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K.B. Jinaraja Hegde and ors. Vs. the State of Mysore by Chief Secretary, Vidhana Soudha, Bangalore and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberWrit Petn. Nos. 627, 684, 685, 989, 991 and 992 of 1967, 98, 1116, 3459 to 3461 and 3542 of 1968 and
Judge
Reported inAIR1971Kant12; AIR1971Mys12; (1970)2MysLJ224
ActsEssential Commodities Act, 1955 - Sections 3 and 3(3B); Mysore Paddy Procurement (Levy) Order, 1966
AppellantK.B. Jinaraja Hegde and ors.
RespondentThe State of Mysore by Chief Secretary, Vidhana Soudha, Bangalore and ors.
Appellant AdvocateK. Shivshankar Bhat, ;B.V. Krishnaswamy Rao, ;G.S. Holla and ;Mohandas N. Hegde, Advs.
Respondent AdvocateK.S. Puttaswamy, High Court Govt. Pleader
Excerpt:
.....to indicate that the choice is left to the grower, it is just like a provision requiring a person served with a notice to submit his say, if he has anything to say, against the notice. it would also follow that if the information is furnished to the tahsildar himself before he has taken a decision under sub-clause (3) of clause 4, then also the legal requirement should be satisfied. then, in fixing the quantity, lands have been classified as 'lands under scheduled projects, lands under irrigation projects works other than scheduled projects having an assured supply of water and well irrigated lands and rainfed and other lands......under the order as per schedule ii is valid? 2. what is the nature of obligation requiring the paddy grower to furnish information under clause 4 of the order? 3. whether the scale of paddy fixed in the i schedule under clause 3 of the order is inequitable? we shall deal with each of these questions in their serial order.3. the most important question relates to the fixation of the purchase price. the levy order defines purchase price in clause 2 (g) of the said order. it states:' 'purchase' price in relation to any variety of paddy means the price fixed for the purchase of such variety of paddy in schedule ii'.the order has been promulgated under section 3(2)(f) of the essential commodities act, 1955 (central act 10 of 1955), which empowers the central or state government to pass an.....
Judgment:

Tukol, J.

1. The petitioners in these writ petitions have challenged the validity of whole or part of the Mysore Paddy Procurement (Levy) Order 1966 issued by the State of Mysore in exercise of the powers conferred by section 3 of the Essential Commodities Act, 1953 (centrol Act 10 of 1955) read with the orders relevant thereto. The order (hereinafter called the Levy Order) came into force on 21st October, 1966. Some of the petitioners have prayed for quashing the notice of demand issued against them by the Enforcement Officer of the concerned Taluk. The petitioners are all from the different taluks of South Kanara and North Kanara Districts.

2. In spite of the various grounds mentioned in the different writ petitions, the learned advocate for the petitioners have addressed their arguments only on 3 points:

1. Whether the purchase price fixed under the Order as per Schedule II is valid?

2. What is the nature of obligation requiring the paddy grower to furnish information under Clause 4 of the Order?

3. Whether the scale of paddy fixed in the I Schedule under Clause 3 of the Order is inequitable?

We shall deal with each of these questions in their serial order.

3. The most important question relates to the fixation of the purchase price. The Levy Order defines purchase price in Clause 2 (g) of the said Order. It states:

' 'Purchase' price in relation to any variety of paddy means the price fixed for the purchase of such variety of paddy in Schedule II'.

The Order has been promulgated under section 3(2)(f) of the Essential Commodities Act, 1955 (Central Act 10 of 1955), which empowers the Central or State Government to pass an order providing for requiring any person holding in stock any essential commodity to sell the whole or a specified part of the stock..... to a State Government or to an officer or agent of such Government .............'

It is with a view to achieve this object, Clause 3 of the Levy Order provides:--

'Every grower shall, out of the paddy grown in his holding and held in slick by him in respect of each crop, sell to the State Government or its authorised agent at the purchase price such quantity of paddy in accordance with the scale specified in Schedule I as may be determined by the Enforcement Officer after taking into consideration the information available with him regarding the holding of the grower and the paddy grown in such holding.'

In order to enforce this obligation on the part of the paddy growers, Sub-clause (2) of this clause enjoins upon the Enforcement Officer to determine the quantity of paddy required to be sold by a grower and serve on the grower an order in the manner specified in Clause 1 of Sub-section (5) of section 3; such order shall specify the quantity of paddy to be sold, the purchase point at which the time within which such paddy is to bo delivered. Now so far as the points raised in these writ petitions are concerned, it would be manifest that the order issued by the Enforcement Officer has reference to the purchase price fixed in Schedule II, the quantity of paddy as per the scales specified in Schedule I and has to be served in the manner provided in Sub-clause (2) of Clause 3 of this order.

