Case: M/S. Holani Auto Links Pvt. Ltd Vs. State Of M.P

2. Brief facts leading to the filing of this appeal are as follows.The Appellant Company was appointed as a Distributor by Castrol India Ltd. (in short the "manufacturing company") by entering into an agreement dated 1st of June, 1998. On 27th of May, 1999, a team headed by Deputy Collector, Food Department, Sagar, M.P. came to the office premises of the appellant company for inspection and asked for the records and various registers and the lists. Before the Deputy Collector and the Members of the Food Department, Sagar, the representative of the appellant company had explained that it was only a Distributor and therefore was not required to maintain all those lists and other things. However, the Deputy Collector and his team seized around 33344.80 litres of lubricating oil stored in the premises of the appellant company. The value of the oil was worth Rs.2,01,840/-. On the basis of such inspection, the Collector, Sagar on 2nd of June, 1999 issued a show cause notice to the appellant company and thereafter evidence from both the sides were adduced and the Collector by his order dated 20th of December, 1999 found that the appellant company had violated Clauses 3(1) to 3(3) and 6(1) of the Order of 1977 and, accordingly, he ordered confiscation of the commodities worth Rs.1,00,000/- out of the commodities seized from the possession of the appellant company under Section 6(a) of the Essential Commodities Act, 1955. In the alternative, it was directed that in case the appellant company wanted the release of the commodities worth Rs.1,00,000/-, it may deposit Rs.1,00,000/- instead and get the release of the entire stock of oil. Feeling aggrieved, the appellant company filed an appeal under Section 6-C of the Essential Commodities Act, 1955 before the Sessions Judge, Sagar. The learned Sessions Judge, Sagar by the order dated 24th of February, 2000 had set aside the order of the Collector and allowed the appeal of the appellant company holding that the appellant company was not covered by the definition of "Dealer" under the Order of 1977 and accordingly, it was neither liable to exhibit the price nor was it required to keep the accounts. Feeling aggrieved by this order of the Sessions Judge, Sagar, the State of M.P. filed a Criminal Revision No.890 of 2000 before the High Court and the High Court by the impugned judgment and order dated 3rd of May, 2001 had allowed the revision case thereby setting aside the order of the Sessions Judge and restoring the order of the Collector, Sagar. Against this decision of the High Court, a special leave petition has been filed in respect of which leave has already been granted.

Reasoning:
7. Having examined the findings of the High Court in the impugned judgment in the light of the definition of Dealer and the 2nd exception to it, as reproduced herein earlier, we agree with the views expressed by the High Court that the appellant company falls within the definition of Dealer and will not be saved from the rigor of the provisions by taking shelter of the 2nd exception to it. Let us first see if the appellant company is covered by the main part of the definition of Dealer. As noted hereinabove, for this, a person must carry on the business of purchase or sale of commodities etc. From the above definition, it also emerges that mere storage will not suffice so as to fall within the definition of Dealer. The storage must be for sale as is clear from the expression storage for sale. In this case, the learned senior counsel for the appellant company has argued that the commodities were only stored with the appellant company and there was no sale to the general public. However, from the agreement entered into by the appellant company with the manufacturing company, we find certain clauses, which give the clear impression that the appellant company was carrying on the business of purchase and sale and that it was not a mere storage depot of the manufacturing company but all the transactions were carried on a principal to principalconsidering the fact that more than 5 kilolitres of engine oil was found in the premises of the appellant company and reading the agreement as a whole, in particular, the clauses quoted hereinabove, we have no doubt in our mind that the appellant company squarely falls within the main part of the definition of Dealer. In this view of the matter, we affirm the findings of the High Court that the appellant company is covered by the main part of the definition of Dealer.8. The significance, if any, of the argument of the learned senior counsel for the appellant company that no sales were made to the general public will be considered by us later. In this context, let us first see if the appellant company falls within the 2nd exception to the definition of Dealer. The 2nd exception provides that Any oil company producing or storing Kerosene, Diesel (High Speed Oil), Petrol (Motor Spirit), cooking gas, or engine oil in its storage depot or installation wherefrom no sales are made to the general public shall not fall with in the definition of dealer. The