SOCIO ECONOMIC
OFFENCES
UNIT-1
HOARDING AND PROFITEERING
Topic 1.2
THE ESSENTIAL COMMODITIES ACT, 1955
Ms. Anjali Panwar
Assistant Professor
DME Law School
[email protected] 1
THE ESSENTIAL COMMODITIES
ACT, 1955
• Commodity-a substance or product that can
be traded, bought, or sold
• Enforced on 01st April 1955
• An act of Parliament to ensure the delivery
of certain commodities or products
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Preamble of the Act
“ control of the production, supply and
distribution, trade and commerce, in
certain commodities, in the interest of the
general public ”
3
Aims & Objective of the act
• Maintaining an uninterrupted supply of
essential commodities in the country
• Preventing unnecessary storage of essential
commodities
• Stop black marketing and hoarding of
essential commodities
• To secure equitable distribution and
availability of these essential commodities.
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Essential Commodities
(1) drugs
(2) fertilizer
(3) foodstuffs
(4) hank yarn made wholly from cotton
(5) petroleum and petroleum products
(6) raw jute
(7) seeds
(8) Hand Sanitizer and Mask
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IMPORTANT DEFINITIONS
• “Collector”
• “Sugar”
• “Foodstuff”
• Essential Commodities (section 2A)
• *refer section 2
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Powers Under the Essential
Commodities (Section 3)
# Power to Notify the essential commodity
# Power to issue a control order
• When the government finds that it is necessary and
expedient to do in favor of the general public.
• When they have to secure equitable distribution and
availability of these commodities in the market.
• When they have to secure any specific commodity
for the Defense of India.
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Purposes for passing control
order
• To regulate by license, permit or otherwise
• To bring under cultivation of any wasteland or arable
land
• To control the buying and selling price of any essential
commodity
• To determine entry, search, examine, seizure of any
essential commodities
• To require any person to do specific works
• To regulate or prohibit any class of commercial and
financial transactions
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Price control [Section 3(3)]
• Agreed price– When the parties have already
agreed upon the controlled price fixed under this
Section.
• Controlled price– When no such agreement can
be reached, the price is calculated with
reference to the controlled price.
• Market price– Where neither the above prices
apply, then the price is calculated according to
the average market rate prevailing in the locality.
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Price Monitoring Cell (PMC)
• This is a body of individuals appointed by the Central
Government, to monitor the price of essential commodities
such as rice, wheat, dal, sugar, tea, potatoes, onions, milk, etc.
• Apart from monitoring the division, it is also responsible for
predicting the future price, analyzing the price situation and
giving advance feedback of these commodities which will help
the policymakers in making future policies.
• In event of shortfall of any essential commodity, the price
monitoring cell also implements commodity-specific market
intervention schemes to give temporary relief to the
consumers.
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Issuance and Service of Control
Orders Under
• The control orders which are issued by the government is notified
in the following manner:
• If the order is directed to the general public, it will be notified in
the Official Gazette, and
• If the order is directed to a specific person, it will be served to
such individual:
• by delivering and tendering it to that specific person, or
• if it cannot be so delivered or tendered, it can be served by
affixing it on the outer side or any other conspicuous part of the
premises in which such person lives. A written report thereof shall
also be prepared and witnessed by two persons living in the
neighborhood.
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Procedure
• 6A- Confiscation of essential commodity
• 6B. Issue of show cause notice before confiscation
of food grains, etc.
• 6C. Appeal - one month from the date of the
communication
• 12A. Power to try summarily
• 12B. Grant of injunction, etc., by civil courts
• 14. Burden of proof in certain cases
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Difference between Seizure and
Confiscation
• According to the Act, in seizure, the
ownership of seized articles gets vested in the
hands of the government however the
proprietorship continue to stay with the
proprietor,
• However, in confiscation, both ownership and
proprietorship of confiscated article get
vested upon the hands of the government.
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Disposal of Sale Proceeds of
Confiscated Goods (Section 6A)
• The collector, on receiving the report of seizure or on inspecting such
essential commodity finds that if it is necessary and expedient in the public
interest so to do, he may:
• Immediately pass the Order to sell that commodity at the controlled price. if
fixed
• Where no such price is fixed then pass the order to sell it on a public auction.
• The sale proceeds of aforesaid confiscated good after deducting necessary
expenses shall be paid to the owner or person from whom it is seized and in
the following circumstances:
• Where no order is ultimately passed by the collector;
• Where the order passed is on appeals;
• Where in the prosecution of contravention of the order, the person
concerned is acquitted.
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• ISSUANCE OF SHOW CAUSE NOTICE BEFORE CONFISCATION
OF ESSENTIAL COMMODITY (SECTION 6B) :There is no order
for confiscation of any essential commodity is passed against
any person without giving him a written notice which
informs him about the grounds on which such order is
proposed and to provide him an opportunity to make his
presentation in writing.
• AN APPEAL AGAINST CONFISCATION ORDER (SECTION 6C) :
Any person aggrieved by any order of confiscation is entitled
to appeal to the judicial authority appointed by the
government within one month from the date of the
communication. And the appellate Court, after hearing the
case, may confirm, modify, or annul such an order.
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Cognizance of Offences
• Taken on report of Public Servant, or any person aggrieved or any
recognised consumer association ( sec 11)
• Sec 12 A- Power to try summarily- JMIC
• Sec 12 B- No injunction or other relief to be granted by civil court
until a notice has been given to a government officer
• Sec 14 –B.O.P on the person contravening the order issued under
section 3 or the person possessing such quantity without permit
• Sec15 A-When any public servant alleged to have committed any
offence while discharging of his duty given under Section 3
cognizance to be taken only after taking sanction from the
Government
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There are different kinds of penalties imposed upon different kinds of offences.
