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Sri Rama Krishna Rice and Groundnut Oil Mill No. 1 and ors. Vs. State of Andhra Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtAndhra Pradesh High Court
Decided On
Case NumberW.P. Nos. 5010, 5104, 5445, 5820, 5923 and 5958 of 1983
Judge
Reported inAIR1983AP383
ActsEssential Commodities Act, 1955 - Sections 2 and 3(2)
AppellantSri Rama Krishna Rice and Groundnut Oil Mill No. 1 and ors.
RespondentState of Andhra Pradesh and ors.
Appellant AdvocateP. Ramachandra Reddy, ;P. Krishna Reddy, ;V. Rajagopal Reddy and ;Vedula Jagannadha Rao, Advs.
Respondent AdvocateGovernment Pleader for Food and Agriculture
Excerpt:
constitution - validity - sections 2 and 3 (2) of essential commodities act, 1955 - petition filed against government order of restricting export of rice outside the state for implementing the scheme to supply rice to poorer section at lower rate - petitioners also directed to sell certain quantity of food grains with them to andhra pradesh state civil supplies corporation - petitioners contended that due to order issued they were suffering from huge losses and same is unsustainable in law - court observed that object of scheme is to provide food to poorer section of community at reasonable rate - present order is helpful in achieving the same and so valid - petition accordingly dismissed with certain directions. - - currently, the levy quota is 50% for all the districts in the state.....order1. the government of andhra pradesh introduced a scheme to supply rice to poorer sections of the society, at the rate of rs. 2/- per kilogram and in the interest of that scheme, issued certain orders restricting the export of rice outside the state and also calling upon the rice-millers and dealers in the state to sell a certain quantity of foodgrains with them, to the andhra pradesh state civil supplies corporation. these orders are questioned in these writ pwtitions. the points raised in the batch of writ petitions are common. though the prayer in the writ petitions calls in question the valdiity of cls. 4-a 4-b and 4-c of the andhra pradesh rice procurement (levy) and restriction of sale order, 1967 (hereinafter referred to as the 'levy order), the said aspect was not urged before.....
Judgment:
ORDER

1. The Government of Andhra pradesh introduced a scheme to supply rice to poorer sections of the society, at the rate of Rs. 2/- per Kilogram and in the interest of that scheme, issued certain orders restricting the export of rice outside the state and also calling upon the rice-millers and dealers in the state to sell a certain quantity of foodgrains with them, to the Andhra pradesh state civil supplies corporation. These orders are questioned in these writ pwtitions. The points raised in the batch of writ petitions are common. Though the prayer in the writ petitions calls in question the valdiity of Cls. 4-A 4-B and 4-c of the Andhra pradesh Rice procurement (Levy) and restriction of sale order, 1967 (hereinafter referred to as the 'Levy order), the said aspect was not urged before me. The arguments centred roung the interpretation of the various clauses, and the validity of the Government orders. In the light of the said Rules. For the sake of convenience I will set out the facts in W.P. No. 5445/83.

2. The petitioners in W.P. No. 5445 of 1983 are licensed foodgrain dealers millers in krishna district who purchase paddy and mill the same in their mills. Under Cl. 3 of the levy order, they are obliged to supply the specified percentage of rice. So derived by them by way of levy to the state at the notified price. Currently, the levy quota is 50% for all the districts in the state the petitioners say that the remaining 50% they are entitled to sell whereever they like and at whatever price they can get and that no restriction can be placed by the state thereon. Their case is that for the Kharif season 1982-83, they have satisfied the levy quota targets fixed for them and that when they applied for permits for transport and sale of the remaining 50% of rice, the appropriate authorities have been denying and deliberately delaying the issuance of permits purporting to Act under the instructions of the Government impugned herein which permit export of only half of levy-free rice outside the state and whih instructions provide further that permits for sale of rice outside the state shall be issued only after the rice meant for sale inside the state is released. It is submitted that the petitioners are entitled in law to sell the entire levy -free rice (remaining 50%) outside the state if they so wish and that as and when they apply for such permits, the respondents are bound to issue the same. It is submitted that the petitioners cannot be compelled to sell the whole of it or any portion thereof, within the state. It is complained that under the impugned orders to which I shall presently refer - the Government has been compelling them to sell half the levy-free rice within the state. And following the export of only the other half without any authority of law. It is complained further that they are being compelled to sell the levyfree rice to the A.P. state civil supplies corporation at the price fixed by the Government which is resulting in huge losses to the petitioners. Even for the current Rabi season it is complained the authorities are compelling the rice-millers to deliver 2,50,000 tonnes over and above the levy quota and that such compulsion is equally unsustainable in law. This is short is the gravamen of the petitioners' complaint.

The legal aspect.

