http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10  

PETITIONER: TAPAN KUMAR SADHUKHAN

       Vs.

RESPONDENT: FOOD CORPORATION OF INDIA & ORS.

DATE OF JUDGMENT:       20/08/1996

BENCH: N.P. SINGH, S.C. SEN

ACT:

HEADNOTE:

JUDGMENT:                 THE 20TH DAY OF AUGUST 1995 Present:                  Hon’ble the Chief Justice                  Hon’ble Mr.Justice N.P. Singh                  Hon’ble Mr.Justice S.C. Sen G.L. Sanghi,  Sr. Adv.  Ranjit  Kumar,  Ms.  Sarla  Chandra, Y.P. Rao,  J. Gupta,   R. Mukherjee,  Ms.  S. Mukherjee  and Goodwill Indeevar, Advs. with him for the appearing parties.                       J U D G M E N T The following Judgment of the Court was delivered:                       J U D G M E N T AHMADI, CJI.      Leave granted.      The present  civil appeal arises out of an order of the Division  Bench   of  the   High  Court  of  Calcutta  dated 13.10.1993 vacating an interim order of injunction passed by a Single  Judge of  the same  Court. The  sequence of events upto the  filing of  this  special  leave  petition  may  be narrated as under :      The Food  and Supply  Department of  the Government  of India issued  instructions to  the Senior  Regional Manager, Food  Corporation   of  India,   west  Bengal   region,  the respondent No.2  herein, on  28.4.1986 regarding disposal of sub-standard par-boiled  rice unacceptable to the Government of West  Bengal through  auction/tender, The Food & Supplies Department of  the  Government  of  West  Bengal  laid  down certain conditions  for disposal  of such  stocks of rice by the Food  Corporation of  India.  The  important  conditions relevant for the present master are as under :      "(1) All  the stocks proposed to be      auctioned  should   at   first   be      jointly inspected  by  the  Quality      Control Staff  of  this  department      and the  Food Corporation of India.      Clear markings  should be  made  on      the   stocks    unfit   for   human      consumption to  prevent any mixture      of these stocks with the stocks fit      for human consumption.      (2) Sub-standard  stocks should  be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10  

    sold to  established cattle/poultry      feed manufacturers only.      (3) Stocks  for  human  consumption      should be  sold  to  licensed  rice      dealers only."      By a subsequent communication, the Department of Food & Civil Supplies substituted the word "sub-standard" appearing in para  2  of  the  aforesaid  communication  by  the  word "damaged". On 2.8.1993, the Food Corporation of India issued a    tender     notice    inviting    tenders    from    the registered/licensed rice  dealers for sale of 11,683 M.T. of sub-standard rice. The relevant clauses of the tender notice dated 2.8.1993 are as under:      "The  above   stock  of   rice   is      presently   not   fit   for   human      consumption, so  it will be subject      to upgradation  by  the  purchasers      before issue for human consumption.      Out  of  the  above  quantity  some      stock in  which the  percentage  of      damaged grains are presently beyond      PFA limits,  which will  have to be      brought within  the said  limit  by      the purchasers  as they are not fit      for human  consumption so long they      remain beyond PFA limits. Tenderers      shall have  to give  an undertaking      to the effect that no stock will be      issued   for    human   consumption      without  upgradation   and  without      bringing them in the PFA limits.      Stocks lying  in  S.R.  Areas  will      have to  be moved out of S.R. Areas      by the  purchasers after  obtaining      movement   permit   from   Food   &      Supplies Department, West Bengal.      Tender documents containing details      of terms and conditions for sale of      sub-standard rice  can be  had from      Commercial Division  of F.C.I.,  6,      Royd   Street,    Calcutta-16,   on      payment of  Rs.100/- in  cash  from      6.8.93 to  17.8.93 between 11-00 AM      to 2-00 PM."      Two licensed  rice dealers who are respondents No.6 & 7 in the  present civil appeal filed writ petitions before the High Court  challenging the tender notice as being violative of the  West Bengal  Rice and  Paddy (Licencing  &  Control) Order, 1967  as amended  from time  to time  and also  being violative of  the Government circular issued in that regard. The learned  Single Judge of the Calcutta High Court made an interim  order  dated  3rd  September,  1993  directing  the Quality Control  Committee of  the Food Corporation of India to submit  a report  as to  whether the  rice which  was the subject matter  of the  tender notice dated 2nd August, 1993 was capable  of being upgraded for human consumption. Before submitting the  report, the  Quality Control  Committee  was also to  invite the  food  technologists  from  the  Central Government  for   their  views.   This  interim   order  was challenged in  appeal which  was heard  and disposed of by a Division Bench  by an  order dated  13.10.1993 which  is the impugned order  in this  case. The  injunction issued by the Single Judge  was vacated  and detailed instructions to deal with the  stock of rice were issued. The relevant portion of the order is as under :

