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2024 Supreme(Cal) 909
IN THE HIGH COURT AT CALCUTTA
SUBHENDU SAMANTA, J.
In The Matter Of
NPG Rice Mill Private Ltd. & Anr. – Appellants
Versus
The State of West Bengal & Ors. – Respondents
WPA 15978 of 2024
Decided on : 09-08-2024
Advocate Appeared:
For the Petitioners: Mr. Debabrata Saha Roy, Adv., Mr. Pingal Bhattacharyya, Adv., Mr. Subhankar Das, Adv., Mr. Neil Basu, Adv. Mr. Sankha Biswas Adv.
For the State : Mr. Swapan Kr. Datta, Adv., Mr. Dipankar Das Gupta Adv.
IMPORTANT POINT
The court established that a company's liability under the Essential Commodities Act does not extend to automatic de-empanelment based on a director's arrest without direct evidence of wrongdoing.
Headnote:
Judicial Review - Writ Jurisdiction - Essential Commodities Act 1955, Section 10 - The court interpreted the provisions of the Essential Commodities Act regarding corporate liability and the nature of the agreement between the parties, concluding that the state’s refusal to empanel the petitioner was unjustified.
Fact of the Case:
The petitioner, a rice mill company, was de-empanelled for the Kharif Marketing Season 2023-2024 after one of its directors was arrested. The petitioner claimed this decision was arbitrary and violated their rights, as they had fulfilled their contractual obligations in previous seasons.
Finding of the Court:
The court found that the state’s action to de-empanel the petitioner lacked justification, as there was no evidence linking the director's arrest to any violation of the Essential Commodities Act. The court emphasized that the agreement was not purely commercial and had public elements.
Issues: Whether the state’s refusal to empanel the petitioner based on the arrest of a director was justified and whether the writ petition was maintainable given the nature of the agreement.
Ratio Decidendi: The court held that the arrest of a director does not automatically implicate the entire company in liability under the Essential Commodities Act, and the state failed to provide sufficient grounds for de-empanelment.
Result: The court quashed the state’s order and directed the empanelment of the petitioner’s rice mill for the next Kharif Marketing Season.
JUDGMENT :
Subhendu Samanta, J.
1. Affidavit of service filed on behalf of the petitioners is taken on record.
2. Present petitioner No. 1 is a Private Ltd. Company running a rice mill and petitioner No. 2 is one of the Directors of the company. The present petitioner company is running the rice mill with an agreement with the Government to carry out procurement of paddy at Minimum Support Price (MSP) directly from the farmers at Centralized Procurement Centres (CPC) notified by the Government or by setting up Direct Purchased Camps (DPC) to be fixed by the District Administration and conversion of the same into Customs Milled Rice (CMR) and delivery of CMR to various State godown(s) of Food & Supplies Department, Government of West Bengal. The agreement usually executed between the petitioner and the State for each Kharif Marketing Season (KMS), It is the case of the present petitioner that initially the agreement was executed on 29th October, 2018 for KMS 2018-2019. After completion of the term, another agreement was also entered into for Kharif Marketing Season (KMS) 2022-2023 on 21st of October, 2022. It is the case of the present petitioner that they are executing the terms of the agreement by procurement of Customs Milled Rice (CMR) and by delivering the same to the department concerned without any objection or complaint from any corner. Suddenly, the present petitioners were de-empanelled for the Kharif Marketing Season (KMS) 2023-2024. The petitioner made representation to the concerned State authority wherein the State authority verbally submits that one of the Directors of the Company was arrested by the Enforcement Directorate, thus, the company has been de-empanelled.
3. The petitioners made specific representation to the Government authority but their representation was not considered. Thus, he moved before this Court in a writ petition being WP No. 4764 of 2024. The writ petition was disposed of by a Co-ordinate Bench of this Court directing the Government authority concerned to dispose of the representation by giving a reasonable opportunity for being heard.
4. The Government authority has disposed of a representation vide impugned order dated 09.05.2024.
5. Being aggrieved by and dissatisfied with the said impugned order the instant writ petition has been preferred.
6. Mr. Debabrata Saha Ray Learned Counsel appearing on behalf of the petitioner submits that the impugned order passed by the principle secretary has no basis. The order was actually on the basis of speculations. The order of not empanelling petitioners company for Kharif Marketing season (KMS) 2023-24 is purposive and illegal.
7. Mr. Saha Ray submits that it is true one of the director of the rice mill has been arrested by the Enforcement Directorate and in the jail custody but for that reason the entire rice mill cannot be held liable. He further submits that there are more than 500 employees engaged in the said rice mill, due to the non-empanelment of the present rice mill the livelihood of the said employees are at stake. Mr. Saha Ray further argued that by filing this writ petition petitioner undertake to deposit 100% bank guarantee over the value of the procured paddy. Thus if situation arises the government shall suffer no loss.
8. Respondent no. 1-3 and 8 used the affidavit against the writ petition it is the contention of the state that the petitioners have no legal right to claim for re-empanelment after expiry of the agreement for Kharif Marketing Seasons (2022-23) on 21.10.2023.
The said agreement between the petitioners and the Government is purely commercial in nature and for a specific period of one year. The said agreement has not been enumerated any auto-renewal clause for further period after its expiry. Empanelment, re-empanelment or renewal of agreement by way of entering into a fresh agreement is solely at the discretion of either party based on the requirement of conversion of paddy to rice for distribution in PDS etc; and as such the pe
