Unaccounted Deposit Of Rice Within The Fold Of Public Demand Of State Govt: SC Upholds District Collector’s Jurisdiction To Initiate Recovery Proceedings

The Court upheld the decision of the Division Bench of the Patna High Court, which held that the amounts sought to be recovered qualified as a ‘public demand’ under the Bihar and Orissa Public Demands Recovery Act, 1914 (the Act). The Bench upheld the validity of recovery proceedings initiated under the Act, against Pawapuri Rice Mills (Appellant). The Appellant had challenged recovery certificates issued for non-delivery of Custom Milled Rice (CMR) as per agreements executed for the procurement year 2011-12.

The Bench of Justice Hrishikesh Roy and Justice S.V.N. Bhatti observed, “We uphold the finding in the impugned judgement that the initiation of proceedings under the Act by the Civil Supplies Corporation, i.e., as the nodal agency of the state government. The unaccounted deposit of rice at the depots of FCI certainly comes within the fold of public demand of the state government under section 3(6) of the Act. Therefore, the proceedings under the Act are maintainable before the certificate officer. Further, we hold that the jurisdictional fact on the initiation of recovery proceedings under the Act is available and legal.”

Senior Advocates Amit Sibal, Rudreshwar Singh and Navaniti Prasad Singh represented the Appellant, while AOR Manish Kumar appeared for the Respondents.

The Appellant was engaged in milling paddy procured by the Bihar State Food and Civil Supplies Corporation (Respondent) under the State’s procurement policy for CMR. Under the scheme, millers were required to deliver 67% of raw rice or 68% of parboiled rice from every 100 quintals of paddy received.

The State alleged that the Appellant failed to deliver the agreed quantities of CMR to designated depots of the Food Corporation of India (FCI). Consequently, recovery certificates were issued, demanding amounts corresponding to the undelivered rice.

The Appellant contested the recovery proceedings, submitting that the amounts could not be classified as public demands under Section 3(6) of the Act, read with Clause 8-A of Schedule I, and that the Civil Supplies Corporation did not have the jurisdiction to invoke recovery proceedings under the Act.

The Supreme Court observed that the amounts sought to be recovered constituted a public demand under the Act, as the Civil Supplies Corporation acted as the nodal agency for the State Government, and the undelivered CMR directly affected public distribution under the Public Distribution System (PDS).

“The argument that the absence of a specific clause in the agreement authorising recovery under the Act, thus negating the jurisdiction of the certificate officer, is untenable. The Act itself provides a comprehensive framework for the recovery of public demands. The nature of the transaction, the public interest involved, and the role of the Civil Supplies Corporation as the State’s nodal agency allows for the initiation of recovery proceedings before the Certificate Officer,” the Bench remarked.

Consequently, the Court held, “The impugned judgement correctly determined that the recovery proceedings initiated by the Civil Supplies Corporation were valid and justified. The court has appreciated the facts of the case and applied the law correctly. The nature of the transaction between the State Government and the Rice Millers, involving the procurement, milling, and distribution of public grain, clearly falls within the ambit of “public demand” as defined in the Act. The certificate officer’s jurisdiction to initiate recovery proceedings is thus established.”

Accordingly, the Supreme Court dismissed the Appeal.

Cause Title: Pawapuri Rice Mills v. The Bihar State Food And Civil Supplies Corporation Ltd. & Ors. (Neutral Citation: 2024 INSC 999)

Appearance:

Appellant: Senior Advocates Amit Sibal, Rudreshwar Singh and Navaniti Prasad Singh; Advocates Manish Kumar, Anshuman Tiwari, Vinod Kumar, Shashi Ranjan, Pawan Kumar Sharma, Priya Rastogi, Shweta Kumari, Manoj Kumar, Vikas Chopra, Pankaj Prakash, Sumeet Singh, Shatakshi Sahay, Shivam Singh, Kumar Avinahs, Deepali Singh, Alka Singh, Kumar Vikram, Tanishka, Madhavi Agrawal, Vijayraj Singh Chouhan, Divyanshu Agrawal, Jairaj Singh and Madhur Mahajan; AOR Harish Pandey, Shyamal Kumar, Dharmendra Kumar Sinha, Smarhar Singh, Gopal Jha, Kaushik Poddar and Vaibhav Niti

Respondents: AOR Manish Kumar, Abhay Kumar and Gopal Singh; Advocates Divyansh Mishra, Shagun Ruhil, Tirupati Gaurav Shahi, Saurabh Mishra, Kusum Pandey and Karan Chopra

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