Dismissed

National Federation of Farmers Procurement Processing and Retailing Cooperatives of India Limited v. the State of Jharkhand through the Chief Secretary

Jharkhand HC1 Mar 2023WPC/1339/2021

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition seeking payment of outstanding paddy procurement dues. Rejecting the argument that the jurisdiction is maintainable in a money claim case, the Court held that serious disputed questions of fact involving complex contractual relationships could not be determined by the High Court. The petitioner was advised to approach a fact-finding body or file a suit. The

What did the court decide?

Petitioner not entitled to relief under writ jurisdiction; liberty given to approach fact-finding body.

National Federation of Farmers Procurement… — Service and Employment | Jharkhand HC (2023)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (C) No.1339 of 2021

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National Federation of Farmers Procurement, Processing and Retailing Cooperatives of India Limited, New Delhi.

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.......... Petitioner.

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-Versus-

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The State of Jharkhand, through the Chief Secretary, Project Building, Dhurwa, Ranchi.

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The Secretary, Food, Public Distribution and Consumer Affairs Department, Government of Jharkhand, Project Building, Dhurwa, Ranchi.

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The Joint Secretary, Food, Public Distribution and Consumer Affairs Department, Government of Jharkhand, Project Building, Dhurwa, Ranchi.

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The Jharkhand State Food Corporation (JSFC), through its Managing Director, Kadru, Ranchi.

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The General Manager, Jharkhand State Food Corporation (JSFC), Kadru, Ranchi.

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The Deputy General Manager, Jharkhand State Food Corporation (JSFC), Kadru, Ranchi.

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Food Corporation of India (FCI), New Collectorate Building, BlockA, 4^th Floor, Kutchery Road, Ranchi.

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.......... Respondents.

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CORAM : HON’BLE MR. JUSTICE RAJESH SHANKAR

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----For the Petitioner : Mr. Abhinav Kardekar, Advocate Mr. Saurabh Shekhar, Advocate For the State : Mr. Rituraj, A.C. to Sr. S.C.I For Res. Nos.4 to 6 : Mr. Mrinal Kanti Roy, Advocate For Res. No.7 : Mr. Nipun Bakshi, Advocate -----

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Order No.13 Date: 01.03.2023

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The present writ petition has been filed for quashing/setting aside part of the impugned order dated 24.11.2020 to the extent that the Managing Director, Jharkhand State Food Corporation (JSFC)respondent no.4 has denied payment of appropriate amount against quantity of paddy procured by the petitioner from the farmers for which outstanding dues payable to the petitioner has already been accepted. Further prayer has been made for issuance of direction upon the respondent no.4 to make appropriate payment to the petitioner with respect to full amount paid by it to the farmers against the paddy procured in relation to the work executed under Kharif Marketing Season (KMS) 2016-17 undertaken pursuant to public contract issued

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for paddy procurement and agreement dated 2.12.2016 executed between the petitioner and the respondent no.6 in accordance with the order of the respondent no.2 as contained in memo no.4878 dated 1.12.2016 and the notification as contained in memo no.4877 dated 1.12.2016 issued by the respondent no.2 for constitution of Jharkhand Custom Milled Rice (Liability and Control) Order, 2016. The petitioner has also prayed for issuance of direction upon the respondent no.7Food Corporation of India to make appropriate payment directly to the petitioner with respect to full amount paid by it to the farmers against paddy procured in relation to work executed under Kharif Marketing Season, 2016-17.

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Learned counsel for the petitioner while explaining the factual background of the case submits that the petitioner was appointed as Paddy Procurement Agency by the State Government for Khariff Marketing Season 2016-17 with respect to Santhal Pargana Division and North Chotanagpur Division (excluding Ramgarh District) vide resolutions dated 27.09.2016 and 02.11.2016. In course of paddy procurement process, certain issues arose which hampered the paddy procurement work and delivery of Custom Milled Rice (CMR). The petitioner made several representations before the concerned respondent authorities, however, instead of redressing and resolving the issues, the respondent no.2 blacklisted the petitioner vide order dated 29.06.2017. Aggrieved by the said order, the petitioner moved this Court by filing a writ petition being W.P.(C) No.2166 of 2018, which was disposed of vide order dated 21.08.2018 and the order of blacklisting dated 29.06.2017 passed by the respondent no.2 was quashed.

