Holding

The appellant is a dealer within the meaning of Clause 2(a) of the Order, and the second exception does not apply, making it liable under the Order.

Summary

M/s. Holani Auto Links Pvt. Ltd. entered into a dealership agreement with Castrol India Ltd. and stored over 33,000 litres of engine oil at its premises. The State Food Department seized the oil and, under the Madhya Pradesh Essential Commodities (Exhibition of Price & Price Control) Order, 1977, issued a show‑cause notice alleging violations of clauses 3(1)‑3(3) and 6(1). The Collector ordered confiscation of part of the stock; the Sessions Judge set aside the order, holding that the company was not a "dealer" within the Order. The State appealed, the High Court reversed the Sessions decision, declaring the appellant a dealer and upholding the confiscation. On appeal, the Supreme Court examined the amended definition of "dealer" and the second exception, concluding that the appellant engaged in purchase and sale of oil and therefore fell within the main definition, while the exception applied only to oil companies. Consequently, the appellant was liable under the Order and the appeal was dismissed.

Issues considered

Whether M/s. Holani Auto Links Pvt. Ltd. falls within the definition of "Dealer" under Clause 2(a) of the Madhya Pradesh Essential Commodities (Exhibition of Price & Price Control) Order, 1977 (as amended).
Whether the second exception to Clause 2(a) – which excludes oil companies storing oil where no sales are made to the general public – applies to the appellant.
Whether the appellant violated Clauses 3(1)‑3(3) and 6(1) of the Order and is liable for confiscation of the seized oil.

Legislation cited

Essential Commodities Act, 1955s. 6(a), s. 6-C, s. 7

Subjects

Dealer definitionEssential Commodities ActPrice controlStatutory interpretationException clauseConfiscationCriminal appeal

Judgment

(2008] 7 S.C. R. 168

{

A M/S. HOLAN I AUTO LINKS PVT. LTD.
II.
STATE OF MADHYA PRADESH
(Criminal Appeal No. 207 of 2002)
APRIL 29, 2008
B
(C.K. THAKKER AND TARUN CHATTERJEE, JJ.)

M.P Essential Commodities (Exhibition of Price & Price
Control) Order, 1977; Clauses 2(a), 3(1) to 3(3) and Clause
c 6(1) as amended in the year 1998:
Dealership agreement - Appellant company entering
into dealership agreement with an oil and lubricant
manufacturing company - Seizure of commodities by
authorities from the premises of the company for not displaying
D price nor keeping accounts in terms of the provisions under
Order 1977 - Show cause Notice - Confiscation of part of
seized goods - Appeal allowed by Sessions Judge holding
that the appellant company was not a dealer - Revision petition
allowed by High Court - Correctness of - Held: Correct -
E Appellant-company was not a mere storage depot of the
manufacturing company but carrying on business of sale and
purchase of the goods on principal to principal basis though
not selling it to public in general - Appellant could
appropriately be called as dealer in terms of Clause 2, Order
F 1977 as more than five kilolitres of engine oil/commodities
found in the premises of the appellant - Term 'its' in Clause
2(a) cannot be given an extended meaning so as to include
the appellant as dealer in its ambit as it would be against the
clear legislative intent - Since appellant was not a
G manufacturing concern, second exception to Clause 2(a) of
Order 1977 not attracted - Hence, High Court was right in
holding the appellant as dealer - Interpretation of Statutes -
Rule of strict construction.
Words and Phrases:
H 168
M/S. HOLAN I AUTO LINKS PVT. LTD. v. STATE OF 169
MADHYA PRADESH

'Dealer' and 'its' - Meaning of in the context of Clause A
2(a) of the Essential Commodities (Exhibition of Price & Price
Control) Order, 1977.
Appellant company entered into a dealership
agreement with an auto oil manufacturing company. A
team of officers of State Food Department headed by the 8
Deputy Collector inspected the premises of the company
and seized therefrom certain quantity of lubricating oil. A
show cause Notice was served to the company and, after
hearing both the sides, the Collector found that the
appellant company violated Clauses 3(1) to 3(3) and 6(1) C
of the M.P. Essential Commodities (Exhibition of Price &
Price Control) Order, 1977 and accordingly ordered
confiscation of commodities worth Rs. One Lakh out of
the seized items. Aggrieved, the appellant company filed
an appeal before the Sessions Judge. Sessions Judge D
set aside the order of the Collector holding that the
company was not covered by the definition of 'Dealer' as
under Order 1977 and therefore not liable to exhibit the
price of the goods in question nor did it require to keep
the accounts. The State filed a Revision Petition which E
was allowed by the High Court. Hence the present appeal.
Appellant company contended that it was appointed
as a Distributor by the manufacturing company through
a written agreement, which clearly prohibited any sale of
the goods; that the principal company was the F
manufacturer of Castro! Oil and the appellant company
was keeping the commodities at the instance of the
principal company; that the High Court had erred in
holding the appellant company as 'Dealer' when in fact, it
was only the Distributor who in terms of the agreement G
was prohibited to trade in the company's product as a
'Dealer' either by itself or through anyone else; that the
company was merely storing the material on behalf of the
principal company without making any sales to the public
in general, thus, it would come within the 2nd exception to H
170 SUPREME COURT REPORTS [2008] 7 S.C.R.