4. The Levy Order does not mention how the purchase price mentioned in Schedule II to that order has been fixed. It docs not also prescribe the manner in which it has to be fixed. The fixation of this price is based on the provisions contained in Sub-section (3B) of section 3 of the Essential Commodities Act, 1955 (hereinafter called, the Act). Sub-section (3B) reads as follows:

'Where any person is required by an order made with reference to Clause (f) of Sub-section (2) to sell any grade or variety of foodgrains, edible oil-seeds or edible oils to the Central Government or a State Government or to an officer or agent of such Government and either no notification in respect of such foodgrains, edible oil-seeds or edible oils has been issued under Sub-section (3A) or any such notification having been issued has ceased to remain in force by efflux of time, then, notwithstanding anything contained in Sub-section (3), there shall be paid to that person such price for the foodsrains, edible oil-seeds or edible oils as may be specified in that order having regard to-

(i) the controlled price, if any, fixed under this section or by or under any other law for the time being in force for such grade or variety of foodgrains, edible oil-seeds or edible oils; and

(ii) the price for such grade or variety of foodgrains, edible oilseeds or edible oils prevailing or likely to prevail during the post-harvest period in the area to which that order applies.

Explanation:-- For the purpose of this sub-section, 'post-harvesting period' in relation to any area means a period of four months beginning from the last day of the fortnight during which harvesting operations normally commence.'

Since this sub-section refers to sub-section (3), but at the same time refers to it by the insertion of the non obstante clause, namely,

'Notwithstanding anything contained in Sub-section (3)'

it is unnecessary for us to refer to the price that is required to be paid under that subsection. It is, however, clear that every grower who is called upon to deliver specified quantity of foodgrains, edible oil-seeds or edible oils, has to be paid the price which has to be specified in the order; in specifying the same in the order the State Government which fixes the purchase price, has to pay regard to two factors that are enumerated in Clauses (i) and (ii) of Sub-section (3B) of Section 3 quoted above. The first factor which the State Government has to take into consideration is the controlled price, if any, fixed under the section or under any other law for the time being in force for any grade or variety of foodgrains, edible oil-seeds or edible oils. The second factor to be taken into account is the price for such grade or variety of foodgrains, edible oil-seeds or edible oils prevailing or likely to prevail during the post-harvest period in the area to which that order applies. It would, therefore, be clear from this sub-section that the price to be paid is neither the controlled price nor the market price, but the price which the State Government fixes while promulgating the relevant order after having regard to both of them.

5. As regards the first, namely, the controlled price, it was submitted on behalf of the petitioners that the State Government had not fixed any controlled price either under the Act or under any other law in force in the State of Mysore. Mr. Putta-swamy, learned Advocate for the State, submitted that the price fixed in Schedule II of the order was itself the controlled price. We are unable to agree with this submission. The controlled price has necessarily reference to the object of the State fixing up a maximum price beyond which sale cannot be legally made by the grower or the dealer. The price fixed under Schedule II is not such price. It is common knowledge, and that factor is not disputed by the State, that paddy is sold at much higher price in the open market both by the growers and the dealers than the price mentioned in the Schedule. We cannot therefore call this price as the controlled price, as contemplated by Clause (i) of Sub-section (SB) of section 3 of the Act. The wording of the Levy Order leaves no doubt in our mind that the price that has been fixed in Schedule II is the 'purchase price' and not the controlled price.

6. As regards the second factor referred to in clause (ii) of Sub-section (3B) of Section 3, it is necessary to explain that provision to a certain extent, as it gives considerable guidance to the State Government in taking into account the prices of foodgrains, edible oil-seeds or edible oils prevailing at a time and required by law to be taken into consideration. This clause of the sub-section has clear reference to two factors viz., (a) the point of time and (b) the area. So far as the point of time is concerned, it refers to the price prevailing during the harvest period. The explanation to this sub-section is intended to clarify as to how the post-harvest period should be determined. The explanation states that the post-harvest period should be:

'in relation to any area.'