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It is further submitted that prior to issuance of the aforesaid order of blacklisting dated 29.06.2017 a resolution as contained in memo

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no.2670 dated 19.06.2017 was issued by the respondent no.2, whereby the earlier resolution as contained in memo no.3846 dated 27.09.2016 was amended to the extent that the authorized nodal agency for paddy procurement i.e. the respondent no.4 would make payments of procured paddy from the revolving fund available for paddy procurement to those farmers whose payments were not cleared by the petitioner and amount of such payment would be compensated to the respondent no.4 by the respondent no.7 from the amount to be paid by it for deposited custom milled rice. The duty to arrange lifting of paddy from concerned LAMPS/PACCS, delivery of CMR to godowns of FCI and receiving of payment from FCI was also transferred to the respondent no.4. Pursuant to the said resolution, the respondent no.4 cleared the payment of farmers to the extent of Rs.17.47 crores. The petitioner requested the concerned authorities to

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settle the dispute regarding payment of procured paddy so that a clear picture could be drawn in order to ascertain the status of the funds lying with the respondent no.4, rice millers and PACCS/LAMPS. Thereafter, a reconciliation report was prepared by the Senior Assistant Manager (Contract), JSFC, Ranchi showing transactions carried out between the petitioner and the farmers, PACCS/LAMPS, Rice Mills, FCI (prior to blacklisting of the petitioner) as well as between the JSFC and farmers, PACCS/LAMPS, Rice Mills, FCI (after blacklisting of the petitioner). It was found from the said report that the petitioner had paid Rs.63,56,36,552/-, whereas the respondent no.4 had made payment of Rs.17,47,17,033.60/- to the farmers. It was also evident from the said report that JSFC had received surplus amount from the FCI as against the payment made by it to the farmers, however, the petitioner had received less than 30% of the amount from the FCI as against the payment made to farmers. The petitioner filed another writ

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petition being W.P.(C) No.6278 of 2018 for recovery of its due amount which was disposed of vide order dated 02.01.2019, giving liberty to the petitioner to file a fresh representation before the respondent no.4 raising its claim and further the said respondent was directed to take appropriate decision on the claims raised before it expeditiously within a period of eight weeks from the date of receipt of the representation. In compliance of the said order passed by this Court, the petitioner submitted representation on 15.02.2019 and the total amount claimed by the petitioner under various heads was Rs.51,76,37,713/- including the payments received by JSFC from FCI (Dhanbad & Deoghar) on account of the petitioner as well as the payments to be received by JSFC from FCI, Deoghar on account of CMR bills submitted by the petitioner after reconciliation and interest recoverable from JSFC on account of withholding the funds of the petitioner after release of the same by FCI. However, out of the aforesaid claim raised by the petitioner, it was paid Rs.22,23,18,572.51/- as would be evident from the letter dated 09.04.2019; Rs.2.00 crore on 11.10.2019 and Rs.1.00 crore on 20.01.2020. The petitioner again filed representations before the respondent no.4 on 11.11.2019 and 16.04.2019 for releasing the balance payment along with interest claimed by it, however, the said respondent did not decide the same. Thereafter, the petitioner filed Cont. Case (Civil) No.1168 of 2019 and during the pendency of the said contempt case, the respondent no.4 passed the impugned order dated 24.11.2020 directing to release the amount of Rs.24,93,122/only out of the total claim of the petitioner amounting to Rs.28.60 Crore.

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Learned counsel for the petitioner also submits that though the respondent-JSFC accepted in the impugned order dated 24.11.2020 that the petitioner had made payment to farmers against 3,97,272.85

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quintals of paddy, however, it has failed to pay the petitioner total amount against the said quantity. The respondent no.4 has wrongly observed in the impugned order that the payment of paddy was pending with the concerned rice millers and LAMPS/PACCS for which the petitioner has been made responsible. For the purposes of paddy procurement, the respondent No.4 was nominated as 'Nodal Agency' vide resolution dated 27.09.2016 issued by the respondent No.2 and was vested with overall responsibility of monitoring the entire paddy procurement process. The State Government through the Department of Food, Public Distribution and Consumer Affairs had passed an order on 01.12.2016 for Kharif Market Season 2016-17 constituting a Paddy Procurement Monitoring Committee at State, District and Block levels for comprehensive monitoring of the paddy procurement process. The State Level Committee was vested with the responsibility to carry out supervision and monitoring of entire paddy procurement plan on regular basis. The District Level Committee was assigned with various tasks including monitoring of operations of PACCS/ LAMPS, procurement and payment of paddy to farmers, transportation of both paddy and rice, preparation of CMR in mills and supply to FCI, informing the Nodal Agency about the procured paddy and rice as well as monitoring whether rice millers were working as per the provisions of CMR Control Order or not, etc. Further, the Block Level Committee was assigned with the work of comprehensive publicity of paddy procurement plan, registration of paddy producing farmers, arrangement of paddy procurement and payment to the farmers as well as any miscellaneous work relevant for successful operations of paddy procurement process. Hence, there is no iota of doubt that the responsibility of monitoring was vested with the Respondent No.4 and various committees were constituted by the

