section of law

 Police  will book the shop owners under Indian penal code sections 465 and 468. "It is the shop owners responsibility to cross check and confirm the applicants documents,"  Further,  such SIM card users will also be punished.

here is no case of shop owner....

Such an act will be dealt under section 405 of the Indian Penal Code (IPC), 1860.
Section 405 deals with "Criminal Breach of Trust", and states that —
"Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust".

In such a case, both 'B' and 'C' will be liable for the action. This is because, the person 'A' handed over his sim card to person 'B' in a good faith that he/she will not misuse the property (sim card in this case) for violation of any sort of law, however without the permission of the actual owner (i.e. person "A") of the property person 'B' handed the sim card over to 'C'.
Now, since the consent of person 'A' was not obtained by person 'B' before handing over the sim card to person 'C', both person 'A and B' will be liable under section 405 IPC while person 'A' will be free from the same.

One might wonder, why does not person 'B' is acquitted from offence as he/she also might have handed over the sim card to person 'C' in good faith. So the reason, for person 'B' being liable for the offence is that he/she did not obtained proper instructions/consent from the actual owner of the sim card (i.e. person 'A') before handing over his property to a third person.

Hope It Helps!

Regards,
Kevin M. Paul