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IN THE SUPREME COURT OF INDIA
CIVIL APPEAL NO. 1889 OF 2023
PAWAPURI RICE MILLS … APPELLANT(S)
CIVIL SUPPLIES CORPORATION
LTD. & ORS … RESPONDENT(S)
J U D G E M E N T
S.V.N. BHATTI, J.
JUDGMENT
1. Common issues of fact and law arise in the instant batch of Appeals under the Bihar and Orissa Public Demands Recovery Act, 1914 (for short, ‘the Act’) and the Bihar and Orissa Public Demands Recovery Rules (for short, ‘the Rules’), hence, these Appeals are disposed of by this Judgment.
I. BACKGROUND
2. The appellants in Civil Appeal No. 1890 of 2023 and Civil Appeal No. 1889 of 2023 are rice millers in the State of Bihar. The first respondent in the Civil Appeals is the State of Bihar, and the fourth respondent is the Bihar State Food and Civil Supplies Corporation. For convenience, the appellants are referred to as ‘Rice Millers’ and the contesting respondents as the ‘State’ and ‘Civil Supplies Corporation,’ respectively. The subject matter of the Appeals relates to the procurement of Custom Milled Rice (for short, ‘CMR’) for the procurement year 2011-12 in the State of Bihar. The subject procurement policy departs from the previous policy of collecting levy rice from the Rice Millers. As is known from practice and scheme, levy rice is a system requiring millers to sell a percentage of their rice to the Government at a particular price. Under the levy rice procurement scheme, the Rice Millers buy paddy directly from the farmers at the Minimum Support Price (for short, ‘MSP’) and sell a percentage of rice to the Government at a specified price. The Government may purchase the rice from the millers or farmers to implement the Public Distribution System (for short, ‘PDS'). The scheme of levy rice was replaced with the present procurement policy of CMR. In this Judgment, we are not examining the reasons or wisdom for the shift in the State’s policy because the State knows what a good and correct policy is while administering and implementing its welfare schemes.
3. In the changed set-up, on 11.11.2011, the Ministry of Consumer Affairs, Food and Public Distribution, Government of India, conveyed the fixation of provisional rates of CMR and the cost of gunny bags of fifty kilograms used in the procurement scheme. The State, through the Development Commissioner, issued the memo dated 07.12.2011, setting out the objectives and major features in the implementation of procurement of thirty lakh metric tons of paddy from the farmers in the State of Bihar for the procurement year 2011-12. The Civil Supplies Corporation has a role to play as the nodal agency of the State for the procurement of paddy during the year 2011-12. In furtherance of such an arrangement, the Development Commissioner, Food and Consumer Protection, Government of Bihar issued the letter dated 07.12.2011 appointing Bihar State Food Corporation as the nodal agency for procuring paddy and entrusting the paddy to Rice Millers for CMR. This letter was sent to all Divisional Commissioners and District Magistrates in the State. The Rice Millers, as per the scheme, are required to enter into an agreement with the State and Civil Supplies Corporation for milling the paddy procured from the farmers. It is a matter of record that the Rice Millers have entered into an independent agreement with the Civil Supplies Corporation. The features of the agreement are that the Rice Millers are required to deliver 67% of raw rice or 68% of par-boiled rice for hundred quintals of paddy in advance, and the Civil Supplies Corporation releases proportionate paddy for CMR by the Rice Millers. The Rice Millers are under an obligation to supply CMR, as directed, to the designated depots/warehouses of the Food Corporation of India (for short, ‘FCI’).