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State Government for this purpose. The petitioner had no direct control over functioning of either PACCS/LAMPS or rice millers and the Monitoring Committees (which were identified, selected and tagged by the Respondent JSFC itself) in the entire procurement process. The petitioner had submitted detailed report separately for each district expressing its problems faced from the concerned PACCS who were not providing paddy to the tagged rice mills resulting difference in paddy procurement report of PACCS & Rice mills. Moreover, CMR were not being deposited to godowns of FCI timely and hence requested to take action against the rice millers. The petitioner had made representations way back in the year 2017 itself apprising the concerned respondents of the problems faced with respect to lifting of paddy and delivery of CMR by rice mills, however, neither strict action was taken against such LAMPS/ PACCS and rice mills nor any initiative was taken for recovery of the amount which shows arbitrary, noncooperative and irresponsible attitude of the respondent no.4. The concerned authorities were aware of the fact that some rice mills wrongly suppressed the stock of paddy and never delivered the CMR to FCI, however, the petitioner was forced to pay for the paddy whose equivalent CMR was never actually supplied to FCI.

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It is further submitted that the respondent no.4 before passing the impugned order has failed to consider that the distance certificate from godowns of concerned PACCS/ LAMPS to godowns of Rice Mills of the concerned districts as required by the petitioner was not provided to it. It is also submitted that the respondent no.4 failed to consider the claim of the petitioner regarding payment of bills raised for society commission, Mandi labour, gunny bags etc. Originally the payment was to be made by the respondent-FCI to the petitioner but after its blacklisting, the payments were made to the respondent No.4. JSFC

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has already received its payments from the respondent no.7 with respect to the funds disbursed to the farmers and thus the respondent No.4 is liable to make payments directly to the petitioner.

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It is also submitted that the petitioner had borrowed short term capital from National Cooperative Development Corporation (NCDC). However, due to aforesaid arbitrary action of the respondent authorities, the petitioner was not able to clear its loan which were taken for paddy procurement operations and has been paying exorbitant interest. Since obligation of paddy procurement process was on the respondent-JSFC and the FCI was also releasing funds directly to it, the respondent-JSFC was under an obligation to clear the petitioner’s dues which may be recovered from the concerned LAMPS/PACCS and rice millers. The petitioner had submitted a detailed list regarding recovery of dues from the LAMPS/ PACCS of all 12 districts indicating that the interest was also recoverable from them for delayed payment and pursuant to the said letter, notices were issued to the District Managers, JSFC of the respective districts stating that the recovery was to be done within a period of one month from the date of the impugned order dated 24.11.2020. However, till date neither any strict action has been taken against the concerned rice millers, LAMPS/ PACCS nor the amount is being released by the respondent-JSFC. In fact, the impugned order has been passed as an empty formality to get away from the contempt proceeding of this Court.

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On the contrary, learned counsel for the respondent-JSFC submits that in Kharif marketing season 2016-17, 506480.94 quintals of paddy were procured by the petitioner against which the price of 397272.85 quintals of paddy was paid by it to the farmers. The petitioner had not made payment to the farmers for remaining procured paddy of

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1,09,208.10 quintals and thus the Department of Food, Public Distribution and Consumer Affairs, Government of Jharkhand made the balance payment to the Jharkhand State Food and Civil Supplies Corporation for disbursing the same to the farmers by blacklisting the petitioner and the amount paid to the farmers was reimbursed by the Food Corporation of India. The petitioner’s representative was directed to remain present at the headquarter of the respondent no.4 with evidence for reconciliation of account and Rs.25,23,18,573/- was paid to the petitioner against its representation. In the light of the petitioner’s representation dated 09.07.2020, confirmation reports were received from all the concerned districts and after review, a reasoned order was passed by the respondent no.4 vide letter no.2132 dated 24.11.2020. Consequently, Rs.24,93,122/- was paid to the petitioner. During reconciliation, it was found that CMR of about 57,892.81 quintals of paddy was not obtained for which the petitioner itself was responsible as due to non-monitoring at its level, the information regarding pending payments with concerned rice millers and LAMPS/PACCS against paddy was not given to JSFC in time. In the light of the petitioner’s request, requisite cooperation is being extended by the JSFC for recovery of amount against pending paddy. 8. It is further submitted that the Government's Jan Kalyan Yojana (Paddy Procurement Scheme) was adversely affected as due to nonpayment of amount by the petitioner to concerned rice mills and LAMPS/PACCS, the rice mills did not take interest in milling work. The rice millers from whom the amount was recovered, were paid to the petitioner. The petitioner was to receive money from the Food Corporation of India against supply of CMR and the amount has been paid to it according to remittance of the same by the Food Corporation of India. Continuous action is being taken by the corporation

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headquarter for recovery of dues from the concerned rice mills and LAMPS/PACCS.

