WP/16900/2009 of Sri Santhoshima Parboiled Modern Rice Mill, Gadipally Vs The District Collector , Nalgonda District, Office of the on 30 December 2009

THE HON'BLE SRI JUSTICE GOPALA KRISHNA TAMADAWrit Petition Nos.12805, 14867 & 16900 of 2009COMMON ORDER:

1 Since the issue involved in all these Writ Petitions is one and thesame, the same are being disposed of by way of this common order.

2 For the sake of convenience I take up the case in Writ PetitionNo.12805 of 2009 first and then give finding in the other two Writ Petitions.

3 Petitioner filed the Writ Petition 12805 of 2009 seeking a writ ofmandamus to declare the action of the respondents in seizing the entirestock of paddy, rice and broken rice from his mill on 17.06.2009 as arbitrary,illegal and without jurisdiction and consequently set aside the proceedings ofthe first respondent in CS 1/1017/2009 dated 25.06.2009.

4 Brief facts are that Petitioner herein is a Parboiled Modern Rice Millsituate at Gadipally village, Garidepally Mandal Nalgonda District and it hasall valid licences to carry on the business of milling paddy and selling rice.On 17.06.2009 the Joint Director (CS) Nalgonda District who is arrayed assecond respondent herein along with the vigilance officials surprised the ricemill of the petitioner and seized 2942 Quintals of BPT variety paddy, 26,224Quintals of JGL paddy, 34,454 Quintals of 1010 variety paddy, 550 Quintalsof BPT rice, 550 Quintals of Boiled Rice, 360 Quintals of Rejected rice and495 Quintals of Broken rice and the stock registers on the ground that onverification of particulars of paddy purchased for milling, rice produced bythe petitioner with reference to sales made (FCI/Open Market), the vigilanceofficials noticed variation of (-) 15216.45 Quintals in rice and (-) 753 Quintalsin paddy. A panchanama was drafted then and there itself and put the entirestock in the custody of one Pabba Nageswar Rao Managing Partner of M/s.Mahalakshmi Rice Mill, Suryapet for safe custody. Thereafter the matterwas reported to the first respondent-District Collector for initiation ofproceedings under Section 6 A of the Essential Commodities Act. The firstrespondent issued a show cause notice to the petitioner vide proceedings CS 1/1017/2009 dated 25.06.2009 stating that the vigilance officials noticedvariations in stocks of paddy and rice and the petitioner has stored preferredvariety of paddy over and above the permissible limits and contravened theprovisions of clauses 9, 12 and 16 of AP Rice Procurement (levy) Order1984 and under clause 10(1) of APSCD (L, S &R) Order 2008 as amendedvide the Government Memo No.41/CS1 (1)/2008 dated 12.01.2009 andG.O.Ms.No.50 CA, F & CS Department dated 02.12.2008 and proposed forconfiscation of the entire stock worth Rs.6,84,11,620/-.

5 The petitioner contends that the authorities have calculated the stockswithout taking into consideration the yield of broken rice and that it supplied2,000 Quintals of BPT to assist the Government in distribution of the ricethrough civil supplies counters, that as required by law it is submitting theregisters to the authorities for every fifteen days, which are under the controlof the respondents and there is no concealment of any stock as they havepaid the market fee besides the sales tax and VAT.

6 This court on 30.06.2009 while adjourning the matter to 06.07.2009enabling the learned Assistant Government Pleader to file counter affidavit,permitted the respondents to sell 550 Quintals of BPT rice seized from thepetitioner’s mill in public auction and as regards the direction to the petitionerto mill the seized paddy, no further action shall be taken in that regard till thenext date of hearing.

7 An affidavit sworn to by the second respondent has been filed statingthat the stocks held by the petitioner is beyond the permissible limits,according to Clause 18(2) (c) of APSCD Order 2008, 6% variation betweenbook balance and ground balance should be allowed as per which thepermissible variation in rice is only 88 Quintals on ground balance, but thevariation noticed by the authorities is 15,216 Quintals. It is further stated thatthe yielding of rice was calculated @ 67% as per the Government Memowhich is for the head rice only and broken rice percentage is different, whichwill not be included in the head rice percentage. The petitioner did notproduce any evidence regarding per hour milling capacity of the mill is 10

tonnes and even if the contention of the petitioner is taken into consideration,as per G.O.Ms.No. 49 CA, F&CS (CS1) Department dated 25.11.2008 thepaddy stock limits than can be held by the rice millers for above 5 tonnepaddy per hour milling capacity is 2,52,000 Quintals and as perG.O.Ms.No.4 CA, F&CS (CS1) Department dated 16.01.2009 and MemoNo.41/CS 1/2009, dated 05.06.2009 the rice miller can hold 10% of totalstock allowed as superfine (preferred varieties) of paddy i.e. 25,200 Quintalsonly, but the petitioner has hoarded 29166 Quintals of preferred variety ofpaddy as on the date of seizure which is 3,966 Quintals more than thepermissible limit.

