1. The plaintiffs are rice-millers. The plaintiffs sold during the crop years 1975-76 and 1976-77 to the Food Corporation of India (F.C.I) certain quantities of rice. For both the years, the plaintiffs were paid at the rates mentioned in the A. P. Rice Procurement (Ex-Mill) Prices Order 1975. But the F.C.I. later acting on the basis that they paid the plaintiffs excess rates under a mistake of law for the crop year 1976-77 started recovering those excess amounts from the rice-millers. The rice-millers sued the Government and the F.C.I. and sought to interdict the Government and the F.C.I. from recovering. The suits filed by the rice-millers in different Courts were dismissed. This appeal is from one such decree passed by a Subordinate Court, Nizamabad District,
2. The Andhra Pradesh Rice Procurement (Levy and Restriction on Sale) Order 1967 (simply levy order) issued by the State of Andhra Pradesh in exercise of its powers under the Essential Commodities Act, 1955 (simply the E. C. Act) in G. O. Ms. No. 2346 dated 17-9-1967, places the plaintiffs under a statutory obligation to sell to the F.C.I. certain percentage of the total quantity of rice manufactured by them in their mills at procurement prices. The provisions of the E. C. Act not only direct payment of procurement prices to the millers but also lay down how the procurement prices shall be fixed by the Government. Under the levy order also the plaintiffs are declared to be entitled to be paid for the sales of theirrice at prices called the 'notified prices' which the E. C. Act calls as procurement prices. The levy order defines the 'notified price' to mean the price fixed under the Andhra Pradesh Rice Procurement (Ex-Mill) Prices Order 1974 for a particular variety of rice and which is in force for the time being, Section 3 Sub-section (3-B) of the E. C. Act mentions the statutory relevant factors that must be taken into account in fixing these 'procurement prices'. The plaintiffs supplied and sold to the F.C.I, rice in two successive years. They sold the rice milled from paddy of kharif and rabi crops of the crop year 1975-76 and also the rice milled from paddy of kharif and rabi crops of the crop year 1976-77. The F.C.I. had paid them for these sales effected by the rice-millers according to the prices stipulated in the afore-mentioned Andhra Pradesh Rice Procurement (Ex-Mill) Price Order 1975 ('Price order', for short) marked in the suit as Ex-B-1. The prices mentioned in the aforesaid Ex-B1 are the prices fixed by the State Government in exercise of its statutory powers conferred by the provisions of the E. C. Act, 1955 and more particularly, Section 3(2) of that Act. Ex-B-1 prices were fixed at a time when the rice-millers were statutorily liable to pay purchase tax at 3 1/4% on their purchases of paddy, The E. C. Act, 1955 is an Act passed by the Parliament providing for direct Governmental intervention in order to control production as well as trade and commerce in commodities which are essential for the living of the community so that those commodities are made available to the community at reasonable rates. Under Section 3(2)(f) of the E. C. Act the Government requires any person holding in stock, or engaged in the production, or in the business of buying or selling, any essential commodity, to sell the whole or a specified part of the quantity held in stock or produced or received by him to the Central Government or State Government or to any officer or agent of such Government or to a Corporation owned or controlled by such Government. Sub-section (3-B) of Section 3 of the E. C. Act provides that where any person sells any essential commodity in compliance with an order made with reference to Clause (f) of Sub-secj tion (2), such a person should be paid an amount equal to the procurementprice of such foodgrain, which shall be specified by the State Government with the previous approval of the Central Government having regard to the following factors viz.,
(a) the controlled price, if any, fixed under this section or by or under any other law for the time being in force,
(b) the general crop prospects,
(c) the need for making such grade or variety of foodgrains, edible oil seeds or edible oils available at reasona-ble prices to the consumers; particularly the vulnerable sections of the consumers; and
(d) the recommendations, if any, of the agricultural prices commission with regard to the price of the concerned grade or variety of foodgrains etc., The aforementioned provisions make it clear that the plaintiffs are under an obligation by reason of Section 3 subsection (2) (f) read with the aforesaid Levy Order (not fully quoted here) to supply and sell 50 per cent of the rice milled in the plaintiffs mills to the F.C.I. at a rate fixed as procurement price by the Government in accordance with criteria laid down by Sub-section (3-B) of Section 3 of the E. C. Act. In this case the plaintiffs had sold to the F.C.I. the requisite quantities of rice in both the crop years in accordance with the requirements of the aforesaid Levy Order and were paid Ex. B-l prices. But subsequently the defendants acting on the basis that the plaintiffs were paid excess for the second crop year sales of rice started recoveries. This gave rise to the suit and this appeal. The point for consideration is: At what rates the plaintiffs are entitled to be paid for their sales of rice of the crop-year 1976-77?
