Skip to content


Konduri Buchi Rajalingam and ors. Vs. State of Andhra Pradesh by Its Secretary, Agriculture Civil Supplies, Government of Andhra Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Constitution
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petn. No. 266 of 1963
Judge
Reported inAIR1968AP156
ActsConstitution of India - Articles 19(1), 19(5), 226 and 299; Madras Revenue Recovery Act, 1864 - Sections 52 and 59
AppellantKonduri Buchi Rajalingam and ors.
RespondentState of Andhra Pradesh by Its Secretary, Agriculture Civil Supplies, Government of Andhra Pradesh a
Appellant AdvocateD. Narasa Raju, Adv. for ;V. Venkateswarlu, Adv., ;T. Dasaratharamayya and ;M.S. Sarma, Advs.
Respondent Advocate3rd Govt. Pleader
Excerpt:
.....classification, that the purpose of the classification is apparent and that the modern democratic state is not a police state, that it is within a welfare state or one attempting to become a welfare state, that its activities are manifold permeating the daily life of society, that it takes on hand many social and ameliorative activities and to implement the same enters into commercial transactions with other persons, that if it is the duty of the state to implement such policies, it is equally its duty, if it should function effectiv there is no doubt that the restriction is clearly a reasonable restriction within the meaning of the article 19(5) of the constitution and having regard to the view taken in kuppuswamy's case, air1957mad23 the power of the government to bring property to..........paddy. in 1955, the government wanted the petitioner to cleanse large stocks of dirty and damaged rice stuff which was practically rubbish and the useful and consumable quantity was hardly 20 to 30 per cent. much of the stock contained bran, dust, husk and sand and the petitioner was to winnow and after cleansing it put it in bags. in the circumstances, it was found risky to stipulate any fixed rates or terms as there was no knowing what would be the actual or approximate useful quantity that might ultimately be recovered from the stocks entrusted to him. because of this uncertainty, he could not enter into any express or specific contract with the government for the job of cleansing rice stocks given to him. the authorities however made him understood that he would be paid the market.....
Judgment:
ORDER

1. This petition is filed under Article 226 of the Constitution for the issue of a Writ of Certiorari or any other order or direction calling for the records and to quash the orders of the Government dated 4-3-63 and 7-2-63 directing the Respondents not to collect a sum of Rs. 1.26,974.00 nP or any other amount under the purchase contract dated 8-1-57 or under the cleansing agreement of 1955, by way of sale of the properties of the petitioner. Subsequent to the filing of the petition, the petitioner died and his legal representatives, petitioners 2 and 3 were brought on record.

2. The facts as stated by the petitioner are as follows: The petitioner was the owner of a Rice Mill at Jammikunta, Karimnagar District He was milling paddy of the Government under various terms in accordance with the prevailing market rates. There was no specific contract between him and the Government and the Government used to entrust him with stocks of paddy whenever they wanted the stocks to be milled and he used to deliver stocks after milling the paddy. In 1955, the Government wanted the petitioner to cleanse large stocks of dirty and damaged rice stuff which was practically rubbish and the useful and consumable quantity was hardly 20 to 30 per cent. Much of the stock contained bran, dust, husk and sand and the petitioner was to winnow and after cleansing it put it in bags. In the circumstances, it was found risky to stipulate any fixed rates or terms as there was no knowing what would be the actual or approximate useful quantity that might ultimately be recovered from the stocks entrusted to him. Because of this uncertainty, he could not enter into any express or specific contract with the Government for the job of cleansing rice stocks given to him. The authorities however made him understood that he would be paid the market rate of four annas to eight annas per Bengal maund. The petitioner did not enter into any specific agreement as that would require his having to make a security deposit of Rs 500 and then sign an agreement and without such an agreement, there could be no express agreement under the rules The whole deal was an oral one based on a mutual understanding and 'the Government did not fix any percentage or proportion of dust or refuse in the stuff supplied in order to enable him to re-deliver the cleansed goods'. The actual understanding between the Government and the petitioner was therefore vaeue and incapable of estimation.

