Dismissed

Food Corporation of India v. Pallikkal Roller Flour Mills (P) Ltd.

Kerala HC18 Jul 2017WA/1287/2017

Case brief

AI extract

What is this about?

This writ appeal was dismissed. The High Court upheld the single judge's decision that the Food Corporation of India could not retrospectively revise the issue price of wheat after the sale was completed and goods appropriated. The right to property was held to have transferred at the agreed price.

What did the court decide?

Appeal dismissed; the single Judge's judgment holding the price revision invalid is upheld.

Food Corporation of India Vs Pallikkal… — Contract and Commercial Disputes | Kerala HC (2017)

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'C.R.'

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE THE CHIEF JUSTICE MR.NAVANITI PRASAD SINGH &

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THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V

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TUESDAY, THE 18TH DAY OF JULY 2017/27TH ASHADHA, 1939

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WA. No.1287 of 2017 ()

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(AGAINST THE JUDGMENT DATED 27-02-2017 IN WP(C) NO.10210/2010.)

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APPELLANT(S)/ADDL.2ND RESPONDENT:

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FOOD CORPORATION OF INDIA, 16-20, BARAKHAMBA LANE, NEW DELHI-110001, REPRESENTED BY ITS MANAGING DIRECTOR.

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BY ADVS. SRI. T. P. M. IBRAHIM KHAN, SC, FCI (SR.)

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SRI. K. M. ABDUL MAJEED

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RESPONDENT(S)/PETITIONER & RESPONDENT NO.1:

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PALLIKKAL ROLLER FLOUR MILLS (P) LTD., MATTOOR, KALADY-683574, ERNAKULAM DISTRICT, REPRESENTED BY ITS MANAGING DIRECTOR SRI. P. POULOSE.

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THE KERALA STATE CIVIL SUPPLIES CORPORATION LIMITED, REPRESENTED BY ITS MANAGER (PURCHASE), MAVELI BHAVAN, MAVELI ROAD, GANDHI NAGAR, KOCHI- 682020.

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R2 BY ADVS. SRI. N.D.PREMACHANDRAN,SC,SUPPLYCO SMT. MOLLY JACOB, SC R1 BY SRI.S.RAMESH BABU (SR.)

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 18-07-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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“C.R.”

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NAVANITI PRASAD SINGH, C.J. & RAJA VIJAYARAGHAVAN V., J.

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- - - - W.A. No. 1287 of 2017

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- - - - Dated this the 18^th day of July, 2017

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JUDGMENT

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Navaniti Prasad Singh, C.J.

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We have heard learned Senior Counsel for the Food Corporation of India (FCI) at length. They have filed this appeal being aggrieved by the judgment of the learned single Judge dated 27.02.2017 in W.P.(C) No.10210 of 2010. The facts are not in dispute. The facts not being in dispute, with the consent of the parties, we are disposing of this appeal at this stage itself.

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On or about 19.11.2009, Exhibit P1 news paper publication was issued by the Kerala State Civil Supplies Corporation Limited informing all and sundry that under the Open Market Sales Scheme of the Central Government, the rice and wheat collected from the FCI are being distributed by the Corporation to intending persons subject to prices stipulated therein. So far as wheat is concerned, with which we are concerned, the price stipulated was Rs.1,358.20 per quintal. The writ petitioner, the sole respondent, who was running a flour mill at Kalady, paid an amount of Rs.67,95,987/- for

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purchase of certain stocks of wheat under the said scheme. This payment was made on or about 26.11.2009. Later, the writ petitioner was informed by Exhibit P3 dated 09.12.2009 asking of him to ensure that the wheat is utilised for sale in the State of Kerala and that too, at economical prices. He was also asked to pass the benefit of reduced cost to the consumers. The final retail price, for which the commodity was to be sold, was also fixed. Having received the supply of wheat, Company of which the writ petitioner was the Managing Director processed and manufactured Wheat flour, Sooji and Maida and sold it to wholesalers. They informed the Corporation accordingly from time to time.

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On 22.02.2010, Exhibit P6 communication was issued by the Corporation to the writ petitioner in relation to purchase of wheat by the writ petitioner in the month of November-December, 2009 stating that based on observations of the Accountant General, the Board of Directors of the Corporation have decided to revise the issue price of the said supplied wheat to Rs.1,620/- per quintal plus the Value Added tax. The effect is that the wheat that was earlier supplied and consumed by the writ petitioner at the rate of Rs.1,358.20 was now being valued at Rs.1,620/- and the difference

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is being demanded by the Corporation. This is what brought the writ petitioner to this Court.

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The contention of the writ petitioner was simple. The supply of wheat was taken under the Open Market Scheme. It was neither a statutory sale nor a regulated sale in any manner. The sale being complete, there could not be a unilateral enhancement of price subsequently. According to the petitioner, the demand of enhanced price would be clearly without authority of law and thus, arbitrary. The learned single Judge held so and, in our view, correctly.

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The basic principle is that once the sale was complete, the goods having been appropriated, the Corporation had no authority to revise the price retrospectively. The rights over the property stood transferred to the writ petitioner at a price already fixed by the Corporation and paid. Such a demand, if permitted, would amount virtually to tax, as held by the Apex Court in A. Venkata Subbarao and others v. The State of Andhra Pradesh, etc. [AIR 1965 Supreme Court 1773]. Under similar circumstances, we have a Bench decision of the Patna High Court in M/s. Bokaro Roller Flour Mills Pvt. Ltd. and others v. The Union of India

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and others [AIR 1984 Patna 331]. This decision was followed by a

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Division Bench of this Court in Kerala Flour Mills, Mattancherry, Cochin v. The Board of Revenue (Civil) Supplies), Govt. of

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Kerala, Trivandrum and others [AIR 1990 Kerala 14].

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In view of the aforesaid, we see no reason to interfere in