Allowed

Peekay Roller Flour Mill & Others v. Kerala State Civil Supplies Corporation

Kerala HC4 Feb 2016WP(C)/7862/2010

Case brief

AI extract

What is this about?

Millers/dealers and the State Civil Supplies Corporation challenged the Central Government's unilateral enhancement of the price of wheat already allotted and lifted under the Open Market Sale Scheme, and FCI's adjustment of amounts deposited. The Court held the price revision and adjustment arbitrary, quashed the FCI proceedings, and ordered refunds with interest.

What did the court decide?

Ext.P26 quashed; respondents to refund Rs.7,72,60,970 to the Corporation with 9% interest from 01.01.2010; Corporation to refund petitioners for unlifted wheat; demands for enhanced price quashed.

Peekay Roller Flour Mill & Others Vs Kerala… — Contract and Commercial Disputes | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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THURSDAY, THE 4TH DAY OF FEBRUARY 2016/15TH MAGHA, 1937

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WP(C).No. 7862 of 2010 (G)

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PETITIONER(S):

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1. PEEKAY ROLLER FLOUR MILL, PUTHIYANGADI, CALICUT-21, KERALA.

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2. AHAMMED ROLLER FLOUR MILL, 39/2152, PUTHIYANGADI, CALICUT-21, KERALA.

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3. PONDY ROLLER FLOUR MILL (P) LTD., NALLALAM, CALICUT-27, KERALA.

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BY ADV. SRI.C.P.MOHAMMED NIAS

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RESPONDENT(S):

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1. THE KERALA STATE CIVIL SUPPLIES

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CORPORATION LIMITED, (SUPPLYCO), P.B.NO.2030, MAVELI BHAVAN, MAVELI ROAD, GANDHI NAGAR, KOCHI-682 020, REP. BY ITS GENERAL MANAGER.

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2. FOOD CORPORATION OF INDIA, 16-20, BARAKAMBA LANE, NEW DELHI, REP. BY ITS MANAGING DIRECTOR.

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3. UNION OF INDIA, REP. BY ITS SECRETARY, MINISTRY OF FOOD & CONSUMER AFFAIRS, DEPARTMENT OF FOOD & PUBLIC DISTRIBUTION, NEW DELHI-1.

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4. STATE OF KERALA, REP. BY THE SECRETARY, FOOD, CIVIL SUPPLIES & TRANSPORT, DIRECTORATE OF CIVIL SUPPLIES, PUBLIC OFFICE, OPP. MUSEUM, VIKAS BHAVAN, THIRUVANANTHAPURAM-33.

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R1 BY ADVS. SRI.N.D.PREMACHANDRAN, SC SMT.MOLLY JACOB, SC R2 BY ADV. SMT.KARTHIKA, SC R3 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL R4 BY GOVERNMENT PLEADER SRI.REJI JOSEPH

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13-11-2015 ALONG WITH WPC. 8920/2010 & CONNECTED CASES, THE COURT ON 04-02-2016 DAY DELIVERED THE FOLLOWING:

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mbr/

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WP(C).No. 7862 of 2010 (G)

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APPENDIX

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PETITIONERS' EXHIBITS:

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EXT. P1 :	TRUE COPY OF THE PRESS RELEASE DATED 19.11.2009 ISSUED BY SUPPLYCO.
EXT. P2 :	TRUE COPY OF THE COMMUNICATION ISSUED BY THE DISTRICT SUPPLY OFFICE, KOZHIKODE, DATED 19.11.2009, CALLING FOR THE MEETING OF TRADERS, MILLERS AND BAKERS ON 23.11.2009.
EXT. P3 :	TRUE COPY OF THE COMMUNICATION DATED 8.12.2009 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONERS.
EXT. P4 :	TRUE COPY OF THE LETTER DATED 26.12.2009 OF THE 1ST PETITIONER TO THE 1ST RESPONDENT.
EXT. P5 :	TRUE COPY OF THE LETTER DATED 26.12.2009 OF THE 2ND PETITIONER TO THE 1ST RESPONDENT.
EXT. P6 :	TRUE COPY OF THE LETTER DATED 26.12.2009 OF THE 3RD PETITIONER TO THE 1ST RESPONDENT.
EXT. P7 :	TRUE COPY OF THE DETAILS OF THE QUANTITY ALLOOTTED, QUANTITY LIFTED AND THE BALANCE RECEIVABLE TO THE PETITIONERS.
EXT. P8 :	TRUE COPY OF THE REPRESENTATION SUBMITTED DATED 18.1.2010 SUBMITTED BY THE 1ST PETITIONER CLAIMING REFUND FROM THE 1ST RESPONDENT.
EXT. P9 :	TRUE COPY OF THE REPRESENTATION SUBMITTED DATED 18.1.2010 SUBMITTED BY THE 2ND PETITIONER CLAIMING REFUND FROM THE 1ST RESPONDENT.
EXT. P10 :	TRUE COPY OF THE REPRESENTATION SUBMITTED DATED 18.1.2010 SUBMITTED BY THE 3RD PETITIONER CLAIMING REFUND FROM THE 1ST RESPONDENT.
EXT. P11 :	TRUE COPY OF THE LETTER DATED 22.2.2010 ISSUED TO THE 1ST RESPONDENT TO THE 3RD PETITIONER.
RESPONDEN	TS' EXHIBIT :
EXT.R1(A):	TRUE COPY OF LETTER NO.J.I/OSW/2/2009 DATED 4.1.2010.
EXT.R1(B):	TRUE COPY OF THE LETTER DATED 9.6.2010 CHAIRMAN AND MANAGING DIRECTOR OF THE 1ST RESPONDENT.

//TRUE COPY//

P.S. TO JUDGE

mbr/

A.M. SHAFFIQUE, J.

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=============

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WP(C) Nos. 7862/10, 8920/10, 9917/10, 10301/10, 10460/10, 11221/10, 37758/10, 4193/12, 13396/12 & 29111/12 =========================

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Dated this, the 4^th day of February, 2016

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J U D G M E N T

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All these writ petitions concern common issues which are closely connected and are therefore heard and decided together.

