Back
SUPREME COURT OF INDIA
14th December 1964
A.K. SARKAR, N. RAJAGOPALA AYYANGAR AND R.S. BACHAWAT, JJ.
(1) A. Venkata Subbarao (In C. A. No. 101 of 1962),
(2) The Firm of Perumballa Subbarao and Byraju Ramaraju (In C. A. No. 131 of 1962),
(3) The Firm of Mallidi Satyam, Contractors, Sri Suryanarayana Rice Mill (In C. A. No. 168 of 1962),
(4). A. Venkata Rao, Agent of Sri Sitarama Rice Mill Contractors Company (In C. A. No. 169 of 1962),
(5) The Firm of Perumalla Subba Rao and Byraju Ramaraju, Proprietors and Contractors, Sri Satyanarayana Rice Mill and another (In C. A. No. 170 of 1962),
(6) M/s. Sri Radha Krishna Rice Mill (In C. A. No. 171 of 1962),
(7) Sri Jayalakshmi Rice Mill Contractors Company (In C. As. Nos. 259 and 260 of 1962),
(8) Golakoti Satyanarayan Murthy (In C. As. Nos. 302 and 303 of 1962),
(9) Rimmulapudi Subbarao and others (In C. A. No. 306 of 1962),
(10) Mullapudi Thimmaraju and another (In C. As. Nos. 307 to 309 of 1962),
(11) Nuli Subba Rao (In C. A. No. 310 of 1962),
(12) Sree Radha Krishna Rice and Oil Mill and others (In C. A. No. 644 of 1962),
(13) Shree Koteswara Rice Mill Contractors Company (In C. A. No. 837 of 1962),
(14) Sri Govindaraja Rice Mill Contractors Co. (In C. As. Nos. 838 and 839 of 1962),
(15) Sri Tatavarti Venkataratya Mahalakshmamma and others (In C. As. Nos. 841 and 842 of 1962),
(16) Pothineni Ramakotayya and Kilaru Jagannadharao (In C. A. No. 843 of 1962),
(17) Sree Koteswara Rice and Oil Contractors Company (In C. A. No. 844 of 1962),
(18) Sree Lakshmi Satyanarayana Rice Mill Contractors Company (In C. A. No. 845 of 1962),
(19) Shree Udaya Lakshmi Rice and Groundnut Oil Mill Contractors (In C. A. No. 846 of 1962),
(20) Sree Sree Venkateswarlu and Company Contractors (In C. A. No. 847 of 1962),
(21) Sree Radha Krishna Rice Mill Company (In C. A. No. 848 of 1962),
(22) Sree Jaya Lakshmi Rice Mill Contractors Company (In C. A. No. 849 of 1962),
(23) Sree Radha Krishna Rice and Oil Mill Contractors Company (In C. A. No. 850 of 1962),
(24) Sree Kanyakaparameswari Rice Mill Contractors Company and another (In C. A. No. 851 of 1962),
(25) Sree Padmalaya Rice Mill Contractors (In C. A. No. 852 of 1962),
(26) Sree Durga Kala Purnachandradya Rice Mill Contractors Company (In C. A. No. 853 of 1962),
(27) Majetivari Rice Mill Contractor (In C. As. Nos. 854 and 855 of 1962),
(28) Sri Rama Rice Mill Contractors Company and others (In C. As. Nos. 856 and 857 of 1962),
(29) Sri Venu Gopala Krishna Rice Mill Co. (In C. A. No. 325 of 1963),
(30) Penmetcha Somaraju and another (In C. A. No. 437 of 1963),
(31) Bikkma Narayana Murthy (In C. A. No. 438 of 1963),
(32) Medidhi Satyanarayana Murthy (In C. A. No. 439 of 1963) 1774
(33) Sri Kakollu Kammayya and Son (In C. A. No. 440 of 1963),
(34) Pericharla Subbaraju (In C. A. No. 441 of 1963),
(35) Sree Satyanarayana Rice and Oil Mills (In C. A. No. 996 of 1963), Appellants
Versus
The State of A.P., etc., Respondents.
Civil Appeals Nos. 101, 131, 168 to 171, 259 to 260, 302 to 303, 306 to 309, 310, 644 and 837 to 857 of 1962 and 325, 437 to 441 and 996 of 1963.
