The High Court · 2025

This petition coming on for hearing, upon perusing the Memorandum of Grounds of criminal Petition and upon hearing the arguments of Sri somavarapu satyanarayana, Advocate for the petitioners and the public prosecutor on behalf of the Respondent No.1 and of none appeared for the Respondent No_2. The Court made the following: ORDER THE HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION No.1678 OF 2O2O ORDER: This Criminal Petition is filed by the petitioners/Al, A2 and A3 under Section 482 of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.'), aggrieved by the criminal prosecution launched by the Balapur Police against them in C.C.No.5780 of 20 19 on the file of V Additional Metropolitan Magistrate-cum-V Addl.Junior Civil Judge, Cyberabad at L.B.Nagar. The offences alleged against the petitioners are under Sections 42O of the Indian Penal code ald Section 7(l) of the Essential Commodities Act

2. According to the charge sheet laid against the petitioners, on O3.O7.2OI9 on the basis of information received, the Balapur Police went to Mohammed Nagar, Green City, Balapur Village & Mandal, and searched a place near Masjid-e-Ayesha, and found that the Accused No.1 had stored rice in the sajd rented premises. A1 was taken into custody, and he confessed that he has been procuring PDS rice from the benehciaries and transporting the said rice with the help of A2-auto driver. The said rice was procured to sell the same to A3 at a higher cost- i -i 2

