IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 12TH APRIL 2011 / 22ND CHAITHRA 1933 WP(C).No. 307 of 2011(K) ------------------------ PETITIONER: --------------- SMITHA KARTHIKAPALLY PROPRIETOR, ANNAM AGRO FOODS, KINFRA SMALL INDUSTRIES PARK,MAZHUVANNUR, NELLAD PO, MUVATTUPUZHA, REPRESENTED BY HER POWER OF HOLDER RAJISH P THANKAPPAN. BY ADV. SRI.V.V.ASOKAN SRI.P.P.RAMACHANDRAN SRI.K.S.SAJEEV KUMAR RESPONDENTS --------------- 1. THE DISTRICT COLLECTOR,ERNAKULAM 2. DISTRICT SUPPLY OFFICER ERNAKULAM, KAKKANAD. 3. TALUK SUPPLY OFFICER, KUNNATHUNAD. 4. CIRCLE INSPECTOR OF POLICE PATTIMATTOM, ERNAKULAM DISTRICT. 5. DISTRICT MANAGER, FOOD CORPORATION OF INDIA, ERNAKULAM. 6. DEPOT MANAGER FOOD CORPORATION OF INDIA, DEPOT, ANGAMALY. BY GOVERNMENT PLEADER ADV. MR. P. NARAYANAN R5 AND R6 BY ADV. SRI.T.P.M.IBRAHIM KHAN, SC, FCI THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23/02/2011 ALONG WITH W.P.(C)3211 OF 2011, THE COURT ON 12/04/2011 DELIVERED THE FOLLOWING: P.R. RAMACHANDRA MENON, J. .............................................................................. W.P.(C) No. 307 OF 2011 & 3211 OF 2011 ......................................................................... Dated this the 12th April, 2011 J U D G M E N T Both these writ petitions have been filed by the same writ petitioner in respect of the very same cause of action at different stages and hence are dealt with together. 2. The petitioner is the owner of a Roller Flour Mill dealing with wheat and wheat products, having started the operation by the end of September, 2010. On 01.01.2011, the 4th respondent, with the help of others concerned, conducted a search in the premises, whereby some bags containing wheat with the endorsement/tag/mark of FCI, which according to the respondents, were meant for Public Distribution System, were traced out. In view of the alleged offences under the relevant provisions of the Essential Commodities Act (E.C. Act in short), the entire stock of nearly 2926 bags of wheat were seized and the Mill was put under lock and key. Apprehending hasty steps at the hands of the respondents for causing the wheat to be W.P.(C) No. 307 OF 2011 & 3211 OF 2011 2 distributed through Public Distribution System, the petitioner approached this Court by filing W.P.(C) No. 307 of 2011 with the following prayers : “i. Issue a writ of mandamus or other appropriate writ or order directing the 1st respondent to release the seized stock of wheat to the petitioner forthwith or in the alternative direct the 1st respondent to take a decision on Exhibit P3(a) Claim Petition forthwith; ii. Issue a writ of mandamus or other appropriate writ or order forbearing respondents 1 to 3 from in anyway attempting to dispose of or distribute the seized stock of wheat through public distribution until a final decision is taken on exhibit P3(a) Claim Petition; iii. Issue a writ of mandamus or other appropriate writ or order directing the 4th respondent to permit the petitioner to run the mill as before after removing the lock and key put by them to the mill. iv. Grant such other orders as may be deemed necessary in the facts and circumstances of this case and in the interests of justice.” 3. In the course of the proceedings, it was revealed that W.P.(C) No. 307 OF 2011 & 3211 OF 2011 3 only 108 bags of wheat were initially identified as diverted from the FCI, which were ear-marked for Public Distribution System. It was stated that verification was going on and hence the petitioner could not be permitted to open or run the Mill. Referring to the request of the petitioner not to distribute 108 bags of wheat containing the logo of the FCI, it was contended by the respondents before the Court that, by virtue of the relevant provisions of the Essential Commodities Act and the law declared by the Apex Court in Shambhu Dayal Agarwala vs. State of West Bengal (1990) 3 SCC 549 , no such order could be passed by this Court, as the purpose of confiscation under the E.C.Act was not to raise money through such sale, but to protect and preserve the Public Distribution System intended for the poor and needy. After considering the rival claims, this Court, as per the interim order dated 14.01.2011 observed that the request of the petitioner not to distribute 108 bags or any other quantity of wheat through the Public Distribution System until finalisation of the proceedings, could not be acceded to W.P.