Essential Commodities Act, 1955 — Section 3 read with Section 7 — Cement — Decontrol — Absence of Subsisting Control Order — Conviction Unsustainable
(Paras 14 to 19, 25)
Where statutory price and distribution control over cement stood withdrawn with effect from 01.03.1989 by amendment to the Cement Control Order, 1967, and further delegation of powers to State Governments for regulating retail distribution stood rescinded in 1990, no subsisting order under Section 3 of the Essential Commodities Act, 1955 remained in force on 24.03.1994. In the absence of a valid and operative control order, contravention thereof cannot be alleged and penal consequences under Section 7 cannot be attracted. Conviction under Section 3 read with Section 7 without proof of a subsisting statutory order is legally impermissible.
Penal Liability under Section 7 — Foundational Requirement — Proof of Existence and Contravention of Statutory Order
(Paras 9, 16, 17, 25)
A conviction under Section 7 of the Essential Commodities Act necessarily requires proof of the existence of a valid order issued under Section 3 and its contravention. Where prosecution fails to produce or establish any operative control order governing cement on the date of alleged offence, the very foundation of criminal liability collapses.
Effect of Omission/Deletion of Statutory Provision — Absence of Saving Clause — Pending and Future Proceedings
(Paras 18, 19)
Where a statutory provision is unconditionally omitted without a saving clause preserving pending or future proceedings, actions founded upon such provision cannot continue. Applying the principle laid down in Kolhapur Canesugar Works Ltd. v. Union of India, once the Cement Control regime stood substantially deleted without saving prosecution for future acts, no proceedings could be initiated for acts committed after decontrol.
Diversion of Government Property — Inapplicability of E.C. Act — Potential IPC Offences
(Paras 21 to 24)
Though regulatory control under the Essential Commodities Act stood rescinded, diversion or dishonest retention of Government-supplied cement may attract penal consequences under appropriate provisions of the Indian Penal Code, subject to proof of ingredients thereof. However, in absence of proper charge and prosecution under IPC, conviction cannot be substituted at the appellate stage.
Section 222 CrPC — Conviction for Minor Offence — Limits of Appellate Power
(Paras 26, 27)
Though Section 222 of the Code of Criminal Procedure permits conviction for a minor offence where facts so justify, such power must be exercised at trial and cannot be invoked for the first time in appeal to substitute conviction under a distinct penal statute without proper charge or foundational findings.
ANALYSIS OF FACTS AND LAW
The appellants were convicted by the Special Court for offences under Section 3 read with Section 7 of the Essential Commodities Act, 1955, on the allegation that they unauthorisedly purchased and stored Government quota cement intended for public works and attempted to black-market the same.
The prosecution case was that cement supplied to a contractor for construction of a public works project was diverted and found in premises allegedly connected to the appellants. Upon raid, cement bags were seized from trucks and from a shop. The trial Court convicted the appellants and the High Court affirmed the conviction.
Before the Supreme Court, the principal contention was that as on the date of alleged offence, namely 24.03.1994, cement had already been decontrolled. By notification dated 01.03.1989, the Central Government substantially removed price and distribution control over cement by omitting key provisions of the Cement Control Order, 1967. Further, by notification dated 07.08.1990, delegation of powers to State Governments for regulation of retail distribution through licensing was rescinded.
The Court examined the statutory scheme and found that on the relevant date no operative order under Section 3 of the Essential Commodities Act was in force regulating sale, storage or distribution of cement in a manner attracting penal consequences. The prosecution failed to produce any subsisting control order operative on 24.03.1994.
In criminal law, penal liability under Section 7 is contingent upon contravention of a valid order made under Section 3. In absence of such order, conviction is without statutory foundation.
The Court relied upon the principle laid down in Kolhapur Canesugar Works Ltd., that omission of a statutory provision without a saving clause obliterates the provision and pending or future actions founded thereon cannot survive unless expressly preserved.
While the Court noted that diversion of Government-supplied cement might potentially attract provisions of the Indian Penal Code, it held that such prosecution was neither undertaken nor could be substituted at the appellate stage in the absence of proper charge.
Accordingly, the conviction was set aside.
RATIO DECIDENDI
For conviction under Section 7 of the Essential Commodities Act, there must exist a valid and operative order under Section 3 whose contravention is established. Where statutory control over a commodity stands withdrawn prior to the date of alleged occurrence, and no saving clause preserves penal liability, prosecution under the Act is legally unsustainable. Penal consequences cannot be imposed in vacuum without subsisting statutory prohibition.
CONCLUSION
The Supreme Court allowed the appeals and set aside the judgments of conviction and sentence passed by the trial Court and affirmed by the High Court. Bail bonds were cancelled and fine amounts directed to be refunded. The Court clarified that while prosecution under the Essential Commodities Act was untenable, appropriate IPC provisions might have been attracted had they been properly invoked.