3. The essential commodities Act has been enacted in the interest of general public for the control of production, supply and distribution of and trade and commerce in certain commodities, declared as essential commodities S. 3(1) empowers the Central Government to provide by order for regulating or prohibiting the production, supply and distribution of any essential commodity and trade and commerce therein if in its opinion it is necessary or expedient so to do for maintainin or increasing or f or securing thier equality distribution and availability at fair prices. Subsec. (2) provides that without prejudice to the generality of the powers conferred by sub-sec (1) order made under S. 3(1) may provide among others-

(a) to (c) xx xx xx (d) for regulating by licences permits or otherwise the storage transport distribudisposal acquisition use or consumption of any essential commodity:

(e) xx xx xx xx (f) for requiring any person holding in stock or engaged in the production or in the business of buying or selling of any essential commodity:-

(a) to sell the whole or a specified part of the quantity held in stock or produced or recived by him or

(b) in the case of any such commodity which is likely to be produced or received by him to sell the whole or a specified part of such commodity when produced or received by him,

To the Central Government or a state Government or to an officer or agent of such Government or to a corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order'.

Clause (c) of sub-sec. (2) empowers the central Government to control the price at which any essential commodity may be bought or sold.

4. Section 5 of the Act empowers the central Government to direct by a notified order that the power to make orders or issue notifications under S. 3 shall in relation to such matter. And subject to such conditions if any as may be specified in the direction be exercisable by the state Government among other authorities.

By its order dated 24-7-1967 contained in G.S. R. 1111 published in the Gazette of India, extraordinary, dated 24-7-1967 the central Government directed that 'the powers conferred on it by sub-sec. (1) of S. 3 of the said Act to make orders to provide for the matters specified in Cls. (A) (b) (c) (d) (e) (f) (h) (I) (ii) and (j) of sub sec. (2) thereof shall, in relation to food-stuffs be exercisable also by a state Government subject to the conditions-

'(1) that such powers shall be exercised by a state Government subject to such directions if any as may be issued by the central Government in this behalf: and

(2) that before making an order relating to any matter specified in the said cls. (A) and (c) or in regard to regulation of transport of any food-stuffs under the said cl. (D) the state Government shall also obtain the prior concurrence of the central Government .........'

Condition No. 2 was modified by an other order contained in G.s. r. 1508 dated 30-9-1967 condition No. 2 substituted by this order, reads:-

'(2) that before making an order relating to any matter specified in the said cls. (A) (c) or (f) or in regard to distribution or disposal of food-stuffs to places outside the state or in regard to regulation of transport of any foodstuff under the said cl. (D) the state Government shall also obtain the prior concurrence of the central Government'. Yet another order has been issued in G.S. R. 800 dated 9-6-1978: but since the terms thereof in so far as they are relevant are identical with the earlier orders, it is not necessary to refer to the 1978 order.

5. On 17-11-1967 the Government of Andhra pradesh made the 'Andhra pradesh Rice procurement (Levy) and Restriction on sale order. 1967' which was published in the Gazette on 18th November 1967 This order purports to have been made under section 3(2)(f) of the essential commodities Act read with sub-secs. (3) (3-B) and (5) of section 3, and the order of the Government of India contained in G. S. R. 1111 dated 24-7-1967 and also with the prior concurrence of the central Government clause 2 of this order defines certain expressions used in the order clause 3 provides for the levy. Sub-clauses (1) to (4) of Cl. 3, read as follows:-

'3. Levy on rice: (1) Every miller carrying on rice milling operations shall sell to the agent or an officer duly authorised by the Government in this behalf at the notified price and at such percentage of the total quantity of each variety of rice produced or manufactured by him in his rice mill every day as is specified for each district in the schedule.

(2) Every dealer shall sell to the agent or an officer duly authorised by the Government in this behalf at the notified price and at such percentage of the total quantity of:

(a) each variety of rice milled by him every day out of his stocks of paddy and

(b) each variety of rice purcahsed or otherwise acquired by him for the purpose of sale from persons other than millers or dealers as is specified for each district in the schedule I:

(provisos omitted)

(3) every miller or dealer in a district who holds stock of rice on behalf of any person shall deliver to the agent or an officer authorised by the Government in this behalf such percentage of each variety of rice specified for the district in schedule -I on behalf of the person on whose behalf the miller or dealer holds the stock.

(4) any person whose stock of rice is delivered to the agent or officer authorised by the Government under subcl. (3) shall not be entitled to recover from the miller or dealer on account of value of the stock so delivered notwithstanding any contract or instrument to the contrary. He shall forthwith approach the agent and state why such rice should not be levied from him by Government at the notified price and in case of such levy he shall be entitled to receive the payment of the cost of the rice taken by Government at notified price..............'

It is not necessary to refer to Cls 3-A and 3-b which deal with levy of paddy and the price to be paid to the producer/agriculturist. Clause 4 places certain restrictions upon the sale and movement of rice. It reads as follows:-

'4. (1) No miller or delaer shall sell or agree to sell or otherwise dispose of the rice recovered by milling other than the quantity specified in Cl. 3 except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf.

(2) Save as otherwise provided in sub-cl. (1). No person shall transport rice for sale from the premises of any rice mill except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf'.

It is not necessary to refer to Cls. 4-A and 4-B which provide for certain restrictions on sale and movement of paddy and broken-rice.

6. Clause 4-C empowers the Government to issue directions which shall govern the permits granted under cl. 4 and cl. 4-A It reads as follows:-

'4-C. Permits issued shall be subject to directions of Government Any permit issued under cl. 4 or cl. 4-A shall however be subject to such directions as the Government may give in this behalf'.

