SCR.A/1710/2007 1/18 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CRIMINAL APPLICATION No. 1710 of 2007 For Approval and Signature: HONOURABLE MS.JUSTICE H.N.DEVANI ========================================= = 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 ? ========================================= = THE STATE OF GUJARAT & 1 - Applicant(s) Versus HASMUKHBHAI KANTIBHAI DAVE & 4 - Respondent(s) ========================================= Appearance : MR KP RAVAL, ADDL. PUBLIC PROSECUTOR for Applicant(s) : 1 - 2. MR ANSHIN H DESAI for Respondent(s) : 1, 5, ========================================= = CORAM : HONOURABLE MS.JUSTICE H.N.DEVANI Date : 02/09/2008 ORAL JUDGMENT 1. By this petition, the petitioner – the State of Gujarat challenges the order dated 12th April, 2007 passed by SCR.A/1710/2007 2/18 JUDGMENT the learned Sessions Judge, Junagadh in Criminal Appeal No.45 of 2006, whereby the learned Judge has quashed and set aside the order passed by the Collector, Junagadh in Case No.58 of 2006. 2. The facts of the case are that on 15th September, 2005 the officers of the Civil Supplies Department, at Keshod carried out search of a tanker bearing No.GRR-5427 and detected several irregularities which shall be referred to in detail hereinafter. Pursuant to the search vide seizure order dated 15.9.2005, the tanker along with the stock of 12,000 litres of crude [Light Diesel Oil (L.D.O.)] came to be seized and samples of L.D.O. were taken for the purpose of analysis. Vide order dated 15.11.2005, the respondent No.1 came to be detained under the provisions of the Prevention of Black-Marketing and Maintenance of Supplies of Essential Commodities Act, 1980 (PBM Act). 3. Subsequently, by a show cause notice dated 4th March, 2006, the Collector, Junagadh in exercise of powers under section 6 of the Act called upon the respondents to show cause as to why the entire stock should not be confiscated for breach of the provisions of clauses 6,8 and 9 of the Gujarat Essential Articles Dealers (Regulation) Order, 1977 (Dealers Order) and clause 3 of the Solvent Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000 (Solvent Raffinate Order). 4. In response to the show cause notice, the respondent SCR.A/1710/2007 3/18 JUDGMENT No.1 appeared through his advocate and submitted written reply as well as made oral submissions. Vide order dated 31st August, 2006, the Collector, Junagadh held that there was breach of the provisions of clauses 6, 8 and 9 of the Dealers Order, clause 3 of the Solvent Raffinate Order as well as the provisions of the Motor Spirits and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 (MS & HSD Order) and the Gujarat Essential Articles (Licensing, Control and Stock Declaration) Order, 1981 (Licensing Order) and ordered confiscation of the entire stock of LDO/HSD (High Speed Diesel) worth Rs.3,12,000/- as well as the tanker No.GRR-5427 worth Rs.2,00,000/- in all worth Rs.5,12,000/-. 5. The respondent No.1 carried the matter in appeal before the learned Sessions Judge Junagadh which came to be registered as Criminal Appeal No.45/2006. The learned Sessions Judge vide the impugned judgement and order dated 12th April, 2007, allowed the appeal and quashed and set aside the order dated 31.8.2006 passed by the Collector in Criminal Case No.58/06 giving rise to the present petition. It may be noted that though the petition is stated to be one under Article 226 of the Constitution of India, in effect and substance, it is a petition under Article 227 of the Constitution. 6. Heard Mr.K.P.Raval, learned Additional Public Prosecutor for the petitioner – State of Gujarat and Mr.Anshin Desai, learned advocate for the respondents. SCR.A/1710/2007 4/18 JUDGMENT 7. The learned Additional Public Prosecutor has vehemently assailed the order passed by the learned Sessions Judge. It was submitted that the respondent No.1 did not have any valid license to deal with High Speed Diesel. That it was the case of the respondent No.1 that it had purchased the petroleum product as LDO, however, no bills had been produced by Sai Petroleum indicating purchase of LDO. It was further submitted that mens rea was present, and that the respondent No.1 knowing full well that the stock is HSD, had purchased the same and had sold the same to some unknown person for the purpose of adulteration. It was submitted that the learned Sessions Judge has erred in coming to the conclusion that the same officer who had exercised the powers under the Prevention of Black Marketing Act, he could not have exercised powers under the Essential commodities Act. That the powers conferred under the Essential Commodities Act and those under the Prevention of Black Marketing & Maintenance of Supply of Essential Commodities Act, 1980 (Black Marketing Act) are different. That the order passed by the learned Judge was passed on conjectures and surmises, hence, the conclusions arrived at by the learned Sessions Judge are vitiated and as such, the impugned order is required to be quashed and set aside. It was submitted that the order passed by the Collector, Junagadh was just, legal and proper, and that there was no warrant for any intervention by the learned Sessions Judge. 