3. Ex. B-1 fixed the procurement prices taking into account the tax liability of 3 1/4% of the rice-millers on their purchase of paddy. But, those prices would apply only for the first year, for Clause 3 of Ex. B-1 explicitly says that 'it shall apply to the rice milled or hand-pounded from paddy of kharif crop of 1975-76 or subsequent crop'. There cannot be any doubt that the adjective 'only' used in Clause 3 of Ex. B-l Order would confine the applicability of the aforesaid Order of 1975 only to the rice milled by the plaintiffs from paddy of kharif and rabi seasons of the crop-year 1975-76which ended belore 7-9-1976. In other words, the prices which have been fixed by the aforesaid Ex. B-1 would not apply to the supplies of rice made by the plaintiffs to the F.C.I. on and after 7-9-1976 and upto 23-2-1977. According to the common case of the parties the 1975-76 crop year would come to an end some time before 7-9-75 and the prices notified by Ex. B-l Order would therefore, have no application to those supplies and sales made by the plaintiffs on or after 7-9-1976. But the plaintiffs' contention is that the Government by means of its Memorandum No. 2611/SCI (CSI?) (2)/76-2, dated 2-11-1976- continued the procurement prices of rice mentioned in Ex. B-l for the succeeding crop year of 1976-77, and that therefore the payments already made by the defendants to the plaintiffs for the second year (1976-77) supplies on the basis of Ex. B-1 prices, cannot be called excess payments made under any mistake of law, enabling the defendants to withhold payments otherwise due to the plaintiffs. The aforesaid Government Memo No. 2611/CSI (2)/76-2 dated 2-11-1976 which is marked as Ex. B-6 in a companion suit out of which arises C.C.C.A. 6/81 heard along with this appeal, reads, in relevant parts, as follows:--
'Sub:-- Civil supplies -- prices and procurement policy for kharif cereals for 1976-77 season-regarding:--Ref:-- 1. From the Government of India, Ministry of Agriculture and Irrigation (Department of Food) New Delhi, Telex Message No. 167 (28) 76-PY. I, dated 30-9-1976.
2. From the Government of India, Ministry of Agrl., and Irrigation (Department of Food) New Delhi (Lr. No. 167/28/7 6-PY.I dated 30-9-1976.
The Government of India in their reference cited, copies of which are communicated herewith to all Dt. Collectors, Chief Rationing Officer, Hyderabad, Director, Vigilance Cell (CS) and Board of Revenue (CS), have declared the procurement policy for kharif cereals 1976-77. They are informed that the producer's levy slabs prescribed for the crop year 1976-77 in the schedule to the Andhra Pradesh Paddy Procurement (Levy) Order 1972 as amended last in G. O. Ms. No. 844, F. & A. (CS. I) dated24-9-1975 shall continue to apply for the crop year 1976-77 also.
2. The procurement prices of paddy and specifications for the crop year 1976-77 shall be the same as were fixed for the crop year 1975-76 and notified in G. O. Ms. No. 1002 Food & Agrl. (CS. V) dated 6-11-1974 in the Schedules under the Andhra Pradesh Paddy (Procurement Prices) Order 1974. The procurement prices of rice for crop year 1976-77 shall be the same as notified in the schedules to the A. P. Rice (Procurement Ex-Mill Prices) Order, 1975.
3. With regard to the Mill Levy, it has been decided to fix 50% levy uniformly for millers and dealers and necessary amendment to the relevant schedule to the Andhra Pradesh Rice (Procurement Levy) and Restriction on Sale Order, 1967 will be issued shortly in consultation with the Government of India, Pending issue of the amendment, the Dt. Collectors are instructed to take action to collect levy from millers and dealers not exceeding the percentage mentioned above for the crop year 1976-77' 4. x x x x 5. x x x x
4. According to the terms of the above Memo No. 2611 dated 2-11-1976, (Ex. B-6), 'the procurement price of rice for the crop year 1976-77 shall be the same as notified in the Schedule to Andhra Pradesh Rice (Procurement Ex-Mill) Prices Order, 1975' (Ex. B-l). It follows from the above that the payments already made to the plaintiffs by the defendants on the basis of Ex. B-1 prices could not be called excessive. But the contention of the defendants is that the Government Memo No. 2611 (Ex. B6) is on order without any legal force. According to the defendants, Ex. B-6 is not made in exercise of the legislative power, but is made only in exercise of executive power and therefore that Memo should be disregarded as being contrary to the provisions of the E. C. Act and the Levy Order. This argument of the defendants raises an important question as to the legal validity of the aforesaid Ex. B-6. The sales of rice effected by the rice-millers are not voluntary sales nor the prices at which they should be paid are negotiable. They are all transactions under the compulsion of the E. C. Act. Both the quantity and the quality of the rice tobe sold by the rice-millers to the defendants as well as the prices which they should be paid for those sales are all required by the provisions of the E. C. Act to be settled by law. They are not left to be decided by the executive power. It cannot be otherwise, for the very element of compulsion involved in these levy sales takes these matters out of the orbit of negotiations between the rice-millers and the executive and require to be governed by law. It is well known that one's right to life, liberty and property cannot be adversely affected by the exercise of executive power except under legislative sanction (ELKO case). It is for that reason that the Parliament, through the provisions of the E. C. Act, directed that all the above-mentioned matters should be settled and determined by the executive in accordance with the legislative direction. The combined effect of Sec. 3 Sub-section (3-B) and the Levy Order already referred to above in this judgment is clearly to exclude the operation of executive power in fixation of prices. Fixation of prices