DHARMESH VIPINCHANDRA SHAH vs STATE OF GUJARAT
- Court
- Gujarat High Court
R/CR.MA/7915/2016 JUDGMENT DATED: 20/07/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 7915 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE P. M. RAVAL
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Approved for Reporting Yes No
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DHARMESH VIPINCHANDRA SHAH
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MS AMRITA M THAKORE(3208) for the Applicant(s) No. 1
MR. KM ANTANI, APP for the Respondent(s) No. 1
RULE SERVED BY DS for the Respondent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE P. M. RAVAL
Date : 20/07/2026
JUDGMENT
1. On 13.07.2026 , the matter was heard and kept for
orders on 28.07.2026 . However, the matter is listed today
under the caption "For Orders." In this regard, the Registry
has placed an office note on record. On perusal it reveals that,
due to updation of the case status, the matter has been listed
today. Be that as it may, since the matter is listed today and
the learned advocates appearing for the respective parties
have no objection, the order is pronounced today.
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2. The applicant before this Court is the Manager,
Corporate Affairs of Reliance Defence and Engineering Limited
("RDEL"), formerly known as Pipavav Defence and Offshore
Engineering Company Limited, and prior thereto as Pipavav
Shipyard Limited. By way of the present application under
Section 482 of the Code of Criminal Procedure, 1973, the
applicant has prayed for quashing and setting aside FIR being
C.R. No. II-05/2016 registered with Marine Police Station,
Pipavav, for the offence punishable under Section 7 of the
Essential Commodities Act, 1955.
3. The allegations levelled in the FIR, in a nutshell, are to
the effect that:
3.1 That the licence No.202/11 issued in favour of the Pipavav
Defence and Offshore Engineering Company Limited in respect
of its diesel pump had been cancelled by the respondent No.2
vide order dated 15.12.2015, despite which the company
purchased 12000 litres of diesel on 15.12.2016 and 12000
litres of diesel on 05.01.2016 from Indian Oil Corporation
Limited “IOC” and stored the same and thereby illegal activity
was committed and that, upon taking inspection on
13/14.01.2016, it was found that 6061 litres of diesel worth
Rs. 2,85,291/- was stored. It is therefore alleged that an
offence has been committed under Section 7 of the Essential
Commodities Act, 1955 by the applicant, Shri Sanjay Rawat,
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Shri Parag J. Fukan and all officer connected with the
licensing and operatin of the diesel pump.
3.2 Thus, the alleged offences are alleged to have been
committed during the period between 25.12.2015 and
05.01.2016. Hence, the present application.
4. Learned advocate Ms. Amrita M Thakore for the
applicant submits that company for its business activities at
the Pipavav Port, RDEL operates more than 100 vehicles,
being hydra-cranes, crawler-cranes, cherry-pickers,
skymasters, fortlifts, truck-mounted cranes, multi-utility
vehicles, FRP boats, transport buses for transporting their
employees to and from Pipavav Port, etc. which requires high
speed diesel (HSD) in large quantities on a daily basis for
operating these vehicles and for tiral and testing of vessels i.e.
its own consumption.
4.1 Learned advocate for the applicant further submitted that
the company is neither engaged in the business of
manufacturing nor dealing in petroleum products and that the
petroleum stored at the said pump is used exclusively for its
own consumption. It was further submitted that the Indian Oil
Corporation, in its e-mail dated 28.02.2016, has categorically
stated that the supply was made under the category of a
"consumer". It was further contended that, as required under
Rule 116 of the Petroleum Rules, 2002, the company was
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required to obtain a licence for storage of petroleum, and
accordingly, a licence was obtained from the Deputy Chief
Controller of Explosives, Vadodara. The said licence was
renewed from time to time and was lastly renewed on
01.07.2014, remaining valid up to 31.12.2016.
5. Learned advocate further argued that the persons in the
management of RDEL, before it was acquired by RDEL, under
a mistaken impression of law, applied for a licence in or
around September 2011 and were issued Licence No. 202/11
in respect of the diesel pump by respondent No. 2 under the
Gujarat Essential Articles (Licensing, Control and Stock
Declaration) Order, 1981. The said licence was to expire
sometime in the year 2013, and on 26.12.2013 an application
for its renewal was submitted. Thereafter, respondent No. 2
addressed a communication to the erstwhile company seeking
a copy of the explosive licence. However, as the same could
not be produced, respondent No. 2, without issuing any show
cause notice or affording any opportunity of personal hearing,
vide order dated 15.12.2015 rejected the application for
renewal of Licence No. 202/11 in respect of the diesel pump
and directed that the stock of diesel lying with the company be
removed and that no further diesel be purchased.
