CWP No.3654 of 2009 #1# IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.3654 of 2009 Date of Order: 18.8.2009 Nav Durga Rice Mills and others ...Petitioner Versus Union of India and others ....Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JASWANT SINGH Present: Mr. Anil Kashetarpal, Advocate and Ms. Naina Goel, Advocate for the petitioner(s). Ms. Sangeeta Dhanda, Advocate & Ms. Jaspal Kaur Gurna, Advocate for respondent No.1- Union of India. Mr. P.K. Jain, Addl.A.G, Punjab for respondent No.2- State of Punjab. Mr. Puneet Bali, Advocate for respondent No.3- Punjab Infrastructure Development Board. Mr. S.D. Sharma, Senior Advocate with Mr. Hari Pal Verma, Advocate for respondent No.4. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? M.M. KUMAR,J This order shall dispose of CWP Nos.3654, 2709, 4956, 5404, CWP No.3654 of 2009 #2# 5531, 9993 & 12178 of 2009. The petitioners are engaged in the business of paddy milling. They have approached this Court with the prayer for issuance of directions to the respondents to pay fee payable under the Punjab Infrastructure (Development and Regulation) Act, 2002 (for brevity “the Act”) by including the same in the costing sheet prepared for calculating the procurement price of the relevant years. A further prayer has also been made that the amount of fee already paid by the millers-petitioners to the Board be reimbursed to them. These cases present a peculiar situation. The paddy is purchased from the market either by the State agencies or by the millers like the petitioners. The State agencies hand over the paddy for milling to the millers like the petitioners, which in common parlance is known as ‘custom milling’. The expression 'custom milling' has been defined in the Punjab Rice Procurement (Levy) Order, 1983 (for brevity 'the Levy Order'). The aforesaid order has been issued by the State of Punjab in exercise of powers conferred by clauses (d), (f),(h),(i), and (j) of Section 3 of the Essential Commodities Act, 1955. Clause 2(b) of the Order defines 'Custom Milling' to mean milling of paddy, not belonging to the miller, into rice in his rice mill on payment of milling charges in cash or in kind. The procurement agencies like the Punjab State Cooperative Supply and Marketing Federation Ltd (for brevity 'the Markfed') and others forward paddy procured by them to the licensed millers for milling on payment of milling charges. They were subjected to payment of fee under the Act. Accordingly CWP No.9688 of 2002 was filed by the Punjab State Cooperative Supply and Marketing Federation seeking a direction that fee under the Act was liable to be paid by the FCI and not by the procurement CWP No.3654 of 2009 #3# agencies like Markfed. The whole dispute had arisen on account of non- inclusion of infrastructure development fee in the costing sheet, which resulted in exclusion of the element of infrastructure development fee under the Act, which has actually been paid by the procurement agencies like MARKFED. The costing sheet is prepared by the Department of Food & Public Distribution, Govt. of India, New Delhi-respondent No.1. The grievance made by the Markfed before this Court was that no column has been earmarked in the costing sheet representing the payment of infrastructure development fee payable under the Act. In the absence of such a column the fee is being charged from the procurement agencies like Markfed and others in pursuance to the judgments rendered by Hon'ble the Supreme Court in the cases of Oil and Natural Gas Commission v. CCE (2004) 6 SCC 437 and Mahanagar Telephone Nigam Ltd v. Chairman, Central Board, Direct Taxes (2004) 6 SCC 431. Accordingly this Court issued directions vide order dated 4.3.2004 to the Officers Committee of the Markfed and the respondents to meet and resolve the issue. In pursuance to the directions issued all the parties. The decision dated 25.3.2004 taken by the Officers' Committee in respect of custom milled rice has been set out in the reply filed by Union of India-respondent No.1, which reads as under: “(i)The FCI will release payments on account of the Infrastructural Development Fee to the State Agencies and also make payment of the same with effect from 1st April 2002. Necessary amendments in the costing sheets for inclusion of this element would be made immediately. (ii)The FCI would arrange for payment of Infrastructural Development Fee for the period 11th July 2002 to 31st March 2004 after following the necessary procedures. CWP No.3654 of 2009 #4# (iii)Payments of cess, if any, due under the PIDA Act will await the decision of the Hon’ble High Court with regard to the legality of the cess and its applicability to the FCI.” When the miller like the petitioners purchase paddy from the market and mill the same, it is known as ‘levy milling’. They are under an obligation to supply 75% of the rice to the State agencies by virtue of the provisions made by clause 3 of the Levy Order. According to clause 7(3) of the Levy Order, the miller is entitled