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Home > SC > Criminal Law > Essential Commodities Act > FOOD CORPN. OF INDIA Vs. V.K.SUKUMARAN ETC. ETC.



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FOOD CORPN. OF INDIA Vs. V.K.SUKUMARAN ETC. ETC.

Posted on 23 June 2009 by jyoti

Title

FOOD CORPN. OF INDIA Vs. V.K.SUKUMARAN ETC. ETC.



Coram

RAMASWAMY, K.



Act

Essential Commodities Act



Subject

Essential Commodities Act, 1955-Sections 3(1) & (2}-Kerala Rationing Order, 1966-Sub-clause (8A) of Clause 45-Interpretation of-Rationed articles-Revision of prices including distribution Cost-Intimation of revised rates necessary to retail dealers-Retailers to account for differential price of the stock on hand on previous closing day.

The respondent, an authorised retail dealer at Ernakulam Distt. purchased from the appellant's godown rice on 10.10.1985 and 11.10.1985 at the pre-revised rates for public distribution to the cardholders. On 11.10.1985, the Civil Supplies Officials issued instructions to the respondent and other retail dealers revising the price of the rice w.e.f. 12.10.1985 and stating that the closing stock on 12.10.1985, should be ascertained and the difference of the price was to be deposited in the Treasury and Challan was to be submitted within two days thereafter and in the case of non-compliance, action would be taken against the defaulter. Writ petitions filed against the orders were allowed while holding that the respondent was not liable to refund the difference of the price for the stock on hand on closing day of 9.10.1986 and supplied on October 10 and October 11, 1985; that the liability would arise only from the date when intimation of the revised rate thereof was given by the Civil Supply Officer and since the intimation was given on 13.10.1985, for the stock on hand as on 12.10.1985 difference would be liable to be refunded at the revised rates from that date. Writ appeal filed challenging the order was dismissed by the Division Bench, upholding the order of the Single Judge. Hence these appeals by special leave. The question raised for consideration was whether the retailers were liable to refund the difference of the price for the opening stock held by the retailer on 10.10.1985 and purchased on October 10 and 11, 1985 as intimated.



Citation

, 1995( 5 )Suppl.SCR 631, 1996( 8 )SCC 401, 1995( 7 )SCALE367 , 1995( 9 )JT 231



Head Notes

Dismissing the appeal, this Court

HELD : 1.1. The respondent was bound by the Kerala Rationing Order, 1966 issued under sub-section (1) and (2) of S3 of the Essential Commodities Act, 1955. Sub-clause (8A) of Clause 45 of the order enjoins that whenever the existing issue price of rationed articles, i.e., the price at which the stock has to be released from the Food Corporation of India or Central Storage Depot, is revised by the Government of India or State Government either upward or downward, the stock of rationed articles with the authorised retail distributor as on the beginning of the day from which day the revised issue price will come into force, should be assessed by the authorised retailed distributor and intimated to the Taluk Supply Officer/City Rationing Officer or any officer authorized by the State Government for the purpose. [636-D-F]

1.2. The authorized distributor, either whole-seller or retailer, is enjoined to make good the difference of the price of stock on hand as on the previous closing day, in these cases as on October 9,1985, consequent to the revision of the issue price by the Central Government with effect from October 10, 1985. Para 2 of the Government Circular No. 176, Ministry of Food and Civil Supplies issued on 11.10.1985, authorised the State Government/Union Territory to revise the rates of issue price consequent upon the revision of the price including the distribution cost with effect from October 10, 1985. In terms thereof, on revision of retail price by the State/Union Territory government and on issue of instruction from the State Government, the Taluk officials as stated earlier, had intimated to the retail dealers that the revised prices would come into effect from October 13, 1985 and they were directed to pay the difference on the stock on hand on 12.10.1985. It would be desirable to avoid loss to public exchequer and unintended windfall to whole-sale or retail dealers that before enforcing the revised rates of rice, an infrastructure in built, revision by State Government or Union Territory Authorities is made and intimation thereof and the date of its becoming effective is made public through media, i.e. Radio., T.V. or press so that the revised rates would come into effect from that date and the stock held at the close of the previous date would be assessed in terms contained in the Government of India Order so that there would not be any hiatus between fixation of revised rates and its enforcement and the liability of the retail dealer to refund the differential price in that behalf. If this procedure is adopted, there would be no difficulty for the retail dealers to account for the differential price of the stock on hand on the previous closing day and to credit the same to the Treasury account as intimated by the concerned officer. [637-F-H; 639-B-D]

