Nivas Ali And Another vs State Of U.P. And 4 Others

Rakesh Pande (Senior Adv.), Ram Prakash Sharma, Vishakha Pande, Yashaswin Venugopal Bajpai

Counsel for Respondent(s)

:

C.S.C.

Court No. - 1

HON'BLE AJIT KUMAR, J.

HON'BLE INDRAJEET SHUKLA, J.

(Per : Indrajeet Shukla,J.)

1. Heard Sri Aishwarya Vardhan, Advocate holding brief of Ms. Vishakha Pande, learned counsel appearing for the petitioners and Sri Pradeepta Kumar Shahi, learned Standing Counsel for the State Respondents.

2. Present writ petition has been instituted with following relief :

"(a) Issue a writ, order or direction in the nature of certiorari quashing the impugned order dated 11.04.2014 passed by the District Food Marketing Officer, Siddharth Nagar-respondent no. 4 and citation dated 26.05.2014 (annexure nos. 22 and 23 respectively to this writ petition)."

3. Brief facts as narrated in the writ petition are, the recovery in question has been initiated owing to non-delivery of Custom Milled Rice (CMR) for the Kharif Marketing Season 2012-13. Petitioner is a licensee authorised for hulling of paddy provided by the State Government to be returned back as Custom Milled Rice. Petitioner was served with a notice dated 16th September, 2013 to pay an amount of Rs. 56,61,186/- towards non-delivery of Custom Milled Rice. Thereafter further extension of 30 days was accorded vide letter dated 11.12.2013.

4. The case of the petitioner is, due to non-acceptance of Custom Milled Rice, petitioner earlier approached this Court by way of filing Civil Misc.Writ Petition No. 6697 of 2014 (Niwas Ali and another Vs. State of U.P. and others) seeking direction for acceptance of Custom Milled Rice. In the meantime, respondent authorities issued recovery by virtue of letter dated 29.01.2014 issued by District Food Marketing Officer, Siddharth Nagar requiring petitioner to deposit Rs. 50,88,684.74/-. The order dated 29th January, 2014 asking for recovery of aforesaid amount was impugned through Writ-C No. 13343 of 2014 titled as Niwas Ali and another Vs. State of U.P. and others. The said writ petition was disposed of by this Court on 05.03.2014 permitting petitioner to submit the reply to the notice dated 29th January, 2014 before authority concerned within three weeks and the authority concerned was further mandated to pass appropriate orders and only thereafter the liberty was granted to proceed with the matter. The order dated 05.03.2014 passed in Writ-C No 13343 of 2014 reads as under :

"Heard the learned counsel for the petitioner and the learned Standing Counsel.

The petitioner contends that he was supplied paddy and after hulling he was required to deliver the rice to a godown of the Food Corporation of India as designated by the State of Uttar Pradesh.

The petitioner contends that after hulling the paddy, he proceeded to deliver it at the designated place but the respondents refused to accept the rice for reasons best known to them. In this regard, the petitioner wrote several letters to the authorities requesting them to assign an appropriate godown so that he could deliver the rice.

It is contended that inspite of these letters being received by the respondents, no action was taken, and now, by the impugned notice dated 29th January, 2014 the petitioner has been directed to deposit an amount of Rs.50,88,684.74 towards loss caused to the State for non-delivery of the rice, failing which the same would be recovered as arrears of land revenue. The petitioner, being aggrieved, has filed the present writ petition.

Having heard the learned counsel for the petitioner, we are of the opinion that the petitioner should reply to this notice before the authority concerned. We accordingly dispose of the writ petition directing the petitioner to file an appropriate reply to the said notice within three weeks from today. If such a reply is received, the authority concerned will consider the matter and pass appropriate orders and only thereafter will proceed with the matter."

5. Counsel for the petitioners further contended that in compliance of order dated 05.03.2014, petitioner submitted detailed representation addressed to Regional Food Controller Basti for ventilation of his grievances who is the authority competent to deal with the issue. Despite respondents were in receipt of representation dated 10.03.2014, no order was passed in compliance of mandate issued by this Court on 05.03.2014. Thus respondents were precluded from passing any order of recovery and issuance of consequential recovery citation is also without authority of law.

