*THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY + WRIT PETITION No.17950, 17957, 17970, 17979, 17994, 18003, 18009 and 18017 of 2008 % Dated: 26-08-2008 # Mekala Thimmaraju & others … Petitioners (in WP.No.17950 of 2008) Yannam Seshi Reddy … Petitioner (in WP.No.17957 of 2008) Koduri Anjaneyulu & others … Petitioners (in WP.No.17970 of 2008) D. Veeraswamy & others … Petitioners (in WP.No.17979 of 2008) M. Prabhudas & others … Petitioners (in WP.No.17994 of 2008) A. Siva Reddy & others … Petitioners (in WP.No.18003 of 2008) G. Ramakrishna Reddy & others … Petitioners (in WP.No.18009 of 2008) Chinni Sivannarayana & others … Petitioners (in WP.No.18017 of 2008) VERSUS $ The Govt., of A.P., rep., by its Secretary, Civil Supplies Department, Secretariat Buildings, Hyderabad & others. … Respondents (in all writ petitions) ! Counsel for Petitioner: Sri V. Venkatarami Reddy, Sri M. Sudhir Kumar, Sri Madhava Rao Nalluri Sri K.V. Raghuveer and Sri Nimmagadda Satyanarayana ^Counsel for the Respondents: GP for Civil Supplies <GIST: > HEAD NOTE: ? Cases referred 1. AIR 1994 SC 2663 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY SIXTH DAY OF AUGUST, TWO THOUSAND EIGHT ONLY PRESENT: THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.17950, 17957, 17970, 17979, 17994, 18003, 18009 and 18017 of 2008 Between: Mekala Thimmaraju & others … Petitioners (in WP.No.17950 of 2008) Yannam Seshi Reddy … Petitioner (in WP.No.17957 of 2008) Koduri Anjaneyulu & others … Petitioners (in WP.No.17970 of 2008) D. Veeraswamy & others … Petitioners (in WP.No.17979 of 2008) M. Prabhudas & others … Petitioners (in WP.No.17994 of 2008) A. Siva Reddy & others … Petitioners (in WP.No.18003 of 2008) G. Ramakrishna Reddy & others … Petitioners (in WP.No.18009 of 2008) Chinni Sivannarayana & others … Petitioners (in WP.No.18017 of 2008) AND The Govt., of A.P., rep., by its Secretary, Civil Supplies Department, Secretariat Buildings, Hyderabad & others. … Respondents (in all writ petitions) Counsel for the petitioners : Sri V. Venkatarami Reddy, Sri M. Sudhir Kumar, Sri Madhava Rao Nalluri Sri K.V. Raghuveer and Sri Nimmagadda Satyanarayana Counsel for the respondents: GP for Civil Supplies This Court made the following: THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.17950, 17957, 17970, 17979, 17994, 18003, 18009 and 18017 of 2008 COMMON ORDER:- This batch of writ petitions, which are identical in nature, are heard together and being disposed of at the admission stage after hearing the learned counsel for the petitioners in the respective writ petitions and the learned Government Pleader for Civil Supplies. The petitioners claim to be the farmers of different villages in Kurnool and Prakasam Districts. They have felt aggrieved by the separate orders passed by the District Collectors (Civil Supplies) of Kurnool and Prakasam districts, whereby they directed huge quantities of red gram seized from warehouses to be distributed through public distribution system and remit the sale proceedings before them. The sheet anchor of the petitioners’ case is that there is strong evidence to show that they are agriculturists owning the agricultural lands and that the seized stocks stored in the warehouses belong to them and therefore there is no justification for the respective District Collectors to direct distribution of the seized stocks pending proceedings under Section 6-A of the Essential Commodities Act, 1955 (for short, ‘the Act’). They further submitted that the reason given by the District Collectors that the seized stock is subject to speedy decay is without any basis because red gram can be stored for substantial length of time without its quality getting deteriorated or leading to its decay and that since disposal of the proceedings under Section 6A of the Act may not require a very long time, in the interests of justice, the seized stocks may be directed to be retained without their sale till the disposal of Section 6A proceedings. At the hearing, learned counsel for the petitioners made strenuous efforts to convince this Court that the prima facie findings of the District Collectors that some unknown traders have stored the stocks clandestinely are wholly unwarranted and against the evidence made available before the seizing officers by the persons in-charge of the warehouses. In this regard, learned counsel relied upon the xerox copies of pattadar passbooks to show that the petitioners are genuine farmers and the stocks found in the warehouses represent the produce yielded by the said lands. In some of the cases, learned counsel also pointed out that some farmers have even taken loans in respect of the stocks lying in the warehouses. I have carefully considered the submissions of the learned counsel and perused the record. As the orders passed by the District Collectors are almost alike, it will suffice if I refer to one of the orders in this batch of cases. Let me therefore consider the order passed in the first case of the batch, namely, WP.No.17950 of 2008. In this case, it is stated by respondent No.2 that a report was received from the Senior Assistant in the office of Tahsildar, Mahanandi Mandal, that he along with Sub-Inspector, Vigilance and Enforcement, Kurnool, inspected Sri Balaji Rural Farmers Warehouse in W.Govindinne Village, Dornipadu Mandal and on verification of the records they found that some unknown traders stored red gram of 660 quintals in the names of the benami farmers (the 3 petitioners) and that the unknown traders violated the provisions of the Andhra Pradesh Pulses (Licensing and Regulations) Order, 2007 (for short, ‘the 2007 Order’) and the provisions of the Act and that