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2020 DIGILAW 423 (AP)

Hemadri Rice Mill v. State Of Andhra Pradesh

2020-06-17

U.DURGA PRASAD RAO

body2020
JUDGMENT U. Durga Prasad Rao, J. - In W.P.No.2491 of 2019, the petitioner seeks Writ of Mandamus declaring the order in Roc.No.CS.1/18/ECA-1/2019, dated 19.02.2019 issued by District Collector/Respondent No.2 directing to confiscate 100% of the value of the seized stock and encashment of bank guarantee as illegal and arbitrary and contrary to the provisions of Essential Commodities Act, 1955 (for short, "EC Act") and consequently set aside the said order. In W.P.No.47208 of 2018, the petitioner prays for Writ of Mandamus declaring the action of respondent Nos.6 and 7 in seizing 4818.60 Qtls of paddy, 400 Qtls of Rice (130 Qtls in mill + 270 Qtls in CSCIG, Tetali) and 30 Qtls of brokenice of custom milling stock and 11406.66 Qtls of paddy, 4778.45 Qtls of Rice and 8.81 Qtls of brokens of the mill stock along with 'A' and 'B' Registers respectively from the petitioner mill on 13.12.2018 as illegal, arbitrary and violative of provisions of EC Act and for a consequential direction to the respondents not to take any action in pursuance of the illegal seizure. 2. The petitioner's case is thus: (a) The petitioner is the Managing Partner of Hemadri Rice Mill, Peravali Village, West Godavari District. The Government having dispensed with the levy system, introduced Custom Milling System, as per which, the A.P. State Civil Supplies Corporation purchases the paddy directly from the farmers at purchase centres of Self Help Groups and supply the same to the Rice Mills in the district for Custom Milling. The Millers have to mill the paddy and deliver 67% of Rice and 68% of boiled Rice to Civil Supplies Corporation or Food Corporation of India which pays milling charges to the Rice Millers. They have to maintain 'A' Register for Custom Milling paddy/rice. (b) During Khariff Marketing Season (KMS) 2018-2019, the Civil Supplies Corporation made an allotment of 3000 Tones of Custom Milling paddy to the petitioner's Mill on petitioner offering bank guarantee of Rs.2,90,00,000/- to the Corporation. Pursuant thereof, the Corporation sent 6221.60 Qtls of Custom Milling paddy by 13.12.2018 in tranches. Out of the said quantity, the petitioner milled different quantities of paddy on different dates and realized the rice as follows. Sl. No. Date Quantity of paddy milled Rice realized Rice supplied to C.S. Corporation 1. 11.12.2018 500 Qtls. 335 Qtls. 2. 12.12.2018 500 Qtls. 335 Qtls. 270 Qtls. 3. 13.12.2018 -- -- 270 Qtls. Out of the said quantity, the petitioner milled different quantities of paddy on different dates and realized the rice as follows. Sl. No. Date Quantity of paddy milled Rice realized Rice supplied to C.S. Corporation 1. 11.12.2018 500 Qtls. 335 Qtls. 2. 12.12.2018 500 Qtls. 335 Qtls. 270 Qtls. 3. 13.12.2018 -- -- 270 Qtls. loaded in trucks for delivery. (c) The petitioner also purchases paddy from ryots directly and mill the same and sell the rice to traders and dealers and maintains 'B' Register with regard to the said stock. (d) While so, R6 and R7 (in W.P.No.47208 of 2018) surprised his mill at about 4:00 PM on 13.12.2018 and verified the physical stock and compared with book balance. They informed that they came to inspect the mill pursuant to the report of Assistant Manager (Tech.) Retd., wherein it was alleged that in some of the bags out of the consignment of 270 Qtls. of rice delivered by the petitioner, the fortified rice Kernels were found as per the iodine test conducted by him which indicates that the petitioner supplied PDS rice. The petitioner has nothing to do with the alleged PDS rice. The respondents seized the entire stock available in the mill under the cover of mediator report dated 13.12.2018 and handed over to the miller of Tadepalligudem for safe custody. It is alleged in the mediator's report as if 270 Qtls. of rice supplied by the petitioner was PDS rice and hence the same was seized and handed over to MLS point, Tanuku. With regard to 'A' Register stock, they wrongly noted as if there is a variation of 403 Qtls. of paddy (less) and with regard to 'B' Register stock, they wrongly noted as if there is a variation of 143 Qtls. of paddy (less) and 23 Qtls. of rice (less). The petitioner explained to respondent Nos.6 and 7 that 403 Qtls. of paddy was offered for milling on that day i.e., 13.12.2018 and the said paddy was in bins, but they did not take the said paddy into consideration, as otherwise there would have been no variation of CMR paddy. So far as stock relating to 'B' Register is concerned, the inspecting officers neither weighed the physical stock nor counted the bags with reference to 'B' Register but approximately stated as if there was a variation of 143 Qtls. of paddy and 23 