in any manner other than by exercise of legislative power is not within the statutory contemplation. When a lawful legal provision thus provides for doing of certain things in exercise of legislative power those matters can only be dealt with in exercise of such legislative power and in accordance with the procedure prescribed by the relevant legislative provisions and not otherwise (see Mandir Seetharam's case.) : 1SCR597 Government Memo No. 2611 (Ex. B6) cannot be regarded from any point of view, as having been made in compliance with the provisions of the E. C, Act and the Levy Order. Both from the point of view of procedure and substance. Ex. B-6 is bad in law. The fixation of prices at which the rice-millers shall be paid undoubtedly affects a class of persons. Such an order fixing prices is required under Section 3(5-A) of the E. C. Act to be notified in the Official Gazette. But Ex. B-6 is never published in the Official Gazette. As the above memo is not published in the Official Gazette, the Memo should be treated as invalid for that reason alone. It should be emphasized that the statutory requirement of publication in Gazette is not a matter of formality in this case. Section 7 of the E. C. Act makes any contravention of any order made underSection 3 punishable with imprisonment and also with fine. The property with respect to which such a contravention takes place is also made by the Act liable to be forfeited. Because of the penal consequences provided for by the Act for non-compliance with an order made under Section 3 of the Act, the requirement of publication of such an order cannot but be regarded as mandatory. It is conformity with this principal Act that the abovementioned Levy Order requires the rates at which the rice-millers should be paid, should be embodied in a notified order. As the aforementioned Ex. B-6 was never published as required either by the E. C. Act or the Levy Order, it must be held invalid. The result is that Ex. B-6 cannot continue the prices. Further, the abovementioned Levy Order prescribing prices to be notified is a statutory instrument. Its legal effect is to direct the applicable prices to be notified. Where a valid statutory instrument requires the executive to act in -a particular way the executive cannot deviate from that requirement. This departure from Levy Order renders Ex. B-6 invalid. Above all, there is a substantive objection to the validity of Ex. B-6. The procurement prices are required by Sub-section (3-B) of Section 3 of the E. C. Act to be fixed keeping in view the need to supply these essential commodities to consumers at reasonable prices. Supply of the essential commodities at reasonable price is the main purpose of the Act. In order to achieve that objective, the Act requires the fixation of price to be based upon among other things the cost price of rice to the millers. In other words, price fixation should provide for just compensation to the rice-millers and not for their unjust enrichment. At the time when Ex. B-1 prices were fixed the rice-millers were legally liable to pay purchase tax on paddy at the rate of 3 1/4%. It was therefore just that Ex. B-l prices took that fact into account. But that tax liability was removed by an Ordinance No. 18/1976 dated 8-9-1976 and thereafter it would have been just for the Government to reduce the prices of rice payable for the millers. By the time of Ex. B-6, the millers were no longer liable to pay the purchase tax on paddy. The result is that the cost price of rice to the miller had come down by 3 1/4%. Assuming Ex. B-6 to be otherwise valid, it should be held in-valid on the ground that it did not take into account the removal of tax liability of the millers. The method thus adopted by the aforementioned Government Memo (Ex. B-6) in fixing the price payable to the miller for the subsequent year crop sales by extending Ex. B-1 into the second year is thus not in conformity with the statutory requirements of Sub-section (3-B) of Section 3 of the E. C. Act. In other words, Ex B-6 is bad for its non-conformity with Section (3-B) of the Act. For all these reasons, we hold that the above-mentioned Government Memo No. 2611 (Ex. B-6) was invalid and inoperative and could not fix the prices of rice. It was wholly incapable of creating any rights in favour of the plaintiffs.
5. The argument of the plaintiffs, therefore, that they were entitled to be paid on the basis of the prices first fixed by Ex. B-l and later continued by the Government Memo No. 2611 (Ex. B-6), is not a tenable argument. We accordingly hold that the payments made by the defendants to the plaintiffs for the quantities of rice sold to them an or after 7-9-1976 on the assumption that Ex. B-1 prices were continuing, suffer from a mistake of law.
6. It is then argued by Mr. N.K. Acharya for some of the plaintiffs, that even if the aforementioned Ex. B-6 was invalid in law and could not continue the Ex. B-l prices, it should be taken as constituting a representation of the defendants made to the rice-millers assuring the latter that they would be paid the prices mentioned in Ex. B-l even for the succeeding crop year sales and that this Court should not permit the defendants now to go back on that representation and to pay them anything less than what is contained in Ex. B-1. This argument of the plaintiffs is based on the doctrine of 'promissory estoppel', which is a recent but a dramatic entrant into the field of the British jurisprudence. It must be said that the exact limits of promissory estoppel are yet to be settled (see Halsbury's Laws of England Vol. 15 p. 175, 3rd Edition). Halsbury's Laws of England (Vol. 16, 4th Edition para 1514) gives the following description of this doctrine :
'When one party has, by his words or conduct, made to the other a clear and unequivocal promise or assurance which was intended to affect the legalrelations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced.'