It may be stated that Cl. 4-C was added by the state Government after obtaining the prior concurrence of the central Government in its telegram dated 6-10-1981.

7. A reading of the above provisions makes the following position clear: section 3 of the Essential commodities Act empowers the central Government or its delegate to make orders for regulating the supply distribution trade and commerce in any essential commodity in the interest of maintaining or increasing the supply of such essential commodity or for securing its equitable distribution and availability at fair prices. Clause (d) of sub-sec. (2) empowers the central Government /State Government to make orders regulating, by permits inter alia, the disposal and acquisition of any essential commodity: while Cl. (F) empowers them to make an order directing any person holding instock any essential commodity to sell the same to the state or a state controlled corportation. The price at which such essential commodity is to be sold can also be fixed under an order made under Sec. 3 The levy order has been made under sec. 3 (2) (f) of the Act. When orginally made it did not contain Cl. 4 in the present form cl. 4 in the present form was introduced only in 1972 Cls. 4-A and 4-b were introduced in 1974 and Cl. 4-C in october 1981 Cl. 3 obliges every miller and dealer to deliver 50% of the rice milled by him or got milled by him on any day by way of levy to the state. The percentage of levy now in force is 50% cl. 4 restricts the sale and movement of levy-free rice, the heading of cl. 4 is relevant It is 'restriction on sale and movement of rice'. Cl. 4 expressly declared that no miller or dealer shall sell or agree to sell or otherwise dispose of the rice recovered by milling other than the quantity specified in Cl. 3 except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf', While subcl. (2) of Cl. 4 declares that 'save asotherwise provided in sub-cl (1), no person shall transport rice for sale from the premises of any rice mill except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf.' In disputably. Therefore even the sale of levy-free rice is not free at the volition of the miller/dealer but subject to regulation. It can be sold or disposed of only in accordance with the permits issued by the collector. Or other authorised officer. In this connection the following circumstances deserve notice: Clause 4 in the present form was introduced by G.O. Ms. 1533 F & A (C.S. 1) dated 30-10-1972 published in the rules suplement to part II (Extraordinary) page 1. Of the Andhra pradesh gazette dated 31-10-1972 the preamble to this amendment order does not refer or recite cl. (F) of sec. 3 (2) of the Act, as is done by the original order made in 1967. It purports to have been made in exercise of the powers conferred by section 3 of the essential commodities Act'. In my opinion this was advisedly done for cl. 4 of the levy order is referable to cl. (D) in sec. 3 (2) secondly. I find that this amendment order has been issued with the prior concurrence of the central Government as recited in its preamble. Thus the requirement of G.s. R. 1508 dated 30-9-1967 and in particular of condition no. 2 thereof has also been satisfied Indeed the validity of cl. 4 was not challenged either in the writ petitions or in the arguments before me Now the avowed purpose of the amendment order is also found stated in the preamble. It reads Whereas the state Government is of the opinion that it is necessary and expedient so to do for maintaining supplies of rice produced in the state of Andhra pradesh and for securing equitable distribution and availability thereof at fair prices in the state of Andhra pradesh'. It is thus clear that cl. (4) is neither a formal provision nor an empty one. It is made with a definite purpose and must be understood and interpreted accordingly. The sale of rice produced in this state is sought to be regulated by means of permits in the interest of maintenance of supplies for securing their equitable distribution and for ensuring their availability at fair prices in this state The Rule-making authority could not have made its intention clearer than this over and above this, Cl. 4-C expressly declares that the permits issued under Cl. 4 shall be subject to such directions as the Government may give it is of course that the directions that the Government can give under Cl. 4-C must be warranted by the levy order and must be meant for and designed to further and advance its objects (see Laker Airway's case (1977) 2 All ER 182).

The orders of the Government impugned:-

8. Since cl. 3 of the levy order provides for collection of levy out of the rice milled or purchased every day by the millers/dealers the Government has for the sake of convenience of both the administration as well as the traders been following the practice of fixing a target for each district and the collector, in turn fixes the target for each rice-mill or dealer, as the case may be the Millers dealers are first required to fulfil the levy quota and only thereafter are they permitted to sell the levy-free rice. This system dispenses with the governmental supervision on every ricemiller's/dealer's business. Every day. The very fact that the millers/dealers never complained of such practice all these years is proof positive of the fact that the said practice is not in any way prejudicial to the interests of the millers/dealers Again for the sake of convenience the Government divides each year into two halves. Viz Kharif and Rabi the Kharif season begins with Ist of october and ends with the 31st of March while the Rabi season begins with 1st of April and ends with 30th of September the levy targets are fixed separately for both kharif and Rabi.