6. Counsel for the petitioner contended that in utter defiance of the order dated 05.03.2014 passed in Writ-C No. 13343 of 2014, District Food Marketing Officer Siddharth Nagar vide order dated 11th April 2014 asked for recovery of a sum of Rs. 50,88,684.74/-, which is the same amount alleging non-supply of Custom Milled Rice for the year 2012-13 i.e for the same period. Petitioner has been served with consequential recovery citation dated 26.05.2014 contained as annexure No. 23 raising demand of Rs. 50,88,684.74/. It is in this background that instant proceedings have been instituted.

7. The pith and substance of the submissions raised by counsel for the petitioners at Bar is, impugned order dated 11.04.2014 passed by the District Food Marketing Officer, Siddharth Nagar U.P. and consequential impugned recovery citation dated 26.05.2014 are wholly without jurisdiction and in the teeth of order passed by this Court in Writ-C No. 13343 of 2014. Thus, the impugned order of recovery and consequential citation are non-est and without jurisdiction.

8. Counsel for the petitioner brought to our notice to the judgment of this Court rendered in M/s Maa Bhawani Rice Mill and another Vs. State of U.P. and others (Writ-C No. 35296 of 213, decided on 24.02.2014 along with connected matters). The relevant paragraphs of the said judgment are extracted as under :

"60. From the discussion made above, it follows that the impugned recovery proceedings cannot be sustained in law as the claim of the State Government is yet to be adjudicated by the Arbitrator and unless adjudication takes place, the claim for damages cannot be said to be the sum due and payable to the State Government, so as to warrant recovery of the said amount by adopting coercive measures.

61. But at the same time, this court cannot loose sight of the fact that the petitioners have been supplied paddy, against which CMR has yet not been delivered. The question whether the non-delivery or short-delivery is on account of the fault of the Government or the petitioners, is yet to be decided, based on which an award in terms of money may be passed in favor of one or the other party, but indisputably, the paddy in the hands of the millers, does not belong to them. This court cannot permit the petitioners to retain the same, awaiting decision by the Arbitrator, without putting them to terms. For the said purpose, we posed a specific question to the counsel for the petitioners to come up with concrete offers, to show their bonafides. Thereupon, most of the counsel for the petitioners, namely, Sarvshri Ramendra Asthana, Shrikant Shukla, Mayank Agrawal, Rahul Agrawal, G.P. Srivastava, A.K. Srivastava, J.S. Pandey, A.C. Srivastava and D.P. Singh have agreed to deposit the price of paddy.

62. At the same time, they laid a serious challenge to the commercial value of the rice (Rs.1921.53/quintal: slight variation in different areas because of difference in transportation charges, etc.), being demanded from them. It has been contended that the provisional commercial value, as is sought to be realized from the millers, is in fact, the price of rice fixed by the central Government for payment to the procurement agencies. The same cannot ipso facto be the commercial value of the rice. The commercial value of the rice shall be such as is prevalent in the market at the relevant time, for which data has to be collected, and mind applied, before it is determined. It has been submitted that clause 2(e)(iii) of the agreement contemplates a decision by the RFC, regarding prevailing market price, which pre-supposes application of mind. However, in every case, the authorities have mechanically asked for compensation at the rate fixed by the Central Government for payment to the procurement agencies. It includes various components which cannot be made applicable to the millers, such as (1) milling charges, (2) VAT, and (3) cost of gunny bags.

63. We, however, refuse to go into the question regarding fixation of the provisional commercial value of rice, by the government, and leave it open to the petitioners to raise this question, also, before the arbitrator.

64. However, there is unanimity amongst the counsel for the parties regarding the value of common variety of paddy, being Rs.1080/- per quintal (admitted in supplementary counter affidavit of respondents dated 8.10.2013). The out turn ratio being 67%, the proportionate price of per quintal of CMR tentatively comes to Rs.1611.93 per quintal (as is evident from the letter of Zonal Accounts Officer, Food, Gorakhpur dated 10.6.2013 in writ petition no. 39599 of 2013 M/s. Jagdamba Enterprises vs. State of U.P and others). The value of paddy in possession of petitioners can thus be obtained by multiplying 1080 with the quantity of paddy or 1611.93 with the deficit quantity of CMR.

