TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 1016
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.... 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 scheme, levy rice is a system requiring mi....
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....nated 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.10,15,94,961.94/- 2. 1892/2023 PAWAN KUMAR Rs.41,99,218/- ....
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....il 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 Sone Valley Rice Mills in the High Court of Patna, praying to set aside the Certificate Proceedings and Notice dated 13.05.2013. It is a matter of record that, on 29.07.2013, ....
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....iller 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 not confer jurisdiction under the Act for realizing the due as a public demand. 9. Aggrieved by the judgement dated 22.07.2014 in Writ Petition No. 13746/2013, the Civil Supplies C....
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....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 money to Civil Supplies Corporation for the purchase of paddy, the paddy does not automatically become the property of the Government. The default in delivery of CMR is a breach of the agreement....
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.... 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 the Rules, it is argued that the procedure has been complied with, the objections are considered, and an order is passed by the primary authority. The decision under the Act is subject to an ap....
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....er 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 includes any interest which may by law be chargeable thereon up to the date on which a certificate is signed under part II. 17. Perusal of the definition on the indicated lines, nothing is determinative on who can and what amount can be recovered under the Act. The claims, types of causes, and the per....
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....e 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 first brush, the contention canvased by the Rice Millers may sound an issue on the interpretation of clause 8-A. But on close scrutiny of the provisions, it transpires that the crux of the matter would be whether the amount being recovered through the summary process under the Act, by the Civil Supplies Corporation is a Public Demand or not. In o....
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.... 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 or dues explicitly mentioned or implied in Schedule I. The deliberate legislative design of section 3(6) and Schedule I reinforces the inclusive scope of the term. 24. The Full Bench, in reaching such consideration, inter alia considered: 24.1. Legislative intent - to create a special procedure for the recovery of public demands, including those that may be....
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....on. 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, we are unable to subscribe to the view taken by the Learned Single Judge on the existence of jurisdictional facts. A cause of action is stated to be a bundle of facts set out in the plaint. Similarly, jurisdictional facts are determined by the totality of circumstances in a given case. It is as simple as not omitting from consideration what is obvious. Likewise, a relevant circumstan....
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.... 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 objection of Rice Millers is purely one of convenience and contravenes the conduct and the admitted contemporaneous circumstances. The noncompliance by the Rice Millers with the terms of the agreement directly impacted the PDS, a matter of significant public interest. 33. The Division Bench correctly held that the nature of the transaction, involving the procurement of public grain and it....
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....iolated. 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 remedies to the aggrieved persons. The Rice Millers, by invoking writ jurisdiction, have failed to exhaust statutory remedies at the first instance. 40. Mr. Manish Kumar has placed before us the photocopies of the proceedings of the certificate officer, and argued that these proceedings have been initiated in due compliance with the provisions of the Act and have been concluded by duly considering the ....