9. In the begining of the Kharif season, 1982-83. The collector. Krishna District. Issued proceedings dated 23-10-1982. Contained in Rc. No. A 341/82,in pursuance of the Government memo dated 8-10-1982 referred to therein fixing the target for each rice-mill for the Kharif season and also stating further that (5) millers and dealers delivering levy will be eligible to sell levy-free stocks in proportion to mill levy delivered. Since the percentage of levy is 50 the millers and dealers will be eligible to sell levyfree stocks at 1:1 ratio'. This was of course, subject to revision if there are any changes in the policy of the Government

10. On 12-2-1983 the Government revised its procurement policy for 1982-83 in its circular No. P1/2896/83, wherein the state Government directed that with a view to ensure supplies to the people within the state and also to ensure against the rise in prices of rice the district administrations shall not allow any rice or paddy to go outside that state without the authority of the collector with a view to make the rice available to the people of this state in the first instance, the collectors of the surplus and deficit districts were directed to stop unauthorised movement of any kind across their districts. Among the instructions given the follwing instruction is relevant for the present purpose:-

(1) In all the surplus districts not more that 50% of the levy-free rice only should be permitted to be transported outside the state. The other half shall be reserved for consumption within the state. Every collector shall make out a budget for releasing these permits for local sales in a controlled fashion till the end of November monthwise............In other words the levy-free eligibilty earned to the extent of 50% and which would be required in the open market will have to be released through permits in a controlled fashion taking care to release larger quantities in the lean months. This method is advocated so that we may not only ensure overall availability of rice but also help hold the price line.......'

11. In pursuance of the above circular the commissioner of civil supplies issued instructions in his Memo dated 16-2-1983 by way of clarification stating that out of the levy free eligibility accrued the millers may be permitted to transport rice outside the state to the extent of hald of their eligibility the balance half has to be offered for sale in the domestic market as per the guidelines issued in the reference second cited; (circular dated 12-2-1983). Where such rice is not purchased for sale in the domestic market in a given month that also may be permitted to be sold outside the state as instructed in the reference second cited......Surplus district collectors are requested kindly to watch closely the price of paddy in this connection to ensure that prices of paddy do not go below suppor t price........under all circumstances paddy prices should be kept well above the notified prices. To this extent collectors should exercise their own discretion, but keep the commissioner informed immediately thereafter...........'

12. Consequential instructions were issued to all the millers in Krishna district by the collector Krishna.

13. Now coming to the Rabi season 1982-83. The Government announced its Rabi procurement policy in Government memo No. 19844/A/CSI/83, dated 25-4-1983. In this memo it was stated:-

'The Rice Milling Industry shall pay an amount of not less than Rs. 20/- per quintal of paddy above the minimum support prices fixed by the Government of India during the Rabi season In other words the minimum price payable for Fair Average Quality paddy by the millers and dealers may be:-

(i) common ......Rs. 142/- Quintal

(ii) fine..............Rs. 146/- Quintal

(iii) superfine....Rs. 150/-Quintal

During Rabi 1982-83 the mill levy percentage shall be 50% and the entire levy free eligibility earned by the millers or dealers can be sold anywhere in the country...........'

It was further directed that the millers and dealers shall also make available and sell an aggregate quantity of 2.50 lakh tonnes of rice for internal consumption within the state during Rabi 1982-83, in the open market at a price not exceeding Rs. 265/- per quintal of fair average quality rice. The mill -wise apportionment of this aggregate quantity will be made by the collectors in pro portion to the levy procured from each mill.....' Another direction related to the unutilized stock of kharif season it was in the following words:-

'In respect of the Unutilized stocks of Kharif levy-free rice meant for sale within the state i.e, out of the 50% levy free eligibility of 1982-83 Kharif, and the 2.50 lakh tonnes of rice to be sold within the state by the millers during Rabi 1982-83 which comes to a total of 6,81.500 tonnes for the state as a whole, the month-wise budgeting of releases into the open market for the entire state shall be as follows:-

April 1983 ..... 20,000 TonnesMay 1983 .. 70,0000 ,,June 1983 ..... 1.10,000 ,,July, 1983 ...... 1.10,000 ,,August 1983 ....... 1,10,000 ,,September 1983 ...... 1,10,000 ,,October 1983 ......1,04.500 ,,November 1983 ..... 47.000 ,,_______________Total 6.81.500 Tonnes .........These quantities shall be sold by the millers at a price not exceeding Rs. 265/- per quintal. As had been agreed to by them. The entire quantity shall be sold within the state of andhra pradesh only and the collectors shall ensure this by having these stocks lifted as laid down in the circular of the commissioner (C.S.) Ref. P1/2896/ 82 dated 12-2-1983, fifth cited.........'

With respect to the export of rice outside the state it was stated:-

'Permits for transport and sale of rice eligible to be sold outside the state i.e, the 25% levy free eligibility out of the Kharif levy deliveries and the quantity of rice equal to the levy delivered in the Rabi season shall be issued only after the state's internal requirements are released first. This shall be done by the collectors, on a week to week basis, where however a miller would deliver his share of rice meant for internal consumption within the state of andhra pradesh in full he may be given a permit for transport and sale outside the state ensuring that the ration between internal sales and outside the state by him is not disturbed'.

14. On 25-5-1983 the Government issued certain further orders with respect to its procurement policy for rabi 1982-83 in this memo the Government issued the following instructions:-

'In order to meet the increasing demand for rice at Rs. 2/- per kg., from the green card holders, Government have decided to purchase through a.P. state Civil supplies corporation Limited levy-free rice budgeted to be sold by the mills in the months from April 1983 to November 1983 at the following rates as agreed to by the millers and distribute the same to the green card holders at Rs. 2/- per Kg.