The Government in 1955 stated that it supplied to the petitioner approximated --8600 pallas of mota stuff, 3561 pallas of barik stuff. 1044 pallas of lobia stuff and 1110 pallas of H.R. 19 stuff. On 29-9-55, the Director of Civil Supplies made a verification of the entire stocks and after actual weighment stated the stocks to be -- PallaS 8324. 65 seers mota stuff, pallas 3465. 9l| seers of barik stuff, pallas 1044 and 86 seers of lobia stuff and pallas 1110, seers 10 of H.R. 19 stuff There was a huge difference between the figures given by the Government and the figures given after actual weighment of stocks. The Director also verified the earlier stocks delivered prior to September 1954 and lying in his mill and noted mota stuff as 88521 and barik stuff as 239.111 Pallas. The petitioner had cleansed the stocks entrusted to him and thereafter the Government wanted him to store the cleansed stocks in his eight godowns The Government agreed to pay orally Rs. 2 per 100 bags per month in October. 1955, the Government made some sample winnowings and wanted to have a crude estimate of possible shortages which they unilaterally held at 12 per cent to 17 per cent.. This type of sample test cannot be accurate because the stuff varied from bag to bag and the percentage of rubbish was more than 40 per cent in a major quantity of bags. In February, 1956, the petitioner delivered 1769-20 pallas of mota cleansed rice to the Central Storage Department and on 23-1-56 the Government verified the cleansed stocks in all the godowns and put their seals on the hags. The Govt. then decided to sell the cleansed stocks by public auction and sold to one Ram Narayan who was the highest bidder on 7-4-56, Ram Naravan entered into a written contract and deposited huge amounts towards the said purchase contract. The Government by 23-2-56 had put its seals to all the godowns and the petitioner's cleansing and stocking duty ended and no further responsibility was attached to him for the stocks sealed in godowns. The auction purchaser got the godowns opened in May. 1956 and removed all the best and consumable stuff and then wanted to avoid the further contract. He therefore reported against the petitioner saying that the seal of godown No. 8 was tampered but the Director, Civil Supplies who inspected was satisfied that the seals were not intact due to natural causes of weather, and dampness. The Government then persuaded the petitioner to take up the stock left over and he entered into a simple purchase agreement. On 8-1-57 whereunder a flat rate of Rs. 12-14-0 per maund for the useful stuff of mota rice was fixed. An arbitration clause was incorporated whereby the Secretary to the Department of Agriculture was made the sole arbitrator in case of dispute between the petitioner and the Government

As per the terms of the agreement, he deposited Rs. 23,160 and the Tahsildar opened the seals of godowns 4. 5 and 8 on 10-1-57 and 11-1-57 examined the stocks and recorded panchanamas After removing the useless stuff, the authorities delivpred to the petitioner pallas 2146-116 of mota rice and he oaid Rs. 83,687-8-0 to the Department as per the agreement, in addition to the original deposit of Rs. 23,160 Out of the three godowns 4, 5 and 8 only 2146-116 (Pallas) were actually realised by the petitioner and he paid the amount due under the contract fully for the quantity he actually realised from the godowns Some small stock of 72 pallas was left over in the other godowns and it was put to auction. The petitioner was demanding from the Government to pay his bills after deducting some part-payments made earlier to him. The Civil Supplies Department then began to find out some ways and means to avoid payment of his dues and deny the amounts due to him. Then the third respondent, the Director. Civil Supplies started proceedings and issued a notice demanding a sum of Rs. 5.21.441 from the petitioner. He preferred an appeal and the Committee of Officers who heard the appeal reiving on the contract dated 8-1-57 gave some findings. He then preferred an appeal to the Commissioner, Civil Supplies who was pleased to hold that his deposit of Rs. 23,160 should not be forfeited and a very slight shortage in stocks be granted. Pursuant to the order of the Commissioner, the Director of Civil Supplies asked the petitioner to pay Rs. 3,49,347,37. A revision was filed against that order and the Commissioner of Civil Supplies ordered that he should pay Rs. 1,09,602.29 np. by the order dated 6-8-62. Pursuant to the said order, the Director of Civil Supplies passed an order dated 6-9-62 holding that a sum of Rs 1,26,974.95 np. is due from the petitioner. It is against this liability that this Writ Petition is filed.

3. A counter was filed on behalf of the respondents by the Assistant Secretary to the Government in Food and Agriculture Department. It is averred by the respondents that the orders of the Commissioner or the Director of Civil Supplies are not vitiated by errors of law apparent on the face of the record which would justify an issue of a Writ of Certiorari. The amount demanded from the petitioner arose out of contractual obligations and contractual obligations cannot be questioned under Article 226 of the Constitution. The petitioner was a milling contractor of the H.C.C.C. from 1945 to the end of February, 1952 for the H.C.C.C. and from March, 1952 to 1954 for the Government and the functions of the H.C.C.C. were taken over by the Government. The petitioner had entered into an agreement with the H.C.C.C. and the Government from time to time. Milling was not undertaken at the prevailing market rates but at the rates fixed by the H.C.C.C. and the Government from time to time. There were specific contracts between the petitioner and the Government and they were executed for 1951-52 on 1-1-52 and for 1953-54 on 20-11-53. The petitioner did not correctly re-deliver every year the rice after milling and there was shortage every year.