(C) No. 307 OF 2011 & 3211 OF 2011 4 (para 6 of the order). The crux of the said order as contained in paragraph 7 reads as follows: ”7. Therefore, taking note of the above, the following interim order is passed, (1) That the respondents shall complete the process of verification now going on, and if any quantity is found to be earmarked for public distribution system and diverted therefrom, the said quantity will be segregated and separated from the remaining stock. (2) Thereafter, the quantity which is found to be procured by the petitioner from the open market shall be returned to the petitioner. (3) The prayer of the petitioner not to distribute the 108 bags stock seized or any quantity to be seized after verification is rejected. (4) The process of verification and returning the open market wheat shall be completed at any rate within one week from today. (5) Once the process of verification is completed and stock is returned as above, if the petitioner has complied with all statutory requirements, the petitioner will be permitted to open and function her rice Mill. “ W.P.(C) No. 307 OF 2011 & 3211 OF 2011 5 4. In view of the ongoing verification process and the time requirement to complete the proceedings, I.A.No.1181 of 2011 was filed by the respondents for enlargement of time. The said I.A. came up for consideration on 25.01.2011 . After considering the rival submissions, it was observed and ordered as follows : “3. Having regard to the averments contained in the affidavit of the District Supply Officer filed in support of this I.A., I cannot find fault with the authorities in concluding that a detailed enquiry is necessary and in my view, the only question is whether the mill should be kept locked in the meanwhile. Fact remains that since 01.01.2011, following the seizure of the stock, the mill is lying closed . In my view, if in spite of the enquiry now going on and without permitting the petitioner to make use of the 2926 bags of wheat mentioned in paragraph 4 of the affidavit, if the mill is permitted to function, that will in no manner affect the interest of the respondents or the enquiry that is now in progress. 4. Therefore, while I enlarge the time for conducting the enquiry as sought for, I direct the W.P.(C) No. 307 OF 2011 & 3211 OF 2011 6 petitioner herein to keep the stock of 2926 bags of wheat mentioned in paragraph 4 of the affidavit separately and also take in custody all necessary records for facilitating the enquiry and thereafter, permit the petitioner to open and function the mill, provided, the petitioner has all licences for the same. It is made clear that the petitioner shall not in any manner interfere with the enquiry now going on and if the enquiry is interfered with in any manner, it will be open to the respondents to bring it to the notice of this Court for appropriate orders.” 5. In the meanwhile, a show cause notice dated 05.01.2011 was issued by the first respondent with regard to the proposed step to distribute 108 bags of wheat containing FCI logo(stated as diverted), to be distributed through Public Distribution System and as to why the price procured should not be confiscated under Section 6A of the E.C. Act. This was replied as per Explanation dated 07.01.2011. But then, the first respondent issued another show cause notice on 12.01.2011 referring to the infringement of the clauses 3,4 and 5 of the Kerala Roller Flour Mills wheat and Wheat Products Stock Limits W.P.(C) No. 307 OF 2011 & 3211 OF 2011 7 Order 1993 and as to the proposed step to order confiscation under 'clause 7' of the said Order. After filing reply dated 17.01.2011, the petitioner approached this Court by filing W.P. (C) 3211 of 2011 challenging the notice and to direct the respondents 1 and 2 to release the stock of wheat kept by the petitioner and to permit to run the Mill, without causing any obstruction in this regard. 6. When the above matter came up for consideration before this Court on 14.02.2011, it was pointed out by the learned Government Pleader that, pursuant to Ext. P8 Show cause notice, Ext. P13 notice of hearing was issued and after hearing, a final order was passed by the first respondent, which necessitated filing of a petition for amendment as per I.A.No. 2775 of 2011, which was allowed on 17.02.2011 . 7. As stated in the amended writ petition (W.P.(C) No. 3211 of 2011), the petitioner challenges the various proceedings including Ext. P15 order dated 11.02.2011 passed by the first respondent as aforesaid. The prayers raised are as W.P.