8. On the other hand, Mr.Anshin Desai, learned advocate SCR.A/1710/2007 5/18 JUDGMENT for the respondents has strongly opposed the petition and has defended the order passed by the learned Sessions Judge. It is submitted that the respondent No.1 had purchased the petroleum product from the steamer, at Alang. The same was sold to the respondent firm as LDO, and was also sold as LDO. That the element of mens rea was required to be proved, however, there was nothing to show that the respondent No.1 was, in fact, aware of the fact that the petroleum product was not LDO, but HSD, as is the case of the petitioner. The learned advocate has taken the Court through the findings recorded by the learned Sessions Judge, to submit that there is no perversity in the impugned order. That it is settled legal position that, in a petition under Article 227 of the Constitution, this Court has a limited role to play. That, unless the impugned orders suffer from any jurisdictional error or is otherwise perverse, this Court would normally not interfere with the same even if on the same set of facts and circumstances and evidence on record, it was possible to take a different view of the matter. 9. In support of his submissions, the learned advocate for the respondents has placed reliance upon the following decisions : [a] Decision of the Supreme Court in the case of Puran Ram v. Bhaguram and another, (2008)4 SCC 102. [b] Decision of this Court in the case of Pushkar SCR.A/1710/2007 6/18 JUDGMENT Navnitlal Shah v. Rakhi Pushkar Shah, 2006(3) GLH 437. [c] Decision of this Court in the case of Sunil Kumar Maheshwari v. Union of India,2007(1) GLR 194. [d] Decision of this Court in the case of ASE Information Service v. Arvindkumar D. Parekh, 2006(4) GLR 3716. 10.This Court has considered the submissions advanced by the learned advocates for the parties and has perused the record of the case as well as the decisions cited at the bar. 11.At the outset, it may be pertinent to refer to the grounds stated in the show cause notice dated 4.3.2006 issued by the Collector in exercise of powers under section 6 of the Act, which as translated into English read as under: (i) The tanker driver Ramjibhai Revashanker Panon, in his statement, had declared that the tanker bearing No.GRR-5427 contained 12,000 liters of crude (LDO). However, upon carrying out preliminary inspection in the presence of the panchas, it appeared that the same contained petroleum product other than crude (LDO). (ii)Upon scrutiny of the sale bill produced by the tanker driver, the stock had been sold to an LDO SCR.A/1710/2007 7/18 JUDGMENT license holder of Mendarda, Udaykujar Kanjibhai, by Sai Petroleum, Alang, Bhavnagar district through sale bill No.61 dated 14.9.2005. However, the Mamlatdar, Mendarda, upon verification, found that the purchasing party, that is the party in whose name the bill had been made, had stated that he had in fact not purchased the crude, hence, the stock had been purchased under a false name without a license. (iii)As per the statement of Shri Dilip Bhaktiram Danidhariya, resident of Bilkhavala, he did not possess any license either retail or wholesale for sale or purchase of crude (LDO), hence, it was alleged that, with a view to make economic gain, he was carrying on activities of purchasing and selling the petroleum products under a false name. (iv)As per the sale bill produced by the tanker driver, the Mendarda firm had purchased the same from Bhavnagar firm, whereas the distance from Bhavnagar to Mendarda was shorter via Bhavnagar – Una – Kodinar – Pranchi (Ghantiya) – Talala, whereas the tanker had gone via Bhavnagar – Una – Kodinar – Veraval, and had reached Keshod, hence, it was apparent that such stock had falsely been purchased in the name of the license holder, and the same was being taken to a place other than the place of business of the license holder for the purpose of economic gain. Hence, there was reason to believe that the same was meant for SCR.A/1710/2007 8/18 JUDGMENT sale in the black-market. (v)Shri Dilip Bhaktiram did not