13. Admittedly such an intimation was in fact given by the Taluk Officer on October 13, 1985 and that a direction was given that the difference of the price of the stock on October 12, 1985 should be ac-counted, the respondent-retailer cannot be made liable to account for the difference on the revised price of the closing stock on October 9, 1985 or the stock purchased on October 10 and 11, 1985. Under the Order and Licence held by the retailer he is enjoined to distribute to the card-holders at the rates revised by the State Government and until that is done he is obliged to distribute the essential commodity, namely, rice at the pre-revised rates. If any contravention is made that would be a contravention of the licence of distribution or the Order. But that would be ascertained on the facts in each case. [639-E-G]



Judgment Made On

23/11/1995

JUDGMENT:
With
(C.A. No. 999/92, C.A.No.405/92, C.A.No. 12006/95 & 12005/95
SLP 28438/95 10537)/90, C.A. No. 1828/89, C.A.No. 1827/89,
C.A. 1829/89)
With
I.A. No.3 In CIVIL APPEAL NO. 405/92
ORDER
Leave granted.
The controversy raised in these cases hinge upon the
interpretation of sub-clause (8A) of Clause 45 of the Kerala
Rationing Order, 1966 and the circular of the Union of India
dated October 11, 1995. The facts of CA No.1826/89 which lie
in a short compass would be sufficient for disposal of all
the appeals before us and are stated as under:
The respondent is an authorised retail dealer at
Kanayannur Taluk, Ernakulam Distt. He had purchased from the
appellant's godown rice on October 10, 1985 and October 11,
1985 at the pre-revised rates for public distribution to the
Card-holders. On October 11, 1985, the Civil Supplies
officials issued instructions to the respondent and other
retail dealers that the price of rice has been increased
with effect from October 13, 1985 and the closing stock on
October 12, 1985, should be ascertained and the difference
of the price was to be deposited in the Treasury and Challan
was directed to be submitted within two days thereafter. If
the difference of the rate would not be deposited in the
Treasury or in the event of non-submission of the Challan,
action would be taken against the defaulters. By letter
dated November 28, 1985, the Assistant Manager of the
appellant-Corporation called upon the respondent to pay the
difference of the rate for the stock on the closing day of
October 9, 1985 and the purchase from October 10, 1985
onwards till October 11, 1985. Calling in question of the
said demand, writ petitions came to be filed. The learned
single Judge following the decision dated June 19, 1986 of
the High Court in O.P.No.7926/82 entitled Kerala State
Wholesale Distributors Federation & Ors. vs. Union of India
& Ors. had held that the respondent was not liable to refund
the difference of the price for the stock on hand on closing
day of October 9, 1986 and supplied on October 10 and
October 11, 1985. The liability would arise only from the
date when intimation of the revised rate thereof was given
by the Civil Supply Officer. Since the intimation was given
on 13.10.1985, for the stock on hand as on October 12, 1985
difference would be liable to be refunded at the revised
rates from that date. The order was challenged in writ
appeal and the Division Bench in the impugned order dated
January 14, 1988 in Writ Appeal No.597/87 upheld the order
of the learned single Judge and dismissed the appeal. Thus
these appeals by special leave.
The Government of India issued Circular No.176,
Ministry of Food and Civil Supplies on 11.10.1985 revising
the issue price of the rice from central pool for public
distribution with effect from October 10, 1985. It reads
thus:
"As already intimated in Telex/Telegram
of even number dated 9.10.1985, the
revised Central issue prices of rice
supplied from the Central Pool for
distribution through the public
distribution system, which will be
effective from 10.10.1985 are as under:
(Rs.per quintal)
1.... Current Issues Revised
Prices Issue Prices
(Raw & Parboiled) w.e.f.10.10.85
(Raw Parboiled)
(i) 208.00 217.00
(ii) 220.00 229.00
(iii) 235.00 244.00
2. The aforesaid issue prices of rice
are for delivery Ex-FCI depots or F.O.R.
destination stations. The State
Government/Union Territory
Administrations are aware that
foodgrains from the Central Pool are
supplied to them at the subsidised issue
price with a view to enable them to meet
their requirements of the public
distribution system. Even after the
increase, with effect from 10.10.1985,
the issue prices of rice will be heavily
subsidised. The State Governments/Union
Territory Administrations are,
therefore, requested to arrange sale of
foodgrains, supplied to them from
Central Pool, through ration/fair price
shops at retail issue prices fixed by
them after adding only reasonable
distribution costs to the revised issue
prices effective from 10.10.1985. It may
be stressed here that the State
Government/Union Territory
Administrations, wholesalers, retailers
or any other agency that may be involved
in distribution, should not derive any
profit put of these transactions. The
new retail issue prices as will be fixed
by the State Governments/Union Territory
Administrations may be intimated to this
Department as early as possible. 3. In
order to ensure that the wholesalers,
fair price shops and other retailers who
are supplied rice from Government stocks
do not make any unintended profit on
account of enhancement of wholesale and
retail issue prices of these foodgrains,