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A short narration of the facts, which are relevant for all

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these cases, are as under:

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An issue concerning wastage of food grain was being considered by the Supreme Court in a Public Interest Litigation matter. It was observed that huge quantities of food grain are being damaged for want of adequate storage facilities. Pursuant to the directions issued by the Supreme Court, Union of India had filed an affidavit offering to distribute the food grains at a very low cost to deserving persons and for making necessary arrangements for proper distribution of the stock. Pursuant to such decision taken by the Government of India, the Secretary, Ministry of Consumer Affairs, Department of Food and Public Distribution addressed a letter to the Department of Food and

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W.P(C) No.7862/10 & conn.cases

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Civil Supplies, Government of Kerala stating that 40,660 MT of wheat had been allotted to the State under Open Market Sale (OMS) Scheme fixing the price of wheat at `1295.74/- per Qtl. Government of Kerala forwarded the said letter to the Kerala State Civil Supplies Corporation Ltd., (hereinafter referred to as the Corporation). The Corporation expressed its inconvenience in implementing the Scheme on account of the slow movement of wheat during the previous Onam season and also the increase in the price of wheat. The State Government convened a meeting with representatives of the Merchants Association to work out the modalities in implementing the Scheme. In the meeting, it was decided that the Corporation shall be a nodal agency for implementing the Scheme and necessary publication in that regard have to be made. Necessary publications were also effected based on which several whole sale merchants, mill owners etc., approached the Government. Retail consumers or traders did not give any positive response. The Government having taken note of the aforesaid factual situation, to ensure that the entire wheat alloted by Government of India is utilized in the

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W.P(C) No.7862/10 & conn.cases

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State and that the price of wheat could be brought down and when all other options for sale of wheat and warehousing were found to be not feasible, it was decided to issue release orders to millers/dealers who had approached the Corporation expressing willingness to purchase OMS Scheme wheat on first come first basis after collecting money from them in advance. Accordingly, the State Government decided to allot the entire quantity of 40,660 MTs of wheat to the Corporation for distribution to the dealers/millers. The sale price of wheat was fixed at 1295.74 + Value Added Tax (VAT) per Qntl. and the Corporation was directed to charge 50 per Qntl. as handling charges. Accordingly, price was fixed at `1359.20/-. Pursuant to the same, necessary directions were issued to dealers/millers. On receipt of the payment, the Depot Managers of the Corporation issued sanction order for the quantity to be lifted from Food Corporation of India (for short FCI) Depot, pursuant to which necessary supplies were being effected. Accordingly, the Corporation remitted the cost of 35,560 MTs of wheat to FCI. The millers/dealers started lifting stock on 30/11/2009. However, the

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W.P(C) No.7862/10 & conn.cases

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same was stopped within a few days. On the request of the Corporation officials, wheat was again supplied and was again stopped on 15/12/2009. In the meantime, the General Manager, FCI, by letter dated 7/12/2009, informed the Secretary to Government as well as the Managing Director of the Corporation stating that the stock from FCI are not reaching the retail consumers which is against the Government of India guidelines. A meeting was convened on 16/12/2009 in the Chamber of Minister of Food and Civil Supplies, Kerala. In the meeting it was decided that since the Government of India has launched another scheme exclusively for the millers to sell the wheat under open sale scheme, there was no reason for Government of Kerala to lift the balance quantity of 16,000 MT. Therefore, no wheat was released after 15/12/2009. The parties who had remitted the amount have sought for refund. Necessary direction was issued by the Chairman and Managing Director of the Corporation to FCI to refund the amount, but nothing has been done in the matter. The total quantity of wheat lifted was only 23,540 MTs. The Corporation has remitted the cost of 35,550 MTs of wheat.

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W.P(C) No.7862/10 & conn.cases

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Therefore, FCI had to refund the cost of balance quantity of wheat, which would come to approximately 15,71,65,855/-. This amount was pending since November 2009. The Corporation called upon the FCI to refund the amount with 12% interest. Several correspondence followed. In the meantime, the Corporation revised the price of wheat to 1620 + VAT and notice was issued to all the dealers/millers calling upon them to remit the balance amount. The millers/dealers therefore filed several writ petitions before this Court, which are pending consideration. In the meantime, it was also intimated that the supply of wheat had not been stopped by the Government of India and the Government had to make arrangements for collecting the said wheat. Finally, the 2^nd respondent, General Manager, FCI issued proceedings dated 30/7/2010 intimating the decision to realise higher rate for the wheat already released and to appropriate the same from the amount available with the FCI. This, according to the General Manager, FCI was based on the decision of Government of India as per their letter dated 21/7/2010. It was inter alia mentioned that `1620.17/- per Qtl. has to be charged

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W.P(C) No.7862/10 & conn.cases

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from Government of Kerala for the quantity of wheat lifted in December 2009 under the OMS Scheme and 1603.21/- per Qtl. for quantity of wheat lifted in November 2009. In the meantime, FCI adjusted an amount of 7,72,60,970.20/- from `15.71 crores. The Corporation contended that the aforesaid action was clearly arbitrary. The millers in turn therefore contended that they are not liable to pay any amount in excess of what they have actually remitted and a claim for enhanced value was totally baseless, arbitrary and unsustainable. Certain of the millers who had remitted more amounts and had lifted only a lesser quantity of wheat had sought for refund of amount from the Corporation.

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According to the Corporation, the FCI was not entitled

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to adjust any amount from the amount available with them in so far as the wheat was supplied and purchased by the millers/dealers under special circumstances, and any variation in the price by the Government of India and FCI was clearly arbitrary.

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In the said circumstances, based on the aforesaid facts, WP(C) No. 37758/2010 is filed by the Corporation seeking

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W.P(C) No.7862/10 & conn.cases

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for the following reliefs:

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“(i) To call for the records leading to Ext.P26 and Ext.P30 and quash the same by the issuance of a writ of certiorari.

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I(a) to issue an appropriate writ, order or direction commanding the 4^th respondent to reconsider Ext.P30. (ii) To issue an appropriate writ, order or direction commanding the respondents to refund the amount of Rs.7,72,60,970/- adjusted as per Ext.P26 with interest @12% per annum.

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(iii) To issue an appropriate writ, order or direction commanding the 1^st respondent to pay interest at the rate of 12% for the sum of Rs.15,71,65,855/- remitted by the petitioner for release of wheat under OMS Scheme implemented as per Ext.P6 and retained by the 1^st respondent.

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(iv) To issue an appropriate writ, order or direction commanding the respondent to constitute a Committee consisting of representatives from the side of the petitioner as well as respondents, and the State of Kerala, to settle the issue that has cropped up in the implementation of the OMS Scheme in the State of Kerala as per Ext.P6.”

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Other writ petitions are filed by the millers/dealers who had taken delivery of the wheat. WP(C) No. 7862/2010 is filed seeking for a declaration that the Corporation cannot withhold the amounts tendered by the petitioners and for a declaration that they are

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W.P(C) No.7862/10 & conn.cases

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entitled to get the balance of wheat at a price of 1359.20/against the payments already made, for a direction to the Corporation to refund the amounts covered by Exts.P7 to P10, i.e., for refund of the amounts which had been collected in excess of wheat supplied and to quash letter dated 22/2/2010 issued by the Corporation claiming a higher amount and adjusting the amount remitted by them. In Ext.P11 letter dated 22/2/2010, the Corporation had informed the 3rd petitioner that they have to pay a further amount of 53,68,690/- as the differential value of the wheat taken delivery by fixing the value of wheat at `1620 + VAT per Qtl. Petitioners contend that the aforesaid action is absolutely arbitrary and amounts to unlawful enrichment. They had entered into a contract for lifting wheat at a particular price which cannot be varied and the amount paid for the unsupplied quantity of wheat has to be refunded.