6. It is further submitted that, being aggrieved and
dissatisfied with the order passed by respondent No. 2, the
company preferred an appeal on 04.01.2016 before the
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Collector, Amreli. After hearing the respective parties, the
Collector, vide order dated 03.03.2016, set aside the order
dated 15.12.2015 passed by respondent No. 2 and remanded
the matter to respondent No. 2 for fresh consideration, inter
alia observing that the order dated 15.12.2015 had been
passed without issuing any show cause notice or affording any
opportunity of hearing to the company.
7. Learned advocate further submitted that, as per Clause
5(2) of the Gujarat Essential Articles (Licensing, Control and
Stock Declaration) Order, 1981, where an application for
renewal of a licence is preferred within the validity period of
the licence, the licence shall be deemed to have been duly
renewed until the licensing authority either renews or refuses
to renew the same. Learned advocate further submitted that
though the licence was not actually renewed, the Collector, by
setting aside the order dated 15.12.2015 and remanding the
matter vide order dated 03.03.2016 in the appeal preferred by
the company, restored the proceedings relating to renewal. It
is, therefore, argued that an appeal is a continuation of the
original proceedings and, once the order cancelling the licence
had been set aside, the cancellation ceased to have any effect.
Consequently, even on the date of the alleged raid by
respondent No. 2, the licence could be said to have been
deemed to be renewed in terms of Clause 5(2) of the said
Order.
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8. Learned advocate further submitted that the company
was not required to procure any licence under the Gujarat
Essential Articles (Licensing, Control and Stock Declaration)
Order, 1981, since the diesel was purchased from the Indian
Oil Corporation solely for its own requirement and self-
consumption. It is, therefore, argued that the present
application deserves to be allowed. Learned advocate further
submitted that no specific averments have been made in the
FIR with regard to any breach alleged to have been committed
by the present applicants, nor has any specific role been
attributed to them. More particularly, the company, which is
the holder of the licence, has not been arraigned as an
accused. Under such circumstances, it is submitted that, in
view of the penal provisions, more particularly Section 10 of
the Essential Commodities Act, 1955, no vicarious liability can
be fastened upon any of its employees when the company
itself has not been arraigned as an accused.
9. Learned advocate for the applicant has placed reliance
upon the following judgments:
(i) State of Andhra Pradesh v. M/s H. Abdul Bakhi & Bros. , AIR 1965
SC 531.
(ii) S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another , (2005) 8
SCC 89.
Managing Director, Castrol India Ltd. v. State of Karnataka and
(iii)
Another , (2018) 17 SCC 275.
(iv) Aneeta Hada v. M/s Godfather Travels & Tours Private Ltd. , AIR
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2012 SC 2795.
10. Per contra , learned APP Mr. K.M. Antani submitted that
once the licence was not renewed and the Mamlatdar, i.e.,
respondent No. 2 herein, had directed that the stock of diesel
be reduced to nil by removing the existing stock and that no
further purchase of diesel be made, the company was not
entitled to possess or purchase diesel thereafter. It is further
submitted that, after the application for renewal of the licence
was rejected and before the applicant preferred an appeal
against the said order, respondent No. 2 conducted a raid at
the applicant company's premises. During the raid, it was
found that the applicant company was carrying on its
business without holding a valid licence. In such
circumstances, it cannot be said that no offence is made out
under Sections 7 and 10 of the Essential Commodities Act,
1955.
11. Learned APP placed reliance upon the decision in State
(Government of NCT of Delhi) v. D.A.M. Prabhu and
Another, (2009) 3 SCC 264 , to buttress his submission that
no interference at the threshold is warranted merely on the
ground that the company has not been arraigned as an
accused.
12. Learned APP further submitted that Clause 5(2) of the
Gujarat Essential Articles (Licensing, Control and Stock
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Declaration) Order, 1981, would not be applicable in the facts
of the present case, inasmuch as the goods were found in
possession of the company without any valid licence after the
Mamlatdar, respondent No. 2, had rejected the application for
renewal and before the appeal came to be filed before the
Collector. It is, therefore, urged that the present application
deserves to be rejected.
13. At the outset, it is required to be noted that the
judgment relied upon by the learned APP in the case of State
(Government of NCT of Delhi) v. (supra) , which in turn relies
upon the earlier decision of the Hon'ble Supreme Court in
Sheoratan Agarwal v. State of Madhya Pradesh , AIR
1984 SC 1824 , is of no assistance to the State, as the said
decision in Sheoratan Agarwal has subsequently been
overruled and no longer lays down the correct position of law.