A the definition of 'Dealer'; and that a liberal approach
should be adopted while interpreting the word "its"
appearing in the 2nd exception to the definition of 'Dealer'
under Clause 2(a) of the Order of 1977 and by doing so,
the appellant company should also be given the benefit
B of this exception.
Respondent-State submitted that on a plain reading
of the definition of 'Dealer' as under Clause 2(a) of Order
1977 and 2nd exception to it, it is evident that the exception
is applicable only to the oil company and to no one else.
c
Dismissing the appeal, the Court
HELD: 1.1 Having examined the findings of the High
Court in the impugned judgment in the light of the
definition of 'Dealer' and the 2nd exception to it, this Court
D agrees with the views expressed by the High Court that
the appellant company falls within the definition of 'Dealer'
as given in the order of 1977 and will not be saved from
the rigor of the provisions by taking shelter of the 2nd
exception to it. (Para - 7) [181-D, E]
E 1.2 From the definition, it also emerges that mere
storage will not suffice so as to fall within the definition of
'Dealer'. The storage must be for sale as is clear from the
expression 'storage for sale'. Certain clauses of the
agreement entered into by the appellant company with
F the manufacturing company give the clear impression that
the appellant company was carrying on the business of
purchase and sale and that it was not a mere storage
depot of the manufacturing company but all the
transactions were carried on a principal to principal basis.
G (Para - 7) [181-F-H, 182-A]
1.3 Considering the fact that more than 5 kilolitres of
engine oil was found in the premises of the appellant
company and reading the agreement as a whole,
H undoubtedly, the appellant company squarely falls within
M/S. HOLANI AUTO LINKS PVT. LTD. v. STATE OF 171
MADHYA PRADESH
)
-
the main part of the definition of 'Dealer' as given in the A
Order of 1977. In this view of the matter, the findings of
the High Court that the appellant company is covered by
the main part of the definition of 'Dealer' are affirmed.
(Para - 7) [182-F, G]
2.1 The 2nd exception, as rightly held by the High B
Court, applies only to an oil company. What is exempted
through this provision is the Oil company if it satisfies the
ingredients laid down in that exception and not the
storage depot or installation. It is not the case of the
appellant company that it is an Oil company and therefore c
1 should be covered by this exception. (Para - 8) [183-E, F]
2.2 The term 'its' in 2nd exception to Clause 2(a) of
Order 1977 refers to the installation or storage depot of
the oil company and the Court would desist from giving
D
the same an extended meaning for two reasons. First, as
rightly held by the High Court, an exception must be
construed strictly and in that view of the matter, this Court
cannot interpret the same to add something to it by
implication. Secondly and more importantly, by doing that,
the clear intention of the legislature would be ignored. This E
is because if the erstwhile definition of 'Dealer' is
compared with the amended definition, it is pellucid that
the intention of the legislature was to exclude people like
.. .; the appellant company from the purview of the exception .
' (Para - 8) [184-A, B, C] F

Charan Lal Sahu vs. Union of India [(1990) 1 SCC 613
and Bangalore Water Supply & Sewerage Board vs. A.
Rajappa and others (1978) 2 SCC 213 - held inapplicable.
2.3 It is true that no sales were made from the storage G
depot of the appellant company to the general public. But
from a plain reading of clause 8(d) of the agreement, it is
apparent that sales were made by the appellant company
to its customers/dealers. The agreement clearly shows
that the appellant company, although termed as a H
172 SUPREME COURT REPORTS [2008] 7 S.C.R.
(

A Distributor, essentially did what 'Dealers' do. The terms
'Dealer' and 'Distributor' can be used interchangeably.
(Para - 8) [184-E, F]
2.4 From the agreement, it is clear that the appellant
company was purchasing the commodities from the
B manufacturing company, stocking them for sale and
selling them to its customers/dealers and was not merely
storing them as alleged. Therefore, the appellant company
was not merely storing the commodities but purchasing
the commodities, selling it at the price prescribed by the
C manufacturing company and also earning profit, by
whatever name called. (Para - 8) [184-G, H; 185-A] ,~

