State of Arunachal Pradesh and Others vs Food Corporation of India and Others

P.K. Musahary, J.—The principal question that arises for consideration is whether the Hill Transport Subsidy (for short HTS) payable to carriage contractors engaged by the State of Arunachal Pradesh (for short the State) is required to be calculated on the basis of the Government of India letter dated 28.11.1995 (as claimed by the Food Corporation of India or FCI) or on the basis of the Government of India letter dated 23.02.2001 (as claimed by the State). In our opinion, HTS is required to be paid on the basis of the letter dated 28.11.1995 and not on the basis of the letter dated 23.02.2001.

While the issue raised is rather simple, the financial ramifications are quite enormous and therefore, although a preliminary objection was raised by the FCI to the maintainability of the writ petition filed by the State, we do not propose to express any opinion on it. The additional reason is that it would be in public interest if the issue raised is quickly decided one way or the other. Indeed, even the Supreme Court required that the matter be decided within eight weeks, vide order dated 25.11.2010 passed in SLP(C) No. 9597 of 2010 (a time frame that we could not adhere to because of the complexity of the issues raised). Taking all this into account, we have gone into the meat of the matter. BACKGROUND FACTS:

Sometime in 1971-72, the Agricultural Prices Commission recommended (and this recommendation was accepted and implemented) that food grains from the stocks of the Government of India be released for delivery to the Principal Distribution Centres (for short PDCs) in the Hill States (such as Arunachal Pradesh) under the Public Distribution Scheme. It was decided that the central issue price for the food grains would include the rail freight, thereby making the pool issue price free on rail. Thereafter, for carrying the food grains by road from the rail-head to the PDCs, the transportation cost incurred was to be borne by the State Government.

We are concerned in this case with the hill State of Arunachal Pradesh which does not have any rail-head and has a difficult terrain, large area and a sparse population. All these factors combined to create a problem in Arunachal Pradesh whereby the pool issue price could not be maintained without passing on a heavy burden to the consumers.

A solution to this problem was found through a letter dated 09.07.1975 whereby the Government of India decided that the benefit of pool issue price of food grains be extended to supplies made to the PDCs. To achieve this, FCI was required to establish godowns at the PDCs (wherever possible) or reimburse the State Government the cost of transportation upto the PDCs. Certain conditions were required to be observed, but we are not concerned with them. The sum and substance of the letter dated 09.07.1975 is two-fold: Firstly, the supply of food grains under the public distribution scheme would be free on rail upto the rail-head. Secondly and thereafter, Arunachal Pradesh would be entitled to reimbursement of the cost of transportation upto the PDC. It may be mentioned that this reimbursement is called Hill Transport Subsidy (or HTS).

The letter dated 09.07.1975 is of some importance to appreciate the scheme of things and this reads as follows:

No.l67(32)/72-PY.l

Government of India Ministry of Agriculture & Irrigation (Department of Food)

New Delhi the 9th July, 1975

From

A.K. Agarwal

Deputy Secretary to the Government of India

To

The Managing Director, Food Corporation of India; New Delhi.

Subject: Distribution of foodgrains at Princip- al Distribution Centres of Hill State-reimbursement of Transport Cost.

Sir,

In its report on the price policy for kharif cereals for 1971 -72, the Agricultural Prices Commission inter-alia Recommended that "population in Hill States being generally poor, the pooled price for grains issued out of the Union Government stocks should be for delivery at the principal distribution centres m such states." While the rail freight incurred on the movement of foodgrains issued from the Central stocks is included in the Central issue prices, the road transport charges for their further movement from rail heads is incurred by the State Governments.

In case of Hill States, the number of rail heads is limited and the cost of moving grains by road to the interior is heavy. The people in Hilly areas have, therefore, to bear an additional burden on account of lack of rail transport fa-, cilities. The question as to how the extra burden caused to these States Governments/Union Territories in the movement of foodgrains could be reimbursed has been examined by the Central Governments.

It has been decided that the benefit of the pool price of food grains issued out of the central stocks be extended in the case of supplies to a number of important distribution centres in the Hill Stations/Union Territories having no rail heads/FCI''sGodowns. The FCI should open godowns at the principal distribution centres wherever possible or reimburse the State Governments/Union Territories the cost of transportation upto these centres. A list containing the principal distribution centres in the Hill States/Union Territories is attached.

The following conditions are, however, to be observed by the State Governments/Union Territory Administrations while utilizing the transport reimbursement received from the FCI.

(i) Full benefits of the transport subsidy should be passed on to the consumers by the State Governments/Union Territories Administrations.

(ii) Where the State Governments are already giving some subsidy they should consider passing on the same quantum of subsidy by opening more interior distribution centres not covered by these recommendations; and

(iii) In the exceptional case of J&K where the State Government is already giving not only transport subsidy but substantial price subsidy to the consumers, the relief which the Government of J&K will get on account of this transport subsidy will be taken into account by the Plan Finance Division while dealing with their resource gap problem.

This order will come into force with effect from 01.08.1975.

Yours faithfully, Sd/- (A.K. Aggarwal) (Deputy Secretary to the Government of India)

(Emphasis supplied)

We are not really concerned with the events that transpired immediately thereafter, except to note that on 05.02.1986 the FCI communicated to its Regional Office in Guwahati/Shillong that the Government of India, by a letter dated 29.01.1986 approved twelve PDCs in different districts and sub-divisions of Arunachal Pradesh for the purpose of HTS.

To sum up this aspect of the case: HTS was intended to reimburse Arunachal Pradesh the expenditure incurred by it for transporting food grains from the rail-head to the PDC so that the beneficiaries under the public distribution scheme are not burdened with the transportation cost.

It appears that during the actual working of the public distribution scheme and the release of HTS a few course corrections needed to be made due to some facts and factors that needed consideration. We are not directly concerned with these course corrections, but since these were needed, a letter dated 31.10.1990 was issued by the Government of India to the Food and Civil Supplies Department of all the North Eastern States. In this letter, a base depot was explained to mean not only FCI depots but also linked rail-heads. The letter also explained the concept of "Road Reimbursement Charges or Transportation Charges" to mean reimbursement of expenditure incurred for transporting food grains from the rail-head to the base depot. This amount was quantified as 11 paise per quintal per km. The letter explained HTS to mean reimbursement of transportation charges from the designated base depot of the FCI to the approved PDC. This amount was payable on an actual basis, unlike Road Reimbursement Charges.

Equally importantly, the letter dated 31.10,1990 specifically stated that "to avoid any ambiguity, and in supersession of all previous instructions" HTS would be reimbursed on actual basis for transportation of food grains from the base depots to the PDCs. Effectively therefore, this was only a favourable modification and a reaffirmation of the existing policy.

The letter dated 31.10.1990 is of some importance and it''s relevant extracts are reproduced hereinbelow, with the salient features highlighted by us:

No. 179(5)/90-PY.l

Government of India Ministry of Food and Civil Supplies (Department of Food) New Delhi-1

Dated 31st October, 1990

To

The Secretary, Food and Civil Supplies Department (North Eastern States)

Subject: Reimbursement of transport charges in NEF States for lifting of foodgrains un der PDS from Central pool - Regarding.

Sir,

At present, two type of road reimbursement charges are being allowed for distribution of foodgrains to NEF States covered under the scheme referred, as given below:

i) ROAD REIMBURSEMENT CHARGES:

These charges are paid to the State Government for lifting of foodgrains from rail heads other than base depots and taking upto the base depots. The existing ceiling limit for such road reimbursement charges is 11 paise per qtls. per km., and

ii) HILL TRANSPORT SUBSIDY:

These transport charges cover the expenditure incurred by State Government for moving the stocks from base depots (designated by FCI) upto the approved Principal Distribution Centres (PDC''s).PDCs are approved by the Government of India. These charges are reimbursed by the FCI on actual basis as certified by the State Government.

It has been observed that FCI has at times not been able to make food grains available at the base depots and in such cases, the State Governments are lifting foodgrains from other than base depots from distant BG/MG termi-nals/FCI depots and move foodgrains directly to PDCs. The instructions regarding payment of transport charges to cover such cases do not seem to be free from ambiguity. In order to avoid any ambiguity, and in supersession of all previous instructions, the following instructions are issued regarding reimbursement of such charges:

a) ...

b) ...

c) In case stocks arc lifted from the base depots to the approved PDCs the transportation charges i.e. Hill Transport Subsidy would be reimbursed on actual as incurred by the State Government.

3....

The base depots would mean not only FCI''s Depots but also the linked rail head. The list of various base depots approved for the purpose for the various States in North East is given in Annexure....

