Dismissed¶68

M/S. Shankar Rice Mill (Huf) v. State of Chhattisgarh

Chhattisgarh HC5 Jan 2026WPC/4073/2025

Case brief

AI extract

What is this about?

Chhattisgarh High Court, Bilaspur; WPC No. 4073 of 2025; decided 06/01/2026; Shankar Rice Mill (HUF) v. State of Chhattisgarh, MARKFED, FCI and others; custom milling KMS 2023-24; CMR deposit at FCI Mandir Hasaud depot not recorded in NIC Data Module; alleged wrong shortage entry; bank guarantees Rs. 1.80 crore; claimed halting charges Rs. 10,000/- per day per truck; arbitration Clauses 14 and 15 of Custom Milling Agreement; alternative remedy; Article 226 writ jurisdiction; Goyal Rice Industries; Gujarat Ambuja Cement; Glaxo SmithKline; writ petition dismissed as not maintainable with liberty to arbitrate.

What did the court decide?

Liberty to the petitioner to avail the remedy available under Clause 14 & 15 (arbitration) of the agreement, if so advised. ¶68

M/S. Shankar Rice Mill (Huf) Vs State of Chhattisgarh — Arbitration | Chhattisgarh HC (2026)

What the court decided

AI extract

Outcome

Liberty to the petitioner to avail the remedy available under Clause 14 & 15 (arbitration) of the agreement, if so advised.

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Issue for consideration

Whether the writ petition under Article 226 of the Constitution is maintainable, given that Clauses 14 and 15 of the Custom Milling Agreement provide for resolution of disputes through arbitration (alternative remedy).

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Court's answer

Clauses 14 and 15 of the Custom Milling Agreement embed a comprehensive and statutorily recognized arbitration mechanism; the petitioner has an effective, adequate and efficacious alternative remedy and cannot bypass the agreed contractual and statutory forum.

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Ratio / Principle

It is well-settled that when a remedy is available, writ jurisdiction under Article 226 of the Constitution should not ordinarily be exercised.

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Key takeaways

Following Goyal Rice Industries, where a contractual remedy by way of arbitration is available and the dispute pertains to interpretation of policy or contract terms, parties must avail such remedy rather than invoking writ jurisdiction.ratio¶64

Detailed headnote1 paragraphs

Custom milling of paddy (KMS 2023-24) — HUF rice mill sought writ directions to FCI and State agencies to record CMR delivered at Mandir Hasaud depot, pay halting charges of Rs. 10,000/- per day per truck, shift remaining CMR from Central Pool to State Pool (NAN) and restrain encashment of Bank Guarantees of Rs. 1.80 crores — Custom Rice Milling Agreement contained arbitration Clauses 14 and 15 — Held (DB: Ramesh Sinha, CJ and Arvind Kumar Verma, J; per Arvind Kumar Verma, J): the petitioner has an effective, adequate and efficacious alternative remedy under the agreement; writ jurisdiction under Article 226 should not ordinarily be exercised where a remedy is available; disputes under custom milling agreements are better resolved through arbitration (relying on Goyal Rice Industries (P&H), State of H.P. v. Gujarat Ambuja Cement, and Asst. Commissioner (CT) LTU v. Glaxo SmithKline) — Writ petition dismissed as not maintainable, with liberty to avail arbitration under Clauses 14 & 15, if so advised.

2026:CGHC:588-DB

NAFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

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WPC No. 4073 of 2025

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M/s. Shankar Rice Mill (Huf) Through Its Proprietor Roop Kumar Choudhary S/o Late Narsing Das Choudhary, Aged About 69 Years, R/oWard No. 14, Near New Bus Stand, Akoli Road, Tahsil- Arang, DistrictRaipur, Chhattisgarh. …Petitioner(s)

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versus

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1. State Of Chhattisgarh Through Principal-Secretary, (Directorate Of Food, Civil Supplies And Consumer Protection), Capitol Complex, Block2, Iii Floor, Indravati Bhawan, Sector-19, Nava Raipur, Atal Nagar, Raipur, Chhattisgarh. Email- [email protected]

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2. Chhattisgarh State Co-Operative Marketing Federation Limited Through Its Managing Director 880, Civil Lines, Raipur, Tahsil- Raipur, DistrictRaipur, Chhattisgarh.

