C.W.P. No.5515 of 2010 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No.5515 of 2010 Date of Decision.22.09.2011 Haryana Rice Millers & Dealers Association, 1364/6, Old Post Office Road, Old Anaj Mandi, Ambala City (Haryana) .....Petitioner Versus The State of Haryana through its Financial Commissioner and Principal Secretary to Government Haryana Food & Supplies, Department, Chandigarh and others .....Respondents Present: Mr. S.K. Yadav, Advocate for the petitioner. Ms. Kirti Singh, DAG, Haryana for the State. Mr. Narinder Singh, Advocate for respondent No.3. Mr. Pankaj Gupta, Advocate for respondent No.5. Mr. Jitender Sharma, Advocate for respondent No.6. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? No 2. To be referred to the Reporters or not ? Yes 3. Whether the judgment should be reported in the Digest? Yes -.- K. KANNAN J. 1. The writ petition has been filed through the Association of Rice Millers and dealers within the State of Haryana as the name of the organization itself reveals. They seek to challenge a particular method of levy that is made by the Government for transport of custom milled rice from the places where mandis are situate or from the store yards of the procurement agencies to the respective mills. Contending that the respondents have also secured post-dated cheques for transportation to C.W.P. No.5515 of 2010 -2- defray the transport charges, it is complained that such collection is without any statutory or contractual basis and they shall not be enforced. Since the levies have sought to be under the colour of authority by the proceedings of the Financial Commissioner and Principal Secretary to the Government of Haryana dated 05.08.2009, the petition also contains a challenge to the notice as being arbitrary, without any legal statutory authority and violative of Article 19(1) (g) of the Constitution. The grievance could be better understood with reference to the facts which are brought through the averments in the petition. 2. The paddy delivered by various farmers on the basis of compulsory levies made, is custom milled at the mills with which the Government enters into contract through Department of Food and Supplies. The procurement agencies Hafed and Confed have them stored either at mandi or their own warehouses and they are transported to the various millers for having them milled as rice and delivered to the Food Corporation for distribution to the Central pool all across India. Before commencing the custom milling, an agreement is executed on a pro forma for each year by State agency and the rice millers are allocated a particular quantity. The rice millers are paid the milling charges depending on the quantity milled, provided that they conform to the quality as regards colour, purity etc. The issue for adjudication in this case is not with reference to any of the essential details relating to the payment of milling charges or issues of quality. On the other hand, the grievance is that after the completion of the contracts for the various Kharif Marketing Season (KMS) for years 2004- 2005 to 2007-2008, State Agencies were pressurizing the rice millers to C.W.P. No.5515 of 2010 -3- pay the expenses incurred by the State to transport paddy during those periods from the grain markets/mandis/purchase centres to their own stocking points through independent transport contractors since the Government of India was itself not ready to defray the expenses. When such demands were made, the rice millers had a joint case to put up against the Central Government and to the State, contending that their obligations for transportation of paddy commenced only after the paddy was released to them for milling from the State agency stocking point and therefore, the State Agencies were responsible for transportation of paddy from Mandi/purchaser centre to their stocking points. Any expenses incurred by the State for transportation from the Mandis to their stocking centres ought to be their own business and the millers cannot be compelled to pay expenses for the same. However, when the Government sought to recover the expenses for transportation from the Mandi/purchase centres to their stocking points and made deductions against the payments due to the millers from the Kharif Season 2009- 2010 and also secured post-dated cheques, the millers were up in arms disputing the right of the State to make such deductions or recoveries through the cheques obtained by them by force. 3. The petitioner would point out to the fact that for all KMS 2004-05 to 2007-08, paddy had got released to the rice millers from the agencies’ stocking points for milling them into rice and the expenses for transportation of paddy from Mandi/purchase centres to storage points were also borne by the procurement agencies themselves. It is only at the time when the amounts spent by the Corporation were sought to be recovered from the milling agencies, the problem came to surface. Since the entire levy is sought to be made on the basis of C.W.P. No.5515 of 2010 -4- communication said to be issued on 05.08.2009 from the Financial Commissioner-cum-Principal Secretary, it has become immediately necessary to refer to the basis and the justification sought to be made through the said communication. 4. The issue is whether the agreement that the State Agencies were entering into with the respective millers contained any particular clause relating to bearing the burden of transportation expenses and if so, from which place to which place. In the first set of instructions that had been issued and which are brought before this Court by the Director, Food and Supplies Department to all the District Food and Supplies Controllers on 13.09.2004 for Kharif Season, it is seen that it provided that rice millers shall not be entitled to any transportation charges on the lifting of paddy and delivery of custom milled rice (CMR) within a radius of 8 kms but however, beyond 8 kms transportation charges will be reimbursed as per DC rates or FCI rates, whichever was less. This communication does not make any specific reference to the places from where stocks have to be lifted by the millers. Consequently, for any transportation that results to a miller from a distance of 8 kms or less, the expenses will have to be borne only by the millers themselves. 