the team seized the said stock and kept it in the custody of Sri Y.Bhaskar, Manager of the warehouse. It is also stated in the order that the Senior Assistant conducted panchanama in the presence of Sub- Inspector and four residents of W.Govindinne Village. It is further stated that the Joint Director Agriculture, Kurnool, reported the average yield of red gram per acre as 3.35 quintals during Rabi and 2.56 quintals during Kharif seasons. Respondent No.2 further stated in his order that no trade license to do the business of pulses was shown, no record of right/lease/cultivation and crop sown was shown in the name of the alleged farmers and that the stocks available in the warehouse in the names of the alleged farmers are in excess of the maximum possible yield out of the extent of Ac.51.12 cents shown in the copies of pattadar passbooks. On these premises, respondent No.2 arrived at the prima facie conclusion that the pulses were stored in the warehouse by the unknown traders violating the 2007 Order and the Act and that to avoid natural decay he directed the District Manager, Civil Supplies Corporation, Kurnool District to take possession of the seized red gram, dispose of the same through public distribution system and remit the sale proceeds in his office. In order to test the legality and the validity of the said order, it is necessary to refer to the relevant provisions of the Act and the 2007 Order. A perusal of the long title of the Act discloses that the Act is made to provide for the control of the production, supply and distribution of, and trade and commerce, in certain commodities, in the interest of general public. The word ‘essential commodity’ is defined under Section 2-A, which includes foodstuffs including edible oilseeds and oils and any other class of commodity, which the Central Government may by notified order, declare to be an essential commodity for the purposes of the Act. Section 3 inter alia empowers the Central Government for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, by order to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. In sub-section (2) of Section 3 of the Act, the Central Government is empowered to make orders, which are regulatory in nature, which inter alia include an order for regulating by licences, permits or otherwise the production or manufacture of any essential commodity, controlling the price at which any essential commodity may be bought or sold and for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of, any essential commodity. Section 5 of the Act empowered the Central Government to delegate any of its powers under Section 3 to any officer or authority subordinate to the Central Government or the State Governments or the officer or authority subordinate to the State Government by making a notified order to that effect. Section 6A of the Act provides for confiscation of essential commodity seized in pursuance of an order made under Section 3, by the Collector of the District or the Presidency town in which such essential commodity is seized along with any package receptacle, animal, vehicle, vessel etc. Section 6A (2) of the Act, which is very material for the present purpose, provides that where the Collector, on receiving a report of seizure or on inspection of any essential commodity under sub-section (1), is of the opinion that the essential commodity is subject to speedy and natural decay or it is otherwise expedient in the public interest so to do he may order the same to be sold at the controlled price, if any, fixed for such essential commodity under the Act or under any other law for the time being in force or where no such price is fixed, order the same to be sold by public auction. In the proviso to the said provision, where the retail price of the essential commodity seized has been fixed by the Central Government or by the State Government under the Act or under any law for the time being in force, the Collector may, for its equitable distribution and availability at fair prices, order the same to be sold through fair price shops at the price so fixed. Under sub-section (3) of Section 6A of the Act, where any essential commodity is sold, the sale proceeds thereof, after deduction of the expenses of any such sale or auction or other incidental expenses relating thereto, shall be paid to the owner thereof or the person from whom it is seized, where no order of confiscation is ultimately passed by the Collector, where an order passed on appeal under sub-section (1) of Section 6 so requires or where in a prosecution instituted for the contravention of the order, the person concerned is acquitted. Section 7 of the Act provides for penalties for contravention of orders under Section 3 of the Act, which include imprisonment for a term up to one year along with fine. In exercise of its delegated power, the State Government made the 2007 Order. Clause 2(c) defined ‘pulses’ as those indicated in Schedule-I including red gram (Tur). The words “Dealer, Wholesaler, Retailer and Producer” have been defined in the Order. Clause 3 imposes an embargo on any person to carry on business as a dealer or producer or a commission agent dealing in pulses, except under and in accordance with the terms and conditions of a licence issued in this behalf by the licensing authority. Under Clause 3 (2), any person who stores in quantity of more than ten quintals of one or more of pulses put together at any one time, unless the contrary is proved be deemed to be carrying on business as a dealer, producer or a commission agent dealing in pulses under this Order and under sub-clause (3) of Clause 3 a separate license shall be obtained by