Calcutta High Court
Bengal Rice Mills Association & Anr vs State Of West Bengal & Ors on 17 February, 2011
Author: Indira Banerjee
Bench: Indira Banerjee
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Order Sheet Serial No........
W.P. 1271 of 2009
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
In the matter of :
BENGAL RICE MILLS ASSOCIATION & ANR.
Vs
STATE OF WEST BENGAL & ORS.
Before:
The Hon'ble Justice
INDIRA BANERJEE
Date: 17.02.2011
JUDGMENT
In this writ application, the petitioners have challenged the West Bengal Rice Mills Wholesalers (Control & Levy) Order, 2009, hereinafter referred to as 2009 Levy Control Order.
Some of the relevant provisions of the 2009 Levy Control Order are set out hereinbelow for convenience:
"2.(m) "Rice" means rice produced or manufactured with power out of paddy, and includes broken rice (khud) but does not include 'Chira', 'Muri' and 'Khoi'. "Rice of Fair Average Quality"
means rice generally of the quality indicated in Schedule-II containing admixture of impurities within the maximum limits specified in column (3) of the said Schedule;
3. All paddy purchased by the State Government or its designated agency and the FCI shall conform to the Specifications laid down in Schedule-I of this Order.
4. Levy on rice produced in a rice mill or traded by a wholesaler:-
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(1) a) Every miller shall sell to State Government or its designated agency and the FCI minimum 50% of the quantity of rice produced or manufactured out of paddy received by him in any rice mill from the date of commencement of this order excluding paddy received from the designated agencies appointed by the Government of West Bengal or by the FCI, on instructions from the Government of West Bengal, specially for the purpose of milling for delivery as Custom Milled Rice to the designated agencies of the Government of West Bengal or to the FCI or for any other scheme of the Government.
b) Every Wholesaler shall sell to State Government or its designated agency and the FCI minimum 50 per cent of the quantity of rice dealt with or traded by him from the date of effect of this order. The rice purchased by the wholesaler for which R.C. has been issued once already, shall not come within the purview of this quantity.
(2) Rice sold under sub-paragraph (1) shall not contain admixture or impurities exceeding the rejection limit specified in Schedule-II and such rice shall be delivered to, and paid for by, the State Government or its designated agency and the F.C.I. at the appropriate procurement price specified in paragraph-5.
(3) For the purpose of calculating the actual quantity of rice saleable under sub-paragraph (1), a quantity of paddy shall be deemed to yield rice at the rate not lower than the rate of extraction specified in Schedule-II in respect of different areas and for different types, varieties and grade of paddy after allowing refraction as laid down in the Schedule-I of this order.
(4) The fixed percentage of rice saleable under Sub-
paragraph (1) may, by notification, be increased or decreased with the prior concurrence of the Central Government, in respect of any area or for any type, variety or grade of rice.
5. Procurement Prices:-
(1) For the purpose of this order the procurement prices for different varieties and grades of paddy and rice shall, 3 subject to provisions of sub-paragraph (2),(3) and (4) be as per rate fixed for the State by Central Government.
(2) The rates specified in sub-paragraph (1) are inclusive of all taxes and statutory charges including those leviable at the rice stage.
(3) The rates specified in sub-paragraph (1) includes the cost of gunny bag, container and other components like handling, transportation charges up to 8 K.M. from mills to depots of Government and its designated agency and the F.C.I., stitching the colour coding charges of two 50 Kg. bags, etc. (4) The rates specified in sub-paragraph (1) are for paddy and parboiled rice of fair average quality of both Common and Grade (A) varieties. The rates shall be reduced by the amount of cuts indicated in the notes below the Schedule-II.
6. Replacement/reconditioning of Rice offered for sale:- In case any stock of rice offered for sale by the millers in pursuance of paragraph 4 does not conform to the specifications laid down in Schedule-II, it shall be replaced or reconditioned or rectified by the miller at his own cost and risk so as to bring it in conformity with such specifications.
