AI Drafter 
TaxTMI 
TaxTMI 
2024 (12) TMI 1016
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....023 WITH CIVIL APPEAL NO. 1906 OF 2023 WITH CIVIL APPEAL NO. 1907 OF 2023 HRISHIKESH ROY And S. V. N. BHATTI , JJ. JUDGEMENT S. V. N. BHATTI , J. 1. Common issues of fact and law arise in the instant batch of Appeals under the Bihar and Orissa Public Demands Recovery Act, 1914 (for short, 'the Act') and the Bihar and Orissa Public Demands Recovery Rules (for short, 'the Rules'), hence, these Appeals are disposed of by this Judgment. I. BACKGROUND 2. The appellants in Civil Appeal No. 1890 of 2023 and Civil Appeal No. 1889 of 2023 are rice millers in the State of Bihar. The first respondent in the Civil Appeals is the State of Bihar, and the fourth respondent is the Bihar State Food and Civil Supplies Corporation. For convenience, the appellants are referred to as 'Rice Millers' and the contesting respondents as the 'State' and 'Civil Supplies Corporation,' respectively. The subject matter of the Appeals relates to the procurement of Custom Milled Rice (for short, 'CMR') for the procurement year 2011-12 in the State of Bihar. The subject procurement policy departs from the previous policy of collecting levy rice from the Rice Millers. As is known from practice and ....
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....ion to supply CMR, as directed, to the designated depots/warehouses of the Food Corporation of India (for short, 'FCI'). 3.1. The procurement period is from 15.11.2011 to 30.04.2012. A dispute on the discharge of obligations by the Rice Millers had arisen with the Civil Supplies Corporation. As per the contractual obligations, the Rice Millers asserted that they had milled the rice and were ready to supply CMR to the FCI. Because of a few issues with the FCI, the CMR agreed to be delivered by the Rice Millers was neither accepted nor taken forward. The contesting parties have their own views on the default of performance of obligations. We need not refer to either side's case on this behalf to dispose of the appeals. This dispute over the Rice Millers' non-supply of CMR led to the initiation of recovery proceedings by the Civil Supplies Corporation under the Act and the Rules before the Certificate Officer. The District Collector/District Certificate Officer issued Recovery Certificates to the Civil Supplies Corporation, and the details are noted as follows : Sl No. Civil Appeal No. Petitioner Amount 1. 1889/2023 PAWAPURI RICE MILLS Rs.10,15,94,96....
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....eedful for lifting the CMR to the allotted warehouse/depot of the FCI. It is averred by the Rice Miller that a follow-up letter was sent to the District Manager of the Civil Supplies Corporation to discharge the obligations under the agreement fastened on the Civil Supplies Corporation. On the respective views held by the contesting parties, a few letters have been exchanged; however, reference to the correspondence is unnecessary for the purpose of this Judgment. Hence, the correspondence is not adverted to. On 10.05.2013, the District Manager-Kaimur sent a letter in Form II to the District Certificate Officer-Kaimur requesting initiation of recovery proceedings under the Act. On 11.05.2013, the District Magistrate-Kaimur issued a Recovery Certificate in Form I (Certificate of Public Demand) for a sum of Rupees four crore sixty-one lakh forty-nine thousand one hundred and fiftytwo (Rs. 4,61,49,152/-) in favour of Civil Supplies Corporation. On 13.05.2013, Form 3 (Certificate of Notice) under section 7 of the Act in Case No. 36(Y)/2012-13 was communicated to Sone Valley Rice Mill on the initiation of recovery proceedings under the Act. 6. C.W.J. No. 13746 of 2013 was filed by So....
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....on and illegal; (ii) the demand is not a public demand within the scope of section 3(6) of the Act, read with Clause 8-A of the Schedule; (iii) that the relationship between the miller and the Civil Supplies Corporation stems from an agreement entered between the parties concerning the delivery of advanced rice and consequent lifting of paddy; (iv) deliver at the authorised warehouse/depot; (v) payment of milling charges is an issue; (vi) clauses 11 and 12 of the agreement provide for forfeiture of the security deposit made by the Rice Miller for breach of a condition; (vii) the agreement does not indicate that the paddy supplied by the Civil Supplies Corporation is the property of the State and that paddy is made available to the Rice Miller for and on behalf of the State; (viii) the agreement does not enable the Civil Supplies Corporation to take recourse to the Act to realise the alleged demand as public demand; (ix) the Civil Supplies Corporation is not a subsidiary, and the Civil Supplies Corporation can sue and be sued independently; (x) the Civil Supplies Corporation, though a Government Company under section 617 of the Companies Act, 1956, the said status ipse dixit does no....
