Allowed

S.V Industries Modern Rice Mills v. Food Corporation of India., Regional office, 3rd floor

Telangana HC12 Apr 2023WP/1274/2010

Case brief

AI extract

What is this about?

The court set aside recovery letters issued by the Food Corporation of India to rice millers for alleged excess payments, as no show cause notices or hearing were provided before recovery, violating principles of natural justice. The court left it open for the respondents to take appropriate steps in accordance with law.

What did the court decide?

The impugned recovery letters/proceedings were set aside; it was left open to the respondents to take appropriate steps in accordance with law.

S.V Industries Modern Rice Mills Vs… — Constitutional and Fundamental Rights | Telangana HC (2023)

¶1

[³¹⁶⁸ ]

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction)

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WEDNESDAY, THE TWELFTH DAY OF APRIL TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HON'BLE SRI JUSTICE K. LAKSHMAN

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WRIT PETITION NOs. 1 272, 127 4, 127 6,1284,1 286.1 303.1 31 6.1298 AND 1300 0F 2010

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WP NO: 1272OF 2010

¶8

Between:

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Sri Sathya Sai & Co,, Jammikunta, Karimnagar District Rep. by its Managing Partner Sri D. Upender S/o. Ramaiah 68^yrs

¶10

...PETITIONER

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AND

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Food Corporation of lndia., Regional office, 3rd floor, HACA Bhavan,^Opp: Public Gardens, Hyderabad rep.by its General fvlanager

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Food Corporation of lndia., District office ,Karimnagar, Rep.by^{its District} Manager

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J. Goverhment of lndia, Ministry of Consumer Affairs, & Public^Distribution Department of Public Distribution Krishi Bhavan. New Delhi

¶15

...RESpoNDENTS Petition under Article 226 ot lhe Constitution of lndia^praying that^{in the} circumstances stated in the affidavit filed therewith, the^{High Court may be} pleased to issue writ ,order or direction more^particularly in the nature of writ of mandamus, declaring the action of the 1st and^{2nd respondentsin recoveringan} amount of Rs.Rs.1 ,45,7761- alleged to be^{an excesspayment fromthe running} bill No.16117 dated 31-12-2OOg from the^petitioner in^{pursuance of its letter} dated 8.2.2008 as illegal, arbitrary,^{violativeof Artlcle14,.19,and300A of the} Constitution of lndia and also barred^{by limitation and consequently dirtect the 1't} and 2"d respondents to refund the^paid amount^{to the petitioner.}

¶16

l.A. NO: 1 OF 2010^(WPMP. NO: 1688 0F²⁰¹⁰⁾

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Petition under Section 151 CPC^praying that^{in the circumstancesstated} in the affidavit filed in support of the^{petition,the High Court may be pleasedto} direct the 1st and 2nd respondents to^{refund the recovered amountof} Rs.145,7761- forthwith,^pending disposal^{of the mainwrit petition}

WP NO: 1274 OF :}'tO

Between

S.V lnJustri rs Modern Rice Mills, Jammikunta,l(anmra:lar Partner rep.by its lt4anaging F' r111er Sri S.Nagaraju,S/o. Vaikuntanr Aqe( ltl) ...pETtTtoNER

¶22

AND

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1 Food Oorgrc, :r[ on of lndia., Regional office, 3rd floor, HA.)A l]havan, Opp: Public Garor n:;, Hyderabad rep.by its General Manager

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2 Food Oorpc,, at on of lndia., District office ,Karimnagar 1, p.by its District Manager

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3 Governmenl cf lndia., I/inistry of Consumer Affairs, & ['u rlic Distributron Deparlment rf Public Distribution Krishi Bhavan, New Ite n, ...*raroroa"r,

¶26

Petition unc,-.r Article 226 of the Constitution of lnr ia prrying that in the circumstance,s stz 1e I in the affidavit filed therewiti, the lligtt Court may be pleased to issur: v^'ril ,order or direction more particl lar y ir ihe nature of writ of mandamus, ,jecla n,l the action of the 1st & 2nd responc onts in recovering an amounts of Rs 7'7, l:17l- alleged to be an excess paynrent fror.n the running bill No 12251 dl 24-11 )- Xl9 from the petitioner in in pursuan,;e of its letter dated 8.2.2008 as arbitr r),, violative of Article 14,19,and 300h of thr> Constitution of lndia and also bar^r)c by limitation consequently direct the^' s & 2nd respondents to refund the said rn ount to the petitioner

