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2025 Supreme(Online)(J&K) 819
IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT JAMMU
Wasim Sadiq Nargal, J
Mahajan Roller Flour Mills – Appellant
Versus
Food Corporation of India – Respondent
WP(C) No.261/2023 | WP(C) No.1651/2022
For the Appellants/Petitioners:Mr. Ankesh Chandel, Advocate, Mr. Sunil Sethi, Sr. Advocate, Mr. Paras Gupta, Advocate
For the Respondents:Mr. Ahtsham Hussain Bhat, Advocate
The CAG lacks authority to assess agricultural produce quality; unilateral recovery without due process violates natural justice.
Headnote:(A) Food Corporation Act - Recovery proceedings against defaulting bidders - Violation of principles of natural justice. (Paras 1, 30, 49, 74)
(B) CAG Reports - Authority of CAG limited to financial auditing, not quality assessments - Unilateral actions based on CAG reports are unsustainable. (Paras 36, 74)
(C) Jurisdiction - Disputes under contract must be resolved in competent courts - Unilateral actions by Food Corporation of India infringe contractual terms. (Paras 55, 74)
Facts of the case:
The petitioners, engaged in the flour milling business, challenged recovery notices issued by the Food Corporation of India regarding alleged lifting of inappropriate wheat quality without evidence. Procedural fairness was not upheld in the communication which did not provide an opportunity to respond.
Findings of Court:
Recovery proceedings initiated were quashed as they violated natural justice, lacked adequate evidence and were untimely.
Issues: Central issues included whether the CAG could comment on agricultural produce quality and whether recovery proceedings were lawful without the opportunity to contest findings.
Ratio Decidendi: The court held that the CAG's role does not extend to adjudicating quality disputes and emphasized the necessity of fair hearing before adverse actions.
Result: Both writ petitions allowed; recovery communications quashed and respondents restrained from further actions.
| Table of Content |
|---|
| 1. argument on denial of due process. (Para 12 , 13) |
| 2. cag's authority limits regarding agricultural quality. (Para 30 , 39) |
| 3. principles of natural justice in administrative action. (Para 50 , 64) |
| 4. quashing of fci's recovery orders. (Para 71 , 75) |
JUDGMENT
01. By this common judgment, both th e petitions are proposed to be disposed of as the issues involved in them are identical in nature.
Brief Facts in WP(C) 261/2023
02. The petitioner through the medium of the instant petition WP(C) No. 261/2023 is challenging communication bearing No.JI(S)/OMSS(D)/ Defaulter parties/2021-22/1638 dated 07.09.2021 along with the proceedings initiated thereof which has adversely affected the rights of the petitioner as the same has been passed without there being any application of mind, evidence on record or for that matter giving an opportunity of being heard to the petitioner.
03. The petitioner’s firm is engaged in the business of manufacturing of refined flour, atta, maida, suji and allied products in their factory establishment situated at Gangyal, Jammu J&K having valid registration certificate and the firm stands registered through all the Government Authorities. That the Food Corporation of India which is a Statutory Body and has been created under the Food Corporation Act has been assigned the role of distribution, procuring and maintaining operational and buffer stocks of food grains throughout the territory of India and to ensure that the national food security invites e-tenders from the various stake holders for the purpose, including the lifting of wheat from Godowns and Depots in large quantities.
04. In the aforesaid backdrop, the respondents issued e-tender/NIT bearing Comml.2(1)/Wheat/OMSS(D)/J&K/15-16 dated 28.03.2016 inviting bids from the empanelled traders/bulk consumers for the sale of Wheat under OMSS(D) lying at various Depots under FCI Regional Office, Jammu J&K through E-Auction dated 28.03.2016 which has been reflected in the order impugned. The NIT also lays down the various terms and conditions governing the e-auction. The petitioner firm applied to the aforesaid tender dated 28.03.2016 and submitted his bid after signing all the requisite documents and the petitioner also deposited the Earnest Money and was declared as successful bidder on 31.03.2016 and was allotted the contract for the quantity of 1500/ Metric Tonne against which the petitioner had paid the requisite amount including the EMD for lifting of the Wheat from the Depot of FCI.
05. The petitioner through the medium of the instant petition bearing WP(C) No.261/2023 has sought quashment of the recovery which has been initiated by the Food Corporation of India through its General Manager by virtue of which the recovery proceedings have been initiated against the petitioners and an amount of ₹2,71,515/- stands recoverable against the petitioners on account of lifting of FAQ Wheat other than the tendered crop for the year 2015-16 URS wheat stocks under OMSS(D) scheme.
06. It is a specific case of the petitioner that the aforesaid communication has been issued without due application of mind and without providing an opportunity of being heard to the petitioner and on the other hand the respondent-Food Corporation of India has unilaterally came to the conclusion that the aforesaid amount is recoverable from the petitioner. In addition, the respondents have also blocked other e-tenders of the petitioners which have nothing to do with the e-tender against which the alleged dispute has arisen.
07. The allegation made in the aforementioned communication that FAQ wheat was lifted from the designated depots instead of URS wheat for the crop year 2015-16, allegedly causing a loss to the corporation, according to the petitioner, is entirely baseless, lacking credible evidence, and made without affording the petitioner any opportunity to be associated with or respond to the findings recorded by the respondents.
Brief facts in WP(C) No. 1651/2022
08. The pr
