Patna High Court
M/S Shivam Mini Modern Rice Mill vs The State Of Bihar & Ors on 22 July, 2014
Author: Mihir Kumar Jha
Bench: Mihir Kumar Jha
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.9133 of 2014
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M/s Shivam Mini Modern Rice Mill, through its Proprietor Pankaj Kumar son of
Vijay Kumar, resident of village - Rafiganj, P.S. Rafiganj, District - Aurangabad
.... .... Petitioner/s
Versus
1. The State of Bihar through District Magistrate, District - Aurangabad
2. The Bihar State Food and Civil Supplies Corporation Limited through its
Managing Director, District - Aurangabad
3. The District Manager, Bihar State Food and Civil Supplies Corporation Limited,
Aurangabad, District - Aurangabad
4. The Food Corporation of India, through its Divisional Manager, Gaya Division,
District - Gaya
5. The Store - in - charge, State Food Corporation, Rafiganj Centre - 1, P.S.
Rafiganj, District - Aurangabad
6. The Store - in - charge, State Food Corporation, Pauthu Centre - 2, P.S. Pauthu,
District - Aurangabad.
.... .... Respondent/s
with
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Civil Writ Jurisdiction Case No. 12355 of 2014
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M/s Bakaur PACS Rice Mill through its Proprietor, Smt. Meena Devi W/o
Maheshwari Prasad Yadav R/o Village Sihe, P.O. Bakaur, P.S. Supaul Sadar
District Supaul.
.... .... Petitioner/s
Versus
1. The State of Bihar through its Principal Secretary, Food and Consumers
Department, Govt. of Bihar, Patna.
2. District Magistrate, Supaul.
3. Managing Director, Bihar State Food and Civil Supplies Corporation (HQ)
Patna.
4. District Magistrate, Bihar State Food Corporation Ltd., Supaul.
.... .... Respondent/s
with
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Civil Writ Jurisdiction Case No. 12356 of 2014
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Shyam Chandra Kumar, S/o Ram Ekbal Sah, Proprietor Shivam Rice Mill,
Sonbarsa, Sitamarhi, resident of village and post office Haribela, Police Station
Bathnaha, District Sitamarhi.
.... .... Petitioner/s
Versus
1. The State of Bihar through the Principal Secretary, Food and Consumer
Protection Department, Government of Bihar, Patna..
2. The District Magistrate, Sitamarhi.
3. The Sub Divisional Officer, Sitamarhi, District Sitamarhi.
4. The Bihar State Food and Civil Supplies Corporation Limited through its
Chairman, Patna.
5. The District Manager, State Food Corporation, Sitamarhi.
6. The Food Corporation of India through its Managing Director, New Delhi.
.... .... Respondent/s
Patna High Court CWJC No.9133 of 2014 dt.22-07-2014
2/9
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Appearance :
(In CWJC No. 9133 of 2014)
For the Petitioner/s : Mr. Sumeet Kumar Singh, Advocate.
For the Respondent/s : Mr. Raj Nandan Prasad, S.C. 9
For the Corporation : Mr. R.S.Pradhan, Sr. Advocate.
Mr. Shailendra Kumar Singh, Advocate.
Mr. Amrendra Narayan Rai, Advocate.
(In CWJC No. 12355 of 2014)
For the Petitioner/s : Mr. Ishwari Singh, Advocate.
For the Respondent/s : Mr. Vinay Kumar, AC to SC 4
For the Corporation : Mr. R.S.Pradhan, Sr. Advocate.
Mr. Shailendra Kumar Singh, Advocate.
(In CWJC No. 12356 of 2014)
For the Petitioner/s : Mr. Ambuj Nayan Chaubey, Advocate.
For the Respondent/s : Mr. S.S.Prasad, S.C. 10
For the Corporation : Mr. R.S.Pradhan, Sr. Advocate.
Mr. Shailendra Kumar Singh, Advocate.
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CORAM: HONOURABLE MR. JUSTICE MIHIR KUMAR JHA
ORAL JUDGMENT
Date: 22-07-2014
Heard learned counsel for the parties.
2. All these three writ applications, having filed on
identical facts with the same cause of action as with regard to a
challenge to the demand notice for payment of price of Custom Milled
Rice (CMR) in lieu of paddy received by the petitioners pursuant to a
written separate agreement entered between the petitioners and the
Bihar State Food Civil Supplies Corporation Limited (hereinafter
referred to as 'the Corporation'), have been heard together and are
being disposed of by this common judgment.
3. At the outset, it has to be noted that the petitioners, in
CWJC No. 9133 of 2014, has assailed the demand notice dated
24.04.2014whereby and whereunder he has been directed to pay a Patna High Court CWJC No.9133 of 2014 dt.22-07-2014 3/9 sum of Rs. 33,83,688/- by way of CMR whereas in CWJC No. 12355 of 2014, the petitioner has assailed the demand notice dated 16.05.2014 directing it to deposit a sum of Rs. 50,45,754.80 and in CWJC No. 12356 of 2014 by a similar demand notice dated 31.05.2014 directing the petitioner to deposit price of CMR amounting to Rs. 2,46,73,394.48 has been assailed primarily on the grounds that the Corporation, having itself violated the terms and conditions of the respective agreement with the petitioners, was not entitled to raise such demand notice.
