PETITIONER: STATE OF U.P. Vs. RESPONDENT: O.P. SHARMA DATE OF JUDGMENT: 06/02/1996 BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. HANSARIA B.L. (J) G.B. PATTANAIK (J) CITATION: JT 1996 (2) 488 1996 SCALE (2)356 ACT: HEADNOTE: JUDGMENT:
O R D E R
This appeal by special leave has been placed before us
by a reference. The facts are not in dispute. The appellant-
State has filed an F.I.R. with allegations as under:
“It is submitted that Modi
Paints and Varnish Works,
manufactures Varnish and Paints at
Modinagar. This firm had been
buying linseed oil and other edible
oils in large quantities for quite
some time, and had been storing the
same and utilizing it for the
manufacture of paints and varnish.
This industrial unit had been
buying and storing the linseed oil
and other edible oils, and in this
respect the said industrial unit
has not obtained any licence.
The said industrial unit had
given an application for obtaining
a licence in respect of their
business for the purpose of said
oils for utilizing the same in
paints and varnish but their
application was rejected.
Subsequent to that also, the said
industrial unit kept purchasing,
storing and utilizing the said oils
and kept manufacturing said selling
paints and varnish. Earlier also
this firm had not made available
its records concerning stock of
bills.
To-day on 4.12.1985 in the
evening at about 3.30 p.m. myself
Abdul Qadir, Senior Marketing
Inspector, Modinagar under the
direction of Sri P.K. Upadhayaya,
Addl. District Magistrate [Supply]
Ghaziabad along with Sri Mohan
Singh, District Supply Officer,
Ghaziabad, Sri Rameshwar Dayal,
Supply Inspector Modinagar, Sri
Rais Ahmad, Supply Inspector
Modinagar, Sri S.K. Mishra,
Marketing Inspector, Sri S.K.
Singh, Marketing Inspector, Sri
Anil Kumar Srivastava, Marketing
Inspector, Modinagar, Sri J.R.
Joshi, Sub-Inspector, Sri
SamaiSingh, Constable No.56, Sri
Sukhbir Singh, Head Constable
No.53, Police Station Modinagar
etc. inspected the oilstored in the
oil tankers of Modi Paints and
Varnish Works, Modinagar. To verify
four tanks oil stored in them the
oils stated by the party, three
samples each were taken from every
tank total 27 samples and sealed on
the spot in the presence of the
representatives of the firm Sri
Kailash Chandra, Store Clerk and
Sri O.P. Sharma, Factory Manager,
the stock register pertaining to
the year 1985-86 consisting of 389
pages serially numbered was taken
into custody after the used pages
signed by me and the said Kailash
Chandra. The stock of stored oil
was inspected on the basis of the
stock register and the following
quantities of oil was found stored
in the tanks:
1. Soyabean oil 843 Qtls. and 57
kgs.
2. Castor oil 8147 Qtls. and 45
kgs.
3. Refined Soyabean oil 32 Qtls.
& 31 kgs.
The sample fard was prepared
of one sample each from the
collected samples and after taking
the signature of every one it was
handed over to the store clerk Sri
Kailash Chandra. The stock register
pertaining to the year 1984-85 was
taken into custody and according to
it on 4.11.1985 they had in their
stock 2000 kiloliters of linseed
oil stored with them. According to
the oil register taken into
custody, the aforesaid unit had
purchased the refines soyabean oil,
soyabean oil and linseed oil, had
stored the same, utilised the same
for manufacturing of varnish and
paints and sold the said paints and
varnish. The said oil comes in the
category of edible oils because
soyabean oil and refined soyabean
oil are such oils in which the food
can be cooked. In this way the said
unit has utilised the edible oils
in the manufacture of paints and
varnish in illegal manner and
without obtaining any licence.