3. Learned Counsel appearing for the petitioners would submit that the petitioners cannot be criminaJly prosecuted. Learned Counsel relied on several judgments, which are: a) The common order passed by the Hon'ble Judge of this Court in Writ Petition Nos. 4O429, 40323, 40328, 40448, and 4O5O2 of 2017. These writ petitions were filed to challenge the orders of the District Collector confiscating IOO%o of the seized stocks in favour of the government, alleging that the confiscation was illegal and arbitrar5r. The learned counsel for the petitioners contended that the seizure of stocks occurred before the introduction of Clause 17 (e) of the Telangana State public Distribution System (Controt) Order, 2O 16 ("the Control Order, 2OL6"), and at the time of the seizure, purchasing pDS rice from cardholders was not an offense. ii) The judge a-llowed the writ petitions, relying on the decision of the Division Bench of the erstwhile combined High Court of Judicature at Hyderabad for the State of Telangana ald Andhra Pradesh in Maimuna Begum u. State of Telangana (W.p. No. 7811 of 2016l. ln Maimuna Begum, the Division Bench observed that Clause 17(A) applies only when there is ar, interruption in the movement of food grains from the Food Corporation of India (FCI) godown to the final beneficiar5r, i.e., the cardholders. The provision .r' /' 3 does not cover any activities involving commodities governed by the Control Order, 2008, once they reach the cardholder. The Division Bench, addressing a similar allegation-where the detenus were accused of purchasing rice meant for the public distribution system-held that such activity fell entirely outside the purview of Clause 17(A) of the Control Order, 2008. Since neither the 1995 Act nor the Control Order, 2OOB, prohibited such activity, ald as the Control Order, 2OOB, was the only governing regulation for PDS rice distribution, the detenus could not be accused of committing any offense. b) The counsel also relied on the judgment of this Court in Criminal Revision Case No. 640 of 2O18, which challenged the judgment passed in Crl. A. No. ll7 of 2016, wherein the confiscation order issued by the Collector was confirmed by the Learned Principal Sessions Judge. The judge allowed the criminal revision case, relying on the Hon'ble Judge's decision in Writ Petition Nos. 40429, 40323, 4O32a, 40448, arld 40502 of 2Ol7 Additionally, the judge noted that the seizure of stocks in this case also occurred before the introduction of Clause 17(e) of the Control Order, 2016, and at the time of the seizure, purchasing PDS rice from cardholders was not an offense. ..!.iai8(i 4 ii) The facts of the above two cases differ from the present case because, in those cases, the seizure of stocks occurred before the introduction of clause 17 (el of the Telangala State Public Distribution System (Control) order, 2016 ("the Contr.ol order, 2016") At the time of seizure, purchasing PDS rice from cardholders was not considered an offense' However, in the present case, the seizure of PDS rice from A1 took placc after the introduction of Clause 17(e). c) The counsel also relied on the judgment of this Corrrt in Crl filed by petitioner/A2 seeking to quash the P No. 78 of 2019, proceedings in C.C No. 258 of 2018 for offenses undr:r Section 42O read, with Section 34 of the Indian Pena1 Code (IPC) and section 7 0f the Essential commodities Act. The facts of the case were that A1 and A3 to A8 (accused therein) were purchasing rice from individuals in their village, which been supplied under .had the Public Distribution System (PDS) scheme. After collecting PDS rice from various individuals, 41 and A3 to A8 q'ould sell it to A2 (the petitioner), who in turn allegedly resold it to the government at a higher price, thereby causing a loss to the government. The judge considered the judgment of the Division Bench in W.P. No. 7811 of 2016 and allowed the criminal petition, holding / 5 that the petitioner had purchased rice from consumers, not directly from a fair price shop dealer. Therefore, prima facie, no offense was committed. Further, the judge observed that A2's involvement was based solely on the confession statements of other accused, and apart from these confessiona-l statements, no records existed proving that Al and A3 to A8 had sold rice to ,A.2 or that A.2 had sold the rice to the government. iii) Additionally, the judge noted that when the crime vehicle was seized, ,A.2 was not present, arrd no rice was found.in his possession. There was also no material eyidence showing any business transactions between A2 and A1 or A.3 to A8. Moreover, the judge held that none of the ingredients of Secfion 42O of IPC were established against 42, as no complaint had been filed by any person alleging deceit on his part due to his purchase of PDS rlce Similarly, no beneficiar5r of the. scheme had lodged a complaint stating they were denied PDS rice due to any interruption caused by A2. iv) The facts of this case are applicable to A3 in the present case but not to Al or A2. ln the above case, the petition was filed by A2 therein, who was not accused of purchasing PDS rice from cardholders but from consumers. Similarly, 43 in the present case 6 1 is accused of purchasing rice from A1' Furthermore' e\ren in the present case, the Police have not submitted any material to establish arry transactions between A 1 and 43 regarding the purchase of PDS rice. Additionally, A3 was not present when the crime vehicle was seized, nor was any rice found in A3's possession. The judge's observations in the above case concernlng the ingredients of section 42O of IPC also apply to A3 in the present case d) The counsel further relied on the judgment of this Cburt in Crl P No. 1794 <tf 2O2O, fited by petitioners/accused nos' 1 and 3 therein, seeking to quash the proceedings in CC No' 16796/2019 for offences under Sectio ns 42O read with 34 of IPC and Section 7 of the Essential Commodities Act' The facts of the case are that during vehicle checking, a DCM vehicle was found fully loaded with bags. Upon inquiry, it was revealed that the bags contained PDS rice. The driver of the vehicle confessed that he would purchase PDS rice from various individuals at a cheaper rate of Rs. 5 per kg ancl sell it in 6ne Zaheerabad Market to one Feroz at Rs. 10 per kg. The counsel for the petitioners argued that there were no direct u,itnesses to establish that the petitioners had purchased PDS rice from cardholders and sold it to customers' Furthermore, there were no witnesses to show that the seized rice I 7 was purchased from ration shop dealers or cardholders, The judge allowed the petition on the ground that none of the ingredients of Section 42O were satisfied, as no complaint was hled by any individual claiming to have been deceived due to the petitioners' actions in transporting PDS rice. Additionally, there was no allegation that the PDS rice, intended for benehciaries, was diverted into the black market without being distributed to the needy. Nor were