¶27

l.A. NO:1OF 201( PMP. NO: 1690 OF 2010)

¶28

Petition un,:.)r Section 151 CPC praying that n the C r<;unstances stated in the affidavit lilr 1 in support of the petition, the l'1igh C orrrt ray be pleased direct the 1s:& i2rr i respondents to refund the recov,:red z nrouTt of Rs 77,2371 forthwith pendin3 r srosal of the main wp

¶29

WP NO: 1276 OF itl10

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Between

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Balaji En.r:r,rises, Jammikunta,, Karimnagar Distr,c t ref,resented by its Managrng Pi rtner Sri Ch. Srimannarayana S/o. Venkat ri rh. ..PETITIONER

¶32

AND

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1 Food f)orpror rtirn of lndia., Regional office, 3rd flrror. ll,(.:A Eihavan, Opp: Public Garrk ns , Hyderabad rep.by its General lVl;rnagr-.r

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2 Food f)orpror rtirn of lndia., District office .Karimnagar, Rercrer;enled by its District fi/z ti^rl(rr Governme,nt cf lndia, tvlinistry of Consumer Affairs, & Put, i<; [)istribution Departrnent rf^rublic Distribution Krishi Bhavan, lew Der ,'

¶35

...uaro,roura

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Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue writ ,order or direction more particularly in the nature of writ of mandamus, declaring the action of the 1st and 2nd respondents in recovering an amount of Rs.Rs.1,53,8691 alleged to be an excess payment from the running bill No.16423 dated 2.1.2010 from the petitioner in pursuance of its letter dated 8.2.2008 as illegal, arbitrary, violative of Article 14,'19,and 3004of the Constitution of lndia and also barred by limitation and consequently dirtect the 1'r and 2nd respondents to refund the paid amount to the petitioner.

¶37

l.A. NO: 1 OF 2010(WPMP. NO: 1692 OF 2010)

¶38

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the^petition, the High Court may be pleased to stay of recovery of the amounts payable in pursuance to the letter of the 1st and 2nd respondents dated 08.02.2008 from the running bills of the petitioners, pending disposal of the main Writ Petition.

¶39

WP NO: 1284OF 2O1O

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Between:

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Mukka lndustries, Jammikunta,, Karimnagar District, represented by its Managing Partner Sri.Jithender Sio. Narayana.

¶42

...PETITtONER

¶43

AND

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Food Corporation of lndia., Regional office, 3rd floor, HACA Bhavan, Opp: Public Gardens, Hyderabad rep.by its General Manager

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Food Corporation of lndia., District office ,Karimnagar, Represented by its District Manager

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Government of lndia, Ministry of Consumer Affairs, & Public Distribution Department of Public Distribution Krishi Bhavan, New Delhi

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...RESpoNDENrs

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Petition under Article 226 of the Constitution of lndia^praying that in the

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circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue writ ,order or direction more particularly in the nature of writ of mandamus, declaring the action of the 1st and 2nd^respondents in recovering an amount of Rs. Rs.1 ,44,968i- alleged to be an excess^{payment from} the^{running bill} No.12115 dated 21.11.2009 from the^petitioner in^pursuance of its^letter dated

¶50

¶51

8.2.2008 as llegal .rrbrtrary, violative of Article 14,19 and 3l(.A cf the Constitution of lndia and alsc o:rrred by limitation and consequ:ntly li tec. the 1't and 2nd respondents lo^'el rrd the paid amount to the petitiorer.

¶52

l.A.NO:1OF201{@

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Petition unr: :r Sr-.ction 151 CPC praying that ir the cirr umstances stated in

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the affidavit filed ir s rpport of the petition, the High C0urt rn a1, be pleased to direct the 1st and 2nd r:spondents to refund the recovered anro rnt of Rs.l ,44,9681 forthwith, pendir,q is posal of the main writ petition

¶55

WP NO: 1286 OF ; il'0

¶56

Between

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Bachu Veer n'allaiah lndustires, Modern Rice It4ill, Jan riktnta, Karimnagar Districl,rep.: / its Managing partner Sri.Bachu /ishcl, Ktmar, S/o.Veera Mallaiah aqe 1'lbout 52 years ...pETlroNER