65. In fact, in writ petition No.39599 of 2013 M/s. Jagdamba Enterprises vs. State, the petitioner had already deposited the proportionate price of paddy/CMR @ 1611.94 per quintal. In certain other cases, the petitioners have shown willingness to deposit the price of paddy at the said rate, as in writ petition no. 41167 of 2013 M/s. Rohit Industries vs. State, writ petition no. 41169 of 2013 M/s. Kanhaiya Industries vs. State, writ petition no.39936 of 2013 Ran Vijay Singh vs. State, writ petition no. 43175 of 2013 Shree Murari Rice Mill vs. General Manager Food Corporation of India and others, writ petition no. 39600 of 2013 M/s. Sahu Traders and another vs. State of U.P. and others, writ petition no.39601 of 2013 M/s. Maha Luxmi Aata & Rice Mills and another vs. State of U.P. and others, writ petition no. 54464 of 2013 M/s. Ramji Prasad Jawahar Lal vs. State of U.P. and others, writ petition no. 54583 of 2013 M/s. Narain Traders vs. State of U.P. and others, writ petition no. 54584 of 2013 M/s. Ashirvad Industries vs. State of U.P. and others, writ petition no. 55271 of 2013 M/s. Mohit Enterprises vs. State of U.P. and others, writ petition no. 56140 of 2013, M/s. Maha Laxmi Mini Rice Mill and another vs. State of U.P. and others, writ petition no. 42355 of 2012 Vishnu Industries vs. State of U.P. and others, writ petition no.69759 of 2013 M/s. Maa Sharda Udyog Avam Rice Mill and another vs. State of U.P. and others and writ petition no.69765 of 2013 M/s. Hans Mini Rice Mill and another vs. State of U.P. and others. Some of the petitioners and their counsel declined to make any deposit.

66. It is well settled that merely because action of the State has been found to be illegal on certain scores, this court is not bound to interfere. After all, exercise of power under Article 226 is discretionary. It is well within the power of this court to direct the petitioners to part with the undue benefit accrued to them by being in possession of public property; they can be put to terms, before relief is granted to them. Such power of this court was affirmed by the apex court in AIR 1996 SC 2402 Shangrila Foods Products Ltd Vs. LIC, wherein has been held that :

"It is well-settled that the High Court in exercise of its jurisdiction under Article 226 of the Constitution can take cognizance of the entire fact and circumstances of the case and pass appropriate orders to give the parties complete and substantial justice. This jurisdiction of the High Court, being extraordinary, is normally exercisable keeping in mind the principle of equity. One of the ends of the equity is to promote honesty and fair play. If there be any unfair advantage gained by party priorly, before invoking the jurisdiction of the High Court, the court can take into account the unfair advantage gained and can require the party to shed the unfair gain before granting relief."

67. Thus, after taking into consideration the entire facts and circumstances, and while balancing individual interest of the petitioners on one hand, and the public interest on the other hand, we consider it expedient to direct the petitioners to deposit the price of paddy/ proportionate price of CMR @ Rs.1611.93 per quintal with the State Government within a period of one month from today. The petitioners will make a self calculation of the amount as per the figures of deficit CMR given in the impugned orders and deposit the same within the period stipulated above, without prejudice to their rights and contentions before the arbitrator. Amount already deposited under interim order of this Court or in pursuance of the recovery certificates issued in particular cases, shall be adjusted while calculating the amount due, to be deposited under this order. Only, on such deposit being made, all recovery proceedings and consequential action, including orders debarring/ blacklisting the millers from future hulling shall remain in abeyance. The Principal Secretary, Food and Civil Supplies will proceed to adjudicate upon the rival claims of the parties. The State Government as well as petitioners are free to file their respective statement of claims before the Arbitrator, who shall make all endeavour to conclude the arbitration proceedings within a further period of six months, uninfluenced by any observation made in this judgment. Recovery of any further sum from petitioners shall abide by the final outcome of the arbitration proceedings. Those who fail to deposit the price of paddy at the rate and within the timeframe as stipulated above, their writ-petitions will be deemed to be dismissed. In some cases, the petitioners have raised dispute regarding quantity of paddy received and / or the quantity of deficit CMR. It shall be open to those petitioners to raise such dispute also before the Arbitrator, but for making deposit of the amount as directed by this Court, the figures mentioned in the impugned orders will be assumed to be correct, failing which their writ petitions will be treated to be dismissed.