7. Delivery of Levy Rice:-
(1) The rice required to be sold to the State Government or its designated agency and the FCI under paragraph 4 shall be delivered by the miller or wholesaler, in the godown specified by the State Government and or the FCI to the Purchase Officer after 100% packing in double line machine stitched new B.T. Gunny bags. Such Gunny bags should be SBT of BIS Specification with safety stitches sewn for safe handling and acceptance of the levy rice. The millers/wholesalers will deliver levy rice in 50 kg. bags during 2009-2010 KMS.
(2) The Purchase Officer shall give a receipt to the miller or the wholesaler specifying the quantity and variety of the rice delivered by him and the date of taking delivery thereof.4
(3) The Purchase Officer shall, on receiving delivery of the rice, pay 95% of the prices for the quantity and the varieties of rice so delivered by the miller or the wholesaler calculated on the basis of the procurement price and obtain a receipt from the seller thereof. The payment of balance 5% of the prices shall be made after making such deduction, if required from the total prices as admissible under the specifications vide Schedule-II assessed on the basis of analysis as provided in sub-paragraph (4).
(4) The Purchase Officer shall, in the presence of the miller or the wholesaler or their agents, cause to be taken three representative-sealed samples of rice delivered under sub-
paragraph (3), hand over one sample to the miller, wholesaler or their agents and sent other two samples to the laboratory of the quality control branch of the State Government and the FCI, as the case may be. One of the two samples analysed in the said laboratory shall be returned to the Purchase Officer with a report of the analysis and the other retained thereof.
(5) The price payable for the stock of the rice shall be determined on the basis of the result of the analysis, which shall be communicated to the millers/wholesalers. (6) If within a week of the receipt of the result of the analysis the miller or the wholesaler/seller disputes the correctness of the result, the Purchase Officer, shall arrange to get the other sample, retained in the laboratory, reanalyzed after previous intimation to the miller or the wholesaler about the date and time fixed for such analysis. The miller or the wholesaler, if he so desires, may either present himself or depute his representatives to be present at such analysis. (7) The result of the re-analysis referred to in sub-paragraph (6) shall be binding on both the parties and the price payable for the stock of rice shall be determined on the basis of such result.
8. Certain restriction on Purchase of Paddy, Sale of Rice and Milling by millers/Wholesalers:-
(a) Millers shall purchase paddy from the farmers at a rate not below the MSP prescribed by the Govt. of India.5
(b) No miller shall sell, deliver or otherwise dispose of or move out of any rice mill any quantity of paddy owned by him, except under and in accordance with a permit granted by the District Controller.
(c) No miller or wholesaler shall sell, deliver or otherwise dispose of or move out of any rice mill or his godown/storing point any quantity of rice produced or manufactured in any such rice mill out of paddy owned by him or dealt/traded by him until he sells and delivers to the State Government or its designated agency and the FCI the quantity of rice required to be sold under the provision of sub-paragraph (1) of paragraph 4 and except in accordance with a release certificate issued by the Director.
(d) No miller shall produce or manufacture in his rice mill, rice out of any paddy not owned by him provided that the millers may produce rice out of paddy supplied by the State Govt. or its designated agency/FCI for custom milling under decentralized procurement or for any scheme of the Government.
9. Release Certificate:-
(a) Every miller or a wholesaler after delivery of rice under paragraph 7 may make an application in the form set out in Schedule-V to the Director for issue of a release certificate for disposal of levy-free rice.
(b) The application referred to in sub-paragraph (a) shall be accompanied by the receipt in original issued by the Purchase Officer in respect of delivery of rice under levy.