The above doctrine of promissory estoppel is essentially a private law concept and when first applied by Lord Denning in High Trus case to private parties, it was welcomed as promoting justice. But Lord Denning extended the area of its operation in Robertson v. Minister of Pensions, (1949) 1 KB 227, to public law field and declared that Crown is bound by estoppel. Almost immediately thereafter, Lord Simonds and Lord Normand had heavily criticised in Howell v. Falmouth Boat Construction Co. Ltd.. 1951 AC 837, this extension of promissory estoppel into public law as wholly unwarranted by making specific references to the observations of Lord Denning in Robertson case. Yet, thanks to the moral force Lord Denning, the intrusion of promissory estoppel into the field of public law could not be effectively arrested. This doctrine was first approved by our Supreme Court in Union of India v. Anglo Afghan Agencies Limited. AIR 1968 Sc 718, which was later followed in several decisions, including Century Spinning and Mfg. Ltd. v. Ulhasnagar Municipal Council. : 3SCR854 . Although, Lord Denning spoke in praise of this doctrine, he had never analysed the legal implications of the fact that as applied against the Government and its departmental units promissory estoppel can threaten to undermine the fundamental and paramount legal doctrine of ultra vires which is the very foundation for the doctrine of legality and rule of law, nor did he examine the existing body of authority against his innovation. Our whole legal system is based on the premise that law alone is the source of power and that law-making exclusively belongs to the legislature and that the executive shall always be bound by and be under law. In theChief Settlement Commissioner v. Omprakash, : 3SCR655 our Supreme Court describingthis fundamental constitutional principle observed thus (at p. 36 of AIR):--
'Under our constitutional system the authority to make the law is vested in the Parliament and the State Legislatures and other lawmaking bodies and whatever legislative power the executive administration possesses must be derived directly from the delegation of the Legislature and exercised validly only within the limits prescribed. The notion of inherent or autonomous law-making power in the executive administration is a notion 'that must be emphatically rejected. As observed by Jackson, J., in a recent American case, Youngstown Sheet and Tube Co. v. Sawyer ((1952) 343 US 579, 655) 'with all its defects, delays and inconveniences men have discovered no technique for long preserving free Government except that the Executive be under the law, and that the law be made by parliamentary deliberations.'
In our constitutional system the central and most characteristic feature is the concept of the rule of law which means, in the present context, the authority of the law Courts to test all administrative action by the standard of legality. The administrative or executive action that does not meet the standard will be set aside if the aggrieved person brings the appropriate action in the competent Court. The rule of law rejects the conception of the Dual State in which Governmental action is placed in a privileged position of immunity from control by law. Such a notion is foreign to our basic constitutional concept'
The notion of promissory estoppel as applied to public law field could completely derail the constitutional engine from the track of legality by denying validity to the above basic constitutional concept. In private law, by the application of this doctrine, a principal may be held to be bound by an act done or representation made by his agent under the latter's ostensible or apparent authority without resulting in any illegality. But in the field of public law where the Government and its organs are subject to the paramount and fundamental doctrine of ultra vires, the application of this doctrine of promissory estoppel could not only lead to many an anamolous result but could even undermine, an already noted, the veryfoundations of rule of law. The American Supreme Court in Moffat v. United States, (1883-84) 28 L Ed 623 warned that Govt. Officers 'are but the servants of the law, and, if they depart from its requirements, the Government is not bound. There would be a wild license to crime if their acts, in disregard of the law, were to be upheld to protect third parties, as though performed in compliance with it'. The administrative agency is a statutory body and can only perform the acts which the law empowers it to perform. The decision of the King's Bench in Minister of Agriculture and Fisheries v. Matthews (1950) J KB 148, 153, had high-lighted the dangers involved in applying this doctrine to the Government in these words.
'It would entirely destroy the whole doctrine of ultra vires if it were possible for the donee of a statutory power to extend his power by creating an estoppel.'
There is therefore no doubt that the indiscriminate use of promissory estoppel to public law field would subvert the basic doctrine of ultra vires. In Merrill's case (1947) 92 L Ed 10 Frankfurter, J., quoting an earlier dictum from Rock Island's case ( (1920) 65 L Ed 188) said that 'men must turn square corners when they deal with the Government' and rejected the applicability of estoppel to the Government. He declared.
'it is too late in the day to urge that the Government is just another private litigant.....Whatever the form in-which the Government functions, any one entering into arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority'.