The State Governments while submitting their claims on fortnightly or on monthly basis would give full details with supporting documents of movement of foodgrains so that the same are verifiable and FCI would scrutinize and pass the same for payment in shortest time possible so that States Governments are not put to any undue financial hardship in this regard due to lockup of their funds. The State Governments should not allow their bills to accumulate and should not delay for more than a fortnight. The document which would be submitted in this regard by the State Governments along with their road reimbursement claims would be decided by the Zonal Manager (NEF).

The above claims would be scrutinized by the District Office concerned and recommended for payment to the SRM who would pass the bills for payment through District Manager. These bills in any case should be passed within 10 working days.

...

...

Yours faithfully, (S.C. Sharma)

Enclo: As above.

Under Secretary to the Government of India

Copy forwarded to:

Manager (Sales), FCI, New Delhi/Manager (Proc.), FCI, New Delhi.

US(F)/I.

Factually, as on 31.10.1990, Arunachal Pradesh had seven identified base depots or linked rail-heads and 12 approved PDCs.

To sum this aspect of the case: As on 31.10.1990 Arunachal Pradesh was entitled to Road Reimbursement Charges for transportation of food grains from the railhead upto the base depots at 11 paise per quantal per km and HTS for transportation of food grains from the base depot to the PDC on an actual basis.

Notwithstanding the above clarifications, some problems in the implementation of the HTS scheme continued to remain. The most important of them was with regard to payment of HTS in situations where, given the hilly terrain, low population density and the large land mass, it was more convenient to off-load the food grains either en-route to the PDC or on some convenient off-route location. In other words, while transporting the food grains from the base depot to the PDC, it was sometimes more convenient to off-load the stock at a Fair Price Shop that was enroute or at a Fair Price Shop that was not en-route but the diversion was more conveneint given the associated factors mentioned above.

A solution to this problem was found by the Government of India which issued a letter dated 28.11.1995 to the FCI further liberalizing the HTS reimbursement policy. It was decided that as far as Arunachal Pradesh is concerned, HTS would be admissible even if the food grains were off-loaded en-route at distribution centres or Fair Price Shops or even off-route at such centres or Fair Price Shops. This was, however, subject to two conditions, that is:

(1) The reimbursement will not, under any circumstances exceed the amount reimbursable had the stocks been otherwise moved to the PDC.

(2) No demand for shifting or increasing the number of PDCs would be entertained.

The letter dated 28.11.1995 is extremely significant for the determination of the controversy before us and it reads (with emphasis supplied) as follows:

No.l79(1)/ 90-PY.I

Government of India Ministry of Food (Department of Food Procurement & Distribution) KRISHI BHAWAN New Delhi-1, dated 28th Nov, 1995

To

The Managing Director, Food Corporation of India, 16-20, Barakhamba Lane, New Delhi.

Subject: Reimbursement of Hill Transport Subsidy to Arunachal Pradesh.

Sir,

I am directed to say that the question of extending certain concessions to the Government of Arunachal Pradesh in the implementation of the scheme of hill transport subsidy in view of the special features of the State vte. hilly terrain, large area, very low density of population etc. has been under consideration of this Ministry for some time. In relaxation of the instructions contained in this Ministry''s letter No. 179(5 V90-PY.I dated 31 st October. 1990. it has been decided that reimbursement of hill transport subsidy will be allowed to the State of Arunachal Pradesh even in such cases where the food grains are off-loaded at distribution centers/FPS other than the PDCs or en-route to PDC. The relaxation of the scheme will, however, be subject to the following conditions:

(i) The reimbursement of HTS upto the off-route distribution points/FPS will not under any circumstances exceed the amount that would have become reimbursable, had the stocks been moved to the Principal Distribution Centres.

(ii) No demand for either shifting or increasing the number of existing PDCs will be entertained.

These instructions will take effect from the date of issue of this communication. The bills already pending with the FCI may also be disposed off in terms of these instructions.

This issues with the concurrence of Finance division vide their Dy. No. 3702/Dir(Fin), dated 23rd Nov., 1995.

Yours faithfully, (M. Sudhakaran) Under Secretary to the Government of India

Copy to:

Secretary, Food & Supplies Deptt.,

Govt. of Arunachal Pradesh,

Itanagar.

Copy also to:

Director (Finance)

(Emphasis supplied)

Tosumthisaspectofthecase:Acom-bined reading of the two letters dated 30.10.1990 and the letter dated 28.11.1995 makes it clear that the overall scheme of payment of HTS remained unchanged inasmuch as reimbursement was still required to be made on actual transportation expenses from the designated base depot to the approved PDC. However, the payment scheme was liberalized inasmuch en-route or off-route offloading was permitted subject to the overall maximum of reimbursement of transportation charges from the base depot to the PDC. THE BEGINNING OF THE PROBLEM:

The above arrangement continued quite well for some time. Eventually, however, Arunachal Pradesh felt the necessity of shifting some existing PDCs since they seemed to be inconveniently located. The Government of India addressed this problem, notwithstanding the letter dated 28.11.1995 to the effect that no demand for either shifting or increasing the number of existing PDCs would be entertained. The reconsideration by the Government of India resulted in its issuing a letter dated 23.02.2001 to the FCI permitting the shifting of six PDCs. It appears to us that this letter dated 23.02.2001 is not only quite innocuous but also quite unambiguous, but it has resulted in this litigation, which we believe is rather needless. The letter dated 23.02.2001, which is the nub of the controversy (with the relevant extracts highlighted by us) reads as follows:

Most Immediate

No.l79(5)/98-PY.I Government of India Ministry of Consumer Affairs, Food & Public Distribution (Department of Food & Public Distribution) Krishi Bhavan, New Delhi,

Dated the 23rd Feb, 2001

To

The Managing Director, Food Corporation of India, 16-20, Barakhamba Lane, New Delhi.

Subject: Shifting/Extension of 6 PDCs regarding.

Sir,

The proposal of the State Government of Arunachal Pradesh for shifting/extension of the existing PDCs to new locations under Hill Transport Subsidy scheme (HTS) has been under consideration of the Government.

It has been decided to shift/extend the following 6(Six) PDCs under HTS scheme in Arunachal Pradesh for the purpose of reimbursement of transportation cost of foodgrains on actual basis, subject to the condition laid down from time to time for regulating the scheme of reimbursement of transport cost under HTS scheme. Full benefits of the transport subsidy will be passed on by the State government of Arunachal Pradesh to the consumers:

Lemeking to the shifted from Taliha.

Mechukato be shifted from Liromoba

Damin to be shifted from Nypin.

Tuting to be shifted from Mariyang in Upper Siang District.

Kibithoo to be shifted from Hayuliang.

Vijoynagar to be shifted from Miao.

This order will have immediate effect.

Yours faithfully, Sd/- (B.K. Dewarma) Director (Policy) Tele: 3385792

(Emphasis supplied)

According to Arunachal Pradesh, the letter dated 23.02.2001 substantially modified the reimbursement scheme. The view of Arunachal Pradesh was that reimbursement of HTS would now be payable on an actual basis from the base depot to the Fair Price Shop rather than upto the PDC. Frankly, we cannot see how such a construction can be placed on the letter dated 23.02.2001 but anyway that is how Arunachal Pradesh understood the letter, acted on it and apparently made payments to the contractors engaged by it. The reimbursement bills submitted in this regard were also cleared by the FCI after due checking and "super-checking".

The view of the FCI (as canvassed before us) is that the HTS scheme did not undergo any modification-only that the location of some existing PDCs was shifted and "the condition laid down from time to time for regulating the scheme of reimbursement of transport cost under HTS scheme" remained unchanged. That is to say that reimbursement would be made on actuals for transportation cost incurred from the base depot to the PDC.

Be that as it may, the net result of the interpretation given by Arunachal Pradesh was that HTS claims by Arunachal Pradesh increased quite suddenly and rapidly during 2003-04. The result of this was that sometime in 2004 the FCI stopped reimbursement claims on the ground that huge over-payments had been made to Arunachal Pradesh under the HTS reimbursement scheme. This resulted in some correspondence between the Government of India and Arunachal Pradesh and ultimately a meeting was convened between the Government of India, the FCI and Arunahal Pradesh on 22.03.2005 on the subject of reimbursement of HTS claims.

A perusal of the Minutes of the meeting held on 22.03.2005 makes it clear that Arunachal Pradesh was claiming reimbursement of HTS claims for transportation costs incurred from the base depot to the FPS rather than upto the PDC. It was decided, after discussion, that the bills would be scrutinized by the Deputy Commissioners as per the circular of the Government of India dated 28.11.1995 and that they would certify that the bills have been passed only after obtaining necessary certificates and verification reports. Some further decisions were also taken in that meeting, particularly relating to a special audit for the payments made during 2003-04, but according to Arunachal Pradesh there was no discussion on this issue (and therefore no decision thereon).

