Iranna S/O Karabasappa Malagi vs. Deputy Commissioner

Facts

The petitioner, Iranna S/o. Karabasaappa Malagi, proprietor of Parvati Trading Corporation, is engaged in the business of rice and food grains and holds a GST number. The Food Inspector registered a case (Crime No. 314/2021) under the Essential Commodities Act, 1995, leading to the seizure of the petitioner's vehicles and 49,050 kg of rice. The petitioner furnished bank guarantees totaling Rs. 33,50,000/- for the release of the vehicles, which were released on March 14, 2022. Subsequently, this Court quashed the criminal proceedings in Criminal Petition No. 101520/2022 on October 17, 2022. Following this, the petitioner applied for the release of the seized rice or its sale proceeds, along with the bank guarantees. The respondent rejected this application on March 20, 2023, erroneously stating that criminal proceedings were still pending.

Held

The Court held that the respondent's order dated 20/03/2023 was unsustainable. The primary issue was whether the respondent could continue to withhold the seized rice and bank guarantees after the criminal proceedings under the Essential Commodities Act, 1995, were quashed. The Court noted that the learned AGA fairly conceded that no other criminal proceedings were pending. Consequently, the Court found no justification for the continued detention of the seized rice or the bank guarantees. The Court reasoned that once the criminal proceedings are quashed, the basis for seizure and retention of goods and securities disappears. The Court directed the respondent to return the bank guarantees for cancellation within 15 days and to make payment of the value of the seized rice, along with interest at bank rates from the date of sale until receipt by the petitioner, within 30 days. The Court also reserved liberty for the petitioner to file civil proceedings for any differential in price. The ratio decidendi is that the quashing of criminal proceedings necessitates the return of seized goods and related securities, along with compensation for any loss or delay, including interest.

Key Issues

1. Whether the order dated 20/03/2023 passed by the respondent, rejecting the petitioner's application for the release of seized rice and bank guarantees, is sustainable in light of the quashing of criminal proceedings under the Essential Commodities Act, 1995? Petitioner's Contention: The petitioner argued that since the criminal proceedings (Crime No. 314/2021) under the Essential Commodities Act, 1995, have been quashed by this Court, there is no basis for the respondent to continue withholding the seized rice or its sale proceeds, nor the bank guarantees furnished for the release of vehicles. The respondent's order dated 20/03/2023, which cited pending criminal proceedings as justification for the denial, is therefore erroneous. Respondent's Contention: The respondent, through the learned AGA, fairly submitted that there were no other criminal proceedings pending concerning the said crime number, implicitly acknowledging the quashing of the primary criminal case. However, the respondent's initial order rejected the petitioner's claim based on the erroneous premise of ongoing proceedings.