hold any license for carrying out the business in any type of petroleum products, despite which, he had sold, purchased and stored petroleum products illegally. A sample of the petroleum product – crude (LDO) which was stored in the tanker had been obtained for the purpose of analysis. The analysis of the same had been carried out by the Forensic Science Laboratory, Junagadh, and the same appeared to be High Speed Diesel. Thus, all the aforesaid persons, namely, Dilip Bhaktiram Danidhariya, Manojbhai Sidabhai Kuvadiya, Ramjibhai Revashanker Panon, Shri Hasmukh Kantilal Dave and Bhatt Shaileshkumar Kanaiyalal, had in connivance with each other, used the name of the license holder and prepared false bill, suppressed the fact as to where the stock was actually to be unloaded, and purchased and sold High Speed Diesel (HSD) in an illegal manner. 12.In response to the said show cause notice the case of the respondent No.1 was that the respondent No.1 was running a sole proprietorship firm in the name and style of Sai Petroleum in Bhavnagar district and the said firm possessed a licence which was valid till 31.12.2006. That the said firm used to obtain diesel from steamers at Alang and accordingly, in absence of the proprietor, the administrator of the firm, Hasmukhbhai Kantilal Dave had, pursuant to an order being placed by Dilip SCR.A/1710/2007 9/18 JUDGMENT Bhaktiram on telephone, dispatched 12,000 liters diesel to the firm of one Udaybhai Kanjibhai, at Mendarda. That, on 15th September, 2005, when the tanker was near Village Agatrai, search was carried out and the stock had been seized by the Mamlatdar, Keshod. It was the case of the respondent No.1 that no proper notice had been issued under the provisions of the Act, and that the notice did not disclose contravention of any Control Order. It was also the case of the respondent No.1 that the stock of diesel was owned by Sai Petrol Pump, whose owner was one Ashokbhai Haribhai Jani, resident of Sathra, who held a license under the Solvent Order of 2000. That the firm used to purchase diesel from the steamers at Alang and was sold to the firm as LDO. That the said diesel was obtained from the tend of the steamer or its store, and the nature of the diesel obtained therefrom was not as per the standards of the Petroleum Companies. That while breaking the steamers, such diesel was obtained and hence, there was possibility of variation of quality of such diesel. The diesel purchased from such pumps was different from the diesel in different pumps in the country. That the diesel was purchased as LDO and whatever be the nature of the petroleum product purchased by them, the same was always sold as LDO. That the Government was also aware of such trade practice. It was the further case of the respondent No.1 that the analysis of the sample taken from the tanker did not disclose that the stock was adulterated or sub-standard. That though they disputed that the sample was taken in accordance with law, the diesel had been certified to be as per fuel SCR.A/1710/2007 10/18 JUDGMENT specifications which was evident from the report of the Forensic Science Laboratory. It was also evident that the stock was LDO. 13.As regards the second irregularity, it was the case of the respondent No.1 that the purchase order had in fact been placed by Udaykumar Kanjibhai, though he had subsequently denied the same. That Dilip Bhaktiram Danidhariya, who was carrying on the business of agent as well as broker had, as per his statement recorded by the authorities, stated that he had ordered the stock in the tanker, which was to be given to Udaybhai Kanjibhai. The said Dilipkumar Danidharia had produced bill No.61 as well as the delivery challan, and had stated that the tanker was kept in the compound of Somnath Oil Industries as per his instructions. He had also explained as to why the tanker had gone to Mendarda via Veraval and Keshod. 14.As regards the third irregularity, it was the case of the respondent No.1 that the notice was addressed to five persons, however, Sai Petroleum which was No.4, possessed a license for trading in LDO and had the capacity to purchase the LDO and the sale of the LDO was not in any manner illegal. It was also the case of the respondent No.1 that the stock of diesel was freely available, hence, there was no question of any economic gain, as alleged. 15.As regards the fourth irregularity, it was the case of the respondent No.1 that, merely because the route had SCR.A/1710/2007 11/18 JUDGMENT been changed and the purchasing party had denied having purchasing the said stock, there was no reason to believe that the stock was meant for black marketing. 