Kerala High Court
D. Batch Moideen vs State Of Kerala And Ors. on 1 March, 1999
Equivalent citations: AIR1999KER282, AIR 1999 KERALA 282, (1999) 1 KER LT 824
Author: Ar. Lakshmanan
Bench: Ar. Lakshmanan
JUDGMENT Narayana Kurup, J.
1. The petitioner in O.P. No. 2340/99 of this Court is the appellant. The appeal is directed against thejudgment of the learned single Judge dismissing the original petition thereby upholding Ext. P10 order of confiscation passed by the second respondent District Collector, Kozhikode. The brief facts necessary for the disposal of the Writ Appeal arc as follows:
2. The appellant/petitioner is the Managing Partner of M/s. Munnar Traders, a licensed dealer under the Kerala Foodgrains Dealers Licensing Order, 1967 (hereinafter referred to as the 'Licensing Order'). Ext. P1 is the licence issued in his favour by the District Collector, Idukki wherein the place of business is shown as Munnar. Recently, the appellant purchased 2893 bags of boiled rice from two millers in Andhra Pradesh which was consigned by rail from Bhimavaram Junction in Andhra Pradesh to Kozhikode. It was necessitated on account of the fact that Munnar is not connected by rail. It was therefore necessary for the appellant to consign the stock to Kozhikode, Thrissur, Ernakulam or Kollam which are the only rake points in Kerala. Since wagon facility was easily available to Kozhikode, the stock of 2893 bags of rice was consigned to Kozhikode. The consignment in question reached Kozhikode on 18-11-1998. It was absolutely necessary for the appellant to clear the consignment from the railway goods-shed immediately on arrival on account of the exorbitant and formidable demurrage charges which would be realised by the railways if the goods are not cleared within the time stipulated. On 19-11-1998 after having identified the storage facilities in the godown of the State Warehousing Corporation (a Government body) at Cheruvannur in Kozhikode, the appellant as per Ext. P3, inlimated his licensing authority, viz. the District Supply Officer, Idukki who is the third respondent herein of the storage of the 2893 bags of rice in the godown at Cheruvannur. The clearance of the goods from the railway goods-shed took place on 20-11-1998 and the same was stored in the Warehousing Corporation's godown as per Ext. P2 receipt produced in the original petition. After storage, on 20-11-1998 itself the petitioner intimated the said fact to the District Supply Officer, Kozhikode vide Ext. P4. On 3-12-1998 when one of the partners of the firm approached the fifth respondent, viz. the Kerala State Warehousing Corporation where the goods were stored, for taking delivery of the rice, he was served with Ext. P5 proceedings of the District Collector, Kozhikode (second respondent) effecting seizure of the entire 2893 bags of rice. Ext. P5 was followed by a notice issued by the second respondent on 5-12-1998 (Ext. P6) proposing to confiscate the entire stock of 2893 bags of rice on the ground that there is contravention of the provisions of Section 3 of the Essential Commodities Act, 1955 (for short 'the Act). In Ext. P6 the appellant was directed to show cause why the rice in question shall not be confiscated. The appellant was also directed to appear before the District Collector, Kozhikodc on 11-12-1998 in pursuance of the said show cause notice. At the same time, on 5-12-1998 the second respondent passed a further order directing that the entire stock of 2893 bags of rice stored in the godown of the State Warehousing Corporation be handed over to the Civil Supplies Corporation to be sold through its fair price outlet, viz. Mavcli Store vide Ext. P7. The appellant thereupon approached this Court in O.P. No. 24685/98 challenging inter alia the very jurisdiction of the second respondent to proceed under the Act. This Court as per Ext. P8 judgment disposed of the said original petition recording the undertaking given by the Addl. Advocate General to the effect that the stock of rice will not be disposed of in pursuance of Ext. P7 order. Thereafter, the appellant appeared before the second respondent District Collector and filed a detailed representation, Ext. P9. However, the District Collector, as per Ext. P10, passed an order confiscating the entire stock of 2893 bags of rice belonging to the appellant and stored in the State Warehousing/Corporation solely on the ground that the appellant though a licensee under the Licensing Order, is not entitled to store any goods in a place outside Idukki District and as such violated the provisions of the Licensing Order and the Act. Aggrieved by Ext. P10, the appellant has moved this Court in O.P. No. 2340/ 99 seeking, inter alia, a writ of certiorari quashing Ext. P10 and for writ of mandamus commanding respondents 2 to 4 to forthwith release ihe entire quantity of rice stored by the petitioner in the godown of the Slate Warehousing Corporation at Cheruvanur and covered by Ext: P2 receipt as also for other incidental reliefs. It was contended by the appellant/petitioner