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Judgment
The petitioner has filed the Writ petition for the following reliefs:
“i)For issuance of Writ of certiorari for quashing certificate notice and the order dated 25.7.2014 passed by respondent no.3 whereby notice under section 7 of the Bihar & Orissa P.D.R. Act has been issued.
(ii)For issuance of Writ of certiorari for quashing the entire proceeding of the certificate Case no. 08/2014-15 which is instituted against the petitioner on the instance of the respondent no. 4 for the recovery of the alleged amount.
iii) For the issuance of appropriate Writ for the stay of the operation of the order dated 9.5.2015 passed by respondent no.3 whereby and where under issued Warrant against the petitioner.
(iv)For the other reliefs which may be granted to the petitioner in the facts and circumstances of this case.”
It appears that by order dated 22.04.2016, this Court has passed following order:
"The petitioner, who is a rice miller, submits that warrant in certificate proceeding has been issued without disposing of his objection filed under Section 9 of the Bihar & Orissa Public Demands Recovery Act, 1914.
Learned counsel for the respondents prays two weeks time to file counter affidavit.
As prayed, put up this case after two weeks.
In the meanwhile, no coercive steps would be taken against the petitioner subject to deposit of Rs.3 lacs within a period of two weeks from today."
By filing the counter affidavit, the respondents have brought on record, as Annexure-C, the final order passed under Section 10 of the PDR Act on the objection petition filed by the petitioner under Section 9 of the said Act.
At this stage, the Learned counsel appearing for the respondents submits that the controversy raised in the present Writ petition is now governed by the judgment of the Hon’ble Supreme Court in Pawapuri Rice Mills Vs. Bihar State Food and Civil Supplies Corporation Ltd. & Ors. and analogous cases, reported in 2024 SCC OnLine SC 3777. It is, therefore, submitted that the Writ petition may be disposed of in terms of the aforesaid judgment.
The Hon’ble Supreme Court in Pawapuri Rice Mills (supra) has observed as follows:
“37.The next limb of the argument is that the continuation and the concluding of proceedings by the certificate officers are vitiated by procedural irregularities. The arguments on this behalf are already referred to in the preceding paragraphs. To capture the arguments in a nutshell, it is noted that the initiation is not in accordance with the procedure stipulated under the Act, the procedure prescribed by the Act is not followed, and the principles of natural justice are violated.
38.The Act is a comprehensive and codified enactment that provides adequate safeguards for parties facing recovery actions. Parts II and IV of the Act outline the procedures for filing, serving, and contesting recovery certificates, as well as provisions for appeal, revision, and review. Procedural Safeguards : Part II of the Act outlines the procedure for filing, serving, and adjudicating certificates. Sections 43 and 44 provide remedies to challenge certificates in civil courts on specific grounds. The section provides for a time limit of 6 months for availing the remedy to move to the Civil Court. Sections 60, 62, and 63 deal with appeal, revision, and review of the orders made under the Act.
39.The Division Bench rightly emphasised the availability of these statutory remedies to the aggrieved persons. The Rice Millers, by invoking Writ jurisdiction, have failed to exhaust statutory remedies at the first instance.41. We have perused the record and are of the view that the Rice Millers invoked the Writ remedy by raising a jurisdictional fact against realising the sums as a public demand under the Act. As a Writ court or in an appeal under Article 136, we are not examining the contentions on alleged procedural deviations. We, however, leave it open to the respective Rice Millers to avail a statutory remedy as may be available under the Act. For availing a statutory remedy, we grant thirty days from today to the Rice Millers.
41.We have perused the record and are of the view that the Rice Millers invoked the Writ remedy by raising a jurisdictional fact against realising the sums as a public demand under the Act. As a Writ court or in an appeal under Article 136, we are not examining the contentions on alleged procedural deviations. We, however, leave it open to the respective Rice Millers to avail a statutory remedy as may be available under the Act. For availing a statutory remedy, we grant thirty days from today to the Rice Millers.
42.In the event of a Rice Miller availing a statutory remedy as permitted by this Judgment, the said authority shall entertain the case without reference to the delay and the period of limitation in availing a remedy before the said authority. With the above observation, the civil appeals stand dismissed. No order as to costs. ”
However, the Learned counsel appearing for the petitioner submits that the facts and circumstances of the present case are distinguishable from those involved in Pawapuri Rice Mills (supra) and, therefore, the said judgment has no application to the controversy involved in the present Writ petition.
The Learned counsel for the petitioner submits that the petitioner had entered into an agreement with the Bihar State Food and Civil Supplies Corporation (BSFC) for milling of paddy during KMS 2012-13. Under the agreement, the Custom Milled Rice (CMR) continued to be Government property and the petitioner was not authorised to sell the same on its own. It was the responsibility of the BSFC to lift the CMR from the petitioner's mill and take it to the designated godown.
The Learned counsel for the petitioner submits that the petitioner repeatedly requested the BSFC authorities to lift the CMR lying in the mill, but despite such requests the rice was not lifted within the prescribed period. According to the petitioner, the delay was attributable to the respondents, including non-availability of sufficient storage space and expiry of the FCI deadline for receipt of CMR. Thus, the petitioner cannot be held responsible for the accumulation of rice at the mill.
It is further submitted that, after considerable delay, the petitioner was directed to sell the CMR and deposit the sale proceeds with the BSFC at the rate of Rs.2,165.56 per quintal. The petitioner disputes the said rate, particularly when the BSFC itself had sold paddy/milled rice at substantially lower rates ranging between Rs.499/-and Rs.750/- per quintal. Therefore, the alleged dues are neither admitted nor finally determined and the very basis of the demand is disputed.
