Managing Director Tamil Nadu Civil Supplies Corporation Thambusamy Street, Kilpauk, Chennai v. Bannariamman Modern Rice Mill, Rep. by its Lease Holder O. P. Mariappan, Erode District
2012-07-03
D.MURUGESAN, K.K.SASIDHARAN
body2012
DigiLaw.ai
Judgment D. MURUGESAN, J. 1. This writ appeal, at the instance of the Tamil Nadu Civil Supplies Corporation, is directed against the order dated 12.7.2011 allowing the writ petition filed by the first respondent. 2. The first respondent was granted lease hold rights as a hulling agent by the appellant Corporation and for that purpose an agreement dated 1.7.2010 was entered into between them. Among other conditions, clause 12 of the agreement provides that, in the event the principal of the agreement has reason to believe that the agent had indulged in malpractice or had misappropriated paddy/resultant rice or gunnies, then the agreement may be terminated apart from blacklisting the mill and also recovering the value of the rice/paddy etc. Similarly, clause 24 states that the principal at his discretion may terminate the agreement, in the event of any infringement of the conditions of agreement by the agent. 3. It appears that the Headquarters Vigilance Squad had conducted a surprise visit to the first respondent rice mill on 16.2.2011. During inspection, the squad ascertained a mixture of 19.4% recycled Public Distribution System rice and therefore, a letter dated 17.2.2011 was addressed to the District Collector and samples were taken on the same day and the rice bags numbering 666 were also seized. The samples were sent for analysis and a report was also received indicating that "storage musty smell noticed out of 19.4% unconnected rice." 4. Based on the above report, a show cause notice was issued calling for explanation and as the explanation was not satisfactory, the contract given to the first respondent for hulling was cancelled by order dated 25.3.2011 and the first respondent was also blacklisted. 5. This order was questioned by the first respondent in the writ petition. The learned Judge following the order of this Court dated 19.8.2010 in W.P.(MD) No.9214 of 2011, holding that before Corporation completion of enquiry under Section 6-A of the Essential Commodities Act Following the said judgment, the Corporation cannot terminate the contract, allowed the writ petition. It is the said order which is challenged in this writ appeal by the Corporation. 6. We have heard Mr.L.P.Shanmugasundaram, learned counsel for the appellants, Mr. C. Prakasam, learned counsel for the first respondent and Mr.D.Raja, learned Additional Government Pleader appearing for the second respondent. 7. In our opinion, the ratio decided in W.P.(MD). No.9214 of 2010 cannot be accepted.
It is the said order which is challenged in this writ appeal by the Corporation. 6. We have heard Mr.L.P.Shanmugasundaram, learned counsel for the appellants, Mr. C. Prakasam, learned counsel for the first respondent and Mr.D.Raja, learned Additional Government Pleader appearing for the second respondent. 7. In our opinion, the ratio decided in W.P.(MD). No.9214 of 2010 cannot be accepted. The proceedings under Section 6-A of the Essential Commodities Act is in respect of confiscation of the commodity. As far as the issue in question is concerned, it entirely depends upon the terms of the contract. There is no dispute that hulling agency was granted to the first respondent by virtue of an agreement between the Civil Supplies Corporation and the first respondent, who are referred to in the agreement as principal and agent respectively. As per the said agreement, the rice meant for Public Distribution System is given to the agent for hulling purpose. In the show cause notice there is a specific allegation that at the time of inspection, sub standard quality rice were also mixed with public distribution system rice and it was also revealed in the analysis report. In terms of clause 12, in the event of any malpractice or misuse of the agreement, the principal is entitled to invoke clause 24, by not only terminating the agreement and also blacklisting the agent. Before invoking clause 24, the only condition to be complied with by the principal is to give sufficient opportunity to the agent. In this case, a show cause notice was issued and only after response to the said show cause notice from the first respondent, the impugned order came to be passed on the basis of the analysis report. In that context, reference to the pending 6-A proceedings is has no relevance as the said proceeding is an independent action which could be taken by the principal strictly in terms of the contract. Hence the order in W.P.No.9214 of 2010 holding that till such time, 6A enquiry could be completed, the Corporation would not be entitled to invoke any of the provisions of the terms and conditions of contract and deal with the case depending upon the situation that is warranted, cannot be accepted. Hence the impugned order placing reliance on the judgment in W.P.(MD). No.9214 of 2010 cannot be sustained. 8.
Hence the impugned order placing reliance on the judgment in W.P.(MD). No.9214 of 2010 cannot be sustained. 8. That apart, as has been rightly contended by the learned counsel for the appellant, the impugned order in the writ petition was passed only on the ground of violation of the terms and conditions, which is purely contractual and this Court is not justified in entertaining the writ petition of this nature particularly when there is a provision of appeal under clause 42 of the very same agreement. That apart, it is brought to our notice that subsequent to the above order, confiscation proceedings have been completed and has gone against the first respondent and not withstanding the same, he has filed an appeal. 9. For all the above reasons, we are of the considered view that the impugned order cannot be sustained and accordingly the same is set aside. The first respondent can work out his rights depending upon the orders that may be passed in the appeal, challenging the order of confiscation. The writ appeal is allowed. Consequently, the connected MP is closed. No costs.