IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTIETH DAY OF MARCH TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE P.S.NARAYANA WRIT PETITION NO : 24606 of 2007 Between: 1 Mogaparthi Sombabu S/o.Chiranjivi Rao Resident of Kovvada village Buttaigudem Mandal West Godavari District 2 Mogaparthi Pavan Kumar S/o.Chiranjivi Rao Resident of Kovvada village Buttaigudem Mandal West Godavari District 3 Mogaparthi Chiranjivi Rao S/o.Rattaiah Resident of Kovvada village Buttaigudem Mandal West Godavari District 4 Nimmagadd Srinu S/o.Brahmanandam Resident of Kovvada village Buttaigudem Mandal West Godavari District 5 Mogaparthi Chandirani W/o.Chiranjivi Rao Resident of Kovvada village Buttaigudem Mandal West Godavari District 6 Mogaparthi Vijayasri W/o.Sombabu Resident of Kovvada village Buttaigudem Mandal West Godavari District 7 Kunja Akkamma W/o.Venkanna Resident of Kovvada village Buttaigudem Mandal West Godavari District 8 Kunja Venkata Lakshmi D/o.Venkanna Resident of Kovvada village Buttaigudem Mandal West Godavari District 9 kunja Sujatha D/o.Venkanna Resident of Kovvada village Buttaigudem Mandal West Godavari District 10 kunja Ramulamma D/o.Venkanna Resident of Kovvada village Buttaigudem Mandal West Godavari District ..... PETITIONER(S) AND 1 The Tobacco Board, Guntur, rep.by its Secretary Guntur Town, Guntur District 2 The Auction Superintendent, Tobacco Board, Gopalapuram village, West Godavari District .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ order or direction more particularly one in thenature of writ ofmandamus declaring the action of the respondent in not renewing the registration/license of tobacco barrens of the pettioners for the crop year 2007-08 pursuant to proceedings in reference No.1(12)/2003-04/PDN /1030 to 1034 and 1037 to 1041 datd 26.9.2007 issued by the 2nd respondent as illegal,irregular, without jurisdiction violative of principles of natural justice provisions of the Tobacco Board, Act 1975 Rules framed there under and offends Articles, 14 and 21 of the Constitution of india and consequently direct the respondents to renew the tobacco barren operator registration/license for the crop year 2007-08 without insisting upon discharge of debts to the banks and to pass Counsel for the Petitioner:MR.NIMMAGADDA SATYANARAYANA Counsel for the Respondent No.: MR.S.SRINIVASA REDDY THE HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION NO. 24606 OF 2007 ORAL ORDER: 1. This Court issued Rule Nisi on 29.11.2007. Counter affidavit and reply affidavit as well are filed. 2. The Writ Petition is filed for Writ of Mandamus declaring the action of the respondents in not renewing the registration licence of tobacco barrens of the petitioners for the crop year 2007-08 pursuant to proceedings in reference No. 1(12)/2003-2004/PDN/1030 to 1034 and 1037 to 1041 dated 26.9.2007 issued by the second respondent, as illegal, irregular, without jurisdiction, violative of principles of natural justice, provisions of the Tobacco Board Act, 1975, Rules framed thereunder and offends Articles 14 and 21 of the Constitution of India and consequently direct the respondents to renew the tobacco barren operator registration/licence for the crop year 2007-08 without insisting upon discharge of debts to the banks and to pass such other order or orders as this Hon’ble Court may deem fit and proper in the circumstances of the case. 3. Sri Satyanarayana Nimmagadda, the learned counsel representing the petitioners had taken this Court through the averments made in the affidavit filed in support of the Writ Petition, the averments made in the counter affidavit and also the averments made in the reply affidavit as well and would maintain that the respondents have no authority or jurisdiction to act as recovery agents. The learned counsel also would maintain that the respondents are bound to follow the provisions of the Tobacco Board Act, 1975 and the Rules framed there-under and inasmuch as the respondents cannot insist on repayment of loan or cannot impose conditions relating to the clearing of the entire loss to all the credit agencies, the action of the respondents in not renewing the registration/licence of tobacco barrens of the petitioners cannot be sustained. 4. Per contra Sri Srinivasa Reddy, learned Standing Counsel representing the respondents would submit that the revisions had been preferred before the second respondent which had been forwarded to the first respondent and having availed the remedy by way of revisions, the writ petitioners cannot maintain the present writ petition. Further, the learned counsel would maintain that in the light of clear specific stand taken in the counter affidavit of the respondents, the petitioners are not entitled for any positive directions as such, at the best their cases may be considered by the respondents in accordance with law. 5. Heard the counsel on record. Perused the respective pleadings of the parties and also the material papers placed before this court. The petitioners are the owners and possessors of different extents of agriculture lands of Kovvada Village of Bhuttaigudem Mandal. The petitioners had been raising tobacco crop with due permission and licence granted by the respondents. The particulars of the lands and tobacco barrens held by the petitioners are as follows: SL. No. Name of the petitioner S.No. Extent TBGRNo. 