Purchase rate by the ____________________APSCSCL from the Mills:(1) All first crop common Varities: Rs. 250/- per Qtl.(2) All first crop fine and superfine varieties : Rs. 260/- ,,(3) second crop fine varieties eo. G. Hamsa: Rs. 245/- ,,(4) Second crop superfine varities like BPT 1235 etc. Rs. 255/- ,,

The prices fixed above shall be forfair average quality rice. The A.P. State civil supplies corporation Ltd., shall purchase fair average quality rice from the levy free stocks available with the mills in the districts and move the stocks to the deficit districts as per the allotment made by the commissioner of civil supplies. The rice shall be delivered at the fair price shops at Rs. 200/- per quintal minus the retailer's margin as in the case of the Food corporation of India rice.

Collectors shall issue permits for sale of levy free rice to the millers to enable them to sell the rice of the A.P. State civil cupplies corporation limited. Permits for movement outside the state shall be issued only after the stocks for sale within the state are released or an undertaking in writing is given to the effect that the concerned mills would release rice for local sales in full as and when it is demanded.

The collectors shall ensure that the millers deliver to the maximum extent possible Kharif varieties towards Kharif eligibility.

Collectors shall issue levy free permits against deliveries made for movement outside the state from Rabi crop varieties only and no Kharif variety shall be allowed to move outside the state on levy free permits.......'

15. The various order referred to above disclose the following position: In the begining of the kharif season 1982-83, the only obligation of the millers/dealers was to deliver 50% of the levy under Cl. 3 of the levy order and then they were free to sell the levy-free rice whereever they liked and the Government was to issue permits for the sale of such levy-free rice at the request of the Millers/dealers who satisfied the levy target fixed for them. However after the new Government came into office in january 1983 this policy underwent a change with a view to ensure domestic supplies and also to arrest the rise in prices the Government directed that only half the levy-free rice should be allowed to be transported outside the state which means that the remaining half should be sold only within the state. Further with the same object in view it was directed that the permits for sale to be issued under Cl. 4 of the Levy order should be phased. In other words permits for the entire levy-free rice would not be issued at once even it faked for These permits were to be issued in a phased manner over several months. This was undoubtedly a policy. Change to the prejudice of the millers/ dealers for the reason that the prices of rice outside the state are far higher than the prices of rice prevailing in this state. Another prejudice to them was that they were not to be issued permits for the entire levy-free rice as and when they asked for the same but that they were to be issued in a controlled fashion the millers complain that such a policy has the effect of locking up their capital over an unduly long period the submission is that they have to raise substantial loans from their financiers for purchasing paddy and that if they are not allowed to sell the levy-free rice also soon after satisfying their levyquota they will be obliged to pay large amounts by way of interest to their lenders the submission is that there is no legal authority for both these types of restrictions viz the restriction on sale of levy-free quota outside the state and also the refusal to issue permits for sale of levy-free quota as and when asked for . it is submitted that by enforcing these instructions the millers/ dealers were disabled and prevented from selling huge quantities of levy-free rice of kharif season outside the state, and which quantity is now being tagged on to the Rabi quota.

16. Now coming to the Rabi season the policy for this season is slightly different from the policy followed for the kharif. The mill levy is 50% and the millers/dealers are held entitled to sell the levy free rice any where in the country but subject to their making available an aggregate quantity of 2.5 lakhs tonnes of rice for internal consumption in the state at a price not exceeding Rs. 265/- per quintal. This 2.5 lakh tonnes of rice is added to the held over stocks of levy free rice meant for sale within the state and the total quantity of 6.81.510 tonnes is proposed to be released into the market in specified quantities every month permits for sale out side the state are to be issued only after the state's internal requirements are released first. The price at which the A.P. state civil supplies corporation was to purchase levy-free rice meant for domestic market from the millers/ dealers was fixed at Rs. 250/- per quintal for all first crop common varieties, and Rs. 260/- for all first crop fine and duperfine varities, similarly for second crop the prices were fixed at Rs. 245/- and Rs. 255/- per quintal respectively the permits for sale of levy free rice outside the states were to be issued only after the stocks meant for sale within the state are released indeed in its memo dated 25-5-1983 the Government directed that no Kharif variety shall be allowed to move outside the state on levy-free permits'. The facility given in the circular dated 12-2-1983 to sell the rice remaining unsold within the state in a given month outside the state was also withdrawn.