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WP(C) Nos. 8920/2010, 9917/10, 10301/2010, 10460/2010, 11221/2010, 4193/2012, 13396/2012 and 29111/2012 have been filed seeking almost similar reliefs.

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As far as the millers/dealers who had filed writ petitions

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W.P(C) No.7862/10 & conn.cases

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are concerned, they have remitted the value for the wheat which they have contracted for. In certain cases, they have already received the quantity of wheat for which they have paid the price. Now they are called upon to pay a higher amount on account of enhancement of the price by FCI, at the instance of Government of India. As far as certain other millers/dealers are concerned, they have remitted more amounts but they have not lifted the entire quantity of wheat. Their amounts had been adjusted towards the higher value of wheat fixed by Government of India which they have challenged as arbitrary and unreasonable. The main contention urged by them is that once a contract had been entered into with the Corporation and a price has been fixed, the Corporation is not entitled to charge a higher amount than the contractual amount unilaterally which amounts to an arbitrary action. Further, if the wheat is not supplied, they are entitled to seek refund of the value of wheat that they have deposited before the Corporation.

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On the other hand, Corporation has sought for relief against FCI inter alia contending that wheat has to be taken

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W.P(C) No.7862/10 & conn.cases

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delivery under special circumstances since there were no takers for the wheat for distribution through the retail distribution system or wholesale distribution system. Hence supplies were effected through millers/dealers and at a later stage, for the supply already effected at a particular price, a higher rate cannot be fixed by the Government.

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As far as the millers/dealers are concerned, there cannot be any dispute about the fact that they have taken supplies based on certain contract with the Corporation and they cannot be mulcted with any further liability merely for the reason that the supplies had been effected based on a Scheme of the Government of India and there has been violation of the Scheme. If at all there is violation of the Scheme, it has been made by the State Government and its authorities. The Corporation also is a nodal agency, charging only `50 per Qtl. as handling charges and they were not involved in any policy decision. In other words, it was only an agency acting as an intermediary between the millers/dealers and FCI. As far as FCI is concerned, they are bound by the directions issued by the Government of India as the

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W.P(C) No.7862/10 & conn.cases

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wheat is supplied as directed by Government of India.

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Therefore, the only question that remains to be considered is whether Government of India is entitled to charge a higher rate for the wheat under the special circumstances of this case and, if not, what are the directions that could be issued in favour of the parties to the lis.

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In the counter affidavit filed by respondents 1 to 3 in WP(C) No. 37758/10, it is inter alia contended that FCI is bound to act as per the directions issued by the Government of India for effecting sale of food grains for all the Schemes approved by the Government of India. In order to check inflationary trends, the Government of India has issued directions to release wheat and rice under the OMS Scheme during the month of October 2009 to December 2009 for distribution to retail customers. Another letter dated 12/10/2009 has also been issued by Government of India introducing a Scheme for sale under OMS Scheme to bulk consumers. It is stated that when the value of wheat to retail consumers of wheat in the State of Kerala was fixed at `1295.74/per Qtl., in respect of bulk consumers, a higher rate was fixed at

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W.P(C) No.7862/10 & conn.cases

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1586.41/- per Qtl. for October 2009, 1603.21/- per Qtl. for November, 2009, 1620.17/- per Qtl. for December, 2009 and 1436.35/- per Qtl. for January, 2010. It is stated that under the OMS Scheme, the wheat was intended for sale to retail consumers and small processors of wheat. It was not intended for sale to millers/dealers. It is stated that when State of Kerala had issued proceedings allotting the entire quantity of wheat to the Corporation, an intimation was given to all Area Managers of FCI to issue wheat stocks to the Corporation. However, while conducting inspection in FCI Depot, Kozhikode, it was found that two release orders have been issued to Roller Flour Millers which is against the Government of India guidelines. Hence, direction was issued to stop issue of wheat to Roller Flour Mills. Government of India after examining the issue had directed FCI to charge a higher rate applicable to bulk consumers for the quantity already sold under the OMS Scheme. It is pursuant to that FCI had issued Ext.P26 order dated 30/7/2010 adjusting the amount available with FCI towards the higher cost and the balance amount was refunded to the Corporation.

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W.P(C) No.7862/10 & conn.cases

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The learned Assistant Solicitor General has filed a

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memo producing a file note. In fact, by judgment dated 23/12/2010, this Court had directed the State of Kerala to move the Government of India for an out of court settlement in the matter. By the aforesaid file note dated 14/3/2011, proceedings had been dropped stating that any reconsideration of the decision taken by Government of India in July, 2010 is not possible.

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As already indicated, the short question to be considered in WP(C) No.37758/2010 is whether the action of the respondents, especially Union of India, in claiming a higher amount for the wheat supplied, was unilateral or whether it is in accordance with the OMS Scheme.

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For easy reference, I am referring to the documents produced in WP(C) No.37758/2010, unless otherwise stated.

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Ext.P2 is the order of the Supreme Court in Writ Petition (Civil) No.196/2001. While issuing directions, the Supreme Court observed as under:

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“The Food Secretary in her affidavit has stated that there has been record procurement of wheat and rice in the last three years as a result of which the central pool stocks reached the level of 604.28 lakh

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W.P(C) No.7862/10 & conn.cases

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tonnes on 1.6.2010. Due to high procurement of wheat and rice during the last three years and insufficient covered storage space available in the country to store the procured stock, 178 lakh tonnes of wheat was stored in Covered and Plinth (CAP) storage, as on 1.6.2010. CAP storage involves storage on elevated plinths with polythene covers specially made for this purpose.

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The Union of India must ensure food security of the country. In view of record procurement, which the Government of India is not able to properly store and preserve it would be appropriate that the Government of India may take some long term and short term measures to solve the problem. Permanent solution lies in constructing adequate storage facilities. The Union of India may consider constructing atleast one large Food Corporation of India godown in every State and consider the possibility of construction of one godown in every division if not in every district of the State”.

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Ext.P6 dated 12/10/2009 is the letter issued by the Ministry of Consumer Affairs, Food and Public Distribution to the State Government. The total quantity of wheat alloted to State of Kerala was 40,660. In paras 5 and 6 of the said letter, it is stated as under:

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“5. State/UT Government should lift the allocated quantity of wheat and rice from the godowns of FCI

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W.P(C) No.7862/10 & conn.cases

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and distribute it to retail consumers through their own Corporations/cooperatives/federations/selfhelp groups or any other Government or SemiGovernment organization. The State/UT Government may also use this wheat/rice for various educational institutions, SC/ST/women hostels, etc. The State Governments may also convert wheat into flour for distribution to retail consumers. In addition to retail consumers, State Governments may sell wheat to small processors of wheat like chakkies, bakeries etc., whose monthly consumption of wheat is less than 30 tonnes.

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6. In order to make this intervention meaningful so that inflationary trends in food economy are checked and that benefit is passed on to consumers, State Governments, may ensure that not more than Rs.200 per qunital is added in the end retail prices (above the rate at which rice has been released to State Governments) on account of handling, transportation etc.”