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3. District Marketing OfÏcer Chhattisgarh State Co-Operative Marketing Federation Limited, Raipur, Tahsil And District- Raipur, Chhattisgarh.

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4. Union Of India Through Secretary, Department Of Food And Public Distribution, Ministry Of Consumer Affairs, Food And Public Distribution Department Of Food And Pd Krishi Bhawan, New Delhi.

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5. Food Corporation Of India Through Its Managing Director, 16-20, Barakhamba Ln, Fire Brigade Lane, Barakhamba, New Delhi, Delhi. 110001

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6. General Manager Food Corporation Of India, Regional OfÏce, Raipur, Vidhansabha Marg, Kapa, Raipur, Chhattisgarh. 492005

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7. Depot Manager Food Corporation Of India, Mandir Hasaud Depot, Mandir Hasaud, Raipur, Chhattisgarh. 492005

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8. Chhattisgarh State Civil Supplies Corporation Through Its Managing Director, Hitvad Complex, Avanti Vihar, Raipur, Chhattisgarh. Pin492006.

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9. Indian Bank Through Its Branch Manager, Indian Bank Of India BranchCivil Lines, Raipur, Chhattisgarh. --- Respondent(s)

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For Petitioner	: Mr. Raj Kamal Singh, Advocate appears through V.C. assisted by Mr. Suryapratap Yuddhveer Singh, Adv.
For Respondents/ State For MARKFED	: Mr. Prasun Bhaduri, Dy. A.G. : Mr. Animesh Tiwari, Advocate
For Respondent No. 4 For Respondent No. 5 to 7	: Ms. Annapurna Tiwari, CGC : Mr. R.S. Patel, Advocate
For Respondent No. 9	: Mr. Saleem Kazi, Advocate

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Hon’ble Shri Ramesh Sinha, Chief Justice Hon’ble Shri Arvind Kumar Verma, Judge

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Order on Board

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Per Arvind Kumar Verma. J.

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06/01/2026

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1. The present writ petition has been filled for following reliefs:

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10.1 That, hon'ble Court may please be kind enough in calling the entire records from the respondents pertaining to the data manged by the respondents in their Data Module and relevant communications pertaining to the subject issues.

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10.2 This hon'ble Court may please be kind enough in directing the respondent FCI to accept and record the CMR delivered by petitioner firm at their Mandir Hasaud Depot and pay the petitioner halting charge @ Rs.10,000/- per day per truck for petitioer's Trucks standing idle in their Mandir Hasaud Depot.

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10.3 This hon'ble Court may please be kind enough in directing the respondent state authorities to arrange a suitable warehouse & allow the petitioner to deposit the remaining CMR in the State Pool at the earliest or in alternate,

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10.4 This hon'ble Court may please be kind enough in directing the respondent No.1 & other state authorities to take the charge & control of the CMR from petitioner on

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as is where is basis and release their custom milling bills, bonus, sureties, trucks and pay the halting charge @ Rs.10,000/- per day per truck for petitioer's Trucks standing idle in their Mandir Hasaud Depot.

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10.5 This hon'ble court may please be kind enough in restraining the respondents from encashing the petitioners Bank Guarantees until decision on the issues in the matter.

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10.6 This hon'ble court may please be kind enough in granting any other relief, interest, compensation, damages & cost of petition.