1. Mogaparthi Sambasiva Rao 24/3 5.00 17212002 2. Mogaparthi Pavan Kumar 207 5.00 17212001 3. Mogaparthi Chiranjivi Rao 207 5.00 17212003 4. Nimmagadda Srini 24/1 5.00 17212005 5. Mogaparthi Chandirani 24/3 5.00 17212006 6. Mogaparthi Vijayasri 24/2 5.00 17212006 7. Kunja Akkamma 24/2 10.00 17212007 8. Kunja Venkata Lakshmi 9 10.00 17212008 9. Kunja Sujatha 7 10.00 17212009 10. Kunja Ramulamma 24/1 10.00 17212010 The respondents have been collecting tobacco crop being raised and processed in the licensed barrens by the petitioners and paying the cost of tobacco through State Bank of India, Branch at Chityala. The said Bank had been advancing money on the undertaking given by the respondents to repay the loan from and out of the sale proceeds of tobacco. The said practice had been regularly observed, ever since the petitioners started cultivating tobacco and settling it to the respondents. The petitioners did not commit any default in repayment of crop loans advanced by the said bank. Even in the last crop season also, the respondents paid the sale proceeds of tobacco through the bank accounts of the petitioners with the said bank. The bank deducted the amounts payable to it towards discharge of loans and released only balance amount to the petitioners. 6. The respondents have been regularly reviewing the registration and barren operator license every year. For the present year i.e., crop year 2007-08, the respondents did not renew the license. The petitioners repeatedly requested to renew the licence. But the 2nd respondent issued different orders to the petitioners dated 26.9.2007, thereby directing the petitioners to repay the loans availed by them from Union Bank of India, Branch at Koyyalagudem on or before 31.10.2007, failing which the applications of the petitioners for renewal of registration/license stand rejected. The second respondent further declared that he would not entertain any written communication in that connection and the tobacco crop already raised would be declared as unauthorized crop. The petitioners submitted revision petitions separately requesting the second respondent to drop the said order and renew their registration/licence. The petitioners further requested that they had already discharged the loan granted by the State Bank of India, Branch at Chityala and the same was only concerned with the crop, but the loan availed from Union Bank of India, Branch at Koyyalagudem is unconcerned with the crop. The second respondent did not renew the registration/license of the petitioners in spite of such revision petitions. 7. Further, it is averred that the second respondent has no power, authority or jurisdiction to impose repayment of loans availed from various banks as condition precedent for renewing the registration/license. There is no mandate of law to that effect. The respondents facilitated loans only from the State Bank of India, Chityala Branch and such loans are being regularly repaid by way of deduction at the payment source, since the payment towards sale proceeds of tobacco is being made through the bank accounts of the petitioners. The respondents are unconcerned with any other credit agencies from whom the petitioners might avail loans. The respondents are not conferred with power, authority or jurisdiction to act as recovery agencies. 8. Further, it is averred that the respondents did not impose any condition such as clearance of entire loans to all the credit agencies as a condition precedent for granting or renewing registration-cum-licence. The respondents allowed the petitioners to prepare and raise tobacco crop for the crop year 2007-08. The petitioners raised tobacco crop about two months ago and now the crop is growing. The respondents used to supply manures at subsidized price. Now the respondents refused to supply the same pursuant to non-renewal of license. The petitioners borrowed money from private financiers at exorbitant rates of interest. They could not meet the debts from meager returns, if the petitioners were not supplied with manures as usual by the respondents. The petitioners approached the respondents repeatedly with a request to renew their registration/license, but in vain. The petitioners led team to the first respondent at Guntur for suitable instructions to the second respondent. 