In absence of black-marketing allegations, technical breaches of stock maintenance do not warrant confiscation of goods.

The respondent, a dealer in light diesel oil (LDO), was inspected on March 20, 2008. Authorities alleged several irregularities: maintaining furnace/fuel oil stocks (19,000 liters) beyond licensed storage capacity, failing to update display boards and stock registers, and trading in lubricating oil without a license at separate premises.

Consequently, the Collector, Bhavnagar, ordered the confiscation of seized stock valued at ₹1,85,000/- on April 2, 2009.

The respondent challenged this before the Additional Sessions Judge, Bhavnagar, who quashed the confiscation order on October 13, 2011, on grounds of violation of natural justice and lack of evidence regarding black-marketing.

The State of Gujarat filed the present criminal revision application before the High Court to restore the Collector’s order.

1. Whether the order of confiscation passed by the Collector was vitiated for failure to comply with the principles of natural justice.

2. Whether technical breaches of licensing conditions, such as maintenance of registers, justify confiscation of goods in the absence of allegations of black-marketing.

The court applied Sections 3, 8, and 9 of the Gujarat Essential Commodities (Regulation) Act, 1977, and various Control Orders of 1987 and 2000.

It emphasized the constitutional mandate of the principles of natural justice—specifically the right to be heard and the opportunity to cross-examine—before punitive action is taken.

The Court followed the precedents in Karan Oil Industries v. District Collector, Jamnagar [1996 (1) GLH 614] and N. Nagender Rao & Co. v. State of Andhra Pradesh [AIR 1994 SC 2663], establishing that technical breaches of rules do not warrant confiscation unless there is evidence of black-marketing or hoarding.

The High Court observed that the Collector’s order was based solely on oral submissions and a written reply to a show-cause notice without a full evidentiary inquiry.

The Court found no record of independent witnesses being examined or the respondent being given a meaningful opportunity to present a defense, rendering the order legally unsustainable for violating natural justice.

Regarding the merits, the Court determined that the alleged irregularities—not updating display boards, separate maintenance of stock lists for identical products, and exceeding storage capacity—amounted to technical breaches.

Applying the settled legal doctrine, the Court reasoned that since the State failed to allege or prove that the respondent engaged in black-marketing, the drastic penalty of confiscation was disproportionate and unauthorized.

The Criminal Revision Application filed by the State was dismissed, and the order to release the confiscated goods to the respondent was upheld.