CIVIL WRIT PETITION NO.9416 OF 2009 :{ 1 }: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 17.05.2011 Sanan Rice and General Mills and others ...Petitioners Versus Union of India and others ...Respondents CORAM: HON'BLE MR. JUSTICE RANJIT SINGH 1. Whether Reporters of local papers may be allowed to see the judgement? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present: Mr. Anil Kshetarpal, Advocate for the petitioners. Mr. Rajiv Sharma, Senior Panel Counsel for respondents No. 1 and 2. Mr. Sumeet Abrol, AAG, Punjab for the State/respondent No. 3. Mr. B.S. Sudan, Advocate for Ms. Puneet Kaur Sekhon, Advocate for respondents No. 4 and 5. ****** RANJIT SINGH J. This order shall dispose of eight Writ Petition i.e. Civil Writ Petition 9416 of 2009 (Sanan Rice and General Mills and others versus Union of India and others), Civil Writ Petition No. 12532 of 2009 (M/s H.R. Trading Co. and others Versus Union of India and others), Civil Writ Petition No. 14258 of 2009 (The Kurali Luxmi Coop. Industrial Society Ltd. And others Versus Union of India CIVIL WRIT PETITION NO.9416 OF 2009 :{ 2 }: and others), Civil Writ Petition No. 11332 of 2010 (M/s Malwa Rice & General Mills Co. and others Versus Union of India and others), Civil Writ Petition No. 14787 of 2010 (M/s Janta Rice Mills and another Versus Union of India and others), Civil Writ Petition No. 16946 of 2010 (M/s Kurali Laxmi and others Versus Union of India and others), Civil Writ Petition No. 7981 of 2010 (M/s Raj Kumar Sanjay Kumar and others Versus Union of India and others) and Civil Writ Petition No. 11282 of 2010 (Ganesh Rice and General Mills and others Versus Union of India and others). The petitioners in these eight writ petitions are Commission Agents and have approached this Court with a prayer to quash notices issued to them by respondent-Market Committees to discharge the liability of bonus due to purchase of paddy IR8 from the farmers. The petitioners would also pray for issuance of mandamus commanding the respondent-Union of India to pay bonus allowance to the farmers directly through the State Government and for prohibiting the respondents to recover the same from the petitioners, who have actually purchased this paddy. In Civil Writ Petition Nos.12532 of 2009, 11282 and 11332 of 2010, the prayer is to recover the amount, which the petitioners have paid as bonus to the farmers on the ground that liability for the same would be that of of the Union Government and not of the petitioners. The issue being common i.e. the payment of bonus to the farmers, which is either to be paid by the petitioners or the Government, these writ petitions are being disposed of together through this common order. For convenience, the facts are noted from C.W.P. No.9416 of 2009. CIVIL WRIT PETITION NO.9416 OF 2009 :{ 3 }: The issue pertains to payment of bonus for the year 2007- 08. Central Government had announced minimum support price of paddy for Kharif Market season 2007-08 for different varieties. Minimum support price of common paddy was fixed at Rs.645 whereas paddy A grade carried minimum support price of Rs.675. The Government has also fixed the minimum support price of Jowar, Maize, Bajra etc. As is usually done, Central Government had also notified uniform specification of all varieties of paddy. Accordingly, moisture contents upto 17% and the damage/discolouration/ sprouting/weevilled grains were specified to the extent of 4%, which could be purchased by the Government or its agencies. The Government was not to purchase paddy having refraction beyond the specification. During the Kharif season, the Government decided to give incentive bonus of Rs.50/- per quintal to the farmers over and above the minimum support price. This was announced on 12.10.2007. Subsequently, on 21.11.2007 the Union Government decided to grant an additional bonus of Rs.50/- per quintal over and above the incentive bonus and, thus, total incentive bonus payable was Rs.100/- per quintal. It is stated that two varieties of paddy are available in the State of Punjab, which are common and grade A. Every licence dealer has to supply such percentage of rice at the procurement price as is fixed by the Government. For the year 2007- 08, initially the percentage notified was 90%. Paddy variety IR-8 is a common variety of paddy. It is stated that this variety of paddy does not meet the uniform specification, as notified by the Central CIVIL WRIT PETITION NO.9416 OF 2009 :{ 4 }: Government. This variety therefore, is not purchased either by the State agency or by the Central agency. This variety is purchased by the commission agents, rice millers or other private buyers through an open auction. For the last 3 years, levy rice produced from IR-8 variety has not been supplied and the State Government has not insisted upon levy rice of this variety. It is stated that the payment of bonus is passed on to rice millers/commission agents with the payment of levy rice. Since no levy rice of IR-8 paddy has been supplied and hence, the bonus for this variety was not paid to the rice millers/commission agents. It is averred in the petition that similar notices as impugned in the present writ petitions for recovery of bonus amount were issued to the rice millers/commission agents on 26.3.2009. Civil Writ Petition No.4822 of 2009 was filed before this Court on similar grounds. This Court had stayed the recovery while directing