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The Chairman & Managing Director of the Corporation by fax message dated 12/11/09 has informed the Secretary to Government, Food, Civil Supplies and Consumer Affairs Department, State of Kerala that on account of the price of wheat fixed under the OMS Scheme, it will not be possible to purchase rice/wheat by the Corporation. By Ext.P8 dated 20/11/09, the

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W.P(C) No.7862/10 & conn.cases

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Government has forwarded the minutes of the meeting dated 19/11/09 to the Corporation to take appropriate steps in the matter for giving wide publicity. It seems that publicity had been given by the Corporation. By proceedings dated 25/11/09, decision was taken by the Corporation to distribute the wheat to various dealers at a price of 1295.74 + VAT per Qtl. and to charge 50/- per Qtl. as handling charges. Ext.P16 is the minutes of meeting dated 16/12/2009 in the Chamber of Food Minister of Government of Kerala regarding the sale of wheat under the OMS Scheme in State of Kerala. It was mentioned in para 6 to 10 as under:

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“6. Abiding by the above instructions from Government of Kerala, the Supplyco issued a press note on 19/11/2009 in the leading news papers for popularizing these schemes indicating therein the rate per Quintal of wheat and rice. In the Press Note it was mentioned that under the open market sales scheme of Government of India, the rice and wheat allotted by FCI will be distributed to the interested parties, on the sale price mentioned therein based on terms and conditions laid down therein. The interested parties may make payment for rice and wheat to the Supplyco depots.

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7. The above decision taken by the

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W.P(C) No.7862/10 & conn.cases

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Government of Kerala was to make more and more availability of wheat in the open market keeping in view the various factors including lack of infrastructure with the government. As per Government of India guidelines, the sole purpose of the State Government is to ensure that the inflationary trend in wheat/rice price is curbed with a heavy hand by ensuring maximum availability of the stock in the open market. Following are the few constraints due to which the Government of India guidelines in totality could not be followed by the Government of Kerala.

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a) there are only Roller Flour Millers in Kerala who are dealing with the food grain in the market. There is no merchant of commission agent of dealers who may be doing any transaction in the market.

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b) There are no chakkiwalas in existence in Kerala State.

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c) The Public Distribution System is being managed through private Authorized Ration Dealers who are drawing their stocks from Authorised Whole Sale Dealers.

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d) The authorised Whole Sale Dealers get the stock from FCI after depositing the payment directly with the FCI.

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e) These Authorised whole sale dealers are authorised by the Director of Civil Supplies. f) Thus the State Government has only either dealers or millers available in the State through

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W.P(C) No.7862/10 & conn.cases

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whom the said scheme could be implemented. g) In addition to it the ration is also being distributed through Supplyco outlets but the Supplyco do not have necessary infrastructure to bear the additional burden. Ration dealers also shown their helplessness due to price difference to lift the atta from Roller flour millers for further distributing the same through their fair prices shops.

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h) In the last the Government also knew well that the Supplyco who is the only Corporation engaged in foodgrain handling does not have sufficient funds available with them to honour/implement the Government of India schemes. There are no restrictions on stock holding of wheat in the State at present and licensing requirements of wheat has already been removed. There was no intention to defeat Government directions in this regard by the state.

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i) There is no restriction for movement of foodgrain stock from one state to another. 8. Keeping in view all the above factors, the Government of Kerala had taken the decision to sell the stocks in the open market through the merchants or roller flour millers in order to ensure sufficient availability of wheat stocks in the market. 9. It is also placed on the record that due to the timely interaction by the Government of Kerala in the market the prices of food grains have come down appreciably and the public is feeling a great

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W.P(C) No.7862/10 & conn.cases

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relief.

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10. During the meeting it was also decided, since the Government of India has launched another scheme exclusively for the millers to sell the wheat under open sale scheme, as such there is no further point for the Government of Kerala to lift the balance around 16,000 MT unlifted wheat because there will be no taker for the same as such no further lifting will be made from FCI godowns. It was agreed that the FCI will refund the amount to the Supplyco, on the formal request of Supplyco”.

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It is rather clear that it is based on certain special circumstances that wheat was supplied to millers/dealers. They have remitted the amount as directed by the Corporation and now by virtue of Ext.P26 dated 30/7/2010, they are called upon to remit additional amounts and adjustment has been made. The following is the proceedings dated 30/7/2010;

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“ FOOD CORPORATION OF INDIA

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REGIONAL OFFICE: KESAVADASAPURAM PATTOM PALACE P.O, THIRUVANANTHAPURAM

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695004

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No.S&S.4(2)/2009-10/OMSS(D)/gok/Vol.II Dated 30/7/2010.

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PROCEEDINGS

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Sub:- Commi-Allotment of Wheat under OMSS(D) to Retailers for 2009-10- regarding. Ref; 1) Letter No.1-11/2009-Py.IV dated

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W.P(C) No.7862/10 & conn.cases

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12.10.2009 of Government of India.

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2) Proceedings No.CS.A3.26492/09(2) dated 25.11.2009 of Director of Civil Supplies, Trivandrum.

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3) Letter No.P.10-21406/09 dated

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28.11.2009.

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*******

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As per the letter cited first, the Government of India have made allocation o 40660 MT of wheat under OMSS(D) Scheme to Kerala State for distribution to Retail Consumers. The Government of Kerala vide proceedings cited 2^nd has allocated the entire quantity of 40660 MTs of wheat to Supply-Co for being distributed to Retail Consumers as per requirement. Accordingly, Supply-Co has remitted a total cost of Rs.46,45,85,577/- in various FCI Depots of Kerala Region for a quantity of 35500 MT @ Rs.1,295.74 per quintal. The Supply-Co has lifted a quantity of 23634 MTs in FCI Depots and the cost of 23634 MTs comes to Rs.30,92,97,543.5 including VAT.

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After having received the information that wheat stocks are issued to Millers, as per direction from higher authorities of FCI, Government of India, FCI have stopped further issue under this scheme.

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The Ministry of CAF&PD vide letter No.111/2009-Py-IV/Pt. dated 21.07.2010 has intimated the decision of Government of India on the subject as follows:

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1. Rate of Rs.1,620.17 per quintal, ie the

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W.P(C) No.7862/10 & conn.cases

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Reserve Price as also the price discovered through tenders floated by FCI in the State of Kerala during December 2009 may be charged from Government of Kerala for the quantity of wheat lifted in December 2009 under OMSS(D) and

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2. Rate of Rs.1,603.21 per quintal, ie the prevailing Reserve Price for November 2009 may be charged from Government of Kerala for the quantity of wheat lifted in November 2009 under OMSS(D).

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Accordingly the additional charges to be collected for 23634 MTs lifted quantity of wheat stocks under this scheme Rs.7,72,60,970.20. The above said sum of Rs.7,72,60,970.20 is hereby adjusted from the amount already available with FCI and the balance amount of Rs.7,80,29,063.30 is refunded to Supply-Co. Payment will be arranged shortly.