¶58

AND

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1 Food Corgror rtion of lndia., Regional office, 3rd fl ror t-1,( )A []havan, Opp: Public Gardt^-rs,, Hyderabad rep.by its General M rnage'

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2 Food C)orpor rtion of lndia., District office ,Karimnagar, Ile;p.b 7 its District lt4anager

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3 Governme,nt ,rf lndia, lvlinistry of Consumer Affairs, & P tkrlic [)istribution Departmert rf^Dublic Distribution Krishi Bhavan, \erv L e: ni

¶62

Petition und :r Article 226 of the Constitution of lndi;: ,r,,r;ffi:[:i?"=1;: circumstances s,ta :<l in the affidavit filed therewittt, the tligh Court may be pleased to issu€ rr rit ,order or direction more particularly irr lhe nature of writ of mandamus, cteclar rr: the action of the 1st and 2nd r()spon( e tts in recovering an amount of fls.ll:; 1,03,994/- alleged excess payrrenl frorn the running bill No.12116 dated 1l .'1.2009 from the petitioner in prrsuar cr> o1 its letter dated 8.2.2OO8 as illegal, arbitrary, violative of Article 14, l9,irnd :lCt),\ of the Constitution of lndia and also^,arred by limitation and conseque ntly dir ect the 1't and 2nd respondents to relr n(I tl're paid amount to the petitiont:r.

¶63

¶64

l.A. NO: 1 OF 2010(WPMP. NO: 1702 OF 2010)

¶65

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the 1st and 2nd respondents to refund the recovered amount of Rs.1,03,9941 forthwith pending disposal of the main writ petition

¶66

WP NO: 1303 OF 2010

¶67

Between:

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G. Rajamouli Modern Rice & Oil Mill,, Kothapally (V), Karimnagar District, rep.by its Managing Partner G. Rajamouli, Sio. Bucchi Rajam, Aged about 58 Yrs'

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...pETraoNER

¶70

AND

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Food Corporation of lndia., Regional office, 3rd floor, HACA Bhavan, Opp: Public Gardens, Hyderabad rep.by its General Manager

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, Food Corporation of lndia., District office ,Karimnagar, Rep.by its Diskict Manager

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2 Government of lndia, Ministry of Consumer Affairs, & Public Distribution Department of Public Distribution Krishi Bhavan, New Delhi

¶74

...RESpoNDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to.issue writ ,order or direction more particularly in the nature of writ of mandamus, declaring the action of the^'1st and 2nd respondents in recovering an amount of Rs.2,13,204! alleged excess^payment from the running bill No.12123 dated 21.11.2009 from the petitioner in pursuance of its letter dated 8.2.2008 as illegal, arbitrary, violative of Article 1 4,'l 9,and 3004 of the Constitution of lndia and also barred by limitation and consequently dirtect the^'1't and 2nd respondents to refund the paid amount to the petitioner.

¶75

l.A. NO: 1 OF 2010(WPMP. NO: 1721 OF 2O1Ol

¶76

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the^petition, the High Court may be^pleased to direct the^'lst and )nd respondents to refund the recovered amount of^{Rs-2,13,2O41-} forthwith, pending disposal of the main writ^petition

¶77

WP NO: 1316 OF 2010

¶78

Between:

¶79

Ramlaxman Enterprises, Jammikunta,, Karimnagar District, represented by^lts Managing Partner Sri M.Raja Laxmaiah S/o.Ramalingam ...pETt.oNER

¶80

¶81

AND

¶82

1 Food^rlorpo alion of lndia., Regional office,3rd floor, l-A )A Bhavan, Opp: Publc Garrl rns, Hyderabad rep.by its General fuianaq( r

¶83

2 Food^(lorpo alion of lndia-, District office ,Karimrragar, R,rprersented by its District lvlarr rgrer

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3 Governm,:n or lndia, It4inistry of Consumer Affairs, & F ublic Distribution Departme,rrt,rf Public Distribution Krishi Bhavan, New [)e:lhi

¶85

...RESpoNDENTS Petition unr er Article 226 of the Constitution of lnrl ; praying that in the circumstancos sti :oC in the affidavit filed therewith, th€^-1ig r Court may be pleased to issur; : vrrit ,order or direction more particularl'y irr ther nature of writ of mandamus,^,iecla n I the action of the 1st and 2nd responJ( nts in recovering an amount of Rs Rs i 4 7531- alleged to be an excess paymerrt frorn the running bill No.13756 dertecl^{- t)} 12.2OO9 from the petitioner in pursuarr:e cf its letter dated 8.2.2OO8 as illecyal arbitrary, vrolative of Article 14,19,and^.3r)()A of the Constitution of lndia and als;c cirrred by limitation and consequ,lntly rlr tec the^'1"1 and 2nd respondents to^-r:l rrd the paicl amount to the petitioner.

