Dismissed

Sri Selvakkumaran Modern Rice v. the Managing Director

Madras HC9 Oct 2017WP/3345/2011

Case brief

AI extract

What is this about?

The Court dismissed a writ petition seeking quashment of an order blacklisting a rice mill proprietor for mixing unconnected PDS rice with supplied paddy. Relying on lab reports and analysis certificates, the Court found no grounds to interfere with the respondent Corporation's decision to terminate the agreement under the contract terms.

What did the court decide?

The writ petition filed to quash the termination order and seek supply of paddy was dismissed. No costs. Connected miscellaneous petitions closed.

Sri Selvakkumaran Modern Rice Vs the… — Contract and Commercial Disputes | Madras HC (2017)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 09.10.2017

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CORAM:

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THE HONOURABLE MR. JUSTICE S.VAIDYANATHAN

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W.P.No.3345 of 2011

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Sri Selvakumaran Modern Rice Mill, rep. by its Proprietor, B.Velusamy, S/o.Bagavathi Appagounder, No.56, Bangalapudur, Kangeyam, Tiruppur District. ... Petitioner vs.

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The Managing Director, Tamil Nadu Civil Supplies Corporation, Tambusamy Street, Kilpauk, Chennai 600 010.

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The Regional Manager, Tamil Nadu Civil Supplies Corporation, Erode.

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The District Revenue Officer, Tiruppur, Tiruppur District. ... Respondents

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Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a writ of certiorarified mandamus, calling for the entire records relating to the order passed by the 2nd respondent in his proceedings Na.Ka.No.4754/2008/PS-2, dated 30.12.2009, confirming the impugned order passed by the 1st respondent in his proceedings Na.Ka.No.MP.2/75467/2009, dated 31.01.2011 and quash the same and consequently direct the respondents 1 and 2 to supply paddy to the petitioner's rice mill for hulling purpose.

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The petitioner has come up with this Writ Petition seeking to quash the impugned order dated 31.01.2011, passed by the 1st respondent in his proceedings Na.Ka.No.MP.2/75467/2009 and for a consequential direction to the 1st and 2nd respondents to supply paddy to his Rice mill for hulling purpose.

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https://hcservices.ecourts.gov.in/hcservices/

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According to the petitioner, he is owning a modern Rice Mill in the name and style of 'Sri Selvakumaran Modern Rice Mill' for the past several years and he is acting as a Hulling Agent for Tamil Nadu Civil Supplies Corporation for many years. As per the procedure of Tamil Nadu Civil Supplies Corporation, paddy is supplied to rice mills for hulling purpose, only based on the deposit made by the rice mill owners/hulling agents in favour of the 'Tamil Nadu Civil Supplies Corporation'. In this connection, the petitioner deposited a sum of Rs.1 lakh as cash with the 1st and 2nd respondents and gave a Bank Guarantee to the tune of Rs.11 lakhs in their favour. Accordingly, the Tamil Nadu Civil Supplies Corporation supplied paddy to the petitioner for hulling purpose only to the extent of Rs.12 lakhs.

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In the course of hulling process, on 31.07.2009, the Vigilance officials of the 1st respondent came and inspected the petitioner's rice mill and verified the stock position of the paddy supplied by them and resultant rice and found that all the stocks are intact, however, they separated 200 bags of rice from the stock, put them in one room and sealed the room on the ground that they have got suspicion that 200 bags of rice are PDS rice. Thereafter, on 09.09.2009, the petitioner handed over the said rice bags to the Tamil Nadu Civil Supplies Corporation Godown, Kangeyam for safety purpose and approached the respondents and explained them that Tamil Nadu Civil Supplies Corporation is supplying paddy for hulling purpose and resultant rice has to be distributed to PDS shops and hence, he is manufacturing PDS rice in his rice mill as per the terms and conditions of Tamil Nadu Civil Supplies Corporation.

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But, without looking into the explanation given by the petitioner, the 1st respondent directed the 3rd respondent to seize 200 bags of rice and also directed the 2nd respondent to black list the petitioner's Rice mill and cancel his hulling agency and in that regard, the 2nd respondent issued a show cause notice to the petitioner. Aggrieved by the same and having no other alternative, the petitioner approached this Court in W.P.No.19337 of 2009, and this Court directed the petitioner to make a representation to respondents 1 and 2. In the meantime, the petitioner submitted his explanation to the respondents in respect of the above show cause notice. However, without passing any orders, the 1st respondent sent a fax message to the Vigilance Officer of the 1st respondent Office to seize the entire 200 bags of rice and hand over the same to the District Collector, Tiruppur District.