(c) On receipt of an application under sub-paragraph (a) the Director shall issue a release certificate for movement and disposal of levy-free rice. The release certificate shall be in the form set out in Schedule-VI provided that the millers or the wholesalers have delivered levy rice as per terms of paragraph 4 and that those delivering rice @ minimum 50% of their production/sale in terms of paragraph 4(1)(a) and (b) shall be eligible for getting Release Certificate only after levy delivery and after proper certificate of Inspecting Officer about quantity & quality of rice produced during the material period and quantity & quality of levy delivered.6
(d) The District Level Monitoring Committee shall coordinate all activities connected with procurement operations carried out by the State or its agencies including the FCI within the district.
10. Power to require miller to mill paddy:- The Director may, with a view to regulating the production or manufacture of rice of fair average quality or for expeditious milling of paddy held by the Government, direct miller to convert the whole or a specified quantity of paddy held by the Government into rice on such terms and conditions as may be specified by the Director with the prior approval of the Government:
Provided that the quantity of paddy to be given to any miller by the Government, in terms of the preceding para, during the Kharif Season beginning from 1st October, 2009 shall not exceed 40% of the annual milling capacity to be calculated on average of 300 working days.
11. Duty to comply with order or direction:-Every miller or wholesaler shall comply with such order or direction as is issued under the power conferred by or under this order."
The petitioners have questioned the requirement on every miller to sell to the State Government or its designated agency and the Food Corporation of India (FCI) at least 50% of the quantity of rice produced out of paddy received by the miller in any rice mill from the date of commencement of the 2009 Levy Control Order, excluding paddy received from the designated agencies appointed by the Government of West Bengal or by the FCI specially for the purpose of milling for delivery as custom milled rice to the designated agencies of the Government of West Bengal or to the FCI or for any other scheme of the Government.
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The 2009 Levy Control Order and in particular paragraph 5 thereof empowers the Central Government to fix the procurement price for different varieties of paddy and rice.
Like previous years, two sources have been identified for procurement of rice. One source is through the rice millers and wholesalers and the other source is through Government agencies, that is, FCI, WBECSC, BENFED, CONFED, NAFED, NCCF and self-help groups. The rice procured through rice millers is categorized as levy rice and rice procured through the Government agencies is categorized as custom milled rice.
As per the guidelines, the total quantity of levy rice for the season 2009-10 has been targeted at 10 lakh metric tonnes, out of which the State Government would procure 5.25 lakh metric tonnes and the remaining 4.75 lakh metric tonnes would be procured by the FCI.
The Minimum Support Price (MSP) of common paddy and graded paddy have been fixed at Rs.950 per quintal and Rs.980 per quintal respectively. In addition incentive bonus of Rs.50 per quintal has been added to the price of paddy.
By a memo dated 13 th November, 2009, the Department of Food and Public Distribution, Government of India has fixed the procurement price 8 for levy rice and by a memo dated 18 th November, 2009 the Government of India fixed the price of custom milled rice.
The main thrust of the challenge to the 2009 Levy Control Order is on the ground of discrimination. The price fixed for different varieties of levy rice and custom milled rice are set out in the table given below:
Commodity Custom Levy Rice Custom Levy Rice
Milled Milled
Common Common Grade-A Grade-A
Raw Rice 1709.63 1574.30 1758.16 1619.30
Par Boiled Rice 1686.11 1566.50 1733.48 1610.80
According to the petitioners both Government agencies and rice millers are obliged to deliver fair, average, quality rice. Reference is made to Paragraph 4(2) of the 2009 Levy Control Order which provides that rice sold to State Government or its designated agency and the FCI shall not contain admixture or impurities exceeding the rejection limit specified in Schedule-II and such rice shall be delivered to and paid for by the State Government or its designated agency and the FCI at the appropriate procurement price specified in Paragraph 5.
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The petitioners submit that both rice millers and the Government agencies are obliged to deliver the same quality of rice as defined in Schedule-II, that is, fair, average, quality rice. For the same variety of rice, the miller gets a lower price, but Government agencies such as BENFED and CONFED get a higher price for custom milled rice.
