Abhishek Agarwal vs. State Of U.P. And 2 Others
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The petitioners, Abhishek Agarwal and Ved Prakash Agarwal, filed petitions under Article 227 of the Constitution of India challenging orders that rejected their application for the release of seized molasses. An FIR was registered against them under Section 420 IPC and Sections 11/12 of the U.P. Sheera Niyantran Adhiniyam, 1964, alleging unauthorized storage of 9492 quintals of molasses. The petitioners claimed to be trading Khandsari Molasses through their firm, Khiansh Enterprises, and provided GST invoices, purchase bills, and stock register details. They argued that the molasses was purchased legally and taxes were paid. The seized molasses was given into the custody of a representative of the petitioner's firm. The Magistrate rejected the release application, citing Section 8 of the U.P. Sheera Niyantran Adhiniyam, 1964, and the State contended that the molasses was obtained unauthorizedly from a sugar factory. The revisional court upheld the Magistrate's order.
Held
The High Court allowed the petitions, setting aside the orders of the Magistrate and the revisional court. The Court held that the Magistrate had failed to exercise his jurisdiction properly by rejecting the release application. The Court reasoned that Section 8 of the U.P. Sheera Niyantran Adhiniyam, 1964, which was relied upon by the Magistrate, is applicable to sugar factories and not to the trading of Khandsari Molasses by a firm like the petitioners'. The petitioners had presented GST registration, bills, and stock details, and the learned A.G.A. did not point out any discrepancies. The Court also noted that no other person was claiming the molasses. Citing the Supreme Court's observations in Sundar Bhai-Amba Lal Desai Vs. State of Gujarat, the Court emphasized the general rule that case property should be released expeditiously to prevent loss to the owner and to avoid unnecessary custody. The Court further observed that the offence is compoundable and the molasses is subject to diminishing value. Therefore, the learned C.J.M. was directed to release the molasses in favour of the petitioners after taking personal bonds and one surety bond of adequate amount, with the value to be assessed by a competent authority, and to impose any other necessary conditions.
Key Issues
1. Whether the learned Magistrate and the revisional court erred in rejecting the application for the release of seized molasses, considering the petitioners' claim of lawful trading and submission of relevant documents, and the nature of the offence under the U.P. Sheera Niyantran Adhiniyam, 1964? Petitioner's Arguments: The petitioners contended that the prosecution was initiated arbitrarily without any offense being committed. They argued that all purchase bills, GST invoices, and stock register details pertaining to their trading of Khandsari Molasses were duly furnished to the investigating officer, but were ignored. They highlighted that the GST registration certificate, GST bills, returns, and e-way bills supported their claim of legitimate trading. They also questioned the reliance on the Lab Test Report, especially after their request to test samples through a Central Government laboratory was denied, and cited an RTI disclosure from the National Sugar Institute, Kanpur, stating that chemical examination cannot differentiate between Khandsari and Sugar Mill molasses. Furthermore, they argued that Section 16 of the Act makes the offence compoundable and there is no bar to transporting molasses within the state, nor have forfeiture proceedings been initiated. They relied on the Supreme Court's decision in Sundar Bhai-Amba Lal Desai Vs. State of Gujarat regarding the expeditious release of case property. Respondent's Arguments: The learned A.G.A. contended that the petitioners are accused in the case, charge-sheet has been submitted, and the molasses was found in their possession without relevant papers. They argued that the molasses was obtained from a sugar factory in an unauthorized manner and, being case property, cannot be released. They asserted that there was no illegality or infirmity in the impugned orders.
Sections Cited
Section 420 IPC, Section 11 U.P. Sheera Niyantran Adhiniyam, 1964, Section 12 U.P. Sheera Niyantran Adhiniyam, 1964, Section 8 U.P. Sheera Niyantran Adhiniyam, 1964, Section 16 U.P. Sheera Niyantran Adhiniyam, 1964, Section 451 Cr.P.C.
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
order.
Heard Sri Swetashwa Agarwal, learned counsel for the petitioners, Ms. Sushma Soni, learned A.G.A. for the State and perused the record
These petitions Under Article 227 of the Constitution of India have been filed with the following prayers: (I) and Section 11/12 U.P. Sheera Niyantran Adhiniyam, 1964, P.S. Kotwali Dehat, District Bulandshahar.