¶86

l.A. NO: 1 OF 201( PMP. NO: 1740 OF 20101

¶87

Petition unrl rr Section 151 CPC praying that in the c rCUmstances stated in the affidavit f led ir s rpoort of the petition, the High Court m r1, be pleased to direct the 1st and 2nC^-eipondents to refund the recov(,red an:urt of Rs.84,7531 forthwith, pendirq^li-. posal of the main writ petition.

¶88

WP NO: 1298 OF : 0'0

¶89

Between

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Kanaka Dur-, ra lndustries, [/odern Rice Mil,OPP: FCl, J,trnmiliunta,Karimnagar Partner rep l,y its l\ilanaqinq Partner Sri P.Srinivas,S/o.l)r;rbhakar.AUgg{l_?A*.^

¶91

AND

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1 Food Oorpclrlion of lndi;r., Regional office, 3rd fl,)or tl,( )A tlhavan, Opp. Public Gardt rs;, Hyderabad rep.by its General M;rnage'

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2 Food Corpcr rtion of lndia., District office ,Karimnagar, Rr:p.b'7 its District lVlanager

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3 Governmernt^,rf India., It,4inistry of Consumer Affai-s, & F uirlic Distribution Departmelt^{,f Dublic} Distribution Knshi Bhavan, \ew De a,

¶95

...*arrOn oa^ra Petitioir und:r Article 2'26 of the Constitution of India prayrng that in the circumstances s;ta :rl in the affidavit filed therewittr, thr: Iliqh Court may be pleased to issue '/^-it ,order or direction more particu arly il the nature of writ of mandamus, declar r{ the action of the 1st respondert recc,, }rinll an amounts of Rs 1,22,6541. allt:t :il excess payment from the running bi I l{o 12250 dt 24-11-

¶96

¶97

2009 from the petitioner in in pursuance of its letter dated 8.2.2008 as arbitrary, violative of Article 14,19,and 3004 of the Constitution of lndia and aslso barred by limitation and consequently dirtect the 1"t and 2nd respondents to refund the paid amount to the petitioner.

¶98

l.A. NO: 2 OF 2010(WPMP. NO: 1715 OF 2o1ol

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Cou( may be pleased direct the 1st respodent to refund the recovered amount of Rs 1,22,6541 forthwith pending disposal of the main wp

¶100

WP NO: 1300 OF 2010

¶101

Between:

¶102

Karuna Traders Rice, Oil & General Merchants, Jammikunta,, Karimnagar District, represented by its Managing Partner Sri.P. Shankar, S/o. Venkataiah. ...PETITIONER

¶103

AND

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'1 . Food Corporation of lndia., Regional office, 3rd floor, HACA Bhavan, Opp. Public Gardens, Hyderabad rep.by its General Manager

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Food Corporation of lndia., District office ,Karimnagar, Represented by its District Manager

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Government of lndia, Ministry of Consumer Affairs, & Public Distribution Department of Public Distribution Krishi Bhavan, New Delhi

¶107

...RESPONDENTS

¶108

Petition under Article 226 ot the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue writ ,order or direction more particularly in the nature of writ of mandamus, declaring the action of the^'1st and 2nd respondents in recovering an amount of Rs.Rs.1,39,054/- alleged to be an excess^payment from the running bill No.12124 dated 2'l .11.2009 from the^petitioner in pursuance of its letter dated 8.2.2008 as illegal, arbitrary, violative of Article 14,19,and 300A of the Constitution of lndia and also barred by limitation.