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10  

    "Accordingly considering  the facts      and circumstances  of the case, the      balance  of   convenience  and  all      other relevant  factors, we  are of      the  view  that  interim  order  of      injunction  should  be  vacated  on      this  condition   that  the  tender      should be  finalised and  the goods      may be  delivered to the successful      tenderers  on  condition  that  the      same is brought within the required      standard  as   laid  down   in  the      Prevention of Food Adulteration Act      and that  after the  upgradation is      made, the  same should  be  checked      and examined  by the Directorate of      Inspection, Quality  Control, Govt.      of West  Bengal and  only after the      said authority  gives a certificate      and clearance that the some was fit      for  human   consumption  and   not      damaged  and  or  unfit  for  human      consumption. For  this purpose  the      lifted stock  should be  stored  at      the   place    which   should    be      immediately   notified    to    the      Directorate   of   Inspection   and      quality control  Department of Food      and Supplies,  Govt, of  India, 11,      Mirza  Galib  St.,  Calcutta-7  and      without    the    permission    and      obtaining a  clearance  certificate      from  the   authority   who   would      examine the  stock upon upgradation      that   it    is   fit   for   human      consumption.     The     successful      tenderers shall  also file  written      undertaking before  the trial Judge      to the  extent that  they will keep      the  stock   after  lifting   on  a      particular godown to be notified to      that  quality  control  directorate      within 94  hours from  the  storage      and  shall  not  remove  from  that      place without  standardisation  and      without obtaining a certificate and      clearance  on  examination  of  the      goods certifying  that the  same is      fit for  human consumption. Further      no part  of the  said stock of rice      should  be   released   in   public      distribution system  without having      such    certificates    from    the      competent authority,"      The appellant,  Tapan Kumar  Sadhukhan,  claims  to  be interested in  the subject  matter of the case as proprietor of one  M/s Ma  ’Kali Trading Company dealing in manufacture and supply  of cattle  food, poultry food, manure etc., as a registered contractor  of the  Respondent No.1.  His plea is that rice  which was  unfit for human consumption was sought to  be   sold  as   sub-standard/damaged  rice,  subject  to upgradation by the purchasers.      The appellant  further claims  that the Quality Control Manual issued by the respondent No.1 in 1992 relating to the Central Legislation  regarding foodgrain  handling makes  no