In this way the said unit and
the owner of the said unit [Modi
Industrial Unit] Sri Kailash
Chandra, Store Clerk, Om Prakash
Sharma, Factory Manager and Modi
Paints and Varnish Works, Modinagar
have violated the clause 4 of the
U.P. Oil Seeds and Oilseeds
Products Control Order 1966 [as
amended upto date] Government Order
1284/XXIX-E-C-L-112[US]/77 dated
8.3.1977 which is published in the
U.P. Gazette dated 8th March 1977
and G.O. No.4500/XXIX-Section 8-22
Oil/82 dated 29.10.1982 and Clauses
2, 3, and 6 of Pulses Edible Oil
Seed and Edible Oil [Storage
Control] Order 1977 [as amended
upto date] which is a punishable
offence under Section 3/7 of the
Essential Commodities Act, 1955.
Therefore register a case
against all the aforesaid persons
and take necessary action. The
copies of recovery memos and
Supurdginama are enclosed herewith
accordingly the entire aforesaid
stored oil has been given in the
custody of Sri Nand Kishore,
General Manager, Modi Industries,
Modinagar and the sample seal and
the nine sealed samples along with
two stock registers are accordingly
being handed over by me in the
police station.”
The respondent filed Criminal Misc. Petition No.15985
of 1985 in the High Court of Allahabad. The learned single
Judge of the High Court by order dated January 7, 1986
quashed the F.I.R. holding that as per the case set out in
the counter-affidavit, the respondent was not engaged in the
sale or purchase of the oil seeds; he has been engaged in
the manufacture of paints and varnishes. Therefore, he is
not a dealer in oil seeds or edible oil covered under the
U.P. Oilseeds and Oil-seeds Products Control Order, 1966
(for short, the ‘Order’]. Accordingly, the prosecution
against the respondent is not in accordance with law. The
application was accordingly allowed and the F.I.R. was
quashed. Thus this appeal by special leave.
The term “dealer” has been defined in clause 2 [g] of
the Order thus:
“[g] `Dealer’ means a person
engaged in the business of purchase
or sale or storage for sale of oil
seeds – and oilseeds products, but
does not include the [Food
Corporation of India] the U.P. Food
and Essential Commodities
Corporation or a dealer who stocks
less than 5 quintals of oils or
less than 10 quintals of oil seeds
or less than 25 quintals”.
No dealer shall occupy or set up any premise for
purchase or sale or storage for sale of oil-seeds and oil-
seeds products, except under and in accordance with the
terms of a licence granted by the Regional Food Controller
under the Order.
Another Order, viz., Pulses, Edible Oil-seeds and
Edible Oils [Storage Control Order], 1977 was issued.
“Dealer” under clause 2 [f] thereof was defined to mean “a
person engaged in the business of purchase, sale or storage
for sale of any pulses, edible oil seeds or edible oils,
whether or not in conjunction with any other business and
includes his representative or agent”. Clause 3 thereof also
provides the mandatory requirement of obtaining licence by
dealers with the following language:
“3. Licensing of dealers:-
Notwithstanding anything contained
in any State Orders after the
expiration of a period of fifteen
days from the coming into force of
this clause, no person shall carry
on business as a dealer in pulses
or in edible oilseeds or in edible
oils except under and in accordance
with the terms and conditions of a
licence granted under a State Order
if the stocks of pulses or edible
oilseeds or edible oils in his
possession exceed the quantities
specified below :
(i) Pulses 10 quintals for all pulses taken together.
(ii) Edible oils 5 quintals for
including all edible
hydrogenated oils including
vegetable hydrogenated
oils vegetable oils
taken together
(iii)Edible oil- 30 quintals of
seeds including all edible
groundnut in oilseeds.
shell.”
Clause 4 imposes restriction on possession of pulses,
edible oil-seeds and edible oils. No dealer shall, after a
period of fifteen days from the coming into force of this
clauses either by himself or by any person on his behalf,
store or have in his possession at any time pulses, edible
oil seeds or edible oils in excess of the quantities
specified thereunder. The quantities specified or stock
limits – maximum and minimum – have been prescribed.
