Unchallenged price-fixing arrangement bars collateral challenge to recovery made in accordance with the agreed supply terms.

A party supplying rectified spirit under an unchallenged Government Order fixing the price could not later resist recovery of the State's stipulated share when the demand was made in accordance with that arrangement. The challenge was confined to the recovery notice, while the supplier had accepted the rate structure and supplied the goods with full knowledge that Rs. 1 per litre was payable to the State. The absence of transportation expenses did not alter the agreed price mechanism. The Supreme Court therefore upheld the demand and rejected the collateral attack on the underlying price-fixing arrangement.

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Issues: Whether the State could recover Rs. 1 per litre from the appellant towards the fixed price of rectified spirit when the appellant had not challenged the Government Order fixing the price and had supplied the spirit with full knowledge of that arrangement.

Analysis: The price structure for rectified spirit had been fixed by the Government Order, and the appellant supplied rectified spirit on the footing that Rs. 6 per litre would be recovered, out of which Rs. 1 per litre was payable to the State. The demand raised by the Excise authorities was based on that pre-existing arrangement. The challenge was directed only against the demand, not against the underlying Government Order. In these circumstances, the appellant could not accept the benefit of supply under the fixed price arrangement and later dispute the State's entitlement to the amount stipulated therein. The argument based on the absence of transportation expenses did not displace the fact that the appellant had accepted the rate structure with full knowledge.

Conclusion: The demand for Rs. 1 per litre was valid and the challenge to the recovery failed.

Ratio Decidendi: A party that supplies goods with full knowledge of an unchallenged price-fixing arrangement cannot collaterally attack a demand made in accordance with that arrangement.

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