3.1 The appellant company was at least indulging in
the activity of purchase and sale of lubricant oil. (Para -
D 9) [186-C]
Nathulal vs. State of M. P. (AIR) 1966 SCC 43 -
distinguished.
3.2 Looking at the main part of the definition of
E 'Dealer', it is pertinent to note that it nowhere requires as
one of its ingredients that to be a 'Dealer', the commodities
should be sold to the general public. The very idea of 'sale
to the general public' finds mention for the first time in the
2nd exception. It does not mean that this Court should
include this aspect i.e. 'sale to the general public' as an
F ingredient of the main definition. It is not permissible for
this Court to do that. The function of a proviso or an
exception is that it qualifies the generality of the main
enactment by providing an exception and taking out as it
were from the main enactment a portion which but for the
G proviso would fall within the main enactment. Ordinarily
it is foreign to the proper function of the proviso to read it
as providing something by way of an addendum. (Para -
10) [187-C, D, E]
Madras & Southern Maharatta R/y Co, Ltd vs. Bezwada
H
MIS. HOLANI AUTO LINKS PVT. LTD. v. STATE OF 173
' MADHYA PRADESH [TARUN CHATTERJEE, J.]

Municipality AIR 1944 PC 71 and West Derby Union vs. A
Metropolitan Life Assurance Co., (1897) AC 647, p. 652 (H.L.)
- referred to.
3.3 A 'Dealer' may be any person, whether he sells
commodities to the general public or not. It is only the
exception, which provides that an oil company storing B
its goods in its storage depot or installation wherefrom
no sales are made to the general public shall not be a
'Dealer'. 'Sale to general public' therefore cannot be taken
to be an ingredient of the main definition and the
exception is applicable only to an oil company. c
(Para - 10) [188-A, 8, C]
CRIMINAL APPELALTE JURISDICTION : Criminal
Appeal No.207 of 2002.
From the final Judgment and Order dated 3.5.2001 of the D
High Court of Madhya Pradesh at Jabalpur in Criminal Revision
No. 890 of 2000.
V.A. Mohta, Atul Kumar, Nilkanth Nayak and S.K. Verma
for the Appellant.
E
C.D. Singh, Merusagar Samantary, Ram Naresh Yadav,
Sunny Chowdhary, Vairagya Vardhan and Go~ind Goel for the
Respondent.
The Judgment of the Court was delivered by
F
TARUN CHATTERJEE, J. 1. This appeal is directed
against the judgment and order dated 3rd of May, 2001 of the
High Court of Madhya Pradesh at Jabalpur in Criminal Revision
No.890 of 2000 whereby the High Court had set aside an order
dated 25th of February, 2000 passed by the Sessions Judge, G
>
Sagar, M.P. in Criminal Appeal No.184 of 1999 who in his turn
had set aside an order dated 20th of December, 1999 passed
by the Collector, Sagar in so far as he proceeded to include M/
s. Holani Auto Links Pvt. Ltd. (in short the "Appellant Company.")
within the definition of "Dealer" as contained in Clause 2(a) of
H
174 SUPREME COURT REPORTS [2008] 7 S.C.R.

A the M.P. Essential Commodities (Exhibition of Price & Price
Control) Order, 1977 (in short the "Order of 1977") and held
them guilty for violating Clauses 3(1) to 3(3) and 6(1) of the Order
of 1977.
2. Brief facts leading to the filing of this appeal are as
B follows.

The Appellant Company was appointed as a Distributor
by Castrol India Ltd. (in short the "manufacturing company") by
entering into an agreement dated 1st of June, 1998. On 27th of
c May, 1999, a team headed by Deputy Collector, Food
Department, Sagar, M.P. came to the office premises of the
appellant company for inspection and asked for the records and
various registers and the lists. Before the Deputy Collector and
the Members of the Food Department, Sagar, the representative
of the appellant company had explained that it was only a
0
Distributor and therefore was not required to maintain all those
lists and other things. However, the Deputy Collector and his
team seized around 33344.80 litres of lubricating oil stored in
the premises of the appellant company. The value of the oil was
E worth Rs.2,01,840/-. On the basis of such inspection, the
Collector, Sagar on 2nd of June, 1999 issued a show cause
notice to the appellant company and thereafter evidence from
both the sides were adduced and the Collector by his order
dated 20th of December, 1999 found that the appellant company
had violated Clauses 3(1) to 3(3) and 6(1) of the Order of 1977
F and, accordingly, he ordered confiscation of the commodities
worth Rs.1,00,000/- out of the commodities seized from the
possession of the appellant company under Section 6(a) of the
Essential Commodities Act, 1955. In the alternative, it was
directed that in case the appellant company wanted the release
G of the commodities worth Rs.1,00,000/-, it may deposit
Rs.1,00,000/- instead and get the release of the entire stock of
oil. Feeling aggrieved, the appellant company filed an appeal
under Section 6-C of the Essential Commodities Act, 1955
before the Sessions Judge, Sagar. The learned Sessions
H Judge, Sagar by the order dated 24th of February, 2000 had
M/S. HOLAN I AUTO LINKS PVT. LTD. v. STATE OF 175
MADHYA PRADESH [TARUN CHATTERJEE, J.]
)