Qtls. So far as stock relating to 'B' Register is concerned, the inspecting officers neither weighed the physical stock nor counted the bags with reference to 'B' Register but approximately stated as if there was a variation of 143 Qtls. of paddy and 23 Qtls. of rice. Even if those figures are accepted for argument sake, the variation will be 1.24% of paddy and 0.48% of rice which is negligible one and occur due to evaporation of moisture content. Hence, seizure of Custom Milling Stock and a personal stock of the petitioner is illegal and booking of case under Section 6-A of Essential Commodities Act, 1955 is also illegal, which was done for statistical purpose. (e) The seizure of CM Stock is illegal also for other reasons. The Commissioner of Civil Supplies in his proceedings vide CCS Ref.No.P1(1)/2362/2012 dated 13.08.2012 had clearly instructed all the officials of Civil Supplies Department not to seize paddy or rice belonging to CMR category. Hence, the stock ought not to have been seized. Further, the Government of A.P, issued instructions in CCS Ref.No.P1(3)/1831/2014 dated 09.04.2015 stating that in view of lapse of GOI S.O.No.3543 (E) dated 29.11.2013, the APSCD (LS&R) Order 2008 is not applicable in respect of paddy and rice from 01.12.2014. In view of the instructions of Government of Andhra Pradesh, there is no need to either obtain FGL or to maintain the records in respect of paddy and rice as they are neither Scheduled Commodities nor Essential Commodities. (f) It is contended that the petitioner has not committed any irregularities either in delivering CM Rice or the Personal Mill Stock and there are no violations of the provisions of Essential Commoditites Act or A.P. Rice Procurement (Levy Order) 1984 because the government is not accepting any levy and proceeding with the Custom Milling System. The petitioner has also not violated the provisions of A.P. State Targeted Public Distribution System (Control) Order, 2018 as the said order is not applicable to the facts of the present case. Though it was alleged in the report of Asst. Manager (Tech.) that there are some fortified rice kernels in the bags of consignment dated 12.12.2018 sent by the petitioner, however, no report is served on the petitioner. Besides, the samples were not taken in the presence of the petitioner from out of the consignment sent by the petitioner. Though it was alleged in the report of Asst. Manager (Tech.) that there are some fortified rice kernels in the bags of consignment dated 12.12.2018 sent by the petitioner, however, no report is served on the petitioner. Besides, the samples were not taken in the presence of the petitioner from out of the consignment sent by the petitioner. Therefore, the rice supplied by the petitioner cannot be termed as PDS rice. Hence the petitioner at first filed W.P.No.47208 of 2018 challenging the seizure of the stock. The High Court was pleased to pass interim order dated 31.12.2018 directing the release of seized stock on the condition of petitioner offering bank guarantee as mentioned in the said order. 3. So far as the case booked under section 6-A of EC Act, 1955 is concerned, since no material papers were served on the petitioner except the notice, he could not submit his explanation within three days as stipulated. Therefore, the petitioner appeared along with his counsel before the 2nd respondent on 19.01.2019 and filed a memo requesting to furnish copies of the relevant material to enable him to submit his explanation and to adjourn the case to a convenient future date. However, no order was passed on his memo as the 2 nd respondent was under the order of transfer to Visakhapatnam, but, the 2nd respondent issued proceedings dated 19.01.2019 directing release of the seized stock and accordingly stocks were released and handed over to petitioner on 23.01.2019. While the matters stood thus, the petitioner received a copy of the impugned order dated 19.02.2019 passed by the 2nd respondent without hearing the petitioner or considering his memo dated 19.01.2019. Hence the W.P.No.2491 of 2019 challenging the impugned order dated 19.02.2019. 