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The receipt of the amount may please be acknowledged.

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Sd/(O.K.SOMASEKHARAN NAIR) ASST.GENL.MANAGER (COMML.) for GENL.MANAGER (KERALA)”.

¶149

In the counter affidavit, it was stated that since the supply had been effected to Roller Flour Mill owners, they are not entitled to claim the benefit under the OMS Scheme (Retail).

¶150

Having regard to the aforesaid factual circumstances, the following factors are rather clear:-

¶151

W.P(C) No.7862/10 & conn.cases

¶152

-:22:-

¶153

(a) Under the OMS Scheme, the price of wheat has been fixed at `1295.74 per Qtl. along with VAT. Corporation had fixed this price based on the directions issued by the Central Government. However, Government of Kerala was unable to lift the wheat on account of the fact that there was no demand from retailers. Accordingly, the Government of Kerala, after having conducted a meeting of all those who have approached the Government, took a decision to supply the aforesaid wheat to millers/dealers. This apparently was a very conscious decision taken as it was found that there were no distributors for lifting the wheat under the OMS Scheme whereas certain millers/dealers expressed their intention to lift the aforesaid wheat. It is clearly mentioned that decision was taken by the Government to make available more wheat in the open market on account of various factors including lack of infrastructure with the Government. Government had also narrated the constraints that were faced for not following the scheme as such. It is apparent that Corporation was not in a position to take and store the entire quantity of wheat and to sell the same in open market so that it reaches

¶154

W.P(C) No.7862/10 & conn.cases

¶155

-:23:-

¶156

eligible consumers. The only method available was to permit millers/dealers to take delivery of wheat so that it may reach the retail consumers in an appropriate manner.

¶157

(b) On a perusal of the judgment of the Supreme Court in Writ Petition (Civil) No. 196/2001, it is evident that it was on account of the high procurement of wheat and rice during the previous three years and insufficient covered storage space available in the country to store the produced stock, that temporary arrangements were made to store wheat on elevated plinths with polythene covers. It was observed that necessary arrangements should be made to properly store and preserve the food grains for which necessary long term as well as short term measures shall be taken to solve the problem. The short term measures suggested by the Supreme Court are explained in the said order itself, which reads as under;

¶158

“Similarly, the Government of India may consider taking some short term measures to deal with this problem of foodgrains which is rotting:

¶159

(a) increase in the quantum of food supply to the population Below Poverty Line;

¶160

(b) opening the fair price shops for all the 30 days in a month;

¶161

W.P(C) No.7862/10 & conn.cases

¶162

-:24:-

¶163

and

¶164

(c) distribute foodgrains to the deserving population at a very low cost or no cost.

¶165

The public distribution system needs to be strengthened particularly, in tribal and drought prone areas of the country”.

¶166

Presumably, it is to comply with clause (c) of the aforesaid order that the OMS Scheme was brought into force.

¶167

(c) No doubt, it is apparent from the Government of India letter dated 12/10/2009 that the Government intended to release the wheat under the Scheme for distribution to retail consumers. But how would it reach the retail consumers was not detailed in the said letter, whereas it was indicated that the State Government should lift the allocated quantity of wheat and rice from the godown of FCI and distribute it to retail consumer through their own Corporations/Co-operatives/Federations/Self help groups or any other Government or Semi Government organization. It is also indicated that State Governments may also convert wheat into flour for distribution to retail consumers and that the Government may sell wheat to small processors whose consumption is less than 30 tonnes. Therefore, the Government

¶168

W.P(C) No.7862/10 & conn.cases

¶169

-:25:-

¶170

was given the right to form the necessary modalities to ensure that the wheat is distributed to retail consumers. Materials are also available on record to indicate that the State Government had requested the Corporation to take delivery of the wheat, but the Corporation for want of sufficient storage space and cash flow was unable to do so. Government stand in this regard is evident from the minutes of meeting dated 19/11/2009, which forms part of Ext.P8. Pursuant to the same, the Corporation has made sufficient advertisements, but, there were no takers at all. However, the wheat has been allotted to be taken delivery for which the Government had taken appropriate steps and a conscious decision was taken to permit millers/dealers to take delivery of the wheat. The reason for arriving at such a decision is clear from the subsequent minutes dated 16/12/2009. Perusal of the said minutes by itself indicates that there is no mala fides on the part of the Government in taking the wheat through Roller Flour Millers in Kerala who are dealing with foodgrain in the market, so that it would be possible to deliver the wheat in various forms to the retail market. It is also clear that when the

¶171

W.P(C) No.7862/10 & conn.cases

¶172

-:26:-

¶173

distribution system in the State of Kerala is through Authorized Ration Dealers as well as Authorized Wholesale Dealers, there is no Government agency which can be entrusted with the distribution of wheat. The ration dealers as well as the wholesale dealers were not agreeable to take the wheat. The Corporation also did not have sufficient funds or storage facility to take delivery of the wheat. Under such circumstances, taking into account the overall factual aspects involved in the matter, it was also decided not to lift the balance quantity of 16,000 MTs of wheat, which remain unlifted.

¶174

What remains consideration is only with reference to the value of wheat that has already been taken delivery by the millers/dealers as instructed by the Corporation. Perusal of the correspondence in this regard clearly indicates that the decision of the Central Government in directing to enhance the value of the wheat was unilateral. As already indicated, the wheat was allocated to State of Kerala for supply to retail consumers. Though in letter dated 12/10/2009 (Ext.P6), certain modalities had been mentioned by the Central Government and the manner in which

¶175

W.P(C) No.7862/10 & conn.cases

¶176

-:27:-

¶177

the supply has to be effected, it was well within the power of the State Government to find out a method for taking delivery of the allotted quantity of wheat and to distribute the same in open market, i.e., to retail consumers. When no other method was possible especially supply through the Corporation, wholesale ration dealers or retail ration dealers, the Government had taken a conscious decision to supply the wheat through private millers/dealers. That decision was taken to enable lifting the stock as well as to have a proper distribution system. In fact, the Government found that it was impossible to distribute the wheat in accordance with the directions issued by the Central Government. They had the discretion to find out other methods to lift the wheat and distribute the same especially on account of the fact that the millers/dealers have agreed to lift the wheat at that particular price. Therefore, I do not think that the policy decision taken by the State Government to effect supply of the wheat through millers/dealers was against the scheme of things as provided by the Central Government. In other words, there is sufficient justification on the part of State Government to adopt a

¶178

W.P(C) No.7862/10 & conn.cases

¶179

-:28:-

¶180

method that was suitable under the circumstances. Even otherwise, neither the Corporation nor the millers/dealers, who had paid the value of wheat at the price fixed by the Central Government, is not responsible for any breach of the terms of OMS Scheme by the State Government. Under such circumstances, when wheat has been lifted based on a price which was agreed upon by the Central Government, it was not proper on the part of the Central Government to have enhanced the price for the wheat already lifted as per allotment letters issued by the Corporation. In other words there was no privity of contract between the millers/dealers and the Central Government or FCI. Similarly there was no privity of contract between the Corporation and the Central Government or FCI. The entire scheme of things was on the basis of an arrangement between the Central Government and the State Government, and therefore Central Government has no right to recover any additional cost from the millers/dealers or the Corporation. Consequently, FCI was not entitled to make the adjustments as evident from Ext.P26.