that he is a licensee duly licensed under the Licensing Order and has its place of business in Munnar. The godown where the petitioner is entitled to stock bis rice is also mentioned in Ext. P1 licence. It was further submitted that the petitioner had purchased 2893 bags of rice from millers in Andhra Pradesh and the same was cleared from the railway goods-shed at Kozhikode on 20-11-1998 after giving intimation of the storage of the said quantity of rice in the godown of the Warehousing Corporation to the licensing authority of the petitioner as evidenced by Ext. P3. According to the petitioner, it became necessary for him to temporarily store the goods in Kohikode on account of the absence of sufficient transportation facility to immediately take the entire stock to Munnar and that such temporary storage was clearly bona fide. The further plea put forward by the petitioner is that had it been the intention of the petitioner to effect any business except in accordance with his licence, the godown of the State Warehousing Corporation would have been last place to be chosen by him. Since no business actually was done by the appellant as a dealer in any place other than its place of business al Munnar, it cannot be said that there is any contravention of the provisions of the Licensing Order of the conditions of licence. However the learned single Judge, as per the judgment impugned in this appeal, dismissed the original petition in limine on 29-1 -1999 itself, the date on which the same had come up for admission, on the ground that a dealer licensed by the licensing authority having territorial jurisdiction over the Idukki District of the concerned foodgrains is not entitled to store the goods is in contravention of the Licensing Order warranting confiscation in terms of Section 6A of the Act. Being aggrieved by the aforesaid judgment, the appellant has moved this Appeal.
3. We heard learned Senior Counsel Mr. S.V.S. Iyer for the appellant at length and also learned Addl. Advocate General Mr. T. M. Muhammed Youseff appearing for the State and Mr. Majnu Komath, appearing for the 5th respondent Warehousing Corporation.
4. Learned counsel for the appellant reiterated the contentions advanced by him before the District Collector and this Court and in a particular, it was urged that a violation of the conditions of licence even assuming there is a violation, will not amount to violation of the conditions of the Licensing Order warranting confiscation of the rice in question under Section 6A of the Act. However, learned Addl. Advocate General would contend that the appellant/petitioner though a dealer under the Licensing Order, cannot store goods outside the district in which his place of business is situate, viz. Idukki district and such storing of foodgrains will warrant initiation of confiscation proceedings under the Act. Having considered the rival contentions, we are of the view that Ext. P10 order of confiscation passed by the second respondent as affirmed by the judgment of the learned single Judge of this Court cannot be legally sustained. The finding entered by the District Collector that the appellant/petitioner has violated the provisions of the Licensing Order and the Act is not supported by the either authority under the provisions of any Statute or any other judicial pronouncement. At the outset, it has to be remembered that the Licensing Order does not contemplate a demarcation of territorial limit in the matter of the grant of licence under the said Licensing Order. No doubt, it is true that licence is granted to a dealer to carry on the business in accordance with the terms and conditions of the licence. It is also true that business should be carried on only in the place of business as noted in the licence. It is not the case of the respondents in the instant case that the appellant/petitioner had carried on business, namely, wholesale dealing in rice in a place other than the place of business mentioned in Ext. P1 licence. In fact, the ground for confiscation mentioned in Ext. P6 show cause notice issued in terms of Section 6B of the Act speaks only of storage of rice in the godown of State Warehousing Corporalion at Cheruvanur in Kozhikode by a dealer whose licensing authority is District Collector, Idukki. That is to say, the ground for confiscation mentioned is the storage of the goods in a place situate outside the territorial limits of the District concerned. Therefore, it is clear that there is no provision either under the licence or under the Licensing Order or for that matter in the conditions of licence which prohibits storage of the essential commodity in a place outside the place mentioned in the licence. The interpretation sought to be placed in that regard to make it illegal on the part of a dealer to store the rice in a godown situate outside the district concerned is totally unreasonable and unsupported by any logic or expediency. The reasoning of the District Collector in that regard cannot therefore be legally sustained.