set aside the order of the Collector and allowed the appeal of A
the appellant company holding that the appellant company was
not covered by the definition of "Dealer" under the Order of 1977
and accordingly, it was neither liable to exhibit the price nor was
it required to keep the accounts. Feeling aggrieved by this order
of the Sessions Judge, Sagar, the State of M.P. filed a Criminal B
Revision No.890 of 2000 before the High Court and the High
Court by the impugned judgment and order dated 3rd of May,
2001 had allowed the revision case thereby setting aside the
order of the Sessions Judge and restoring the order of the
Collector, Sagar. Against this decision of the High Court, a c
special leave petition has been filed in respect of which leave
has already been granted.
3. From the factual matrix and in view of the arguments
advanced before us, the following questions need to be decided
in this appeal. D
(1) Whether the appellant company would fall within the
definition of 'Dealer' as contained in Clause 2(a) of
the Order of 1977.
(2) Whether the appellant company has violated Clauses E
3(1) to 3(3) and 6(1) of the Order of 1977.

4. Before we answer these questions, it is expedient to
give a brief narrative pertaining to the Order of 1977 and the
relevant provisions contained there under.
F
The State Government promulgated the Order of 1977 with
the prior concurrence of the Central Government in the exercise
of its powers conferred by Section 3 of the Essential
Commodities Act, 1955 (10 of 1955).
In 1998, certain amendments were made in the Order of G
>
1977. Prior to the amendment of 1998, Clause 2(a) defined
'Dealer' as under: -
"Dealer meanE' a person who carries on the business of
selling by reta!f or wholesale or storing for sale by rMail H
176 SUPREME COURT REPORTS [2008] 7 S.C.R.
(

A or wholesale any commodity, whether or not such
business is carried on in addition to any other business,
but does not include a hawker or peddler or an oil
company, storage depot or installation wherefrom no
sales are made to made to general public"
B The amended definition of the term 'Dealer' now reads as
under: -
"Dealer means a person (except the exceptions
mentioned below under this clause) who carries on the
c business of purchase, sale, or storage for sale, or
processing or manufacturing any of the following essential
commodities: -
i.
ii.
D
iii.
iv.
V.
E
vi. If dealing with engine oil at any time in more than 5
(five) kilolitres.
Exceptions.- Following persons or categories of persons
are not included in the above definition of dealer: -
F i.
ii. Any oil company producing or storing Kerosene,
Diesel (High Speed Oil), Petrol (Motor Spirit), cooking
gas, or engine oil in its storage depot or installation
G wherefrom no sales are made to general public.
iii. "
We keep it on record that the decision of this appeal shall
practically rest on the interpretation of the amended definition
H of the term 'Dealer' and the 2nd exception to it as noted
M/S. HOLANI AUTO LINKS PVT. LTD. v. STATE OF 177
MADHYA PRADESH [TARUN CHATTERJEE, J.)
)
hereinabove. We will examine this definition more elaborately A
a little later.
The other relevant provisions, which would be required in
this appeal are Clauses 3(1 }, 3(2), 3(3) and Clause 6(1 ).
Clause 3 reads as under: - B
3. Exhibition of Price List. - (1) Every dealer shall exhibit
at the entrance or some other prominent place of his
business premises the price list of essential commodities
held in stock by him for sale.
c
(2) The price list shall-
(a) indicate separately the prices of different categories
or varieties of essential commodities;
(b) bear the signature of the dealer; and
D
(c) be legibly written in Hindi language and devnagari
script.
(3) Every dealer shall prominently exhibit a separate list
showing the stock of different categories or varieties of E
essential commodities held by him at the end of the day
preceding."
Clause 6(1) of the Order of 1977 is another relevant
provision and was also amended in the year 1998. The
amended Clause 6(1), which would be required in this case F
reads as under: -
"6. Every dealer shall maintain proper accounts of the
purchase and sale of essential commodity showing the
price of purchase, price of sale as the transactions take
place, and the balance in stock on each day on the close G
of the day."
5. Keeping these provisions in mind, let us now take up
the first question, as noted herein earlier, for our consideration.
The learned senior counsel for the appellant company Mr. H
178 SUPREME COURT REPORTS [2008) 7 S. C.R.