9. It is further stated that the impugned orders are violative of principles of natural justice besides being without jurisdiction. The second respondent did not issue any notice before passing the impugned order. The action of the respondents in not renewing the registration/license of tobacco barrens of the petitioners for the crop year 2007-08 pursuant to proceedings in reference No. 1(12)/2003- 2004/PDN/1030 to 1034 and 1037 to 1041, dated 26.9.2007 issued by the second respondent is illegal, irregular, without jurisdiction, violative of principles of natural justice and also provisions of the Act and Rules framed there under and offends Articles 14 and 21 of the Constitution of India. Under such circumstances, the writ petitioners being left with no other remedy approached this Court praying for appropriate reliefs. 10. In the counter affidavit filed by the respondents, it is averred that it is true that the deponent was acting on behalf of all the petitioners in all matters both with the Tobacco Board and the Banks. On 2.7.2007, he addressed a letter stating that the loan account with the State Bank of India, Chityala, is closed and that future cheques that would be issued in favour of the petitioners must be forwarded to Andhra Bank, Kannapuram which indicate that the petitioners had taken loan from the Andhra Bank, Kannapuram also. 11. Further, it is stated that the petitioners are not entitled for renewal of registration till such time they clear the loans to the Bank which they obtained for growing tobacco. 12. Further, it is also averred that to facilitate the farmers to take the loans, an understanding is arrived at between the Tobacco Board and the respective Banks where the farmers could obtain loans for growing tobacco, that the Tobacco Board would send the proceeds of the sale of tobacco directly to the Bank for clearing the loan obtaining by the grower. The said practice had been in vogue since a very long time, which the petitioners also admit. It may be pointed out here that the lead bank of a given District fixes the scale of crop finance to each crop every year. The same guidelines are being followed throughout the District by the bankers. In the process the bankers would insist upon production of the land records from the Revenue Department as to the holding of each farmer i.e., to say the farmers who seek crop loan will have to submit a copy of the Adangal, based on which the bankers would finance crop loans. In the instant case, in view of the understanding the document issued in the form of renewal of tobacco growers passbook is taken to be an authentic document for issuance of loans. Therefore, the document issued by the Tobacco Board plays a pivotal role to the Bank for financing the farmers. The tobacco Board will route the sale proceeds through the loanee bank and facilitate the prompt recovery of crop loan from the borrower. This is a ‘gentleman agreement’ between the Bank, farmers and Tobacco Board. Even in the case of financial crunch in the farmers family, the banks come forward boldly to over finance such needy farmers to meet their immediate medical expenses etc. From the above, it is clear that the tobacco growers passbook issued by the Tobacco Board is the most important document for getting finance from the banks and the said document had been totally exploited by the petitioners to get crop loans from various banks. 13. Further, it is averred that during the period of registration/renewal of registration of growers for 2007-08 crop season, the Tobacco Board had received various appeals from the Union Bank of India, Koyyalagudem, State Bank of India, Chityala and Andhra Bank, Kannapuram that the petitioners sale proceeds had not been forwarded to their respective banks to clear the loan obtained by the petitioners. On perusing such correspondence from various banks, the Tobacco Board was shocked as to how the petitioners obtained crop loans from various banks for the same area of production and for the same crop year. The Chairman, Tobacco Board ordered an enquiry into the matter. The Regional manager, by letter dated 9.8.2007, called information from various banks and prima facie it was observed that the petitioners submitted a copy of tobacco growers passbook afresh to each Bank and mis-utilized the document issued by the Tobacco Board and obtained crop loans for same area and for the same crop year in triplicate. 14. It is submitted that the claim of the petitioners that they had cleared the crop loan at State Bank of India, Chityala is false. As per the information furnished by the Manager, State Bank of Chityala, Petitioners 1,2,5 and 10 have still not cleared the loan. The total amount due from the said petitioners to the said banks is Rs. 36.38 lakhs. The said loans have been obtained by the petitioners using the passbooks issued by the Tobacco Board and the allegation that the loan that had been obtained from the Union Bank of India, Koyyalagudem is unconcerned with the crop, is false accordingly to the knowledge of the petitioners. 