Food Corporation of India and Another vs Goraya Rice Mills and Others

M.M. Kumar, J.—This order shall dispose of a bunch of Letters Patent Appeals* filed under Clause X of the Letters Patent. All the appeals are directed against the common judgment dated 6.2.2009 rendered by the learned Single Judge while disposing of a number of writ petitions.

The writ Petitioner-Respondent(s) are the Rice Millers working in the State of Punjab and they approached this Court with a prayer for quashing letter dated 27.8.2007 issued by the Union of India, Ministry of Consumer Affairs, Food and Public Distribution (P-1). The aforesaid letter has led to the issuance of recovery notices dated 5.11.2007. The letter dated 27.8.2007 seeks to revise the earlier circular dated 20.12.2006 and full value cut has been imposed on the levy rice. In the present case we are concerned with the paddy for levy rice which is directly purchased by the Rice Shellers themselves from the market/farmers. The purchase or allocation of paddy is governed by various statutory orders issued from time to time by the Central or the State Government under the Essential Commodities Act, 1955. For the Khariff Marketing Season (KMS) 2006-07, the Government of India fixed the following prices of levy rice, vide its order dated 3.10.2006:

( Rs. perquintal)

Variety

RawRice

Par-boiled

Common

1092.10

1092.00

Grade-A

1141.70

1140.80

The Rice Millers requested for relaxation in the aforesaid specification in respect of damaged or dis-coloured grain because according to them the levy rice was moisturised due to excessive rains and was far below the fair average quality. The Chief Secretary to Government of Punjab, vide D.O. letter dated 18.12.2006, expressed the opinion that the demand for relaxation by the Millers in respect of the damaged and dis-coloured specification of rice may be considered without imposing value cut and he requested the authorities to render its decision expeditiously. This recommendation led to the issuance of letter dated 20.12.2006, which relaxed the specification of rice during ''KMS 2006-07'' in relation to the State of Punjab. The aforesaid letter reads thus:

I am directed to refer your DO No. PS-CS/06/2174 dated 18.12.2006 on the subject cited above and to state that as per the approved principle any relaxation even without any relaxation/reduction in OTR has to be with value cut, which is being followed uniformly in respect of all the States. Last year also, in respect of Punjab, the financial burden shared on 50-50 basis between the Government of India and the State Government had accounted for relaxation granted in paddy/rice. Accordingly, the proposal received from Govt. of Punjab has been examined and following relaxations in specifications of rice for CMR as well as levy have been allowed for the current KMS 2006-07.

- Rice having additional 1% damaged/slightly damaged grains in respect of raw rice and additional 0.5% in respect of par boiled rice may be accepted over and above the maximum limit under uniform specification.

- Rice having additional 2% discoloured grains in respect of raw rice and 1% in respect of par boiled rice may be accepted.

The value cut in respect of rice delivered under relaxed specifications has been worked out by imposing a token value cut, as a special case, in public interest and should not be cited as precedent in the future. The Department would have no objection if a portion of the loss incurred by the State Government is passed on to the millers.

Value cut for rice under relaxed specifications

(a) CMR -

(i) Raw rice (Grade ''A'') Rs. 5.74 per quintal and (Common) Rs. 5.48 per quintal

(ii) Parboiled rice (Grade ''A'') Rs. 5.68 quintal and (Common) Rs. 5.43 per quintal.

(b) Levy rice -

(i) Raw rice (Grade ''A'') Rs. 5.71 per quintal and (Common) Rs. 5.46 per quintal

(ii) Parboiled rice (Grade ''A'') Rs. 5.70 per quintal and (Common) Rs. 5.46 per quintal.

Rice conforming to uniform specifications would continue to be accepted by the FCI as per the costing sheet already communicated and it is expected that most deliveries would take place without the aforesaid relaxations.

