Case
Title and Citation
Case No. W.P.(C)
No. 31340 of 2019
Date of Judgment: 5th April, 2025
Court: High Court of Kerala
Judge: Honourable Mr. Justice Mohammed Nias C.P.
Facts of the Case
The
petitioner is the managing partner of a roller flour mill engaged in the
production and distribution of wheat products. On 20.04.2007, a raid was
conducted on the petitioner's godown by the Taluk Supply Officer and the
Rationing Inspector, based on instructions from the second respondent, the
District Collector. During the raid, a total of 2,34,610 kilograms of wheat was
seized. The authorities alleged that this wheat was meant exclusively for
distribution through the Public Distribution System (PDS) and that the
petitioner was in illegal possession of it for unauthorized sale.
Following
the seizure, the prosecution was launched against the petitioner under Section
3(1) of the Essential Commodities Act, 1955, and Clause 5A of the Kerala
Rationing Order, 1966. Crime No. 247/2007 was registered, and a chargesheet
was filed, which culminated in C.C. No. 656/2007 before the Judicial
First Class Magistrate Court-I, Changanacherry. The case ended in acquittal
through judgment dated 13.03.2015 (Ext. P1).
Petitioner’s Claims
The
petitioner, following the acquittal, invoked Section 6C(2) of the
Essential Commodities Act, 1955, which provides that in the event of acquittal,
and if it is not possible to return the essential commodity, the owner must be
paid the price of the commodity as if it had been sold to the Government, along
with reasonable interest from the date of seizure.
The
petitioner claimed to have legally purchased the wheat through invoices (Exts.
P2 to P4) and also incurred transportation costs. He estimated a reasonable
market rate of ₹12 per kilogram for the seized
wheat, amounting to ₹28,15,320/-. A representation
was submitted to the District Collector (Ext. P5), requesting payment of the
said amount with 12% interest from 20.04.2007.
Since
no decision was made on the representation, the petitioner filed W.P.(C) No.
36483 of 2018, which was disposed of with a direction to the District
Collector to consider and pass orders on the claim. In compliance, the
Collector passed Ext. P7 order, allowing compensation only to the extent
of the controlled price, and sanctioned ₹14,49,440/-.
The petitioner then filed the present writ petition challenging the validity
and legality of Ext. P7.
Arguments Advanced
Petitioner’s
Counsel argued that under Section 6C(2) read with Section
3B of the Essential Commodities Act, the petitioner is entitled to receive
the procurement price, not merely the controlled price. It was contended
that the seizure was unlawful, and following the acquittal, the legal mandate
is to treat the wheat as though sold to the Government, with interest.
On
the other hand, the Government Pleader argued that the petitioner is
only entitled to the controlled price of the wheat, as provided under Section
6A(5) of the Act.
Legal Framework and Analysis
The
Court analysed various provisions of the Essential Commodities Act, 1955,
particularly Sections 6A, 6C, and 3B. Section 6A(2) provides for sale of
perishable commodities at controlled price. Section 6A(3) mandates that if no
confiscation order is passed and prosecution ends in acquittal, the sale
proceeds (if goods were sold due to perishability) shall be paid to the owner.
However,
Section 6C(2) is more directly applicable in this case. It states that
where prosecution ends in acquittal and the commodity cannot be returned, the
person concerned shall be paid the price of the commodity as if sold to the
Government, with reasonable interest from the date of seizure.
The
Court further referred to Section 3B, which governs the procurement
price of foodgrains and specifies the parameters to be considered for price
fixation:
·
The controlled price (if any)
·
General crop prospects
·
Consumer interests, especially of vulnerable
sections
·
Recommendations of the Agricultural Prices
Commission
These
factors are to be considered by the State Government with prior approval from
the Central Government.
Court’s Findings
The
Court found that the respondent authorities wrongly applied Section 6A(5)
to award compensation at the controlled price. This section is applicable only when
foodgrains are perishable or if public interest warrants immediate sale, which
was not the case here. The wheat was not shown to be of perishable nature, nor
was any urgency cited under Section 6A(2).
Accordingly,
the applicable provision is Section 6C(2). Since the petitioner was
acquitted and the wheat could not be returned, the law mandates payment of the procurement
price with reasonable interest. The District Collector’s reliance on the
controlled price was legally unsustainable.
Final Order and Directions
The
Court quashed Ext. P7 order passed by the District Collector. The second
respondent (District Collector) was directed to:
1.
Ascertain and calculate the procurement
price for the seized wheat in terms of Section 3B of the Essential
Commodities Act, 1955.
2.
Add reasonable interest from the date of
seizure, i.e., 20.04.2007.
3.
Pass fresh orders within two months from
the date of receipt of a copy of this judgment, in accordance with the findings
of the Court.
The
writ petition was allowed and disposed of with these directions.
Conclusion
This
judgment reiterates the statutory obligation under Section 6C(2) of the
Essential Commodities Act to compensate individuals whose essential commodities
were seized and not returned following acquittal. The compensation must reflect
the procurement price, not merely the controlled price, and must
include interest from the date of seizure. The decision strengthens the
protection of lawful traders against arbitrary state action.