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10  

provision for  sale of  substandard/damaged rice  for  human consumption  and   does  not.   prescribe  that   such  sub- standard/damaged rice  can be upgraded for making it fit for human consumption.  The  appellant  expresses  concern  that while selling  sub-standard rice in question. the respondent No. 1  was not taking any responsibility about the manner in which the  seller would sell the same after having purchased the sub-standard  rice  and  it  depended  entirely  on  the undertaking to be submitted by the purchaser for upgradation of the  products to  the standard quality before selling the same for human consumption.      The appellant  further says  that even according to the manual  of   the  respondent   No.1  the  stock  being  sub- standard/damaged could  be sold  only to cattle/poultry feed manufacturers or  used as manure. The appellant claims locus standi to  file  the  special  leave  petition  as  being  a cattle/poultry feed  manufacturer interested  in buying  the stock in question.      On 5.11.1993,  this Court  stayed the implementation of the impugned order pending notice to the respondents.      In response,  the respondent  No.1 submitted  that  the appellant  had  no  locus  standi  whatsoever  to  file  the petition as  he was  not a  party before  the Calcutta  High Court. The  respondent No.1  further  submitted  that  "sub- standard" rice  is far  better than  "damaged" rice and that the petitioner  is trying  to buy  such sub-standard rice at the price  of damaged  rice and  thereby attempting  to make profit at  the cost  of the  exchequer. The  respondent No.1 denies that  the rice  is not  capable of being upgraded for human consumption and submits that since the Corporation did not have  the necessary  infrastructure for  the upgradation process, it  had to  sell the  stock to  the purchasers  who could upgrade  the rice.  The respondent No.1 says that rice is categorised  as category  ’A’ -  (good quality), category ’B’ (very  fair quality)  category ’C’  (fair  quality)  and category ’D’  (average quality),  and that  rice of category C&D require to be upgraded or improved before being sold for human consumption  and that  if the  rice contains less than 15% damaged grains and foreign matter, it is said to be sub- standard and if the lot contains more than 15% damaged grain and foreign  matter apart  from defective appearance, smell, colour and  contamination,  etc.,  same  is  categorised  as damaged rice  which is  fit  only  for  cattle/poultry  feed manufacture. The  respondent No.1  claims  that  the  tender notice was within the authority granted by the Government of India and  within the  provisions of  the Food  Adulteration Act. The  respondent No.1  had accordingly  taken a specific undertaking from  the tenderers  that they  would  sell  the stock only  after upgradation to make the rice fit for human consumption. The  respondent No.1  submits that the impugned order is  correct since  it prevents the chances of the rice being sold  for human  consumption without upgradation while ensuring that the stock of rice does not further deteriorate in the godowns of the respondent No.1.      Keeping in  view the  conflicting claims of the parties and the risk to the health of the citizens, we made an order on 28.2.1994  directing The  respondent, No.1  "(1) to state the process  of upgradation;  (2) what measures can be taken to ensure  that before  the rice  enters the  market  it  is upgraded and  (3) what  objection, if  any, it  has  to  the learned  Single   Judge’s  direction  for  a  report  to  be submitted by a Quality Control Committee of the FCI itself." The respondent  No.1 in its additional affidavit stated that the  rice  could  be  upgraded  by  a  process  of  sieving, cleaning,  winnowing,   polishing,   remilling   processing,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10  

reconditioning, etc. To ensure that the stocks of rice enter the market  only after  upgradation, the respondent No.1 has taken the  following measures  :  (1)  Stocks  are  sold  to licensed dealers  after being specifically informed that the rice is  unfit for  human consumption and the sale of stocks to the  dealers is  intimated to  the State  Government; (2) Stocks are  sold on  a specific stipulation that such stocks can be  sold to  the public only after the same are upgraded and made  fit for  human consumption;  (3) on  the basis  of information given  to the  State Government,  the  statutory authorities will  ensure that  the stocks  are not  sold  to public without making the same fit for human consumption and bringing the same within PFA limits.      As for  the last  direction, the respondent No.1 stated that the  compliance of the directions of the learned Single Judge of  the Calcutta  High Court  would result  in loss of time  during   which  the   stock  of   rice  would  further deteriorate  and  that.  it  was  in  the  interest  of  the Corporation as  well as  the public  that  the  stocks  were immediately sold  to the tenderers. The respondent No.1 also constituted Committee comprising of senior Officers from the quality control  wing, who  first checked  427 101  of lower category sub-Standard  rice representing about 11683 MT held in 24  FCI depots in the State of West Bengal which were the subject matter  of the tender dated 2.8.1993 on random check basis and  also  scrutinised  the  results/findings  of  the analysis done  by the  earlier categorisation  Committees at different levels.  The Committee found that the stocks which are the  subject matter  of the  present case are capable of being upgraded  by tenderers  by employing various processes of upgrading, viz., sieving, cleaning, winnowing, polishing, remilling reprocessing  and reconditioning  to make the rice fit for  human consumption.  The report of the Committee was also filed.  Appended to  the report were statements showing stockwise analysis  results in  respect of different stocks, all of which contain a remark to the following effect :      "All   stocks/stacks   of   LC/Sub-      standard  rice  have  developed  an      unpleasant smell  and  have  become      dull  in  appearance  in  prolonged      storage."      The respondent No.1 did not have the infrastructure for upgradation and  so the  dealers would  have to be entrusted with the  responsibility of upgrading the stock. The counsel for the  appellant, however,  insisted that the rice was not fit for human consumption and that the report of the Quality Control Committee  of the respondent No.1 could not be taken as an  independent report.  On 2.5.1994, we, on the basis of the above, made the following order :      "Taking  into   consideration   the      above submissions we appoint a two-      member  Committee   comprising  one      expert to  be nominated  by each of      the Director  of Indian Agriculture      Research   Institute   and   Indian      Council  of  Agricultural  Research      who will  submit a  report to  this      Court  within   a  fortnight   from      today. The  Registrar of  the Court      will send  an intimation  at  once.      The   officers    of    the    Food      Corporation of  India  will  extend      all  necessary  assistance  to  the      said two  members for enabling them      to   complete   their   task.   The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10  