¶181

W.P(C) No.7862/10 & conn.cases

¶182

-:29:-

¶183

Now, I shall deal with the other writ petitions and the relief that could be granted in those matters.

¶184

In WP(C) No. 7862/10, the first petitioner had remitted an amount of 4,07,76,000/- for purchasing 3,000 MT of wheat of which he had taken supply of only 1649.711 MT of wheat. The amount outstanding on account of short supply from the Corporation is 1,83,53,128/-. The 2^nd petitioner also remitted 4,07,76,000/- as value of 3,000 MT of wheat and they have taken delivery of 1,000 MT. The amount outstanding from the Corporation is 2,71,84,000/-. The 3^rd petitioner also remitted 4,07,76,000 for purchasing 3,000 MT of wheat and they took delivery of 1989.529 MT of wheat. The amount outstanding with the Corporation is 1,37,34,322/-. The total amount outstanding to them for the wheat that is not supplied is 5,92,71,450/-. It is stated that part payments were effected by the Corporation with reference to the amount due to the petitioners. 1st petitioner was paid 21,74,720/-, 2^nd petitioner was paid 1,35,92,000/- and the 3rd petitioner 1,35,92,000/-. Petitioners submitted separate representations for refunding the balance amount, but, so far, the

¶185

W.P(C) No.7862/10 & conn.cases

¶186

-:30:-

¶187

same has not been paid. According to them, they were not liable to take delivery of wheat at the enhanced price as offered by the FCI. A statement has been filed by the petitioners stating that the amount outstanding in their account for the wheat that has not been supplied as far as the first petitioner is 1,61,78,408.09/-, 2nd petitioner is 1,35,92,000/- and the 3^rd petitioner is 1,42,321.83/-. No dispute has been raised with reference to the above amounts. In the counter affidavit filed, it is stated that no amount has been kept with the 1st respondent. It is also stated that the Corporation had remitted 46.50 crores towards the cost of 35,550 MT of wheat, which the Corporation received from the customers towards the price of wheat under OMS Scheme. The FCI stopped issue of wheat after lifting a quantity of 23541 MT.

¶188

In WP(C) No. 8920/10, petitioner contends that petitioner made full payment of 2,03,87,961/- to the Corporation as value of 1500 MTs of wheat. He lifted 1,254.122 MTs of wheat till 9/12/2009. Thereafter the price was enhanced. After deducting the value of wheat supplied, the balance amount due to the petitioner is 33,41,963/-. By Ext.P6 dated 22/2/2010,

¶189

W.P(C) No.7862/10 & conn.cases

¶190

-:31:-

¶191

petitioner is called upon to pay a further amount of 1,31,950/- by valuing the wheat at a rate of 1620 + VAT, which according to the petitioner is unilateral. Counter affidavit has been filed by the Corporation raising similar contentions and stating that the demand has been made on the basis of directions issued by FCI.

¶192

In WP(C) No. 9917/10, the petitioner remitted an amount of 48,93,120/- as value of 360 MT of wheat. Later, on 8/12/2009, he remitted a further amount of 95,14,400/- as value of 700 MT of wheat. Petitioner received only 474.88 MT out of the total quantity of 1060 MT. The petitioner sought for refund of the amount paid after adjusting the value of wheat supplied. Similar contentions had been taken by the Corporation.

¶193

In WP(C) No. 10301/2010, the petitioner remitted 67,96,000/- as value of 500 MT of wheat. The supply effected was only 243.756 MT and he claims the balance amount of 34,82,877.50/-. Counter affidavit has been filed by the Corporation raising similar contentions.

¶194

In WP(C) No. 10460/10, four petitioners are involved. The first petitioner had remitted an amount of `4,07,79,960/- for

¶195

W.P(C) No.7862/10 & conn.cases

¶196

-:32:-

¶197

purchasing 3,000 MT of wheat of which he had taken supply of only 1877.378 MT of wheat. The amount outstanding from the Corporation is 1,52,62,685/-. The 2nd petitioner remitted an amount of 54,37,828/- as value of 400 MT of wheat and they have taken delivery of 250 MT. The amount outstanding from the Corporation is 20,39,834/-. The 3rd petitioner also remitted 67,96,660/- for purchasing 500 MT of wheat and they took delivery of 200 MT of wheat. The amount outstanding from the Corporation is 40,78,265/-. The 4th petitioner remitted an amount of 67,96,660/- for purchase of 500 MT of wheat and they were supplied only 200 MT of wheat. The amount outstanding from the Corporation is 40,78,265/-. The Corporation effected part payment of an amount of 1,01,94,900/- due to the 4^th petitioner. But the said amount is withheld by the Corporation pending receipt of refund from FCI. Thereafter, by letter dated 22/2/2010, 1^st petitioner was informed that the price of wheat has been revised to 1620 + VAT per Qtl. and in respect of the total quantity taken delivery, the value comes to 2,86,33,500/-. Ext.P5 is the document. Petitioner seeks for refund of the amount and

¶198

W.P(C) No.7862/10 & conn.cases

¶199

-:33:-

¶200

also to quash Ext.P5. The petitioner had remitted only 2,37,86,000/- and therefore the balance has to be remitted. Ext.P4 is the statement by which the petitioners have claimed refund of the balance amount. They have indicated in the statement the balance amount receivable and the total amount payable to the petitioners would come to 2,54,59,051/-.

¶201

In WP(C) No. 11221/2010, the first petitioner had remitted an amount of 1,35,92,000/- for purchase of 1000 MT of wheat and he was supplied only 782.602 MT of wheat. The amount outstanding on account of short supply from the Corporation is 29,54,873/-. The 2^nd petitioner had remitted an amount of 40,77,600/- for purchase of 300 MT of wheat. The Corporation has neither supplied wheat nor has refunded the amount to the 2nd petitioner. Thus the amount outstanding from the Corporation to the 2nd petitioner is 40,77,600/-. The petitioners were entitled to get `70,32,473/- from the Corporation. The petitioners requested for refund of the amount, but since no action had been taken in the matter, this writ petition is filed.

¶202

In WP(C) No. 4193/2012, the 1^st petitioner had remitted

¶203

W.P(C) No.7862/10 & conn.cases

¶204

-:34:-

¶205

an amount of 13,59,198/- for purchase of 100 MT of wheat and the said quantity was supplied to the petitioner. Later, petitioner was issued with letter dated 22/2/2010 calling upon the petitioner to remit an additional amount of 1,38,500/-. Thereafter, revenue recovery proceedings were also taken against the petitioner. It is under the circumstances, this writ petition has been filed challenging Exts.P5, P7 and P8.