(ii) Issue an appropriate order or direction to the court below/C.J.M. Bulandshahar to release the molasses in question weighing 9492 quintal, seized by the O.P. No. 2 from the petitioner's firm-Khiansh Enterprises in connection with Case Crime No. 271 of 2021, under section 420 IPC and Section 11/12 UP. Sheera Niyantran Adhiniyam, 1964, P.S. Kotwali Dehat, District Bulandshahar.
In brief the facts are that an FIR Crime No. 271 of 2021, under section 420 IPC and 11/12 U.P. Molasses Control Act, 1964 was registered against the petitioners and one Tushar Agarwal and Sunil Kumar. The allegations of the FIR are that on 4.4.2021 a secret information was received by the complainant regarding storage of molasses, pursuant whereto a raid was conducted by the Excise Officials and upon asking for the molasses related documents, no license or permit could be produced, instead four bills of purchase of Khansari Molasses weighing 755 quintal could only be produced. The molasses stored in the tanks appeared to be much more and there was an apprehension of the same being manufactured by Sugar Mill and 9492 quintal of molasses was found stored in the storage tanks. Samples of molasses was taken at the spot as per the relevant Rules. One of the sample was made available to one Tushar at the factory premises and one sample was sent to the Regional Lab for examination and the seized molasses was given in the custody/superdagi of Unit Representative Tushar Agarwal, directing him not to use or sale the same and that the provisions of UP. Sheera Niyantran Niyamawali, 1974 and U.P. Sheera Nivantran Adhiniyam, 1964 have been violated, for which the first information report is being registered. After investigation charge-sheet has been submitted.
Learned counsel for the applicants submitted that the Excise Officials have initiated the prosecution of the petitioners on their own whims and fancies without there being any offence committed by them. Learned counsel further submitted that all the bills of purchase, 2
GST Invoices and details of Stock Register were duly furnished by the petitioners to the Investigating Officer during the course of investigation regarding the trading of Khandsari Molasses undertaken by them, but no heed was deliberately paid to the same. The petitioners also brought on record the GST Registration Certificate of the firm Khiansh Enterprises, GST Bills and Returns from Jan. 2021 to March 2021, E. Way Bills, GST Bills and Stock Register relating to the purchase and sale of Khandsari Molasses, in support of the release application moved by them. Perusal of the aforesaid bills and invoices would reveal that the petitioners have been trading with various firms across State of U.P in respect of sale and purchase of Khandsari Molasses, upon which requisite taxes were duly paid. It is further submitted that neither the Investigating Officer nor the Excise Officials disputed any of the Bills or Invoices or Stock Details furnished by the petitioners along with the release application regarding sale and purchase of Khandsari Molasses. However, relying upon the Lab Test Report of the Excise Department, it was alleged that the Molasses in question has been found to be manufactured by Sugar Mill. The aforesaid Lab Report is of no consequence, once the Excise Department got the sample tested through its own Regional Lab, despite a request having been made by the petitioners to get the sample tested through the Lab of Central Government. As per the information obtained under the R.T.I. Act from the National Sugar Institute, Kanpur, it was disclosed that:- (i) It cannot be determined by chemical examination as to whether the sample of Molasses pertains to Khandsari Molasss or that of Sugar Mill. (ii) The Institute/National Sugar Institute has not been informed of any yardstick of differentiating between Molasses obtained through Khandsari or Sugar Mill. 3
The learned Magistrate illegally and erroneously rejected the release application of the petitioners. It is also contended that under section 16 of the Act the offence is compoundable. There is no bar for transportation of the molasses within the State. No proceedings for forfeiture of the molasses have been initiated by the Excise Department. The revisional court also failed to consider the aforesaid facts and legal points and has dismissed the revision. Both the courts below have failed to exercise juri iction vested in its.
Learned A.G.A. contended that petitioners are accused in the case and charge-sheet has been submitted against them. 9492 quintal molasses was found in the possession of petitioners and they could not show the relevant papers. The molasses was obtained from sugar factory in an unauthorized manner. The molasses has been seized and is a case property. Hence, it can not be released in favour of the petitioners in the case. There is no illegality or infirmity in the impugned order.