The petitioners submit that a comparative reading of the Circulars dated 13 th November, 2009 and 18 th November, 2009 would show that the rate of custom milled rice has been fixed at Rs.1686.11 per quintal whereas the rate of levy rice has been fixed at Rs.1566.50 per quintal.
Referring to the Circulars, the petitioners have pointed out that the price of custom milled rice has been determined upon addition of interest on cost price at the rate of 11.25% for two months, but the cost of levy rice does not. Similarly, in determining the price of custom milled rice allowance has been made of Rs.23.75 per quintal on account of administrative charges. The price of levy rice has been determined ignoring administrative charges.
The petitioners have submitted that levy rice as well as custom milled rice is despatched in gunny bags which get destroyed. A sum of Rs.17.22 has been included in the cost price of custom milled rice towards 10 depreciation of gunny bags but in the price of levy rice there is no allowance for depreciation of gunny bags.
Similarly, Government agencies have been allowed Rs.3.68 per quintal of paddy as custody and maintenance charges, and Rs.23.75 per quintal of custom milled rice towards Commission. The price of levy rice does not include any commission or custody or maintenance charges.
The petitioners have also argued that fixation of price of levy rice and custom milled rice is discriminatory, in that millers and Government agencies have not been treated equally.
The petitioners also submit that the requirement under the 2009 Levy Control Order that all rice millers should deliver to the State Government 50% of their production of levy rice from paddy except for paddy received from designated agencies of the Government for milling and delivery to those designated agencies is arbitrary.
The factual issue as to whether levy rice sold by millers and custom milled rice sold by Government agencies are of the same quality or different quality cannot be adjudicated upon affidavits by this Writ Court exercising jurisdiction under Article 226 of the Constitution of India. This Court 11 cannot decide whether rice produced by the rice millers is of the same quality, or of superior quality or of inferior quality.
Although the 2009 Levy Control Order has been challenged as violative of Article 19 (1) (g), the petitioners have not been able to demonstrate how the right of the petitioners to carry on business has been affected by the 2009 Levy Control Order.
The allegation of discrimination between millers and Government agencies is also not sustainable since millers and Government agencies are not equally circumstanced. It is well-established that unequal treatment of equals violates Article 14. There is no uniform rule of equality of persons and/or bodies not equally circumstanced.
The petitioners have submitted that on a conjoint reading of sub- paragraphs (a), (b) and (c) of Section 3 of the Essential Commodities Act, 1955 the respondents concerned were obliged to calculate price of an essential commodity at the market rate prevailing in the locality in the absence of agreement. Even assuming that the concerned respondents were so obliged, no materials have, however, been adduced on the basis of which this Court can conclusively determine the market price of rice or arrive at the finding that price fixation was done ignoring the market rate. 12
This Court exercising jurisdiction under Article 226 of the Constitution of India does not examine the correctness of price fixed by the appropriate authorities for essential commodities. In Prag Ice and Oil Mills vs. Union of India reported in 1978 SC 1296, the Supreme Court held that price fixation was neither the function nor the forte of the Court. The Court was neither concerned with the policy nor with the rates. But the Court in an appropriate case had jurisdiction to enquire into the question of whether relevant factors had been taken into consideration and irrelevant factors had been kept out of consideration. For example, if the legislature had decreed the pricing policy and prescribed the factors which should guide the determination of the price, the Court would, if necessary, enquire into the question of whether the policy and the stipulated factors were taken into account by the authorities specifying the price. The Supreme Court held that the assembling of the raw materials and the mechanics of price fixation were the concern of the executive. The Court would not reevaluate the considerations even if the prices were demonstrably injurious to some manufacturers or producers.
In Welcome Hotel vs. State of Andhra Pradesh reported in AIR 1983 SC 1014 the Supreme Court reiterated that price fixation had necessarily to be left to the judgment of the executive and unless there was hostile discrimination against a class of operators such price fixation would have to be accepted.
