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PETITIONER: FOOD CORPN. OF INDIA

       Vs.

RESPONDENT: V.K.SUKUMARAN ETC. ETC.

DATE OF JUDGMENT23/11/1995

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. HANSARIA B.L. (J)

CITATION:  JT 1995 (9)   231        1995 SCALE  (7)367

ACT:

HEADNOTE:

JUDGMENT:                             With (C.A. No. 999/92, C.A.No.405/92, C.A.No. 12006/95 & 12005/95 SLP 28438/95  10537)/90, C.A.  No. 1828/89, C.A.No. 1827/89, C.A. 1829/89)                             With             I.A. No.3 In CIVIL APPEAL NO. 405/92                            ORDER      Leave granted.      The controversy  raised in  these cases  hinge upon the interpretation of sub-clause (8A) of Clause 45 of the Kerala Rationing Order, 1966 and the circular of the Union of India dated October 11, 1995. The facts of CA No.1826/89 which lie in a  short compass  would be sufficient for disposal of all the appeals before us and are stated as under:      The  respondent  is  an  authorised  retail  dealer  at Kanayannur Taluk, Ernakulam Distt. He had purchased from the appellant’s godown  rice on October 10, 1985 and October 11, 1985 at the pre-revised rates for public distribution to the Card-holders.  On  October  11,  1985,  the  Civil  Supplies officials issued  instructions to  the respondent  and other retail dealers  that the  price of  rice has  been increased with effect  from October  13, 1985 and the closing stock on October 12,  1985, should  be ascertained and the difference of the price was to be deposited in the Treasury and Challan was directed  to be submitted within two days thereafter. If the difference  of the  rate would  not be  deposited in the Treasury or  in the  event of non-submission of the Challan, action would  be taken  against the  defaulters.  By  letter dated November  28,  1985,  the  Assistant  Manager  of  the appellant-Corporation called  upon the respondent to pay the difference of  the rate  for the stock on the closing day of October 9,  1985 and  the purchase  from  October  10,  1985 onwards till  October 11,  1985. Calling  in question of the said demand,  writ petitions  came to  be filed. The learned single Judge  following the  decision dated June 19, 1986 of the High  Court  in  O.P.No.7926/82  entitled  Kerala  State

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Wholesale Distributors  Federation & Ors. vs. Union of India & Ors. had held that the respondent was not liable to refund the difference of the price for the stock on hand on closing day of  October 9,  1986 and  supplied  on  October  10  and October 11,  1985. The  liability would  arise only from the date when  intimation of  the revised rate thereof was given by the  Civil Supply Officer. Since the intimation was given on 13.10.1985,  for the stock on hand as on October 12, 1985 difference would  be liable  to be  refunded at  the revised rates from  that date.  The order  was  challenged  in  writ appeal and  the Division  Bench in  the impugned order dated January 14,  1988 in  Writ Appeal No.597/87 upheld the order of the  learned single  Judge and dismissed the appeal. Thus these appeals by special leave.      The  Government   of  India   issued  Circular  No.176, Ministry of  Food and  Civil Supplies on 11.10.1985 revising the issue  price of  the rice  from central  pool for public distribution with  effect from  October 10,  1985. It  reads thus:      "As already  intimated in Telex/Telegram      of  even  number  dated  9.10.1985,  the      revised Central  issue  prices  of  rice      supplied  from   the  Central  Pool  for      distribution    through    the    public      distribution  system,   which  will   be      effective from 10.10.1985 are as under:                              (Rs.per quintal)      1....   Current Issues   Revised              Prices           Issue Prices             (Raw & Parboiled) w.e.f.10.10.85                               (Raw Parboiled)      (i)      208.00           217.00      (ii)     220.00           229.00      (iii)    235.00           244.00      2. The  aforesaid issue  prices of  rice      are for delivery Ex-FCI depots or F.O.R.      destination    stations.    The    State      Government/Union               Territory      Administrations    are     aware    that      foodgrains from  the  Central  Pool  are      supplied to them at the subsidised issue      price with a view to enable them to meet      their   requirements   of   the   public      distribution  system.   Even  after  the      increase, with  effect from  10.10.1985,      the issue prices of rice will be heavily      subsidised. The  State Governments/Union      Territory      Administrations      are,      therefore, requested  to arrange sale of      foodgrains,  supplied   to   them   from      Central Pool,  through ration/fair price      shops at  retail issue  prices fixed  by      them  after   adding   only   reasonable      distribution costs  to the revised issue      prices effective from 10.10.1985. It may      be  stressed   here   that   the   State      Government/Union               Territory      Administrations, wholesalers,  retailers      or any other agency that may be involved      in distribution,  should not  derive any      profit put  of these  transactions.  The      new retail issue prices as will be fixed      by the State Governments/Union Territory      Administrations may be intimated to this      Department as early as possible.   3. In