a dealer for each place of business and storage point also except in respect of places of purchase. Clause 11 places restriction on storing and possession of pulses. Under this Clause while a wholesaler is entitled to store a maximum of 1000 quintals under Category ‘B’ cities, a retailer is permitted to store up to 40 quintals only. Clause 17 empowers the licensing authority or any other officer of the Revenue Department or Civil Supplies Department not below the rank of Inspector of U.D. cadre or any Commercial Tax Inspector or any officer of Police Department not below the rank of Sub-Inspector in their respective jurisdictions may inter alia enter any premises, search such premises, vehicle etc., and seize the books of accounts, documents and also seize and remove stocks of all or any of the pulses in respect of which contravention has taken place. Keeping in view the various statutory provisions referred to above, let me consider the contentions of the learned counsel. The predominant purpose for which the Act was made is to ensure supply and distribution of the commodities identified as essential commodities in the interest of the general public. Therefore, whenever any essential commodity is seized, it is incumbent upon the Collector to keep in mind the interest of general public while exercising his power under Section 6A (2) of the Act. In N. Nagendra Rao and Company vs. State of Andhra Pradesh the Supreme Court considered the purpose of Section 6A (2) and the amplitude of the Collector’s power under the said provision. It was held therein that the expression “it is otherwise expedient in the public interest” in Section 6A (2) has to be understood so as to advance the legislative objective of ensuring that the goods do not suffer either in quality or quantity. The Supreme Court has considered the instance of fertilizers and held that it may not be susceptible to speedy and natural decay, but it is expedient in public interest to ensure that it is either sold to the agriculturists or disposed of at least before the next season and that since the purpose of the said provision is to protect the goods seized by the Collectors, they have to form an opinion whether it falls in one of the two categories, namely, they are subject to speedy and natural decay or it is otherwise expedient in the public interest to be sold. Thus, held the Court, that the Collectors have no option but to direct their disposal or selling of in the manner provided, the case falls in one or the other category. In all these cases, coming from two different districts of the State, the plea of the petitioners, who are supposed to be the agriculturists, is strikingly identical. They have come out with the common case that in order to ensure better prices in the market, they stored red gram in the warehouses. In each of the cases, the stocks run into hundreds of quintals. In the first case itself, its value is estimated at Rs.16,50,000/-. In that case the Collector considered the fact that the stock of 660 quintals (66 metric tons) was stated to have been produced by three farmers in Ac.51.12 cents which comes to about 13 quintals of yield per acre. The Collector has taken note of the opinion given by the Joint Director Agriculture, Kurnool that the average yield per acre was 3.35 and 2.56 quintals in Rabi and Kharif seasons respectively and has prima facie opined that the stock stored in the warehouse is far in excess of the average yield, certified by the Joint Director Agriculture. In WP.No.17957 of 2008 where the staggering quantity of 1424-10 quintals (142 tons) of red gram was seized was shown to be belonging to 13 alleged agriculturists. The District Collector considered maximum yield per acre as eight quintals and found in each of the 13 cases the quantity stored, which was said to be the yield from their agricultural lands, was far in excess of the maximum yield of eight quintals per acre and has therefore come to the prima facie opinion that the red gram was stored in the warehouse in violation of sub- sections (2) and (3) of Section 3 of the 2007 Order. In WP.No.17970 of 2008, the seized quantity of 1310-55 quintals was said to be belonging to 10 alleged farmers and its value is estimated to be Rs.35,30,800/- and xerox copies of pattadar passbooks produced related only to an extent of Ac.23.54 cents of dry land which prima facie suggested that it was most unlikely that such a huge quantity would have been produced from the said extent of Ac.23.54 cents. In WP.No.17979 of 2008, 878-50 quintals of red gram, which was approximately valued at Rs.24,59,800/- was seized and the said stock was stated to be belonging to six alleged agriculturists. In all the rest of the cases the facts are more or less identical which warranted a prima facie opinion by the District Collectors that some unknown traders have illegally stored the red gram, which undoubtedly is needed by every human being for his daily life. They have also formed an opinion that the red gram being subjected to natural decay is liable to be sold. Learned counsel for the petitioners, as noted above, seriously questioned the opinion of the District Collectors that the seized commodity, namely, the red gram is subject to speedy and natural decay. Except advancing the said contention, they have not produced any material or the opinion of the experts in the field as to what is the duration for which the seized commodity will last without decay or deterioration in its quality. It is therefore not possible for this Court to disturb the findings of the District Collectors on this aspect. As held by the Supreme Court in N.Nagendra Rao and Company (supra) if the