4. Further, the petitioner himself in his application 27-11-58 admitted that he had entered into an agreement and he cannot now deny the fact of execution of the document. The terms of the agreement were common to all the millers and cleansing charges at the rate of four annas per maund of cleansed rice delivered was payable. He had also deposited Rs. 500 towards the security deposit having entered into an agreement on 27-11-58 and there is no basis for the present allegation that the contract was an oral based on mutual understanding. The contract is therefore binding on the petitioner and he had to re-deliver cleansed rice according to the percentages found in the winnowing tests. The following stocks were supplied to the petitioner's mill during the period from 30-12-54 to 24-4-55; Rice mota 8600 Dallas and 26 seers, rice barik 3561 pallas 68 seers. 1044 pallas and 86 seers of Lobia rice and 1110 pallas and 10 seers of H.R. 19 rice, .The Director of Civil Supplies made a verification of the stocks transferred from other places and there was actual weighment of the stocks found in the mill. Thus, there were complaints against the petitioner of misappropriation of Government stocks and re-verification and weighment of the stocks had to be made which disclosed shortages in addition to the rice transferred from other places to the petitioner's mill, stocks which were already with the petitioner of the previous year 53-54 at the end of September, 1954 were ordered to be cleansed.

The allegation that the application of the miller to cleanse and store rice ended on 23-2-56 is not correct. Stocks were sealed in April, 1956. Though the stocks were sealed, they were in the custody of the petitioner and he had to open the godowns daily and reseal the same at the close of the day. The Respondent gave various other details relating to the stocks accountable by the petitioner. Clause 14 of the Agreement provides for arbitration whereby the Secretary of Agriculture Department was made the sole arbitrator in case of any dispute. The Collector was later asked to remove the seals and stocks in the custody of the petitioner were sealed and the petitioner had agreed to purchase the stocks in whatever conditions they were. Under Clause 5 of the agreement 'the purchaser will accept the stocks of civil supplies rice in whatever condition they are found in the godown of K.B, Rajalingam and there will be no commitment as to its quality and exact quantity on the part of the Government.' The petitioner submitted several revision petitions and ultimately the amount now demanded by the Government came to Rs. 1,26,974.95 and he was directed to pay the amount in three equal instalments and the last instalment was to be paid by 31-10-62 and he had not paid a single pie towards the liability. The Government had not discriminated against the petitioner in any manner by giving liberal concessions to other contractors under similar circumstances. The matter is governed by the conditions and terms of the contract and no principles of natural justice can be applied to the facts of the case. The petitioner was given every opportunity to represent his case and it is only after determining the amount due and payable by him that the authorities had proceeded to collect the amount by issuing a notice and the action of the respondents is perfectly legal and just in the circumstances of the case.

5. Mr. Narasaraju appearing for the petitioners raised three questions: (1) that there is no written contract under Article 289 of the Constitution to bind the parties to the terms of the contract and therefore there can be no liability of the petitioner; (2) that when the liability, that is the sum due, is in dispute, the provisions of Section 52 of the Madras Revenue Recovery Act can have no application; and (3) even if it is held that Section 52 of the Revenue Recovery Act applies, Section 52 would be unconstitutional as it would be an unreasonable restriction, resulting in deprivation of a right to property under Article 19(1)(f) of the Constitution.

6. It is contended by Mr. Madhava Reddy appearing for the third Government Pleader that there is no question of any infringement of any fundamental right of the petitioner; nor is there any deprivation of his property save by authority of law and that it was open to the petitioner to go to a Civil Court under Section 59 of the Act contending that the amount sought to be recovered was not the amount due or payable by him and that he is not liable to pay under the terms and conditions of the contract, and that in view of the admission of the petitioner in his application dated 27-11-58 that he had entered into a written agreement and also paid Rs. 500 as security deposit, the present plea that there was no contract between the petitioner and the respondents is untenable.