(C) No. 307 OF 2011 & 3211 OF 2011 8 given below (i). Call for the records of the case leading to Ext. P8 notice and quash the same by the issue of writ of certiorari or other appropriate writ or order; (ia).Call for the records of the case leading to Ext.P15 order and quash the same by the issue of a writ of certiorari or other appropriate writ or order; (ib). It is alternatively prayed that this Hon'ble Court be pleased to direct the respondents 1 to 3, more particularly the 2nd respondent, to reimburse the real cost of 2926 bags of wheat to the petitioner worked out at the rate i.e., Rs.16/- since the implementation of Ext.P15 order was made in haste and in an arbitrary manner. (ii) Issue a writ of mandamus or other appropriate writ or order directing the respondents to permit the petitioner to run the mill. (iii) issue a writ of mandamus or other appropriate writ or order directing the respondents 1 and 2 to release the stock of wheat kept by the petitioner and thus to enable the petitioner to run the mill without any hurdle. (iv) issue a writ of mandamus or other appropriate writ or order forbearing respondents 1 to 3 from in anyway attempting to dispose off or distribute the seized stock of wheat through public distribution. W.P.(C) No. 307 OF 2011 & 3211 OF 2011 9 (v) Grant such other orders as may be deemed necessary in the facts and circumstances of this case and in the interest of justice.” 8. Both the sides were heard at length on the questions of law, facts and binding judicial precedents . 9. Mr. Mayankutty Methar asserted on behalf of the petitioner that the wheat seized from the petitioner's premises was in fact purchased from the open market, as covered by Ext.P3 series bills; that existence of the logo of FCI on some of the bags is not liable to be treated as an incriminating circumstance in so far as FCI itself has conceded that they are supplying wheat to the Public Distribution System as well as in the Open Market, also conceding that gunny bags with the 'FCI logo' are available in plenty, in the open market; that Kerala Roller Flour Mills Wheat and Wheat Products Stock Limits Order 1993 and the proceedings thereunder are not at all attracted to the case in hand for the reason that confiscation under 'clause 7' can be there, only if there is any violation of excess stock; that W.P.(C) No. 307 OF 2011 & 3211 OF 2011 10 'wheat' turns to be a 'free commodity' by virtue of the Notification of Removal of (Licensing Requirements, Stock Limits and Movement Restrictions) on Specified Foodstuffs Order 2002, issued by the Central Government whereby any quantity of wheat could be stored by the petitioner and hence there was no question of any violation of stock position as prescribed under clause 4 of the Kerala Roller Flour Mills wheat and Wheat Products Stock Limits Order 1993. 10. Learned Counsel for the petitioner, in support of the contentions, placed reliance on the decisions rendered by the Apex Court in Govt. of A.P and others vs. V. Ranga Rao and another [(2005) 12 SCC 274], Kailash Prasad Yadav and another v. State of Jharkhand and another [(2007) 5 SCC 769] and on Entry 33(b) of List III of 7th Schedule and Article 245 of the Constitution of India with reference to the power of legislation. It is also stated that, after the '2002 Order' issued by the Central Government (referred to above), no new order has been passed by the State invoking GSR 800 (as relied W.P.(C) No. 307 OF 2011 & 3211 OF 2011 11 on in the Kerala Roller Flour Mills Wheat and Wheat Products Stock Limits Order, 1993) with prior concurrence of the Central Government. It is accordingly contended, that 'wheat' is not an essential commodity, except the wheat intended to be distributed through Public Distribution System, which according to the petitioner is not the position in the instant case. Reliance is also sought to be placed on the decision reported in [(1986) 4 SCC 447] Chandavarkar Sita Ratna Rao vs. Ashalata S. Guram as to the scope of non obstante clause , 1972 KLT 35, (Tata Iron & Steel Co. Ltd. vs. State of Kerala ), which was passed following the verdict of the Supreme court in AIR 1970 SC 1453 (Harakchand Ratanchand Banthiya vs. Union of India) and in 2009 (1) KHC 367 ( Johny Thomas vs. Union of India ) referring to the question of conflict/repugnancy between the relevant provisions of law and the power of legislation, besides referring to (1994) 6 SCC 205 ( N. Nagendra Rao & Co. vs. State of A.P.)as to the duty before confiscation. W.P.(C) No. 307 OF 2011 & 3211 OF 2011 12 11. It is contended that, even if the Kerala Roller Flour Mills wheat and Wheat Products Stock Limits Order 1993 applies, confiscation under 'clause 7' is still not possible, as such course can be pursued only if there is excess stock than the limit prescribed under 'clause 3'. By virtue of the Central Order 2002, 'wheat' has been made a free commodity enabling the dealer to procure and store any quantity of wheat, thus making the provisions of Kerala Roller Flour Mills wheat and Wheat Products Stock Limits Order 1993 otiose, submits the learned Counsel. 