3.1. The procurement period is from 15.11.2011 to 30.04.2012. A dispute on the discharge of obligations by the Rice Millers had arisen with the Civil Supplies Corporation. As per the contractual obligations, the Rice Millers asserted that they had milled the rice and were ready to supply CMR to the FCI. Because of a few issues with the FCI, the CMR agreed to be delivered by the Rice Millers was neither accepted nor taken forward. The contesting parties have their own views on the default of performance of obligations. We need not refer to either side's case on this behalf to dispose of the appeals. This dispute over the Rice Millers' non-supply of CMR led to the initiation of recovery proceedings by the Civil Supplies Corporation under the Act and the Rules before the Certificate Officer. The District Collector/District Certificate Officer issued Recovery Certificates to the Civil Supplies Corporation, and the details are noted as follows:
┌──────────────────────────────────────────────────────────────────────────────┐ │ Sl No. Civil Appeal No. Petitioner Amount │ ├──────────────────────────────────────────────────────────────────────────────┤ │ 1. 1889/2023 PAWAPURI RICE Rs.10,15,94,961.94/- │ │ MILLS │ │ 2. 1892/2023 PAWAN KUMAR Rs.41,99,218/- │ │ 3. 1902/2023 RAJESH KUMAR Rs.1,63,75,957.87/- │ │ MEHTA │ │ 4. 1905/2023 AMOD KUMAR Rs.30,02,092.42/- │ │ SINGH │ │ 5. 1903/2023 MANISH KUMAR Rs.18,53,420.24/- │ │ 6. 1904/2023 PRANAV KUMAR Rs.1,86,36,210.21/- │ │ SINGH │ │ 7. 1908/2023 M/S. UMA RICE Rs.88,44,815/- │ │ MILL │ │ 8. 1909/2023 M/S. Rs.23,26,795.00/- │ │ MUZAFFARPUR │ │ MODERN RICE │ │ MILL THR. ITS │ │ PARTNERS AND │ │ ORS. │ │ 9. 1911/2023 CHANDRASHEK- Rs.38,44,676.00/- │ │ HAR SAH │ │ 10. 1910/2023 RAJ KUMAR RAI Rs.2,91,78,200.00/- │ │ 11. 1914/2023 WAKIL PRASAD Rs.45,77,027/- │ │ YADAV │ │ 12. 1912/2023 SULEKHA Rs.26,28,780/- │ │ KUMARI │ │ 13. 1913/2023 M/S. SHANKAR Rs.53,43,912/- │ │ RICE MILL │ │ 14. 1915/2023 ASHOK KUMAR Rs.82,96,336.45/- │ │ 15. 1916/2023 ASHOK KUMAR Rs.4,62,78,797/- │ │ 16. 1917/2023 M/S NARAYAN Rs.19,99,390/- │ │ RICE MILL │ │ 17. 1890/2023 SONE VALLEY Rs.4,66,68,330/- │ │ RICE MILL │ │ 18. 1891/2023 SACHINDRA Rs.3,56,26,841.01/- │ │ KUMAR RAI │ │ 19. 1895/2023 M/S MAA LAXMI Rs.5,21,46,846/- │ │ SILKY RICE │ │ MILL │ │ 20. 1894/2023 PURSHOTTAM Rs.1,46,30,844.76/- │ │ PRASAD │ │ 21. 1898/2023 GANESH Rs.28,23,921.39/- │ │ PRASAD │ │ JAISWAL │ │ 22. 1896/2023 M/S. AKASH Rs.6,60,41,846.32/- │ │ FEED PVT. LTD. │ │ 23. 1893/2023 M/S MAA Rs.2,19,61,092.53/- │ │ JAGDAMBA │ │ RICE MILL │ │ 24. 1899/2023 M/S PUJA RICE Rs.1,29,54,301.40/- │ │ MILL │ │ 25. 1897/2023 M/S GANGOTRI Rs.58,13,662.50/- │ │ RICE MILL │ │ 26. 1900/2023 ABINASH Rs.9,91,29,305/- │ │ KUMAR SINGH │ │ 27. 1901/2023 RAKESH KUMAR Rs.88,53,551/- │ │ 28. 1906/2023 MUNNA PRASAD Rs.85,58,508/- │ │ 29. 1907/2023 RAMESH Rs.1,17,06,648/- │ │ BHUSHAN │ └──────────────────────────────────────────────────────────────────────────────┘
30. Let us revert to the circumstances of the case on hand. The State Government, as part of the changed policy, has dispensed with the levy rice scheme from the Rice Millers. In place of purchasing the levy rice, the present policy substitutes availing the services of Rice Millers for CMR. We are not concerned with the subtle intricacies in the operation of the policy of CMR. Broadly, the paddy is purchased from the farmers by the state government or the Civil Supplies Corporation, and under the agreement, the paddy is transferred to the Rice Millers for conversion into CMR. The State is also acting as per the guidelines issued by the FCI. The whole scheme appears to be to purchase paddy at MSP, convert paddy into CMR, and deliver at the depots of FCI for the PDS. It is for this reason that the Civil Supplies Corporation is recognised as the nodal agency of the State. The Rice Millers cannot take up a convenient argument by ignoring the role assigned to the Civil Supplies Corporation as a nodal agency by the State Government.
31. In the subject procurement year, the State Government aimed to procure thirty lakh metric tons of paddy from the farmers. The State Food Corporation and Civil Supplies Corporation have been assigned a few rights and duties to perform in this massive function as per the scheme. It is difficult to assume that the Civil Supplies Corporation, with its wherewithal of both manpower and financial ability, would have acted as an independent entity. The paddy is purchased either from the amount given by the state government or paddy received from primary agricultural societies. The control of the State Government and District Administration is evident, both from the circumstances noted in the impugned judgement, a letter dated 11.11.2011 of the Government of India, a letter dated 09.01.2012 of State Food and Civil Supplies Corporation, and a letter dated 11.01.2012 of the food and consumer department. Consequently, all the jurisdictional facts to accept the role of Civil Supplies Corporation as the nodal agent of the state government have been satisfactorily established in this case. The agreement between the parties explicitly recognises the Civil Supplies Corporation’s right to recover dues, and the nondelivery of CMR is a documented fact. These jurisdictional facts thus exist, thereby validating the certificate proceedings. In the present case, the claim for the cost of undelivered CMR aligns with this definition. Therefore, the claim qualifies as a ‘public demand’ recoverable under the Act.