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Thereafter, the petitioner again filed a Writ Petition in W.P.No.20158 of 2009 seeking a direction to respondents 1 and 2 to supply paddy to his rice mill for hulling purpose. On 30.11.2009, this Court disposed of the said Writ Petition, directing the 2nd respondent to pass final orders on the show

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cause notice with an observation that if it is against the petitioner, appropriate proceedings can be initiated in the manner known to law.

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Pursuant thereto, the 2nd respondent passed an order on 30.12.2009, blacklisting the petitioner's rice mill and cancelling his hulling agency. Seeking to quash the same, the petitioner approached this Court in W.P.No.181 of 2010, and by an order dated 06.01.2010, this Court granted an order of stay of all further proceedings. Thereafter, the said Writ Petition was disposed of directing the petitioner to prefer an Appeal before the 1st respondent herein. Accordingly, the petitioner preferred an Appeal before the 1st respondent, however, the same was rejected by the 1st respondent vide proceedings dated 31.01.2011 without assigning any reason. Aggrieved by the same, the petitioner has come up with the present Writ Petition.

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Denying the averments and allegations of the petitioner, the 2nd respondent has filed counter affidavit and has stated that while hulling 2008-2009 season paddy, Vigilance Cell of the 1st respondent (Head Office Team) had inspected the petitioner's Mill on 31.07.2009 and found that 200 bags of Common Rice (PDS rice 10 MTs) were found in the mill premises and the rice sample was drawn by the Vigilance Cell in the presence of the petitioner and confirmed that the rice (i.e. 200 bags) was mixed with PDS rice over and above the admixture norms. The petitioner had acknowledged the variety and quality of paddy supplied to him without any reservation. As such, it was confirmed that the miller was indulged in malpractice, such as diversion of paddy given for hulling and also procuring PDS rice illegally and recycling it as hulled rice. Hence, as per the instructions of the Vigilance Officer of the 1st respondent Corporation, the above said 200 bags of rice had been kept under safe custody in a separate room in the mill premises and the room was locked and sealed in the presence of the petitioner.

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According to the 2nd respondent, pursuant to the order dated 18.09.2009 passed by this Court in W.P.No.19337 of 2009, the explanation given by the petitioner was carefully examined with reference to the analysis report on the sample drawn from the rice available in the petitioner's Mill. Since it was found that rice was mingled with PDS rice to the tune of 4.6% and that the petitioner had indulged in malpractice and had violated the terms of the Agreement executed by him, his Hulling Agency was terminated by blacklisting his name vide proceedings of the 2nd respondent, dated 30.12.2009.

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It is the further case of the 2nd respondent that the petitioner ought to have supplied only resultant rice of the same variety of paddy supplied to him, but, he tried to supply unconnected rice to the respondent Corporation. The 2nd

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respondent went on to state that since the petitioner had indulged in malpractice, in gross violation of the terms and conditions executed by him by keeping 200 bags of unconnected rice to the tune of 10.417 Mts, worth of Rs.2,60,425/-, as such, the petitioner is liable to remit the said sum towards the loss sustained by the Corporation, failing which, the said amount is liable to be recovered from the security deposit amount of Rs.1,00,000/- and the balance amount from the Bank Guarantee.

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It is the contention of the learned counsel for the petitioner that the respondent-Corporation is not able to identify the type of rice produced to them with regard to the 200 bags of rice seized from the Godown. He further contended that the findings of the respondent-Corporation that there is a shortfall of 4.6% of rice similar to the one supplied by the respondent is totally unwarranted and incorrect. According to the learned counsel, the said 4.6% of rice is different from the one that has been supplied by the respondent-Corporation for hulling purpose. It is also his contention that the petitioner has deposited a huge sum with the respondent-Corporation and that the samples have not been handed over to the petitioner, when they were taken for lab test and on that score also, the Writ Petition has got to be allowed.

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Learned counsel for the petitioner further submitted that there is a statutory obligation on the part of the respondent-Corporation to furnish a copy of the Analysis Certificate and the samples have got to be produced. He pointed out that yet another Hulling Agent faced a similar problem, but his name was not blacklisted and his Hulling Agency was not cancelled and that he continues to be a Hulling Agent. It is his contention that the respondent-Corporation cannot discriminate the petitioner from that of other persons and that the impugned order dated 30.01.2011 is bereft of details and it has got to be interfered with.