Advocates appeared
Mr. K. R. Chaudhuri, Advocate (In C. As. Nos. 101, 168, 169, 171 and 310 of 1962 and 438 of 1963), Mr. A. Viswanatha Sastri, Senior Advocate, (Miss A. Vedavalli and Mr. A.V. Rangam, Advocates, with him), (In C. As. Nos. 131 and 170 of 1962), Mr. T. V. R. Tatachari, Advocate, (In C. As. Nos. 259 to 260 of 1776 1962, 325, 437, 439, 440, 441 and 996 of 1963), Mr. R. Gopalakrishnan, Advocate, (In C. As. Nos. 302 and 303 of 1962), Mr. A. V. Viswanatha Sastri Senior Advocate, (Mr. T.V. R. Tatachari, Advocate, with him), (In C. As. Nos. 306 to 309 of 1962), Miss Lakshmi Devi and Mr. T. Satyanarayana, Advocates, (In C. A. No. 644 of 1962), Mr. A. V. Viswanatha Sastri, Senior Advocate, (Messrs. N. R. Rao and B. Parthasarthy, Advocates and J. B. Dadachanji and Co., Advocates, with him), (In C. As. Nos. 837 to 857 of 1962), for Appellants; Mr. C. B. Agarwala, Senior Advocate, (Messrs. R. Ganapathy Iyer and B. R. G. K. Achar, Advocates with him), (In C. As. Nos. 306 to 309 and 837 to 857 of 1962), Messrs. R. Ganapathy Iyer. Yogeshwar Prasad and B. R. G. K. Achar, Advocates, (In C. As. Nos. 101, 131, 168 to 171, 259-260, 302 and 303, 310 and 644 of 1962 and 325, 437 to 441 and 996 of 1963), for Respondents.
Judgment
SARKAR, J. :- These appeals arise out of suits filed for recovery of money from the Government. The appellants were the plaintiffs and the respondent in each appeal is a State, the defendant in the suits.
2. In the years 1947 and 1948 there was rice scarcity in certain districts in Madras as it was then constituted. These districts are now in Andhra Pradesh. The Government of Madras took action under the Essential Supplies (Temporary Powers) Act, 1946 and passed various orders for the procurement and distribution of rice. Rice thereafter could be procured only by the Government or by the procuring agents appointed by it and disposed of according to the orders of the Government. Under these orders licensed wholesalers and retailers were also appointed. The appellants were procuring agents and wholesalers under this system. They entered into various agreements with the Government for the purpose. Their duty was to procure rice from specified areas at prices specified by the Government from time to time and to deliver it at prices so specified, to the Government or to persons nominated by it or to other licensed purchasers. The procurement price was in each case lower than the selling price and the procuring agents were under the contract entitled to the difference between the two prices.
3. During the period with which we are concerned, three successive orders were made by the Government specifying the prices and in each case there was an increase. The first increase in prices took effect on July 27, 1947, the second on or about December 6, 1947 and the third on November 21, 1948. On the dates on which each of these orders came into force, each appellant had lying with him in stock certain quality of rice. This had been procured by the agents earlier and, therefore, at the then prevailing lower purchase price. The appellants had to sell this rice at the new increased price and hence became automatically entitled to a larger sum than they were before the increase. The enhancement of the procuring agents profit was entirely due to the Government action in increasing the prices and the Government thought that they were not entitled to it and insisted that the excess sums should be paid to it by them. The appellants paid these moneys to the Government under protest and it is for the recovery of the moneys so paid that, broadly speaking, the suits were filed.
4. Now various methods had been employed by the Government for realising these excess amounts which have been described in these proceedings as surcharges . Thus in some cases the procuring agents or wholesalers refusing to pay were threatened with cancellation of their licences and to avoid this they made the payments. In other cases, these surcharges were deducted from moneys payable by the Government to them for rice supplied by them. The third method which concerned the increase made in November 1948 was to requisition the stock of rice lying with the procuring agents on the day immediately preceding the coming into force of the increased price at the rate then obtaining and thereafter releasing such rice to the procuring agents only upon their paying the surcharge or on their executing an agreement to pay the same.
5. It is clear that if the Government was not entitled to the amount of the surcharge, it could not retain the moneys paid by the appellants to it on that account. The principal question is, Was the Government entitled to those moneys? In regard to the moneys collected except by the method of requisition and release, the Government s contention was that the appellants were its agents and that being so, any excess amount which was coming to them as a result of the orders was profit made by them in connection with the business of the agency for which they were liable to accounts to the Government. It was also said that if the appellants were not the Government s agents strictly speaking, they at least stood in a fiduciary relationship to it which made them li
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