4. The respondent No.2 in W.P.No.2491/2019 and the respondent No.6 in W.P.No.47208/2018 filed counters and opposed the writ petitions contending that the petitioner rice mill is a habitual defaulter of the provisions of EC Act and other control Orders and earlier a case under Section 6-A was booked against him and orders were passed and the petitioner paid confiscated amount of Rs.54,988/- on 03.12.2018. Again, he is involved in similar type of malpractice in the present case and therefore confiscation of 100% stock was ordered by the 2nd respondent. Again, he is involved in similar type of malpractice in the present case and therefore confiscation of 100% stock was ordered by the 2nd respondent. The petitioner rice mill has been habitually purchasing the PDS and fortified rice in various ways by encouraging the black market and recycles the secured stock and supplies to A.P. State Civil Supplies Corporation. The Asst. Manager while taking delivery of the rice supplied by the petitioner under CMR scheme in the presence of the representative of the petitioner, suspected the rice to be PDS rice and immediately informed to the District Manager, APSCSCL by phone who in turn sent technical staff to Tetali to conduct Iodine test. The technical staff conducted the Iodine test in the presence of the representative of the petitioner by name Y. Siva Kumar and found that the rice supplied was mixed with fortified kernels. Hence, the stock was seized and case was booked against him under Section 6-A of EC Act. It is also contended that the other grounds mentioned in the writ petition are not applicable in the instant case. (a) It is further contended that the allegation of the petitioner that the documents were not supplied to him, is not correct. On 19.01.2019, the petitioner and his counsel appeared before the 2nd respondent and sought documents relating to the case booked against him. When enquired by the 2nd respondent, the 4th respondent stated that the documents were already supplied on 13.12.2018. Again, the 2 nd respondent furnished the material to the counsel for petitioner for perusal and for submission of his arguments. The counsel for petitioner perused the material documents and submitted his arguments. Therefore, the contra argument of the petitioner is wrong. The Successor of the 2nd respondent verified the documents and passed the order on 19.02.2019 duly taking into consideration of the documentary evidence and also the findings of the Predecessor. Hence, the order of 2nd respondent cannot be questioned by the petitioner. The petitioner has liberty to file an appeal against the impugned order as per the provisions of Section 6-C(1) of EC Act. Instead, the petitioner filed the writ petition which is not maintainable. The respondents thus prayed to dismiss the writ petitions. 5. Heard learned counsel for petitioners Sri V. Sudhakar Reddy and learned Government Pleader for Civil Supplies and learned Standing Counsel for APSCSCL. 6. Instead, the petitioner filed the writ petition which is not maintainable. The respondents thus prayed to dismiss the writ petitions. 5. Heard learned counsel for petitioners Sri V. Sudhakar Reddy and learned Government Pleader for Civil Supplies and learned Standing Counsel for APSCSCL. 6. The main plank of argument of learned counsel for petitioner is that he was never dealing with PDS rice and seizure of the stocks in his rice mill on the ground that he supplied PDS rice while sending the consignment of 270 Qtls of CM Rice is palpably false. His further argument is that iodine test was not got conducted in his presence and samples were not supplied to him to refer the subject rice for chemical test. Therefore, the authorities cannot claim that the petitioner supplied PDS rice. There can be no violation of A.P. Rice Procurement (Levy Order) 1984 because the Levy system was done away with by the government and Custom Milling System was introduced long back. It is further argued that principles of natural justice were not followed in this case as no material documents were supplied to him in spite of his filing a memo dated 19.01.2019. But, surprisingly the impugned order was passed on 19.02.2019. It is further argued that since the rice is taken out of the purview of Essential Commodities and also Scheduled Commodities, case under Section 6-A of EC Act is not maintainable against the petitioner. Learned counsel placed reliance on the judgment in Sri Sai Traders, rep. by its Proprietor and others vs. Assistant Supply Officer, Circle-I, Vijayawada and others, (2006) 4 ALT 758 . 7. The learned Government Pleader for Civil Supplies supported the impugned order. 8. The point for consideration is whether there are merits in the writ petitions to allow? 9. Point: I gave my anxious consideration to the facts and arguments put forth by either side. The nub of the issue is whether the petitioner while sending the consignment of 270 Qtls of CM rice, clandestinely supplied PDS rice. As already stated several points touching the facts and law are raised by the petitioner. In this context, when the impugned order dated 19.02.2019 passed by the 2 nd respondent is verified, the points of arguments now raised by the petitioner in this writ petition were not adumbrated and considered in the impugned order. As already stated several points touching the facts and law are raised by the petitioner. In this context, when the impugned order dated 19.02.2019 passed by the 2 nd respondent is verified, the points of arguments now raised by the petitioner in this writ petition were not adumbrated and considered in the impugned order. The reason is not far to seek, as it is mentioned in the order itself as follows. This case was came up for hearing before the District Collector's Court, West Godavari on 19.01.2019. The counsel on behalf of Sri G.N. Suryanarayana, Managing Partner of M/s. Hemadri Rice Mill, Peravali Village of Peravali Mandal and respondent were attended the District Collector's Court, West Godavari and he has failed to submit any written explanation in response to the show cause notice issued to him at the time of hearing. 