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2. Learned counsel appearing for the petitioners submit that Petitioner is an HUF Firm which runs a Rice Milling Industry in Arang, Raipur is registered with the respondents authorities under the custom milling policy of the government of Chhattisgarh. The petitioner firm entered into Custom Rice Milling Agreements, for the paddy procurement in the Khareef Marketing Year 2023-2024 (hereinafter referred to as KMS 23-24). The Custom Milled Rice (hereinafter referred to as the CMR) was to be delivered under the terms of the agreements to the Food Corporation of India (hereinafter referred to as the FCI) in the Central Pool of KMS 23-24 or Chhattisgarh State Civil Supplies Corporation (Nagarik Apurti Nigam hereinafter referred to as NAN) in Chhattisgarh State pool. As per the terms of the agreement the petitioner furnished the Bank Guantees amounting to Rs. 1.80 Crores for lifting of the Paddy for the Custom Rice Milling as per the terms of the Custom Milling Agreements. Predominantly because the Chhattisgarh State Marketing Fedration could not arrange the warehouses for depositing the CMRs

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therefore, the Custom Milling & CMR depositing excercices went through various hurdles. And later because of no co-operation & hostile attitude of the ofÏcers of the Food Corporation of India (FCI) the CMR deposited by the petitioner firm in the FCI Depot, Mandir Hasaud has not been recorded into the National Informatics Centre, Data Module and the parts of CMR lots delivered at the FCI Depot, Mandir Hasaud are still stuck therein alongwith the petitioners' Truckes since 22nd February 2025 inside FCI Depot, Mandir Hasaud and the remaining quantity the respondents are not taking in the NAN Depot. the respondent No.1 through a departmental letter/ circular dated 26th March 2025 instructed all the concerned ofÏcial in respect of the adjustments & deposits of the CMR. Accordingly the petitioner given its consent for depositing the CMR in the state pool of the Chhattisgarh State Civil Supplies Corporation in KMS 23-24 but the DMO-Markfed, Raipur has informed the petitioner that, since the name of petitioner's Rice Mill is shown in the Paddy/ Rice shortage list therefore, the remaining quantity couldn't be changed from Central Pool in FCI to State Pool in NAN. Whereas, the said entry was wrong from the beginning because there was no actual shortage as confirmed by the DMO-Markfed, Raipur himself through earlier letters.

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3. Learned counsel for the petitioner would submit that because of the aforesaid issues the petitioner has filed the Writ Petition (Civil) No./ 2025 & thereafter the Writ Petition (Civil) No.786 of 2025 wherein suitable directions have been given by this honourable Court but the

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respondent authorities put no years to the petitioners genuine & reasonable requests and they have knowingly disobeyed the orders passed by this honourable Court leading to filing of Contempt Petition (C) No. 125 of 2025 & Contempt Petition (C) No.272/2025 before this honourable Court. However the petitioner firm's troubles and grievances still remain unresolved.

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4. Learned counsel for the petitioner further submits that now because of the malafide & arbitrary inactions of the respondent authorities the CMR produced by the petitioner's Rice Mill after milling of the Paddy procured under KMS 2023-24, the deadline for depositing the CMR under KMS 2023-24 is already over and the natural consequence of the inactions of respondents is that, the sureties in the form of the Bank Grantees furnished by the petitioner may be encashed at will by the respondents authorities and the petitioner may be termed defaulter for future rice milling agreements with State/ Markfed and petitioner firm will thus suffer serious financial losses & bad credit core those may result into total collapse of their financial capacity leading to closure of petitioner's rice mill that too only because of a wrong entry made regarding physical verification of stock in the Date Module maintained by the respondents themselves wrongly showing the shortage which was actual never occurred at petitioner's Rice Mill.

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5. Learned counsel for petitioner would submit that the respondent FCI may be directed to compensate the petitioner for stalled Truck loaded CMR and the Markfed may please be directed to allow the