to full payment of the 75% rice supplied to the Food Corporation of India, within a period of 24 hours of the delivery of rice. The provisions of clause 3 marks it obligatory on every licensed miller to sell to the government at the procurement price such percentage of rice as may be specified by the Government from time to time viz.a.viz each variety of rice conforming to the specifications owned/milled by him every day out of the stocks of paddy owned by him and each variety of rice procured or purchased or otherwise acquired by the miller for the purposes of sale. It is undisputed that the State of Punjab has required the miller under the said Clause 3 to sell to the Government like FCI 75% of the stock. There is a corresponding obligation on the FCI to make the full payment of 75% of rice supplied by the miller within a period of 24 hours of the delivery as per the provisions of clause 7(3). In the present case, the dispute is identical which has surfaced between the Food Corporation of India and the State procurement agencies, namely, whether infrastructure development fee payable to the Punjab Infrastructure Development Board (for brevity, ‘PIDB’) was to be included in the costing sheet and reimbursable by the Food Corporation of India. In the present case, the miller like the petitioners, who have supplied rice to the Food Corporation CWP No.3654 of 2009 #5# of India-respondent No. 4, admittedly have not been reimbursed the infrastructure development fee since 1.4.2002 in respect of levy rice. The stand taken by the Food Corporation of India-respondent No. 4 is that the decision dated 25.3.2004 is only limited to the State procurement agencies and the same cannot be applied to the case of the millers like the petitioners. When the matter came up for hearing on 21.4.2009, we had heard learned counsel for the parties at a considerable length and in that order we expressed the opinion that there was no difference between the custom milled rice or the levy rice for the purpose of reimbursement of infrastructure development fee. In both the cases, the purchaser is under an obligation to pay infrastructure development fee to the PIDB. If the costing sheet has been ordered to be amended in respect of the State procurement agencies, which get the paddy milled from the private millers like the petitioners, then there is no reason why by virtue of the same logic the ‘costing sheet’ be not amended in respect of the millers like the petitioners. The apathy on the part of the Union of India and the State Government has resulted in non-payment of huge amount to the millers since April 1, 2002. The situation called for an early resolution of the dispute because non- reimbursement of infrastructure development fee, which has already been paid by the millers would eat into the liquidity of the millers causing extreme financial difficulties. Accordingly, we had directed that a joint meeting of the representatives of the Union of India, Food Corporation of India, State of Punjab, the PIDB and two representatives of Ganesh Rice and General Mills, New Grain Market, Raikot, District Ludhiana and Goel Agro Foods, Raikot, be held. A decision was required to be taken with CWP No.3654 of 2009 #6# regard to amendment of the ‘costing sheet’ by including the column of infrastructure development fee as has been done in the case of State procurement agencies. The needful was required to be done within a period of four weeks from the date of the order and the matter was to be listed on 26.5.2009 for further consideration. On 26.5.2009, matter was ordered to be listed for 9.7.2009 when a request for adjournment was made on the ground that the orders in a bunch of petitions challenging the imposition of infrastructure development fee including CWP No.6676 of 1999 were awaited and the arguments in those cases had already been heard and that the order was likely to be pronounced. It is pertinent to mention that in those matters, constitutional validity of Section 25 of the Act and charging/enhancing of fee was challenged. The aforesaid judgment has now been pronounced on 22.6.2009 and the vires of the Act along with enhancement of fee from 2 % to 3% have been upheld. However, we had deferred the hearing to 9.7.2009 with a further direction that the decision in terms of direction issued on 21.4.2009 was to be taken by the respondents. This court had also passed interim directions to the effect that F.C.I-respondent No.4 would not ask the petitioners to pay Punjab Infrastructure Development Fee nor any coercive steps were to be taken against them to effect recovery till the next date of hearing, which was 9.7.2009. On 9.7.2009, it was represented before us that the meeting in terms of our order dated 21.4.2009 would be held within two weeks from that date to settle the issue regarding liability of payment of cess under the Act in respect of levy rice. However, a meeting was held and a decision was taken to challenge the judgment of Division Bench of this Court