PETITIONER: DAKSHINA KANNADA DISTRICT Vs. RESPONDENT: RUDOLPH FERNANDES DATE OF JUDGMENT: 29/02/2000 BENCH: M.B.Shah, B.N.Kirpal JUDGMENT:
Shah, J.
C.A.No.3214 of 1989 In this appeal, a Matador (Mini
Lorry) carrying 44 bags of cement was intercepted and seized
by the Bajpe Police, Dakshina Kannada on 22.8.1983.
Proceedings under Section 6A of the Act were initiated
before the Deputy Commissioner. During the pendency of the
proceedings, the respondent applied for interim release of
vehicle and the same was granted by order dated 1.9.1983 on
his furnishing a bank guarantee of Rs. one lakh. That
order was challenged by the respondent before the High Court
of Karnataka at Bangalore in W.P. No.16668 of 1983 on the
ground that imposition of such condition was illegal and
onerous. The learned Single Judge after considering second
proviso to Section 6A(1) held that the words market price
occurring in the section relate only to the essential
commodity sought to be carried. According to the learned
Judge the proviso gives a concession to the owner to avert
confiscation by paying fine not exceeding the market price
prevalent on the date of its seizure of the essential
commodity. According to the learned Judge if option is to
pay a fine equivalent to the market price of the vehicle
then there is no necessity to give such option. Owner
instead of paying a fine equivalent to the market price can
as well think of purchasing a new or fresh vehicle. He,
therefore, directed release of the vehicle accepting the
Bank Guarantee to the extent of Rs.500/- only. Being
aggrieved the State preferred an appeal before the Division
Bench of the High Court in WA No.2248 of 1983 which was also
dismissed by the impugned order dated 22.3.1988.
C.A. Nos. 5074-75 of 1989
In these appeals, two transport vehicles belonging to
the respondents carrying paddy were seized by the Police for
the alleged contravention of Food Control Orders.
Applications were filed before the Deputy Commissioner for
release of said vehicles. By order dated 16.2.1989 the
Deputy Commissioner passed an order directing the release of
the vehicles in question on their furnishing Bank Guarantee
in a sum of Rupees three lakhs each. That order was
challenged before the High Court of Karnataka by filing writ
petition Nos. 3563 and 3579 of 1989. The High Court
following its earlier decision in Rudolph Fernandes vs.
Deputy Commissioner, D.K. [1984 (1) Kar. L.J. 200]
(C.A.No.3214/89 before us) allowed the writ petitions and
reduced the fine amount to rupees 10,000/- each. Both the
orders are challenged before us in these appeals. The short
question involved in these appeals is whether fine in lieu
of confiscation contemplated under the second proviso to
Section 6A(1) of the Essential Commodities Act, 1955 (herein
after referred to as The Act) provides for levy of fine on
the basis of market value of the confiscated vehicle or
on the basis of the market price of the essential commodity
sought under: – to be carried by such vehicle. Section 6A
of The Act is as 6A. Confiscation of essential commodity
(1) Where any essential commodity is seized in pursuance of
an order made under section 3 in relation thereto, a report
of such seizure shall, without unreasonable delay, be made
to the collector of the district or the Presidency town in
which such essential commodity is seized and whether or not
a prosecution is instituted for the contravention of such
order, the Collector may, if he thinks it expedient so to
do, direct the essential commodity so seized to be produced
for inspection before him, and if he is satisfied that there
has been a contravention of the order may order confiscation
of
(a) the essential commodity so seized;
(b) any package, covering or receptacle in which such
essential commodity is found; and
(c) any animal, vehicle, vessel or other conveyance
used in carrying such essential commodity:
PROVIDED
PROVIDED FURTHER that in the case of any animal,
vehicle, vessel or other conveyance used for the carriage of
goods or passengers for hire, the owners of such animal,
vehicle, vessel, or other conveyance shall be given an
option to pay, in lieu of its confiscation, a fine not
exceeding the market price at the date of seizure of the
essential commodity sought to be carried by such animal,
vehicle, vessel or other conveyance. (emphasis supplied)
At the outset it is to be stated that the object of
The Act is to deter a person from illegally dealing in an
essential commodity and consequently, impose a deterrent
penalty against a person dealing in them illegally. While
doing so, the law takes care to prevent the owner of any
vehicle from aiding or assisting such an illegal activity.
