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2012 Supreme(Mad) 3033
High Court of Judicature at Madras
VINOD K. SHARMA
Sri Padmavathi Modern Rice Mill rep by its Proprietor B. Gangatharan & Others
Versus
The Government Of Puducherry, rep by its Joint Secretary, Dept. Of Civil Supplies And Consumer Affairs & Another
W.P.No.21095 of 2011
Decided on: 17-07-2012
For the Petitioners:V. Raghavachari, Advocate.
For the Respondents:T. Murugesan, SC for Miss N. Mala, Advocate.
The Government cannot arbitrarily withdraw an incentive granted to citizens, especially with retrospective effect, as it violates the principles of promissory estoppel and legitimate expectation.
Headnote:
Levy Price - Single Boiled Rice - Incentive - Retrospective Withdrawal - Legality - Essential Commodities Act, 1955 - Puducherry Paddy and Rice Procurement (Levy) Order, 1996 - G.O.Ms.No.30 dated 05.01.2011 - G.O.Ms.No.3 dated 18.08.2011 - G.O.38 dated 27.03.2012 - Constitutional Validity.
Fact of the Case:
Petitioners, rice mill owners, challenged the notification issued by the Government of Puducherry withdrawing the incentive granted to them for the procurement of single boiled rice under the Puducherry Paddy and Rice Procurement (Levy) Order, 1996. The incentive was granted vide G.O.Ms.No.30 dated 05.01.2011 to compensate for the low Out Turn Ratio (OTR) of single boiled rice. The Government subsequently withdrew the incentive vide G.O.Ms.No.3 dated 18.08.2011, which was further modified by G.O.38 dated 27.03.2012. The petitioners contended that the withdrawal of incentive was arbitrary, violative of the principles of promissory estoppel and legitimate expectation, and that the Government had no authority to pass the impugned order retrospectively.
Finding of the Court:
The Court held that the impugned notification was illegal and quashed it. It held that the incentive granted to the petitioners was not a mere concession but a part of the statutory price payable for single boiled rice, as determined by the Government of Puducherry in exercise of its powers under Section 3 of the Essential Commodities Act, 1955. The Court further held that the Government could not arbitrarily withdraw the incentive, especially with retrospective effect, as it violated the principles of promissory estoppel and legitimate expectation. The Court also held that the Government had no authority to pass the impugned order retrospectively, as it was in violation of the principle of rule of law.
Issues: 1. Whether the Government of Puducherry had the authority to withdraw the incentive granted to the petitioners retrospectively? 2. Whether the withdrawal of incentive was arbitrary and violative of the principles of promissory estoppel and legitimate expectation?
Ratio Decidendi: 1. The Government of Puducherry did not have the authority to withdraw the incentive granted to the petitioners retrospectively, as it was in violation of the principle of rule of law. 2. The withdrawal of incentive was arbitrary and violative of the principles of promissory estoppel and legitimate expectation, as the petitioners had acted on the assurance given by the Government and had altered their position to their prejudice.
Final Decision: The Court allowed the writ petition and quashed the impugned notification G.O.Ms.No.3 dated 18.08.2011, as modified vide G.O.38 dated 27.03.2012, with no order as to costs.
1. The petitioners, who are rice mill owners, have invoked the writ jurisdiction with a prayer for issuance of a writ in the nature of Certiorari to quash the notification issued vide G.O.38 dated 27.03.2012, being illegal, incompetent, unconstitutional and without jurisdiction.
2. The Director, Department of Civil Supplies and Consumer Affairs, Puducherry, entered into a statutory contract with the Millers for procurement of single boiled rice under Clause-3 of Puducherry Paddy and Rice Procurement (levy) Order 1996.
3. The petitioners, under the contract, undertook to sell singled boiled rice to the Government at the rate acceptable to both the parties. The petitioners agreed to supply single boiled rice under fifty percent levy system. The procurement policy of rice and paddy (levy Order) 2010, stipulated formation of a committee for implementing the provisions of levy order.
4. The Government Order 18 dated 03.09.2010 was issued for forming of committees. In order to effectively implement the scheme, the Government of Puducherry issued different Government orders from time to time, including the Government Orders with regard to fixing of the rate.
5. The Government of Puducherry issued G.O.17 dated 18.08.2010 to enforce fifty percent levy on licensed Millers, wherein it was stipulated THAT;
i) Food Corporation of India (FCI) will be the agent of Union of Puducherry for procurement of rice from the rice Millers.
ii) the rice will be procured at the rate fixed by the Government of India from time to time for each season and the FCI was to pay procurement price to Millers.
iii) the licensed rice Millers were obliged to deliver fifty percent of the total production as mill levy to FCI. The FCI was to make arrangement for procurement of 61,000 metric tonnes of single boiled rice as per the specification approved by the Government of India. The Millers were also directed to deliver 17,000 metric tonnes of single boiled rice for KMS 2009-2010.
iv) the committee was also constituted to fix the mill wise target
6. The Government of India in exercise of statutory function, notified the cost fixed for single boiled rice for 2009-2010. The notification dealt with the price for not only Puducherry, but many States.
7. It is the submission of petitioner, that Union Territory of Pondicherry is the predominant user of single boiled rice in the entire country and no other State has entured into it. It was in view of the cost factor involved for single boiled rice, that the Central Government undertook to pay the price through FCI and the excess price for single boiled rice was to be borne by the Government of Puducherry.
8. It is submitted that the Union Territory of Puducherry was aware, that the purchase of single boiled rice will be costlier than parboiled rice or double boiled rice.
9. The rate fixed by the Central Government in exercise of statutory powers for Grade-A during the KMS year 2009-2010, was Rs.1620.50 (Rupees One Thousand Six Hundred Twenty and Paise Fifty only) and for KMS 2010-2011, it was Rs.1619.20 (Rupeees One Thousand Six Hundred Nineteen and Paise Twenty only).
10. The Millers expressed their difficulties in supplying single boiled rice at the rate fixed, as in the preparation of single boiled rice, there is substantial wastage. It was therefore thought fit to constitute a committee, for submission of the report. It was in pursuance to the report submitted, by the duly constituted committee, that the Government of Puducherry issued G.O.30 dated 05.01.2011, stipulating payment of incentive to sustain Millers.
11. The stand of the petitioners is that the term incentive was misnomer, as in fact, it was compensation to recuperate the loss. The basis for incentive was the recommendation of the committee, constituted by the Government. It is the submission of petitioners, that the report of the Indian Institution of CROP Processing Technology (Ministry of Food Processing Industries, Government of India),