stocks of rice available with them at
the close of transactions on 9.10.1985,
should be verified and the difference
between the old prices and the revised
prices should be recovered from them for
being credited to the Central account.
Immediate action may, therefore, kindly
be taken to arrange for ........... the
stocks of rice issued from the Central
stocks available with the wholesalers,
fair price shops and other retailers, if
any. 4. The State Governments/Union
Territory Administrations will also have
to credit to the Central account the
difference between the old prices and
the enhanced prices of rice in respect
of stocks that the State
Governments/Union Territory
Administrations had with them at the
close of transactions on 9.10.1985. For
the purpose of calculation, stocks held
by the State Governments/Union
Territory, at the close of 9.10.1985 and
still in transition that date will also
be included. 5. Arrangements may also be
made to notify to the Government of
India, latest by the 31st October, 1985,
the quantity of rice available with the
State Governments/Union Territory
Administrations, the wholesalers, fair
price shops and other retailers at the
close of transactions on 9.10.1985 so
that the Controller of Accounts may be
requested to raise necessary details for
the difference between the old and
revised prices."
The respondent is bound by the Kerala Rationing Order,
1966 issued under Section 3(1) and (2) of the Essential
Commodities Act, 1955. Sub-clause (8A) of Clause 45 of the
order enjoins that whenever the existing issue price of
rationed articles, i.e., the price at which the stock has to
be released from the Food Corporation of India or Central
Storage Depot, is revised by the Government of India or
State Government either upward or downward, the stock of
rationed articles with the authorised retail distributor as
on the beginning of the day from which day the revised issue
price will come into force, should be assessed by the
authorised retail distributor and intimated to the Taluk
Supply Officer/City Rationing Officer or any officer
authorised by the State Government for the purpose. In the
case of revision of price upward, differential cost on the
quantity of rationed articles so held in stock should be
remitted to the State Government. Similarly, in the case of
revision of price downward, a refund claim for the
differential cost shall be submitted by the authorised
retail distributor to such officers of the State Government
authorised for the purpose. In this behalf, the retailer has
also entered into an agreement under cl.45(6) of the Order
which reads thus:
"Whenever the existing issue price of
rationed articles (i.e. the price at
which the stock has to be released from
the Food Corporation of India or Kerala
State Civil Supplies Corporation Depot)
is revised by the Government of India or
State Government either upward or
downward, the stock of rationed articles
in the hands of the Bounden as on the
beginning of the day from which the
revised issue price shall come into
force shall be assessed by the Bounden
and intimated to the Taluk Supply
Officer/City Rationing Officer or any
Officer authorised by the State
Government for this purpose. In the case
of upward revision of price differential
cost on the quantity of rationed
articles so held in stock shall be
remitted by the Bounden to the State
Government, within such time as the
Taluk Supply Officer/City Rationing
Officer or other authorised officer as
the case may be, may order in writing.
Similarly, in the case of downward
revision of price a refund claim for the
differential cost shall be submitted by
the Bounden to such officers as the
State Government may authorise for this
purpose. Any sum found-due to Government
on account of excess transport charges,
handling charges, profit and the like
gained by the bounden due to incorrect
fixation of price or any other defect in
calculation when the mistake is
subsequently decide should be remitted
to Government by the Bounden.
Under the above provision, an
authorised retail distributor is bound
to ascertain the stock in hand on the
date with effect from which the price of
rationed articles was revised.
Differential cost consequent on upward
revision of price held in stock on the
relevant date was also to be remitted by
the dealer to the State Government."
In terms thereof the authorised distributor, either whole-
seller or retailer, is enjoined to make good the difference
of the price of stock on hand as on the previous closing
day, in these cases as on October 9, 1985, consequential to
the revision of the issue price by the Central Government
with effect from October 10, 1985. Para 2 of the Government
Circular referred to hereinbefore authorised the State
Government/Union Territory to revise the rates of issue
price consequent upon the revision of the price including
the distribution cost with effect from October 10, 1985. In
terms thereof, on revision of retail price by the
State/Union Territory Government and on issue of
instructions from the State Government, the Taluk officials
as stated earlier, had intimated to the retail dealers that
the revised prices would come into effect from October 13,
1985 and they were directed to pay the difference on the
stock on hand on 12.10.1985.
The question, therefore, that emerges is whether the
retailers are liable to refund the difference of the price
for the opening stock held by the retailer on October 10,
1985 and purchased on October 10 and 11, 1985 as intimated