It appears from the Levy Order that the entire State has been taken by the State Government as the area. This also appears to be the case with the Kerala Government, when they issued their order called the Kerala Rice and Paddy (Procurement of Levy) Order, 1966. The only relevant point to be borne in mind in taking into account the area is the post-harvest period, implying that the State Government should take into consideration whether the harvest period in all the areas of the State in regard to paddy would be the same or would differ materially, so as to require them to assess the prices prevailing at the post-harvest period. Another useful hint which the explanation gives is, as regards the determination of the post-harvest period. It states that the post-harvest period is the period 'of four months beginning from the last day of the fortnight during which harvesting operations normally commence.' There cannot be much difficulty if the post harvest periods with regard to paddy in the entire State are approximately identical. But, if they differ in a manner so as to create fluctuation in prices, the State Government would be required to take the time factors into consideration in determining the prices prevailing or likely to prevail during the post-harvest period. Mr. Shivashankar Bhat appearing for some of the petitioners drew our attention to the information published by the State Marketing Department referring to the prices prevailing at different rates in different markets in the State as regards paddy, other foodgrains and other articles. It is not possible, having regard to the phraseology used in Sub-clause (ii) of Sub-section (3B) of Section 3, to accept straightway these prices as the prices contemplated thereunder. The price has got reference to the post-harvest period and post-harvest period has been explained in the explanation itself, So, it is these prices prevailing or likely to prevail at the post-harvest period in any area that the State Government has to pay due regard in fixing the price that 'shall be paid to that person selling food-grains or other articles to the State Government,'

7. During the course of the arguments, our attention was drawn to a Full Bench decision of the Kerala High Court in the State of Kerala v. Annam, : AIR1969Ker38 (FB). It is riot necessary for our purpose to refer to the various points decided in that case. So far as the relevant point is concerned, it appears that the Kerala Government fixed the purchase price, having regard to the Maximum Price Order promulgated on September 3, 1965 and the price prevailing or likely to prevail during the post-harvest period. Referring to the clauses of that Order, their Lordships observed:

'The provision in the Levy Order for payment of price to the cultivator 'at the prevailing market rate subject to the maximum price specified by the Government for the time being under the concerned Maximum Prices Order does not therefore spell any negation of a just equivalent or a violation of Article 81(2) of the Constitution.'

The observations of their Lordships as regards the implications of the Maximum Price Order have also some bearing in finding out what is the controlled price contemplated by Clause (1) of Sub-section (3B) of Section 3 of the Act. They observed:

'When such fixation of maximum price is in force the market price cannot rise above It; it may be anything equal to or less than the maximum price. Any sale at a price above it will not be lawful and therefore cannot afford a standard for 'just equivalent' for the commodity.'

Now we are not called upon in this case to decide the price with reference to Article 31(2) of the Constitution. It is unnecessary to refer to the discussion on the point raised as regards the applicability o that Article with reference to the price that has to be paid by the Government. Another decision referred to is that of the Madras High Court in Ummal Bajiria v. State of Madras, (1069) 82 Mad LW 218. In that case also the question of price had to be determined under Sub-section (3B) and in deciding that point, the High Court had the advantage of the Madras Paddy (Maximum Prices) Order 1966. It would be obvious from these two decisions and also from the plain wording of the two clauses of Sub-section (3B) of Section 3 of the Act that the purchase price fixed by the State Government, as specified in the IInd Schedule is not in consonance with the provisions of the Act and has therefore to be struck down. We do not think that it would be correct in individual petitions to strike down the whole Schedule. We confine the effect of our order to the petitioners before us. We would like to observe that the limitation placed on our order should not create any complaisance in the mind of the State Government, but we expect that expeditious steps to avoid the confusion, which is otherwise likely to be created, would be taken to revise the purchase price in the light of Sub-section (3B) of section 3 and what we have observed above in interpreting the above provisions.

8. The second question that was agitated before us by Mr. Shivashankar Bhat related to clause 4 of the Levy Order. Under Sub-clause (1) of Clause 4, when the Enforcement Officer serves an order of demand on a grower under Clause 3 (2) of the Levy Order, the grower has to furnish to that Officer, within 7 days from the day of the receipt of such order, information in respect of matters specified in items (a), (b), (c) and (d) of Sub-clause (3) of Clause 4. The question that has been agitated by the learned Advocate is, whether the provision is mandatory or directory. This clause is purely intended for the protection of the grower. Whether to file the information or not is left to his discretion. If he accepts the demand made as being consistent with the quantity grown by him and his liability fixed in Schedule I, then it is not necessary for him to file any information contemplated thereunder. The expression used thereunder is 'may furnish, to the Enforcement Officer'. The word 'may' is used in order to indicate that the choice is left to the grower, It is just like a provision requiring a person served with a notice to submit his say, if he has anything to say, against the notice.