5. The guidelines for procurement for KMS 2004-05, which have been issued on 15.09.2005 does not, however, contain any reference to the transportation expenses at all. As regards the guidelines issued for KMS 2005-2006, there are again no specific provisions for the transportation charges except that it states that if the milled rice is not delivered as per the schedule, the procurement agency will itself shift the paddy stocks at the cost and risk of the miller concerned. For KMS C.W.P. No.5515 of 2010 -5- 2007, also there was no specific clause relating to transportation or how the charge shall be collected. 6. For KMS 2008, there is a specific direction that paddy procured by the agencies will be stored in the premises of the rice mills in joint custody and the transportation of paddy from Mandi/purchase centres will be done by the millers and not the Government agencies, keeping in mind the policy of the Government of India regarding the milling charges. Hence, the paddy will be delivered to the millers in the Mandi itself. Again for the Kharif Season 2009, it is specifically stated that transportation of paddy from Mandi/purchase centre will be done by the millers and not by the Government agencies. 7. The examination of the various directives issued by the Financial Commissioner to the various Division Commissioners and the Managing Directors of the respective State procurement agencies are relevant only to see whether the actions of the State Agencies in entering into contracts with particular clauses for recovering transportation charges have a basis through any powers for collection of transportation charges or not. We have examined that there is no uniform policy for all the years from 2004 to 2009. It shall only be seen as left to the particular contracts of whether collection of transportation charges from the millers would be possible or not. As far as the miller is concerned, the primary rights and obligations are set through the agreements entered into with the State at the time when allocations are made and with reference to the procurement agencies when stocks are entrusted to them for custom milling. Any directions or guidelines by the Government to procurement agencies themselves will not be material unless such directives are also incorporated in the C.W.P. No.5515 of 2010 -6- agreements. Any directives or guidelines that have no statutory force, shall only be taken as the yardstick to govern the action of party to whom such directives were given and not to persons who are strangers to such communication. Therefore, as far as the millers are concerned, the liability to pay the transportation charges would arise only if the contract stipulates collection of charges. 8. A pro forma produced before this Court for the year 2005 states that delivery of paddy to the miller shall be deemed to have been completed by the Government when the stocks or weight of the scale point i.e. first storage point and all operations thereafter including the lifting of the stocks from the first storage point will be done by the miller. Consequently, any expenses incurred by the State Agency from Mandi to the storage point shall not be levied on the miller but inasmuch as the agreement provides for delivery to be completed when the stocks were weighed at the storage point, it must be taken that if it is lifted from the storage point to the mill, the expenses shall not be borne only by the miller himself. Clause No.6 of the pro forma of agreement for the year 2005 states that if the paddy is delivered from a storage depot of the Government within 8 kms, it would be transported at his own cost but if the paddy is lifted by the miller from a storage point beyond 8 kms, the expenditure concerning such transportation and loading charges would be paid by the miller initially but it will be repayable by the Government as per the DC rates or FCI rates. It also states that if a miller lifts paddy from the Mandi/purchase centres of his own, all the expenditures including loading, transportation or unloading charges will be borne by him. If the pro forma produced before the Court is any guide then it means that the Government would be entitled to collect C.W.P. No.5515 of 2010 -7- the transportation charges from the miller only in cases of expenses incurred for transporting the stocks from the storage points to the mills, which fall within the range of 8 kms. For any distance in excess of 8 kms, the State itself will bear the expenses and cannot make the miller liable. 9. As regards the pro forma produced for the year 2006, the reimbursement that it contemplates through Clause No.9 is stated to be as per the Regulation of the Government's instructions in this regard depending upon whether the paddy was delivered from Mandi/purchase centres or from the 1st storage point. Since the agreement seeks to incorporate the Government of India instructions, the rights of party will govern only with reference to such instructions, which are brought through to the knowledge of miller, which are current and in force for the particular season. If the State agency cannot show any Government of India instructions in that regard for the particular season, the clause will have to be only construed as vague and unworkable and any attempt to recover transportation charges cannot be justified. The pro forma for year 2007 is also regulated by a similar clause that Government of India instruction would only prevail in that regard. The pro forma for the year 2008 also contains a similar provision. 2009 agreement contains a specific stipulation that transportation of paddy upto 8 kms from the Mandi/purchase centres will be done by the miller as per the definition of milling charges by the Government of India. It, therefore, means that all transportation charges irrespective of where the stocks are picked up, from the Mandi or the storage point, the millers will have to bear the transportation expenses so long as the distance is only 8 kms. Consequently, if the transportation has taken place from the mandi to C.W.P. No.5515 of 2010 -8- storage point and from storage point to the mill, the State will be entitled to collect the whole of transportation expenses and not merely confined to transportation expenses from the storage points to the respective mills. 