Admittedly, the respondent does not have any licence
issued under either of the Orders. Both the Orders issued
under Section 3 of the Essential Commodities Act regulate
“possession of” ant “dealing in” of the essential
commodities for equitable distribution at fair price or for
supply to the consumers. The question, therefore is: whether
the respondent is a dealer within the meaning of either of
the Orders? The case of the respondent is that since he
stored 843 quintals and 57 kgs. of soyabean oil, 8147
quintals and 45 kgs of castor oil and 32 quintals and 51
kgs. of refined soyabean oil for the purpose of manufacturer
of paints and varnish, he is not a dealer. That contention
was accepted by the High Court. We find that the High Court
is wholly incorrect in that construction. It is seen that
the dealer means a person engaged in the business of
purchase or sale or storage for sale of oil-seeds or oil-
seeds products. The exemption from the Order is given to the
Food Corporation of India and the U.P. Food and Essential
Commodities Corporation as they are public undertakings for
regulating distribution of essential commodities. They are
not dealer under the Orders. Any other dealer who stocks
quantity less than the minimal prescribed under the Orders
need not obtain licence. Even a person who is engaged in the
business of purchasing oils or oil seeds for the purpose of
using them in another commercial products is a dealer under
the definitions referred to hereinabove, when he stores the
quantity in excess of the limits prescribed by the Orders.
This controversy is no longer res integra.In State of
A.P. v. Abdul Bakhi & Bros. [(1964) 7 SCR 764], a three-
Judge Bench of this Court considered a similar question
having arisen under the Hyderabad General Sales Tax Act,
1950. The respondent was carrying on business of tanning
hides and skins and selling the tanned skins. He kept in
stores a total quantity of tanning barks. He contended that
since he was not dealing in them but stored them for the
purpose of manufacture, he could not be held to be a dealer
and that, therefore, he is not liable to pay the sales tax
on its turnover. This Court had rejected the contention and
held that when a person is buying or selling a commodity-
specified in the Rule for use as finished products in
another commercial use, he is engaged in the business of
buying, selling or supplying that commodity and, therefore,
he is a dealer within the meaning of that Act.
In view of the specific definitions contained in
clauses 2 [g] and 2 [f] of the respective Orders there is no
doubt to conclude that he is a dealer under the respective
Orders. Since he had not obtained a licence, he is liable to
be proceeded with in accordance with law. ‘
Dr. Ghosh, learned senior counsel appearing for the
respondent, contended that though the respondent had sought
for licence, the licence had not been given to him and,
therefore, he cannot be proceeded with. He also further
contended that the F.I.R. does not contain all the
ingredients of the offence and, therefore, the High Court
was right in quashing the F.I.R. It is seen that the
complaint is self-explanatory and has specifically mentioned
about the storage of oil and oil seeds without licence under
the respective Orders. It is not in dispute that the F.I.R.
did mention that he purchased and kept in store the above
quantity. Thus the ingredients have been specified. Whether
he has applied for licence or not, we are not concerned with
that controversy in this case.
The question then is: whether the High Court is right
in its exercise of inherent power under Section 482 Cr.P.C.?
This Court in State of Himachal Pradesh v. Pirthi i & Anr.
[Crl. A. 1752 of 1995] decided on November 30, 1995 held as
under:
“It is thus settled law that the
exercise of inherent power of the
High Court is an exceptional one.
Great care should be taken by the
High Court before embarking to
scrutinize the FlR/charge-
sheet/complaint. In deciding
whether the case is rarest of rare
cases to scuttle the prosecution in
its inception, it first has to get
into the grip of the matter whether
the allegations constitute the
offence. It must be remembered that
FIR is only an initiation to move
the machinery and to investigate
into cognizable offence. After the
investigation is conducted and the
charge-sheet is laid the
prosecution produces the statements
of the witnesses recorded under
Section 161 of the Code in support
of the charge-sheet. At that stage
it is not the function of the Court
to weigh the pros and cons of the
prosecution case or to consider
necessity of strict compliance of
the provisions which are considered
mandatory and its effect of non-
compliance. It would be done after
the trial is concluded. The Court
has to prima facie consider from
the averments in the charge-sheet
and the statements of witnesses on
the record in support thereof
whether court could take cognizance
of the offence, on that evidence
and proceed further with the trial.