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petitioner to deposit the CMR in the State Pool with NAN; the Chhattisgarh State Civil Supplies Corporation and the respondents may please be restrained from encasing the petitioner's Bank Guarantee, and from taking any other Coercive against the petitioner Firm and its Rice Mill. The petitioner's case fall in the category of violation of special equities & irretrievable injuries being by the arbitrariness of the actions of the respondents those intend to encash the Bank Guarantee without properly complying with the terms of subject contracts; Annexure P-2, " UP Sugar Corporation Vs. Sumac International Ltd ; (1997) 1 SCC 568". The Hon’ble Supreme Court of India in the " Andhra Pradesh Pollution Control Board v. CCL Products (India) Ltd .;, 2019 SCC OnLine SC 985", again held that, in the absence of a case of fraud, irretrievable injustice and special equities, the Court should not interfere with the invocation or encashment of a bank guarantee but undisputedly in the present matter, the intended invocation will also cause irretrievable injustice to petitioner and will surely breach the special equities available to parties and natural justice. The Hon’ble Supreme Court held in Unitech Limited v. Telangana State Industrial Infrastructure Corporation & Ors. , (2021) 16 SCC 35 , wherein it was reiterated that the State cannot act unreasonably or capriciously even in matters arising out of contracts. The Hon’ble Supreme Court in Popatrao Vyankatrao Patil v. State of Maharashtra & Ors. , (2020) 19 SCC 241 , held that writ jurisdiction is available where State action is ex facie arbitrary or

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unreasonable, notwithstanding the contractual nature of the dispute. In Vidya Drolia v. Durga Trading Corporation , (2021) 2 SCC 1 , the Hon’ble Supreme Court emphasized that contractual obligations must be performed bona fide and cannot be defeated by unilateral or oppressive conduct. The Hon’ble Supreme Court in EMAAR India Ltd. v. Tarun Aggarwal Project LLP & Anr . , (2023) 13 SCC 661 , held that contractual discretion must be exercised in a reasonable, non-arbitrary manner and is open to judicial review when exercised unfairly.

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6. On the other hand, learned counsel appearing for the respondents opposes the submissions and submits that the petitioner has an alternative efÏcacious remedy expressly under the Arbitration and Conciliation Act provided under Clauses 14 and 15 of the agreement, the petitioner has directly invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution. The present case does not fall within any of the recognized expectations to the rule of alternative remedy, as there is no allegation of violation of fundamental rights, breach of natural justice, lack of jurisdiction, or challenge to the vires of any statute.

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7. We have heard learned counsel for the parties and perused the pleadings and documents.

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8. For the sake of convenience, it would be appropriate to quote arbitration clause of the agreement. It reads thus :

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ARBITRATION CLAUSE:

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Clause 14.1 of the agreement states as under:

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14.1 इससंवि�दाकीविकसीभीकंडि�कासेसंबंडि�तवि��ादउत्प्ቐ होने कीቝኌ��डितमेंउभयप्ቌों्ቛ ारावि��ादकेसौहाद$पू्ቓ$ समा�ानकेलि(ए जि+(ाक(ेक्टरकोअभ्या�ेदन्ቚ �तुतविकया+ासकेगा।जि+(ा क(ेक्टर्ቛ ाराउ्ሹ अभ्या�ेदनमेंविकयागयाविन्ቓ$यउभयप्ቌोंकोमान्य होगा।

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Clause 15 Arbitration as under

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15.1 अनुबं�कीकंडि�का 14.1 केअंतग$तसंबंडि�तजि+(ाक(ेक्टर ाराविकयेगयेविन्ቓ$यकेवि�रू्ቍ उभयप्ቌों्ቛ ारावि��ादकेविन्ቓ$यहेतु्ቛ 60 विद�सकेभीतरआब$विटशनहेतुछ . ग . मध्य�यतमअडि�कर्ቓ रायपुर ( छ . ग .) केसम्ቌ आ�ेदन्ቚ �तुतविकया+ासकेगा , जि+सकाविन्ቓ$य अंडितमहोगा+ोउभयप्ቌोंकोमान्यहोगा।

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15.2 आब$विटशनमेंविकयेगयेविन्ቓ$यसेयविदउभयप्ቌ मेंसेकोई असंतु्ቖ होताहै , तो�हअन्यवि�डि�क्ቚ ा��ानोंकाउपयोगकरसकेगा।

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9. On bare perusal of the material available on record, it is manifest that there is arbitration clause. Clause 14 & 15 embedded in the contract, which provides a comprehensive and statutorily recognized dispute resolution, this Court is of the considered view that the petitioner has an effective, adequate, and efÏcacious alternative remedy available. The petitioner cannot bypass the agreed contractual and statutory forum, particularly when the dispute pertains to contractual obligations and administrative decisions.