It was observed in Howell's case (1951 AC 837) (supra) in refutation of the promissory estoppel in public law that 'the illegality of act is the same whether or not the actor has been misled by an assumption of authority on the part of a Government Officer, however high or low in the heirarchy'. It follows from the above that in principle, promissory estoppel cannot be applied against the Government and its agencies as it might be applied against the private parties. As already noted above, unlike cases involving a private principal and agent, more than private interest is at stake in public law type olcases. There is a vital constitutional and public interest in ensuring that administrative officials do not act beyond the bounds of their actual authority. If officials can bind the Government hand-and-foot by their acts, even when those acts are not within the scope of their authority, there is danger that they may assume powers not possessed by them knowing that their Governmental Principal will not be able to disavow them. The executive could then create its own authority and power by its own acts. The ramparts of legality devoutly guarded for ages by law of ultra vires would then be destroyed. In certain conceivable cases the Government might even be crippled in the use of its authority for the protection of nation's vital interests such as those involved in such sensitive areas, like imports and exports. The rights of many would then come to be mortgaged to the interests of a few by the ultra vires acts of the executive. The extension of promissory estoppel into public law field, is not therefore, an un-mixed blessing. It is for this reason that the latest judgment of our Supreme Court on promissory estoppel reported in Jit Ram Shiv Kumar v. State of Haryana, : 3SCR689 ruled that there can be no estoppel against a Statute. In that judgment the Supreme Court considered the English cases and also the cases of our Supreme Court and finally declared that, (at p. 1305):--
'there can be no promissory estoppel against the exercise of legislative power of the State So also the doctrine cannot be invoked for preventing the Government from acting in discharge of its duty under the law. The Government would not be bound by the act of its officers and agents who act beyond the scope of their authority and a person dealing with the agent of the Government must be held to have notice of the limitations of his authority'.
That authoritative pronouncement makes the plaintiffs' argument that Ex. B-6 constitutes a promissory estoppel against the defendants wholly untenable. Ex. B-6 was admittedly made in disregard of Section 3(3-B) and Section 3(5-A) of E. C. Act. In such a case as that, if this Court were to hold that Ex. B-6 would operate as an effective estoppel against the Governmentthis Court would, in effect, be granting legal sanctity to what is a patently illegal and ultra vires act of the executive Government. It would also amount to imparting impotency to the Legislature to protect the society through the executive. As that obviously cannot be done, we hold that Ex. B-6 would not operate as an estoppel.
7. Additionaly, the rice-millers cannot be said to have suffered any detriment by reason of Ex. B-6. The statutory obligation of the rice-millers to sell specified quantities of rice arose not under the terms of Ex. B-1 and Ex. B-6, but by the Levy Order. The said Levy Order was made under the provisions of E. C. Act and is independent of the Price Order, fixing the prices. In selling the rice to the F.C.I. the rice-millers cannot, therefore, plead that they have acted on the basis of Ex. B-l or Ex. B-6. They cannot, therefore, claim that they have suffered any detriment by reason of Ex. B-1 or Ex. B-6 or both, Ex. B-6 by itself or in conjunction with Ex. B-l, therefore, in law, cannot operate to constitute any estoppel against the defendants. Further, Ex. B-6 is never published in the Gazette. It is not addressed to the rice-millers. Ex. B-6, therefore, cannot be regarded as a representation of the Government made to the rice-millers. It is not therefore possible to hold that the plaintiffs have acted on the basis of Ex. B-6 and suffered any detriment on that account. For all these reasons, we hold that Ex. B-6 does not constitute an effective estoppel against the Government.
8. However, it must be said that the above is not intended to deny the applicability of the doctrine of equitable estoppel to Government altogether. We are not insensitive to what Bernard Schwartz praised in the above reasoning excluding applicability of promissory estoppel to Government as containing all the beauty of the logic and what he condemned as containing all the ugliness of injustice. In the above mentioned Jit Ram's case : 3SCR689 (supra) the Supreme Court did not completely rule out the applicator lity of promissory estoppel to Government. It clearly left an area open where the doctrine of promissory estoppel can operate against a public authority. But, as we are not concerned with that situation in this case, we are not farther pursuing that point. Allthat need be said now is that the plea of promissory estoppel would not be admissible where it involves the defeating of the principles of ultra vires.
9. It is then argued by Mr. Acharya that Ex. B-6 extending G. O. 901 (Ex. B-1) into the succeeding year represents agreed price and that therefore, the rice-millers are entitled to get that price as represented by Ex. B-l and continued by Ex, B-6. In our opinion, this argument is fallacious, because the rice-millers are entitled to be paid under Section 3(3-B) of the Act procurement price which shall be fixed in accordance with the requirements mentioned in Section 3 Sub-section (3-B) of E. C. Act and not an agreed price or negotiated price. As Ex. B-1 prices cannot be regarded, for reasons already mentioned, as representing procurement prices for the succeeding year also, we reject this argument.
