Saptagiri Auto Investments vs State of Andhra Pradesh

The plaintiff filed OS No. 108 of 1980 on the file of the Subordinate, Penukonda, for recovery of Rs.34,689-00 from the defendants on the ground that the lorry bearing Registration No.MYY 4784 sold by the 3rd defendant without notice to the plaintiff is illegal and void. The trial Court decreed the suit against the 1st and 2nd defendants but dismissed the suit as against the 3rd defendant. Aggrieved by the judgment and decree dismissing the suit as against the 3rd defendant, the plaintiff filed AS No.2255 of 1984 while defendants 1 and 2 filed the appeal AS No.3573 of 1985 having been aggrieved by the decree and judgment passed against them. Since both the appeals arose out of the same judgment, they are being disposed of by a common judgment.

For the sake of convenience, the parties to these appeals will be referred to in accordance with their ranking in the suit.

The averments in the plaint, in brief, are as follows:

The plaintiff is the Auto Financing Company. It has its office at Hindupur carrying on business in partnership registered under the Indian Partnership Act. The plaintiff carries on business of advancing money by way of loans for purchase of lorries and other vehicles and also gives lorries and other motor vehicles on hire. The 1st defendant approached the plaintiff for financial assistance. On 4-12-1974 the 1st defendant entered into an agreement whereby he agreed to pay a sum of Rs.55,700/- as hire charges in repayment of the amount advanced in a sum of Rs.55,700/-. The 2nd defendant stood as guarantor and undertook to pay the money by executing a promissory note along with the 1st defendant on the same date. Thus, defendants 1 and 2 are jointly and severally liable for the due performance of the hire purchase agreement. The lorry bearing Registration No.MYY 4784 of which the plaintiff is the owner, was subject matter of hire purchase agreement dated 4-12-1974. The 1st defendant does not become the owner of the vehicle until the last instalment of hire purchase amount is paid, The plaintiff continued to be the owner thereof. As per the extract of the account, the 1st defendant is liable to pay a sum of Rs.34,689-65 to the plaintiff after giving credit to all the payments made by him. The plaintiff has a lien over the lorry for the payment of the said amount as per the terms of the hire purchase agreement and under the provisions of the Hire Purchase Act. The plaintiff came to know that the lorry MYY 4784 was produced before the District Revenue Officer, Anantapur and that it is in his custody. Further enquiries reveal that the lorry was confiscated under the provisions of the Essential Commodities Act but no notice was issued to the plaintiff as contemplated under the Essential Commodities Act. The registration certificate of the lorry discloses that the plaintiff is the owner of the vehicle. The order of confiscation passed behind the back of the plaintiff is not binding on him. Further, the order of confiscation resulting in the sale of the vehicle is illegal and void and unsustainable in law. The plaintiff ought to have been given notice after confiscation and before sale. The plaintiff not being a party to those proceedings is entitled to ignore the sale proceedings. The 3rd defendant by illegally seizing the vehicle prevented the plaintiff from realising the amount due from the 1st defendant and the plaintiff had no knowledge of the alleged offence said to have been committed by the first defendant, attracting the provisions of the Essential Commodities Act. The petition filed by the plaintiff before the District Revenue Officer putting forth claim for the vehicle was not inquired into. The lorry was illegally sold in public auction on 30-12-1976. The 1st defendant by his negligent conduct deprived the plaintiff of the possession of the lorry and the 3rd defendant is not entitled to seize the lorry and put it for sale without notice and without paying the amount due to the plaintiff. Defendants 1 to 3 are jointly and severally liable for the suit amount. The plaintiff issued the suit notice u/s 80 CPC to the 3rd defendant on 25-9-1976 and the 3rd defendant issued a routine reply stating that the threatened suit is awaited. Hence the suit.

Defendants 1 and 2 filed a written statement denying the liability. They took the plea that they left the business and that they are living on agriculture and sought the protection as small farmers under Act 7 of 1977.