CWP No.3654 of 2009 #7# rendered in CWP No.6676 of 1999 before Hon'ble the Supreme Court. On the request made by learned counsel for the Food Corporation of India, we granted 15 days time to enable them to file S.L.P against order dated 22.6.2009 passed by the Division Bench of this Court. Learned counsel further represented that if the Food Corporation of India was to remain unsuccessful in getting an order from Hon'ble the Supreme Court, then the order with regard to amendment of costing sheet were to be passed as indicated in orders dated 26.5.2009 and 15.4.2009. Shri S.D. Sharma, learned Senior Advocate has stated that S.L.P has been filed on 13.8.2009 but it has not yet been listed. The aforesaid events show that the Food Corporation of India, Union of India, State of Punjab and P.I.D.B have not been able to hold any meeting in pursuance of directions issued by this Court vide order dated 21.4.2009. No effective decision has so far been taken under the liability to pay cess to PIDB on the levy rice. In respect of custom milled rice, the Officers' Committee has already decided to make an entry in the costing sheet by including the infrastructure development fee at the appropriate rate and accordingly it is FCI which purchase rice from the procurement agencies who is under obligation to pay the infrastructure development fee. The petitioners who are millers are in the same position as the procurement agencies like Markfed when they are under legal obligation to sell levy of rice to the extent of 75% to the FCI. We have repeatedly asked, learned counsel for the respondents to point out the difference between the two transactions one which is held between the procurement agencies like Markfed and the FCI viz.a.viz the one held between the miller who is supposed to give 75% of the rice to the FCI. The levy rice to the extent of CWP No.3654 of 2009 #8# 75% is required to be given to FCI at a minimum support price fixed by the State under the levy order. The miller is put in unenviable position by imposing legal obligation on him firstly to supply 75% of the levy rice to FCI or any other government agency at a fixed rate irrespective of the cost incurred by him. The miller, thereafter, cannot be expected to bear the burden of infrastructure development fee under the Act. Similar rationale has prevailed when the officers' committee has taken a decision in respect of custom rice in its meeting held on 25.3.2004. The counsel for the respondents have not been able to point out any conceptual or substantive difference between the two procurements. Merely because in the costing sheet concerning levy of rice no column has been carved out for inclusion of infrastructure development fee as has been done in a case of custom milled rice would not shift the legal obligation to pay to the PIDB the infrastructure development fee to the miller instead of FCI. The obligation would continue to be that of the FCI who is a purchaser of rice from the miller as it is in the case of purchase of rice from the procurement agencies like Markfed. We also make it clear that rate of fee payable to the PIDB would be as it was prevalent at the time of procurement as there is variation from 2% to 3% which has been upheld by this court in CWP No.7766 of 2008 along with bunch of other petitions decided on 22.6.2009. In view of the aforesaid discussion, we are of the view that this group of seven petitions deserve to be allowed and similar directions are liable to be issued which should have been prevailing in respect of the custom milled rice. Accordingly, we direct the FCI to release the payment on account of infrastructure development fee to the millers w.e.f 1.4.2002 at the prescribed rates. We further direct respondent No.1 to make necessary CWP No.3654 of 2009 #9# amendment in the costing sheet by including the element of infrastructure development fee in any of its column. The amendment in the costing sheet for the purpose of payment of infrastructure development fee shall be made w.e.f 1.4.2002 which shall operative for the future years as well. The needful shall be done at the earliest but not later than four weeks from the date of receipt of copy of this order. The writ petitions stand disposed of in the above terms. ( M.M. KUMAR ) JUDGE August 18, 2009 ( JASWANT SINGH ) manoj JUDGE 1. CWP No.3654 of 2009 (O&M) Nav Durga Rice Mills, Raikot and others v. Union of India & Ors 2. CWP No.2709 of 2009 Ganesh Rice & General Mills, New Grain Market, Raikot and others v. Union of India and others 3. CWP No.4956 of 2009 Kurali Luxmi Milling Coop. Industrial Society Ltd and others v. Union of India and others 4. CWP No.5404 of 2009 Mahesh Rice Oil & General Mill and others v. Union of India and others 5. CWP No.5531 of 2009 Jai Ganga Rice Mills and another v. Union of India and others 6. M/s Ram Sarup Subhash Chander Rice Millers & General Merchants and others v. Union of India and another 7. CWP No.12178 of 2009 Durga Rice & General Mills and others v. Union of India & Ors