10. There cannot be under the circumstances a general direction from this Court as to whether the Government is entitled to collect transportation expenses from the respective millers and deduct them from the milling charges. They have to be seen first with reference to the particular clause relating to the transportation expenses in the agreement. If the agreement itself stipulates a particular rate of levy and the distance from the mill to either the storage point or the Mandi the same shall be payable by the miller. If the agreement does not set out a specific clause relating to the recovery of transportation charges and would refer to the Government of India instructions, then before a levy could be justified by the State agency for recovery of transportation expenses, the Government of India instructions shall be shown as being current for its application to the particular Kharif Season. Since the millers have made the issue of lack of uniform policy, as we have examined now that there are no particular uniform policy adopted and the liability for transportation charges have varied from year to year, the Government seems to have spelt out a policy in the year 2008 when they have taken important decisions on notifying specific storage point and to incorporate the same in the respective individual agreements with the concerned millers. The collection of post-dated cheques for defraying the expenses of transportation shall be possible in case where such storage point is notified and incorporated in the agreement. Even in the communication given on 22.10.2008 C.W.P. No.5515 of 2010 -9- relating to the cost of transportation charges, the directive has been that the transportation charges of paddy upto 8 kms from mandi/purchase centres was still pending consideration and that the Corporation must protect itself by recovering the transportation charges by post-dated cheques. The subsequent communication dated 05.08.2009 also makes a provision, in the sense that the entire recovery of the outstanding cost of the transportation of paddy upto 8 kms, would be made by the concerned miller of his milling charges, if the Government of India did not clarify the issue. 11. I cannot find any justification for quashing the communication issued by the Financial Secretary to the Managing Directors. The issue of whether the millers could be compelled to pay the transportation charges and whether the recoveries are possible will have to be considered only in the light of particular contractual obligations relating to transportation charges on a case to case basis. To reiterate what is stated above, by way of summing up, (i) the liability of a miller to pay transportation charges and the entitlement of the State agency to make deductions or call upon millers to give post-dated cheques could be only anchored to specific clauses in the agreements entered into between the parties. If the clause does not provide for transportation charges, the question of recovering the same from the millers does not arise. (ii) if the agreements referred to the place of delivery to a miller and stipulates also the place from which the delivery could be stated to be made to the miller, that place will be taken to be the starting point from where C.W.P. No.5515 of 2010 -10- the miller could undertake the liability to transport to his own mill. Any expenses incurred for transportation from the place where the delivery is said to have been made to the place where it has to be taken by the miller for milling purpose shall be borne only by the miller. (iii) In all cases, where transportation charges is provided for to be collected in the manner given by Government of India regulations and such regulations are not forthcoming before the conclusion of that season, the clause relating to transportation charges itself will become inoperative, for there is no enforceable or definite clause that could bind the miller. (iv) If there are any disputes relating to understanding of terms of contract relating to transportation charges, if there is a clause in the agreement providing for an arbitration, it shall be the arbitral Tribunal that will determine the issue of whether the transportation charges could be collected or not. (v) It shall not be possible to give an omnibus direction that the respondents shall not collect transportation charges or that any communication relating to the guidelines for securing post-dated cheques should be enforced or not. If the cheques are sought to be encashed or enforced by the Corporation without there being a definite Government of India guideline as regards the same and when the contract refers to the Government of India guideline as governing the issue then it shall become possible for any affected C.W.P. No.5515 of 2010 -11- party to raise an arbitral dispute or plead want of consideration before the appropriate forum. 12. The prayer sought for in the writ petition that the amounts collected by the respondents shall be ordered to be refunded cannot be issued in this case in the absence of definite evidence of any specific miller complaining that he has been asked to pay the amount which had no justification in the agreement or without any definite evidence under the circumstances as to how the miller had given such post-dated cheques. The Government of India and the State agencies remind themselves that enforcement of contract shall be on specific clauses providing for rights and obligations and it cannot seek incorporation of Government of India guidelines where they exists none and where it expects that it might issue such guidelines in future. Contractual terms shall be definite and conclusive for the respective rights and obligations and they cannot be made to depend on future formulations, which may either come through or they may not at all. 13. With these clarifications and observations, the writ petition is disposed of. (K. KANNAN) JUDGE September 22, 2011 Pankaj*