5. The question then to be considered is whether storage of rice by a licensed dealer in a place other than what is mentioned in the nominal place of storage in his licence will lead to contravention of the provisions of the Licensing Order. In fact, the Licensing Order does not deal with the places of storage nor does it specify any prohibition regarding storage of the essential commodity in a place other than the place of storage mentioned in the licence. Therefore, storage of the essential commodity in a place other than what is mentioned in the licence cannot by itself result in contravention of the provisions of the Licensing Order justifying confiscation in terms of Section 6A of the Act. At best, it is a circumstance which can be token into account either by the licensing authority or the concerned official to issue suitable directions to the dealer to remove the goods from the place outside the district and store it in a place within the district, viz. within the control and jurisdiction of the licensing authority. In as much as that such storage would not result in contravention of the provisions of the Licensing Order, it cannot afford a sufficient or justifiable reason for confiscation in terms of Section 6A of the Act.
6. Another interesting aspect is that on a reading of Clause 12(e) of the Licensing Order in juxtaposition with the provisions contained in Section 6A of the Act would show that the ground which may not be sufficient to seize as essential commodity as such otherwise cannot be made a ground to justify a confiscation in terms of Section 6A of the Act. An apprehended contravention of the provisions of the Licensing Order would, no doubt, be sufficient ground for seizing the goods under Clause 12(c) of the Licensing Order. At the same time, only the actual contravention of the provisions of the Licensing Order can afford a ground for confiscation in terms of Section 6A of the Act. Thus, seizure effected under the provisions of the Licensing Order need not crystallise into a confiscation under Section 6A of the Act. A contravention of the provision may justify a seizure but cannot justify a confiscation under Section 6A of the Act. In this view of the matter, assuming for argument's sake that a seizure of the goods belonging to the appellant stored in the godown of the State Warehousing Corporation is justifiable, it cannot justify a confiscation under Section 6A of the Act because the appellant has not done any business in the said rice in Kozhikode and, therefore, there has, actually not been a sale of any essential commodity by a dealer having his place of business noted in the licence elsewhere. If that be so; contravention of the Licensing Order in the matter of storing cannot be considered as a contravention of Clause 3 of the Licensing Order. We accordingly hold that mere storage without an actual sale in a place other than the place of business does not result in contravention of the provisions of the Licensing Order and therefore does not justify confiscation under Section 6A of the Act. In this connection, distinction has to be drawn between contravention of the Licensing Order and contravention of the conditions of licence issued under the Order. Thus, even if there is a contravention of the conditions of licence, it cannot justify coercive proceedings against the commodity as such but can only justify in an action against the dealer and his licensee. Any such coercive action can only be at the instance of the licensing authority and not by the District Collector who is not the licensing authority visa-vis the appellant. So also, the contravention of the conditions of licence is not a sufficient ground for confiscation in terms of Section 6A of the Act and, therefore, storage of goods in a place other than the place mentioned as godown in the licence could only be contravention of the conditions of licence and therefore insufficient to justify a confiscation under Section 6A of the Act. In the instant case, it has to be noted that there is not even a contravention of the conditions of licence because the appellant/petitioner has vide Ext. P3 on 19-11-1998 intimated his licensing authority, viz. the District Supply Officer, Idukki regarding the storage of 2893 bags of rice in the godown of the State Warehousing Corporation and this is in compliance with note 2 to Clause 2 of the conditions of licence. Note 2 to Clause 2 of the licence is extracted below :
"If the licensee intends storing his foodgrains in place other than those specified above, he shall wherever possible give prior intimation to the licensing authority and where it is not possible, shall intimate the fact of taking additional or new godown for storage purposes within forty eight hours of the actual occupation, and shall also produce the licence for making requisite changes by the licensing authority."