68. Before parting, this court is constrained to observe about the gross negligence and apathy shown by the State agencies in implementation of the scheme. If they would have acted with due diligence and caution, such a situation would not have arisen, in as much as, there were ample safeguards in the scheme itself. The first safeguard under the scheme was by way of regular inspection by the State authorities and the procurement agencies. For the said purpose, the first inspection was to be carried out before the start of the hulling season by the concerned Marketing Inspector/ Senior Marketing Inspector/Mandi Secretary to verify the opening stock of wheat on 1.10.2011. Under clause 33.1, procurement agencies were required to carry out monthly inspection. Under clause 37.1, the procurement agencies and the officials at the district and regional level were required to review weekly progress in the implementation of the scheme and forward information to the Regional Food Controller and the accounts officer regarding the quantity of CMR outstanding against a miller. If it was found that the CMR remains undelivered by a particular miller, the Regional Food Controller was required to stop acceptance of the levy rice from the miller. Under clause 38.2, within one month from the date the purchase of paddy comes to an end, the Center incharge of the procurement agency and the officials of the Food department and the officials at the district and regional level were to ensure that the entire CMR stands delivered. The District Food Marketing Officer was required to fill Form-I giving details of the paddy purchased, the CMR received and the balance CMR and the progress in this regard was to be intimated to the higher authorities in Form - II. This evidences that all figures at every stage were available with the authorities. Then how such an alarming situation was permitted to come into existence is not understood.

69. There is another major safeguard contained in clause 32 which requires that the bank guarantee will be obtained from the millers in proportion to their milling capacity. It is Rs. 3 lacs for mills with capacity upto one tonne; Rs.4 lacs with capacity upto 2 tonnes and Rs.5 lacs above it. Under clause 32.2, a miller was to be provided with only such quantity of paddy which co-relates with the bank guarantee furnished by it. In case any miller was to be supplied excess paddy, then it was incumbent upon the authorities to first require the miller to furnish additional bank guarantee, so as to cover the value of the paddy supplied to it. This was the responsibility of the Center incharge of the procurement agency and the district level officers. There was a further check under clause 32.3, which required that next lot of CMR would to be supplied to a miller only after receipt of CMR against the paddy already supplied. In various writ petitions, there are specific allegations that the respondents have procured excess quantity of paddy, and thereafter started compelling the millers to lift more quantity of paddy than their hulling capacity. The authorities also did not care to obtain additional bank guarantee to cover the cost of the paddy supplied to the millers. In case, the same had been done, the present stalemate would have never occurred.

70. It may be noted that most of the cases are from the eastern region of the State. This demonstrates that the fault lies not in the scheme but it's implementation. The State and its officials and agencies are trustees of public wealth. Since they are responsible for the present situation, we therefore, direct the Chief Secretary, State of U.P. Lucknow to hold an enquiry, and take remedial measures so that it is not repeated again."

8A. The judgment in the case of M/s Maa Bhawani Rice Mill (supra) is of no avail and consequence. The case of the petitioner is at first instance to be considered by competent authority in terms of mandate dated 05.03.2014 issued in Writ-C No. 13343 of 2014. The case of petitioner would rest on a different footing. Once a decision is taken, then the judgment of M/s. Maa Bhawani Rice Mill (supra) could be of any avail to the parties

9. Replying to the submissions advanced by counsel for the petitioner, learned State Counsel has submitted that petitioner had utterly failed to discharge his obligation of providing Custom Milled Rice and is sitting over the public property and money and usurping the same and as such, the petitioners are not entitled for any equitable relief by this Court and the instant writ petition being bereft of merit may be dismissed with heavy cost.