16.As regards the fifth irregularity, it was the case of the respondent No.1 that the petroleum product was sold to them as LDO and there was nothing on record to show that they had knowledge that the same was HSD. That they had purchased the stock as LDO and sold them as LDO. It was also the case of the respondent No.1 that due procedure had not been followed in taking samples of LDO and forwarding the same to the laboratory. 17.The Collector vide order dated 31st August, 2006, held that the stock contained in the tanker was High Speed Diesel. That, in view of the provisions of the Motor Spirit & High Speed Diesel (Prevention of Supplies & Distribution) Regulations, 1988 (the Motor Spirit Regulations, 1988), except for persons appointed by Oil Companies authorized by the State Government, no person could purchase or sell High Speed Diesel. Besides, under the provisions of the Gujarat Essential Articles (Licensing, Control & Stock Declaration) Order, 1981, it was necessary to obtain a license for dealing in High Speed Diesel. None of the respondents were agents appointed by the Oil Companies, nor did they possess the necessary license to deal with the HSD. Despite the aforesaid position, Sai Petroleum, Sathra had, under the guise of holding a license for LDO, misused the same, and purchased and sold the High Speed Diesel and thus, indulged in illegal business, SCR.A/1710/2007 12/18 JUDGMENT thereby, committing breach of the provisions of both the aforesaid enactments. 18.The Collector further held that the tanker did not possess an explosive license for transporting High Speed Diesel. That as per the report of the FSL, the samples satisfied the requirement of HSD. That Udaykumar Kanjibhai had denied having purchased the stock of crude. The Collector was also of the view that there was no provision or practice for agents for dealing with essential articles. The license holder who wanted to purchase the stock from a firm or a company would make a request in writing/demand order to the concerned license holder and accordingly, the stock would be supplied through the shortest route. In the present case, the LDO license holder had, under a false bill/challan, sold the High Speed Diesel in the name of an LDO license holder. That though Sai Petroleum was holding a license for LDO, it did not have any license to deal with HSD, hence, the said firm had indulged in illegal sale and purchase of HSD. The Collector, accordingly, held that there was breach of provisions of Clauses (6), (8) and (9) of the Dealer's Order as well as Section 6 of the Solvent Raffinate Order, provisions of the MS & HSD Order as well as the Licensing Order. He, accordingly, ordered confiscation of the entire stock of petroleum product, alleged to be High Speed Diesel as well as the tanker. 19.As can be seen from the impugned order passed by the learned Sessions Judge, the learned Sessions Judge has SCR.A/1710/2007 13/18 JUDGMENT recorded the following findings : (1) The Collector had earlier expressed satisfaction under the provisions of the PBM Act, hence, the same Officer ought not to have proceeded to continue the proceedings pertaining to the same subject matter though under a different statute. Hence, the order of the Collector is bad on that count. The learned Judge has found that, insofar as ground No.1 is concerned, the tanker driver had disclosed that the stock was of Low Density Oil (LDO) (crude), however the State authorities on examining the same found that the same appeared to be a different petroleum product. According to the learned Sessions Judge, the concerned authorities were already in possession of the FSL report at the time of issuance of the show cause notice, hence, reliance on the opinion of the panchas was uncalled for. The learned Judge was of the view that from a bare look of the commodity, it could not have been stated that the commodity in question was not LDO, but HSD. It was, accordingly, found that while considering the merits of this ground, the authority has referred to extraneous matter. (2) The learned Judge was of the view that it was the case of the respondent No.1 firm that it had sold the LDO to one Udaykumar Kanjibhai, a license holder of Mendarda. According to the authorities, upon verifying from the said Udaykumar, he had disclosed that he had not made any such purchase. The learned Judge was of the view that it is likely that, sensing the criminal or quasi- SCR.A/1710/2007 14/18 JUDGMENT criminal proceedings against the respondents, the said Udaykumar may have opted to deny having entered into any such transaction. The learned Judge was of