I

A VA. Mohta vehemently argued before us that the appellant
company was appointed as a Distributor by the manufacturing
company through a written agreement. which clearly prohibited
sale of the commodity by the appellant company. The
manufacturing company was the manufacturer of Castrol Oil,
B which is used as Engine Oil and t~e appellant company was
keeping the commodities at the instance of the manufacturing
company. Our attention was drawn to clause 1O(a) of the
agreement, which provides that the Distributor, being the
appellant company herein, shall not trade in the company's
c product as a 'Dealer' by itself or through anyone else.
Accordingly, the learned senior counsel Mr. Mohta submitted
that the High Court had erred in holding that the appellant
company was a 'Dealer' when in fact, the appellant company
was only the Distributor who was prohibited to trade in the
D company's product as a 'Dealer' either by itself or through
anyone else. The learned senior counsel further argued that the
appellant company was merely storing the material on behalf of
the manufacturing company without making any sales to the
general public. Accordingly, he argued that the appellant
company would come within the 2nd exception to the definition
E of 'Dealer' and that the High Court had erred in interpreting the
definition of the term 'Dealer' and the 2nd exception to it thereby
holding that the appellant company does not fall within the
• purview of the said exception. Mr. Mohta further argued that the
word "its" as used in the 2nd exception to the definition of 'Dealer'
F should be given a liberal interpretation in favour of the appellant
company. In support of this contention, he relied on a decision
of this court in the case of Charan Lal Sahu Vs. Union of
India [(1990) 1 SCC 613). Relying on this decision, Mr. Mohta
contended that a liberal approach should be adopted while
G interpreting the word "its" appearing in the 2nd exception to the
definition of 'Dealer' under Clause 2(a) of the Order of 1977
and accordingly, the appellant company should also be given
the benefit of this exception. Reliance was also placed in this
connection on the decision of this court in the case of Bangalore
H Water Supply & Sewerage Board Vs. A. Rajappa and others
M/S. HOLAN! AUTO LINKS PVT. LTD. v. STATE OF 179
MADHYA PRADESH [TARUN CHATTERJEE, J.]
)
[(1978) 2 sec 213]. A
These contentions of Mr. Mohta were contested by the
learned counsel appearing on behalf of the respondent who
submitted before us that on a plain reading of the definition of
'Dealer' and the 2nd exception to it, it is evident that the exception
is applicable only to the oil company and to no one else. B
6. Before we deal with this issue as posed by the learned
counsel for the parties, we may now look at the findings of the
High Court on this issue, which are as under: -
"It cannot be disputed that the respondent company was C
stocking the Castro/ engine oil for sale under an
agreement. The Castro! India Ltd. was the manufacturer
of the engine oil and it has sent the oil for storage with
the respondent- company so that it can be sold to various
dealers. Once this fact is realized and it is not disputed D
that the quantity of the oil was more than five kilolitres,
the respondent-company shall be deemed to be covered
by the main part of the definition of "dealer". The only
way the respondent-company could escape the clutches
of the definition of "dealer" is by relying on exception (2) E
of Clause 2(a) of the Order of 1977 which has been
reproduced above. The question, therefore, is whether
the learned Govt. Advocate is right in saying that the
exception is confined only to the oil company mentioned
therein or would it cover the case of the present F
respondent-company which is the distributor under an
agreement on behalf of the company. It cannot be
disputed that the agreement shows that from the storage
:Jepot or the installation of the respondent-company, no
sa:e is made to the general public. The respondent- G
company had undertaken in its agreement not to make
a sale of the essential commodities stored with it to the
• general public. It is, thus, clear that the intention was not
to make any sale from the depot or installation of the
respondent-company to general public. However, the use H
180 SUPREME COURT REPORTS [2008] 7 S.C.R.

(
A of the words "in its storage depot or installation" have to
be interpreted. Obviously, the storage depot or installation
of the respondent-company does not belong to the
Castro! Company. Therefore, strictly speaking the
respondent-company is not covered by exception to the
B definition of "dealer" given in the Order of 1977.
It has been further contended on behalf of the
respondent-company that spirit of the entire order is to
control the prices of a commodity and the exhibition of
the prices required to be made under the order is for the
c purpose that a customer must get the correct value of
the commodity covered by the Order of 1977. Therefore,
an extended meaning should be given to the exception
particularly when its violation is confiscatory in nature.
It is very difficult to accede to this contention for the reason
D
firstly that the respondent-company is relying on an
exception to the definition of "dealer". It must fall strictly
within the exception. Secondly, the intention of the
legislature is very clear by enacting exception 2 to Clause
2(a) of the Order of 1977. It meant only to except the oil
E company producing or storing the commodities
mentioned in the exception. No other person was meant
to be covered by the exception. i"he respondent is not
an oil company Otherwise, the definition of "dealer" is
.:JUite broad. It may be that the, persons like the present
F respondent should be exempted from operation of the
order in case they do not sell the oil to general public,
but the legislature in its wisdom has not done so. This
court cannot fill in the gc. · , ·giving an altogethe. differeq;t v v
meaning to the exception which is not manifested by it.
G The use of the words "engine oil in its storage depot or
installation wherefrom no sales are made to the general
public" refer to the Oil Company This is clear by the use •
of the word "its". The contention of the learned counsel
for respondent that this court should mitigate a rigour of
H definition by reading it down to include a "dealer'' like the
M/S. HOLAN! AUTO LINKS PVT. LTD. v. STATE OF 181
MADHYA PRADESH [TARUN CHATTERJEE, J.]