It has come on record that the writ Petitioner-rice millers supplied the milled rice as per the relaxation specified in the letter dated 18.12.2006. Even payments have also been made to them in accordance with the terms of that letter. It was after about period of nine months that the Union of India issued another decision dated 27.8.2007 (P-1) revising the decision dated 20.12.2006. According to the aforesaid letter the relaxation in value cut so far it pertains to levy rice, has been withdrawn and value cut originally determined vide circular dated 3.10.2006 has been imposed. As a result, recovery notices have been issued to the rice millers by the Food Corporation of India and other procurement agencies operating in the State of Punjab.

The learned Single Judge after hearing the matter at length and perusing the original record has reached the conclusion that the circular dated 27.8.2007 could not be set aside but it could also not be operated retrospectively. The view of the learned Single Judge is discernible from the following paras of his judgment, which reads thus:

Having heard Learned Counsel for the parties at some length and on perusal of the original records, I am of the considered view that the decision taken by the Union of India, which culminated into the circular dated 27.8.2007, has its own rationale and is based upon more than one valid reasons. This Court, having regard to the well-known parameters on the scope of judicial review, would not venture into these reasons which have been uniformly applied throughout the country.

The next question arises as to whether the said policy decision could be implemented retrospectively in order to take away the concession which the Petitioners had already enjoyed in terms of the previous policy decision dated 20.12.2006. The decision dated 27.8.2007 is purely of administrative nature and can have no retrospective effect. True it is that both the decisions dated 20.12.2006 and 27.8.2007 were taken by the Union of India during the currency of the KMS 2006-07, however, the subsequent decision dated 27.8.2007, withdrawing certain concessions could be applied only in respect of the supply of the levy rice by the millers on or after the said date.

For the reasons afore-stated, these writ petitions are allowed to the extent that the policy decision 27.8.2007 is upheld, however, the same being prospective in applicability, the consequential recovery notices issued by the FCI or other procurement agencies giving effect to the said policy decision even in respect of the levy rice supplied by the Petitioners prior to the said policy decision, are hereby quashed.

Learned Counsel for the Appellants-FCI have argued that the letter dated 27.8.2007 is only a modification of the original policy dated 20.12.2006 and the same cannot be interpreted as a statute. According to the learned Counsel it is, in fact, continuation of the earlier letter and, therefore, would apply to the ''KMS 2006-07''.

However, the learned Counsel for the Respondents have argued that the writ Petitioner-Respondents have supplied the milled rice which have been accepted by the Appellants as per the relaxed specifications recorded in the decision dated 20.12.2006 and, therefore, to withdraw the value cut resulting the one which was imposed on 3.10.2006, would not be permissible. According to the learned Counsel any policy or instructions cannot operate retrospectively, especially when such instructions have failed to expressly mentioned that those instructions would take effect from a previous date.

Having heard learned Counsel for the parties and keeping in view the fact that transactions have already been completed by accepting the norms incorporated in the instructions dated 20.12.2006, it is not possible to accept the contention raised by the Appellants. The letter dated 27.8.2007 has to operate prospectively. The question is no longer res integra. In Kusumam Hotels (P) Ltd. Vs. Kerala State Electricity Board and Others, , it has been categorically laid down that the State is entitled to change its policy decision. However, all administrative orders ordinarily are to be considered prospective in nature. When a policy decision is required to be given a retrospective operation, it must be expressly stated in un-mistakable terms or it must flow from necessary intendment. In the present case, letter dated 27.8.2007 neither by express words nor by necessary intendment is to operate from an earlier date. It is often said that "yesterday''s un-equals cannot be made equal today and vice-versa". Likewise, in the present case once the transaction has been completed in pursuance of the earlier relaxed specification, there is no possibility of reviewing the aforesaid transactions and apply on those transactions the new policy decision dated 27.8.2007. Accordingly, we find that the view taken by the learned Single Judge is unexceptionable and the same deserves to be upheld. The appeals are wholly without merit and do not merit admission.

As a sequel to the above discussion, these appeals fail and the same are dismissed.

A photocopy of this order be placed on the files of connected appeals.