¶206

In WP(C) No. 13396/2012, the petitioner was allotted 500 MTs of wheat at a rate of 1345.74. He had also taken delivery of the material. Subsequently, petitioner was called upon to remit a further amount of 1,38,587/- as per letter dated 27/11/2010. Petitioner challenges the same as being unilateral. Thereafter, revenue recovery proceedings had been taken against him and hence the petitioner has filed this writ petition challenging Exts.P5, P6 and P7. Ext.P6 is the notice under Section 7 of the Revenue Recovery Act and Ext.P7 is another letter dated 29/03/2012 issued by the Corporation confirming the demand made as per revenue recovery steps.

¶207

In WP(C) No. 29111/2012, petitioner challenges

¶208

W.P(C) No.7862/10 & conn.cases

¶209

-:35:-

¶210

Ext.P12 by which he was called upon to pay an amount of `1,38,587/- being the differential amount for the value of wheat taken delivery in terms of the OMS Scheme. The contention urged by the petitioner was that he is not liable to pay any further amount as at the time of taking delivery, the value of wheat was fixed as directed by the Corporation. Thereafter, proceedings were also initiated against him, which was challenged by filing WP (c) No. 31653/11. This Court by judgment dated 14/12/2011 had permitted the petitioner to file a representation to the Corporation, pursuant to which Ext.P12 order was passed.

¶211

One other question which is required to be considered is whether this Court should exercise writ jurisdiction under Article 226 of the Constitution of India to grant the reliefs prayed for. The position of law in this regard is well settled. Under normal circumstances, the Court shall not interfere with matters which are in the realm of private law as held by the Supreme Court in

¶212

K.K. Saksena v. International Commission on Irrigation

¶213

and Drainage and others [(2015) 4 SCC 670]. But in an instance where materials available on record indicates that the

¶214

W.P(C) No.7862/10 & conn.cases

¶215

-:36:-

¶216

writ is filed against a State or an instrumentality of a State arising out of a contractual obligation, writ petition is maintainable. However, whether the discretion is to be exercised taking into account the facts and circumstances of the case is a matter to be considered. When the issues projected or complained of does not require consideration of disputed questions of fact, which requires evidence, necessarily, the Court could interfere even if a monetary claim is made. The question would be whether the decision by the authority affects the fundamental right of the citizen or not. The position of law has been considered in the judgment of the Apex Court in State of Kerala v. M.K.Jose [(2015) 9 SCC 433], wherein, the Apex Court approved an earlier judgment in ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd., [(2004) 3 SCC 553]. It would be useful to refer to paragraphs 14 to 20 of the judgment in M.K.Jos e (supra), which read as under:

¶217

“ 14. In State of Bihar v. Jain Plastics and Chemicals Ltd., a two-Judge Bench reiterating the exercise of power under Article 226 of the Constitution in respect of enforcement of contractual obligations has stated: (SCC p. 217, para 3)

¶218

W.P(C) No.7862/10 & conn.cases

¶219

-:37:-

¶220

“3. … It is to be reiterated that writ petition under Article 226 is not the proper proceedings for adjudicating such disputes. Under the law, it was open to the respondent to approach the court of competent jurisdiction for appropriate relief for breach of contract. It is settled law that when an alternative and equally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invoke the writ jurisdiction of the High Court. Equally, the existence of alternative remedy does not affect the jurisdiction of the court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226.”

¶221

In the said case, it has been further observed: (SCC p. 218, para 7) “7. … It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the

¶222

W.P(C) No.7862/10 & conn.cases

¶223

-:38:-

¶224

parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs.” 15. In National Highways Authority of India v. Ganga Enterprises, the respondent therein had filed a writ petition before the High Court for refund of the amount. The High Court posed two questions, namely, (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of breach of contract. While dealing with the said issue, this Court opined that: (SCC p. 415, para 6)

¶225

“6. … It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in Kerala SEB v. Kurien E. Kalathil, State of U.P. v. Bridge & Roof Co. (India) Ltd. and Bareilly Development Authority v. Ajai Pal Singh. This is settled law. The dispute in this case was regarding the terms of offer. They were thus contractual disputes in respect of which a writ court was not the proper forum. Mr Dave, however, relied upon the cases of Verigamto Naveen v. State of A.P. and Harminder Singh Arora v. Union of India. These, however, are cases where the writ court was enforcing a statutory right or duty. These cases do not lay down that a writ court can interfere in a matter of contract only. Thus on the ground of

¶226

W.P(C) No.7862/10 & conn.cases

¶227

-:39:-

¶228

maintainability the petition should have been dismissed.”

¶229

16. Having referred to the aforesaid decisions, it is obligatory on our part to refer to two other authorities of this Court where it has been opined that under what circumstances a disputed question of fact can be gone into. In Gunwant Kaur v. Municipal Committee, Bhatinda, it has been held thus: (SCC p. 774, paras 14-16)

¶230

“14. The High Court observed that they will not determine disputed question of fact in a writ petition. But what facts were in dispute and what were admitted could only be determined after an affidavit-in-reply was filed by the State. The High Court, however, proceeded to dismiss the petition in limine. The High Court is not deprived of its jurisdiction to entertain a petition under Article 226 merely because in considering the petitioner’s right to relief questions of fact may fall to be determined. In a petition under Article 226 the High Court has jurisdiction to try issues both of fact and law. Exercise of the jurisdiction is, it is true, discretionary, but the discretion must be exercised on sound judicial principles. When the petition raises questions of fact of a complex nature, which may for their determination require oral evidence to be taken, and on that account the High Court is of the view that the dispute may not appropriately be tried in a writ petition, the High Court may decline to try a petition. Rejection of a petition in

¶231

W.P(C) No.7862/10 & conn.cases

¶232

-:40:-

¶233

limine will normally be justified, where the High Court is of the view that the petition is frivolous or because of the nature of the claim made dispute sought to be agitated, or that the petition against the party against whom relief is claimed is not maintainable or that the dispute raised thereby is such that it would be inappropriate to try it in the writ jurisdiction, or for analogous reasons.

¶234

15. From the averments made in the petition filed by the appellants it is clear that in proof of a large number of allegations the appellants relied upon documentary evidence and the only matter in respect of which conflict of facts may possibly arise related to the due publication of the notification under Section 4 by the Collector.

¶235

16. In the present case, in our judgment, the High Court was not justified in dismissing the petition on the ground that it will not determine disputed question of fact. The High Court has jurisdiction to determine questions of fact, even if they are in dispute and the present, in our judgment, is a case in which in the interests of both the parties the High Court should have entertained the petition and called for an affidavit-in-reply from the respondents, and should have proceeded to try the petition instead of relegating the appellants to a separate suit.”

¶236

(emphasis supplied)

¶237

17. In ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., a two-Judge Bench

¶238

W.P(C) No.7862/10 & conn.cases

¶239

-:41:-

¶240

after referring to various judgments as well as the pronouncement in Gunwant Kaur and Century Spg. and Mfg. Co. Ltd. v. Ulhasnagar Municipal Council, has held thus: (ABL International case, SCC pp. 568-69 & 572, paras 19 & 27)

¶241

“19. Therefore, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the court entertaining such petition under Article 226 of the Constitution is not always bound to relegate the parties to a suit. In the above case of Gunwant Kaur this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact.