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    order to  ensure that  the  wholesalers,      fair price shops and other retailers who      are supplied rice from Government stocks      do not  make any  unintended  profit  on      account of  enhancement of wholesale and      retail issue prices of these foodgrains,      stocks of  rice available  with them  at      the close  of transactions on 9.10.1985,      should be  verified and  the  difference      between the  old prices  and the revised      prices should be recovered from them for      being credited  to the  Central account.      Immediate action  may, therefore, kindly      be taken  to arrange for ........... the      stocks of  rice issued  from the Central      stocks available  with the  wholesalers,      fair price shops and other retailers, if      any.  4.   The  State  Governments/Union      Territory Administrations will also have      to credit  to the  Central  account  the      difference between  the old  prices  and      the enhanced  prices of  rice in respect      of     stocks     that     the     State      Governments/Union              Territory      Administrations had  with  them  at  the      close of  transactions on 9.10.1985. For      the purpose  of calculation, stocks held      by    the     State    Governments/Union      Territory, at the close of 9.10.1985 and      still in  transition that date will also      be included. 5. Arrangements may also be      made to  notify  to  the  Government  of      India, latest by the 31st October, 1985,      the quantity  of rice available with the      State    Governments/Union     Territory      Administrations, the  wholesalers,  fair      price shops  and other  retailers at the      close of  transactions on  9.10.1985  so      that the  Controller of  Accounts may be      requested to raise necessary details for      the  difference   between  the  old  and      revised prices."      The respondent  is bound by the Kerala Rationing Order, 1966 issued  under Section  3(1) and  (2) of  the  Essential Commodities Act,  1955. Sub-clause  (8A) of Clause 45 of the order enjoins  that whenever  the existing  issue  price  of rationed articles, i.e., the price at which the stock has to be released  from the  Food Corporation  of India or Central Storage Depot,  is revised  by the  Government of  India  or State Government  either upward  or downward,  the stock  of rationed articles  with the authorised retail distributor as on the beginning of the day from which day the revised issue price will  come into  force,  should  be  assessed  by  the authorised retail  distributor and  intimated to  the  Taluk Supply  Officer/City   Rationing  Officer   or  any  officer authorised by  the State  Government for the purpose. In the case of  revision of  price upward, differential cost on the quantity of  rationed articles  so held  in stock  should be remitted to  the State Government. Similarly, in the case of revision  of   price  downward,   a  refund  claim  for  the differential cost  shall  be  submitted  by  the  authorised retail distributor  to such officers of the State Government authorised for the purpose. In this behalf, the retailer has also entered  into an  agreement under cl.45(6) of the Order which reads thus:

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    "Whenever the  existing issue  price  of      rationed articles  (i.e.  the  price  at      which the  stock has to be released from      the Food  Corporation of India or Kerala      State Civil  Supplies Corporation Depot)      is revised by the Government of India or      State  Government   either   upward   or      downward, the stock of rationed articles      in the  hands of  the Bounden  as on the      beginning of  the  day  from  which  the      revised  issue  price  shall  come  into      force shall  be assessed  by the Bounden      and  intimated   to  the   Taluk  Supply      Officer/City Rationing  Officer  or  any      Officer   authorised    by   the   State      Government for this purpose. In the case      of upward revision of price differential      cost  on   the  quantity   of   rationed      articles  so  held  in  stock  shall  be      remitted by  the Bounden  to  the  State      Government,  within  such  time  as  the      Taluk  Supply   Officer/City   Rationing      Officer or  other authorised  officer as      the case  may be,  may order in writing.      Similarly,  in   the  case  of  downward      revision of price a refund claim for the      differential cost  shall be submitted by      the Bounden  to  such  officers  as  the      State Government  may authorise for this      purpose. Any sum found-due to Government      on account  of excess transport charges,      handling charges,  profit and  the  like      gained by  the bounden  due to incorrect      fixation of price or any other defect in      calculation   when    the   mistake   is      subsequently decide  should be  remitted      to Government by the Bounden.           Under  the   above  provision,   an      authorised retail  distributor is  bound      to ascertain  the stock  in hand  on the      date with effect from which the price of      rationed    articles     was    revised.      Differential cost  consequent on  upward      revision of  price held  in stock on the      relevant date was also to be remitted by      the dealer to the State Government." In terms  thereof the  authorised distributor, either whole- seller or  retailer, is enjoined to make good the difference of the  price of  stock on  hand as  on the previous closing day, in  these cases as on October 9, 1985, consequential to the revision  of the  issue price  by the Central Government with effect  from October 10, 1985. Para 2 of the Government Circular  referred  to  hereinbefore  authorised  the  State Government/Union Territory  to revise  the  rates  of  issue price consequent  upon the  revision of  the price including the distribution  cost with effect from October 10, 1985. In terms  thereof,   on  revision   of  retail   price  by  the State/Union   Territory   Government   and   on   issue   of instructions from  the State Government, the Taluk officials as stated  earlier, had intimated to the retail dealers that the revised  prices would  come into effect from October 13, 1985 and  they were  directed to  pay the  difference on the stock on hand on 12.10.1985.      The question,  therefore, that  emerges is  whether the retailers are  liable to  refund the difference of the price