Collector is satisfied that the goods seized fall in one of the two categories mentioned in Section 6A (2) of the Act, namely, that the commodity is subject to speedy and natural decay or that it is otherwise expedient in the public interest, the Collector has no option except to order for its disposal. While the reason, namely, the speedy and natural decay of the commodity given by the District Collectors is patent, a close analysis of the impugned orders by which they directed distribution of the seized commodities through public distribution system instead of selling the same in the public auction clearly suggests that they were also impelled to take the said decision in the public interest. This Court cannot lose sight of the spiraling prices of the essential commodities in recent months, which is a nation wide phenomenon. Political parties have been organizing bandhs leading to disruption of normal life of the citizens in the country. Some political parties in the State have been conducting raids on the godowns where essential commodities are allegedly hoarded. It is therefore not possible for this Court to ignore the ground reality, namely, that unlawful storage of huge stocks of essential commodities by unscrupulous traders is creating acute shortage of essential commodities leading to a virtual chaos in the society. It is therefore expedient in the public interest to put down such activities by the administration with heavy hand. Having examined the facts of the cases and keeping in view the situation prevailing in the State, I am of the considered view that the orders passed by the District Collectors to distribute the seized commodities through public distribution system advances the purpose for which the Legislation is made, namely, to ensure proper supply and distribution of essential commodities. The questions whether the petitioners are farmers and the seized stocks were produced by them in their agricultural lands or they are merely name lenders for unscrupulous traders, whose only object is to make undue profits by holding the whole society to ransom, are eventually required to be adjudicated by the respective District Collectors under Section 6A of the Act. Indeed under Clause 3(2) of the 2007 Order, until contrary is proved, any person, who stores in quantity of more than ten quintals of one or more of pulses put together at any one time, is deemed to be carrying on business as a dealer, producer or a commission agent dealing in pulses. While examining the legality and validity of the orders passed by the District Collectors under Section 6A (2) of the Act, this Court does not exercise appellate powers, but the judicial review undertaken by it is limited only to examining whether the orders passed by them are in violation of the parameters contained in the said provision or not. Incidentally, this Court also is required to examine whether by ordering distribution of seized commodity through public distribution system, any undue hardship is caused to the petitioners. As regards the first aspect, from the discussion undertaken above, I have no reason to hold that the orders of the District Collectors impugned in these writ petitions fall foul of the provisions of Section 6A (2) of the Act. Far from the same, they serve public interest. With regard to the issue of undue hardship, I am of the view that individual interest should always yield to public interest. By ordering distribution through public distribution system, the red gram will be made available to the public at the controlled price fixed by the State. If the petitioners eventually prove that the stocks belong to them, they will get their price equal to the market price ruling at the time of seizure. Learned counsel for the petitioners relied on order dated 13.08.2008 passed by a learned Single Judge in WP.No.17542 of 2008 and batch. I have carefully gone through the said order and I find that no ratio could be culled out from the said order for being followed in these cases. Evidently, having regard to the facts arising in those cases, the learned Judge used his discretion to direct the respondents not to sell the seized commodities pending the proceedings under Section 6A of the Act. On the facts of these cases and for the reasons stated in the foregoing, I have not felt persuaded to pass a similar order. On considering the cases from the above perspective, I do not find any reason to interfere with the orders passed by the District Collectors. The writ petitions are therefore dismissed, however, with the following directions. 1. If the petitioners succeed in the proceedings under Section 6A of the Act, they are entitled to be paid the market value of the seized pulses prevailing at the time of the seizure, and 2. The respective District Collectors shall dispose of the proceedings under Section 6A of the Act, within a period of three months from today. Before parting with these cases, I find it necessary to make it clear that the observations made by this Court, if any, touching upon the merits of the cases are intended only to dispose of these writ petitions and they shall not be understood as this Court expressing any final opinion on the issues involved in the proceedings initiated under Section 6A of the Act against the petitioners. The respective District Collectors shall dispose of the said proceedings uninfluenced by any of the observations contained in this judgment. As a sequel to dismissal of the writ petitions, WPMP.Nos.23376, 23377, 23385, 23398, 23407, 23424, 23433, 23439 and 23449 of 2008 filed by the petitioners are dismissed. ____________________________ C.V.NAGARJUNA REDDY, J Date: 26.08.2008 ES