introducing our identity, explained them about the information received and purpose of our visit and requested them to act as Panch Witnesses, which they agreed willingly. After that we all proceeded to the out skirts of the Pedda Amberpet Village on the National Highway No.9 and while checking the lorries which were passing on the National Highway, we noticed a lorry bearing No.AP 13 T 5402 with the load covered by the Tarpalein was halted near a Petrol Bunk. We all approached the said lorry and on noticing us one person jumped down from the lorry’s cabin and fled away from the scene. We made our efforts to catch hold that person, but our efforts were proved futile. Then we verified cabin of the lorry for trace out documents pertaining to the load, but at the time of verification we found no documents, permits, Registration Certificates etc. Further no person was available near by to the said lorry. Though we waited there for some time, no body come forward claiming the vehicle and stock. After that we noticed that there was rice bags load in the lorry, which was covered by Tarpalein and tightened with the ropes. We opened the tapalein in the presence of mediators and verified that stocks and found that there were PDS rice bags in the lorry. The bags were machine stiched and having FCI emblem with lot numbers, ACK numbers and Rice Mill Addresses. Thus prima facie, it is established that the rice load in Lorry bearing No.AP 13 T 5402 was being illegally transported without any Way Bill, truck chit, Permit or any valid document contravening the provisions of the EC. Act, 1955 and the A.P.PDS (Control) Order, 2001 for diversion into black market. As I have reason to believe that there were contraventions as stated about, I have seized the lorry baring No.AP 13 T 5402 along with PDS rice bags and handed over the seized property to the Station House Officer, Hayathnagar for temporary safe custody, as the near by MLS Point was not available at that time and obtained receipt from the Station House Officer. After that I called upon the in charge of MLS Point, Hayathnagar on Smt. N.Nagalaxmi, Assistant Grade-II. Then, requested the Station House Officer, Hayathnagar to handedover the rice stocks along with Lorry to the Deputy Tahsildar (Enf), Hayathnagar. In turn the Inspecting officials have taken over the lorry bearing No.AP 13 T 5402 from the Station House Officer, Hayathnagar and proceeded to the MLS Point to the Hayathnagar. In turn the Inspecting officials have taken over the lorry bearing No.AP 13 T 5402 from the Station House Officer, Hayathnagar and proceeded to the MLS Point to the Hayathnagar. The in charge of the MLS point has unloaded the rice stocks from the lorry and wighed every bag with the help of hamalies on counting and physical weightment it was found that there were 315 bags weighing 153.65 Qtls of PDS rice available. Further, it was noticed that all bags were machine stiched and printed with FCI emblem lot numbers /ACK numbers. We handedover the above rice stocks to Smt.N.Nagalaxmi, Assistant Grade-II, In charge of MLS Point, Hayathnagar for safe custody under cover of Panchanama, until further orders received from the Collector (CS) Ranga Reddy District and obtained receipt from her in token of receipt of PDS rice stock will full details of lot numbers, ACK numbers etc. We have also drawn the samples of Rice randomly from the rice bags in the presence of mediators duly sealed them in the cartool bags. Further I have handedover the empty lorry bearing No.AP 13 T 5402 to the Station House Officer, Hayathnagar for safe custody, until further received from the Collector (CS) Ranga Reddy District under proper acknowledgment. The value of the seized property is worked out as follows 1. Lorry bearing No.AP 13 T 5402 worth Rs.3,00,00/- 2. PDS Rice bags weighing 153-65 Qtls containing in 315 bags worth Rs.1,38,000/- (Total worth of Rs.4,38,000/-) During the course of further investigation about the above seized stocks, we obtained the details of the loads dispatched on 14-11-2007 from the Depot Manager, FCI, Cherlapally, Ranga Reddy District and the movement in charge of APSCSC Limited at the above godown. As per the statement furnished by the Depot Manager, FCI, Cherlapally, it reveals that the lorry bearing No.AP 13 T 5402 was loaded with 315 bags of AP Rice and dispatched from the godown at 4-15 PM with a destination of Ramanthapur MLS point under truck chit No.2211. Further as per the statement furnished by the Movement in charge of APSCSC Limited, it reveals that the said lorry was dispatched from the Godown point at 4-35 PM on 14-11-2007 with truck chit number 27839 to Ramanthapur MLS point as destination. As per the truck wise movement particulars of rice moved on 14-11-2007 obtained from the District Manager, APSCSC Limited, Ranga Reddy District, it reveals that the said lorry was not reached to the MLS point, Ramanthapur and as per the stock receipt register Xerox