    expenses  for   the  same  will  be      reimbursed by  the Food Corporation      of  India.   We  direct   the  Food      Corporation of  India to  deposit a      sum of  Rs. 20,000/-  in this Court      in   the    first   instance.   The      Directorate may  initially bear the      cost and  communicate the  same  to      the Food Corporation of India under      advice to  this Court.  As soon  as      the communication  is received  the      Food  Corporation   of  India  will      fully  reimburse   the   cost   and      charges incurred  by the  said  two      experts. Let  the  matter  come  up      after the report is received."      The Committee  consisted of Dr. S.L. Mehta, Head of the Division of Biochemistry, IARI and Dr. R.P. Kachra, formerly Head Post  Harvest Engineering Division at Central Institute of Agricultural  Engineering, Bhopal and presently Assistant Director General  (Process Engineering),  ICAR,  New  Delhi. They  collected   the  samples   from  the  FCI  Godowns  at Cossipore, Midnapore  and Shalimar. The samples were sent to Delhi for analysis. The Committee observed as under :      "All the rice samples had developed      off      flavour      and      also      discolouration.  This  varied  from      stack to  stack and  from godown to      godown.  The  stocks  at  Midnapore      were better  stored than samples at      Cossipore and Shalimar. The samples      were infested  in a large number of      cases specially  at  Cossipore  and      Shalimar. At  shalimar many  of the      stocks had  developed  deep  yellow      colour. In  the present  form,  the      samples were certainly not suitable      for human  consumption and  did not      conform  to  standards.  The  major      question before  the committee  was      whether   the   stocks   could   be      upgraded to make them fit for human      consumption. For   this reason, the      samples were  taken  to  IARI,  New      Delhi  for  cleaning,  milling  and      cookability etc.      The Committee  on scrutiny  of  the      records furnished  by FCI  observed      that  the   stocks  at   Cossipore,      Midnapore and  Shalimar represented      less than  half of  the total stock      under dispute.  Since the  rice was      stored   in    different    godowns      throughout the  State, it  was  not      feasible for the Committee to go to      different places  in the short time      at  its   disposal.  The  Committee      therefore, directed Mr. M.K. Mitra,      DM (QC), Zonal Office, Calcutta and      Mr. S.K.  Dutta, DM  (QC), Regional      Office, Calcutta to go to different      places indicated  by the Committee,      where large  stocks are held and to      draw samples  personally  and  send      these  to  IARI  for  analysis.  32

