C.W.P. No.2154 of 2010 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No.2154 of 2010 Date of Decision.19.10.2011 M/s Radha Rice Mills, Cheema Road, Dhandrian, Tehsil and District Sangrur through its partner Shri Balbir Chand .....Petitioner Versus State of Punjab through its Secretary, Department of Food, Civil Supplies and Consumer Affairs, Room No.410, 4th Floor, Punjab Mini Secretariat, Sector 9, Chandigarh and others .....Respondents Present: Mr. Vikas Mohan Gupta, Advocate for the petitioner. Mr. Navdeep Sukhna, DAG, Punjab for respondent Nos.1 to 3. Mr. Hari Pal Verma, Advocate for respondent No.4. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? Yes 2. To be referred to the Reporters or not ? Yes 3. Whether the judgment should be reported in the Digest? Yes -.- K. KANNAN J.(ORAL) 1. The grievance of the petitioner is that the petitioner, who was a lessee of sheller of M/s Jai Hanuman Rice Mill (hereinafter referred to as "Rice Mill") is not being awarded the contract because the Rice Mill was declared a defaulter in the year 2009 and of the two persons, who are partners in the petitioner firm, one of them is a brother of the partner in the Rice Mill and another is a nephew of the partner in the Rice Mill. The actual relation itself is a point of dispute by the Food Corporation of India. The manner of how a disqualification of Rice Mill will attach itself to relative partners or Directors is dealt with in the instructions of the Government of Punjab, Department of Food and C.W.P. No.2154 of 2010 -2- Supplies and Consumer Affairs (Rice Procurement Branch). Clause (iv) contains reference to such disqualification in the following words: “If the owner/partner/director of a lessee/owner rice mill becomes defaulter and is an owner/partner/director of a new/lessee/owner rice mill, the mill in question will not be considered for allotment. Any family member of a defaulter rice mill, unless living separately will also be treated as a defaulter. In such a case proof of separate residence/separate family will be required to the effect that his project is not being financed/promoted by his defaulter family members/blood relations.” 2. From the reading of the clause, it will be seen that it is not as if every member of a family of a defaulter will be treated as disqualified. It is only such person, who is not living separately from the other members, will be disqualified. The issue is, therefore, one of fact of whether the partners of the petitioner Rice Mill are in fact living separately from the partners of the Rice Mill. This decision will have to be taken by the State and the grievance of the petitioner is that the Government is not taking such a decision although they have given proof of the fact that they are not living with any of the members of the family of partners of the Rice Mill. The State would contend that since FCI has not given such a recommendation they have not considered. The FCI states that they would go with the appropriate advice of the State. 3. The counsel for the petitioner would also urge only in cases where the defaulter himself has not cleared the defaulted amount with penal interest, there is a need to examine the relationship inter se between the partners/directors of the defaulting rice mill and the new identity. This disqualification will cease as per Clause (vi), if the amount is paid. In such an eventuality, even a defaulter would be entitled to a consideration for allotment without prejudice to the C.W.P. No.2154 of 2010 -3- outcome of FIR/court case/arbitration case. The clause reads as thus:- "No defaulter rice mill shall be considered for allotment/provisional registration. The default may be on the following counts:- (vi) If a police/court case/arbitration case is pending against the miller on account of embezzlement relating to custom milling or levy rice pertaining to any crop year. However, if the miller clears the default of the concerned agency along with penal interest at the rates for the relevant year(s) he may be considered for allotment without prejudice to the outcome of the FIR/court case/arbitration case pending against him.” 4. This clause would mean that in every case where a defaulter clears the amount with penalty, he shall be entitled to consideration for allotment. The only occasion when the allotment can again be withdrawn would be when the outcome of the FIR/court case/arbitration case results in an adverse finding. Under such a circumstance, even the payment of the defaulted amount with penalty cannot save the day for the defaulter. If the defaulter himself could be considered for fresh allotment if the amount is paid, then Clause (iv) cannot operate for a relative of defaulter. A relative of such a defaulter shall also be entitled to allotment if the defaulted amount is paid. The issue of whether such a relative would still have to prove that he is living separately arises only in a situation where the FIR/court case/arbitration case indicts the original defaulter. 5. In this case, it is admitted that the Rice Mill has already cleared the defaulted amount with penalty. Consequently, it could not be susceptible to any disqualification attached to the petitioner. The petitioner is entitled to be favoured with allotment of paddy for milling in accordance with the policies. C.W.P. No.2154 of 2010 -4- 6. The writ petition is, therefore, allowed subject to a direction that in the event of CBI case, which is alleged to be pending against the Rice Mill results in a conviction or any other form of indictment, it would require a further review for the petitioner's case under Clause (iv) only then a finding of whether the partners of the petitioner are separately living or not will obtain relevance. (K. KANNAN) JUDGE October 19, 2011 Pankaj*