12. The learned Government Pleader appearing on behalf of the respondents submits that the idea and understanding of the petitioner with regard to the status of wheat is quite wrong and misconceived and that the same has always been an essential commodity, whether it is available in the open market or is distributed through the Public Distribution System . Reference is made to Section 2A of the E.C. Act read with Entry No.3 of the Schedule, which defines the term. 13. Obviously, the terminology used in the definition of W.P.(C) No. 307 OF 2011 & 3211 OF 2011 13 'essential commodity' is 'food stuff'. The Central Rules 2002 have been promulgated, specifying the removal of the particular food stuff, which by itself is an essential commodity. It is also stated that the provision does not make any distinction to suggest that wheat, rice, kerosene etc., will become an essential commodity, only if and when it is distributed through Public Distribution System. Further, there is no prayer in the writ petition to declare the Kerala Roller Flour Mills wheat and Wheat Products Stock Limits Order 1993 as inoperative in view of Central Order 2002. Similarly, there is no case that the petitioner has given any declaration as stipulated under clause 4 of the Kerala Roller Flour Mills wheat and Wheat Products Stock Limits Order 1993; nor has she a case that she has filed necessary returns contemplated under Rule 5 of the State Order. 14. The learned Government Pleader submits that the enquiry has revealed that the 'modus operandi' pursued by the petitioner is by procuring the wheat intended for the public W.P.(C) No. 307 OF 2011 & 3211 OF 2011 14 Distribution System from different corners (which are available in gunny bags with FCI logo of 50 Kg each) and by re-bagging them to various denominations of 90 Kg, 50 Kg etc. It is also stated that the bills produced by the petitioner are forged or fabricated and that the matter is being verified further. The learned Government Pleader also submits that, at the time of seizure by the concerned officer, they were dealing with the instance of violation of the EC Act (as given in Ext. P6 show cause notice referring to the confiscation under the Act); whereas it was in the course of the proceedings, that violation of clauses 3,4 and 5 of the Kerala Roller Flour Mills wheat and Wheat Products Stock Limits Order 1993 also happened to be noted by the first respondent, who in turn issued Ext.P8 show cause notice, referring to the proposed confiscation proceedings under 'clause 7' of the Kerala Roller Flour Mills wheat and Wheat Products Stock Limits Order 1993 as well. 15. The learned Government Pleader points out that there is a fundamental difference between confiscation under the EC Act W.P.(C) No. 307 OF 2011 & 3211 OF 2011 15 and confiscation under other enactments; in view of the intention sought to be achieved, as made clear by the Apex Court in (1990)3 SCC 549 (cited supra). The purpose of the Act is stated as discernible from Sec.3 and the scope of confiscation under Section 6A of the EC Act is to be read and understood, also with reference to the context of proviso to sub section 2 of Section 6A and that the word 'may' has to be interpreted as 'shall', in view of the rulings rendered by the Apex Court in (1990)3 SCC 549 (cited supra) and also in N. Nagendra Rao & Co. vs. State of A.P.(AIR 1994 SC 2663). 16. In reply thereto, the learned counsel for the petitioner refers to the term 'ration wheat' with reference to Sec.5(a) of the 'Kerala Rationing Order' and the explanation given thereunder stating that if it does not satisfy the Kerala Rationing Order, there cannot be any violation at all. 17. Obviously, the impugned order (Ext. P15) has been passed under 'Clause 7' of the Kerala Roller Flour Mills Wheat and Wheat Products Stock Limits Order, 1993 and there is a statutory W.P.