15. It is further averred that the allegations made in paragraph 5 of the affidavit are not true and correct. The allegation that the Tobacco Board had no jurisdiction to impose repayment of loans availed from various banks as a condition precedent for renewing the registration/license, that there is no mandate of law to that effect is not true and correct. The petitioners had misutilized the passbooks. They misled the Banks in granting loans on the very same passbooks giving the Banks an impression that they are approaching the Bank for crop loan for the first time. The crop loans are issued on the fictitious passbooks and the Tobacco Board is seriously concerned with the misuse of the said passbooks. The petitioners filed applications on 14.9.2007 for renewal of growers registration for one year i.e., 2007-2008. The policy for the crop season 2007-08 issued under the provisions of the Tobacco Board Act, clearly indicates that unless the outstanding dues are cleared to the concerned Bank on or before 31.10.2007, the registration/renewal would not be considered and the same had been informed to the petitioners by the Tobacco Board by a letter dated 26.9.2007, questioning which the petitioners filed revision petitions. The second respondent forwarded the said revision petitions to the first respondent vide letter- dated 2.11.2007. The petitioners having availed the remedy available under the provisions of the Tobacco Board Act and without even awaiting the result of the Revision Petitions filed this Writ Petition and the Writ Petition is liable to be dismissed on this ground alone. It may be pointed out here that the 4th petitioner herein submitted a no due certificate issued by the Union Bank of India, Koyyalagudem dated 2.11.2007 that he had cleared the tobacco crop loan at Union Bank of India, Koyyalagudem. This letter itself indicates that he had taken loan not only from the State Bank of India, Chityala but also from the Union Bank of India for the same crop season, mis-utilizing the passbook issued by the Tobacco Board. Therefore, it is not correct to contend that the Tobacco Board is not concerned with the credit agencies, from whom the petitioners might have availed loans. If the loans were to be obtained by the petitioners for any purpose without using the passbook issued by the Tobacco Board, the Tobacco Board would not have any control over the same and it is for the banks who have to recover the loans from the respective loanee. In the case on hand, in view of the understanding between the Tobacco Board, Bank and the petitioners, the petitioners could not have obtained loans from the banks and they now contend that the Tobacco Board cannot refuse to grant registration/renewal of their license. 16. Further, it is averred that to facilitate the registered tobacco growers to get inputs of quality with a price advantage, every year the Tobacco Board negotiates with the manufacturers of fertilizers and procure the required fertilizers against the indents received from the registered farmers. In the process, Tobacco Board also negotiates with the banks for the issue of input loans and also crop loans to the registered farmers at competitive rates to help the farmers in tobacco cultivation. In view of the agreement between the growers, banks and Tobacco Board, the tobacco sale proceeds would be routed through Banks. This arrangement facilitates the bankers to finance the farmers liberally to sustain them in cultivation. This system is functioning in the right direction to the benefit of the farmers and in the event of exigency, the farmer is getting an overdraft from the bank on the basis of the tobacco growers passbooks. Any mis-utilization of the said passbook by any one farmer will certainly break the noble understanding between the Tobacco Board, the Bank and the farmer and ultimately leads to uncertainty in financing tobacco, farmer as a whole. When the same tobacco growers passbook is produced to some other bank, such bank will not grant second crop loan as already one crop loan is granted on that Book. In the instant case, the petitioners got granted crop loans during 2006-07 crop season simultaneously from different banks and in each bank they had produced tobacco growers passbook. An enquiry is pending as to how the duplicate/triplicate tobacco growers passbooks are produced to obtain crop loan for the same year. Since the very conduct of the petitioners is called in question, the matter is being referred to the competent authority for taking appropriate action. During the current year, the Tobacco Board has arranged input loans to the registered growers by the Indian Overseas Bank, Tenali at a competitive interest rates. The Indian Overseas Bank, Tenali issued letter dated 6.10.2007 that it is not inclined to extend input loans to those farmers who are defaulters of previous crop loans. Given the situation where the petitioners’ very conduct is under inquiry for having misutilized the tobacco growers passbooks and the Revision Petitions are still pending with the Tobacco Board, the present Writ Petition is premature and the same is liable to be dismissed in limini. 