10. Instant writ petition was instituted way back in the year 2014 but till today State has not preferred to file any counter affidavit rebutting the pleadings advanced therein despite an interim direction is operating since 07.07.2014. The order dated 07.07.2014 is extracted as under :

"The petitioner had approached this Court earlier by filing writ petition no. 13343 of 2014 raising a grievance that after hulling paddy, they went to deliver the hulling rice at the designated place but the respondents had refused to accept the rice for the reasons best known to them and issued a notice requiring the petitioners to deposit Rs.50,88,684.74 towards loss caused to the State for non-delivery of rice, failing which the same would be recovered as arrears of land revenue. The said writ petition was disposed of by the Division Bench vide order dated 05.03.2014 by making following observations :

"Having heard the learned counsel for the petitioner, we are of the opinion that the petitioner should reply to this notice before the authority concerned. We accordingly dispose of the writ petition directing the petitioner to file an appropriate reply to the said notice within three weeks from today. If such a reply is received, the authority concerned will consider the matter and pass appropriate orders and only thereafter will proceed with the matter. "

The grievance raised by the petitioner in this petition is that without considering the objection filed by the petitioners, an order dated 11-04-2014 has been passed again directing the petitioner to pay a sum of Rs.50,88,684.74 and thereafter, proceedings for recovery of the said amount has also been initiated and notice in ZA Form-69 has been issued.

It is contended by learned counsel for the petitioners that the entire action of the respondents is directly in the teeth of the direction issued by this Court vide order dated 05.03.2014 wherein the authority concerned was directed to proceed in the matter only after deciding the objection filed by the petitioner.

Prima-facie there appears to be force in the submission.

Learned Standing Counsel representing the respondents may file counter affidavit with four weeks.

Petitioners will have two weeks thereafter for filing rejoinder affidavit.

List after expiry of the aforesaid period.

Considering the facts, till the next date of listing, recovery proceedings initiated against the petitioner for recovery of Rs.50,88,684.74 towards price of hulling rice shall remain stayed."

11. There is no material on record to indicate that the representation dated 10.03.2014 was either not filed or not received in the office of respondent authorities.

12. In absence of counter affidavit, this Court has no option except to treat the fact of filing of representation dated 10.03.2014 as correct and further there is no positive recital that the competent authority has passed any order on the representation filed by the petitioners in terms of liberty so granted by this Court vide order dated 05.03.2014 passed in Writ-C No. 13343 of 2014. Consequently the grievances raised/voiced by the petitioner through representation dated 10.03.2014 could not be addressed and remedied. This Court vide order dated 05.03.2014 had directed that further proceeding of recovery would abide and be dependent upon decision of representation filed in pursuance of order passed by this Court. Counsel for the State could not defend the inaction on the part of the authorities in not taking decision on the representation dated 10.03.2014 filed as per mandate of this Court issued in Writ-C No. 13343 of 2014.

13. A perusal of impugned order dated 11.04.2014 does not indicate that any decision by Regional Food Controller Basti upon representation of petitioner dated 10.03.2014 has been taken and it further does not take notice of order dated 05.03.2014 passed in Writ-C No. 13343 of 2014. Thus, the impugned order dated 11.04.2014 and consequential recovery being in the teeth of the order dated 05.03.2014 passed in Writ-C No. 13343 of 2014 does not stand to the scrutiny of law and fact.

14. In view of the above, writ petition succeeds and is allowed. The order dated 11.04.2014 passed by District Food Marketing Officer, District Siddharth Nagar U.P. contained as annexure 22 and consequential impugned citation dated 26.05.2014 contained as annexure 23 are hereby quashed. The respondent authorities are reminded to comply with the order dated 05.03.2014 passed in Writ-C No. 13343 of 2014 and decide the objection/reply dated 10.03.2014 contained as annexure no. 21 to the writ petition and pass appropriate reasoned and speaking order accordingly.

15. It is needless to mention that any recovery shall depend upon the outcome of the decision so taken by the respondent authority on the representation dated 10.03.2014 contained as annexure No. 21 to the writ petition .

16. Since the recovery pertains to public money and as such respondent authorities are mandated and cautioned to decide the representation dated 10.03.2014 in accordance with law as expeditiously as possible, preferably within three months after providing opportunity of hearing to the petitioner.

(Indrajeet Shukla,J.) (Ajit Kumar,J.)

May 7, 2026

Pratima