As per the preamble of the Act, the Act is to provide, in
the interest of the general public, for the control of the
production, supply and distribution of, and trade and
commerce, in certain commodities. For this purpose, Section
3 empowers Central Government to provide for regulating or
prohibiting the production, supply and distribution of
essential commodity and trade and commerce therein if the
same is considered necessary or expedient inter alia for
maintaining or increasing supply of any essential commodity
or for securing their equitable distribution and
availability at fair prices by passing an appropriate order.
Section 6A as quoted above provides for seizure and
confiscation of essential commodity for contravention of any
order issued under Section 3. Further Section 6B provides
for issuance of show cause notice and the procedure for
confiscation of the seized essential commodity as well as
any package, covering or receptacle in which essential
commodity is found or any animal, vehicle, vessel or other
conveyance used in carrying such essential commodity.
Section 6C provides for appeal against the confiscation
order and the procedure for return of confiscated article in
case where appeal filed against the confiscation order or
the order passed under Section 7 forfeiting the essential
commodity is set aside. Thereafter, Section 6D provides
that the order of any confiscation under The Act shall not
prevent the infliction of any punishment to which the person
affected thereby is liable under The Act. Therefore, even
if the essential commodity or the vehicle is confiscated,
the person can be prosecuted and the penalty provided under
Section 7 can be imposed. Section 7(1)(a) provides for
punishment to any person who contravenes any order made
under Section 3. Section 7(1)(b) and (c) empowers the Court
to forfeit to the government any property in respect of
which the order has been contravened or to forfeit any
package, covering or receptacle in which the property is
found and also animal, vehicle, vessel or other conveyance
used in carrying the property.
In the light of aforesaid provisions, second proviso
to Section 6A is required to be considered. First it is to
be stated that the proviso limits the power of the competent
authority to recover fine up-to the market price for
releasing the animal, vehicle, vessel or other conveyance
sought to be confiscated. So maximum fine that can be
levied in lieu of confiscation should not exceed the market
price. For our purpose, relevant part of proviso would be
in the case of vehiclethe owner of suchvehicle shall be
given an option to pay, in lieu of its confiscation, a fine
not exceeding the market price at the date of seizure of the
essential commodity sought to be carried by suchvehicle.
Question is whether fine should not exceed the market
price of the seized essential commodity or whether it should
not exceed the market price of the vehicle. For this
purpose, it appears that there is some ambiguity in the
Section. It is not specifically provided that in lieu of
confiscation of vehicle a fine not exceeding the market
price of the vehicle or of the seized essential commodity is
to be taken as measure. Still however, it is difficult to
say that measure of fine is related to the market price of
the essential commodity at the date of its seizure. It
nowhere provides that fine should not exceed market price of
the essential commodity at the date of seizure of the
vehicle. The proviso requires the competent authority to
give an option to the owner of such vehicle to pay in lieu
of confiscation a fine not exceeding the market price. What
is to be confiscated is the vehicle and, therefore, measure
of fine would be relatable to the market price of the
vehicle at the date of seizure of the essential commodity
sought to be carried by such vehicle. This would also be
consistent with the scheme of section 7 which provides for
levy of penalty. It empowers the Court trying the criminal
case to pass an order forfeiting to the Government any
property in respect of which the order under Section 3 has
been contravened It also empowers forfeiture to the
Government any package, covering or receptacle in which the
property is found and in addition any animal, vehicle,
vessel or other conveyance used in carrying the commodity.