there any complaints from intended benehciaries stating that they were deprived of receiving PDS rice. ii) The facts of this case are not applicable, as the judge in the above case did not address Clause 17(e) of the Control Order, 2016, nor did he provide any reasoning for why a case under Section 7 of the Essential Commodities Act was not made out or why the case needed to be quashed. However, the judge's observation regarding Section 42O of IPC in the above case can be applied to the present facts of the case. e) The counsel also relied on the judgment of this Court in Crl P No. 5709 of 2019, frled by petitioners/accused A8 to AlO in CC No. 1703/2019, seeking to quash the proceedings for offences under Sections 406 and 42O of IPC and Section 7 of the Essential Commodities Act. The facts of the case are that a complaint was \ 8 lodged alleging that a fair price shop deaJer had been purchasing PDS rice at a low cost from ration cardholders in his village and neighboring viliages and storing it in the house of Bo3ja Krishna Reddy in plastic bags. On 29.06.20lg, when the pDS rice was being loaded onto a lorry, the police apprehended the vehicle and seized 434 pDS rice bags. The judge noted that the pnmary question was whether, once rice is supplied to consumers through PDS, its subsequent sale by consumers to third parties, including the accused, constitutes an offence. The judge referred to W.p. No. 7817/2016 (Maimuna Begum's case) in addiessing this issue. The judge then examined whether petitioner no. 1 /Ag and petitioner no.2 / A9 , the driver and owner of the lorr5r respectively, and petitioner no.3/A10, the purchaser of the rice, were involved in the offence ii) The judge found that the prosecution had not alreged that petitioner nos. I ald 2 were aware that the lorry had been hired for transporting rice supplied by the government through the pDS system. Furthermore, there was no indication on the rice bags suggesting that the rice had been supplied under the pDS scheme at a concessional price. The judge also observed that the seized rice was indistinguishable from rice available in the open market. Since no ration cardholders were named as accused or wil,nesses, 9 and their statements were not recorded to confrrm that they had sold PDS rice through the accused persons, there was no supporting evidence. Additionally, there was no complaint from any consumer against the accused for transporting PDS rice. No allegations were made against the fair price shop dealer that he had diverted the rice to the black market instead of selling it to cardholders/beneficiaries. The judge also observed that rice transportation is not regulated. Thus, it was concluded that there was no evidence proving that the seized rice had been supplied to a fair price shop by the government. As long as there was no material indicating that petitioners 1 and 2 were aware of the lorry's use for PDS rice transportation or its illegality, they could not be held criminally liable alongside the other accused' iii) The facts of the above case a-re applicable insofar as A2 and 43 are concerned in the present case, as A2 was the driver of the auto and A3 was the purchaser of PDS rice from A1' However, the facts of the case are not applicable with respect to A1' The counsel also relied on the judgment of this Court in Crl' f) Rc. No. 98 of 2OL8,liled with a prayer to set aside the judgment in CrI. A No. 151 of 2017, wherein the Principal Sessions Judge confirmed and modihed the order of the District collector for the \_ 10 con{iscation of. 3O%o of the seized red gram stock in favor of the government. The facts of the case are that officials inspected the petitioner's shop and found 17 quintals of red gram, r'alued at Rs. 85,OOO, stored in 34 bags of 50 kg each, and subsequently seized thb stock. The .ludge observed that the conhscation orders were passed under the provisions of the Telangana State Pulses, Edible Oils, and Oil Seeds Control Order, 2016, read with the Essential Commodities A.ct. The key issue before the court was whether the provisions of the Control Order, 2O 16, were applicable to the petitioner, who u'as admittedly neither a dealer nor a trader and was not engaged in any business as contemplated under the Control Order. The judge relied on the decision of the Hon'ble Supreme Court in Gurram Venkatestaarlu u. Collector and District Magistrate, where the Supreme Court observed that in determining whether the respondent was guilty under Section 7 of the Essential Commodities Act, it was necessary to hrst establish whether he qualihed as a dealer under Clause 3 of the order. The Hon'ble High Court judge noted that a single instance of storage or sale, or even occasional or sporadic acts of storage or sales, does not amount to carrying on a business. Instead, a ,:ontinuous course of conduct in either storage or sales is required to infer that a person is engaged in dealing with such commodities. ---... L e!,- F. FF;. -.-','' 11 Ultimately, the Apex Court in Gurram Venkatestuarlu held that a singleinstanceofstoringfoodgrainsdoesnotconstitute',carrying onbusiness"and,therefore,doesnotattracttheprovisionsof Control Orders. The judge allowed the revision case' ruling that the solitary statement of the petitioner was insuffrcient to conclude that he had stored the red gram for business purposes or was engaged in such business' Consequently' the judge held that the storage of stock could not be held as an offense' and the confiscation order was liable to be set aside' g) The counsel lastly relied on the judgment of this Court in Crl. Rc. No. 104 of 2018, hled with a prayer to set aside the Crl. A No. 150 of 2017, wketein the Principal judgment Sessions Judge conhrmed and modifred the order of the District collector for the confiscation of 30% of the seized red gram stock in favor of the government. The facts and hndings in this revision case were similar to those in Crl' Rc' No' 98 of 2018' iil The facts of the above two cases differ from the facts of the present case, as the judge in those cases dealt with the Telangana State Pulses, Edible Oils, and Oil Seeds Control Order' 2016' focusing on whether its provisions applied to the petitioner' who was admittedly neither a dealer nor a trader and was not engaged 12 in any business under the Control Order. In contrast, the present case concerns the Telangara State Public Distribution System (Control) Order, 2O 16. Furthermore, A1 in the present case has not raised a defense that the provisions of the PDS Con.trol Order, 2016, do not apply to him on the grounds that he is neither a dealer nor a trader and is not engaged in any business. Additiona-lly, while the Telalgana State Pulses, Edible Oils, and Oil Seeds Controi Order defines a dealer, the Telar-rgana State Public Distribution System (Control) Order, 2016 does not. Lastly, Clause 17(e) of the TSPDS Order, 2016 clearly penalises purchase of PDS rice from cardholders. Therefore, the above two cases are not applicable to the present case.