If it reaches a conclusion that no
cognigisable offence is made out no
further act could be done except to
quash the charge sheet. But only in
exceptional cases, i.e. in rarest
of rare cases of mala fide
initiation of the proceedings to
wreak private vengeance process of
criminal is availed of in laying a
complaint or FIR itself does not
disclose at all any cognisable
offence – the court may embark upon
the consideration thereof and
exercise the power.
When the remedy under Section
482 is available, the High Court
would be loath and circumspect to
exercise its extraordinary power
under Article 226 since efficacious
remedy under Section 482 of the
Code is available. When the Court
exercises its inherent power under
Section 482 the prime consideration
should only be whether the exercise
of the power would advance the
cause of justice or it would be an
abuse of the process of the court.
When investigating officer spends
considerable time to collect the
evidence and places the charge-
sheet before the Court, further
action should not be short-
circuited by resorting to exercise
inherent power to quash the charge-
sheet. The social stability and
order requires to be regulated by
proceeding against the offender as
it is an offence against the
society as a whole. This cardinal
principle should always be kept in
mind before embarking upon
exercising inherent power. The
accused involved in an economic
offence destablises the economy and
causes grave incursion on the
economic planning of the Stats.
When the legislature entrusts the
power to the police officer to
prevent organized commission of the
offence or offences involving moral
turpitude or crimes of grave nature
and are entrusted with power to
investigate into the crime in
intractable terrains and secretive
manner in concert, greater
circumspection and care and caution
should be born in mind by the High
Court when it exercises its
inherent power. Otherwise, the
social order and security would be
put in jeopardy and to grave risk.
The accused will have field day in
establishing the economy of the
State regulated under the relevant
provisions.
In State of Bihar v. Rajendra Agrawalla [Crl. A. No.66
of 1996] decided on January 18, 1996, this Court observed as
under:
“It has been held by this Court in
several cases that the inherent
power of the court under Section
482 of the Code of Criminal
Procedure should be very sparingly
and cautiously used only when the
court comes to the conclusion that
there would be manifest injustice
or there would be abuse of the
process of the court, if such power
is not exercised. So far as the
order of cognizance by a Magistrate
is concerned, the inherent power
can be exercised when the
allegations in the First
Information Report or the complaint
together with the other materials
collected during investigation
taken at their face values do not
constitute the offence alleged. At
that stage it is not open for the
court either to shift the evidence
or appreciate the evidence and come
to the conclusion that no prima
facie case is made out.”
[JT 199 (1) 656] this Court held as under:
“… According to the complaint,
the respondents had thereby
committed breach of trust of
Government money. In support of the
above allegations made in the
complaint copies of the salary
statements of the relevant periods
were produced. In spite of the fact
that the complaint and the
documents annexed thereto clearly
made out a, prima facie, case for
cheating, breach of trust and
forgery, the High Court proceeded
to consider the version of the
respondents given out in their
petition filed under Section 482,
Cr.P.C. vis-a-vis that of the
appellant and entered into the
debatable area of deciding which of
the version was true, – a course
wholly impermissible…”.
We accordingly hold that the High Court has committed
grave error of law in quashing the F.I.R. The High Court
should be loathe to interfere at the threshold to thwart the
prosecution exercising its inherent power under Section 482,
Cr.P.C. or under Articles 226 and 227 of the Constitution,
as the case may be, and allow the law to take its own
course.
The appeal is accordingly allowed. The order of the
High Court is set aside. Investigating Officer is directed
to complete the investigation within four weeks from the
date of the receipt of this order and the appropriate Court
would dispose of the case within six months therefrom.