The relevant extracts of the Minutes of the meeting held on 22.03.2005 read as follows:

Minutes of the meeting held on 22.03.2005 under the Chairmanship of JS (P&FCI) with officers of FCI and Arunachal Pradesh Government regarding reimbursement of Hill Transport Subsidy claims.

The list of participants is at Annexure-I.

It was explained that Government of India reimburses the transportation cost beyond the FCI Base Depots and upto the PDCs, in the predominantly hill States including the North Eastern Region, keeping in view the high expenditure on movement of foodgrains in these States due to difficult and inaccessible terrain. In case of Arunachal Pradesh, by way of special dispensation, instructions were issued on 28.11.1995 to provide for reimbursement of HTS upto the distribution centres/FP Ss on en-route locations to the PDCs subject to the condition that the transportation cost would not exceed the amount that would be reimbursed had the stocks been moved to the PDCs. Further, the State Government had also been allowed a ''rolling'' advance of Rs. 10 crore which was to be utilized for settlement of the pending bills and further advance released after adjustment of the previous advance.

Explaining the reasons for the sudden increase in the claims since 2003-04 the representatives of the Arunachal Pradesh Government indicated that the Head Load Carriage System was started on an experimental basis in two Districts in the year 2001 -02 and was subsequently extended to 16 Districts in view of its success by implementing the Head Load Carriage System the foodgrains are now being reached to families living in remote and far flung areas not having motorable roads. The HTS bills presented by contractors were being properly scrutinized by the Deputy Commissioner of the respective Districts. The delivery of foodgrains to distribution points in off-route locations were duly certified by the Circle Officers and members of the Vigilance Committees constituted at the FPS level.

It was observed from the position explained by the State Government''s representatives that the entire cost of transportation from the Base Depots of FC1 to the FP Ss was being claimed as reimbursement under the HTS Scheme without strictly applying the condition imposed vide the 28.11.1995 circular. This was perhaps also not being checked by the Regional Office. FC1 while scrutinising and passing the bills for payment. As a result excess payments under the scheme could not be ruled out.

After discussion, the representatives of the State Government and the FCI agreed as under:

(i)... ...

(ii)... ...

(iii) The Deputy Commissioners shall scrutinize the bills keeping in view the circular of Government of India dated 28.11.1995 and certify that the bills have been passed only after obtaining the certificate by the concerned Circle Officer and verification by representatives of the Vigilance Committees.

(iv) All the HTS payments made in Arunachal Pradesh since 2003-04 would be scrutinized afresh and subject to a special audit by the FCI. specifically keeping in the mind the conditions imposed in the circular dated 28.11.1995. Any excess payments shall be adjusted against pending and future bills. The FCI would not release any funds till this scrutiny and audit was completed. The entire work relating to the special audit, scrutiny pf bills etc. would be completed within a period of two months. Responsibility would be fixed on the officers responsible for the excess payments and disciplinary action initiated,

(v) ltwasreiteratedthattheadvanceofRs. 10 crore to be given by the FCI was only in the form of a ''rolling'' advance and all advances beyond Rs. 10 crore at any one point of time was irregular and should be stopped forthwith.

(Emphasis supplied)

The meeting held on 22.03.2005 was followed up by the Government of India through its letter dated 29.03.2005 and this letter is reproduced below, since it has been challenged by Arunachal Pradesh in this writ petition. The challenge to the letter dated 29.03.2005 is with reference to the instruction to process the bills for payment in terms of the letter dated 28.11.1995. The letter dated 29.03.2005 reads as follows:

Confidential

Joint Secretary Government of India, Ministry of Consumers Affairs, Food & Public Distribution, Department of Food and Public Distribution Krishi Bhawan, New Delhi-110001

Sanjay Kaul

Tel: 23381177(O)

26881251(R)

D.O. No. 2/LS/6/2004-Py.III 29.03.2005

Dear Sir,

I invite your kind attention to this Departments'' letter of even number dated 14.2.2005 addressed to Secretary, Food & Civil Supplies Deptt., Government of Arunachal Pradesh and copied to FCI, on the subject of Reimbursement of HYS claims to Arunachal Pradesh. A reply dated 17.02.2005 has since been received from the Government of Arunachal Pradesh (Annex-ure-I) and from the Zonal Manager (NE), FCI dated 24.02.2005 (Annexure-II).

A meeting to review the system of settlement of bills was held in the Ministry on 22.03.2005 with representatives of the FCI and the State Government of Arunachal Pradesh. A copy of the minutes (Annexure-III) is enclosed to this letter. The decisions agreed upon in the meeting may kindly be implemented.

It has also been decided that the FCI shall undertake a special audit of all HTS bills settled in the case of Arunachal Pradesh relating to the period 2003-04 and onwards and confirm that only bills strictly in accordance with the Government and FCI''s instructions on the subject have been fully complied with. The bills may be specifically scrutinized with reference to this conditions imposed in this Department''s letter No. 179 (1)/90-Py.I dated 28.11.1995 which provide that the reimbursement of HTS in the case of off-route distribution points should not exceed the amount that would have become reimbursable had the stocks been moved to the PDCs. The entire work relating to the special audit, scrutiny of bills etc. may kindly be completed within a period of two weeks.

It may also kindly be ensured that no further funds are released to the State Government under the HTS scheme till all the payments have been scrutinized and the special audit completed. Any excess payments should be adjusted against pending and future bills and disciplinary action initiated against the officers responsible for irregular/excess payments and advances made.

During the meeting it was reiterated that the advance of Rs. 10 crore to be given by the FCI was only in the form of ''rolling'' advance and all advances beyond Rs. 10 crore at any point of time was irregular and should be stopped forthwith. Suitable instructions should be issued on this accordingly. It is further requested that the Sr. Regional Manager, FCI, Assam region may be made personally responsible for the correct scrutiny/accountal of HTS bills of Arunachal Pradesh.

Action taken in the matter may kindly be intimated to the Ministry at an early date.

With kind regards,

Yours sincerely,

Enclo: As above

Sd/-Illegible (Sanjay Kaul)

ShriV.K. Malhotra,

Chairman,

Food Corporation of India,

16-20, Barakhamba Lane,

New Delhi-110001.

As mentioned above, Arunachal Pradesh objected to the "decision" to hold a special audit as stated in the Minutes of the meeting held on 22.03.2005. The objection of Arunachal Pradesh is recorded in its letter dated 11.04.2005 addressed to the Government of India in which it is written, inter alia, that "the points noted at para 5, sub paras (iv) and (v) were not discussed and at no point of time, we insisted for special audit, though it is your prerogative to institute audit."

It seems that for quite some time, no steps were taken to verify the HTS claims through a special audit and consequently no reimbursements were made to the transporters. This situation continued till about April, 2007 when a meeting was held by the Cabinet Secretariat of the Committee of Secretaries which included, inter alia, the Secretary in the Department of Food and Public Distribution of the Government of India and the Secretary in the Ministry of Food and Civil Supplies of the State Government. The entire issue relating to HTS in Arunachal Pradesh was discussed and it was decided, inter alia, that a committee would be appointed to verify the rate of transportation of food grains as fixed by the Deputy Commissioners in Arunachal Pradesh and, more importantly, the actual receipt and lifting of food grains at designated PDCs. The question of verification of rates arose because it appears that the transporters were overcharging Arunachal Pradesh (and therefore the FCI) and the question of actual lifting and receipt arose, we are told, because there was alleged falsification of quantities of food grains transported; that is to say that much larger quantities were shown to have been transported than the actual deliveries.

The relevant extracts of the Minutes of the meeting held by the Cabinet Secretariat on 27.04.2007 are reproduced hereinbelow since they give a rather clear picture of the controversy before us:

CABINET SECRETARIAT Doc. No. 35/2007-CA-III MINUTES OF THE MEETING OF COMMITTEE OF SECRETARIES

Venue: Committee Room, Cabinet Secretariat Rashtrapati Bhavan

Date of meeting: 27.04.2007

Time of meeting: 12.00 Noon

PRESENT

...

...

...

Hill Transport Subsidy in Arunachal Pradesh to operationalize PDS.

A meeting of the Committee of Secretaries, under the Chairmanship of Cabinet Secretary, was held on 27th April, 2007 at 12.00 Noon in the Committee Room, Cabinet Secretariat, Rashtrapati Bhavan, to consider the note dated 26.04.2007 received from the Department of Food & Public Distribution on die subject mentioned above.

