( 1 ) DEFENDANTS are in appeal questioning the correctness of the judgment and decree of the III Additional district Judge, Visakhapatnam in decreeing the suit of the plaintiff O. S No. 41 of 1995 declaring the order of the 2nd defendant as arbitrary and illegal and restraining the defendants by way of permanent injunction from recovering or causing to recover the amount due under the order in RC No. 127/83 (B) ECC, dated 5-11-1983.

( 2 ) THE facts which are not in dispute and relevant for disposal of the appeal briefly stated as under:

( 3 ) PLAINTIFF was appointed as commission agent for supply of essential commodities like rice and wheat to the fair Price Shops in Narsipatnam for a period of one year from 1-12-1981 and entered into an agreement with the defendants on 21-5-1981, whereunder defendants agreed to pay commission at Rs. 2. 25ps. per quintal to the plaintiff. Even after expiry of the period he continued as such without there being any agreement. The 1st defendant obtained a bank guarantee of Rs. 20,000/- besides cash deposit of Rs. 15,769/- for supply of rice and wheat and further security deposit of Rs. 25,000/- as cash deposit towards supply of palmolin oil from the plaintiff. The plaintiff alleges that on 9-5-1983 Vigilance Cell made surprise inspection and seized all the records and break open the locks of godown on 10-5-1983 calling his nephew-D. Kameswara Rao aged about 18 years and forced him to make some entries in the stock book with regard to 14 lorry loads during 3-5-1983 and 8-5-1983 which stock was never received by him. Further, Vigilance people stated to Kameswara Rao to pay an amount of Rs. 1,60,000/- under the threat of prosecution. Subsequently an order dated 5-11-1983 signed by Joint Collector in his capacity as Executive Director (2nd respondent) under Ex. A1 was served on him demanding payment of Rs. 6,09,956. 75ps. Questioning the correctness of the same plaintiff filed WP No. 5259 of 1985 and subsequently withdrawn the said writ petition. Meanwhile, he filed the above suit. In paragraph 7 of the plaint it is specifically stated that plaintiff learnt Government issued a notification under Section 52-A of the Revenue Recovery Act for recovery of the amount due under the said notification under Ex. A7 for enabling the defendant- corporation to recover the said amount of rs. 6,09,956. 75ps. from the plaintiff in the manner of arrears of land revenue. On issuance of notification the Mandal Revenue inspector issued notice Ex. A8 demanding payment of the amount threatening with distraint and without referring the dispute to arbitration in terms of the agreement the liability was fixed unilaterally without hearing him and without ascertaining the actual amount due. Therefore, the amount cannot be recovered and the claim, if any, of the 1st defendant is barred by limitation when computed from 5-11-1983. Section 52-A of the Revenue Recovery Act has no application to the facts of the case on hand. Therefore, he prayed (i) for a declaration that the order in R. C. No. 127/ 83 (B) E. C. C. dated 5-11-1983 is not only arbitrary, illegal and invalid but also void and therefore unenforceable; (ii) for a consequential relief of permanent injunction restringing the defendants from recovering or causing it to be recovered the amount in any manner whatsoever.

( 4 ) DEFENDANTS resisted the claim of the plaintiff and filed a written statement contending that the plaintiff misappropriated rice and wheat worth Rs. 9,54,229. 27 ps. , which was detected by the authorities of Vigilance Cell. They also detected shortage in rice and palmolin oil in the stocks allotted to the plaintiff. After deducting the commission payable to the plaintiff and deposits made by the plaintiff statement of account was prepared. According to which a sum of Rs. 6,09,956. 75 ps. was found due towards shortage of value of the stocks and copy of the said statement was furnished to the plaintiff along with a memo dated 5-11-1983 directing him to

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