In terms of the aforesaid requirement of note 2, the appellant has sent Ext. P4 intimation to the District Supply Officer, Kozhikode regarding the storage of 2893 bags of rice in the godown of the State Warehousing Corporation. It is a mailer of significance that the said letter was made available to the District Collector as well, as early as on 3-12-1998 at the time of the verification of the godown of the State Warehousing Corporation by the City Rationing Officer and other officials. The fact that the said letter was presented even on 3-12-1998 is a clear indication that such an intimation has actually been sent by the appellant on 20-11-1998 to the District Supply Officer as borne out by Ext. P4. This aspect of the matter has not been considered by the District Collector in the correct perspective in which case, it would have been found that there has been due compliance with the conditions of licence also by the appellant/petitioner in the instant case.
7. To recapitulate, it has to be held that inmcre storage of an essential commodity in a place other than that is mentioned in the license by itself does not contravene the provisions of the Licensing Order. The Licensing Order can be said to be contravened only when licensee has taken any place other than what is mentioned under the licence for carrying on business. Storage was in the circumstances of the case only as a temporary measure and not as part of or as preclude to do business in any place other than place mentioned in Ext. P1 licence. Place of storage of the foodgrains cannot be regulated with reference to any territorial jurisdiction of the licensing authority. In this connection, it is pertinent to observe that note 2 to Clause 2(b) of the licence specifically contemplates storage of an essential commodity in aplace other than what is mentioned in the licence. It is true that when a permanent godown is taken in addition to the one already noted and in possession of the licensee, prior intimation of at least 48 hours of the storage is required. It also contemplates production of the licence before the licensing authority for an endorsement. Thus, an endorsement by the licensing authority in the licence is obviously required only for an additional godown taken over and above the normal place of storage mentioned in the licence and such additional godown would be within the territorial limits of the licensing authority. Possession of the godown in the present case is totally different. No material has been brought to our notice to come to a conclusion that the intention of the licensee is to lake any additional godown as a prelude to do business. On the other hand, the appellant/petitioner is justified in submitling that storage in the godown of the State Warehousing Corporation at Kozhikodc was necessitated on account of nonavailability of immediate transportation facility for removal of rice by road from Kozhikode to Munnar. Exorbitant demurrage charges will be realised from the licensee if the goods are not cleared from the railway goods-shed within the specified time. It is in these circumstances that the appellant/petitioner thought of temporary storage in the godown of the State Warehousing Corponlion. More legitimate and transparent place which is accessible to the officials of the Civil Supplies Department cannot be thought of to store the rice. The petitioner then intimated this fact to his licensing authority as well. In such circumstances, mere storage purely as a measure of preservation of the foodgrains as a prelude to transporting the same to the place of business cannot in any manner be considered as violative of the provisions of the Licensing Order. The reasoning of the learned single Judge is that note 2 to Clause 2(b) of the conditions of licence can have application only for the purpose of storage of goods within the place situate in the territorial limits of the licensing authority. We are afraid that no such interpretation is liable to be placed on the terms and conditions of the licence. We can take note of the situation in which a dealer would be called upon to store goods outside the territorial limits of his district on account o'f factors beyond his control. In such circumstances, it will not enable him to store such goods in a place situate outside his district as a permanent measure or as part of his regular course ot business. It is only coupled with the storage, licensee also indulges in business in a place other than what is mentioned as his place of business in Ext. P1 licence, can it be considered as violation of Clause 3 of the Licensing Order? In the instant case it is crystal clear that not a single grain out of 2893 bags of rice was removed by the petitioner from the godown of the State Warehousing Corporation from 20-11-1998 when the storage actually took place till 3-12-1998 when the goods were seized. In that view of the matter, we have no hesitation in holding that there is no valid ground for a drastic measure like confiscation of the entire goods under Section 6A of the Act.
