Read Order: M/s Tyagi Rice Mills v. Union of India and Others 

Monika Rahar

Chandigarh, May 09, 2022: While dealing with a case where, on account of breakdown of the sortex machinery, the petitioner-mill was granted permission by Haryana State Warehousing Corporation (HSWC) to get the 522 MT of rice sortexed from another mill, but the FCI without due appreciation of the matter, was insisting upon not accepting custom milled rice (CMR) as it was not found on the premises on the day of physical verification, the Punjab and Haryana High Court calls the action of the FCI to be “wholly unjustified”. 

The petitioner, a rice miller, approached the Bench of Justice Jaishree Thakur seeking a writ in the nature of mandamus directing the respondents to accept the CMR after physical verification.

The petitioner-firm (engaged in the business of shelling rice) entered into an agreement with HSWC and was allotted 19004 quintals of paddy and in turn, petitioner was to deliver 12,732.68 quintals of CMR i.e. 67% of the paddy and deliver the same to the Central Pool House of Food Corporation of India.

The entire delivery was to be done by April 30, 2021. In terms of the agreement, the petitioner delivered 7,075.18 quintals of CMR and was to deliver the remaining 5,657.5 quintals into the Central Pool. However, the petitioner firm witnessed a technical failure in its Sortex machinery at its premises. The petitioner immediately approached the District Manager, HSWC, Palwal to get permission for getting the rice sortexed from another mill. The permission was granted. 

In response to the permission received, the petitioner firm duly sent 522 MT of rice for sortex purpose to M/s Bajrang Bali Rice Mill, Hodal, Palwal on various dates from April 26, 2021 to May 03, 2021. The petitioner duly paid to M/s Bajrang Bali Rice Mill an amount of Rs. 5 lakhs for transporting the rice. 

During the physical verification of the paddy/mill rice lying at the petitioner’s premises, conducted by the FCI, it was found that a stock of 9938.25 quintals of paddy was missing. The petitioner brought it to the notice of the FCI that permission had been sought to take the rice out of the premises for sortex purposes. The matter was brought to the notice of District Manager, HSWC, Palwal. In response, the Divisional Manager, FCI, Faridabad was asked to re-verify the stock of the petitioner firm and accept the remaining stock in question. 

The HSWC itself conducted physical verification of stock and found that 5657.5 quintals of CMR was ready for delivery. Based on this verification, District Manager, HSWC, Palwal further wrote,  requesting Divisional Manager, FCI, Faridabad to accept the remaining CMR in question. As no action was taken by the FCI, another request was made. As FCI refused to accept the balance CMR in question from the petitioner firm, the instant writ petition was filed. 

The case of the petitioner’s counsel was that the petitioner was not a defaulter in the previous years when the agreements were entered into with the HSWC and other procurement agencies to deliver CMR to the Central Pool i.e. with FCI. The petitioner firm used to deliver CMR on time and as per specifications. 

The counsel argued that the rice was sent for the purpose of sortex, after taking due permission and, therefore, it could not be said that there was a shortfall of the said paddy/rice lying in the premises of the petitioner firm on the date when FCI and its officials came for Physical Verification. It was submitted that even HSWC was addressing several letters to FCI to accept the CMR which was lying ready and the refusal to take delivery of CMR was causing huge loss to the petitioner.

The question that came up for consideration of the Court was whether FCI was being unreasonable in not accepting the CMR as stated, only on account of the fact that when physical verification was done of stock on the premises of petitioner firm, there was a shortage of 9938.25 quintals of paddy, whereas the shifting of rice to another Mill for sortex purpose was brought to the knowledge of FCI?

On this question, the Court made reference to the case of M/s Shiv Shankar Rice Mills vs. Union of India and others wherein the High Court in a similarly situated case held that once the HSWC was seized of the situation of breakdown of machinery and permitted the petitioner miller to get the paddy milled from a nearby concern, as such, action of the FCI not to accept the CMR was wholly unjustified. 

In the instant case, the Court noticed that the situation was similar, as on account of breakdown of the sortex machinery, the petitioner-mill sought permission from HSWC to get the 522 MT of rice sortexed from another mill, which permission was granted whereas, the FCI without due appreciation of the matter, was insisting upon not accepting CMR as it was not found on the premises on the day of physical verification. As such the action of the FCI in not accepting 522 MT of CMR from the petitioner-mill was found by the Court to be wholly unjustified. 

In view of the above situation, the instant petition was allowed. The FCI was directed to conduct a fresh physical verification of the premises of the petitioner within a period of one week and if 522 MT of CMR was found as noted by HSWC in the mill premises and it was as per the specification, the delivery of the same be accepted with consequential relief. 

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