32. The learned Single Judge erred in narrowly interpreting the concept of ‘public demand.’ The court must consider the totality of circumstances to determine if a particular demand falls within the ambit of the Act. In this case, the State Government enabled the Civil Supplies Corporation to enter into an agreement with the Rice Millers for the procurement, milling, and distribution of paddy. The objection of Rice Millers is purely one of convenience and contravenes the conduct and the admitted contemporaneous circumstances. The noncompliance by the Rice Millers with the terms of the agreement directly impacted the PDS, a matter of significant public interest.
33. The Division Bench correctly held that the nature of the transaction, involving the procurement of public grain and its distribution, clearly falls within the definition of ‘public demand.’ The Civil Supplies Corporation, as a nodal agency of the State Government, was acting on behalf of the State to ensure the smooth functioning of the PDS.
34. The argument that the absence of a specific clause in the agreement authorising recovery under the Act, thus negating the jurisdiction of the certificate officer, is untenable. The Act itself provides a comprehensive framework for the recovery of public demands. The nature of the transaction, the public interest involved, and the role of the Civil Supplies Corporation as the State’s nodal agency allows for the initiation of recovery proceedings before the Certificate Officer.
35. We uphold the finding in the impugned judgement that the initiation of proceedings under the Act by the Civil Supplies Corporation, i.e., as the nodal agency of the state government. The unaccounted deposit of rice at the depots of FCI certainly comes within the fold of public demand of the state government under section 3(6) of the Act. Therefore, the proceedings under the Act are maintainable before the certificate officer. Further, we hold that the jurisdictional fact on the initiation of recovery proceedings under the Act is available and legal. We are in complete agreement with the view expressed in the Judgement impugned in the Civil Appeals.
36. The impugned judgement correctly determined that the recovery proceedings initiated by the Civil Supplies Corporation were valid and justified. The court has appreciated the facts of the case and applied the law correctly. The nature of the transaction between the State Government and the Rice Millers, involving the procurement, milling, and distribution of public grain, clearly falls within the ambit of “public demand” as defined in the Act. The certificate officer’s jurisdiction to initiate recovery proceedings is thus established.
37. The next limb of the argument is that the continuation and the concluding of proceedings by the certificate officers are vitiated by procedural irregularities. The arguments on this behalf are already referred to in the preceding paragraphs. To capture the arguments in a nutshell, it is noted that the initiation is not in accordance with the procedure stipulated under the Act, the procedure prescribed by the Act is not followed, and the principles of natural justice are violated.
38. The Act is a comprehensive and codified enactment that provides adequate safeguards for parties facing recovery actions. Parts II and IV of the Act outline the procedures for filing, serving, and contesting recovery certificates, as well as provisions for appeal, revision, and review. Procedural Safeguards: Part II of the Act outlines the procedure for filing, serving, and adjudicating certificates. Sections 43 and 44 provide remedies to challenge certificates in civil courts on specific grounds. The section provides for a time limit of 6 months for availing the remedy to move to the Civil Court. Sections 60, 62, and 63 deal with appeal, revision, and review of the orders made under the Act.
39. The Division Bench rightly emphasised the availability of these statutory remedies to the aggrieved persons. The Rice Millers, by invoking writ jurisdiction, have failed to exhaust statutory remedies at the first instance.
40. Mr. Manish Kumar has placed before us the photocopies of the proceedings of the certificate officer, and argued that these proceedings have been initiated in due compliance with the provisions of the Act and have been concluded by duly considering the objections raised by the Rice Millers. In other words, the argument proceeds that there is no procedural infirmity in the respective certificates issued in favour of the Civil Supplies Corporation. Hence, the civil appeals are also liable to be dismissed by rejecting the contentions on procedural deviation.
41. We have perused the record and are of the view that the Rice Millers invoked the writ remedy by raising a jurisdictional fact against realising the sums as a public demand under the Act. As a writ court or in an appeal under Article 136, we are not examining the contentions on alleged procedural deviations. We, however, leave it open to the respective Rice Millers to avail a statutory remedy as may be available under the Act. For availing a statutory remedy, we grant thirty days from today to the Rice Millers.
42. In the event of a Rice Miller availing a statutory remedy as permitted by this Judgment, the said authority shall entertain the case without reference to the delay and the period of limitation in availing a remedy before the said authority. With the above observation, the civil appeals stand dismissed. No order as to costs....……………………J. [HRISHIKESH ROY] ….……………………J. [S.V.N. BHATTI] NEW DELHI; DECEMBER 18, 2024.