¶109

l.A. NO: 1 OF 2010^(WPMP. NO: 1717 oF 2010)

¶110

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the^petition, the High Court may be^pleased to direct the 1st and 2nd respondents to refund the recovered amount of Rs.1 ,39,054/- forthwith, pending disposal of the main writ^petition Counsel for the Petitioner: Ms. SWAPNA, COUNSEL FOR

¶111

SRI CH. RAVINDER

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(ln all the Writ Petitions) Counsel for Respondents: SRI YADAIAH

¶113

(sc FoR Fcr)

¶114

(ln all the Writ Petitions)

¶115

The Court made the following: COMMON ORDER

¶116

1IIF] HOn$III,I4 SRI ,IUSTICE K.LAKI;ItM,{N WItl'l Pl.- I'IION NOs.l272 1274 1276 t2 i6 1303,131(r ,,t298 AND r300 0F 2010

¶117

(-'0N'l M Ol.{ ( )rli:l) llI{ :

¶118

i\1s. Sua rna. learncd counsel, representing Mr.l]:i. Rrrvindcr lcarned

¶119

counscrl lirr r. c pctitionors would submit that the lis i,r tlLe prcscnt writ pctrlrons srlLLrr ety covcrcrl by the order datcd l0.ll.20)-';. in W.I,.\o.25070 of 2()08 rrtc b trh

¶120

lu \ i(,'\ ol the sairl subrnission, ttrese wri pi:trt rrrs z re disposed oi' in tcrnrs ol' .ltr s rio older

¶121

('ons:r1 e-rtly, rlisccllaneous petitions. ilrrnl , prr)ding in thcse writ

¶122

pctitions. slrLI s and closed

¶123

SD/'T.^JAYASRf-T ASI;^{I :)TAhLT REGISTRAR} //TRUE^COPY// si#r*^oFFrcER

¶124

\ To, 1 r L e^(; c.,'^{I L4 an ase r roo d colt""Jsl} fi l."J,Xt*^{i ;5rTX' ii!} ffi Utti?"#.. HAcABrr;r^{arr,opp:Put)rrcESlXIi"il,i,i'Jtr,i-ia.ostrLrnffi':e.Karimnagar'} 2 3 i* ll';ll, I:3ifl3ii"5;:"i;i.fi';i'c;;"mer^{An;tirs' ':' Pt bricDrstribution} I^:ii,i3{; j;tlUi;i:il'ii'""'x"'i'i1an'"'n'116'6')r'rhi 4 5 H"iX .E^{i,, iii il.ijltr'} *:},"r:,t"o fffl"iSE !?'#., *. ruor0^{or 2008)} iaiJrriwlr^{'r I copy of order dateo ru' t t''vL' ttt ""} 6. Two UD^(: P^es MBC GJP 'fi^-

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HIGH COURT

DATE D: 1210412023

COUIMICN ORDER

WtllI PETITION NOs.1272, 127,4, 1276, 1284, 1286,1303,1316 1298 AND r3oo oF 2oro

¶130

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¶131

DISPOSING OF THE WI?IT PETITIONS

¶132

Wl-tl{CrUT COSTS

¶133

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¶134

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¶135

TION'BLE SRI JUSTICE K. LAKSHMAN

¶136

WRIT PETITION Nos.25070 28864 & 28866 0F 2008 28073 & 28s81 C)F 2009 & 413,465.520, s48. 57 4. s78. 608. 609. 659. 828. 834. 1086. 1089. 1r23 . 1130. 1285. 1287.1297.1315. 1460 1462¹⁴⁶⁵ 2046.2889, 2893.4843.4928.13676 &29272 0F²⁰¹⁰ &¹⁵⁵⁴⁶ 0F 2011 AND l0s2 0F 2012

¶137

COMMON ORDER:

¶138

The /x involved in the present batch of writ^petitions is similar. Therefore, they were heard together and are being disposed vide the following common order

¶139

Heard Mr. P. Balaji Varma, Mr. R. Sudheer, Mr. S. Naveen Kumar, learned counsel representing Mr. Ch. Ravinder and^Mr. Kamatham Govardhan Reddy, learned counsel for respective^petitioners, Mr. Meherchand Nori, Mr. Dantu Srinivas, Mr.^{Yadaiah and} Mr.^G Jayaprakash Babu, learned Standing Counsel^appearing on^behalf of Food Corporation of India and Mr. Gadi Praveen^Kumar, leamed^Deputy Solicitor General of India.