It is undisputed that the molasses has been taken from possession of the petitioners. Case U/s 420 IPC and 11/12 U.P Sheera Niyantran Adhiniyam, 1964, has been registered against the petitioners. The learned Magistrate has rejected the application on the ground that under the Provision of Section 8 of U.P. Sheera Niyantran Adhiniyam, 1964 no person can store or transport the molasses without permission or license of the Controller and the petitioners have failed to file any license or permission for storage or transportation of the molasses. Section 8 U.P. Sheera Niyantran Adhiniyam, 1964 provides as follows: "(1) The Controller may specify the order in which storage tank in a factory shall be filled or emptied and such direction shall be binding on the occupier of the sugar factory. 4
(2) No molasses produced or stored in a factory in a particular molasses year shall be mixed with any molasses of the previous molasses year without the previous permission of the Controller in writing. (3) No molasses shall be stored in a factory until it has been weighed or measured. (4) Occupier of a sugar factory shall take adequate safeguards to see that the wastage in the storage of molasses in a year does not exceed two per cent of the total quantity stored. In case the wastage exceeds two per cent, the occupier shall be liable to penalties imposed under the Act, for the contravention of the rule: Provided that if it is proved to the satisfaction of the Controller that the wastage or deficiency in excess of the above prescribed limit has been caused by accident or any other unavoidable cause, the occupier shall not be liable to penalty.
The aforesaid provision is applicable to the sugar factories. The case of the petitioners is that they are sole proprietor of Khiansh Enterprises and said firm is duly registered with GST Department. The firm is engaged in trading of Khandsari Molasses through valid bills of purchase upon the payment of requisite taxes. Petitioner have filed all the bills of purchase sale and also copy of the stock register. Learned A.G.A has not pointed out any discrepany in it. No other person is claiming the impugned molasses. In case of Sundar Bhai-Amba Lal Desai Vs. State of Gujrat, reported in 2002 (10) SCC 283 the Hon’ble Supreme Court has observed as follows: "In our view, the powers under section 451 Cr.P.C. should be exercised expeditiously and judiciously. It would serve various purposes, namely:
“1. owner of the article would not suffer because of its remaining unused or by its misappropriation; 5
court or the police would not be required to keep the article in safe custody; 3. if the proper panchnama before handing over possession of the article is prepared, that can be used in evidence instead of its production before the court during the trial. If necessary, evidence could also be recorded describing the nature of the property in detail; and 4. this juri iction of the court to record evidence should be exercised promptly so that there may not be further chance of tampering with the articles."
The offence is also compoundable in nature. In view of the law laid down it is a general rule that case property should be released. It should not to be retained in custody of the court or the police for any time longer than what is absolutely necessary and it should be directly or indirectly disposed of and court must pass order for its disposal. Further where the property is subject to speedy and natural decay, resulting in diminishing its value should not be kept lying unattended.
Considering all the facts and attending circumstances of the case it was just and proper on the part of the Magistrate to release the molasses in favour of the petitioners after taking adequate surety bond after getting its value assessed by a competent authority and learned Magistrate may have imposed other conditions which it thinks necessary. Learned Magistrate has failed to exercise his juri iction properly. The learned revisional court has also failed to appreciate the facts and law on the point so both the orders are not justified and are liable to be set-aside.
The petitions Under Article 227 of the Constitution of India are hereby allowed. The impugned order dated 8.7.2021 passed by C.J.M. Bulandshahar in Case Crime No. 271 of 2021 State Vs. 6
Abhishek Agarwal, under section 420 IPC and 11/12 U.P Sheera Niyantran Adhiniyam, 1964, PS. Kotwali Dehat, District Bulandshahar and order dated 17.9.2021 passed by Additional Session Judge, Court No.
Bulandshahar in Criminal Revision No. 101 of 2021 Abhishek Agarwal Vs. State of UP are hereby set-aside. The learned C.J.M. Bulandshahar is directed to release the molasses in question in favour of petitioners after taking personal bonds and one surety bond of adequate amount, The learned Magistrate may got the value of the molasses assessed by any competent authority and fix the amount of personal bond and surety bond accordingly and may also impose other conditions he deems just and necessary. Order Date :- 13.4.2022 Masarrat 7 HUSAIN Date: 2022.04.18 14:20:24 IST Reason: Location: High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.