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....dvocate-on-Record for the Civil Supplies Corporation. 11. The Senior Counsel would contend that the recovery initiation proceedings under the Act for the alleged sums due from the Rice Millers as public demand, is ex-facie illegal and without jurisdiction. The Act is applicable upon satisfying a sine qua non, viz., the demand must be a public demand under section 3(6) read with Schedule I to the Act. Clauses 8 and 15 of Schedule I to the Act are inapplicable. A plain reading or interpretation of clause 8-A would demonstrate that the subject recovery is not covered by the plain meaning of these provisions. The three expressions in clause 8-A are not attracted to the Civil Supplies Corporation because it is neither the Government nor a Department/Official of the Government. Even if the Civil Supplies Corporation acts as an agent of the Government, the dues of the Corporation do not become the dues of the Government and cannot fall within the definition of 'public demand'. The paddy is not purchased from the amount made available by the State Government but from the amount made available by the FCI. 11.1. Alternatively, it is argued that assuming the Government has advanced mone....
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....ddy to the Rice Millers for CMR. The Rice Millers are required to deliver rice as per the specification at the designated depots of the FCI. The Civil Supplies Corporation is a nodal agency, and being the agent of the State, it is entitled to recover the cost of unsupplied rice from the Rice Millers through summary recovery under the Act. The characteristic of 'public demand' is decided from the totality of circumstances in the relationship between the Civil Supplies Corporation and the Rice Millers. The definition of section 3(6), read with clause 8-A of Schedule I to the Act, is attracted to the case on hand. According to him, the case on hand does not concern the scope of these provisions. The real consideration is the effect of the totality of circumstances governing, as noted by both parties, to decide the jurisdictional facts and apply the plain meaning of clause 8-A of Schedule I to the Act. The LPAs were allowed by relying on Ram Chandra Singh (supra). The Full Bench of the High Court of Patna, in the said decision, has considered the scope, meaning, and extent of the definition of public demand. Replying to the contention of violation of procedure stipulated by the Act and....
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.... Any outstanding loans and advances are payable to the state government or to a department or official of the state government by anybody whatsoever. Clause 15 - Any money payable to - (i) State Bank of India constituted under the State Bank of India Act, 1955 (No.23 of 1955); or (ii) A bank specified in (ii) of the first schedule to the banking companies (Acquisition and Transfer or Undertaking) Act, 1970 (Act V of 1970); or (iii) a company or a statutory body, including a registered society carrying on financial transactions, owned by or in which Government has a majority of shares or which is managed by an authority appointed under any law for the time being in force; or (iv) the Bihar State Electricity Board. in respect of which the person liable to pay the same has agreed, by a written instrument that it shall be recoverable as public demand." 16. Section 3(6), interpreted by the golden rule, presents the following limbs: i. Public Demand means any arrear mentioned or referred to in Schedule I. ii. Public Demand means money mentioned or referred to in Schedule I. iii. Public Demand inclu....
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.... not limit the term to the original concept of recovery of land revenue, tax, and fee from the defaulters. A few claims otherwise recoverable through the normal process of law are included and defined as public demand under the Act. The words that have a bearing in clause 8-A are "any loan," "advance," "state," "department," or the "official." The common object of recovery is from anybody whatsoever. The Rice Millers do not contend that clause 8-A is inapplicable if the subject Public Demand is payable to the State Government or Recoverable by the State Government. In other words, the argument proceeds on the premise that, with regard to the circumstances of the case, the Civil Supplies Corporation does not fit into the category of the "state", "department", or "officer of the state". In our consideration, as part of the elimination process, it can be noted that the Rice Millers do not contend that the expression 'anybody whatsoever' does not take within its fold the Rice Millers. However, it is argued that the claimant and the claim before the certificate officer must come within one or the other expressions, namely loan/advance, State, department, or officer of the State. At the ....