¶140

The Petitioners are rice millers who^supplied their^quota of 50'/, of their procured rice under the A.P.^{Rice Procurement(Levy} Order), 1984 (hereinafter^'1984, Levy Order')^{on the levy price fixed by} the Food Corporation of India^{(hereinafter'FCI') for the year 2000-01.}

¶141

¶142

KL. <sup>I ! l5(r7l^(:1003 &bar.h

¶143

Subseqr.rcntlr. .ltc Pctitrouers tnade a declarati<,n ,tl' ti: rr:tnait-ting rice stock as on .iCt )!r.2001 (ivhich rvas left after supPlying tlrc 5 0% cluota) as procured by th ;nr for thc 1,car 2000-01

¶144

Subs :c;uently, the [rCI fixed the procuremen:^,ric: for the crop year 200 t-02. n the meanwhile, the Central Governrr e rrt announced the F-ood tbr WorI Schcmc. As parl of the said scherne. the^rC] procured the remainin.r.r stor 'r rf ricc of thc crop year 2000-01 Ictl rvirh the Petitioners (alier supptl, r I the rnanclatory, 50oh quota). Th: said I:rnaining rice of the crop year 2()0()-0 I ri,as de livered by the Pctitiorre^'s liom October 2001 to ,Iarcf 2002. For the said excess rice o^-the(:)',)p vear'2000-01, FCI paid the [' 'titioners thc price fixed for the cr rp yurr 20( l-02

¶145

,\r- r uclit was conducted by the Conrptrollor and Auditor General (hcrcr a ier'ClA(i') and it was found th,rt cxcrs,s plyments were r-nade by the Irt^'l The^(lA(l Report noted that thc exces:, ric: procured as part of the For I fbr Work Scheme fiom the Petitione rs by the FCI was fi'on-r the crol year 2000-0 I and paynent v,as rril(lc lbr the said procurement b rs:d on thc pricc fixed for the year 2,)()l-02. The CAG Rcport state(.l 1 rat pricc llxcd lor the crop year 200 I-[) .] ci]nnot be paid fbl the batches,tl rice that wcrc milled during 2000-()l. Ilerrce, the CAG

¶146

¶147

KL,J w I'. No.25070 o1 2008 & bnrch

¶148

Report recommended that the excess payment shall be recovered from the Petitioners.

¶149

Based on the findings of the CAG Reports, the impugned letters were issued to the Petitioners wherein it was stated that the excess payments made for the left-over quantity of rice of the year 2000-01 will be recovered from the Petitioners by deducting^{the differencebetween} the levy price hxed for the year 2001-02 and levy^price fixed^for the^year 2000-01. The FCI in certain cases, where bills were submitted for payments for the rice supplied in the subsequent years, deducted the amounts that were paid by them to the Petitioners^for supply of^excess rice during October 2001 to March 2002.

¶150

Therefore, the question before this Court^{is whether the levy} price fixed for the year 2001-02 will apply to the remaining/excess rice milled during the crop year 2000-01 and supplied^{duringOctober 2001} to March 2002 by the Petitioners and^{whetherthe FCI was justifiedin} recovering the alleged excess payments by issuing^{the impugnedletters} based on the CAG Report.

¶151

8. Contentions of the Petitioner:

¶152

1 The Petitioners contended that the FCI can^{mandatorilyprocure} only 50% of the total rice milled by the^{Petitionerson the levy}

¶153

¶154

K I-.I \ l' N, l507rl ol-lo0li & balch

¶155

pnce li^.ie d by thcnr ancl the Petitione ls ar,r ll'crl to sell the remaini rgl 50% in^(hc opcn tnarket

¶156

ii. Rice rr-illers likc tlrc [)etitione rs retain the rcrr aining stock sonrelin c:,, rn casc thc rrarket price is not proli abl: and sell the sanrc Iat .:r

¶157

lll Thc lcr^,z price fixcd by the Govemnrelrt rulc cr the 1984 Lcvy Order is brsed on thc cxisting market pricc fbr .h,rt particular crop

¶158

yerr. 1f ,; lsvy pricc lixcd lbr the ycar 2001-(12 r,'as similar to the ex,sl in [j rarkct pficc

¶159

tV Therelir c. the Petitioncrs rvhose ricc was, procur cd rfter the lcvy pricc ur s llxed lor thc year 2001-02 shall be rz icl :,uch price, as thc'sanr' rvas basecl on the then existing markcl r:rtr'. Though the rcrrainir g rice rvas ol-thc crop year 2000-)1, th: l;CI sha11 pay thc pricc {i r .r' lirr thc 1,car 2001-02