4. Coming to the facts of the present case, the seizure of 2OO bags of PDS rice took place on 03.07.2019, which is signihcantly after the introduction of Clause 17(e) of the Telarlgana State Public Distribution System (Control) Order, 2016, on 19-Oa-2O16-

5. Thus, Clause 17(e) is clearly applicable to the facts of this case. The provision states: "If ang person is found to haue purchased th.e ice suppli'ed through PDS either from. the cardholder or the F.P. Shop dealer or ang other 13 source, he shall be liabte for ciminal action and imposition of penaltg as mag be fixed bg the competent authaitg'" 6'ThisclausecriminalizestheactofpurchasingPDSrice,even from cardholders or FP Shop dealers. Since this provision was introd.uced after the Division Bench's decision in Maimuna Begum (Supra), that judgment does not apply to the present case' \

7. In the present case, seizure was effected from A1' The rice rs \ identihed as PDS rice. Under Clause 17(e)' if any person is found to have purchased rice supplied through PDS' they shall be liable I for criminal Prosecution'

8.Theroleattributedto,A2andA3isonlyonthebasisofthe confession of A1, ald there is no independent evidence placed on record by the lnvestigating Ofhcer to suggest any nexus in between Al, A2, and A3' Even admitting that A2 was transporting the rice at the instance of A1, A2, being an auto driver, cannot be said to have worked along with A1 to procure the rice' It is the specifrc case that ,\2 was transporting the rice which was purchased by A1. In the said circumstances' it cannot be said that A2 had. knowledge that the rice was PDS rice' Further' the only basis of including A3 as an accused is the confession of A1' The 'confession is hit under Section 25 of the Indian Evidence Act' \ - -.,*l:, -, -:i-r:. t4 Moreover, no rice was seized from the possession of A3. Admittedly, there are no seizures or any other evidence apart from the alleged confession made by A1 to implicate A,3

9. In the said circumstances, the prosecution against A2 and A3 is quashed. However, the proceedings against ,{1 may go on.

10. Accordingly, Criminal Petition is partly allowed SD/. N SRI HARI ASSISTANT REGISTRAR //TRUE COPY// I \ SECTION OFFICER 1- The V Additional Metropolitan Magistrate cum V Additional Junior Civil Judge Cyberabad at L.B.Nagar

2. The station House Officer, Balapur Police Station, Rachakonda 3. Two CCs to the Public Prosecutor, High Court for the State of Telangana at \ To, Hyderabad (OUT)

4. One CC to Sri Somavarapu Satyanarayana, Advocate [OPUC] 5. Two CD Copies ADK/PSL o I l HIGH COURT DATED:2'110312025 t t ORDER CRLP.No.1678 ot 2020 STATti {\'- v o

4. '+ -." r rj \\ir, 2 'l;it5 I : _l ,ll . : ;=--->' PARTLY ALLOWING THE CRLP J6