Bejgam Veeranna Venkata Narasimloo vs State Of A. P.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1997 Supreme(SC) 1519

1997(10) Supreme 573
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
S.P. Bharucha and Suhas C. Sen, JJ.
M/s. Bejgam Veeranna Venkata Narasimloo etc. -Appellants
versus
State of Andhra Pradesh & Ors. -Respondents
Civil Appeal Nos. 3196-3200 of 1981
With
C.A. No. 8296 of 1997
(Arising out of SLP No. 568 of 1982)
Decided on 25-11-1997
Counsel for the Parties :
For the Appellants : A. Subha Rao, B. Parthasarthy, Advocates.
For the Respondents : G.I. Gopalkrishna, Y.P. Rao, K. Ramkumar and T.V.S.N. Chari, Advocates.

Headnote:(i) Essential Commodities Act, 1955-Section 3-Andhra Pradesh Rice (Procurement Ex-Mill Prices) Order, 1974-A.P. Rice (Procurement Ex-Mill Prices) Order, 1975-Appellants, rice millers, supplied FCI rice milled from Khariff and Rabi crops for crop year 1975-76 and also 1976-77-FCI paid them price fixed under Order, 1975-Order/memorandum dated 2-11-1976 extending life of 1975-76 procurement order-Claim of State Government that payment for levy of price on and from 7-9-1976 had been made at an excessive rate-Rejected-Held, it is not open to State Government to say that this Memorandum is of no legal effect because it was not notified in official Gazette-Having acted on basis of unnotified Memorandum and having collected rice compulsorily from millers on strength of this Memorandum, Government cannot say that Memorandum is of no legal effect and payment made under mistake of law-Whether State Government can fix procurement price of rice purchased by its retrospectively.
       Held : It has not been explained how and in what circumstances the order/memorandum dated 2.11.76 extending the life of the 1975-76 procurement order came to be issued. The issuance of the memorandum is not denied. It is also not denied that rice was procured in terms of this order. Rice millers had to deliver the rice according to the quantum or slab fixed by the 1975-76 order on the strength of the Memorandum dated 2.11.76. FCI also acted upon this Memorandum and paid the millers at the rates laid down in the order dated 24.9.75. It is not open to the Andhra Pradesh Government now to say that this Memorandum is of no legal effect because it was notified in the Official Gazette and was not addressed to any of the rice millers but was merely an inter-departmental communication. The Memorandum categorically stated "pending issue of the amendment, the District Collectors are instructed to take action to collect levy from millers and dealers not exceeding the percentage mentioned above for the crop year 1976-77". District Collector acted on the basis of this Memorandum. The rice millers were compelled to sell rice to FCI. In the background of all these facts, it is not open to the State Government to contend that the Memorandum was not notified and therefore, no right or obligation flowed from that Memorandum. If the Memorandum was required to be notified, the Government cannot take advantage of its failure to notify it. Having acted on the basis of the unnotified Memorandum and having collected rice compulsorily from the millers on the strength of this Memorandum and also having paid the millers at the rate fixed by the Memorandum, the Government cannot be heard to say that the Memorandum is of no legal effect and the payment was made under mistake of law. (Para 13)
       Rice has been sold under a procurement order and a right to be paid in terms of that order had accrued to the seller as soon as sale of rice was effected. As a matter of fact, the FCI did pay the appellants the price for the rice purchased. If a portion of the price paid by the FCI is taken away, the appellants will be prejudicially affected. They not only had acquired a vested right to be paid but actually received payment for the rice sold. If the rice was delivered without any valid procurement order, the sellers were entitled to be paid at the market rate in terms of Section 70 of the Contract Act. The retrospective subordinate legislation has tried to take away a portion of the money the appellants had lawfully obtained. (Para 16)
       (ii) Essential Commodities Act, 1955-Section 3(3A)-Mandatory provision-Price procured will have to be paid-State Government has a statutory duty to pay for the rice procured by it at market rate calculated in the manner laid down by the statute. (Para 14)

JUDGMENT

Sen. J.-Section 3 of the Essential Commodities Act, 1955 confers upon the Central Government power, inter alia, to regulate production, supply and distribution of essential commodities for securing their equitable distribution and availability at fair prices. The power given to the Central Government by sub-section (1) of Section 3 is in very broad terms. Sub-section (2) specifically provides that an order can be made by the Central Government, inter alia, "for controlling the price at which any essential commodity may be bought or sold". Clause (f) of sub-section (2) of Section 3 has also empowered the Central Government to require any person holding in stock, or engaged in the production, or in business of buying or selling, of any essential commodity, to sell the whole or a specified part of the quantity held in stock or produced or received by him to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government as may be specified in the order. Sub-section (3A) of Section 3 provides that where any person sells any essential commodity in compliance with an order made with reference to clause (f) of sub-section (2), there shall be paid to the seller as the price therefor-

(a) where the price can consistently with the controlled price of the food stuffs, if any, fixed under this section, be agreed upon, the agreed price;

(b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;

(c) where neither clause (a) nor clause (b) - applies, the price calculated with reference to the average market rate prevailing in the locality during the period of three months immediately preceding the date of the notification.

Sub-section (3b) of Section 3 provides :-

"Where any person is required, by an order made with reference to clause (f) if sub-section (2) to sell to the Central Government or to a State Government or to an office or agent of such Government or to a corporation owned or controlled by such Government, any grade or variety of foodgrains, edible oilseeds or edible oils in relation to which no notification has been issued under sub-section (3A), or such notification having been issued, has ceased to be in force, there shall be paid to the person concerned, notwithstanding anything to the contrary contained in sub-section (3), an amount equal to procurement price of such foodgrains, edible oil seeds or edible oils, as the case may be specified by the State Government, with the previous approval of the Central Government having regard to-

(a) the controlled price, if any, fixed under this section or by or under any other law for the time being in force for such grade or variety of foodgrains edible oilseeds or edible oils;

(b) the general crop prospects;

(c) the need for making such grade or variety of foodgrains edible oilseeds or edible oils available at reasonable prices to the consumers, particularly the vulnerable section of consumers; and

(d) the recommendations, if any, of the Agricultural Prices Commissions with regard to the price of the concerned grade or variety of foodgrains, edible oil seeds or edible oils."

2. There is no dispute that rice is an essential commodity under the Essential Commodities Act. Andhra Pradesh Rice (Procurement Ex-Mill Prices) Order, 1974 and Andhra Pradesh Rice (Procurement Ex-Mill Prices) Order, 1975 were promulgated requiring persons carrying on business in foodgrains, paddy, rice, rice milling, etc. to supply rice to Food Corporation of India (FCI) at procurement prices fixed by Orders issued by the Andhra Pradesh Government from time to time. The rice millers were entitled to be paid what is called the "notified price", which has been defined to mean the price fixed under the Andhra Pradesh Rice (Procurement Ex-Mill Prices) Order, 1975.

3. The appellants, who are rice millers, supplied the F

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