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In reply, learned counsel appearing for respondents 1 and 2 submitted that the respondent-Corporation had supplied a particular variety of rice viz. ASD 16 to the petitioner-Rice Mill for hulling purpose. But, on inspection, it was found that the petitioner had indulged in malpractice by mixing PDS rice with the said variety of rice and there is a shortfall of 10.417 MT of ASD 16 variety of rice. He further submitted that there is an Agreement between the petitioner and the respondentCorporation as regards hulling of paddy and if there is any reason to believe that the Hulling Agent had indulged in malpractice, the Agreement may be terminated by the respondentCorporation and the amount due to the respondent-Corporation may be recovered or adjusted.

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According to the respondent-Corporation, the paddy provided by the respondent-Corporation has to be stored in a Godown and the Hulling Agent is responsible for providing storage and if there is loss of stock due to floods, fire or other natural calamities, the same shall be borne by the Hulling Agent. Having entered into a contract, as the petitioner is found to have been indulged in malpractice by mixing rice supplied by the respondent-Corporation with PDS rice to the tune of 4.6% and that the same was confirmed based on the Lab Report, the petitioner is not entitled to any relief and hence, sought dismissal of the Writ Petition.

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Heard the learned counsel on either side and perused the material documents available on record.

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It is not in dispute that the petitioner is a Hulling Agent of the respondent-Corporation and that a contract has been entered into between the petitioner and the respondentCorporation, based on which, paddy has been supplied by the respondent-Corporation to the petitioner for hulling purpose. Though the petitioner has given an explanation that he is manufacturing PDS rice in his rice mill as per the terms and conditions of the respondent-Corporation, the Vigilance Team of the respondent-Corporation have come to a conclusion that the petitioner had indulged in malpractice by mixing PDS rice with the rice supplied by them. It is seen that the respondentCorporation had come to such conclusion only after drawing samples from 200 bags of rice separated from the stock and confirming the same from the Lab Reports.

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The petitioner has relied on an order dated 30.04.2002 passed by this Court in W.P.No.13476 of 1996 in the case of Tamilarasan vs. State of Tamil Nadu, wherein, the petitioner was not furnished with a copy of the Analysis Certificate. Such is not the case of the petitioner herein. In the case on hand, samples from the separated bags of rice were drawn in the presence of the petitioner and after Lab Reports, he was furnished with a copy of the Analysis Certificate. Thus, the said decision relied on by the petitioner is not applicable to the facts of this case and the contention of the petitioner that the impugned order passed by the respondent-Corporation is a non-speaking order is not acceptable.

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As per clause 12 of the Terms and Conditions of the Agreement entered into between the petitioner and the respondent-Corporation, where there is reason to believe that the Agent had indulged in malpractices or has misappropriated

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https://hcservices.ecourts.gov.in/hcservices/

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the Paddy/resultant rice or gunnies, the Agreement may be terminated by the Principal and the amount shall be recovered from him or adjusted from any amounts due to him from the Corporation, without prejudice to any criminal action that may be taken according to law.

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Thus, when the respondent-Corporation has come to a conclusion with sufficient evidence that the petitioner had indulged in malpractice by mixing unconnected rice to the extent of 4.6% with the paddy supplied by them and that there is a shortfall of 10.417 MT of ASD 16 variety of rice and has even furnished a copy of the Analysis Certificate to the petitioner, this Court finds no reason to interfere with the order dated 31.01.2011 passed by the 1st respondent.

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In view of the above, this Writ Petition stands dismissed. No costs. However, it is made clear that if any amount is due to any of the parties, it is open to the other party to recover the same. Consequently, connected M.P.Nos.2 and 3 of 2011 are closed.

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Sd/-
Assistant Registrar(CCC)
//True Copy//
Sub Assistant Registrar
(aeb)
To:
1. The Managing Director,
Tamil Nadu Civil Supplies Corporation,
Tambusamy Street, Kilpauk,
Chennai 600 010.
2. The Regional Manager,
Tamil Nadu Civil Supplies Corporation,
Erode.
3. The District Revenue Officer,
Tiruppur, Tiruppur District.
+ 1 cc to M/s. O. Selvam, Advocate Sr.72284
+ 1 cc to M/s. C. Selvaraj, Advocate SR.72479
+ 1 cc to M/s. C. Prakasam, Advocate Sr.72499
+ 1 cc to the Government Pleader Sr.72675
W.P.No.3345 of 2011

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CP(CO) EU(24/10/2017 )

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Sri Selvakkumaran Modern Rice v. the Managing Director

Case brief

What is this about?

What did the court decide?

Sri Selvakkumaran Modern Rice v. the Managing Director

Case brief

What is this about?

What did the court decide?

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