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for the  opening stock  held by  the retailer on October 10, 1985 and  purchased on  October 10 and 11, 1985 as intimated in the  letter  of  the  Superintendent  of  the  appellant- Corporation. It  is true that the wholesale or retail dealer were not entitled to have windfall of the differential price when they  had sold  at revised  rates of  the stock on hand supplied at  pre-revised rates. The differential rate should be credited  to the  Central Account as it was releasing the stock at  subsidised rate.  It is  seen that  the Government Order clearly indicates that the closing stock as on October 9, 1985  should be verified and the stock on hand as on that date should be revised and distributed at the revised price. The difference  of the  price was directed to be credited to the account  of  the  Central  pool.  But  until  the  State Government or Union Territory Authorities revised the retail price including  distribution costs  and intimation  of  the revision of  the prices  is given  to  the  whole-seller  or retailer, it  may be  difficult for  them to  know,  in  the normal circumstances,  whether the  price of  the  essential commodities, namely,  the rice,  in these  cases, meant  for distribution was  revised and  at what  rate  it  should  be distributed  to  the  card-holders  at  the  pre-revised  or revised rates.  In this  behalf, as rightly held by the High Court, an  intimation thereof  is necessary. The reasons are obvious. In terms of the conditions of licence and the Order and in  terms of the provisions of the Essential Commodities Act, the  violation of  the conditions  of  licence  entails cancellation of  the licence  of the  whole-sale  or  retail dealer and  prosecution under  Section 7  of  the  Essential Commodities Act.  Intimation of  the revised  price would be necessary to  the retail  dealers. In terms of para 2 of the Central Government  Circular  dated  11.10.1985,  the  State Government in  turn is  required to  revise the retail price for the  distribution to the card-holders. On that basis the distributor  is   enjoined  to   distribute  the   essential commodities at the revised price. In view of these facts, it is necessary  that they  should get  an  intimation  of  the revision of the price of the essential commodities.      It is true, as rightly pointed out by Mr. S.K. Gambhir, the learned counsel appearing for the appellant-Corporation, that the  difference of the price of the released stock will be of considerable magnitude and may be a loss to the public exchequer since  the rice  is supplied at a subsidised rates to the  card-holders. But  retail dealers  must equally have knowledge of  the revision  of the  prices at which they are required to  distribute to the card-holders as per the price fixed by  the State  Government/Union Territory  Authorities under the relevant orders. Until that is done and intimated, it is difficult for him to know at what price he is required to  distribute  to  the  card-holders.  Consequentially,  he should distribute  to the  card-holders at  pre-revised rate only.      Considered from this perspective, it would be desirable to avoid loss to public exchequer and unintended windfall to whole-sale or  retail  dealers  that  before  enforcing  the revised rates  of the  rice,  an  infrastructure  is  built, revision by  State Government or Union Territory Authorities is made  and intimation thereof and the date of its becoming effective is made public through media, i.e., Radio, T.V. or press so  that the revised rates would come into effect from that date  and the  stock held  at the close of the previous date would  be assessed in terms contained in the Government of India Order so that there would not be any hiatus between fixation of  revised  rates  and  its  enforcement  and  the liability of  the retail  dealer to  refund the differential

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price in  that behalf.  If this  procedure is adopted, there would be no difficulty for the retail dealers to account for the differential  price of the stock on hand on the previous closing day  and to  credit the same to the Treasury account as intimated by the concerned officer.      In view  of the fact that admittedly such an intimation was in  fact given  by the Taluk officer on October 13, 1985 and that  a direction  was given  that the difference of the price of  the stock on October 12, 1985 should be accounted, the respondent-retailer cannot be made liable to account for the difference  of the revised price of the closing stock on October 9, 1985 or the stock purchased on October 10 and 11, 1985. It  may be reiterated that under the Order and Licence held by  the retailers  he is  enjoined to distribute to the card-holders at  the rates  revised by  the State Government and until  that is  done he  is obliged  to  distribute  the essential commodity,  namely, rice at the pre-revised rates. If any  contravention is  made that would be a contravention is made  that would  be a  contravention of  the licence  of distribution or  the Order. But that would be ascertained on the facts  in each  case. No  general principle  can be laid down in that behalf.      Considered from  this perspective,  we think  that  the High Court  was right,  though  for  different  reasons,  in negativing the claim of the appellant for accounting for the difference of  the held  at the close of October 9, 1985 and purchases by the respondents on October 10 and 11, 1985.      The appeals  are  accordingly  dismissed.  But  in  the circumstances without costs.      The respondent  No.1  in  C.A.  No.405/89  had  already deposited  the   amount  as   demanded  by   the  appellant- Corporation. In  view  of  the  law  laid  down  above,  the appellant is  directed to refund the amount within one month from   the    date   of   the   receipt   of   this   order.