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Learned counsel for the respondent-FCI submits that the petitioner was nominated by the Government of Jharkhand for paddy procurement during KMS 2016-17 and on the basis of the clarification made by the State Government, the payment for CMR bills were made directly to the petitioner. The State Government vide resolution No.2670 dated 19.06.2017 conveyed the FCI that it decided to blacklist the petitioner on the ground of non-payment of Minimum Support Price (MSP) of procured paddy to farmers and that the remaining payable amount of the procured paddy would be disbursed by the JSFC to those farmers whose payments were not made by the petitioner and the paid amount would be compensated from the amount remitted by the FCI against supplied custom milled rice. Only after reimbursement of the amount spent by JSFC, the FCI was to release further payment to the petitioner.

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It is further submitted that the State Government vide letter no.176 dated 30.03.2018 directed the FCI to release payment of CMR directly to the petitioner, since the State Government had got its amount which was paid by it to the farmers, however, the FCI wrote a letter to the State Govt. that it would continue to make payment to JSFC since there was an agreement between JSFC and the petitioner without any involvement of FCI. The FCI vide letter dated 22.07.2020 clarified that payment of gunny bags may be considered for CMR delivery only as per costing sheet of relevant KMS 2016-17 and directed the Divisional Managers of FCI, Deoghar and Dhanbad, both, to resolve the issues in consultation with JSFC and to settle the pending payment of CMR relating to KMS 2016-17.

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It is also submitted that the petitioner wrote a letter dated 18.08.2020 to the Minister of Consumer Affairs, Food & Public Distribution, Government of India, intimating that Rs.8.45 Crore (approx.) was still pending from FCI, Jharkhand Region against KMS 2016-17. The Divisional Managers, FCI, Divisional Office, Dhanbad/Deoghar were asked by the General Manager (Region) FCI, Regional Office, Jharkhand, Ranchi vide letter no.939 dated 17.09.2020 to resolve the issues in consultation with JSFC as well as to settle the pending CMR components of KMS 2016-17 that were payable to JSFC and to submit action taken report.

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Learned counsel for the respondent-FCI further submits that several documents and particulars were required on account of which the pending payments were withheld and the same cannot be released. Those documents are still awaited from the petitioner to be sent through JSFC. The Divisional Office, FCI, Deoghar has already reconciled the pending bills & supporting documents and the Committee constituted for this purpose has already submitted its recommendation for release of payment. The decision for disbursement of the outstanding dues claimed by the petitioner has to be taken by the State Government and the FCI is bound by the decision of the State Government, as the petitioner was appointed as permanent agency by the Government of Jharkhand. It is further submitted that the FCI has not delayed payment to the petitioner and any payment which has been withheld is due to non-production of essential documents relating to procurement of paddy from the farmers.

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Heard the learned counsel for the parties and perused the materials available on record. The contention of the petitioner is that the respondent authority has arbitrarily denied the payment of its

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outstanding dues against the procured paddy for Kharif Marketing Season 2016-17.

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On perusal of the impugned order it appears that 5,06,480.94 quintals of paddy was procured by the petitioner from the farmers, however, it paid the price of 3,97,272.85 quintals of paddy to the farmers and as such JSFC paid remaining amount for 1,09,208.10 quintals of paddy to the farmers from its own level. The said payment made by the JSFC was adjusted from the amount received by the FCI for the deposited CMR. It has further been observed that during reconciliation of accounts, the petitioner claimed an amount of Rs.27,15,28,021.38 from JSFC, however, it was found that JSFC had made payment of Rs.54,11,48,675.03 to the petitioner as well as the concerned farmers, rice millers and LAMPS/PACCS, whereas JSFC received Rs.54,36,41,797.03 from FCI and concerned millers. As such the differential amount of Rs.24,93,122/- is to be paid to the petitioner by JSFC. On the basis of the reports received from the concerned districts, the respondent no.4 has observed that the payment equivalent to 57,892.81 quintals paddy was made by the petitioner, however, custom milled rice against the same was not deposited in godowns of FCI and the petitioner was responsible for the same. The information about pending payment against paddy with rice millers and LAMPS/PACCS was not provided by the petitioner in time. The respondent no.4 also rejected the claim of interest made by the petitioner observing that the petitioner was entitled for payment to the extent of CMR deposited in FCI and payment of the same was made to it as per the amount received from FCI in lieu of deposited CMR. 15. On the other hand, the claim of the petitioner is that the responsibility of monitoring was vested with the respondent no.4 as well as the monitoring committees constituted by the State Government for the