(SECTION 7)
OFFENCES PENALTIES
Contravene the order made under clause (h) and (i) of Imprisonment for a term which may extend to 1
the SubSection (2) year with fine
Imprisonment not less than 3 months which may
Contravene the other orders except above two.
extend up to 7 years with fine
Fails to comply with the direction given under clause (b) Imprisonment not less than 3 months which may
of Sub-Section (4) extend up to 7 years with fine
If any person convicted for offences under Section Sub-
Imprisonment not less than 6 months which may
clause (ii) of clause (a) of Sub-Section (1) or under Sub-
Section (2) again convicted on the same provision extend up to 7 years with fine
If the offences convicted under Sub-clause (ii) of clause
(a) of Sub-Section (1) or under Sub-Section (2) does not Imprisonment for the term of 3 months or 6
cause any substantial harm to any individual or the months whichever is required as per the case.
general public. 17
Type of offence
• Section 9- False statement – 5yrs or fine
• Section 10- Offences by companies: liablity of
person as well as company
• Section10A. Offences to be cognizable
• Section 10 B- power of court to publish name
of convicted company
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Presumption
• Section 10C. Presumption of culpable mental
state- Court shall presume
• Section 13. Presumption as to orders- made by
the authority who signed Attempt or abetment
• Section 8 : If any person is found guilty of
attempts to contravene or abets to contravene
any order made under Section 3 of the Act, then
it will be presumed that such person has a
‘culpable mental state’.
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Landmark Judgments
• Nathu Lal v. State of Madhya Pradesh (AIR 1966 SC 43)
In this case, the applicant was the dealer of foodgrains at Dhar in Madhya Pradesh. He
was prosecuted for having in stock 885 maunds and 21/4 seers of wheat without a
license for the purpose of sale thereby committed an offence under Section 7 of
essential commodities Act,1995. The appellant pleaded that he did not intentionally
contravene the provision of the Act, he said that he stored the goods after applying for
the license and he was fully convinced by the government authorities that it would be
issued to him. It was held that the mere fact that the nature of the statute is to promote
welfare Activity and eradicate the social evil itself does not exclude mens rea from its
ambit. The elements of mens rea excluded from any statute only if it defeats the object
to such a statute.
• Thus when we read the object of the Essential Commodities Act which is “to control
trade in certain commodities for the interest of the general public” we can not say that
this would be defeated if the mens rea is read like an ingredient of offences committed
under it. Therefore in offence under Section 7 would be committed only if a person
intentionally contravenes the provision of Section 3 of the Act. However, in this case,
the appellant successfully proved that he had no guilty intention at the time of having
stored the seized essential commodities however despite having contravening of the
order issued under Section 3 he was not prosecuted for this offence.
20
State of Madhya Pradesh v. Narayan Singh & Ors (1989 AIR 1789)
• In this case, the respondents who were lorry driver, cleaners and coolie were
prosecuted for the offence committed under Section 3 and Section 7 of the essential
commodities Act. They were carrying bags of fertilizers in trucks from Indore to
Maharashtra. The lorry driver possessed invoice and other records but they did not
include a permit issued under the Fertilizers (movement control) Order, 1973. However,
the accused did not deny the fact that they transport bags of fertilizers in their
respective lorries and intercepts the lorries at Sendhwa sales tax barrier but said that
they had no knowledge about the contents of the document so seized.
• The Supreme Court, held that the main reason to amend Section 7 in 1967 was to
impose strict liability on the offender in contravention of the control order through
adding the crucial words like “whether knowingly, intentionally, or otherwise”.
Therefore now this Section is comprehensively worded so to take within the fold of not
only the offences of contraventions done knowingly or intentionally but even
unintentionally. In this case, the mere fact that the respondent exports bags of
fertilizers without permit itself does not consider as a valid reason for convicting them in
this case, the prosecution also failed to prove that there is any culpable mental state or
innocuous purpose involved in the parts of the respondents. Therefore the Supreme
Court did not award any punishment to the respondent for the commitment of the
aforesaid offence.
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Amendment
• The Essential Commodities (Amendment) Ordinance, 2020
• Regulation of food items: The Essential Commodities Act, 1955 empowers the
central government to designate certain commodities (such as food items,
fertilizers, and petroleum products) as essential commodities. The central
government may regulate or prohibit the production, supply, distribution, trade,
and commerce of such essential commodities.
• The Ordinance provides that the central government may regulate the supply of
certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and
oils, only under extraordinary circumstances.
• These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural
calamity of grave nature.
• Stock limit: The Ordinance requires that imposition of any stock limit on
agricultural produce must be based on price rise. A stock limit may be imposed
only if there is: (i) a 100% increase in retail price of horticultural produce; and (ii) a
50% increase in the retail price of non-perishable agricultural food items.
• The increase will be calculated over the price prevailing immediately preceding
twelve months, or the average retail price of the last five years, whichever is lower.
• However, the Bill was taken back and amendment was not enforced due to
Framers protest.
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Next Topic
• Another act was enacted for the prevention
of blackmarketing and maintenance of
supplies of essential commodities in the 80s.
“The Prevention Of Blackmarketing And
Maintenance Of Supplies Of Essential
Commodities Act, 1980”
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