¶160

excess '. The l;(- could not have directly deducted thr. alleged pavm(rr rlithout issuing a show cause notrce

¶161

VI The I;( I c.ruld not have issuefl the irnpugned [r ttr:rs and deducted the al cr^(i([ excess l]avnrcnt solely by relying orr .he 3AG Reporl Reliancr vias placcil on EN{I'A Coal Ltrl. r,. l(:rrnrrtaka Power

¶162

¶163

KI-.J w.P. No.25070 of2008 & batch

¶164

Corporation Ltd.r, Pathan Mohammed Suleman Rehmatkhan

¶165

v. State of Gujarat2 and Arun Kumar Agarwal v. Union of India3

¶166

vll. The Court in exercise of its powers under Article - 226 of the Constitution of India can interfere in contractual disputes involving public law to set aside arbitrary actions ofthe State.

¶167

vlll. Reliance was placed on Food Corporation of India v. Seil Ltd.a and Bakshi Security and Personnel Services Pvt. Ltd. v Devkishan Computed Pvt. Ltd.s.

¶168

Contentions of the Respondcnts^(FCI):

¶169

i) The levy price of crop 2000-01 will apply to the rice milled during the said period. The levy price of the subsequent crop year 2001-02 will apply only to the rice milled and supplied during the said period. The remaining rice though procured during October 2001 to March 2002 was milled and belonged to the crop year 2000-01. Therefore, the levy price ofthe year 2000-01 will apply to the procurement of excess/remaining rice as on 30.09.2001 as declared by the Petitioners

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LR 2016 Kar. 2025 2014) 4 SCC 156 2013) 7 SCC l 2008) 3 SCC 440 20r6) 8 SCC 446

¶171

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KL..r \i ' \r,2t070 {rl .r(x)li & batch

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ii) FC I ': s iustillcd in lccovering the ac ditic,r ai/exless payment

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rne(l( l'y thcm as thc sanrc was based on zur .,udlt repoft from thc^(- A^(i.

¶175

iii) Fixi: r: o1' lcvy pricc is a policy decis on ar<l the Court under Artrc e - 226 cannot intcrl'ere in such p rlir.:v^rle :isions. Rcliance u,as rlzLccd or.r Statc of LJ.P. v. Uttar Prad:sh Fiajya Khanij \rik:r,, Nigan Sagharsh Samiti6 and Foorl Corporation of

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lnrli: r. Ilhanu Lodh7.

¶177

ir )^'Ihc .rirttcr involves sc\ cral disputed quest orts ol fact which cann^,t be decided by this Court under Article 22(. Funher, the issuc i:; a civil disputc relating to Ieco\e r',, o1' thc alleged pa!'rr rlr rts. Thcrclbre, thc Petitioners hirvc to ill)llr()ach the civil court Ilcliancc u'as placed on State of ti P. r'. Bridge and Rool^(1o.8.

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Fir dings of the Court

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excess

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i) rr relevant to notc that recoveq of ttrr: alleged

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payment-\ alrer C'r rnacle by the IrCI has civil c )nseq r(:nce s r.l'h ich will result in a cr: u niary loss to thc Petitioners. I-hcle:r:^'e, such actions

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(1008) ll i(L t,r

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1 (1005)3 SCC r, !

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/\ { l()96 -\C r^<

¶185

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KL,J W.P. No.25070 0f2006 & barch

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passed by the State or its instrumentalities shatl be preceded by compliance of principles of naturaI justice.

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ii) The Supreme Court in S.L. Kapoor v. Jagmohane has held that actions {raving civil consequences shall also follow principles of natural justice. Tlle relevant paragraph is extracted below:

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"7.^{The old} distinction between a^judicial act and an administrative act has withered away and we have been liberated from the psittacine incantation of "adrninistrative action". Now, frorn the time of the decision of this Court in State of Orissa^y. Dr (Miss) Biaapani Dei [AIR 1967 SC 1269 : (1967) 2 SCR 625 : (1961\ 2 LLJ 266l^.,even an administrative order which involves civil consequences must be made consistently with the rules of natural justice". What are civil consequences? The question was posed and answered by this Court in Mohinder Singh Gill v. ChieJ' Election Commissioner, New Delli [(1978) 1 SCC 405, 440, 441 : (1978) 2 SCR212,308-3091 Krishna Iyer, J., speaking for the Constitution Bench said (at pp. 308-09): (SCC p. 4a0, para 66)

¶190

"But what is a civil consequence, let us ask ourselves, by passing verbal booby-traps? 'Civil consequences' undoubtedly cover infraction of not rnerely property or personal rights but of civil liberties, rnaterial deprivations and non-pecuniary darnages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence."