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In Union of India vs. Cynamide India Ltd. reported in AIR 1987 SC 1802 the Supreme Court held that in the analysis, the mechanics of price fixation had necessarily to be left to the judgment of the executive, and unless it was patent that there was hostile discrimination against a class of operators, the procedural basis of price fixation had to be accepted in the generality of cases as valid.
In W.P. No.1228 of 1999 (M/s. Pallishree Rice Mill and Ors. vs. State of West Bengal & Ors.) a Single Bench of this Court found that there was an admission that fixation of price for compulsory sale of paddy and rice in the concerned levy order was not reasonable. The Central Government and the State Government were given the liberty to refix the same. The aforesaid judgment upholds the power of the Central Government/State Government to determine the levy price.
In Pijus Kanti Chowdhury vs. State of West Bengal & Ors. reported in 2007 (3) CHN 178, cited on behalf of the petitioners the Division Bench held that when a decision had been declared ultra vires by an order of the High Court, the State could not invoke the ultra vires even simply because the operation of the order of the High Court had been stayed by the Supreme Court temporarily. It is well-established that a judgment remains valid until set aside by a superior Court, even though the operation thereof may 14 remain stayed, pending disposal of an appeal. The judgment has no application to the facts of this case.
No statute is immune from challenge. As held by the Supreme Court in K.T. Moopil Nair vs. State of Kerala reported in AIR 1961 SC 552, cited on behalf of the petitioners, even a taxing statute is not immune from attack on the ground of violation of Article 14. It is, however, nobody's case that a taxing statute is immune from attack on the ground of violation of Article
14. In State Bank of India vs. The State of West Bengal & Ors. reported in 1979 (1) CLJ 363, this Court held various provisions of the West Bengal Multi-storied Building Tax Act, 1975, ultra vires Article 14 of the Constitution of India. The Court found that having regard to the definition of multi storied building in the said Act whereby any building in an urban area comprising five storeys or more was a multi storied building the levy of tax at a uniform rate on all multi-storied buildings irrespective of the locality, the age of the building, the cost and quality of construction and the like, was arbitrary and violative of Article 14 of the Constitution of India. This Court observed that there were multi storied buildings in different parts of Calcutta and other towns to which the Act might be applied, some of which were in developed areas whereas others were in less-developed areas. A five storied building constructed in Cossipore or Beliaghata long 15 ago could not be considered to be equal to a newly constructed five storied building in Park Street and subjected to tax at the same rate. The judgment can have no application to this case.
In Bhim Singhji vs. Union of India & Ors. reported in 1981 (1) SCC 166, the Supreme Court held that certain provisions of the Urban Land (Ceiling & Regulation) Act, 1976 was taken as ultra vires the constitution of India. The judgment also has no application in the facts and circumstances of this case.
In A. N. Parasuraman & Ors. vs. State of Tamil Nadu reported in 1989 (9) SCC 683, certain provisions of the Tamil Nadu Educational Institutions (Regulation) Act, 1966 were challenged on the ground that no guidelines were laid down for exercise of power by the delegated authority as a result of which the authority was in a position to act according to its whims.
Section 6 of the said Act empowered the competent authority to grant or refuse permission to run a private educational institution without laying down any guidelines for grant or refusal of permission. The Supreme Court found that the competent authority could exercise power to grant or refuse permission arbitrarily by picking and choosing institutions. Similarly, Section 22 empowered the Government to exempt by notification any private educational institution or class of private educational institutions from all 16 or any of the provisions of the said Act without specifying which class of institutions would be eligible for exemption. The judgment has no manner of application in this case.
In H.S.S.K. Niyami & Ors. vs. Union of India & Anr. reported in AIR 1990 SC 2128 the Supreme Court upheld the vires of Section 3(3C) of the Essential Commodities Act, 1955, as also zoning of areas for determination of price. The Supreme Court held that individual sugar factories need not be given notice of hearing.
The challenge to the 2009 Levy Control Order cannot be sustained for the reasons discussed above.
The writ application is dismissed.
(Indira Banerjee, J.)