extract furnished by the MLS point incharge, Ramanthapur also reveals that the above load of rice was not reached the MLS point. Thus, it is clearly proved that the driver of the lorry with a mala fide intention to divert the rice stocks meant for PDS into black market only, proceeded towards Pedda Amberpet village of Hayathnagar Mandal, R.R. District instead of destinated place i.e., MLS point, Ramanthapur. Hence, it is prayed that action may kindly be initiated against the respondents under Section 6-A(1) of the E.C. Act, 1955 and to pass orders for confiscation of the entire seized stocks in favour of the State Government. Further, it is prayed that pending final orders under Section 6-A (1) of E.C. Act, 1955, interim disposal orders under Section 6-A (2) of E.C. Act, 1955 may be issued as deemed fit as the seized stocks are perishable in nature. 7. It is pertinent to note that in the report itself it is specified that on receipt of credible information about diversion and illegal transportation of FCI rice meant for Public Distribution System on the National highway leading to Vijayawada and as per the instructions received from Joint Collector-II, Ranga Reddy District, he along with the Assistant Supply Officer, Circle-II, Uppal, Circle-III, Saroornagar and the Deputy Tahsildar (Enf), Hayathnagar and Ibrahimpatnam had proceeded to Pedda Amber village of Hayathnagar Mandal on 14-11-2007 at about 6.00 PM and summoned the above mediators. Further it is specified that prima facie, it is established that the rice load in lorry bearing No.A.P.13-T 5402 was being illegally transported without any way bill, truck chit, permit or any valid document contravening the documents of the Act and A.P.PDS Control Order 2001 for diversion into black market. Further, it clearly reveals that the said lorry was not reached to the MLS point, Ramanthapur and as per the xerox extract of the stock receipt register furnished by the MLS point in-charge, Ramanthapur also the above load of rice did not reach the MLS point. 8. The applications moved by the writ petitioner and by the Sasidhar Reddy for release of the vehicle in question are also placed before this Court. Strong reliance was placed on the wording employed in the show cause notice dated 30-11-2007 by the Joint Collector-II, Ranga Reddy District under Section 6-B of the Act and the same reads as hereunder: IN THE COURT OF THE JOINT COLLECTOR-II RANGAREDDY DISTRICT NOTICE UNDER SECTION 6-B OF THE E.C.ACT, 1955. 6-A CASE NO.A7/828/2007 Dated:30-11-2007 Between: The Deputy Collector & Tahsildar, Hayathnagar Mandal, Ranga Reddy District …Complainant/Petitioner and 1. Sri md.Fareed, Driver of the lorry bearing No.AP 13 T 5402. 2. Sri Md.Mahamood, Owner of the lorry bearing No.AF 13 T 5402. 3. Sri P.Shashidar Stage-I, Transport Contractor, R.R.District. ….Respondents. To The above named Respondent. Whereas the complainant has seized 153.65Qtls of PDS Rice, from your possession and filed a report dated 17-11-2007 under Section 6-A of Essential Commodities Act and for contravention of conditions of Contract Agreement as Stage I Contractor for enrooting the vehicle and requested for confiscation of the same in favour of the Government. Upon perusing the same there are reasons to believe that, the prima facie of diversion of Essential Commodities is proved. Therefore, the following charges have been leveled against the Respondent. Charge1: It is found that being a stage 1 contractor you have colluded with the owner and the driver of the lorry bearing No.AP 13 T 5402, you have enrooted the vehicle along with 153.65 Qtls of PDS Rice instead of giving delivery at MLS point Ramanthapur for black marketing the PDS rice and respondent No.3 being a Stage-I Transport Contractor you have violated the Contract agreement as Stage-I Contractor read with the provisions of the E.C. Act, 1955. Since there are sufficient grounds to proceed under Section 6-a of the Essential Commodities Act, 1955 you are hereby directed to submit your explanation in writing within 15 days from the date of receipt of this notice to show cause as to why the seized stocks should not be confiscated under Section 6-A of Essential Commodities Act, 1955. You are further directed to appear before this Court on 19-01-2008 at 3.00 P.M. before Joint Collector-II, R.R.District at Court Hall, Collectorate, R.R.District either in person or through Advocate to adduce evidence in support of your written explanation. Sd/- Solomon Arokia Raj Collector (C.S.) Ranga Reddy District. //By Order// Assistant Supply Officer, DSOs Office, R.R.District. 9. Submissions at length were made that the seizure of the lorry had not been referred to in the show cause notice at all and hence, even on this ground, the vehicle should be released by this Court. 