the view that the fact that such a party, namely, Udaykumar was in existence and was a license holder, itself goes to show that the respondents had not dealt with a party under a false name. (3) As regards ground No.3, the learned Sessions Judge was of the view that the said ground, per se, was defective one as non-holding of license by Dilipkumar did not have any bearing on the respondent No.1 indulging in the purchase and sale of petroleum products under a false name. (4) As regards the ground regarding route adopted by the tanker, the learned Judge was of the view that, explanation tendered by the respondents was a reasonable and convincing one and that there was no reason for the Collector to have discarded the same. (5) As regards ground No.5, the learned Judge was of the view that the respondent No.1 had produced a xerox copy of a bill evidencing purchase of crude oil from Alang, which shows that the respondent No.1 had in fact purchased crude oil (LDO). The learned Judge was of the view that it was the case of the respondent No.1, that he had purchased the LDO from the ship and then, directly sent it to the purchaser. That the stock was sold to the respondent No.1 as LDO and he had no means of knowing that the same was HSD. Had it been SCR.A/1710/2007 15/18 JUDGMENT the case that the crude oil had been sold from the storage tank of the respondent No.1 by labelling it as LDO and upon examination, it had been found to be HSD, it would have been a different matter. However, in the facts of the present case, there is nothing to show that the respondent No.1 had knowledge that the crude oil is HSD and had falsely labled or disclosed it to be LDO. The learned Judge was, accordingly, of the view that the conclusion arrived at by the Collector regarding collusion between the respondents was based upon impermissible inferences. Based upon the aforesaid findings, the learned Sessions Judge has quashed and set aside the order passed by the Collector. 20.In the background of the facts noted hereinabove, this Court finds that the learned Sessions Judge has assigned sufficient, cogent and convincing reasons for allowing the appeal. As regards the first ground, it is apparent that the show cause notice only refers to the opinion of the concerned officers of the Civil Supplies Department that the petroleum product in question was something other than LDO. Despite the fact that at the relevant time, the Department had already received the report from the Forensic Science Laboratory, the same does not find a mention in the show cause notice. In the circumstances, no fault can be found with the reasoning adopted by the learned Judge while considering the first ground. 21.As regards the second ground, the learned Sessions Judge is justified in coming to the conclusion that merely SCR.A/1710/2007 16/18 JUDGMENT because the purchasing party has repudiated the fact of having purchased the stock from the respondent No.1, does not mean that he had in fact not placed the order for purchasing the same. As held by the learned Sessions Judge, it is quite possible that the concerned purchaser may have denied the purchase merely with a view to avoid facing any proceedings under the Act. 22.As regards the ground that a longer route had been taken by the tanker in question, no infirmity can be found in the reasoning adopted by the learned Sessions Judge in coming to the conclusion that the explanation tendered by the respondents was reasonable and convincing and there was no reason for the Collector to have discarded the same. 23.As regards the fifth and the main ground, the respondent No.1 had produced a xerox copy of crude oil bill from Alang, which showed that the respondent No.1 had purchased crude oil (LDO) from a shop at Alang. No infirmity can be found in the view taken by the learned Sessions Judge that the respondent No.1 had purchased the stock under the belief that it was LDO and had sold it as such. That the stock had been sent from the ship directly to the purchaser and that the respondent No.1 had no means of knowing that the same was HSD and not LDO. 24.Besides, as is apparent from the facts noted hereinabove, despite the fact that the show cause notice had been issued for violation of the provisions of SCR.A/1710/2007 17/18 JUDGMENT the Dealers Order and the Solvent Raffinate Order, the order passed by the Collector is in relation to the breach of the provisions of the aforesaid Orders as well as the MS & HSD Order and the Licencing Order. In the circumstances, the order passed by the Collector also suffers from the vice of breach of the principles of natural justice inasmuch as