4. Learned counsel for the petitioners, in all these three cases, have sought to primarily assail the demand notice on the ground that prior to issuance of the demand notice no notice and/or opportunity of hearing was given to the petitioners. It has further been submitted by the learned counsel for the petitioners that in these three cases though it is true that the petitioners had entered into an agreement with the Corporation for lifting the paddy and also supply of CMR in lieu of paddy but when the quality of the paddy was found atrocious and the CMR prepared by them was not being lifted by the authorities of the Corporation, the petitioners cannot be held to be liable for payment of any amount much less the impugned demand notice issued by the Corporation specially when their action also in respect to admitted supply of CMR either in respect of milling charges or transportation charges have not been settled and paid to them as Patna High Court CWJC No.9133 of 2014 dt.22-07-2014 4/9 yet.
5. Mr. R.S.Pradhan, learned senior counsel for the Corporation, on the other hand, has submitted that all the three petitioners are bound by inter-party agreement wherein they had not only undertaken to return CMR in lieu of paddy received by them but also to compensate the Corporation if CMR was not delivered to the Corporation in terms of the agreement. Mr. Pradhan, in this regard, also submits that a writ petition of the present nature will not be maintainable for enforcing the terms and conditions of the agreement on the grounds of its being non-statutory. In this regard, he has also relied on a judgment of the Apex Court in the case of M/s Radhakrishna Agrawal & Ors. vs. State of Bihar and Ors. reported in 1977 SC 1496.
6. In the considered opinion of this Court, all such writ applications including the present three of them, in which only demand notices have been questioned by the individual rice mill, are not maintainable in view of the law laid down by the Apex Court in the case of Radhakrishna Agrawal (supra).
7. Let it be noted that in all these cases, there is an identical agreement between the petitioners and the Corporation wherein it has been undertaken by the petitioners, in capacity of second party, as described in such agreement that upon receipt of the paddy for milling by them, they will deliver proportionate percentage Patna High Court CWJC No.9133 of 2014 dt.22-07-2014 5/9 of CMR to the Corporation. To that extent, Clause 3 to 16, being relevant, are quoted hereinbelow:
"3. The second party is at liberty to take paddy for milling as much as the quantity he desires during the said procurement season in accordance with his monthly milling capacity but, he has to furnish bank guarantee for the value of paddy, which he takes for milling or in case, he is not capable of furnishing bank guarantee, he has to pledge immovable property in the form of mortgage bond for the rest amount or he can pledge immovable property for the entire value of paddy which he takes for milling. The property details so mortgage must be certified to be in his one name by the competent authorities either by the circle officer of the block or SDO of the concerned sub-division so that in case of default of second party or any deviation of paddy may be recovered.
4. Out turn ratio for par boiled rice is 68% and for raw rice 67% on 'As where is" basis and by-product like husk, broken etc. obtain from milling shall be property of the second party.
5. After receipt of paddy second party will deliver proportionate percentage of rice within a month from the date of receipt of paddy and only then, any further paddy as desired according to monthly milling capacity will be issued to the second party by the first party. In case of delay in delivery of proportionate percentage of rice, appropriate penalty in terms of money will be charged by the competent authorities with interest at Bank lending rate.
6. Rice will be accepted in the same gunny bags in which the paddy is delivered by first party. For the first consignment/Lot, rice will be delivered by the second party in new SBT gunny bags. The excess gunny bags will be returned by the second party and if retained by the second party, then cost of excess gunny bags (in which paddy is supplied to second party) will be deducted by the first party @ 60% of new gunny bags at the purchase rate from DGS & D, Kolkata for KMS 2012-13 and will be adjusted from the bills submitted by the second party.
7. The second party will provide godowns at their premises as per milling capacity for storage of paddy, CMR, so that the authorized representative of first party or Food and Consumer Protection Department can inspect the stock quantity and quantity of CMR ready for delivery to first party. The second party will store paddy at the mill premises only. Storage of paddy shall not be store at any other place.
8. Rs. 20/- per quintal as paddy milling charges will be paid for par boiled rice and Rs. 10/- per quintal milling charges will be paid for raw rice to the second party after getting the proper bill from the second party.
9. Rice shall be bagged in standard weight of 50kg. and all bags are to be double machine stiched in red thread and bags should be duly stencilled with blue colour showing name of the mill and station, crop year, net weight, commodity, variety and lot no. Patna High Court CWJC No.9133 of 2014 dt.22-07-2014 6/9
10. The second party will supply CMR to the first party. CMR received from second party will be transported by the first party to the tagged depot of Food Corporation of India, proportionate paddy will be actually released by the Bihar State Food & Civil Supplies Corporation Ltd. AURANGABAD to the second party from different Procurement Centres.