Secretary, Department of Food & Public Distribution stated that in Arunachal Pradesh, 12 Principal Distribution Centres were approved in the year 1986 by the Government of India for the purposes of reimbursement of Hill Transport Subsidy (HTS). Foodgrains are released to Government of Arunachal Pradesh by FCI from 7 base depots, 4 of which are located in Arunachal Pradesh. In November, 1995, it was decided that reimbursement of HTS would be allowed to State Government in such cases where foodgrains were off loaded at distribution centres, FPS or en-route of PDCs. The payments under HTS to Arunachal Pradesh had increased disproportionately from 2001-02 to 2003-04. Some complaints were also received about misutilization of funds under the scheme. Subsequently, in September, 2004 payments to the State Government were stopped until further orders. The State Government contended that the head-load system was extended to all the 16 districts of the State to reach PDS foodgrains to beneficiaries in inacessible and remote locations. The transport charges for head-load carriage is about Rs. 125.00 per quintal per km. The average yearly off-take of food grains for Arunachal Pradesh is about 80.000 MT. The State Government claims transportation rate @Rs. 2.25 per quintal per km by road. The State Government has represented to allow these rates for average road distance from base depots to PDCs which is 333 km. The State Government has suggested HTS payment of Rs. 135 crore annually as per the existing approved tender rates. The system of movement of PDS foodgrains to the State can be improved by FCI opening 6 new base depots within the State, for which the cooperation and administrative support of State Government is required by way of providing staff on deputation, identifying suitable premises etc.

The rates being claimed by the State Government are very high compared to other States with similar terrain. Out of existing 13 PDCs, 11 are connected by motorable roads except two PDCs at Damin and Vijaynagar. Head-load transportation to and from these centres would be necessary and the possibility of air dropping the foodgrains may be considered. There is no dispute on the rate of head-load transportation. For road transportation, FCI has offered the rate of Rs. 1.15 per quintal per km whereas, the State Government has requested for Rs. 2.25 per quintal per km. There is also some difference in the average distance calculated by FCI and the State Government which needs to be reconciled.

... ...

Secretary, Food & Civil Supplies, Government of Arunachal Pradesh informed that the State Government had constituted a Committee to look into the details of variation in transportation rates in different districts. The Committee recommended that any rate below Rs. 1.15 per quintal per km. is not workable. In view of this, the rate of Rs. 1.15 per quintal per km. should be taken as the minimum floor, rather than the average. He also requested that the past payments for the years after 2004 should be released so that payments to the contractors could be made.

... ...

... ...

... ...

After detailed deliberations, the following decisions were taken:

(i) ... ...

(ii) ... ...

(iii) ... ...

(iv) ... ...

(v) ... ...

(vi) For the past pending claims, Secretary, Department of Food & Public Distribution would constitute a Committee to verify rates fixed by the D Cs and actual receipt and lifting of foodgrains at designated PDCs. This Committee would submit a report in two months'' time. Based on the recommendations of the Committee, Secretary, Department of Food & PD would take further action for making payments to the State Government for past-dues.

(vi) ... ...

(vii) ... ...

(viii)... ...

REPORT OF THE HIGH POWERED COMMITTEE:

In accordance with the above decision taken on 27.04.2007 (and duly communicated to Arunachal Pradesh) a committee was constituted by an order dated 15.05.2007 cosisting of senior and experienced officers with the terms of reference specified as below:

Chairman and Managing Director, FCI - :Chairman.

ED finance), FCI - :Member

General Manager (Assam Region), FCI - :Member

Food Secretary, Government of Arunachal Pradesh - :Member

This Committee will consider the past pending claims of HTS of Government of Arunachal Pradesh by verifying rates fixed by the Deputy Commissioners and actual receipts and lifting of foodgrains at designated PDCs.

The Committee will complete this exercise within two months from the date of its constitution and submit a report to Department of Food & Public Distribution regarding settling past pending claims of HTS of Government of Arunachal Pradesh.

The High Powered Committee (HPC for short) submitted its interim report on 31.10.2008 and its final report on 05.01.2009. It recommended, inter alia, that "A clear case for consideration of the Ministry exists regarding Rs. 193 crores. of bills which were, during 2004-07, found admissible and then adjusted, as indicated earlier."

The HPC also recommended in paragraph 6.6 of its final report as follows:

This Committee recommends, with reference to Annexures-5A, 5B, 5C that the Ministry may consider the issue in its entirety as a one time exercise and pass necessary directions for FCI. It is a case where the Ministry''s Orders of 1995 were deemed as superseded by the subsequent orders of 2001 and thereafter, in 2005 the orders of 1995 were reiterated. The Ministry may consider the admissibility of bills keeping in view its earlier guidelines and orders. With particular reference to the stand of Arunachal Government that the 2001 orders were, in effect in supersession of the 1995 orders (as there was nothing prima facie to hold otherwise), and therefore, the Ministry could not have given retrospective effect to the 1995 orders for the bills produced after 2001, for which the latter order was valid. It could only have taken prospective effect.

Therefore, as requested by the Arunachal Government, the Annexures at 5B and 5C need reconsideration by the Ministry and directions solicited accordingly for FCI to process the payments further.

COURT CASES:

In the meanwhile, a set of contractors [including Respondent No. 10 herein being the Plaintiff in Money Suit No. 10/07(FTC)] instituted Money Suits before the Addl. District & Sessions Judge, FTC, Yupia (Arunachal Pradesh). Broadly, the Money Suits were for realization of pending bills (ineluding HTS bills) in connection with the Public Distribution System carriage contracts. The State of Arunachal Pradesh, the Union of India and some officers of the FCI were arrayed as Defendants.

In its written statement, Arunachal Pradesh admitted the liability/payment for the carriage contracts. However, it expressed its difficulty in making the payment due to nonavailability of funds. Arunachal Pradesh expressed its willingness to make the payment subject to reimbursement by the FCI. On their part, the officers of the FCI admitted in their written statement that the bills submitted by the contractors were checked and super checked by the concerned FCI authorities and forwarded to their district officers for releasing the payment to Arunachal Pradesh.

On these admissions, the Trial Court decreed the suits in favour of the contractors on 28.09.2007. The total decretal amount in all the Money Suits added up to Rs. 326,71,63,473.00(aboutRs. 327 crores). The Trial Court observed and hoped that the FCI would ensure reimbursement of the decretal amount paid by the State Government to the contractors on production of payment vouchers by the State Government.

The judgment and decree dated 28.09.2007 was challenged only by the FCI by filing a batch of writ petitions (the lead case being WP(C) No. 6228/2007 and the writ petitions pertaining to Respondent No. 10 herein being WP(C) No. 6229/2007, WP(C) No. 6230/2007, WP(C) No. 6231/2007 and WP(C) No. 6234/2007). In this batch of writ petitions, the FCI questioned the constitution of the Fast Track Court and the jurisdiction of the Additional District & Sessions Judge, FTC, Yupia (Arunachal Pradesh), to pass the judgment and decree dated 28.09.2007. By an elaborate judgment and order dated 08.05.2008 the batch of writ petitions was dismissed by a learned Single Judge holding that the impugned decrees were passed by a Court that had the power, authority and jurisdiction to entertain civil cases. On merits, the learned Single Judge found that though the High Court had the jurisdiction to entertain a writ petition under Article 226 of the Constitution, there was no reason why the FCI approached the Principal Seat at Guwahati when it could approach the Permanent Bench at Itanagar under Article 227 of the Constitution. Under the circumstances, the learned Single Judge found the writ petitions wholly without justification and merit and dismissed them.

Feeling aggrieved by the judgment and order dated 08.05.2008 the FCI preferred a batch of writ appeals before the Division Bench, the lead case being WA No. 206/2008 (the writ appeals pertaining to Respondent No. 10 herein being WA No. 209/2008, WA No. 212/2008 and 213/2008). The Division Bench considered the question as to:

...whether the decree passed by the learned Trial Court in each of the suits binds the Appellants FCI in any manner and legally obliges it to perform any act. In other words, can the decrees sought to be challenged be understood to be operative and binding against the FCI.

Answering the question in the negative, the Division Bench held:

There is no direction, either in the judgments or in the decrees following the judgments, to the FCI to reimburse any amount to the State Government after the State Government pays to the Plaintiffs the amounts covered by decrees. The liability of the FCI to make any such reimbursement, therefore, has not been formally adjudicated upon by the learned Trial Court nor has the right of the State Government and the corresponding obligation of the FCI with regard to any reimbursement been conclusively determined by the learned Trial Court. In such circumstances, the Court has to understand that the decrees under challenge in the present appeals are not effective decrees against the FCI and the same do not oblige the FCI to make any reimbursement to the State Government. If that be so, the very foundation of the challenge made by the FCI against the decrees in question has necessarily to fall.