17. The petitioner's complaint with respect to the Rabi procurement policy is that not only the millers/dealers are made liable to supply 2.5 lakh tonnes of rice for internal consumption over and above the levy-quota but that they are obliged to sell the same as also the held -over stocks from the Kharif season to the state (A.P. state civil supplies corporation) at certain fixed prices which are far below the market prices. The petitioners contend that there was no such agreement between the millers and the Government as is recited in the Government memo dated 25-5-1983 and that in any event. There was no such agreement between the dealers (I. E. Dealers who are not millers) and the Government the said price has not been fixed or determined under any order made under S. 3(2) of the Essential commodities Act. The avowed policy of issuing export permits only after the quotas meant for internal sale are satisfied and the altogether banning of export of rice of the Kharif season is complained to be totally without any authority of law and arbitrary contentions:

18. The first question is whether the state Government is empowered in law to direct that the millers/dealers shall sell half the levy free rice shall be granted only with respect to half the quota of levy-free rice I have dicussed hereinbefore extensively the object and purpose behind cl. 4 of the levy Order and also pointed out that it primarily deals with sale and disposal of levyfree rice and not with mere movement or transport as such Sub-cl. (2) of cl. 4 No doubt deals with transport of rice but it is not every transport that is governed by it but only 'transport of rice for sale from the premises of any rice mill'. In other words Cl. 4 of the the Levy order regulates the sale and disposal of rice in accordance with the permits issued by the collector or other officer authorised in that behalf as the case may be now, Cl. 4-C expressly declares that a permit issued under cl. 4 shall be subject to such directions as the Government may give in that behalf. Reading Cls. 4 and 4-c together. It is evident that the Government does have the undoubted power to regulate the sale and disposal of levy free rice for the purpose of maintainaing the supplies and securing equitable distribution and availability at fair prices, of essential commodites. Merely because the original levy order purports to have been made under section 3(2)(f) of the Act, it does not mean that Cl. 4 is not referable to cl. (D) of S. 3(2) as pointed out supra Cl. 4 as introduced in 1972 was made under S. 3 as such without specifying any particular clause in sub-sec (2) of S. 3 sub-sec (1) of S. 3 is very wide in its sweep and sub-section (2) of section 3 is merely and elucidation of sub-section (1) of section 3. Therefore so long as the directions made or issued by the state Government under clause 4-c of the levy order are designed to achieve the objects asmentioned in sections 3(1) of the Act and are underlying clause 4 of Levy order they would be perfectly waranted and unobjectionable in law.

19. The main thrust of the petitioners' argument is that the Levy order is made under section 3(2)(f) of the Act and is designed and meant for compelling the millers/dealers to sell as portion of rice towards levy and once that purpose is achieved ther is no further purpose to be served by the said order. This in my opinion is an unwarranted interpretation of the scope and sweep of the levy order. As its title itself suggests the said order provides not only for levy but also for restriction on sale and trasnport of rice In other words the entire rice produced or acquired by a Milller/dealer is subject to control. Helf of its has to be delivered as levy at the notified price and the remaining half has to be sold in accordance with the permits issued by the specified authorities which permits shall however be subject to such directions as the state Government may issue in the interests of maintaining the supplies and securring equitable distribution and control of price. The levy order has to be releated no only to clause (f) of section 3(2), but also to clause (d) of section 3(2), as stated above. In other words while clause 3 is relatable to sec. 3(2)(f) Cl. 4 is relatable to section 3(2)(d). Once this is so the Government power to regulate the disposal and sale of rice in the interests of matters stated in subsection (10 of section 3 of the Act is unquestionalbe.

20. The second question is whether the Government is empowered to direct that the permits for sale of levy-free rice shall be issued only in a phased and controlled manner In other words whether the petitioners are not entitled to permits for saleof levy-free rice as and when they ask for the same. This power to issue permits in a phased and controlled manner is again implicit in Cls. 4 and 4-c read together it is well known that one means of arresting the rise of prices is by regulating and maintaining the supplies at a sustained and certain level keeping in view the requirements of the populace. For this purpose; the state has been treated as a unit and it is so for the purpose of the levy order.

21. The next complaint is that the policy of the Government not to issue permits for export until and unless the stocks for export until and unless the stocks of levy-free meant for in ternal consumption are released is arbitrary and incompetent it is contended that the millers have to raise huge sums by way of loans from financing agencies and that in the first instance they have to supply rice towards the levy quota; and if now they are required to sell half the levy-free quota within the state first and only thereafter to export it would result in subjecting the millers/ dealers to heavy financial burden and losses. It is complained that the held over Kharif quota (half the levy-free rice meant for sale within the state) is now directed to be sold to the A.P. state civil supplies corporation at a fixed price which is far below the price obtained outside the state. The learned Government pleader counters this arguments by saying that the price at which the held-over Kharif stocks are being asked to be sold to the A.P. state civil supplies corporation is still sufficiently remunerative to the millers /Dealers in the state though it may be that it is not as profitable as the pice obtained out side the state. It is contended that in the interest of maintaining the supplies and for preventing the price-rise within the state the Government orders in this behalf are perfectly competent and justified.