The 3rd defendant filed a written statement contending that since the vehicle was involved in an illegal transport of essential commodities it was validly seized u/s 6-A of the Essential Commodities Act, 1955. It is their contention that even though there is a valid hire purchase agreement the person in possession and custody of the lorry on behalf of its owner cannot violate the provisions of the Essential Commodities Act and the owner cannot claim any exemption from the penal provisions of the Act. The lorry in question was used for smuggling act and therefore it was seized by the competent authority and produced before the District Revenue Officer, Anantapur. Under the provisions of Section 6-B of the Essential Commodities Act the 1st defendant was served with a notice as she claimed to be the owner of the vehicle. Even otherwise, being the agent of the 1st defendant, notice served on the 1st defendant is deemed to be a notice to the plaintiff. It is further contended that the 1st defendant engaged the Counsel and carried the matter upto the High Court and hence he has every knowledge of the seizure proceedings. It is further contended that the plaintiff gave a notice on 11-9-1976 to reagitate the matter which was validly decided as per law. It is also contended that the civil Court has no jurisdiction to entertain the suit of this type calling in question the proceedings taken under the Essential Commodities Act and the order passed in such proceedings. It is also contended by the 3rd defendant that the lorry was sold in public auction by the District Revenue Officer, Anantapur and the sale proceedings were credited under the appropriate head to the Government.

Based on the above pleadings, the trial Court framed appropriate issues mainly addressing itself as to whether the confiscation and sale are illegal and whether the plaintiff is entitled to the suit claim. Based on oral and documentary evidence, the trial Court decreed the suit against defendants 1 and 2 but dismissed the suit as against the 3rd defendant. As already stated above, aggrieved by the judgment and decree of the trial Court dismissing the suit against the 3rd defendant, the plaintiff filed AS No.2255 of 1984 while the 1st defendant filed AS No.3573 of 1985 aggrieved by the decree and judgment of the trial Court granting decree against him.

Sri N. Ashok Kumar, the learned Counsel for the appellant contended that the plaintiff has issued telegraphic notice and also brought to the notice of the 3rd defendant that he is the owner of the vehicle and placed Exs.A1 to A7 and Exs.A36 to A39 for establishing his ownership and inspite of such proof the lorry was sold in auction without notice to the affected parties. It is his contention that the plaintiff gave notice Ex.A36 to the defendants and also issued a telegram (Ex.A38) on 21-12-1976. Inspite of such notices and telegram, the vehicle was sold in auction on 31-12-1976 and such auction without notice to the plaintiff is illegal and void.

The learned Government Pleader appearing for the 3rd defendant-Government has contended that the right of confiscation includes right to sale and notice given to the 1st defendant is sufficient and there is no need to give any notice to the plaintiff.

Section 6-A of the Essential Commodities Act lays down the procedure to be followed before confiscation of goods. It lays down that (a) notice must be given in writing to the owner of the person from whom it is seized, (b) he must be given an opportunity of making a representation in writing and (c) he must be given a reasonable opportunity of being heard in the matter. Thus, the enquiry is contemplated at two stages. In the first stage an opportunity must be given to make a representation in writing against the grounds of confiscation and the second stage is at the stage of hearing he must be given reasonable opportunity of being heard. This includes an enquiry of judicial nature as the consequences of enquiry is the confiscation of property. The second stage of enquiry should be judicial and it should not be an empty formality. The power of confiscation has to be exercised judiciously and not arbitrarily. A Full Bench of this High Court in Govt. of A.P. Vs. Dinde Kanakamma and another, , dealing with the powers of confiscation has held that the power of confiscation of offending material must be exercised judiciously. The Full Bench had an occasion to deal with the power of confiscation under the Andhra Pradesh Forest Act, 1967 and had an occasion to deal with various facets of seizure and confiscation. It was held that power of discretion with regard to confiscation is not absolute and it is a power coupled with duty to act under the provisions of the Act whenever situation warrants keeping in view the public interest. In the present case the authorities might be justified in confiscating the essential commodity which was being transported in violation of the provisions of the Essential Commodities Act but they are not justified in disposing of the vehicle in an auction without notice to the affected parties. Section 6-B of the Essential Commodities Act makes it very clear to issue a show-cause notice before confiscation. Section 6-B reads as follows:

"6-B. Issue of show-came notice before confiscation of food grains, etc :--(1)No order confiscating any essential commodity, package, covering, receptabte, animal, vehicle, vessel or other conveyance shall be made u/s 6-A unless the owner of such essential commodity, package, covering receptable, animal, vessel or other conveyance; or the person from whom it is seized-

(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the essential commodity, packing, covering, receptacle, animal, vehicle, vessel or other conveyance;

(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation; and

(c) is given a reasonable opportunity of being heard in the matter.