7. It is therefore to be seen in the first instance whether there is any contract between the petitioner and the respondents relating to the liability that is now attached by issuing a demand notice under the Madras Revenue Recovery Act. It may be relevant to notice document No. 9 in the typed material papers. It is a letter addressed to the Chief Accounts Officer, Civil Supplies Office, Andhra Pradesh by the petitioner on 27-11-58. The following is the relevant portion, 'in continuation of my previous application dated 14-11-58, I have to submit that I am doing the work of milling of Government paddy since 1355 F. During the years 1955 to 1957, I was given the work of cleansing rice. Before commencing the work of cleansing, I have executed the agreement Bond and also deposited Rs. 500 towards the Security deposit. In connection with the cleansing of rice, the experiment test was conducted by the C.A.O. and the following percentage of shortages were fixed ...............'. In this letter to the Chief Accounts Officer relating to settlement of accounts pertaining to cleansing of rice, the petitioner asked for certain concessions and allowances to be shown. There is nothing to suggest from this letter that there was no contract out of which the present contractual obligations arose or that no amount was due from him. Therefore in view of his own letter, it is futile to contend that there was no written contract, enforceable against him for recovery of the amounts found due from him Therefore T am unable to agree with the learned counsel that there was no contract between the parties as required under Art 299 of the Constitution. It was open to the petitioner to file the contract and then contend it Is not in conformity with the requirements of Article 299 of the Constitution. I am also unable to agree with Mr. Narasaraju that the power of the State Government to bring the petitioner's property to sale under Section 52 of the Madras Revenue Recovery Act is not a reasonable restriction and it is an infringement of the rights of the petitioner to hold property. Section 52 is in the following terms:

'All arrears of revenue other than land-revenue due to the State Government, all advances made by the State Government for cultivation or other purposes connected with the revenue, and all fees or other dues payable by any person to or on behalf of the village servants employed in revenue or police duties, and all cesses lawfully imposed upon land and all sums due to the State Government, including compensation for any loss or damage sustained by them in consequence of a breach of contract, may be recovered in the same manner as arrears of land revenue under the provisions of this Act, unless the recovery thereof shall have been or may hereafter be otherwise specially Provided for'.

His Lordship Mr. Justice Subba Rao as he then was in Kuppuswamv v. State of Madras, : AIR1957Mad23 dealing with the validity of S, 52 of the Madras Revenue Recovery Act held that,

'the clause of Section 52 namely 'and all' sums to the Provincial Government including compensation for any loss or damage sustained by them in consequence of a breach of contract' discriminates the State from any other person in the matter of realising a debt, but the said act of discrimination can be justified on the basis of a reasonable classification, that the purpose of the classification is apparent and that the modern democratic State is not a police State, that it is within a welfare State or one attempting to become a welfare State, that its activities are manifold permeating the daily life of society, that it takes on hand many social and ameliorative activities and to implement the same enters into commercial transactions with other persons, that if it is the duty of the State to implement such policies, it is equally its duty, if it should function effectively, to realise the amounts spent on such activities as early as possible, that public interests demand that such dues should be collected expeditiously that in this context no private individual can be put on a par with the State, nor does the impugned clause finally preclude the affected party from getting his rights decided in a Court of law, that Section 59 of the Act saves such a right, that the provisions of Sections 52 and 59 attempt to reconcile the paramount interests and duties of the State with the just rights of private- individuals, that the classification therefore is not arbitrary, that there is reasonable basis for the classification having regard to the obvious differences between the State and the private individual in their relation to the object underlying the impugned legislation and that the classification is not arbitrary but is based upon differences pertinent to thesubject in respect of and the purpose for which it is made.'

It is on the strength of this decision that the learned Government Pleader has argued that what applies to the question of discrimination dealt therein applies equally to the rights of a private individual in relation to his property and it is reasonable restriction having regard to the principle laid down in aforesaid decision. There is no doubt that the restriction is clearly a reasonable restriction within the meaning of the Article 19(5) of the Constitution and having regard to the view taken in Kuppuswamy's case, : AIR1957Mad23 the power of the Government to bring property to sale under Section 52 of the Act cannot be construed as infringing the fundamental right of the petitioner under Article 19(1)(f) of the Constitution Whatever deprivation of the property may result from the proposed action under Section 52, it would be by authority of law -- the law being Section 52 of the Act. It is open to the petitioner to seek redress in a Civil Court under Section 59 of the Act which is a proper and effective remedy if the petitioner is aggrieved by the action taken by the State wider Section 52 of the Act.

8. The petition therefore fails and is dismissed with costs. Advocate's fee Rs. 100.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //