Retrospective price reduction cannot defeat accrued procurement payments or justify recovery of sums already paid.

A compulsory rice procurement arrangement could not be reopened by the State to recover sums already paid on the basis of an operative memorandum and procurement order acted upon by the administration. The statutory scheme under the Essential Commodities Act required payment for compulsory sales, and the State could not treat the completed payments as a mistake of law after taking the benefit of procurement. A later notification purporting to amend the procurement price from an earlier date was retrospective in substance and could not divest an accrued right to payment or justify recovery in the absence of statutory authority for retrospective subordinate legislation. The recoveries were therefore unsustainable.

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Issues: (i) Whether the State could recover amounts already paid for rice procured under the operative procurement arrangement by disputing the legal effect of the unnotified memorandum and the continuation of the earlier price. (ii) Whether the later notification amending the procurement price with effect from an earlier date could validly operate retrospectively so as to reduce the price already accrued and paid.

Issue (i): Whether the State could recover amounts already paid for rice procured under the operative procurement arrangement by disputing the legal effect of the unnotified memorandum and the continuation of the earlier price.

Analysis: Rice was compulsorily procured and supplied on the strength of the memorandum and the procurement order acted upon by the administration. The procurement machinery, the District Collectors, and the purchasing agency all proceeded on that basis, and payment was actually made at the notified rate. In those circumstances, it was not open to the State to disown the memorandum and characterise the payments as a mistake of law after deriving the benefit of compulsory procurement. Even apart from the disputed memorandum, the statutory scheme under Section 3 of the Essential Commodities Act required payment for compulsory sales, and where no agreed or controlled price applied, payment had to be made on the basis indicated by the statute.

Conclusion: The State could not lawfully recover the amounts already paid on the premise that the memorandum was ineffective.

Issue (ii): Whether the later notification amending the procurement price with effect from an earlier date could validly operate retrospectively so as to reduce the price already accrued and paid.

Analysis: A right to receive the procurement price accrued when the rice was sold under the procurement arrangement, and payment had in fact been received. The later notification attempted to cut down that accrued entitlement by giving the amendment effect from an anterior date. Such an amendment, operating to divest money already lawfully obtained and to impose a new detriment on completed transactions, was retrospective in substance and could not validly take away vested rights in the absence of statutory authority for retrospective subordinate legislation.

Conclusion: The retrospective reduction in procurement price was invalid and could not be used to justify recovery from the appellants.

Final Conclusion: The recoveries sought from the appellants were unsustainable, and the appeals succeeded with the impugned judgment set aside.

Ratio Decidendi: In the absence of statutory authority, subordinate legislation cannot retrospectively divest an accrued right to payment or justify recovery of sums already paid under an operative procurement arrangement.

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