Consequently, all the writ appeals were dismissed by a judgment and order dated 16.06.2009.

We are told that the FCI has now filed Civil Revision Petitions questioning the jurisdiction of the Court of Addl. District & Sessions Judge, FTC to pass the decrees.

Meanwhile, another set of contractors, instead of filing Money Suits, filed writ petitions in this Court for realization of the admitted amounts due against the bills for carriage contract submitted by them. The two lead cases in this batch were WP(C) No. 438 (AP) 2007 and WP(C) No. 453 (AP) 2007. A learned Single Judge by his judgment and order dated 16.05.2008 disposed of these cases with directions, inter alia, to the effect that the HPC should complete its process within two months. It was also directed that whatever amounts are found due and payable to the writ Petitioners shall be made available within one month thereafter. The following additional direction is important:

If the FCI does not make the payment within the said period of one month by way of rolling advance, the Government of Arunachal Pradesh shall be duty bound to make payment to the Petitioners within the said period of one month and, within a fortnight of making such payments by the State Government, the FCI shall reimburse the amount(s) to the State Government.

With regard to the amount not found to be due by the HPC, liberty was given to the Petitioners to institute appropriate legal proceedings. Similar directions were issued in the connected writ petitions. We are told that writ appeals have been filed by the FCI against the judgment and order dated 16.05.2008 and other similar orders.

The situation as it is today:

(a) In so far as the Money Suits are concerned, a Division Bench of this Court has effectively held that the primary responsibility of making payment to the carriage contractors is that of Arunachal Pradesh and no liability is cast on the FCI to reimburse these amounts.

(b) In so far as the writ petitions for recovery of the admitted dues of the carriage contractors are concerned, a learned Single Judge has taken the view that payments have to be made by the FCI and if it fails to do so, then Arunachal Pradesh may make the payments and the FCI shall reimburse the amounts to Arunachal Pradesh. The decision of the learned Single Judge is pending appeal.

(c) In so far as the HPC is concerned, it was of the view that Rs. 193 crores of bills of carriage contractors, subsequently found admissible, were adjusted against previous excess payments leading the road contractors to have a "valid apprehension that, that their bills would be adjusted against past excess payments, even if found admissible after scrutiny."

(d) In so far as the FCI and the Government of India are concerned, they believe that huge excess payments have been made by Arunachal Pradesh, contrary to the scheme envisaged by the letter dated 31.10.1990 and the letter dated 28.11.1995. On the other hand, the State of Arunachal Pradesh and the contractors believe that they are being shortchanged by the FCI.

Pursuant to the decrees obtained by them, the contractors in the Money Suits initiated execution proceeding for recovery of their dues. The Executing Court, by its order dated 07.06.2008 directed Arunachal Pradesh to release the decretal amount in four equal instalments. In compliance with this order, the State Government on 20.06.2009, sanctioned an amount of Rs. 5 crores only towards payment of HTS bills against eight decrees. By its order dated 20.08.2009 the Executing Court held that the judgment-debtors (Arunachal Pradesh) had Med to release the decretal amounts as required and by another order dated 25.08.2009 the Executing Court issued notice to Arunachal Pradesh to show cause why its properties be not attached. The latter order has precipitated the filing of the present writ petition.

We have heard Mr. N. Dutta, learned Advocate General, assisted by Mr. I. Choudhury, learned Senior Government Advocate, for the Petitioner State of Arunachal Pradesh, Mr. K.P. Pathak, learned Senior Counsel, assisted by Mr. P.K. Roy and Mr. S.K. Chakraborty, learned Counsel, for Respondent Nos. 1 to 5, Mr. Randeep Sharma, learned Assistant Solicitor General for Respondents No. 6 & 7 and Mr. M.N. Krishn amani, learned Senior Counsel, for Respondents No. 8,9 and 10.

SUBMISSIONS FOR THE STATE OF ARUNACHAL PRADESH:

The main thrust of the submission of Mr. N. Dutta, learned Advocate General, is that the letter dated 28.11.1995 has been superseded by the letter dated 23.02.2001 issued by the Central Government, Ministry of Consumer Affairs, Food & Public Distribution, inasmuch as the phrase actual basis has been inserted therein and thereby, the ceiling/restriction imposed upon the reimbursement/ payment under HTS Scheme vide Clause-I of the letter dated 28.11.1995 has been waived and due to such waiver, it is incumbent upon the State of Arunachal Pradesh to make the payment on actual basis as provided in the letter dated 23.02.2001. As regards the supercession of the letter dated 28.11.1995, our attention has been drawn by him to paragraph 6.6 of HPC''s report wherein it recommended to the effect that the Ministry may consider the issue in its entirety as a one-time exercise and pass necessary direction to FCI inasmuch as it is a case where the Ministry''s letter dated 28.11.1995 was deemed as superseded by subsequent letter dated 23.02.2001 and thereafter, in 2005, the contents of the letter dated 28.11.1995 were reiterated. Our attention has also been drawn to observations made therein to the effect that the Ministry may consider the admissibility of bills keeping in view its earlier guidelines and orders in view of the stand of the State that the letter dated 23.02.2001 was, in fact, in supercession of the letter dated 28.11.1995 which could not be given retrospective effect for the bills produced after 2001. In the aforesaid premises, it is submitted that since the Petitioner State of Arunachal Pradesh entered into contract/agreement with various individual transporters, who, on execution of works, submitted bills and the same being checked and super checked by the Respondent FCI and its authorities and the bills having been paid on the basis of the letter dated 23.02.2001, the Respondent FCI is duty bound to reimburse the State on actual basis. Further, it is submitted that the payments made to contractors against HTS Scheme were subsequently reimbursed to the State of Arunachal Pradesh by the Central Government through the Respondent FCI and this arrangement continued satisfactorily for the entire period from 2001 -2004 but the same has been stopped by issuing the 2005 letter. This letter, issued unilaterally by the Central Government, has seriously affected the PDS in the State inasmuch as further release of funds has been subsequently stopped. The letter of 2005, according to learned Advocate General, is most illegal and unconstitutional since it has been given retrospective effect from 1995 and it sought to adjust the purported excess amount paid to or drawn earlier by one set of contractors against all pending or future bills that may be passed for payment to another set of contractors. It is further submitted that in order to solve the issue, even the HPC had recommended operation of instruction laid down in the letter dated 23.02.2001 and the same be implemented on one-time basis. Moreover, the letter dated 29.03.2005 was issued by the Joint Secretary, Department of Ministry of Consumer Affairs, etc. on total misunderstanding of facts and law from 2001 -2004 and hence, the same is liable to be struck down being arbitrary in nature.

As regards the challenge to the order dated 25.08.2009 passed by the learned Addl. District & Sessions Judge, FTC, Yupia, in money execution cases, it is submitted that the learned Trial Court while disposing of Money Suit No. 10/2007 (FTC) vide judgment and order dated 28.09.2007, decreed and ordered payment of Rs. 3,72,12,250/-only in favour of the Plaintiffs/contractors to be paid by the Defendants No. 5,6 and 7 that is the State of Arunachal Pradesh with a hope expressed that the FCI shall ensure to reimburse the said amount paid by the State to the Plaintiffs/contractors on production of payment vouchers. It is further submitted that although the suit(s) were decreed, no decree has been drawn till this date and no execution case could be filed by the decree holder without a decree and as such, order dated 20.08.2009 passed by the learned Addl. District & Sessions Judge (FTC) holding that the judgment-debtors (State of Arunachal Pradesh) have failed to release the amount and so also order dated 25.08.2009 issuing notice for attachment of properties belonging to the State of Arunachal Pradesh, are liable to be set aside and quashed, being a nullity for want of jurisdiction. Moreover, it is argued by Mr. Dutta, that the so-called decree cannot be executed or complied with for want of budgetary provision/allocation to be made under Article 202(3)(e) of the Constitution of India which postulates that any sum required to satisfy any judgment and decree requires a statement of estimated receipts and expenditures of the State to be laid before the House by the Governor of the State in the form of Annual Financial Statement. According to him, in the Financial Statement of 2009-2010, no budget allocation for Rs. 326,71,63,473/-has been made to satisfy the judgment and order passed in the money suits and as such, the aforesaid orders dated 20.08.2009 and 25.08.2009 passed by the learned executing Court without any application of mind, is liable to be set aside and quashed. SUBMISSIONS FOR THE FCI:

Mr. K.P. Pathak, learned Senior Counsel, appearing for Respondent FCI and its authorities, first of all, raises the issue as to whether by impleading the private Respondents and asking for a relief by way of certio-rari/mandamus for setting aside the order in money execution cases arising out of the decrees passed in money suits as filed by the State of Arunachal Pradesh under Article 226 of the Constitution of India, is maintainable by avoiding the mandate under Article 131 of the Constitution. According to him, a writ petition in the present form, is not at all maintainable for the following reasons:

(i) In the present proceeding, the dispute has been raised by the Government of Arunachal Pradesh over the applicability of the Central Government''s circulars and therefore, the State Government indisputably is the first ''disputant''. Since the FCI is only an implementing agency of any circular issued by the Government of India through its administrative Ministry, the FCI cannot be said to be a ''disputant'' in true sense of the term. On the other hand, so far as the private Respondents/contractors are concerned, the decree was passed against the State Government on its admission of contractual liability and the private Respondents/contractors have nothing to do in the proceedings relating to the applicability of the Central Government''s circulars. That apart, in the contract entered into between the State and the private contractors for transportation of food grains, a specific contractual right was prescribed which has nothing to do with, rather independent of, the applicability of the Central Government''s circulars. The FCI and the private Respondents have been impleaded as party Respondents only to bring the present proceedings under the ambit of under Article 226 of the Constitution of India whereas the present lis is between the State and the Union of India which can be examined by the Supreme Court alone under Article 131 of the Constitution. The express words of Clauses (a), (b) and (c) of Article 131 exclude the idea of private citizen, a firm or a corporation, figuring as a ''disputant'' either alone or even along with a State or with the Government of India in the category of a party to the dispute. But in the instant case, by any stretch of imagination, neither the FCI nor the private Respondents/contractors could be termed as ''disputant'' in the category of a dispute over the applicability of the Central Government''s circulars. In this respect, Mr. Pathak, would rely on State of Bihar Vs. Union of India and Another, He asserts that the State Government never raised the issue of the applicability of the Central Government''s circulars either before the Trial Court or the executing Court and for this reason, the present writ proceeding should be held to be not maintainable before this Court.

(ii) A petition under Article 226 and/or under Article 227 of the Constitution of India, praying for setting aside for quashing the order passed in the execution case is not maintanable inasmuch as the Petitioner has not availed the alternative remedy available u/s 47 of the Code of Civil Procedure, 1908, which, inter alia, provides that any question relating to the execution, discharge or satisfaction of the decree shall have to be determined only by the Court executing the decree. In the present case, the learned trial Court has passed the judgment as well as the decree together on the same date. Referring to Radhey Shyam and Another Vs. Chhabi Nath and Others, he submits that the High Court in exercise of its power of superintendence under Article 227 of the Constitution of India, cannot issue a writ of certiorari. Further, he submits that the State of Arunachal Pradesh while making a challenge to the orders passed by the executing Court, has prayed for issuance of a writ of certiorari, cannot be allowed even to correct alleged mistake of facts and/or law. Moreover the State, while making such challenge, has made no grievance against either the Government of India or the FCI and its authorities. The relief prayed for setting aside the orders passed by the executing Court, is in no way dependent upon and/or connected to either prayer for setting aside the letter dated 29.03.2005 or for declaration for payment of HTS on actual basis in terms of letter dated 23.02.2001 inasmuch as the decree was passed by the learned Trial Court against the State Government on its own admission of contractual liability towards the plantiffs/contractors. According to him, it is a ploy of the State Government to shift the burden of liability of the decree to the Central Government at the belated stage in 2010.

(iii) While challenging the letter dated .23.09.2005, the State of Arunachal Pradesh have failed to show that any legal or fundamental right of any citizen of India living in the State of Arunachal Prdesh, has been infringed. There is even no such statement in the pleadings to the effect that any such legal and constitutional right, has been violated or infringed and in absence of such pleadings, as held in T.C. Teli, MLA v. Union of India Ors. 1997(3) GLT 278 , a writ certiorari cannot be granted. A reference has been made to Oil and Natural Gas Corporation Ltd. Vs. City and Indust. Dev. Corpn., Maharashtra and Others, to make a point that the dispute arising between the State Government and the Central Government should be kept outside the purview of the Courts of law and dispute between the State Government and Central Government should be settled by the Committee on Disputes constituted for the purpose.

The claim of the Petitioner State of Arunachal Pradesh that the HTS reimbursement should be made on actual basis and it should not be subject to limitations imposed by 1995 letter, is basically an issue relating to and in the realm of economic policy decision of the Central Government and the Court of law may not like to embark upon its examination under Article 226 of the Constitution of India as held by the Apex Court in Secretary, State of Karnataka and Others Vs. Umadevi and Others, wherein it is held that the policy decision of the Government cannot be interfered with or struck down merely on certain factual disputes in the matter unless grave error is found on the part of the Central Government. He also refers to Dhampur Sugar (Kashipur) Ltd. Vs. State of Uttranchal and Others, wherein the Apex Court held that Courts are ill-equipped to deal with such policy decision matters. It is an already established position that in complex social economic and commercial matters, decision have to be taken by the Governmental authorities keeping in view several factors and it is not possible for the Courts to consider competing claims and conflicting interests and to conclude which way the balance tilts. There are no objection, justifiable or manageable standards, to judge the issue nor such question be decided on priori consideration. The basis of calculation of reimbursement of transportation costs of foodgrains off-loaded on way to PDCs on actual basis as per the letter dated 23.02.2001, is within the policy making domain of the Government of India and as such, there is no scope for interference with the same injudicial review under Articles 226 and 227 of the Constitution of India.

The phrase'' actual basis'', as submit -ted by Mr. Pathak, learned Senior Counsel, has been used purposefully in letter dated 23.02.2001 because the moment the location of the 6 PDCs, out of 12 existing PDCs, was changed/shifted to new locations, it was sought to be clarified that for transportation of food grains from the base depots to the 6(six) extended PDCs, the cost of transportation from the base depot to the PDCs would be on actual basis. The letter dated 23.02.2001 is in the nature of an administrative order for the purpose of shifting the existing PDCs to new locations without having any fresh financial implications in the matter of off-loading stocks on its way to the PDCs for FP Ss en-route.

SUBMISSIONS FOR THE DECREE HOLDERS:

In his precise and articulated argument, Mr. Krishnamani, learned Senior Counsel, appearing for private Respondents No. 8,9 and 10, submitted that there is a decree dated 28.09.2007 passed by a Court of competent jurisdiction established under the law in favour of the aforesaid private Respondents (Plaintiffs in the money suits), in execution petitions No. 01, 02, 03, 04, 05, 06, 07 and 08 of 2008 arising out of money suits No. 02,04, 06,07,08,09,10 and 11 of 2007 for payment of Rs. 3,72,12,250/- only. The said decree having not been challenged by any party by way of an appeal, has attained its finality in law and it has become binding among the parties in lis. The Petitioner State of Arunachal Pradesh, in order to comply with the decree, admittedly sanctioned an amount of Rs. 5 crores only towards payment of HTS bills against above 8 money suits and the same was forwarded to the FCI for reimbursement. Now, it is not open for the State of Arunachal Pradesh to take any position contrary to what has been followed by it and the State is now estopped under the law to challenge the decree in any form, far less in a writ petition under Article 226 of the Constitution of India The present writ petition filed by the State of Arunachal Pradesh is an afterthought and actuated by extraneous considerations and reasons and thus, an abuse of process of a Court in an attempt to stifle the decree passed by the Court of competent jurisdiction established under the law. The State having admitted the liability in part, pursuant to execution proceeding, save its inability to paylhe amount "due to paucity of funds and non-release of HTS payment by FCI since 2004, for which reasonable time for payment to the decretal amount was sought", is estopped in law and also by operation of doctrine of res judicata, to challenge the same in proceeding of any alternate nature or even in any regular appeal.