(C) No. 307 OF 2011 & 3211 OF 2011 16 remedy by way of appeal and revision as provided under Clause 8 therein. By virtue of sub clause (1), any person aggrieved by the order of the District Collector may within thirty days from the date of the order of the District Collector, file an appeal before the Commissioner of Civil Supplies and by virtue of sub clause (2), any person aggrieved by an order of the Commissioner of Civil Supplies may within 30 days from the date of the order of the Commissioner prefer a revision petition before the Government. But, considering the assertion made from the part of the petitioner that the Kerala Roller Flour Mills Wheat and Wheat Products Stock Limits Order, 1993 has lost its significance, by virtue of the Removal of (Licensing Requirements Stock Limits and Movement Restrictions) on Specified Foodstuffs Order 2002 (hereinafter referred to as Central Order of 2002), whereby 'wheat' has been declared as a 'free commodity', this Court finds it fit and proper that the matter requires to be examined in detail before the petitioner is relegated to avail the statutory remedy. In other words, if no proceedings are liable to be pursued against W.P.(C) No. 307 OF 2011 & 3211 OF 2011 17 the petitioner and the impugned order is per se wrong and illegal in all respects, without any authority or jurisdiction; the matter has to be considered as to whether any such course as to the alternate remedy is to be insisted; more so, in view of the interim orders dated 14.01.2011 and 25.01.2011 passed by this Court. 18. It remains an admitted fact (if the Kerala Roller Flour Mills Wheat and Wheat Products Stock Limits Order, 1993 is still applicable, notwithstanding the promulgation of the Central Order 2002) that the petitioner has not submitted any 'declaration' as specified under 'clause 4' of the Kerala Roller Flour Mills Wheat and Wheat Products Stock Limits Order, 1993 nor has she submitted any 'return' before the second respondent, as provided under 'clause 5'. The case projected by the petitioner is that, Ext. P1 project report of the petitioner shows that, the Unit of the petitioner is having a milling capacity of 1500 MTs per month and hence she can kept a stock of such capacity (3000 MTs) at a time. Admittedly since the total stock of wheat available in the petitioner's mill on 18.01.2011 (as evidenced by W.P.(C) No. 307 OF 2011 & 3211 OF 2011 18 Ext. P10 report submitted by the FCI, after verification of the stock) was only a total 165 MTs, there may not arise any question of excess stock. But, here the point is whether Ext. P1 project report showing the capacity of the petitioner's unit as 1500 MTs per month could be treated as a 'declaration' under clause 4 of the Kerala Roller Flour Mills Wheat and Wheat Products Stock Limits Order, 1993. The said clause reads as follows : 4. Declaration by owner of the flour mills :- The owner or any other person in charge of a roller flour mill shall within a fortnight from the date of publication of this order in the Kerala Gazette declare in the form prescribed in Appendix I to the District Supply Officer in whose jurisdiction the mill is situate, the quantity of two months' grinding capacity of the mill. Change in the grinding capacity shall also be declared as and when changes occur. 19. The above clause clearly shows that the declaration has to be made in the form prescribed in Appendix I to the second respondent. Admittedly, the petitioner has not filed any W.P.(C) No. 307 OF 2011 & 3211 OF 2011 19 declaration in form Appendix I, but for the reference made in Ext. P1 project report. As obvious from Ext. P1 itself, it is the “proposal for setting up a roller flour mill” by the petitioner. It is possible for anybody to set up the unit, with the proposal varied to the appropriate extent in the course of the proceedings, which hence does not reflect the actual capacity of the unit. Since the declaration as to the unit capacity has to be given in the particular form as given in the Appendix I and further since the petitioner admittedly has not submitted any such declaration, the violation stands rather admitted. 20. The next point to be considered is with regard to the alleged infringement of 'clause 5' as to the necessity for filing the 'return'. The said clause reads as follows: 5. Returns - The owner or any other person in charge of a roller floor mill shall furnish in the form prescribed in Appendix II to this Order the monthly returns of his mill to the District Supply Officer in whose jurisdiction the mill is situate. The petitioner has no case that the petitioner has filed the W.P.(C) No. 307 OF 2011 & 3211 OF 2011 20 necessary returns in the particular form as prescribed in Appendix (ii) before the second respondent. The only contention is that, since the petitioner started the Unit only in September 2010 and since the search and seizure was effected on 01.01.2011, the alleged lapse is only in respect of a few months, which ought not to have led to the confiscation proceedings under Clause 7. Here also, the violation of the Clause, as to the necessity to file return in the prescribed