¶242

* * *

¶243

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

¶244

(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.

¶245

(b) Merely because some disputed questions of

¶246

W.P(C) No.7862/10 & conn.cases

¶247

-:42:-

¶248

fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

¶249

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

¶250

While laying down the principle, the Court sounded a word of caution as under: (ABL International case, SCC p. 572, para 28)

¶251

“28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. v. Registrar of Trade Marks.) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction.”

¶252

18. It is appropriate to state here that in the said

¶253

W.P(C) No.7862/10 & conn.cases

¶254

-:43:-

¶255

case, the Court granted the relief as the facts were absolutely clear from the documentary evidence brought which pertain to interpretation of certain clauses of contract of insurance. In that context, the Court opined: (ABL International Ltd. case, SCC p. 578, para 51)

¶256

“51. … The terms of the insurance contract which were agreed between the parties were after the terms of the contract between the exporter and the importer were executed which included the addendum, therefore, without hesitation we must proceed on the basis that the first respondent issued the insurance policy knowing very well that there was more than one mode of payment of consideration and it had insured failure of all the modes of payment of consideration. From the correspondence as well as from the terms of the policy, it is noticed that existence of only two conditions has been made as a condition precedent for making the first respondent Corporation liable to pay for the insured risk, that is: (i) there should be a default on the part of the Kazak Corporation to pay for the goods received; and (ii) there should be a failure on the part of the Kazakhstan Government to fulfil their guarantee.”

¶257

And it eventually held: (SCC pp. 578-79, para 51) “51. … We have come to the conclusion that the amended Clause 6 of the agreement between the exporter and the importer on the face of it does not give room for a second or another construction

¶258

W.P(C) No.7862/10 & conn.cases

¶259

-:44:-

¶260

than the one already accepted by us. We have also noted that reliance placed on sub-clause (d) of the proviso to the insurance contract by the Appellate Bench is also misplaced which is clear from the language of the said clause itself. Therefore, in our opinion, it does not require any external aid, much less any oral evidence to interpret the above clause. Merely because the first respondent wants to dispute this fact, in our opinion, it does not become a disputed fact. If such objection as to disputed questions or interpretations is raised in a writ petition, in our opinion, the courts can very well go into the same and decide that objection if facts permit the same as in this case.”

¶261

19. In this regard, a reference to Noble Resources Ltd. v. State of Orissa would be seemly. The twoJudge Bench referred to ABL International, Dwarkadas Marfatia & Sons v. Port of Bombay, Mahabir Auto Stores v. Indian Oil Corpn. and Jamshed Hormusji Wadia v. Port of Mumbai and opined thus: (Noble Resources case, SCC p. 246, para 29)

¶262

“29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public law element is involved,

¶263

W.P(C) No.7862/10 & conn.cases

¶264

-:45:-

¶265

judicial review may be permissible. (See Binny Ltd. v. V. Sadasivan and G.B. Mahajan v. Jalgaon Municipal Council.)”

¶266

Thereafter, the Court in Noble Resources case, proceeded to analyse the facts and came to hold that certain serious disputed questions of facts have arisen for determination and such disputes ordinarily could not have been entertained by the High Court in exercise of its power of judicial review and ultimately the appeal was dismissed. 20. We have referred to the aforesaid authorities to highlight under what circumstances in respect of contractual claim or challenge to violation of contract can be entertained by a writ court. It depends upon facts of each case. The issue that had arisen in ABL International was that an instrumentality of a State was placing a different construction on the clauses of the contract of insurance and the insured was interpreting the contract differently. The Court thought it apt merely because something is disputed by the insurer, it should not enter into the realm of disputed questions of fact. In fact, there was no disputed question of fact, but it required interpretation of the terms of the contract of insurance. Similarly, if the materials that come on record from which it is clearly evincible, the writ court may exercise the power of judicial review but, a pregnant one, in the case at hand, the High Court has appointed a Commission to collect the

¶267

W.P(C) No.7862/10 & conn.cases

¶268

-:46:-

¶269

evidence, accepted the same without calling for objections from the respondent and quashed the order of termination of contract” .

¶270

Coming to the present case, there is no dispute on

¶271

facts. Here is an instance where there was an arrangement based on Central Government Scheme. The State Government appointed Corporation as a nodal agency for allotting wheat to millers/dealers. Such a decision was taken at the State Government level for which neither the Corporation nor the other writ petitioners are responsible. The amounts were paid by the writ petitioners agreeing to purchase wheat at a particular price. They have taken delivery of certain quantity of wheat. The money deposited by them was to take delivery of wheat at a particular rate. Even if the Central Government wants to demand a higher rate for the alloted quantity of wheat, which was already taken delivery by millers/dealers through the Corporation, their remedy was to approach the State Government. They cannot through the arm of FCI recover the amount deposited by the Corporation which belongs to millers/dealers who are the other writ petitioners. Such facts do not involve any dispute. I have

¶272

W.P(C) No.7862/10 & conn.cases

¶273

-:47:-

¶274

already come to a conclusion that the decision to refix the price for the lifted quantity of wheat was unilateral. That apart, to adjust the amounts deposited by the Corporation towards the enhanced value of wheat was quite arbitrary and therefore this Court is entitled to entertain the writ petitions and pass appropriate orders.

¶275

Having regard to the fact that I have already come to the conclusion that the decision to enhance the price for wheat already supplied was unilateral and not binding on the Corporation or the petitioners, the writ petitions are to be allowed as follows:

¶276

(i) It is declared that the decision to enhance the price of wheat, already supplied is not binding on the writ petitioners and they are not liable to pay any excess price to the FCI or Central Government.

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(ii) In WP(C) No. 37758/2010, Ext.P26 is quashed. The respondents are directed to refund an amount of `7,72,60,970/to the Corporation with interest @ 9% per annum from 1^st January, 2010, till the date of payment. The payment shall be made within

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W.P(C) No.7862/10 & conn.cases

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a period of one month from the date of receipt of a copy of this judgment.

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(iii) On receipt of the amount from FCI as directed in WP(C) No. 37758/2010, the Corporation shall, within one month thereof, refund to all the petitioners the amount deposited by them with interest, for the unlifted quantity of wheat, after adjusting the amount already paid.

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(iv) The demands made by the Corporation for enhanced price for the wheat already taken delivery by the petitioners are quashed.

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(v) Corporation shall not be entitled for handling charges for the unlifted quantity of wheat.

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Sd/- A.M. SHAFFIQUE, JUDGE

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//True Copy// P.S to Judge

Peekay Roller Flour Mill & Others v. Kerala State Civil Supplies Corporation

Case brief

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Peekay Roller Flour Mill & Others v. Kerala State Civil Supplies Corporation

Case brief

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What the court decided

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