¶191

'. lreroy^{+ scc tze}

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¶193

KL.. ! '] (, 2iol(r^,ia 1003 &^batch

¶194

Thc ir: n :ci Jutlge theu grrocceded to quote lioni^{B l: :k's[-egaI} L'tic t io r trr, ;tnd to consitlcr the interest o1 a^{c,rlt< ldalc ata} prrrlirrr r:r'tary elcction. IIe tinally said: (SCt^' p 4t l.^{para 66)} h: appcllant has a right to ha,e tht^:lcttion co rtl rcred not :rccorrlitrg to hutnour or hul^{ris- but} a c(t!)t li rg to lau antl iustice. .Attd so nl'tuta^rll:;tice Calll I' ,t be stumped out on this score. Itt the rt:gio l of publi aw locus standi and person aggriei'ed,^{r qlrt and} intcrr il have a broadcr itrtport."

¶195

iii) [i rrhcr, dcaling \vith similar cases^{rvlt,:rrr a legedexcess} paylnents wcr' ' t ecove red ft'onr the rice rnillers^{basedtrtt OAGReporls,} the Andhra [)r :d :s]r Iligh Ciourr t'ide order dated^{2E.()l'.1,02t in W.P. No} 14813 ol 2(r2 ;1cl orcler dated 221.08.2021 i1^{\V.['. ].kr. I 7586} ol²⁰²¹ has held that ,u;h actions ol' recovery of allelred^{e):c,lss paynlent has} civil conscqLre rccs and an o1-rporlunity o1'hearing^{shiril llc} 1;rantcd^{to the} aggrievetl l)crt t.ioncrs thereirr.^'Ihe rclevant^{pa agraph', o' order dated} 28.01 .2021 in ,!'P. No. 148 l3 of-2021 areextrat;tedb,:[rrrv

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"(r. I i r scttlcd and rvell established pri rciple o.'la,r that whor' 'r rv action has civil cousequengg5,^rhe satri.^t.nustbe prccrtlt I by a notice to the pcrsons likcly to be cllcc ed bv such ac ion. A perusal ol'the irnpugned pro.:eediner; tliscloses in clca. ru-d vivid tcrnrs that on the basis ofthe repcr o1'ClA(i. thc r,:s1 orrdents 2 ancl 3 have initiatcd thc iurpuolcd actiorr ard thr: r.nprrgncd ordcr does not indicatc a r,,tl n r irs r,lgards

¶197

¶198

KL.J W P No.25070 of2008 & batch

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issuance of show cause notices prior to resorting to the unpugned actlon.

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In the considered opinion of this Cout, the said action on the part of respondents is a patent violation of principles of natural justice, and on this ground alone this Writ Petition is liable to be allowed."

¶201

iv) In the present case, no show cause notices were issued and no opportunity was afforded to the Petitioners before initiating the recovery of the alleged excess payment. Any action or order passed by any authority without the compliance of natural^justice is illegal. In absence of compliance of principles of natural^justice, any relief granted to the Respondents will perpetuate illegality which is impermissible

¶202

v) According to this Court, the question whether the levy price fixed for the year 2001-02 will apply to the remaining/excess rice mills during the crop year 2000-01 and supplied during October 2001 to March 2002 by the Petitioners and whether the FCI was^justified in recovering the alleged excess payments by issuing the impugned letters based on the CAG Report need not be decided at this stage as no opportunity of hearing was granted to the Petitioners

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KI -.J !^f'. No 25010 rii 200S & batch

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I l.^,(lt nr:lusion

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i) TJrc elbre, the impugned letters/procet:dingls ; re set aside.

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ii) ln vLerv of the aforesaid discussior, rt^js lefl open to the

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respondents to [ake appropriate steps in accordatLce rt,ith lar'r

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