10. After mentioning so, the 2nd respondent came to conclusion that the charges levelled against the petitioner were established and accordingly, ordered for confiscation of 100% of the value of the seized stock. 11. Thus, the above order shows as if, the petitioner has not filed his written submission mentioning therein his line of defence. Whereas, it is the contention of the petitioner that the respondent authorities have not supplied him any of the material papers such as the seizure report, the chemical report. Further, the samples of the rice were not obtained in his presence and one sample was not furnished to him to refer to the chemical analysis and hence he got filed a memo through his counsel on 19.01.2019 and was expecting that the 2nd respondent would pass an order thereon for issuance of the copies of necessary documents to enable him to file his written explanation. However, surprisingly, all of a sudden, the impugned order was passed on 19.02.2019 and therefore, the principle of natural justice i.e., audi alteram partem was a casualty in this case. 12. It is seen that though in the counter of 2nd respondent it is pleaded that all the necessary documents were already supplied by 4th respondent on 13.12.2018 itself, such a fact is not mentioned in the impugned order. The respondents also not submitted to the satisfaction of this court as to the mode of supply of the documents to the petitioner. No acknowledgment of the petitioner in token of his receiving relevant documents is filed either. The respondents also not submitted to the satisfaction of this court as to the mode of supply of the documents to the petitioner. No acknowledgment of the petitioner in token of his receiving relevant documents is filed either. In these circumstances, I am unable to countenance the claim of the respondents that all the relevant documents were already supplied to the petitioner and in spite of the same, he did not submit his written explanation. Had the documents been supplied, there would not have been an occasion for the petitioner to file a memo on 19.01.2019 before the 2nd respondent to furnish the relevant documents to enable him to file his written explanation. Therefore, it can be said that the impugned order was passed without the written explanation of the petitioner. Hence, the said order is virtually an ex parte order. In that view, the arguments now raised by the petitioner cannot be answered by this court since there is no discussion about those arguments in the impugned order. Therefore, in the interest of justice, it is apposite to set aside the impugned order and direct the petitioner to submit his written explanation and thereupon the 2nd respondent shall consider the same and after affording a personal hearing to petitioner, pass an appropriate order on merits. 13. (I) In the result, the W.P.No.2491 of 2019 is allowed and the impugned order in Roc.No.CS.1/18/ECA-1/2019, dated 19.02.2019 passed by the 2nd respondent is set aside and the matter is remanded back to the 2nd respondent and the petitioner is directed to appear before the 2nd respondent and submit his written explanation in respect of the charges framed against him within two (02) weeks from the date of this order, in which case, the 2nd respondent shall consider the same and after affording a personal hearing to the petitioner, pass an appropriate order in accordance with the governing laws and rules within two (02) months from the date of submission of written explanation by the petitioner. (II) The W.P.No.47208 of 2018 is disposed of with the observation that the seizure of the stock made by the respondent Nos.6 and 7 will be subject to the out come of the order to be passed by the 2 nd respondent as noted in Point No.I supra. (II) The W.P.No.47208 of 2018 is disposed of with the observation that the seizure of the stock made by the respondent Nos.6 and 7 will be subject to the out come of the order to be passed by the 2 nd respondent as noted in Point No.I supra. Till such order is passed by the 2nd respondent, the interim order dated 31.12.2018 passed by this court shall hold good. There shall be no order as to costs in both the petitions. As a sequel, interlocutory applications pending, if any, shall stand closed.