22. Now there can be little doubt about the proposition that every power, including a statutory power has to be exercised reasnably. It should not be oppressive in its application. The power to give directions under Cl. 4-C of the levy order is also subject tot he above rider. So long as the state's requirements are being met there will be no reason to impose any other or further restriction upon the dealers' right to sell rice outside the state. Now the Government has a rough estimate of the levy-freerice available with the millers/ dealers. The very fact that the Government memo dated 25-4-1983 says that 4.31.500 tonnes of levy-free stock, pertainin to Kharif season meant for internal consumption is still available shows that the Government has already worked out the quantity available with the millers dealers on account of levy-free quota also. Part of it had already been sold by 25-4-1983, and still 4,31,500 tonnes was remaining to be sold within the state. It is indeed only after the issuance of the said memo that the Government directed the A.P. state civil supplies corporation to come forward and make purchases of this quantity as well as the quantity of 2.5 lakhs tonnes agreed to be delivered to the millers/dealers for the Rabi season. This would also mean that large stocks of levy-free rice are lying with the millers/dealers which they propose to sell outside the state. So long as the export of rice from this state is not altogether banned. The millers/dealers must be permitted to sell half the levyfree quota outside the state. The interests of the public of this state which the state Government is seeking to safeguard will not be jeopardized if the state Government maintains a parity in the matter of issuance of permits for sale both within the state and outside the state. In other words if a miller/dealer supplied 10 tonnes of rice to the A.P. state civil supplies corporation or sells the said quantity within the state as the case may be he should be given permit for export of 10 tonnes of rice. Indeed the position today apppears to be that a fair proportion of the stock proposed to be procured by the state Government from the levyfree quota has already been procured. In the circumstances. The direction given herein shall operate only prospectively the proportion of 1:1 as between the sale within the state and sale outside the state shall be implemented with respect to the supplies made hereinafter and once the internal quota as stated in its memo dated 25-4-1983 is satisfied, export permits shall be issued freely.

23. Another major complaint appears to be about the price at which the held over stock of Kharif season and the 2.5 lakhs tonnes of Rabi season are directed to be sold to the A.P. state civil cupplies corporation as also the compulsion to sell to the A. P. State civil supplies corporation the complaint is that this price has not been fixed under any statutory order issued under the A.P. Paddy procurement (prices) order 1980 or any other order in that behalf. It is also denied that there is any agreement between the millers/dealers and the state Government as recited in the Government memo dated 25-4-1983, or Memo dated 25-5-1983 for that matter. Particularly, so far as the dealers are concerned it is contended, even the aforesaid memos do not recite that there is any such agreement between them and the state Government with respect to the price. It is also submitted that the direction to sell within the state does not mean and cannot empower the state Government to compel them to sell the rice to the A.P. state civil supplies corporation the further submission is that even if the Government does have the power to direct the millers/dealers to sell a particular quantity of rice within the state or to the A.P. State civil cupplies corporation they are entitled to be paid the market rate.

24. Now so far as the argument relating to compulsion being exercised upon the millers/dealers to sell half the levy-free rice to the A.P. State civil supplies corporation is concerned I am unable to see any such compulsion the only Government Memo that refers to purchases by the A.P. state civil supplies corporation is the one dated 25-5-1983 and this Memo puts it on the ground of an agreement by millers/ dealers. Obviously sufficinet number of purchasers within the state are not coming forward for purchasing the entire quota meant for internal consumption: this may be for various reasons which cannot be gone into herein. It was therefore agreed that the A.P. state Civil supplies corporation shall purchase those stocks at a particular price, which both the Government and the millers/dealers agreed was a fair price. This is really a matter of agreemetn and not a case of compulsion it is always open to the petitioners if they do not a case of compulsion. It is always open to the petitioners if they do not want to sell the stocks meant for internal consumption to the A.P. State civil supplies corporation to sell the same anywhere within the state and at such price as they can procure the fact remains that the levyfree rice meant for internal consumption has to be sold within the state only whether to the corporation or to others. The prices mentioned in the Government memo dated 25-5-1983 are only the prices at which the Government has directed the corporation to purchase: because the corporation cannot negotiate the price with each individual or each day As I said it is really a matter of agreement and not a matter of any statutory obligation or compulsion.

25. Now coming to the rabi season, the Government has agreed to permit the millers/dealers to sell rice in the proportion of 1:1 anywhere in the country. In other words if they deliver 10 tonnes of levy rice. They will be entitled to the issuance of sale permits for 10 tonnes anywhere in the country, they like but this is subject to their making available 2.5 lakhs tonnes of rice out of the levy-free rice for internal consumption In other words for the Rabi season the proportion of 50: 25: 25 applicable for Kharif season is not being followed it si 50:50 the latter 50 being subject to the supply of 2.5 lakhs tonnes for consumption within the state. Though the proportion is different essentially the position in law is the same. Instead of saying that they must supply half the levy-free rice fro sale within the state the state is now satisfied if the millers/dealers sell only 2.5 lakhs tonnes in this season withint he state and the A.P. state civil supplies corporation is prepared to purchase at the price said to have been agreed between the Government and the millers/dealers. The argument of compulsory purchase, or compulsory purchase at a fixed price is. Therefore equally untenable with respect to the Rabi season as well

26. So far as the petitioners' contention that there was no agreement between the millers/dealers and the Government at which the millers/ dealers should supply the held-over stock of Kharif season and 2.5 lakh tonnes of rabi season to the A.P. state civil supplies corporation is concerned the learned Government pleader has placed before me the relevant record. Though there does not appear to be any formal agreement to the above effect. I find a number of letters given by the president and other office-bearers of the Rice Millers' Associations agreeing to supply rice at the aforesaid rates. The learned Government pleader has indeed stated that a large part of the stock agreed to be sold to the corporation, his already been sold to it . be that as it may, it is not necessary fo me to pursue this enquiry further inasmuch as I have already clarified hereinbefore that such of the petitioners who say they are not bound by the said agreement are intitled to sell their rice any where within the state at such price as they can get.