8 Denying the various allegations adverted to in the counter affidavit,the petitioner filed reply affidavit stating inter alia that the proceedings of theGovernment of India have no statutory value nor they are traceable to anypower so as to calculate the production of rice at 67% for paddy milled, themillers purchase paddy of different varieties from the ryots and as suchthere cannot be any uniform ratio of production of rice for the paddy milledand it is only the rice or paddy, which is delivered as levy to the FCI, isgiven different grades by technical means and beyond prescribed limits thestocks are rejected. As regards the maximum limits of preferred variety ofpaddy, the petitioner submitted that the Government issued Memo No.41/CS1/09 dated 12.01.2009 wherein it modified the upper limit of the paddy to beheld by a miller with reference to the tonnage capacity of the mill and so theupper limit of 25,200 tonnes of paddy for a mill of above 5 tonnes capacityno more holds. The petitioner further submits that as per the inspectionreport of the General Manager, Industries the milling capacity of thepetitioner is 12.75 tonnes and so the petitioner is entitled to hold paddy @3600 tonnes per ton milling capacity, which comes to 45,900 tonnes and thepreferred variety that the petitioner can hold is 10% of this capacity, whichcomes to 4590 tonnes. Whereas the petitioner was holding 29166 Quintals ofpreferred variety, therefore, there is no variation in that regard.

10 Mr. Mahmood Ali learned counsel for the petitioner contended that theso called violation of Government Memo No.1 does not constitutecontravention of an order made under section 3 of the EssentialCommodities Act. As regards the alleged shortage of 753 Quintals of paddywhen compared with the physical stocks of paddy available with reference tobook balance, the learned counsel for the petitioner contended that thepetitioner handled huge stocks of paddy and this quantity of 753 Quintals isnegligible and the alleged shortage of 753 Quintals of paddy was purely onaccount of moisture contents in the paddy. He further contended that underG.O.Ms.No.49 dated 25.11.2008 the millers whose milling capacity is fivetonnes paddy per hour, the miller was permitted to hold 25200 M.T of paddyand subsequently the Government issued Memo No.41/CS 1/2009, dated12.01.2009 permitting the millers to hold paddy with reference to per ton perhour milling capacity of paddy. He further contended that the millingcapacity of the petitioner was reported to be 12.75 tonnes per hour and sothe petitioner is entitled to hold paddy at 2600 tonnes per ton milling capacitywhich comes to 45,900 tonnes whereas in the instant case it comes to 4590tonnes and hence there is no violation. In that regard he takes the aid ofClause 10 of the G.O.Ms.No.49 dated 25.11.2008. He further contended thatin view of the legal position, the proceedings initiated by the Collector will notstand as the Collector has no jurisdiction to initiate such proceedings. Hefurther contended that the seizure of the stocks is totally without jurisdictionand ultimately prayed to allow the Writ Petition.

11 Per contra the learned Assistant Government Pleader has reiteratedthe contentions in the counter affidavit filed on behalf of the respondents, bycontending that the variation in respect of rice is beyond the permissiblelimits and according to Clause 18 (2) (c) of APSCD Order 2008, 6% variationbetween book balance and ground balance should be allowed and accordingto this the permissible variation in respect of rice is only 88 Quintals onground balance, but the variation noticed is 15216 quintals.

12 No doubt, it is contended by the learned counsel for the petitioner thatthe impugned proceedings initiated by the first respondent is withoutjurisdiction. But this Court is not inclined to go into the said aspect for thereason that the said aspect can also be canvassed before the 1[st]respondent. Of course, if this court is satisfied that an order is withoutjurisdiction, there is no need to direct the authority below to complete theenquiry. Since this court is not inclined to go into the said aspect, I deem itappropriate to direct the first respondent to complete the enquiry pendingbefore him.

13 Since it is the contention of the respondents that the miller, with anoblique motive obstructed the free flow of preferred variety rice and paddy inthe market, and since on the other hand it is the contention of the contentionof the petitioner that the alleged variation is within the permissible limits, andinasmuch as proceedings under section 6 A of the Essential CommoditiesAct have already been initiated, this court is of the view that instead of givingany finding in this Writ Petition, suffice it to direct the Collector to completethe said enquiry as expeditiously as possible, preferably within a period ofeight weeks from the date of receipt of a copy of this order because anyfinding in this Writ Petition may have bearing on the outcome of the saidproceedings initiated by the Collector. It is needless to observe that whileadjudicating the matter, the petitioner shall be afforded an opportunity ofpersonal hearing and it is for the petitioner to canvass all the contentionsraised herein before the Collector.

14 Accordingly this Writ Petition is disposed of. No order as to costs.Consequent upon the disposal of the Writ Petition No.12805 of 2009, the WritPetition Nos.14867 and 16900 of 2009, which are filed with an identicalprayer, deserve no separate findings and they are also disposed of with thevery same direction.

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