The Learned counsel for the petitioner further submits that the agreement contains an arbitration clause and, upon disputes arising between the parties, the petitioner approached this Court in Request Case No.121 of 2018 for appointment of an Arbitrator. An independent Arbitrator was thereafter appointed by the Hon'ble Chief Justice of this Court and the said arbitration proceeding is presently pending. Thus, the liability of the petitioner and the amount allegedly payable by the petitioner are matters directly in dispute before the Arbitrator.
It is argued that a disputed contractual claim cannot be recovered through certificate proceedings under the Public Demands Recovery Act, as if it were an admitted or adjudicated debt. Certificate proceedings are in the nature of execution proceedings and cannot be invoked for determination or recovery of a disputed contractual liability. Reliance has been placed upon the decision of this Court in Budha Singh v. State of Bihar, reported in AIR 1981 Patna 149, and other decisions of this Court.
The Learned counsel for the petitioner also challenges the validity of the certificate proceeding on the ground that the mandatory requirement of Section 7 of the Public Demands Recovery Act has not been complied with. The notice issued to the petitioner was not accompanied by the requisite copy of the certificate/Form-1. Despite repeated requests, Form-1 was not supplied to the petitioner, whereas only a copy of Form-2 was subsequently furnished. It is submitted that the certificate itself contained blank and defective particulars and was not properly prepared or served.
It is further submitted by the Learned counsel for the petitioner that issuance of a defective notice under Section 7, without furnishing the certificate on the basis of which the proceeding has been initiated, vitiates the entire certificate proceeding. Learned counsel for the petitioner relies upon the decisions of this Court holding that non-compliance with the mandatory statutory requirements relating to the certificate and notice renders the proceeding unsustainable.
The Learned counsel for the petitioner further submits that, under the agreement, the petitioner's obligation was confined to milling the paddy and keeping the CMR ready, whereas the responsibility for lifting the CMR lay with the BSFC. Since the respondents failed to lift the rice within stipulated time the accumulation of CMR at the petitioner and mill cannot be atributed to any default on the part of the petitioner since the petitioner is disputing both the liability and the rate at which the CMR is sought to be valued, the alleged dues could not have been recovered through certificate proceeding, therefore, the certificate proceeding is premature and without jurisdiction.
On these grounds, the Learned counsel for the petitioner submits that the certificate proceeding, having been founded upon a disputed contractual claim and initiated without compliance with the mandatory requirements of Section 7 of the PDR Act, is liable to be quashed, leaving the parties to have their respective rights and liabilities determined in the pending arbitration proceeding.
Per contra, the Learned counsel for the respondents contends that Section 60 of the Bihar and Orissa Public Demands Recovery Act, 1914 provides a statutory remedy of appeal to the petitioner against the impugned proceedings.
Heard the Learned counsel for the parties and perused the materials on record.
The principal question which arises for consideration at this stage is as to whether this Court should examine the various objections raised by the petitioner against the certificate proceeding in exercise of its Writ jurisdiction.
The issue is no longer res integra. In Pawapuri Rice Mills (supra) the Hon’ble Supreme Court considered challenges to certificate proceedings under the PDR Act and held that where an efficacious statutory remedy is available under the Act, the aggrieved party should avail such remedy. The Hon’ble Supreme Court specifically left the rice millers at liberty to pursue the statutory remedies available under the Act and directed that such remedies be considered without the question of limitation coming in their way.
In the present case, the petitioner has raised questions relating to the validity of the certificate, the nature of the alleged liability, compliance with the statutory procedure, service of the certificate, and the effect of the pending arbitration proceedings. These are matters which can appropriately be examined by the competent statutory authority in accordance with the provisions of the PDR Act.
This Court, therefore, does not consider it appropriate to examine the aforesaid disputed questions on merits in the present Writ proceeding. The petitioner shall be at liberty to avail the appropriate statutory remedy available under the PDR Act. Section 60 provides for an appeal against an original order, in the circumstances specified therein.
Accordingly, without expressing any opinion on the merits of the rival claims, the present Writ petition is disposed of with liberty to the petitioner to avail the appropriate statutory remedy against the order passed in the certificate proceeding, in accordance with law.
If the petitioner files such statutory proceeding within four weeks from the date of receipt/production of a copy of this order, the competent authority shall consider the same on its own merits and shall not reject it merely on the ground of delay, subject to all other statutory requirements.
The competent authority shall consider all the contentions of the petitioner in accordance with law, including the objections relating to the nature of the alleged liability, the pending arbitration proceeding and the alleged procedural defects in the certificate proceeding.
In the event the petitioner files such objection within the aforesaid period, the concerned Certificate Officer shall entertain and consider the same in accordance with law and pass a reasoned and speaking order after affording due opportunity of hearing to the concerned parties.
For a period of four weeks from the date of receipt/production of a copy of this order, no coercive steps shall be taken against the petitioner in connection with the certificate proceeding, subject to the petitioner availing the statutory remedy within the aforesaid period.
It is made clear that this Court has not expressed any opinion on the merits of the claim or counter-claim of the parties, and all questions are left open to be considered by the competent statutory authority.
With the aforesaid observations and directions, the Writ petition stands disposed of.
Interlocutory Application, if any, shall stands disposed of.