10. As can be seen from the averments made in the affidavit filed in support of the writ petition and also the proceedings placed before this Court, certain factual controversies are involved in this matter and this Court as a writ Court cannot express any opinion relating to these aspects. Strong reliance was placed on Sections 3, 6-A 6-B of the Act and the said provisions read as hereunder:- Section 3:- Where any person sells any essential commodity in compliance with an order made with reference to clause (f) of sub-section(2), there shall be paid to him the price therefore as hereinafter provided— (a) where the price can, consistently, with the controlled price, if any, fixed under this Section, be agreed upon the agreed price; (b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any: (c) where neither clause (a) nor clause (b) applies, the price, calculated at the market rate prevailing in the locality at the date of sale. Section 6-A:- 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 : Section-6-B : Issue of show-cause notice before confiscation of Essential Commodity:- (1) No order confiscating any essential commodity, package, covering, respectable, animal, vehicle, vessel or other conveyance shall be made under Section 6-A unless the owner of such essential commodity, package, covering receptacle, animal, vehicle, vessel or other conveyance or the person from whom it is seized— (a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the (essential) commodity, package, covering, receptacle, animal, vehicle, vessel or other conveyance); (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation; and (c) is given a reasonable opportunity of being heard in the matter. (2) Without prejudice to the provisions of sub-section (1), no order c9onfisating any animal, vehicle, vessel or other conveyance shall be made under Section 6-a if the owner of the animal, vehicle, vessel or other conveyance proves to the satisfaction of the Collector that it was used in carrying the essential commodity without the knowledge or conveyance of the owner himself, his agent, if any, and the person in charge of the animal, vehicle, vessel or other conveyance and that each of them had taken all reasonable and necessary precautions against such use.) (3) No order confiscating any essential commodity, package, covering receptacle, animal, vehicle, vessel or other conveyance shall be invalid merely by reason of any defect or irregularity in the notice given under clause(a) of sub-section (1), if, in giving such notice, the provisions of that clause have been substantially complied with. 11. Certain submissions were made in relation to Clause 2(d), clause 7 and Clause 14 of the Rice Levy Procurement order as well. In N.Nagedra Rao & Co. v. State of A.P.[1] the Apex Cour at para 5 observed - 5. Prior to adjudicating upon the legal issues, it appears appropriate to examine in brief the objective of the Act, the provisions dealing with search, seizure and confiscation and the nature of their powers and manner of its exercise as it shall assist in determining if the statutory authorities are responsible for any loss or damage to the stocks and, if so, to what extent. The Act was enacted in the interest of the general public for the control of the production, supply and distribution of essential commodities and trade and commerce. In M/s. Diwan Sugar and General Mills (Pvt.) Ltd. v. Union of India, AIR 1959 SC 626 : 1959 (2) SCR 123, It was held that the prime object of the legislation was to secure availability of essential commodities to the general public at fair prices and to protect their interest by way of equitable distribution. "Essential commodity" under Cl. (a) of S. 2 of the Act means any of the commodities mentioned therein. It extends to such varied items as cattle fodder, coal, component parts and accessories of automobiles, cotton and woollen textiles, foodstuffs, iron and steel, paper, petroleum, raw cotton, jute and any other class of commodity notified by the appropriate Government. S.3 is the main provision directed towards securing equitable distribution of the essential commodity and its availability at fair prices. To achieve this objective, its various sub-sections confer powers on Government to issue orders regulating or even prohibiting production, supply and distribution of such goods. Cl. (j) of sub-sec. (2) of S. .3 empowers the Government to make any provision for any incidental or supplementary matter including in particular, the entry, search or examination of such premises, aircraft, vessels, vehicles etc. to make seizure by a person authorised to make such entry, search or examination. But the power in respect of the articles has been made subject to reasonable belief that a contravention of the order has been, is being, or about to be committed. The reach of the sub-section is very wide as it empowers the person authorised to seize even if any contravention is about to be committed. The expression 'reason to believe' has been interpreted by this Court to mean that even though formation of opinion may be subjective but it must be based on