the Market Committee to first determine the liability of the rice millers/commission agents, which they were liable to discharge. The Market Committees have now issued the impugned notices, threatening to register criminal cases and to cancel the licences of the petitioners on the ground that they have not discharged the liability of paying incentive bonus. Pleading that bonus is payable by the Central Government at the time of supply of levy rice for onward payment to the farmers and hence, would not be payable by the petitioners, as they had not supplied any levy rice in respect of IR-8 variety, which is purchased by them directly from the market. The petitioners would accordingly plead that they can not be fastened CIVIL WRIT PETITION NO.9416 OF 2009 :{ 5 }: with the liability to pay bonus and it should be paid by the Union of India, which has announced the bonus. The petitioners have accordingly impugned all such notices. Replies on behalf of the Market Committee as well as by the Central Government have been filed. In its reply, the Market Committee would plead that only notices are under challenge and the writ petitions, therefore, are pre-mature. Plea is that the petitioners have approached the Court without even responding to the notices. It is further explained that Central Government paid the bonus to the farmers, who have supplied levy rice for the central pool only. It is pointed out that even if the petitioners have not supplied the levy rice, they are liable to pay bonus to the farmers in view of the policy of the Punjab Government dated 22.7.2008. The respondent-Punjab Government has issued an order dated 22.7.2008, directing all Deputy Directors, clarifying that the bonus will be given by the traders on the common variety of paddy alongwith grade A paddy, even if the sheller owners have given levy rice or not. Directions also are that 100% bonus is to be paid on the purchase paddy and not only on which levy has been charged. Since the petitioners have purchased common variety paddy (IR-8) from the farmers directly, therefore, they are liable to pay 100% bonus to the farmers, who have sold their paddy in the open market. Union of India, in its reply, has raised a preliminary objection regarding the maintainability of the writ petition against it. It is otherwise stated that purchase has been made by the Government agencies through the commission agents and payment of bonus to CIVIL WRIT PETITION NO.9416 OF 2009 :{ 6 }: the farmers is to be ensured by the State Government. It is, however, stated that in case of levy rice, FCI makes the payment to the millers only after receiving a certification from the State Government that MSP and bonus have been paid to the farmers. Accordingly, the liability of the Government to pay the bonus on the purchases made by the millers for the rice not delivered to the Central pool, does not arise, as per Union of India. At the outset, the counsel for the petitioners was required to make submission as to how this writ petition would be maintainable to contest the liability, which is towards the farmers. The counsel, however, could not make any satisfactory submission in this regard. The core question, however, would be to see whether bonus would be payable in respect of that variety of rice, which is not purchased by the Government or its agencies and levy rice is not supplied to the Government. On this, the counsel for the petitioners was candid enough to concede that bonus, which is announced by the Central Government, would be payable in respect of those purchases also which are not made by the Government or its agencies or for which no levy rice is supplied to the Central pool. That being the conceded position, the only question left for adjudication was as to who would be liable to pay the bonus. In other words, it is to be seen whether bonus is payable by the commission agents for the purchases which they have directly made for them or the Central Government is to discharge this liability. Counsel for the petitioners has made three fold submissions to pass on the liability to pay the bonus for the CIVIL WRIT PETITION NO.9416 OF 2009 :{ 7 }: purchases that they have made for themselves and levy rice for which is not supplied to the State or Central pool. The counsel would first contend that the liability can not be imposed through an executive order. As per the counsel, only a minimum support price was fixed, which was not a statutorily fixed price and the relationship between the purchaser and the seller would depend upon the contract and so the parties can not be held liable beyond the terms of the contract. It is also pleaded that the payment of bonus does not have a statutory backing. I am not impressed with any of the submissions made before me. Once it is conceded that bonus is payable to the farmers, it matters not, whether it is to be paid by the petitioners, who had made these purchases or by the Union of India, which has announced this bonus. The liability first must be discharged and then the petitioner can sort out the issue with the Government. Prime- facie, this paddy has been purchased by the petitioners, with which the Union of India has got no concern. Once the liability to pay the bonus is conceded, then obviously, the bonus will be payable by the person/agency, which has purchased the paddy. With no sense of logic, such liability can be fastened on to the Government. Announcement