reasons given by the High Court in support of its finding that the appellant company does not fall within the purview of this exception are that first, this exception applies only to the Oil company and secondly, the use of the term its in the exception means that the storage depot or installation should belong to the oil company and not any storage depot or installation. The learned senior counsel for the appellant company argued that an extended meaning should be given to this exception and that the High court has given unwarranted importance to the term its. We have already noted the two decisions of this court relied upon by the learned senior counsel for the appellant company in support of this submission herein earlier. In this regard, we would say that admittedly, the appellant company is not an oil company, which in this case is Castrol India Ltd. (manufacturing company). The 2nd exception, as rightly held by the High Court, applies only to an oil company. By this we mean that what is exempted through this provision is the Oil company if it satisfies the ingredients laid down in that exception and not the storage depot or installation. It is not the case of the appellant company that it is an Oil company and therefore should be covered by this exception. The appellant company is only trying to establish that it is merely a storage depot or installation wherefrom no sales were made to the general public and therefore, although, it did not belong to the oil company, it should nevertheless be given the benefit of this exception. We are unable to agree with this submission of the learned senior counsel for the appellant company. Admittedly, the term its refers to the installation or storage depot of the oil company and we would desist from giving the same an extended meaning for two reasons. First, as rightly held by the High Court, an exception must be construed strictly and in that view of the matter, we cannot interpret the same to add something to it by implication. Secondly and in our view, more importantly, by doing that, we would be ignoring the clear intention of the legislature. This is because if we compare the erstwhile definition of Dealer, as reproduced herein earlier, with the amended definition, it is pellucid that the intention of the legislature was to exclude people like the appellant company from the purview of the exception. We may add here that we may have accepted the contention of the appellant company if the definition of Dealer had not been amended in 1998 in the manner indicated herein earlier. We may also have given an extended meaning to the term "its" but this would militate against the clear intention expressed by the legislature by bringing about the said amendment. This was not the case in the two decisions of this court relied upon by the learned senior counsel for the appellant company and in fact, in those decisions, the language of the Act permitted liberal interpretation. For this reason, these two authorities cannot be of any help to the appellant company. It is true that no sales were made from the storage depot of the appellant company to the general public. But from a plain reading of clause 8(d) of the agreement, as quoted herein earlier, it is apparent that sales were made by the appellant company to its customers/dealers. The agreement clearly shows that the appellant company, although termed as a Distributor, essentially did what Dealers do. The terms Dealer and Distributor can be used interchangeably. However, we should not engage ourselves in the discussion whether any difference does exist between the two. Instead, we should try to see the substance of what was happening in the premises of the appellant company. From the agreement, it is clear that the appellant company, as noted hereinabove, was purchasing the commodities from the manufacturing company, stocking them for sale and selling them to its customers/dealers and was not merely storing them as alleged. Therefore, the appellant company was not merely storing the commodities but purchasing the commodities, selling it at the price prescribed by the manufacturing company and also earning profit, by whatever name called.9. Let us now take up the second question for our consideration. If we look at Clauses 3(1), 3(2), 3(3) and 6(1) of the order of 1977, the clear requirement is that for their violation, one must be a Dealer as defined in Clause 2(a). In this view of the matter and having come to the conclusion that the appellant company is a Dealer, by whatever name called, the High Court and the Collector had rightly held that the appellant company had violated the said clauses. The reason given by the Sessions Judge for holding the appellant company not liable cannot be accepted because we find from the judgment of the Sessions Judge that it has relied on wrong definitions to reach that conclusion. The Sessions judge relied on the definition of "Trader" as given in M.P. Govt. Department of civil Supply of Food and Protection of Consumer, Ministry Ballabha Bhawan Bhopal Notification No. F.one/26/98/29/1 dated 10.9.98. The definition of Trader