11. The second party will submit daily/weekly/monthly report of ready CMR for delivery and status of paddy lying in mill to the concerned District Manager and District Authority.
12. In case of any deviation from above agreed terms and conditions or any default on the part of the second party, Bank Guarantee submitted by the second party will be forfeited by the first party and Legal action against the second party shall be taken including recovery of amount from the mortgaged immovable property by way of attachment and sale.
13. It has also been agreed that payment of milling charge will be made only after delivery of due rice as per specification and acceptance of CMR by Food Corporation of India.
14. The second party also agrees to abide by the instruction issued by State Government from time to time, and the terms of agreement.
15. The second party agrees that in case, any amount found recoverable on account of default, loss, damage on the part of the second party, the said recoverable amount with interest will be recovered as Land Revenue under Bihar & Orissa Public Demands Recovery Act, 1914, by instituting Certificate case before the concerned District Certificate Officer.
16. In case of disputes both parties agree to settle the issue(s) on mutual discussion. Failure to reach agreement the matter will be referred to arbitrator. It has been also agrees that the arbitrator will be District Collector of the concerned District whose decision shall be final, concerning the dispute referred to him.
8. A bare reading of the terms and conditions of the contract, between the petitioners in capacity of the second party and the Corporation as the first party, will leave nothing for speculation that it is an statutory contract wherein the petitioners, in capacity of rice mill owner on their own volition, had agreed to lift the stock of paddy provided by the Corporation and return in form of CMR after its milling and packaging. To that extent, if the petitioners had any grievance with regard to enforcement of the terms and conditions of Patna High Court CWJC No.9133 of 2014 dt.22-07-2014 7/9 the agreement, they had definitely a remedy to get it settled in terms of Clause 16 which provides for both, conciliation followed by arbitration. The petitioners, however, have not approached the Corporation either for conciliation or to the Collector of the District, the named arbitrator for resolution of their disputes and have straightway moved this Court challenging the correctness of the demand notice. Law by now is well settled that there being an arbitration clause in the agreement, recourse to writ proceeding under Article 226 of the Constitution of India will not be available in view of there being alternative and efficacious remedy.
9. Learned counsel for the petitioners, however, have submitted that in view of the wordings of the demand notice wherein they were asked to pay huge amount by way of price of CMR within a very short period of 15 days to one month, they have been coerced to file these writ applications without taking recourse to conciliation and/or arbitration proceedings. This has been suitably answered by Mr. Pradhan by making it clear that if the petitioners were in any way aggrieved by the demand notice issued by the respective District Managers of the Corporation with whom the petitioners had entered into the agreement, they could have moved the Managing Director of the Corporation assailing the correctness of the demand notice on any ground whatsoever, but having failed to do so, they cannot question the demand notice by a writ application under Article 226 of the Patna High Court CWJC No.9133 of 2014 dt.22-07-2014 8/9 Constitution.
10. In the considered opinion of this Court, Mr. Pradhan is again seems to be correct. If the petitioners, on receipt of the demand notice, had found the amount demanded from them to be not payable for any reason whatsoever, they could have easily taken recourse to conciliation proceedings in terms of Clause 16 of the agreement by moving the competent authority of the Corporation. As a matter of fact, the petitioners still had remedy for seeking reference by way of arbitration proceeding in case the conciliation proceeding had failed on the door steps of the Corporation. That having been not done, this Court will have no difficulty in holding the present writ applications are not maintainable.
11. Having held so, this must clarify that the powers of the Corporation for resolution of the dispute as raised by the petitioners by way of conciliation proceedings in terms of Clause 16 of the agreement or for that purpose the forum of the Collector by way of arbitration proceeding shall not be closed. Thus, if the petitioners would file their separate representation before the Managing Director of the Corporation disputing the correctness of the impugned demand notice on any ground whatsoever, the competent authority of the Corporation will thereafter do the needful in terms of Clause 16 of the Agreement and in case the petitioners do not get any relief in such conciliation proceeding from the authorities of the Corporation, they Patna High Court CWJC No.9133 of 2014 dt.22-07-2014 9/9 would be still entitled to seek reference for arbitration before the Collector of the District.
12. Mr. Pradhan has, in fact, assured that if the petitioner would file his representation against the demand notice, the same shall also be disposed of expeditiously so that if the petitioner becomes aggrieved on account of refusal of settlement of dispute by the Corporation, he can take recourse to arbitration proceedings. He has also assured that till disposal of the representation, no further coercive action will be taken against the petitioner beyond what has already been taken against him in terms of the agreement.
13. It is, however, made clear that if in the mean time any criminal case or certificate proceeding has already been initiated against the petitioners, the same shall not be in any way adversely affected, in keeping with Clause 12 and 15 of the agreement which empowers the Corporation to take legal action including recovery of the amount due from the petitioners by way of certificate proceedings under the Bihar Public Demand Recovery Act, 1914.
14. With the aforementioned observation and directions, these writ applications are disposed of.
(Mihir Kumar Jha, J) Patna High Court Dated the 22nd July 2014 A.F.R./Sujit/-
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