Further, in the present writ petition, the State of Arunachal Pradesh is mainly seeking a declaratory relief to declare as to which of the two notifications/circulars would be applicable which requires adjudication between the Union of India on the one hand and the State of Arunachal Pradesh on the other and such legal right is appurtenantto the Union of India and the State of Arunachal Pradesh. It is, thus, ex-facie evident on a bare perusal of the writ petition that such relief cannot be adjudicated by this Court and it can best be adjudicated by the Apex Court only in its original jurisdiction under Article 131 of the Constitution of lndia In his submission, the learned Senior Counsel has made a point that the decretal amount cannot be reduced or altered and the executing Court cannot go beyond the decree. The decree cannot be defeated by way of filing a writ petition. As per the statement made in paragraph 5 of the writ petition, the checked and super checked bills have been paid by the State Government through the concerned Deputy Commissioners and as such, payments are subsequently reimbursed to the State Government by the FCI. Both the State of Arunachal Pradesh and FCI have to share the liabilities and responsibilities of payment in the HTS amount to the Respondent contractors and as such, they may be directed to share equal liability that is 50% each, as was directed by the Apex Court in Rajkamal Builders Vs. Ahmedabad Municipal Corporation and Others, The learned Senior Counsel further submits that the State Government cannot escape from its liability on the ground of non-allocation or non-availability of fund under the Articles 202/ 203 of the Constitution of India, for defraying/satisfying the decretal amount for it is the bounden duty of the State and its officials to take necessary steps for allocation of fund as per the provisions under the said Articles. The State of Arunachal Pradesh had never attempted to take the required steps in that regard and the inaction, negligence or laches on the part of the State and its officials, would merit no excuse defeating the decree lawfully passed by a competent Court of law. SUBMISSIONS FOR THE UNION OF INDIA:

Mr. R. Sharma, learned Assistant Solicitor General, appearing for the Respondents No. 6 and 7, submits that the two letters in question, one dated 28.11.1995 and the other dated 23.02.2001, are completely different from each other like chalk and cheese inasmuch as both the letters were issued to grant certain relaxation/concession in the HTS Scheme of 31.10.1990 to the State of Arunachal Pradesh taking into consideration the special features of the State like hilly terrain, large geographical area, very low density of population, etc. The letter dated 23.02.2001 was issued to enable shifting of 6 PDCs from their earlier location to hew locations without any over-riding effect on the letter dated 28.11.1995 and supercession thereof and that being so, the phrase ''on actual basis'' introduced in letter dated 23.02.2001, has not to be read in relation to the entire HTS Scheme as formulated earlier under letter dated 31.10.1990 and subsequently re-modified vide letter dated 28.11.1995. Further, the term actual basis is subject to conditions that reimbursement of HTS paid for off-route points/FP Ss other than PDCs or en-route to such centres will not in any circumstances exceed the amount that would have become reimbursable had the stocks moved to the PDCs. It is, therefore, clear that the term actual basis inserted in the letter dated 23.02.2001 would not in any case, mean that various terms and conditions imposed for expenditure on ''actual basis'' by various circulars issued by the Government of India from time to time would cease to apply. There is a complete misunderstanding of facts and misinterpretation of letter dated 31.10.1990, letter dated 28.11.1995, letter dated 23.02.2001 and letter dated 29.03.2005 on the part of the State of Arunachal Pradesh which had led it to claim erroneous reimbursement.

DISCUSSION:

We would first like to closely examine three letters to give a finding as to whether the Scheme of HTS as announced on 31.10.1990 read with the letter dated 28.11.1995 continues to operate in spite of issuance of the letter dated 23.02.2001 and whether it could be construed that the letter dated 28.11.1995 has been subsequently superseded by the letter dated 23.02.2001.

It may be recalled that the letter dated 31.10.1990 laying down the scheme for HTS reimbursement by the FCI on actual basis as certified by the State Government provided the following instruction:

In case stocks are lifted from the base depots to the approved PDCs the transportation charges i.e. Hill Transport Subsidy would be reimbursed on actual as incurred by the State Government.

(Emphasis supplied)

By the letter dated 28.11.1995, the Managing Director, FCI, was intimated about the decisions of the Government of India in respect of reimbursement of HTS specially meant for the State of Arunachal Pradesh, that is, reimbursement of hill transport subsidy would be allowed to the State of Arunachal Pradesh even in such cases where the food grains are off-loaded at distribution centres/ FPS other than the PDCs or en-route to PDC. This was subject to two important conditions:

(i) The reimbursement of HTS upto the off-route distribution points/FPS will not under any circumstances exceed the amount that would have become reimbursable, had the stocks been moved to the Principal Distribution Centres.

(ii) No demand for either shifting or increasing the number of existing PDCs will be entertained.

The letter dated 23.02.2001 is an official communication issued by the Director (Policy), Ministry of Consumer Affairs, Food and Public Distribution, intimating the Managing Director, FCI, about the decision of the Government of India to shift/extend in respect of 6 PDCs for the purpose of reimbursement of transportation cost of foodgrains on actual basis, subject to the condition laid down from time to time. The said decision was taken by the Union of India on the request of the State Government for reaching/supplying the PDS items to the remote and inaccessible areas of the State, particularly the frontier areas. The letter dated 23.02.2001 indicates no change in the implementation of HTS Scheme in supercession or cancellation of the letter dated 31.10.1990 or the letter dated 28.11.1995 -rather it has reiterated reimbursement of transportation cost on actual basis. It must be reiterated that such reimbursement on actual basis as incurred by the State Government, is provided in the original HTS Scheme which was issued by the Central Government vide letter dated 31.10.1990 in supercession of all previous instructions.

In the 1990 letter, the modality of reimbursement of HTS has been provided, Clause-1 (ii) is relevant for our purpose. It is to be read with Clause-2(c). The accepted position so far found is that it is the duty of the FCI to send the PDS items to its base depots and then upto the PDCs but not beyond that. It is the responsibility of the State Government to lift the PDS items from PDCs to D Cs/FP Ss by transport wherever possible and by head-load carriage system. Exceptionally, HTS was allowed by the letter dated 28.11.1995 only in respect of State of Arunachal Pradesh even where the foodgrains are off-loaded at D Cs/FP Ss other than the PDCs or en-route to PDCs subject to two conditions mentioned therein. The said conditions have not been removed and as such, the letter dated 28.11.1995 held the field even on the issuance of the letter dated 23.02.2001 and till date, there is at least no scope for escaping from the most important condition i.e. condition No. (l) of the letter dated 28.11.1995 which imposes a ceiling of reimbursement of HTS. Unless this particular restriction is abolished, the letter dated 23.02.2001 could not be read independently of the letter dated 31.10.1990 and the letter dated 28.11.1995. In our considered view, in absence of any recitation to the effect that letter dated 23.02.2001 has been issued in supercession of earlier notifications; one cannot import or read into it that the letter dated 28.11.1995 has been superseded or cancelled. As a fact, the letter dated 23.02.2001 is in continuation of instruction and notification contained in letter dated 28.11.1995. And as a matter of fact, the letter dated 23.02.2001 is nothing more than a permission granted to the State Government for shifting/extending some PDCs under HTS Scheme without over-riding the letter dated 28.11.1995. By the letter dated 23.02.2001, the State has been given discretion to lift/carry the foodgrains from the PDCs to the D Cs/ FP Ss by way of off-loading. Unfortunately, this was misunderstood by the State of Arunachal Pradesh which made exorbitant reimbursement claims. There is no record to show as to where the foodgrains should be delivered/carried to, by head-load and could be off-loaded en-route or off-route. For want of such record and the exorbitant claims, the Central Government had bona fide apprehension of misuse of discretion by concerned officials of the implementing agency. In order to check the possible nisuse of discretion visa-vis misuse of public fund, the Government of India has taken the conscious decision to reimburse the cost of transportation on actuals which has been followed ever since the HTS Scheme was introduced in the State of Arunachal Pradesh. This is a matter of public policy with an aim at saving the public exchequer and as such, we are not prepared to interfere with it injudicial review risking allegation of encroachment upon the domain of the executive. Moreover, we find that the authorities have taken a conscious decision in public good and interest and thus, our interference with it, would be most unwarranted.

We find from the minutes of the meeting dated 22.03.2005 and decisions taken therein that it is very much clear that the letter dated 28.11.1995 was in force and in fact, it directed all concerned to act upon the same. It is evident that no objection was raised by the representatives of the State Government in this regard, amongst whom, the Chief Secretary himself was present, on the decision taken in the said meeting during the discussion and also on subsequent occasion (s). It implies or can be accepted that the State Government agreed to the stand taken by the Central Government in implementing the HTS Scheme as per the guidelines under letter dated 28.11.1995. Since the State of Arunachal Pradesh was a party to the aforesaid decision, it cannot retract from the said position and take a different stand to act only upon the letter dated 23.02.2001. Under such circumstances, it cannot be accepted that the State of Arunachal Pradesh had misunderstood the decision of the said meeting and it can claim reimbursement from the FCI or for that matter from the Central Government on the basis of the letter dated 23.02.2001 inasmuch as the State Government is a party to the decision arrived at in the meeting held on 22.03.2005.