and the exceptions to it are different from the definition of Dealer and its exceptions. We are only concerned with the amended definition of Dealer in this appeal and as noted herein above, after comparing the erstwhile definition of Dealer and the amended definition of Dealer, it is pellucid that the intention of the legislature was to exclude people like the appellant company from the purview of the exception. Faced with this situation, the learned senior counsel for the appellant company argued that the principle of Mens Rea should be applied in this case and it should be held that since the appellant company had no intention to sell the commodities, it should not be held guilty. He relied on Nathulal Vs. State of M.P. [(AIR) 1966 SCC 43] wherein it was held that an offence under Section 7 of the Essential Commodities Act, for breach of Section 3 of the Madhya Pradesh Food grains Dealers Licensing Order, 1958, necessarily involved a guilty mind as an ingredient of the offence. It was further held in that decision that considering the scope of the Act, it would be legitimate to hold that an offence under Section 7 of the Act was committed by a person if he intentionally contravened any order made under Section 3 of the Act and that the object of the Act would be best served and innocent persons would also be protected from harassment if Section 7 was so construed. Mr. Mohta strongly relied on the remarks made by the High Court in paragraph 8 of the impugned judgment to the effect that no sales were made by the appellant company to the general public. From the clauses of the agreement, as quoted herein above, and in view of our discussions made hereinabove, we must come to the conclusion that the appellant company was at least indulging in the activity of purchase and sale of lubricant oil. In Nathulals case [supra], the dealer had made an application for a licence under the order of 1958 and was under a bona fide impression that the licence had been issued to him though not actually sent to him and since the rejection of the licence was not communicated to him, he had stored the food grains in his godown. In these circumstances, it was held that since he had not intentionally contravened the provisions of Section 7 of the Act, he should be held not guilty. This case is distinguishable on facts from our case. Let us now see if the appellant company in the instant case had any such bona fide impression. It is the averment of the appellant company that it had applied for a licence and it is not in dispute that the appellant company did not get any licence under that order. It was claimed by the appellant company that its application was pending. Therefore, it would be wrong to say that the appellant company had any bona fide impression in this case that it was granted a licence.10. Even otherwise, as regards the finding in the impugned judgment that the goods were not sold to the general public, relying on which the learned senior counsel for the appellant company has contended before us that it was not selling goods to the general public but was only an authorized distributor of the commodity to the traders, we would make two points. First, the definition of Dealer does not specify that to be a Dealer, the goods must be sold to the general public. Secondly, if we look at the 2nd exception to the definition of Dealer, it says that an Oil company producing or storing kerosene diesel etc. in its storage depot or installation wherefrom no sales are made to the general public would not be a Dealer. With regard to this exception, we have already noted herein earlier that this exception applies only to the Oil company. Admittedly, the appellant company is not an oil company and neither is it the case of the appellant company that it is an oil company. Therefore, looking at the main part of the definition of Dealer, it is pertinent to note that it nowhere requires as one of its ingredients that to be a Dealer, the commodities should be sold to the general public. The very idea of sale to the general public finds mention for the first time in the 2nd exception. Does that mean that we should include this aspect i.e. sale to the general public as an ingredient of the main definition. We are afraid that it is not permissible for us to do that. In this regard, we may note that the function of a proviso or an exception is that it qualifies the generality of the main enactment by providing an exception and taking out as it were from the main enactment a portion which but for the proviso would fall within the main enactment. Ordinarily it is foreign to the proper function of the proviso to read it as providing something by way of anthe present case, the appellant company was selling commodities to its customers or dealers, may be not to the general public, but in view of the last preceding discussion, this argument of the learned senior counsel for the appellant company does not hold any water. Furthermore, the exception, as noted herein earlier applies only to the oil company and on this count also, the appellant company cannot claim the benefit of the exception.