respondent-company cannot be accepted." A
Let us now look at the ingredients of the definition of
'Dealer' as contained in Clause 2(a).
A dealer means a person who carries on the business
of: - B
1) purchase, or

2) sale or;

3) storage for sale; or
c
4) processing; or

5) manufacturing.
6) If dealing with engine oil at any time in more than 5
(five) kilolitres.
D
7. Having examined the findings of the High Court in the
impugned judgment in the light of the definition of 'Dealer' and
the 2nd exception to it, as reproduced herein earlier, we agree
with the views expressed by the High Court that the appellant
company falls within the definition of 'Dealer' and will not be E
saved from the rigor of the provisions by taking shelter of the
2nd exception to it. Let us first see if the appellant company is
covered by the main part of the definition of 'Dealer'. As noted
hereinabove, for this, a person must carry on the business of
purchase or sale of commodities etc. From the above definition, F
it also emerges that mere storage will not suffice so as to fall
within the definition of 'Dealer'. The storage must be for sale as
;~_clear from the expression 'storage for sale'. In this case, the
learned senior counsel for the appellant company has argued
that the commodities were only stored with the appellant G
company and there was no sale to the general public. However,
from the agreement entered into by the appellant company with
the manufacturing company, we find certain clauses, which give
the clear impression that the appellant company was carrying
on the business of purchase and sale and that it was not a mere H
182 SUPREME COURT REPORTS [2008] 7 S. C.R.

r
A storage depot of the manufacturing company but all the
transactions were carried on a principal to principal basis. Some
of the relevant clauses are as under: -

" ... AND WHEREAS the Distributor has approached the
Company to purchase in wholesale quantities the
B products processes by or on behalf of the Company ..... .
2. The Distributor shall place purchase orders/indents
from time to time on the Company with regard to the
quantity of the products which the Distributor desires to
c purchase from the Company ......... .
3. The Distributor shall purchase the products at the rates
which will be fixed by the Company from time to time.
4. Sales Tax, Excise and other taxes if any levied on
delivery of the products to the Distributor shall be borne
D
by the Distributor as an extra charge.
5. It is expressly agreed that the basis of all transactions
between the Company and the Distributor in pursuance
of this agreement shall be on a principal to principal
E basis and that nothing in this agreement shall constitute
or be deemed to constitute either party as the agent of
the other.
B(d) The Distributor undertakes that in respect of supplies
to be made by it to the distributors customers/dealers, it
F shall not charge prices exceeding the prices
recommended by the Company."
Therefore, considering the fact that more than 5 kilolitres
of engine oil was found in the premises of the appellant company
G and reading the agreement as a whole, in particular, the clauses
quoted hereinabove, we have no doubt in our mind that the
appellant company squarely falls within the main part of the
definition of 'Dealer'. In this view of the matter, we affirm the
findings of the High Court that the appellant company is covered
H by the main part of the definition of 'Dealer'.
MIS. HOLAN I AUTO LINKS PVT. LTD. v. STATE OF 183
MADHYA PRADESH [TARUN CHATTERJEE, J.]
")
8. The significance, if any, of the argument of the learned A
senior counsel for the appellant company that 'no sales were
made to the general public' will be considered by us later. In this
context, let us first see if the appellant company falls within the
2nd exception to the definition of 'Dealer'. The 2nd exception
provides that 'Any oil company producing or storing Kerosene, B
Diesel (High Speed Oil}, Petrol (Motor Spirit), cooking gas, or
engine oil in its storage depot or installation wherefrom no
sales are made to the general public' shall not fall with in the
definition of dealer

The reasons given by the High Court in support of its finding c
that the appellant company does not fall within the purview of
this exception are that first, this exception applies only to the Oil
company and secondly, the use of the term 'its' in the exception
means that the storage depot or installation should belong to
the oil company and not any storage depot or installation. The D
learned senior counsel for the appellant company argued that
an extended meaning should be given to this exception and
that the High court has given unwarranted importance to the
term 'its'. We have already noted the two decisions of this court
relied upon by the learned senior counsel for the appellant E
company in support of this submission herein earlier. In this
regard, we would say that admittedly, the appellant company is
not an oil company, which in this .case is Castro! India Ltd.
(manufacturing company). The 2nd exception, as rightly held by
the High Court, applies only to an oil company. By this we mean F
that what is exempted through this provision is the Oil company
if it satisfies the ingredients laid down in that exception and not
the storage depot or installation. It is not the case of the appellant
company that it is an Oil company and therefore should be
covered by this exception. The appellant company is only trying
G
to establish that it is merely a storage depot or installation
wherefrom no sales were made to the general public and
• therefore, although, it did not belong to the oil company, it should
nevertheless be given the benefit of this exception. We are
unable to agree with this submission of the learned senior
H
184 SUPREME COURT REPORTS [2008] 7 S.C.R.