Consequently, the judgment relied upon by the learned APP,
being founded upon the overruled decision, is of no avail to
the State. Thus, the judgment relied upon by the learned APP
stands impliedly overruled in view of the law laid down by the
Hon'ble Supreme Court in Aneeta Hada v. Godfather
Travels & Tours (P) Ltd. and, therefore, can no longer be
regarded as laying down the correct position of law.
14. The following undisputed aspects emerge from the
record:
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(a) The applicant company had applied for renewal of its
licence on 26.11.2013, prior to the expiry of the licence
on 21.12.2013. Thus, the application was submitted
during the subsistence of the licence and within its
validity period, thereby attracting the provisions of
Clause 5(2) of the Gujarat Essential Commodities
(Licensing, Control and Stock Declaration) Order.
(b) The order dated 15.12.2015 passed by respondent
No. 2 rejecting the application for renewal of the licence
was challenged by way of an appeal. However, before
the applicant company could prefer the said appeal
before the Collector, respondent No. 2 conducted
checking at the premises of the applicant company
pursuant to which impugned FIR came to be lodged.
(c) By order dated 03.03.2016, the Collector set aside
the order dated 15.12.2015 passed by respondent No. 2
and remanded the matter for fresh consideration, with a
direction to decide the application afresh after affording
an opportunity of hearing to the applicant company.
15. This Court is not inclined to examine the question as to
whether the applicant company was, in law, required to obtain
a licence for storing diesel intended solely for its own captive
consumption, particularly when it is an undisputed fact that
the applicant company had, in fact, obtained a licence under
the provisions of the Essential Commodities Act and the
relevant Control Order. In view thereof, the issue as to
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whether such a licence was otherwise required pales into
insignificance.
16. It is not in dispute that the applicant company had
preferred an application for renewal of its licence within the
prescribed period and during the validity of the lisence. It is
equally undisputed that the Collector, by order dated
03.03.2016, quashed and set aside the order dated
15.12.2015 passed by respondent No. 2 rejecting the renewal
application and remanded the matter for fresh consideration
after affording an opportunity of hearing to the company.
17. Therefore, merely because respondent No. 2 conducted
checking during the interregnum period, i.e., after the order
rejecting renewal of the licence but before the applicant
company could prefer an appeal, the same would not advance
the case of the State. Once the Collector has set aside the
order of rejection for renewal of licence and remanded the
matter for fresh consideration, the legal effect is that the order
refusing renewal ceased to exist and the renewal application
stood restored for fresh adjudication. Consequently, the
applicant company would continue to be governed by Clause
5(2) of the Gujarat Essential Commodities (Licensing, Control
and Stock Declaration) Order, 1981.
18. Clause 5(2) specifically provides that where an
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application for renewal of a licence is made within the period
of its validity, the licence shall be deemed to have been
renewed until the licensing authority either renews or refuses
to renew the same. Since the order refusing renewal has itself
been quashed and set aside by the appellate authority, the
legal consequence is that the said order cannot be relied upon
by the prosecution to contend that the applicant company was
operating without a valid licence during the relevant period.
The order of the Collector relates back to the stage when the
renewal application was pending for consideration, thereby
restoring the statutory protection available under Clause 5(2).
19. In such circumstances, the applicant company, being
protected by the deeming fiction contained in Clause 5(2) of
the Gujarat Essential Commodities (Licensing, Control and
Stock Declaration) Order, 1981, cannot be said to have
committed any offence punishable under Section 7 of the
Essential Commodities Act, 1955, merely on the ground that
the checking was conducted during the aforesaid interregnum
period when the company was not having valid licence.
20. So far as the reliance placed by the learned advocate for
the applicant on the judgments in Managing Director (supra)
and S.M.S. Pharmaceuticals Ltd. (supra) is concerned, it is to
be noted that the said decisions deal with the principles
governing constructive/vicarious liability under Section 138
read with Section 141 of the Negotiable Instruments Act,
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1881. Although the present case arises under Section 10 of
the Essential Commodities Act, 1955, the language and
scheme of Section 10 of the Essential Commodities Act are
verbatim (except clause (2) of the NI Act) to those of Section
141 of the Negotiable Instruments Act. Therefore, the
principles enunciated by the Hon'ble Supreme Court in the
aforesaid judgments while interpreting vicarious liability are
relevant and deserve due consideration while deciding the
present application.