The primary objective of HTS Scheme, as we find so far, is reimbursement of expenditure or cost paid by the State Government involved in delivery of foodgrains to the PDCs and thus, relieve the State Government of the financial burden by way of reimbursement of the cost by providing fund from the Central Government through FCI. The simple literary meaning of reimbursement is to repay the cost. In other words, the literary meaning of reimbursement is to pay the equivalent amount to the loss or expenses incurred. The State claims that it has incurred huge amount in payment of HTS bills to the carriage contractors and it must be reimbursed by the Union of India. The State paid the bills for the year 2001-2004 as per the letter dated 23.02.2001 and it must be reimbursed by the FCI in terms thereof. The FCI refuses to reimburse the entire cost paid by the State Government on the basis of the letter dated 23.02.2001 as interpreted by the State Government. The FCI is agreeable to reimburse in terms of the letter dated 28.11.1995 as because the Union of India has provided fund to meet the expenditure as per the letter dated 28.11.1995, which has not been superseded till date. According to FCI, the State Government has paid excess amount to the contractors in violation of the letter dated 28.11.1995 and it has decided to recover the excess payment as per the decision taken in the above meeting held on 22.03.2005, from the pending and future bills of the contractors; no matter whether any excess payment was received or not by the contractors whose bills are pending for payment. Because of this decision to adjust or recover the so-called excess amount, the contractors have stopped submitting their bills and it has created a chaotic situation ultimately affecting the public distribution system in the State of Arunachal Pradesh. If such a situation continues, there would be total failure of the public distribution system directly affecting the people at large.

During the course of argument, it has been submitted by Mr. Krishnamani, learned Senior Counsel, that private Respondents are not concerned whether the bills are cleared by the State of Arunachal Pradesh or by the Union of India or its implementing agency that is FCI, and also the private Respondents are not concerned whether the State of Arunachal Pradesh could arrange the required fund by making budgetary provision under Article 202(3)(e) of the Constitution of India or from other source. It has also been suggested by him that a direction may be issued to the State of Arunachal Pradesh and the Union of India to pay the decretal amount with interest equally that is 50% to the Respondent contractors within a specified period of time. We are afraid that a direction could not be issued to the Union of India to bear 50% of the decretal amount for the simple reason that in the judgment and decree, the learned Trial Court directed the State of Arunachal Pradesh only to pay the amount and issuance of any direction as suggested by the learned Senior Counsel, would amount to modification/alteration of the judgment and decree which is unsustainable under the law. However, we would observe that it is the duty and responsibility of the State of Arunachal Pradesh to arrange the fund to pay/satisfy the decretal amount. The lapse on the part of the State of Arunachal Pradesh in making budgetary provision, as stated in the writ petition and submitted by the learned Senior Counsel, is not supported by any reasonable explanation and the explanation sought to be given is far from satisfactory.

The State is making a serious attempt to show that there are causes of action against the Central Government as well as the FCI in the matter of release of funds and reimbursement of the expenditure towards payment of HTS to the contractors but it has so far not instituted any case against the Central Government or the FCI for realization of the reimbursement amount although some contractors have already instituted money suits against the State for payment of the bills and also succeeded in obtaining a decree from the appropriate Court of law. The State Government is in a precarious situation since the litigant contractors have also filed execution proceedings and got notices served for attachment of properties of the State.

As stated earlier, the State of Arunachal Pradesh, for reasons best known to them only, preferred not to appeal against the judgment and decree and it remained satisfied with filing the present writ petition with one of the prayers for setting aside the order dated 25.08.2009 passed in the money execution cases. We are not oblivious of the established position of law that the decree passed by a competent Court cannot be modified, altered or cancelled by any other Court except the Court passing the judgment and decree. It is conceptually misconceived to file a petition under Article 226 of the Constitution of India before a High Court for issuance of writ of certiorari/mandamus, for setting aside an order passed by an executing Court in the process for execution of the decree. The State could neither come forward with any convincing reason for interference by this Court with an order passed in the execution proceeding nor could it place an authority in support of such demand for interference with the order of an executing Court in exercise of its power under Articles 226/227 of the Constitution of India. In our considered view, the State of Arunachal Pradesh is estopped mom seeking relief from the High Court inasmuch as it preferred no appeal against the judgment and decree passed by a Civil Court by which it became aggrieved by or dissatisfied with. We have, therefore, no other alternative left but to decline the prayer for issuing a writ of certiorari/mandamus, as demanded by the State to issue a writ of certiorari/mandamus for setting aside the judgment and decree dated 25.08.2009 passed by the Civil Court in money execution cases.

As regards the prayer of the State of Arunachal Pradesh to set aside the Government of India''s letter dated 29.03.2005, it is to be noted that the said letter was issued by the Joint Secretary to the Government of India, Ministry of Consumer Affairs, etc. subsequent to the meeting held on 22.03.2005 wherein some decisions were taken, as stated earlier, to review the system of settlement of bills in presence of top FCI and the State Government representatives. The impugned letter dated 29.03.2005 is merely an instruction to FCI to undertake a special audit of all HTS bills settled in the case of Arunachal Pradesh relating to the period of 2003-2004 and onwards, and "confirm that only bills strictly in accordance with the Government and FCI''s instructions on the subejct has been duly complied with". It intended that bills may be specifically scrutinized with reference to the conditions imposed in the 1995 letter and the entire work relating to the special audit, scrutiny of bills, etc., be completed within a period of 2(two) months. The impugned communication dated 29.03.2005 categorically asked the FCI to ensure that the further funds are released to the State Government under the HTS Scheme till all the payments have been scrutinized and the special audit completed and any excess payment should be adjusted against pending and future bills and disciplinary action initiated against the officers responsible for irregular/excess payment and advances made. The aforesaid minutes of the meeting dated 22.03.2005 containing the decisions, which are under challenge in the present writ proceedings, has not been challenged by the State of Arunachal Pradesh for all those years from 2005 till 11.09.2009 that is the date of filing the present writ petition (except with regard to the special audit). The instant writ petition has been filed challenging, inter alia, the impugned communication/ letter dated 29.03.2005 only after the executing Court issued a notice on25.08.2009 asking the State of Arunachal Pradesh to show cause as to why its properties should not be attached in execution of the judgment and decree passed in money suits and subsequent orders passed by the executing Court holding that the judgment-debtors have failed to release the decretal amount. This shows that the State Government was not really aggrieved by the decisions taken in the aforesaid meeting dated 22.03.2005 and the consequential instructions issued by the Government of India vide impugned letter dated 29.03.200 5. There is no such explanation in the writ petition as to why the State of Arunachal Pradesh has challenged the aforesaid consequential letter dated 29.03.2005 at this belated stage. We fail to find any bona fide reason for the same. We, therefore, do not set aside the impugned communication/ letter dated 29.03.2005.

We are not exercising the power and jurisdiction of an original Court to go into and settle the disputes between the State Government and the Central Government or the FCI, relating to claims and counter claims of the parties in regard to payment or non-payment of HTS reimbursement of whatever expenditure it has defrayed in connection with the cost of transportation to the contractors on the basis of letter dated 23.02.2001. The State of Arunachal Pradesh has been able to show that it has paid huge amount to the contractors towards clearance of the HTS bills on the basis of the letter dated 23.02.2001.

On the other hand, the Respondent Union of India and the FCI have been able to show to the satisfaction of this Court that the HTS reimbursement should be made only as per the guidelines issued under the letter dated 23.02.2001 read with the letter dated 31.10.1990 and the letter dated 28.11.1995 and since the State of Arunachal Pradesh has paid excess amount to the contractors, they have been compelled to make detailed inquiry into the excess payments and irregularities and until such inquiry is completed, further payments have been stopped. The claim for reimbursement of HTS from the Central Government and the FCI is an actionable claim. The State of Arunachal Pradesh, as claimant, may (if permissible in law) initiate legal action against the Union of India and the FCI by way of instituting appropriate suit.

CONCLUSION:

The aforesaid discussion inevitably and naturally leads us to hold that the present writ petition is bereft of any merit inasmuch as the State of Arunachal Pradesh has failed to make out a case for granting the relief (s) as sought for by it. We accordingly dismiss this writ petition directing the parties to bear their own costs.

We may conclude by observing that the issues raised in this case need to be discussed and thrashed out by and between the State of Arunachal Pradesh (which appears to have made exorbitant payments for reasons that appear quite dubious), the Union of India and the Food Corporation of India. Otherwise, the issues raised will continue troubling all concerned for a long, long time to nobody''s benefit, except those making dubious claims.