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10  

    samples were  drawn  by  them  from      rice  stocks   held  in   different      places as  per the  list  attached.      These  also   included   additional      samples drawn  from  Cossipore  and      Shalimar  because  earlier  quality      control team  of FCI had not tested      the  samples  from  many  of  these      stocks which  in the opinion of the      Committee,    represented    larger      stock."      The    Committee    proceeded    to    give    specific recommendations stock  wise as to which stocks were suitable and could  be upgraded  for human consumption and which were not suitable  and  could  not  be  upgraded.  The  Committee concluded thus:      "The total  stocks  tested  by  the      Committee  represents  little  over      50%  of   the  total   stocks.  The      Committee felt  that  wherever  all      the  samples   are   suitable   for      upgradation, the  remaining  stocks      may   also    be   taken   up   for      upgradation,  Where   as  in  other      depots, the quality control team of      FCI may  be requested  to test each      stock after  cleaning, milling etc.      and     then      give     suitable      recommendations as has been done by      this Committee.  The  stocks  which      have  been   marked  as   NS   (not      suitable for upgradation) cannot be      made  fit  for  human  consumption,      because we  have tested  it even by      milling. After milling, there is no      off flavour  in  the  samples,  but      discolouration which  is light deep      yellow cannot be removed."      The  report   shows  that  all  the  samples  from  FSD Midnapore were  suitable for  human consumption  but most of the samples  from the other depots, viz., FSD Cossipore, FSD Sitarampur, ARDC  Gopalpur, FSD  Shalimar and CWC Shyamnagar South Jute  Mill were  not suitable  for human  consumption. Needless to  say, the  stocks  found  unsuitable  for  human consumption cannot be sold to any rice dealer and have to be disposed of for purposes other than human consumption in the manner prescribed by the Government. The stock that is found suitable  again   cannot  be   immediately  used  for  human consumption for,  as the  expert report says, that can be so used only after being upgraded.      The next  question is  whether the  upgradation can  be left to  the volition  of the dealers or whether they should be bound  by some further conditions in the matter. It is to be remembered  that Article  47 of  the Constitution directs the State  to raise  the level of nutrition and the standard of living and to improve public health.      The first  respondent, FCI,  is an  agency of State. It was established  under the  Food Corporation  Act 1964.  The function of  the corporation  are mentioned in Section 13 of the Act as Under:      13. Functions  of  Corporation.----      (1) Subject  to the  provisions  of      this Act,  it shall  be the primary      duty   of    the   Corporation   to      undertake  the  purchase,  storage,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10  

    movement,  transport   distribution      and sale  of foodgrains  and  other      foodstuff.      (2)  Subject   as  aforesaid,   the      Corporation   may  also,  with  the      previous   approval    of   Central      Government,-      (a) Promote  by such  means  as  it      thinks  fit   the    production  of      foodgrains and other foodstuffs;      (b)  set   up,  or  assist  in  the      setting up  of  rice  mills,  flour      mills and  other  undertakings  for      the processing  of  foodgrains  and      other foodstuffs; and      (c) discharge  such other functions      as may  be  prescribed  or  as  are      supplemental,     incidental     or      consequential   to   any   of   the      functions  conferred  on  it  under      this Act."      Thus the  processing of foodgrains and other foodstuffs is also  one of  the functions which the respondent No.1 may perform with  the prior  approval of the Central Government. For such  processing of foodgrains and other foodstuffs, the respondent No.1  can also  set up or assist in setting up of rice mills, flour mills and other undertakings.      In  the   Statement  of   Objects  and   Reasons,   the Government. while introducing the Bill, inter alia stated :      "1. It  is considered desirable, in      the    interests    of    increased      agricultural production  as well as      in the  interested  of  the  common      consumer, to  set up a State agency      for  the   purpose  of  undertaking      trading   in    foodgrains   in   a      commercial manner  but  within  the      framework of an over-all Government      policy ... ... ...      2.    ...      ...      ...      3.  The   Corporation  will  engage      itself primarily  in the  purchaser      storage, movement, distribution and      sale of  foodgrains. Provision  has      also  been   made   in   the   Bill      enabling the Corporation to deal in      other  foodstuffs   if   considered      necessary by  the  Government.  The      Corporation  may   also   discharge      certain  incidental   functions  as      provided  for   in  the   Bill   in      consultation   with   the   Central      Government.      4.   The    Corporation   will   be      encouraged to function generally as      an autonomous  organisation working      on commercial lines. It is expected      to secure  for itself  a  strategic      and  commanding   position  in  the      foodgrains trade  of  the  country.      Bearing in  mind the  several large      spheres in  which  the  Corporation      will ultimately  have  to  operate,      this Bill  is being  introduced  to      enable  it   to   function   as   a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10  