(

A counsel for the appellant company. Admittedly, the term 'its'
refers to the installation or storage depot of the oil company
and we would desist from giving the same an extended meaning
for two reasons. First, as rightly held by the High Court, an
exception must be construed strictly and in that view of the matter,
B we cannot interpret the same to add something to it by
implication. Secondly and in our view, more importantly, by doing
that, we would be ignoring the clear intention of the legislature.
This is because if we compare the erstwhile definition of
'Dealer', as reproduced herein earlier, with the amended
c definition, it is pellucid that the intention of the legislature was to
exclude people like the appellant company from the purview of
the exception. We may add here that we may have accepted
the contention of the appellant company if the definition of
'Dealer' had not been amended in 1998 in the manner indicated
herein earlier. We may also have given an extended meaning
D
to the term "its but this would militate against the clear intention
expressed by the legislature by bringing about the said
amendment. This was not the case in the two decisions of this
court relied upon by the learned senior counsel for the appellant
company and in fact, in those decisions, the language of the
E Act permitted liberal interpretation. For this reason, these two
authorities cannot be of any help to the appellant company. It is
true that no sales were made from the storage depot of the
appellant company to the general public. But from a plain
reading of clause 8(d) of the agreement, as quoted herein
F earlier, it is apparent that sales were made by the appellant
company to its customers/dealers. The agreement clearly shows
that the appellant company, although termed as a Distributor,
essentially did what 'Dealers' do. The terms 'Dealer' and
'Distributor' can be used interchangeably. However, we should
G not engage ourselves in the discussion whether any difference
does exist between the two. Instead, we should try to see the
substance of what was happening in the premises of the •
appellant company. From the agreement, it is clear that the
appellant company, as noted hereinabove. was purchasing the
H commodities from the manufacturing company, stocking them
MIS. HOLANI AUTO LINKS PVT. LTD. v. STATE OF 185
' MADHYA PRADESH [TARUN CHATTERJEE, J.)

for sale and selling them to its customers/dealers.and was not A
merely storing them as alleged. Therefore, the appellant
company was not merely storing the commodities but
purchasing the commodities, selling it at the price prescribed
by the manufacturing company and also earning profit, by
~- whatever name called. B
'
9. Let us now take up the second question for our
consideration. If we look at Clauses 3(1 ), 3(2), 3(3) and 6(1) of
the order of 1977, the clear requirement is that for their violation,
one must be a 'Dealer' as defined in Clause 2(a). In this view of
the matter and having come to the conclusion that the appellant c
company is a 'Dealer', by whatever name called, the High Court
and the Collector had rightly held that the appellant company
had violated the said clauses. The reason given by the Sessions
Judge for holding the appellant company not liable cannot be
accepted because we find from the judgment of the Sessions D
Judge that it has relied on wrong definitions to reach that
conclusion. The Sessions judge relied on the definition of
"Trader" as given in M.P. Govt. Department of civil Supply of
Food and Protection of Consumer, Ministry Ballabha Bhawan
Bhopal Notification No. F.one/26/98/29/1 dated 10.9.98. The E
definition of 'Trader' and the exceptions to it are different from
the definition of 'Dealer' and its exceptions. We are only
concerned with the amended definition of 'Dealer' in this appeal
and as noted herein above, after comparing the erstwhile
definition of 'Dealer' and the amended definition of 'Dealer', it F
is pellucid that the intention of the legislature was to exclude
people like the appellant company from the purview of the
exception. Faced with this situation, the learned senior counsel
for the appellant company argued that the principle of Mens Rea
should be applied in this case and it should be held that since
G
the appellant company had no intention to sell the commodities,
·' it should not be held guilty. He relied on Nathulal Vs. State of
M.P. [(AIR) 1966 sec 43] wherein it was held that an offence
under Section 7 of the Essential Commodities Act, for breach
of Section 3 of the Madhya Pradesh Food grains Dealers
H
186 SUPREME COURT REPORTS [2008] 7 S.C.R.

