The Supreme Court has set aside the conviction of two individuals under the Essential Commodities Act, 1955 (E.C. Act), ruling that the prosecution was “wholly misconceived” as the statutory control over the price and distribution of cement had been withdrawn by the Central Government prior to the date of the alleged offense.
A Bench comprising Justice B.V. Nagarathna and Justice R. Mahadevan allowed the appeals filed by the appellants, Manoj and Prakash, against the judgment of the Bombay High Court (Aurangabad Bench), which had affirmed their conviction. The Apex Court held that in the absence of a subsisting order under Section 3 of the E.C. Act on the relevant date, a conviction under Section 7 is “legally impermissible.”
Background of the Case
The case dates back to March 1994. The prosecution alleged that 400 bags of cement, released from the Public Works Department (PWD) godown for the construction of a Khar passage on the Kannad-Bahirgaon Road, were diverted.
On March 24, 1994, acting on secret information, the police raided the premises near Mistri Traders and Maharashtra Agro Industries in Aurangabad. The appellants were allegedly found in possession of 365 bags of government quota cement. It was alleged that the appellants had purchased the cement from the contractor and his associates with the intention of black-marketing it.
The appellants were charged under Section 3 read with Section 7 of the Essential Commodities Act, 1955, for violating the Maharashtra Cement (Licensing and Control) Order, 1973. On April 3, 2000, the Special Judge, Aurangabad, convicted the appellants and sentenced them to one year of rigorous imprisonment. The High Court dismissed their appeal on October 9, 2014, prompting them to approach the Supreme Court.
Arguments of the Parties
Senior Counsel appearing for the appellants argued that the conviction was legally unsustainable because the control over cement had been lifted before the incident.
- It was submitted that the Central Government, vide S.O. 168(E) dated March 1, 1989, had amended the Cement Control Order, 1967, thereby removing price and distribution controls.
- Further, by S.O. 624(E) dated August 7, 1990, the delegation of powers to State Governments regarding the regulation of retail cement distribution was rescinded.
- Consequently, on the date of the alleged offense (March 24, 1994), there was no operative order under Section 3 of the E.C. Act that could have been violated.
Per contra, the Counsel for the State of Maharashtra contended that the possession of government cement by the appellants was proved beyond reasonable doubt. It was argued that since the appellants held no valid license for storage, the contravention of statutory provisions was established. The State maintained that the burden was on the appellants to explain their possession of the diverted cement.
Court’s Analysis
The Supreme Court examined the statutory framework, specifically the effect of the Cement Control (Amendment) Order, 1989 and the subsequent notification of 1990.
Justice R. Mahadevan, writing the judgment, observed that the prosecution failed to place on record any subsisting control order or statutory restriction in force on the relevant date.
The Court noted:
“In the present case, the alleged offence is stated to have occurred on 24.03.1994. On that date, neither the Cement Control Order, 1967 nor the Maharashtra State licensing regime under the 1973 Order operated so as to attract penal consequences under Section 7 of the E.C. Act.”
The Bench relied on the precedent set in Kolhapur Canesugar Works Ltd. v. Union of India (2000), reiterating that when a statute is unconditionally omitted without a saving clause, all proceedings founded upon it must lapse.
The Court held:
“Applying the aforesaid principle, in the absence of any subsisting statutory control or saving provision operative on the date of the alleged incident, the prosecution of the appellants under the E.C. Act is legally untenable. On this ground alone, the conviction and sentence imposed upon the appellants are liable to be set aside.”
Observations on Investigation and IPC
While acquitting the appellants under the E.C. Act, the Court clarified that acts such as the diversion of government-supplied cement could still attract penal consequences under the Indian Penal Code (IPC).
However, the Court pointed out a significant lapse on the part of the investigating agency for not invoking the appropriate IPC provisions.
The Court observed:
“That said, this was a case where the investigating agency ought to have invoked appropriate provisions of the Indian Penal Code, having regard to the nature of the allegations and the evidence collected… The prosecution, however, did not culminate in any such exercise, nor can the High Court, in an appeal against conviction under a distinct statutory offence, substitute the conviction by invoking provisions of the Indian Penal Code for the first time.”
Decision
The Supreme Court allowed Criminal Appeal Nos. 1630 and 1631 of 2015. The judgment of conviction and sentence passed by the Trial Court and affirmed by the High Court was set aside. The Court directed that the bail bonds executed by the appellants be cancelled and any fine amount paid be refunded.
Case Details:
- Case Title: Manoj v. State of Maharashtra & Anr. (With connected appeal)
- Case Number: Criminal Appeal No. 1630 of 2015
- Coram: Justice B.V. Nagarathna and Justice R. Mahadevan