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said purpose at State, district and block levels. The petitioner had no direct control over the functioning of PACCS/LAMPS or the rice millers. It has further been claimed that several representations were made to the respondent no.4 informing that PACCS were not providing paddy to the tagged rice mills and the rice millers were not depositing CMR to FCI in time and, therefore, requested to take action against the concerned rice millers, however, no action was taken against them for which the petitioner cannot be penalized.

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Thus, the petitioner and the respondents have their own contentions justifying the respective claims. They have made allegations and counter allegations against each other, however, undisputedly the CMR of 57,892.81 quintals of paddy was not deposited with the FCI. It appears to the court that since in the process of procurement of paddy from the farmers for delivery of CMR in the godowns of FCI, various agencies i.e. PACCS/LAMPS, rice millers, the petitioner, respondent no.4 and the committees constituted to monitor the paddy procurement process were involved, it is for the fact finding body/forum to examine as to at which level the fault/lapse had occurred.

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In the case of Punjab National Bank and Others Versus Atmanand Singh and Others, reported in (2020) 6 SCC 256 , the Hon’ble Supreme Court after discussing several judgments has summarized the law dealing with the scope of intervention by the High Court in the matter involving money claim. It has been held that when the petition raises questions of fact of complex nature, such as in the present case, which may for their determination require oral and documentary evidence to be produced and proved by the concerned party and also because the relief sought is merely for ordering a refund

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of money, the High Court should be loath in entertaining such writ petition, rather should relegate the parties to the remedy of a civil suit. 18. In the case of Joshi Technologies International Inc. Vs. Union

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of India and others reported in (2015) 7 SCC 728 , the Hon’ble Supreme Court has held that discretion to deal with a contractual matter lies with the concerned High Court which under certain circumstances can refuse to entertain. Normally, the Court would not exercise such a discretion, if there are serious disputed questions of fact which are of complex nature and require oral evidence for their determination. It has further been held that money claims per se particularly arising out of contractual obligations are normally not to be entertained barring exceptional circumstances.

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Thus, it is well settled principle of law that the exercise of writ jurisdiction is discretionary and it is not exercised merely because it is lawful to do so. The writ jurisdiction should not be invoked as an alternative remedy for relief which may be obtained through a suit or other mode prescribed by statute. The High Court should not generally enter upon a determination of questions which demand an elaborate examination of evidence to determine the claim of the parties.

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Learned counsel for the petitioner puts reliance on the judgment rendered by the Hon’ble Supreme Court in the case of ABL

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International Ltd. & Another Vs. Export Credit Guarantee Corporation of India Ltd. & Others, reported in (2004) 3 SCC

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553, wherein it has been held as under:-

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“27. From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition:

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(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

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(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

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(c) A writ petition involving a consequential relief of monetary claim is also maintainable.”

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Learned counsel for the petitioner also puts reliance on the judgment rendered by the Hon’ble Supreme Court in the case of Unitech Limited and Others Vs. Telangana State Industrial Infrastructure Corporation (TSIIC) and Others, reported in 2021 SCC OnLine SC 99, wherein while observing that mere making a claim did not raise a disputed question of fact, the appeal was disposed of holding that Unitech would be entitled for refund of Rs.165.00 crores together with interest at the SBI-PLR commencing from the respective dates of payment, computed in accordance with the provisions of the Development Agreement (except for compounding).

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The aforesaid judgments relied upon by the learned counsel for the petitioner are not applicable in the facts and circumstance of the present case since serious disputed questions of fact are involved in the same which are of complex nature requiring laying of evidence for appropriate determination. The said exercise can only be done by a fact finding body/forum.

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Under the aforesaid facts and circumstances, the petitioner is not entitled to any relief under extraordinary writ jurisdiction of this Court. The writ petition is, accordingly, dismissed.

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The petitioner is, however, at liberty to take appropriate recourse for redressal of its grievance before the fact finding body/forum.

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(Rajesh Shankar, J.)

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Sanjay/AFR

National Federation of Farmers Procurement Processing and Retailing Cooperatives of India Limited v. the State of Jharkhand through the Chief Secretary

Case brief

What is this about?

What did the court decide?

National Federation of Farmers Procurement Processing and Retailing Cooperatives of India Limited v. the State of Jharkhand through the Chief Secretary

Case brief

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