10. On behalf of the defendants it is argued that the Government Memo No. 2847/CS/I/76-4 dated 19-1-1977 and contained in Ex. B-2 has effectively fixed the prices at which the rice-mil-lers should be paid in the subsequent year and the rice-millers are entitled to be paid only at those reduced rates. As already noted above. Ex. B-1 prices were fixed at a time when the rice-millers had to pay purchase tax on their purchased paddy. That liability to pay purchase tax was subsequently removed from the millers by an Ordinance dated 8-9-1976 later on made into an Act. As that Ordinance removed the tax liability from the rice-millers the cost price of paddy to the rice-millers had diminished by 3 1/4 per cent. In order to reflect this change in cost structure, the Government issued the aforesaid Ex. B-2 dated 19-2-1977 but with effect from 7-9-1976 re-fixing and reducing the prices of rice payable by the F.C.I. to the rice-millers. One of the defences set up by the defendants to negative the claim of the plaintiffs to be paid at the rates mentioned in Ex. B-l is based upon Memo. Ex. B-2, That raises the question whether Ex. B-2 is valid. We may mention that the rice-millers had successfully questioned the validity of the above Ex. B-2 both in these proceedings in the Courts below as well as in an earlier round of litigation under Article 226 of the Constitution in this Court. But we hold Ex. B-2 to be in-valid for the same reasons for which we held the executive Memo Ex B-6 to be ineffective to fix prices. We therefore hold agreeing with the plaintiffs this point that the defendants cannot non-suit the plaintiffs on the basis of Ex. B-2.
11. This leaves us with the last and final question in this case. That question is: what are the rates at which the rice-millers should be paid for their second year rice sales. These rice sales, according to the common case of the parties, took place on or after 7-9-1976 and up to 23-2-1977. Payments already made to the plaintiffs were made according to Ex. B-1 prices. But, we have seen above that Ex. B-1 prices would not be applicable beyond 1975-76 kharif and rabi crops. We have also noted that the Government Memo No. 2611 Ex. B-6 is legally not capable of continuing Ex. B-l prices beyond 1975-76. We have already concluded that Ex. B-2 Memo dated 19-1-1977 made by the Government in an attempt to fix applicable prices to this period is not legally valid. It follows from the above that there is no legally efficacious instrument fixing the prices of rice payable for the sales of rice made by the plaintiffs to the defendants between 7-9-1976 to 2.7-2-1977. In other words, there is a legal vacuum. Confronted with this situation of legal vacuum the Government had issued G. O. Ms. No. 116 Food and Agriculture dated 24-2-1977 under the provisions of the E. C. Act fixing the rates of procurement prices at which the plaintiffs should be paid for their supplies of sales of rice during the aforesaid period. The above mentioned G. O. 160 Marked as Ex. B-4 reads as follows:--
The Andhra Pradesh Gazette.
Food and Agriculture Department (C. S. 1/2) (Amendment) of the Andhra Pradesh Rice (Procurement) (Ex-Mill) Price Order, 1975.
(G. O Ms. No. 116, Food and Agrl. C. S. 1/2) 24-2-1977.
In exercise of the powers conferred by Clause (c) of Sub-section (2) of Section 3 of the Essential Commodities Act, 1955 (Central Act 10 of 1955) read with the order of the Government of India, Ministry of Agriculture (Department of Food) New Delhi in G. S. R. No. 316 (E) dated the 20th June, 1972, and with the prior concurrence of the Government of India, the Governor of AndhraPradesh hereby makes the following amendments to the Andhra Pradesh Rice (Procurement Ex-Mill Prices) Order, 1975, issued in G. O. Ms. No. 901 Food and Agrl. (CS. IV) dated the 8th October, 1975 and published at page 8 of the Rules Supplement of Part I, Extraordinary of the Andhra Pradesh Gazette No. 53 dated the 9th October, 1975 as subsequently amended.
2. The amendment hereby made shall be deemed to have come into force on the 7th Sept. 1976.
(i) In Schedule I to the said order in Col. (2), for the figures '149.00', '136.00', '125.00'' and '121.00' against varieties of rice super fine and coarse the figure '146.00, '133.00' and '118.00' shall respectively be substituted.'
Ex-Officio Secy. to Govt.