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10. It is a well-settled principle of law that when a remedy is available, writ jurisdiction under Article 226 of the Constitution should not ordinarily be exercised.

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11. Hon’ble Supreme Court in the matter of Goyal Rice Industries Vs. State of Punjab (2016) SCC Online P&H 9853 is apt in underscoring the principle that disputes under such agreements are better resolved through arbitration and has held as under:

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“9. It is argued by learned counsel for the respondents that the petitioners are claiming paddy out of release order from outside his district. It is further argued that the petitioner has a right of Arbitration as per the Policy, which may be invoked in order to decide the interpretation of the provisions of the Policy of KMS 2015-16 on the basis of which the petitioners may set up their claim for the alleged losses, if any.

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10.1 I have heard learned counsel for the parties in detail and also perused the available record. Once, it is not disputed by the respondents that the petitioner has right of seeking arbitration, it would be in the interest of parties to avail the remedy, which is so provided in clause 19 of Custom Milling Policy of 2015-16, which read as under:

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“All the disputes and differences arising out of or in any manner touching or concerning the agreement whatsoever shall be reered to the sole arbitration of the Managing Director of the concerned agency or any person appointed by him in this behalf. There will be no objection to any such appointment that the person appointed is or was an employee of the Food and Supplies Department, Punjab or the concerned agency or that he had to deal with the matter to which the contract relates and that in the course of his duties such an employee of the Food and Supplies Department, Punjab or the concerned agency had expressed views on all or any of the matter in dispute or difference. The award of such arbitration shall be final and binding on the parties to this contract. It is a term of this contract that in the event of the Arbitrator being transferred or vacating his ofÏce or being unable to act for any reason, the Managing Director concerned at the time of such transfer,

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vacation of ofÏce, death or inability shall appoint another person to act as Arbitrator. Such a person shall be entitled to proceed with reference from and the state where it was left by his predecessor. Provided that any demand for arbitration in respect of any claim(s)/dispute between both the parties, under the contract shall be in writing and made within one year of the date of completion or expiry of the period of contract. If the demand is not made within the period, the claim(s) of the Miller shall be deemed to have been waived off and the agency shall be released of all liabilities under the contract in respect of these claims. The cost for and in connection with arbitration shall be the discretion of the arbitrator who may make suitable orders in his award. Subject as aforesaid, the Arbitration and Conciliation Act, 1996 or any statutory re-enactment on modifications thereof shall apply to the arbitration provided under this clause. However, the cases of fraud, theft or misappropriation etc. on the part of the miller are not covered under this clause and in such cases legal proceedings as deemed fit shall be initiated by the agency against the miller as well as against the sureties.”

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11. In view of the aforesaid, the parties are relegated to the remedy of arbitration and hence the present petitions are hereby disposed of accordingly.”

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12. From the above decision in similar circumstances it has been held that when contractual remedy by way of arbitration is available and the dispute pertains to interpretation of policy or contract terms, parties must avail such remedy rather than invoking the writ jurisdiction.

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13. The Supreme Court in the matter of State of H.P. and Others v Gujarat Ambuja Cement Limited & Another reported in (2005) 6 SCC 499 held that normally the High Court should not interfere if there is an adequate efÏcacious alternate remedy.

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14. The Supreme Court in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd., (2020) 19 SCC 172 , reiterated that writ jurisdiction should not be invoked when a statutory forum is available and has not been availed.

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15. In light of the above facts and settled legal position, this Court finds no ground to entertain the writ petition. Accordingly, the writ petition is dismissed as not maintainable, with liberty to the petitioner to avail the remedy available under Clause 14 & 15 of the agreement, if so advised.

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Sd/Sd/- (Arvind Kumar Verma) (Ramesh Sinha) Judge Chief Justice

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Jyoti

M/S. Shankar Rice Mill (Huf) v. State of Chhattisgarh

Case brief

What is this about?

What did the court decide?

M/S. Shankar Rice Mill (Huf) v. State of Chhattisgarh

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

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