27. Another contention of Mr. P. Ramachandra Reddy is that Cl. 4 of the levy order must be deemed to have been rescinded by virtue of the central Government order contained in S. O 696 (E) dated sept 30, 1977. The said order was issued by the central Government under S. 3 of the Essential commodities Act by the said order, the Central Government rescinded with effect from 1-10-1977, '(1) the orders issued by it as specified in schedule -a (2) the orders issued by the state Government as specified in schedule-b; and (3) any other order issued by ht e state Government and in force in relation to matters concerning regulation of or restriction/prohibition on movement or price of paddy, Neither the Levy order Nor Cl. 4 is mentioned either in Schedule A, or schedule-b. The contention is that it stands rescinded and repealed by virtue of cl. 3 of the said order. The reasoning in support as Cl. 4 concerns the regulation of and restriction on movement of rice it stands rescinded by virtue of Cl. 3 I am unable to agree I have repeatedly pointed out hereinbefore that Cl. 4 deals primarily no with the movement of rice, but with the sale of rice. Clause 4 regulates the sale of rice by permits as contemplated By S. 3(2)(d) of the Essential commodities Act. Only sub-cl. (2) of Cl. 4 speaks of movement viz., transport but that too is not transport by itself, but transport of rice for sale from the premises of any ricemill. The real object or cl. 4 (2) is to regulate and restrict the transport of rice from the premises of any rice-mill for sale. It is therefore not possible to agree with Mr. Ramachandra Reddy that Cl. 4 of the Levy order stand s rescinded for the reasons suggested.

28. A contention is urged by Mr. P krishna Reddy that the fixing of target is not wattanted either by the Act or the Levy order. I have already dealt with the said argument and I need not repeat the same here.

29. Mr. V. Rajagopal Reddy raised another contention that the circulars do not recite the power under which they are issued. And further that they are also not published in the Gazette as required by the Act. It is true that the circulars issued by the Government do not expressly recite that they are issued under clause 4-C of the Levy order but at the same time it cannot be denied that so long as the said circulars are referable to and can be sustained with reference to power vesting in the state Government they should be sustained. The learned Government pleader has clearly sought to sustain them with reference to clause 4-c, and I see no reason not to accede to the said argument.

30. Now so far as the contention that the said circulars were not published in the Gazette is concerned there is no doubt about the desirability of such publication: but the question with which I am now concerned is whether such non-publication leads to the said circulars becoming un-enforceable. The expressions 'notified order' and 'order' are defined by clauses (c) and (cc) respectively in section 2 of the Act. The definitions read as follows:

'(c) 'notified order' means an order notified in the official Gazette;

(cc) order' includes a cirection issued thereunder'.

Now the circulars issued by the state Government are the directions issued under a notified order viz., under the Levy order and therefore there is no obligation to publich them in the official gazette. Moreover they are directions issued to the permit-issuing authorities. Of course, as I have stated above since the circulars are of general application the desirability of their publication in the gazette or by some other popular means is undeniable.

31. Mr. Vedula jagannadha rao raised yet another contention viz that so far as the kharif season is concerned, the ratio of 50:50 was prevaling until 12-2-1983 when the ratio of 50:25: 25 was introduced. He submits that in cases where the millers/dealers have already acquired eligibility for permits (for sale of levy-free rice) by virtue of their delivering the levy quota, they should be given permits for sale of the Levy-free rice outside the state inasmuch as the directions issued on 12-2-1983 do not and cannot have retrospective operation. It may firstly be seen that thought the restrictions were imposed on 12-2-1983 the petitioners have not chosen to question the same during the Kharif season, but have come forward only now i.e. in July 1983 raising the said contention. In the circumstances of the case. Where targets are fixed for each season. This delay certainly amounts to laches disentitling the petitioners to any relief. Secondly there is no question of any restrospective operation here inasmuch as the power under clause 4-C is the power to give directions which shall govern the permits issued on 12-2-1983 pertain to kharif season as such and are applicable to all the permits to be issued for that season. This is not a case of retrospective operation but one of a partial restriction being placed upon the sale of rice outside the state.

32. For above reasons the writ petitions fail and are accordingly. Dismissed subject to the following clarifications and directions that (I) those of the petitioners who do not wish to sell the levyfree rice at the prescribed price to the A.P. state civil supplies corporation, cannot be compelled to do so: but that they have to sell the same within the state: they are entitled to sell the same at such price as they can get: and (ii) that herafter the issuance of permits for sale of rice pertaining to Kharif season outside the state shall be in the ratio of 1:1 as between the levy-free rice sold within the state and the levy-free to be exported outside the state. It is directed herewith that if and when the millers/dealers apply for permission for export of rice in terms of this clarification, they shall be issued forthwith the state being satisfied (iii) so faras Rabi season is concerned, export permits will be issued as soon as the quota of 2.5 lakh tonnes prescribed by the state is satisfied and procured. There shall be no order as to costs. Advocates' fee: Rs. 150/- in each.

33. Order accordingly.


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