It is to be noted that Ex. B-4 prices took note of the removal of purchase tax liability of the rice-millers and is made under the provisions of the E. C. Act. Thus Ex. B-4 is the first attempt made by the Government to re-fix the price of rice necessitated by the removal of the purchase tax liability of the rice-millers. After the purchase tax on paddy was removed by the above-mentioned Ordinance with effect from 7-9-76, the Govt. had no doubt issued Ex. B-2 dated 19-11-1977 reducing the prices. But in the writ litigation above referred to and waged by the millers Ex. B-2 was held by Gangadhararao, J., as invalid. It was during the pendency of that litigation, the Government issued the above G. O. 116 (Ex. B-4) fixing the procurement prices of rice payable to the rice-millers with effect from 7-9-1976 which is the date of the Ordinance removing the purchase tax liability. This G. O. 116 was published in the Gazette. It follows, therefore, that Ex B-4 is in conformity with the requirements of Section 3(3-B) and Section 3(5-A) of the E. C. Act and covers a field hitherto left uncovered by any lawful price fixation order. It is clear that if Ex. B-4 is a valid statutory instrument It would be competent to fix and settle the prices payable to the plaintiffs for their sales of rice during the relevant period. But the plaintiffs argued that Ex. B-4 dated 24-2-1977 is invalid, because it was given retrospective effect fixing the prices from 7-9-1976. In support of this argument Sri Pratap Reddy and Sri Acharya re-lied on a decision of tbe Supreme Court reported in Income-tax Officer v. M.C. Ponnoose, AIR 1973 SC 385 and an unreported judgment of Gangadhara-rao, J., in W. P. No. 2929/77 and batch dated 7-4-77 directly on the issue, holding this G. O. invalid for retrospectivity. On the other hand, Sri G.V.L. Nara-simharao relied on a judgment of the Supreme Court reported in B.S. Vadera v. Union of India, : (1970)ILLJ499SC to contend that Ex. B-4 is not invalid on the ground that it has given retrospective effect fixing the prices from 7-9-76. It is to be observed that the submission of the plaintiffs and the counter-submission of the defendants both proceed on the assumption that Ex. B-4 is retrospective and while the plaintiffs assume that subordinate legislation would always be bad if it is retrospective, the defendants argue that such a legislation would always be valid. It must immediately be observed that these rival contentions cannot be supported either on the basis of any principle or on the basis of any authority. In Vadera's case the question raised and decided was whether the Governor, acting under Article 309 of the Constitution, can make retrospective service conditions. It was argued for the employees in Vadera's case that in as much as there is no express language authorising the Governor to frame rules with retrospective effect, the framing of the rules by the Governor with retrospective effect was invalid. That argument was repelled by the Supreme Court on the reasoning that the power that is exercised by the Governor under Article 309 of the Constitution is legislative in character and that the legislative power can be exercised both prospectively as well as retrospectively. In other words, the Vadera's case ruled that legislative power by its very nature can be exercised either prospectively or retrospectively. Law making can be both backwards and forwards. This very decision in Vadera's case was specifically referred, to in the above Income-tax Officer's case (supra) which is a case concerned with the exercise of executive power. The Supreme Court there did not rule that executive power cannot be exercised retrospectively. It can be exercised retrospectively provided the empowering Statute gave power to act retrospectively. This alight distinction was drown from thequality of power which is legislative in one case and therefore original and executive in another and therefore derivative and limited. In the Income-tax Officer's case, (supra), Section 4 of the Finance Act, 1963 substituted a new definition for the original definition of Tax Recovery Officer' in the Income-tax Act, 1961 and also provided that the new definition shall be deemed always to have been substituted. The now definition empowers the State Government to authorise by notification any State Revenue Officer to exercise the powers of a Tax Recovery Officer'. The Government of Kerala issued a notification dated 14-8-1963 under 1963 Finance Act authorising the various Revenue Officials, including the Taluk Tahsildars, to exercise the powers of a Tax Recovery Officer. The notification was published in the Kerala Gazette dated 20-8-1963 and the concluding portion of the notification stated 'This notification shall be deemed to have come into force on the first day of April, 1962.' The Tahsildar effected attachment of shares towards recovery of arrears of income-tax subsequent to first April, 1962 but prior to 14-8-1963. The Supreme Court held, 'that the action taken by the Tahsildar in attaching the shares was unsustainable', because he could not be authorised by the notification of the State Government dated 14-8-1963 to exercise powers of a Tax Recovery Officer with effect from a date prior to the date of notification. The reason given for this conclusion is that the power given to the State Government to authorise any State Revenue Officer, including the Tahsildar, to exercise the powers of a Tax Recovery Officer, is more of an executive than a legislative act and in the absence of power conferred on the State Government either by express language or by necessary implication, the State Government cannot authorise a Revenue Officer to ex-ercise the powers of a Tax Recovery Officer from an anterior date. The observations of the Supreme Court in the Income-tax case : 75ITR174(SC) (supra) :
'the Parliament can delegate its legislative power within the recognised limits. Where any rule or regulation is made by any person or authority to whom such powers have been delegated by the Legislature it may or may not be possible to make the same so asto give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the Courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect'',
make it clear that the question whether subordinate legislation can have retrospective operation or not depends on the language employed in the empowering statutory provision. It is not at all a question of legal impossibility, but is all a matter of interpretation of the language used in the empowering Statute. It is therefore incorrect to presume, as the plaintiffs do, that a retrospective subordinate legislation per se is always bad. This view of the Supreme Court is reiteratrd in the State of M.P. v. Tikamdas, : AIR1975SC1429 in the following words (at p. 1431 of AIR):
'there is no doubt that unlike legislation made by a sovereign Legislature,, subordinate legislation made by a delegate cannot have retrospective effect unless the rule-making power in the concerned statute expressly or by necessary implication confers power in this behalf.'
