Supreme Court Frees 'Cement Black Marketeers'—But Points Finger at Police for Botched Probe

In a sharp rebuke to outdated prosecutions, the Supreme Court of India has acquitted Manoj and Prakash—nephew and uncle convicted of stockpiling government-supplied cement—ruling that cement controls under the Essential Commodities (EC) Act had been lifted years earlier. Justices B.V. Nagarathna and R. Mahadevan, in a February 13, 2026 judgment (2026 INSC 152), set aside convictions dating back to a 1994 raid, slamming investigators for failing to invoke Indian Penal Code (IPC) provisions despite evidence of diversion from a public works project.

The bench, authoring through Justice Mahadevan, emphasized that while no EC Act offence stood, the facts screamed potential IPC violations—like dishonest misappropriation of government property. "The lapse, therefore, lies squarely at the door of the investigating agency," the court observed, as reported in contemporary coverage highlighting the three-decade ordeal for the appellants.

From Road Project to Raid: The Trail of Missing Cement Bags

The saga began in early 1994 with a Public Works Department (PWD) contract for a cement concrete passage on the Kannad-Bahirgaon Road in Aurangabad, Maharashtra. Awarded to Bharat Majdoor Credit Cooperative Society (chaired by accused Madhukar, A3), the work was sublet to Prakash Vyenkatrao (A4). PWD was to supply 850 bags of concessional-rate "government quota" cement.

But 400 bags from the second indent vanished en route. On March 24, 1994, PSI Kadam of Kranti Chowk Police Station raided premises near Mistri Traders and Maharashtra Agro Industries—shops linked to appellants Manoj (A1) and Prakash (A2). Police seized 365 bags, with 25 more recovered later. Peons Sadashiv (A5) and another allegedly delivered the bags, pocketing 10 as commission.

Charged under Sections 3 and 7 of the EC Act for violating the Maharashtra Cement (Licensing and Control) Order, 1973, the trial court (Special Judge, Aurangabad) convicted A1, A2, A3, and A5 in 2000 to one-year RI and ₹100 fine. The Bombay High Court Aurangabad Bench upheld this in 2014. Appeals reached the Supreme Court in 2015.

Key questions: Was cement still regulated in 1994? Did possession alone prove black-marketing? Could conviction stand without proof of a live control order?

Appellants' Arsenal: Decontrol Notifications and Evidentiary Gaps

Senior counsel for Manoj and Prakash argued the prosecution crumbled on legal bedrock. Cement's price and distribution controls ended via Cement Control (Amendment) Order 1989 (S.O. 168(E), March 1, 1989), deleting key clauses of the 1967 Cement Control Order. State powers were rescinded in 1990 (S.O. 624(E)). By 1994—the raid date—no Section 3 EC Act order bound cement.

No proof of controlled prices, sales intent, or even "government quota" markings. Witness admissions confirmed no control orders in the chargesheet; market cement was freely available. Prakash A2? Mere relation to Manoj, no possession evidence—his tea shop sales tax cert proved irrelevance. Precedents like Prakash Babu Raghuvanshi v. State of Madhya Pradesh (2004) and Salekh Chand v. State of UP (AIR 1960 SC 283) mandated proving a live order and contravention.

Fallback plea: Even if liable, mere possession isn't attempt/abetment ( Malkiat Singh v. State of Punjab , 1969); grant probation given age and lapse of time.

State's Counter: Possession Shifts Burden, Licence Lacking Seals Guilt

Maharashtra's counsel fired back: Raids proved possession of diverted PWD cement in appellant-linked shops/godowns. No licences, no contract link—burden shifted to explain legality ( Kolhapur Canesugar Works Ltd. v. Union of India , 2000). Courts below rightly found unexplained hoarding of concessional cement meant for public works, intent to black-market inferred.

Court's Razor-Sharp Cut: Decontrol Trumps All, IPC Overlooked

Diving into history, the bench traced cement's journey: Declared essential in 1962, controlled via 1967 Order, delegated to states (1973 Maharashtra Order). But 1989 decontrol omitted licensing/storage/sale clauses; 1990 axed state retail powers. No saving clause revived them for 1994.

"Neither the Cement Control Order, 1967 nor the Maharashtra State licensing regime under the 1973 Order operated so as to attract penal consequences under Section 7 of the E.C. Act," the court held. Trial and High Courts erred by ignoring this, basing verdicts solely on evidence appreciation. Citing Kolhapur Canesugar , repeal without savings kills pending actions absent contrary provision.

Factual findings stood—diversion proved—but wrong law applied. Trial courts can convict for minor offences under CrPC Section 222 if ingredients met, but prosecution never pivoted to IPC (e.g., criminal breach of trust).

Key Observations

"In the absence of any subsisting statutory order under Section 3 of the E.C. Act on the date of the alleged occurrence, a conviction under Section 7 thereof is legally impermissible."

"Acts such as diversion of Government-supplied cement meant for public works, dishonest retention thereof, or unauthorised dealing in such Government property may still attract penal consequences under the Indian Penal Code..."

"This case is illustrative of a prosecution founded on an incorrect appreciation of the statutory framework."

Appeals Allowed: Acquittal, But a Cautionary Tale

The Supreme Court allowed the appeals, quashed convictions/sentences, cancelled bail bonds, and ordered fine refunds. Implications ripple: Prosecutions must verify live statutes—lest decades drag innocents through courts. For investigators, a wake-up: Spot IPC fits early, avoid EC Act relics post-decontrol.

This 32-year saga underscores justice delayed by legal myopia, freeing Manoj and Prakash while nudging agencies toward sharper probes.