8. To cap it all, the licensing authority of the appellant has not reported that there has been a contravention of the conditions of licence or the Licensing Order by the appellant. If there was any contravention of the provisions of law, the second respondent District Col lector should have conducted necessary enquiries with the licensing authority of the appellant. It is not as if the department is powerless nor is it that no coercive action could be taken against the appellant except by proceeding against the stock of rice. Significantly, there is no finding in Ext. P10 to the effect that the appellant had not sent any intimation regarding the storage of 2893 bags of rice stored at the godown of the State Warehousing Corporation. In the aforesaid view, it has also to be observed that conferment of powers on any officers of the Government to act as licensing authority under the Licensing Order is only for administering convenience. Demarcation of the districts would not render a person licensed under the Licensing Order unauthorised dealer so as to warrant a drastic action under Section 6A of the Act. The view we are taking is fortified by the following judicial pronouncements.
9. One such decision relied on is East India Commercial Co. Ltd. v. Collector of Customs, AIR 1962 SC 1893 wherein it has been held by the Apex Court that breach of condition in licence will not about to breach of Order under the Imports and Exports (Control) Act, 1947 and issuance of notice was without jurisdiction. Next case relied on by the learned counsel for the appellant is Boothalinga Agencies v. V.T.C. Poraiswami, AIR 1969 SC 110. There again, it was reiterated that breach of conditions of licence will not tantamount to breach of statutory Order within the meaning of Section 5 of Imports and Exports (Control) Act, 1947. Reliance was also placed on the following decision of this Court in Abdulla Kova v. State, 1978 KLT 291 wherein a learned single Judge of this Court held that violation of the terms and conditions of the licence issued under a Statutory Order will not amount to violation of the provisions of the Order. In Narayana Prabhu & Sons v. State of Kerala and others, 1981 KLT SN 43, Case No. 81, it has been held as follows :
"The note to Clause 2(b) of the licence on the other hand enables a licencee to store his foodgrains in places other than those specified in the licence and the only obligation in that regard so far as the licensee is concerned is to give intimation of storing in such places to the licensing authority. The note also permits the licensee to use premises other than those mentioned in the licence as a storage of foodgrains without prior intimation in so far as as per that note he need give prior intimation only wherever that is possible."
The circumstances under which an order of confiscation is liable to be passed by the District Collector under the Essential Commodities Act came up for consideration in Sathish & Co. v. State of Kerala, 1983 KLT 240 wherein this Court sounded a note of caution by observing that the discretion in this regard should be exercised judicially and properly and not arbitrarily.
10. Thus, having regard to the totality of the facts and circumstances brought to our notice and the legal position settled by judicial pronouncements, we have no hesitation in holding that the learned single Judge erred in finding that the appellant had committed violation of Clause (3) of the Licensing Order in the matter of storing of rice covered by Ext. P2 in a place situate outside Idukki District. The approach of the second respondent District Collector is entirely unsustainable. Ext. P10 proceedings leading to confiscation of rice is arbitrary and without jurisdiction. In the aforesaid view, we quash Ext. P10 and set aside the judgment of the learned single Judge and as a sequel, allow this appeal and original petition as prayed. In the result, there will be a direction to the second respondent District Collector, Kozhikode to release the entire stock of rice belonging to the appellant/ petitioner and kept at the godown of the Kerala State Warehousing Corporation at Cheruvannur covered by Ext. P2 including such quantity out of the original stock of 2893 bags of rice which had been removed earlier to the appellant/petitioner forthwith unconditionally.
11. Writ Appeal is allowed as above.