This writ petition under Article 226 of the Constitution of India is filed, seeking to declare the action of the Food Corporation of India in recovering the amounts on account of non payment of Minimum Support Price (MSP) for Non FAQ paddy as arbitrary, illegal, ultravires and unconstitutional and violative of the Petitioners' rights guaranteed under Articles 14 and 19 of the Constitution of India and consequently to declare the Common Letter No.Accts/CAG/V-365/Reply/2009-10 issued to the Petitioners as arbitrary, illegal and Ultravires.

2. Heard Sri R.Sudheer, learned counsel for the petitioners and Sri Vedula Venkataramana, learned Senior Counsel for the counsel on record for Food Corporation of India, apart from perusing the material available on record.

3. The pleaded case of the petitioners is as under:

3.1 Petitioners are the Rice Mills engaged in the business of purchasing paddy from the farmers and milling the same into rice and the said business is regulated by the A.P. Rice Procurement Levy Order, 1984 issued in exercise of the powers conferred under Section 3 of the Essential Commodities Act. Clause 2(j) of the Control Order authorises the Collector or an Officer authorised by him to issue permit to undertake custom milling of paddy. As per Clause 2(k), procurement price means the price specified in Schedule III for different varieties of paddy and for rice as specified in Schedule IV or V as fixed by the State Government with the prior concurrence of the Central Government from time to time. Clause 3 stipulates that every licensed miller shall sell to the Food Corporation of India or State Corporation at the procurement price 75% of the total quantity of (a) each variety of rice confirming to specification owned by him, which is held in stock on the date of commencement of the order; (b) each variety of rice confirming to specification got milled by him everyday out of the stocks of paddy and (c) each variety of rice confirming to specification purchased or otherwise acquired by him for the purpose of sale from persons other than a licensed miller or a licensed dealer. During the year 2005-06 and 2006-07, the Government fixed MSP (Minimum Support Price) for paddy at Rs.580/- and Rs.610/- for common and Grade-A varieties and the Government also announced an incentive bonus of Rs.40/- per quintal and according to which a Miller is bound to pay Rs.620/- and Rs.650/- for common and Grade-A varieties. The said price is applicable to the Fair Average Quality (FAQ) paddy. On the ground that the CAG Auditors pointed out that the Rice millers paid less than the MSP to the farmers, the Area Manager of the Food Corporation of India vide Lr.No.Acct/CAG/V-365/2008-09 dated 6.11.2008 requested the President of the Nizamabad Rice Millers Association to make necessary arrangement to remit the amount by the concerned Rice Millers. The District Collector vide letter dated 9.4.2009 informed the Food Corporation of India that the Millers paid MSP for paddy of FAQ grade and in respect of Non FAQ paddy, the millers purchased below MSP price and the Collector further clarified that the Non FAQ paddy was purchased in terms of the operational guidelines issued by the Government and pursuant thereto, the Food Corporation of India vide its letter dated 9.4.2009 informed the same to the office of the Comptroller and Auditor General of India for dropping all actions. Despite the same the Respondent Corporation addressed letter dated 6.7.2010 to the President of Nizamabad Rice Millers Association informing the adjustment/recovery of the amounts payable to the millers for the period 01-10-2009 to 31-03-2010 towards market fee and ST on gunnies.

4. Pleading in the manner indicated supra and while contending that the above said action which culminated in the impugned letter dated 6.7.2010 is arbitrary, illegal, ultravires and unconstitutional and violative of the Petitioners' rights guaranteed under Articles 14 &19 of the Constitution