It is therefore clear that the argument of the plaintiffs that Ex. B-4 is invalid, because it is retrospective, cannot be accepted to be correct in that bald form. In order to sustain such an argument the plaintiffs must be able to establish that the provisions of the E. C. Act do not authorise the making of subordinate legislation with retrospective effect and that in fact the Government did make subordinate legislation with retrospective effect without possessing the necessary statutory authority. Thus, the whole question in this case boils down to one of interpretation of the relevant provisions of the E. C. Act. In this case, it must be admitted that there is no provision in the E. C. Act authorising the making of subordinate legislation with retrospective effect. It follows, therefore, that Ex. B-4 would be invalid if it is truly a retrospective subordinate piece of legislation. This raises thequestion whether Ex. B-4 dated 24-2-77 fixing prices with effect from 7-9-1976 can be truly called a retrospective law. We are of the clear opinion that it is not. The argument of the plain tiffs that Ex. B-4 is a piece of retrospective subordinate legislation, because it is given effect to from an anterior date, shares in the widely held belief that a law may be retrospective merely 'because a part of the requisites for its action is drawn from a time antecedent to its passing.' But this is always and wholly an erroneous view. Truly speaking a law can be said to be retrospective only when it 'takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect totransactions or considerations alreadypast.' (see -- Craies on Statute Law,6th Edn. Page 386.) Cross in his 'Statutory Interpretation' observes that 'the statute musttake away some vested right or imposea penalty for past acts which were notpenalised when they were committed';before it can be called retrospective. Theappellation of retrospective law, wouldtherefore attach itself only to a lawwhich takes away rights already vested.In such a situation, the subordinatelegislation to be valid should not onlycross the hurdle of presumption againstretrospectivity, as all laws are requiredto do, but additionally it must demonstrate its legitimate parentage;otherwise, there is no difference between the exercise of legislative powerand executive power. But where the lawmerely closes the gap and fills up alegal vacuum without touching or taking away the existing rights, such alaw whether made in exercise of legis-lative power or as a subordinate legis-lation can never in the correct sense ofthe term be called to be retrospective.In our case, after Ex. B-1 had workeditself out by efflux of time, there wasno valid piece of legislation fixing theprices payable to the rice-millers forthe succeeding years. There were nodoubt abortive attempts made throughExs. B-2 and B-6 to fix prices for thesucceeding year. But none of them haveany legal effect, because of the reasonswhich we have already mentioned indetail in this judgment. The result wasthat there was no fixation of procurement prices applicable for the secondyear. This is something which is required by Section 3(3-B) of the E. C. Act to be done. Ex. B-4 performed that duty dictated by the provisions of the E. C. Act. Ex. B-4 did not invade any existing rights. Ex. B-4 did not reduce in any way the prices legally payable to the plaintiffs, because there were no such prices in existence. Nor did it alter in any other way the legal rights of the plaintiffs with regard to their sales for the second year. AH that Ex. B-4 did was to fix the prices for the sales effected on and after 7-9-1976. We therefore cannot first call Ex. B-4 a retrospective piece of subordinate legislation and later hang it on that ground. It is no doubt true that in the aforementioned judgment of Ganga-dhararao, J., the learned Judge had held the aforementioned G. O. 116 (Ex. B-4) as invalid on the ground that it was a subordinate piece of legislation retrospectively made, The learned Judge observed:
'it cannot be disputed that the Governor has power to issue such an order because of the delegation of that power to him under Section 5 of the E. C. Act. But in this case, he has made the amendments with retrospective effect, by stating that they shall be deemed to have come into force on 7-9-1976. I am of the opinion that while the Governor has the power to make amendments to the order, he has no power to give them retrospective effect.'
It will be observed that the learned Judge never considered the question whether G. O. 116 (Ex. B-4) can be called retrospective at all in the correct sense of the law. He neither raised the question whether any existing rights of the rice-millers were affected in any way by G. O. 116. Nor did he find that G. O. 116 affected the existing rights of the rice-millers. He merely assumed that G. O. 116 (Ex. B-4) to be retrospective because it is given effect from a date anterior to the date of its making. We have already shown that this is a wrong approach to the question of retrospectivity. For the reasons which we have already given, we hold with respect, that learned Judge's finding that G. O. 116 is a retrospective subordinate legislation is not correct.
12. From the above it follows that G. O. 116 (Ex. B-4) is a valid piece of legislation and does not suffer from any legal or constitutional infirmity and accordingly the prices payable to the plaintiffs are the prices mentioned in Ex. B-4- It follows that payments made to the plaintiffs not on the reduced basis of Ex. B-4 prices but on the higher basis of Ex. B-1 prices, are excessive, As Lord Reid observed in Shiba Prasad Singh v. Srish Chandra Nandi, (1949) 2 Mad LJ 657 : (AIR 1949 PC 297) 'there was no intention to make a present at money which was not due' (to the plaintiffs). The excess money paid on the basis of Ex. B-1 prices must therefore be taken to have been made under ft mistake of law. It has been held in Union of India v. K. Damodaraiah and Company, (1968) 1 Andh WR 81, that such excess payments can be recovered by making deductions from or withholding amounts from the sums of monies payable to the plaintiffs. It follows therefrom that it is not necessary for the defendants to file suits for recovering these excess amounts paid under Ex- B-l. It also follows the recoveries which are now sought to be made from the plaintiffs are clearly lawful and just.
13. For all the aforesaid reasons which are materially different from those given by the lower Court, we dismiss this appeal with costs throughout. There shall be only one hearing tee.