in the letter of the Superintendent of the appellant-
Corporation. It is true that the wholesale or retail dealer
were not entitled to have windfall of the differential price
when they had sold at revised rates of the stock on hand
supplied at pre-revised rates. The differential rate should
be credited to the Central Account as it was releasing the
stock at subsidised rate. It is seen that the Government
Order clearly indicates that the closing stock as on October
9, 1985 should be verified and the stock on hand as on that
date should be revised and distributed at the revised price.
The difference of the price was directed to be credited to
the account of the Central pool. But until the State
Government or Union Territory Authorities revised the retail
price including distribution costs and intimation of the
revision of the prices is given to the whole-seller or
retailer, it may be difficult for them to know, in the
normal circumstances, whether the price of the essential
commodities, namely, the rice, in these cases, meant for
distribution was revised and at what rate it should be
distributed to the card-holders at the pre-revised or
revised rates. In this behalf, as rightly held by the High
Court, an intimation thereof is necessary. The reasons are
obvious. In terms of the conditions of licence and the Order
and in terms of the provisions of the Essential Commodities
Act, the violation of the conditions of licence entails
cancellation of the licence of the whole-sale or retail
dealer and prosecution under Section 7 of the Essential
Commodities Act. Intimation of the revised price would be
necessary to the retail dealers. In terms of para 2 of the
Central Government Circular dated 11.10.1985, the State
Government in turn is required to revise the retail price
for the distribution to the card-holders. On that basis the
distributor is enjoined to distribute the essential
commodities at the revised price. In view of these facts, it
is necessary that they should get an intimation of the
revision of the price of the essential commodities.
It is true, as rightly pointed out by Mr. S.K. Gambhir,
the learned counsel appearing for the appellant-Corporation,
that the difference of the price of the released stock will
be of considerable magnitude and may be a loss to the public
exchequer since the rice is supplied at a subsidised rates
to the card-holders. But retail dealers must equally have
knowledge of the revision of the prices at which they are
required to distribute to the card-holders as per the price
fixed by the State Government/Union Territory Authorities
under the relevant orders. Until that is done and intimated,
it is difficult for him to know at what price he is required
to distribute to the card-holders. Consequentially, he
should distribute to the card-holders at pre-revised rate
only.
Considered from this perspective, it would be desirable
to avoid loss to public exchequer and unintended windfall to
whole-sale or retail dealers that before enforcing the
revised rates of the rice, an infrastructure is built,
revision by State Government or Union Territory Authorities
is made and intimation thereof and the date of its becoming
effective is made public through media, i.e., Radio, T.V. or
press so that the revised rates would come into effect from
that date and the stock held at the close of the previous
date would be assessed in terms contained in the Government
of India Order so that there would not be any hiatus between
fixation of revised rates and its enforcement and the
liability of the retail dealer to refund the differential
price in that behalf. If this procedure is adopted, there
would be no difficulty for the retail dealers to account for
the differential price of the stock on hand on the previous
closing day and to credit the same to the Treasury account
as intimated by the concerned officer.
In view of the fact that admittedly such an intimation
was in fact given by the Taluk officer on October 13, 1985
and that a direction was given that the difference of the
price of the stock on October 12, 1985 should be accounted,
the respondent-retailer cannot be made liable to account for
the difference of the revised price of the closing stock on
October 9, 1985 or the stock purchased on October 10 and 11,
1985. It may be reiterated that under the Order and Licence
held by the retailers he is enjoined to distribute to the
card-holders at the rates revised by the State Government
and until that is done he is obliged to distribute the
essential commodity, namely, rice at the pre-revised rates.
If any contravention is made that would be a contravention
is made that would be a contravention of the licence of
distribution or the Order. But that would be ascertained on
the facts in each case. No general principle can be laid
down in that behalf.
Considered from this perspective, we think that the
High Court was right, though for different reasons, in
negativing the claim of the appellant for accounting for the
difference of the held at the close of October 9, 1985 and
purchases by the respondents on October 10 and 11, 1985.
The appeals are accordingly dismissed. But in the
circumstances without costs.
The respondent No.1 in C.A. No.405/89 had already
deposited the amount as demanded by the appellant-
Corporation. In view of the law laid down above, the
appellant is directed to refund the amount within one month
from the date of the receipt of this order.





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