9. The difficulty in most of the cases seems to have arisen on account of the extremely technical view taken by the Tahsildar who declined to take into consideration the information furnished by some of the petitioners on the 8th day. Under Sub-clause (2) of Clause 4 of the Levy Order, the Enforcement Officer is required to pass on the information furnished to him along with the other records of the case, if any, to the Tahsildar. The object of this clause is to enable the Tahsildar to determine whether the demand made is correct, having reference to the information furnished by the grower. Sub-clause (3) of Clause 4 reads as follows:--

'The Tahsildar shall, after taking into consideration the information furnished by the grower under Sub-clause (1), determine the surplus stock of paddy with such grower having regard to the following, namely....'

Reading Sub-clauses (2) and (3) together, we think that the period of 7 days mentioned in Sub-clause (1) of the clause appears to be an approximate working period; it is not a rigid period of limitation for the purpose of any act. The object of Sub-clause (1) is to give the grower a reasonable opportunity of objecting to the quantity of paddy mentioned in the order served on him by the Enforcement Officer. Sub-clause (3) requires the Tahsildar to take the information furnished by the grower into consideration. Having regard to the wording of Sub-clauses (1), (2) and (3) of Clause 4, we are of the opinion that these provisions expect these officers to take a lenient view without regarding the period of 7 days as rigid and static. It appears to us that the purpose of Sub-clause (2) would be served if the information is furnished to the Enforcement Officer before he has transmitted his records to the Tahsildar. It would also follow that if the information is furnished to the Tahsildar himself before he has taken a decision under Sub-clause (3) of Clause 4, then also the legal requirement should be satisfied. It has to be remembered that the order is in the nature of a requisition order and assumption of too rigid an attitude in declining to accept the information furnished by the grower for consideration is likely to work a great hardship. Co-operation of the growers is as much necessary as reasonable accommodative attitude on the part of the officers. Even Clause 9 which provides for appeal does not seem to overrule the acceptance of such information furnished reasonably for consideration before the decision is taken. Sub-clause (2) of Clause 9 of the Levy Order imposes an obligation on the grower first to sell to the State whatever quantity of paddy is admitted by him as being liable for sale before his appeal may be entertained thereunder. The implication to our mind is that the grower should be provided with all opportunities to substantiate his contention against the quantity mentioned in the order passed by the Enforcement Officer and served upon him under Clause 3 (2) of the Order.

10. The last question submitted for our consideration is as regards the quantity of paddy specified in Schedule I to the Levy Order. The scale of paddy has been fixed first with reference to the acreage of the holding. Then, in fixing the quantity, lands have been classified as 'lands under scheduled projects, lands under irrigation projects works other than scheduled projects having an assured supply of water and well irrigated lands and rainfed and other lands.' Remembering that the Levy Order is with reference to paddy which is essentially a crop requiring water supply, the classification made by the Government appears to be quite reasonable. The scale of paddy prescribed for each category of land appears to be quite modest; it has not been shown by any of the advocates appearing for the petitioners as unreasonable. Hence, we have no hesitation in rejecting the contention that the scale of paddy specified in Schedule I to the Order is unreasonable.

11. In the result we allow these writ petitions and pass the following order in respect of the different groups.

In Writ Petitions Nos. 627, 684, 989, 991 and 992 all of 1967, Writ Petitions Nos. 98 and 3459 of 1968, Writ Petitions Nos. 2, 1960, 1691 and 1692 all of 1969, the Orders passed by the Enforcement Order in each of these cases are quashed. The Officer is free to serve fresh notice after the revised prices are fixed in the manner stated above.

In Writ Petitions Nos. 685/1967, 3460, 3461 and 3542 all of 1968, 613, 614 and 772 all of 1969 the State Government shall pay to these petitioners for the quantity of paddy delivered by each of them, the revised prices as may be fixed in pursuance of this order and shall issue fresh demand notices with regard to the balance, if any. With regard to the balance, the petitioners shall be paid at the revised prices, in respect of the paddy that they would be delivering in pursuance of the final order passed in each case, if such orders are pending either in appeal or before the Tahsildar or the Assistant Commissioner.

In Writ Petitions Nos. 1116 of 1968 and 1084 of 1969 the Writ Petitioners shall be paid the revised price for the paddy delivered by them. In the circumstances of the case, we make no order as to costs.


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