Therefore, not only the essential commodity which is seized
is to be forfeited, but the vehicle also could be forfeited
to the Government. Hence, measure of fine which is required
to be levied in lieu of confiscation under second proviso to
Section 6A(1) would be relatable to the market price of the
vehicle and not of the seized essential commodity. And, the
fine amount in lieu of confiscation is not to exceed the
market price of the vehicle on the date of seizure of
essential commodity. That is to say, limit of such fine
would be up-to the market price of the vehicle on the
relevant date and it is within the discretion of the
competent authority to fix such reasonable amount
considering the facts and circumstances of each case.
In Shambhu Dayal Agarwala v. State of West Bengal and
another1 after considering the scheme of Sections 6A and 7
and dealing with the proviso (ii) to sub-section (2) of
Section 6A, this Court observed: –
Section 6-A, therefore, merely confers power of
confiscation and not the power of release, disposal,
distribution, etc., except to the limited extent permitted
by sub-section (2) thereof. Of course, the second proviso
to sub-section (1) of Section 6A permits the grant of an
option to pay, in lieu of confiscation of any animal,
vehicle, vessel or other conveyance, seizure. a fine equal
to its market price at the date of (emphasis added)
Lastly we would mention that in the impugned order
dated 22nd March 1998, the High Court in support of its
reasoning referred to a similar provision under Section
115(2) of the Customs Act, 1962, which provides for
confiscation inter alia of vehicle used as means of
transport in smuggling of any goods or carriage of any
smuggled goods which is as under:- 115. Confiscation of
conveyance. (1)
(2) Any conveyance or animal used as a means of
transport in the smuggling of any goods or in the carriage
of any smuggled goods shall be liable to confiscation,
unless the owner of the conveyance or animal proves that it
was so used without the knowledge or connivance of the owner
himself, his agent, if any, and the person in charge of the
conveyance or animal 1[***]:
Provided that where any such conveyance is used for
the carriage of goods or passengers for hire, the owner of
any conveyance shall be given an option to pay in lieu of
the confiscation of the conveyance a fine not exceeding the
market price of the goods which are sought to be smuggled or
the smuggled goods, as the case may be.
Explanation.In this section, market price means
market price at the date when the goods are seized.
The Court observed that though the language of the
aforesaid proviso is clear, the idea sought to be conveyed
under the proviso to Section 6A(1) of the Act appear to be
the same. In our view, the analogy drawn by the High Court
is erroneous because the proviso specifically mentions that
where any such conveyance is used as a means of transport in
the smuggling of goods, the owner of any conveyance is to be
given an option to pay in lieu of the confiscation of the
conveyance, a fine not exceeding the market price of the
goods which are sought to be smuggled. Explanation provides
that market price means market price at the date when the
goods are seized. As against this, Section 6A second
proviso does not refer to payment of fine not exceeding
market price of the essential commodity but apparent
reference is a fine not exceeding the market price of the
vehicle sought to be confiscated. This appears to be
obvious because in case where market price of the seized
essential commodity is more than the price of the conveyance
then owner of the conveyance would not come forward to take
it back if he is asked to pay something more than its market
price. Similarly, when the market price of the seized
vehicle is much more than of the essential commodity, it
cannot be said that instead of confiscation it should be
released at a price which is less than its market price.
Further it is required to be noted that under Section 6B(2)
no order confiscating vehicle or other conveyance can be
passed if the owner proves to the satisfaction of the
competent authority that it was used in carrying the
essential commodity without his knowledge or connivance.
In the result, the appeals are allowed and the
impugned orders holding that measure of imposing fine in
lieu of confiscation under second proviso to Section 6A of
the Essential Commodities Act would be the market price of
the essential commodity seized are set aside. However,
considering the fact that since vehicles are already
released, no further directions are required to
confiscation. be given with regard to the fine amount in
lieu of Ordered accordingly. No costs.