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.... demands which the legislature chooses to incorporate in Sch. I become by virtue of the definition under S. 3(6) a public demand of which recovery can be made under the Act. The scheme of the definition under S. 3(6) of the Act and the frame of the articles of the schedule complementary thereto thus become a key to the interpretation of these provisions." 22. The definition of 'public demand' under section 3(6) is broad and inclusive. It incorporates any arrears mentioned in Schedule I and allows for recovery of such arrears under the Act. Clause 8-A further clarifies that any loan or advance payable to the State Government, its departments, or officials constitutes a public demand. The provision uses broad language, such as "any loan" and "anybody whatsoever," indicating the legislative intent to create an all-encompassing framework for recovery. Clause 15 additionally specifies that debts owed to certain banks and statutory bodies also qualify as public demands, provided that the liability is acknowledged in writing. 23. As held by the Full Bench of the Patna High Court in Ram Chandra Singh (supra), the term 'public demand' is of wide amplitude and encompasses all arrears o....
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....nsidered the memorandum or the agreement between the parties and the existence of a few clauses enabling recovery of outstanding dues through the regular civil court as the determining factors on jurisdictional issues. It is held that the absence of a clause in the agreement authorising recovery through a proceeding under the Act denudes the certificate officer's jurisdiction. The Division Bench, through the impugned Judgement, has taken note of the nature of the transaction, the definition of 'public demand', and whether the parties, by their acts, can confer jurisdiction on an authority or a court. In fine, the jurisdictional facts in the present case can be summed up as: 28.1. The existence of an agreement between the Rice Millers and the Civil Supplies Corporation for delivery of CMR. 28.2. The failure of the Rice Millers to deliver the agreed quantity of CMR. 28.3. The classification of the undelivered CMR's monetary value as a 'public demand' under the Act. 28.4. The undelivered quantity of CMR consists of the recoverable due from the Rice Millers as a public demand. 29. Upon examination of admitted circumstances and the alleged default in delivery of CMR, ....
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....letter dated 11.11.2011 of the Government of India, a letter dated 09.01.2012 of State Food and Civil Supplies Corporation, and a letter dated 11.01.2012 of the food and consumer department. Consequently, all the jurisdictional facts to accept the role of Civil Supplies Corporation as the nodal agent of the state government have been satisfactorily established in this case. The agreement between the parties explicitly recognises the Civil Supplies Corporation's right to recover dues, and the nondelivery of CMR is a documented fact. These jurisdictional facts thus exist, thereby validating the certificate proceedings. In the present case, the claim for the cost of undelivered CMR aligns with this definition. Therefore, the claim qualifies as a 'public demand' recoverable under the Act. 32. The learned Single Judge erred in narrowly interpreting the concept of 'public demand.' The court must consider the totality of circumstances to determine if a particular demand falls within the ambit of the Act. In this case, the State Government enabled the Civil Supplies Corporation to enter into an agreement with the Rice Millers for the procurement, milling, and distribution of paddy. The ....
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....of proceedings by the certificate officers are vitiated by procedural irregularities. The arguments on this behalf are already referred to in the preceding paragraphs. To capture the arguments in a nutshell, it is noted that the initiation is not in accordance with the procedure stipulated under the Act, the procedure prescribed by the Act is not followed, and the principles of natural justice are violated. 38. The Act is a comprehensive and codified enactment that provides adequate safeguards for parties facing recovery actions. Parts II and IV of the Act outline the procedures for filing, serving, and contesting recovery certificates, as well as provisions for appeal, revision, and review. Procedural Safeguards: Part II of the Act outlines the procedure for filing, serving, and adjudicating certificates. Sections 43 and 44 provide remedies to challenge certificates in civil courts on specific grounds. The section provides for a time limit of 6 months for availing the remedy to move to the Civil Court. Sections 60, 62, and 63 deal with appeal, revision, and review of the orders made under the Act. 39. The Division Bench rightly emphasised the availability of these statutory ....