A Licensing Order, 1958, necessarily involved a guilty mind as an
ingredient of the offence. It was further held in that decision that
considering the scope of the Act, it would be legitimate to hold
that an offence under Section 7 of the Act was committed by a
person if he intentionally contravened any order made under
B Section 3 of the Act and that the object of the Act would be best
served and innocent persons would also be protected from
harassment if Section 7 was so construed. Mr. Mohta strongly
relied on the remarks made by the High Court in paragraph 8 of
the impugned judgment to the effect that no sales were made
C by the appellant company to the general public. From the
clauses of the agreement, as quoted herein above, and in view
of our discussions made hereinabove, we must come to the
conclusion that the appellant company was at least indulging in
the activity of purchase and sale of lubricant oil. In Nathu/a/'s
case [supra], the dealer had made an application for a licence
0
under the order of 1958 and was under a bona fide impression
that the licence had been issued to him though not actually sent
to him and since the rejection of the licence was not
communicated to him, he had stored the food grains in his
godown. In these circumstances, it was held that since he had
E not intentionally contravened the provisions of Section 7 of the
Act, he should be held not guilty. This case is distinguishable on
facts from our case. Let us now see if the appellant company in
the instant case had any such bona fide impression. It is the
averment of the appellant company that it had applied for a
F licence and it is not in dispute that the appellant company did
not get any licence under that order. It was claimed by the
appellant company that its application was pending. Therefore,
it would be wrong to say that the appellant company had any
bona fide impression in this case that it was granted a licence.
G
10. Even otherwise, as regards the finding in the impugned
judgment that the goods were not sold to the general public,
relying on which the learned senior counsel for the appellant
company has contended before us that it was not selling goods
to the general public but was only an authorized distributor of
H
M/S. HOLANI AUTO LINKS PVT. LTD. v. STATE OF 187
~ MADHYA PRADESH [TARUN CHATTERJEE, J.]

the commodity to the traders, we would make two points. First, A
the definition of 'Dealer' does not specify that to be a 'Dealer',
the goods must be sold to the general public. Secondly, if we
look at the 2nd exception to the definition of 'Dealer', it says that
an Oil company producing or storing kerosene diesel etc. in its
,, storage depot or installation wherefrom no sales are made to B
the general public would not be a 'Dealer'. With regard to this
exception, we have already noted herein earlier that this
exception applies only to the Oil company. Admittedly, the
appellant company is not an oil company and neither is it the
case of the appellant company that it is an oil company.
c
Therefore, looking at the main part of the definition of 'Dealer',
it is pertinent to note that it nowhere requires as one of its
-.. ingredients that to be a 'Dealer', the commodities should be
__,
__, sold to the general public. The very idea of 'sale to the general
~

public' finds mention for the first time in the 2nd exception. Does
D
that mean that we should include this aspect i.e. 'sale to the
general public' as an ingredient of the main definition. We are
afraid that it is not permissible for us to do that. In this regard,
we may note that the function of a proviso or an exception is
that it qualifies the generality of the main enactment by providing
an exception and taking out as it were from the main enactment E
a portion which but for the proviso would fall within the main
enactment. Ordinarily it is foreign to the proper function of the
proviso to read it as providing something by way of an
addendum. In Madras & Southern Maharatta Rly Co, Ltd Vs.
•. F
Bezwada Municipality [AIR 1944 PC 71], it was held as under:
~

"Except as to cases dealt with by it, a proviso has no
repercussion on the interpretation of the enacting portion
of the section so as to exclude something by implication
G
which is embraced by clear words in the enactment."
·' Further, as stated by Lord Watson, if the language of the
enacting part of the statute does not contain the provisions which
are said to occur in it, you cannot derive these provisions by
implication from a proviso." [See West Derby Union Vs. H
188 SUPREME COURT REPORTS (2008] 7 S.C.R.

A Metropolitan Life Assurance Co., (1897) AC 647, p. 652
(H.L.)]
The reason behind giving the above cases on interpretation
of provisos and exceptions is to drive home the point that in the
present case, admittedly, a 'Dealer' may be any person, whether
8 he sells commodities to the general public or not. It is only the
exception, which provides that an oil company storing its goods
in its storage depot or installation wherefrom no sales are made
to the general public shall not be a 'Dealer'. 'Sale to general
public' therefore cannot be taken to be an ingredient of the main
C definition and the exception is applicable only to an oil company.
In the present case, the appellant company was selling
commodities to its customers or dealers, may be not to the
general public, but in view of the last preceding discussion, this
argument of the learned senior counsel for the appellant company
•
D does not hold any water. Furthermore, the exception, as noted
herein earlier applies only to the oil company and on this count
also, the appellant company cannot claim the benefit of the
exception.
11.For the reasons aforesaid, this appeal is dismissed.
E There will be no order as to costs.
S.K.S. Appeal dismissed.