From the reading of the aforementioned provision, notice to the affected parties is mandatory. Even otherwise the principles of natural justice and fair play requires notice to the owner who is an affected party. The learned Government Pleader contended that the Act does not contemplate notice to the owner, but only to the person from whom the essential commodities were seized. I am unable to agree with this submission made by the learned Government Pleader. Notice to the affected party is a fundamental right and the affected party in the present case is the plaintiff and fit cannot be waived under the pretext that the Act does not contemplate notice to the owner. The Supreme Court in Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, , has clearly analysed the principle of "audi alteram partem" and held :

"Although there are no positive words in the statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the Legislature. The principle of audi alteram partem, which mandates that no one shall be condemned unheard, is part of the rules of natural justice." (Para 57)

"Natural justice is a great humanising principle intended to invent law with fairness and to secure justice and over the year years it has grown into a widely pervasive rule affecting large areas of administrative action. The inquiry must, always be; does fairness in action demand that an opportunity to be heard should be given to the person affected." (Para 58)

"The law must now be taken to be well settled that even in an administrative proceeding, which involves civil consequences, the doctrine of natural justice must be held to be applicable." (Para 61)

Hence, I hold that the plaintiff is entitled to notice before the vehicle was put to auction and auction of the vehicle without notice is illegal and void.

The other submission made by the learned Government Pleader is that Section 6-C contemplates a statutory appeal and hence the civil Court has no jurisdiction to entertain the suit. It is useful to read Section 6-C which is as follows:

"6-C. Appeal :--(1) Any person aggrieved by an order of confiscation u/s 6-A may within one month from the date of the communication to him of such order, appeal to the State Government and the State Government concerned shall, after giving an opportunity to the appellant to be heard, pass such order as it may think fit, confirming, modifying or annuling the order appealed against".

Thus, Section 6-C provides for an appeal against the order passed u/s 6-A to the State Government. However, this section does not give power to auction the vehicle without notice to the true owner. The affected party is entitled to notice any proceeding conducted behind his back is null and void. It is also necessary to state that the civil Court''s jurisdiction u/s 9 of the CPC is not barred by any statute. In a case reported in The Pabbojan Tea Co. Ltd., etc. Vs. The Deputy Commissioner, Lakhimpur, etc., , the Supreme Court had an occasion to deal with a situation where the civil Court''s jurisdiction is barred because of the special enactment. The Supreme Court has clearly held that the civil Court''s jurisdiction is not excluded simply because of a special enactment. In another important judgment reported in Bommidala Poornaish Vs. The Union of India, , a Division Bench of this High Court held as follows:-

''Where a civil Court''s jurisdiction is barred by any stature, or for that matter where it is not expressly barred and the question arises whether the remedy of a civil suit is open to an aggrieved person to challenge an illegal order made under the statute, the alter, native remedy provided by the Act must be taken into consideration. Where elaborate provisions are made in the statute for alternative and adequate remedies, including provision for recording evidence and for determining facts, civil Court''s jurisdiction is barred. Where, however, there is absence of adequate remedy under the statute or where the provisions of the statue are not elaborate and the power to record evidence etc., or of determining collateral fact by the authority constituted under the statute upon which the jurisdiction under the Act is vested is not provided for, civil Courts are not barred from entertaining a suit notwithstanding the fact that there is an express exclusion thereunder. Even where the jurisdiction is excluded, civil Courts have jurisdiction to examine whether the provisions of the Act have not been complied with or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure. In cases where there is no express prohibition, the general presumptions adverted to above apply with greater force and unless the provisions of the statue gave a clear ringing indication of the exclusion of the jurisdiction of civil Courts, civil Court''s jurisdiction is not barred. At any rate, it is the civil Courts that have to determine these questions, including the question whether the authorities under the statute are expressly empowered for the determination of the particular issue or issues involved, whether of ultra vires nature of the impost or of the jurisdiction of the authorities to impose that tax, before their jurisdiction can be said to be excluded."

Thus, it is very clear that by virtue of Section 6-C of the Essential Commodities Act, civil Court''s jurisdiction is not barred.

For the aforementioned discussion. I hold that the auction conducted by the 3rd defendant on 31-12-1976 without notice to the plaintiff is void and illegal and the plaintiff will be entitled to the suit claim with interest @ 6% P.A., from the date of the suit till the date of realisation from all the three defendants jointly and severally. Accordingly, the suit is decreed with costs as prayed for against the 3rd defendant also. AS No.2255 of 1984 filed by the plaintiff is, therefore, allowed, with costs. In view of the aforementioned discussion, AS No.3573 of 1985 filed by the 1st defendant is dismissed. There will be no order as to costs in this appeal.