20.1 For the sake of convenience both the sections are
reproduced below for read reference:
Section 141 of the
Negotiable Instrument
Act, 1881
Section 10 of the Essential
Commodities Act, 1955
141. Offences by companies.
—
1. 10. Offences by
companies.—
(1) If the person committing an
(1) If the person contravening an order made
offence under section 138 is a
under section 3 is a company, every person
company, every person who, at the
who, at the time the contravention was
time the offence was committed,
committed, was in charge of, and was
was in charge of, and was
responsible to, the company for the conduct
responsible to the company for the
of the business of the company as well as the
conduct of the business of the
company, shall be deemed to be guilty of the
company, as well as the company,
contravention and shall be liable to be
shall be deemed to be guilty of the
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offence and shall be liable to be
proceeded against and punished accordingly:
proceeded against and punished
Provided that nothing contained in this sub-
accordingly:
section shall render any such person liable to
Provided that nothing contained in
any punishment if he proves that the
this sub-section shall render any
contravention took place without his
person liable to punishment if he
knowledge or that he exercised all due
proves that the offence was
diligence to prevent such contravention.
committed without his knowledge,
(2) Notwithstanding anything contained in
or that he had exercised all due
sub-section (1), where an offence under this
diligence to prevent the commission
Act has been committed by a company and it
of such offence:
is proved that the offence has been
Provided further that where a person
committed with the consent or connivance
is nominated as a Director of a
of, or is attributable to any neglect on the
company by virtue of his holding
part of any director, manager, secretary or
any office or employment in the
other officer of the company, such director,
Central Government or State
manager, secretary or other officer shall also
Government or a financial
be deemed to be guilty of that offence and
corporation owned or controlled by
shall be liable to be proceeded against and
the Central Government or the State
punished accordingly.
Government, as the case may be, he
Explanation.—For the purposes of this
shall not be liable for prosecution
under this Chapter.
section,— (a) “ company" means any body
corporate, and includes a firm or other
(2) Notwithstanding anything
association of individuals; and
contained in sub-section (1), where
any offence under this Act has been
(b) “ director" in relation to a firm means a
committed by a company and it is
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proved that the offence has been
committed with the consent or
connivance of, or is attributable to,
any neglect on the part of, any
director, manager, secretary or other
officer of the company, such
director, manager, secretary or other
officer shall also be deemed to be
guilty of that offence and shall be
partner in the firm.
liable to be proceeded against and
punished accordingly.
Explanation.—For the purposes of
this section,— (a) “ company” means
any body corporate and includes a
firm or other association of
individuals; and
(b) “ director”, in relation to a firm,
means a partner in the firm.
21. Learned advocate for the applicant has further placed
reliance upon the judgment of the Hon'ble Supreme Court in
Aneeta Hada v. M/s Godfather Travels and Tours Pvt. Ltd.
(supra) , wherein the Hon'ble Supreme Court has, in
paragraph 43 of the judgment, specifically held that the view
expressed in Sheoratan Agarwal does not lay down the
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correct position of law and, accordingly, overruled the said
decision.
22. What has been held by the Hon'ble Supreme Court in
Aneeta Hada (supra) is that arraigning the company as an
accused is a condition precedent for maintaining a
prosecution under Section 141 of the Negotiable Instruments
Act, 1881. In the said judgment, the earlier decision in
Sheoratan Agarwal was expressly overruled. Since the
principles governing vicarious liability under Section 141 of
the Negotiable Instruments Act are analogous to those
contained in Section 10 of the Essential Commodities Act,
1955, the ratio laid down in Aneeta Hada assumes
significance while interpreting the latter provision.
23. This Court is bound by the law declared by the larger
Bench of the Hon'ble Supreme Court in Aneeta Hada (supra),
wherein Sheoratan Agarwal has been categorically
overruled. Consequently, any reliance placed on Sheoratan
Agarwal or on judgments founded upon the said decision
cannot be accepted as laying down the correct position of law
as having impliedly overruled by Anneta Hada (supra) .
24. On a perusal of the FIR, it clearly transpires that the
company has not been arraigned as an accused. Thus, in view
of the law laid down by the Hon'ble Supreme Court in Aneeta
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Hada (supra) , arraigning the company as an accused is an
imperative condition precedent for maintaining a prosecution
under Section 10 of the Essential Commodities Act, 1955,
since the liability of the other categories of offenders is only
vicarious, as specifically stipulated under the provision itself.
25. In view of the aforesaid facts and circumstances, the
present application succeeds and is accordingly allowed. The
FIR being C.R. No. II-05/2016 registered with Marine Police
Station, Pipavav, for the offence punishable under Section 7 of
the Essential Commodities Act, 1955, along with all
consequential proceedings arising therefrom, is hereby
quashed and set aside qua the present applicant.
(P. M. RAVAL, J)
MOHD SAIF ULLAH
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