    statutory Corporation  wholly owned      by the Government."      The Food  Corporation of  India, i.e., respondent No.1, is to  secure a  commanding position in the foodgrains trade of the  country. Being  an important factor in the market of foodgrains and being an agency of the State, it must conform to the  letter and spirit of Article 47 of the Constitution. Such being  the position of the respondent No.1, the trading activity in  rice and  other foodgrains must be done keeping in view the obligation to improve public health.      There can  be little doubt that if sub-standard rice is released and  sold in  the open  market it  would be  highly injurious  to   the  consumers.  Public  health  would    be jeopardised if  such rice  is consumed  by  members  of  the public.  Poverty   in  our  country  is  quite  rampant  and illiterate, ignorant and poor persons would not hesitate  to consume such  rice  if  sold  at  cheap  rates.  That  would undoubtedly be  exposing the  poor to  the risk of consuming sub-standard rice.  A mere  undertaking is no guarantee that the dealer  will upgrade the rice before marketing the same. What action  could be  taken against a defaulting dealer who markets the rice without upgrading the same? At the most, he may be  blacklisted but  the damage  or injury caused to the consumers cannot  be remedied.  Therefore, in  addition  the undertaking, something  more by  way of  a sanction  against misuse seems necessary.      It seems to us that the most ideal solution is that FCI should itself  upgrade the  rice before  sale. A corporation dealing with  such huge quantities of rice can certainly set up a  plant to  upgrade the sub-standard rice before release to the  dealer. The  concerned Ministry of the Government of India should  seriously examine  this proposal. If, however, the idea  of FCI itself setting up a plant to treat the sub- standard rice  is not feasible, the next alternative is that the concerned  Ministry in  the Government  of India  should evolve guidelines  which would  secure  a  foolproof  system which ensures  that sub-standard  rice does  not  enter  the market for human consumption before it has been upgraded and made fit  for human consumption. We are particularly anxious because the  consumers of  such rice are likely to be people who are  downtrodden  and  stricken  with  poverty.  Such  a segment of  society needs  the State’s  protection  in  this behalf. If  a reasonable  and  safe  arrangement  cannot  be worked out,  the third alternative would be to use such sub- standard rice  for any  other purpose,  such as, for cattle- feed, chicken-feed, etc.      We leave  it to  the State authorities to determine the course which  it considers most appropriate, keeping in mind this Court’s  anxiety to  ensure that  the poor  segment  of society is  not exposed  to the  risk of consumption of such rice without  it being  upgraded. A  copy of  this  judgment shall be forwarded by the Registrar General of this Court by a letter  to the  Cabinet Secretary who will ensure that the appropriate Ministries  in the  Government of India initiate action in  this behalf within a reasonable time and complete the exercise  without loss  of time keeping in mind the fact that it  concerns the  lives of  the  poor  and  downtrodden masses. We would appreciate it if the decision taken in this behalf is communicated to the Registrar General of this Court  within a  reasonable time,  preferably not later than six months from the receipt of this judgment.      Accordingly, (i)  we direct  that the  entire stock  of rice in  question, to  the extent  it is  suitable for human consumption, be  duly upgraded by the respondent No.1 either in its  own undertaking  or under its active supervision and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10  

dispose of  the same  by selling  it to  the licensed dealer only after  the upgraded rice is tested and certified by its quality control  team {ii)  the portion  of the  rice  stock found by  the expert  Committee    appointed  by  us  to  be unsuitable for human consumption be disposed of for purposes other than  human consumption as may be deemed proper by the respondent No.1  in compliance  of government  directions in the field.  The appeal  is disposed  of accordingly. No.1 in compliance of government directions in the field.      The appeal is disposed of accordingly. No costs.