17. Further, it is averred that pursuant to the applications filed by the petitioners, the second respondent informed the petitioners so as to clear the crop loan dues taken by them from the bank on or before 31.10.2007 so that the renewal of registration could be considered. As a follow up action, the 4th petitioner repaid the crop loan dues at Union Bank of India, Koyyalagudem on 2.11.2007, while the tobacco board crop loan at Andhra Bank, Kannapuram is still pending. The other petitioners filed Revision Petitions where it was submitted that they had taken loans from other banks on collateral security. Contrary to this, the banks i.e., Union Bank of India, Koyyalagudem, Andhra Bank, Kannapuram categorically mentioned that they had extended tobacco crop loans only and submitted the copy of the tobacco growers passbook obtained from the petitioners during the time of sanction. 18. Reply affidavit is filed, wherein in paragraph two (2), it is averred that the first petitioner addressed a letter dated 2.7.2007 stating to the effect that the loan account in State Bank of India, Chityala was closed and future cheques must be forwarded to the Andhra Bank, Kannapuram, is false. Further allegation that the petitioners are not entitled for renewal of registration till they clear the loans, is not tenable. It is false to allege that the petitioners exploited Tobacco Growers pass books. In fact, the respondents arranged crop loans to the petitioners under a specific tie-up arrangement with State Bank of India, Chityala Branch, alone. The respondents forwarded tobacco Growers, pass books only to the said authorized Bank i.e., State Bank of India, Chityala Branch, through which the respondents are paying sale proceeds of Tobacco by way of cheques to the petitioners, and that bank is the only authorized bank for that purpose. 19. It is also averred that the petitioners had also been raising counter tobacco for which no registration is required. Petitioners availed loans from other banks only basing on immovable property security. Those loans are not connected to barren tobacco. There was no specific tie-up arrangement between the respondents and the other banks for grant of loans or payment thereof directly from the sale proceeds of Tobacco through the respondents. In the absence thereof, the respondents have no power, authority or jurisdiction to refuse renewal of Barren Licence. 20. Further, it is averred that the allegation in 6th paragraph of the counter affidavit that the petitioners secured crop loans from various banks for some crop year, is false and the same is a statement of misunderstanding. The petitioners availed crop loan only from State Bank of India, Chityala Branch. The other crop loans are not connected to present tobacco barens. As regards Tobacco Growers Pass Book, I submit that the Union Bank of India, Koyyalagudem and Andhra Bank, Kannapuram decided to realize the loan by coercive methods without following due process of law. With that conspiracy they called the petitioners and requested to furnish Xerox copies of Tobacco Growers Pass Book by saying that they required the same for audit purpose. The petitioners who are innocent farmers believed their version bonafidely and furnished them only Xerox copies of Tobacco Growers Pass Books. The said bank misused the same alleging that that the petitioners submitted copies of said passbooks for raising crop loan and addressed letters to the respondents. Unfortunately, the respondents themselves became overactive and began acting as recovery agents for the said banks by initiating coercive steps such as passing impugned orders in the present writ petition. As regards the different addresses pointed out, the petitioners are admittedly having permanent address and immovable properties and any discrepancy does not matter much. Though the petitioners 1,2,5 and 10 had some dues with State Bank of India, Chityala Branch, the said bank expressed no difficulty to grant loan further, since it would get repayment from the respondents through cheques from sale proceeds of tobacco. It is false to allege that the petitioners obtained entire loans only using the passbooks of Tobacco Board. Passbooks are not title to any property. No Bank would grant loan only basing on the passbooks. The petitioners never mis-utilized the passbooks. The alleged policy of the Board not to register/renew the licence without clearance of dues has no statutory force. When the respondents have no power, authority or jurisdiction to pass the impugned order, filing of revision by the petitioners does not preclude them from questioning the impugned orders, particularly in the light of delay on the part of respondents. The crop-cutting season is speeding up. The 4th petitioner bonafidely paid the other loan pursuant to coercive methods adopted by the respondents. That does not mean he mis-utilized the passbook. It is conspicuous to note, as pointed out by the