of bonus or a minimum support price of paddy can not be termed as a tax, as submitted by the counsel for the petitioner. Accordingly, the submission that liability can not be imposed through executive order, would be misplaced. There is no challenge made to the right of the Government to fix the support price. Similarly, the liability to pay bonus is not disputed. By no stretch of imagination, CIVIL WRIT PETITION NO.9416 OF 2009 :{ 8 }: fixing of a minimum support price to help the farmers, who have arisen to the occasion to produce bumper crop to make the country self reliant in food, can be branded as a tax. The bonus obviously is announced by the Government as an incentive to the farmers and is so announced by taking into consideration various factors like the costs of input etc., which the farmers have to incur to produce the crop. To clarify these aspects, the Court had even summoned the Secretary from the State as well as Union of India as the farmers who had sold this crop to the petitioners, had been deprived of bonus for a considerable period. Bonus concededly is payable to the farmers. It is clarified that the payment of bonus to the farmers for procurement of paddy is regulated in the manner as is described hereunder:- (a) Government of India announces a minimum support price on paddy every year. The Government agencies procure paddy at MSP as per the specification. The same is got milled from the private rice millers on contractual basis. The rice millers and the traders are free to procure paddy of any quality irrespective of specification keeping in mind their commercial interest. (b) The State Government then recovers the rice in the form of levy from such rice millers/traders against the paddy procured in their own account and pay them the levy price fixed by the Government of India. The Government of India takes into consideration the amount CIVIL WRIT PETITION NO.9416 OF 2009 :{ 9 }: of MSP, taxes, expenses on labour, transport, storage, electricity charges and investment etc. while fixing the levy price. The percentage of levy is prescribed by the State Government, which may vary from year to year as per the levy controlled order, which is approved by the Government of India. (c)The Government of India announces bonus on paddy as incentive to the farmers to encourage production. The bonus on the paddy procured by the Government agencies is paid to the farmers by the Government agencies whereas the bonus on the paddy procured by the rice millers and traders in their own account is to be paid by the rice millers and the traders. The amount of bonus is included while calculating the levy price to be paid to the millers/traders. (d) The payment of the bonus to the farmers by the rice millers is not linked with the delivery of levy rice. The millers/traders are fully aware about the bonus liability at the time of making purchases of paddy from the farmers and, therefore, are free to offer price to the farmers, keeping in view the liability of bonus. (e) Since the liability for delivery of levy rice is with the rice millers/traders, they invariably or atleast sometimes on one pretext or the other do not deliver levy rice to the Government and sell the rice in the open market to earn better profits than levy price. When the rice millers CIVIL WRIT PETITION NO.9416 OF 2009 :{ 10 }: and traders failed to deliver the levy rice due to any reason, they seek exemption from delivery of rice as per the provisions of levy rice controlled order. (f) On the basis of figures available with the Government, only 1.46 to 8.5% of paddy was procured by the rice millers/traders in their private accounts for the period of 3 years i.e. during the years 2008-09, 2009-10 and 2010-11. In view of the above, it is clear that liability to pay the bonus will primarily be that of the millers and traders for the quantity of rice, which is procured by them in their private accounts. The notices issued to the petitioners, thus, are valid and do not suffer from any violation of law or a procedure or want of jurisdiction, which may call for any interference. The counsel for the respondents has also placed before me an order passed in Civil Writ Petition No.14119 of 2010 (Akash Rice Mills and others Vs. Union of India and others), decided on 10.8.2010, where a prayer was made for quashing the circular issued by Food Corporation of India, for payment of incentive bonus on levy rice. After considering the submissions made, the Court has observed that incentive bonus is payable on the entire quantity of paddy purchased by the millers for levy rice. Accordingly, there is no cause made out to interfere in the notices impugned through the present writ petitions. There is also a substance in the submission made that the writ petitions have been so filed against the issuance of notices CIVIL WRIT PETITION NO.9416 OF 2009 :{ 11 }: only and are, therefore, premature. The petitioners have to first respond to these notices. The petitioners can not escape the liability to pay the bonus and must discharge the same towards the farmers. If they feel that the petitioners are not liable to pay this bonus for this paddy so procured by them directly for themselves, then they can approach an appropriate forum for recovery of the amount on any of the grounds that may be available to them after discharging the liability. The writ petitions are accordingly dismissed. May 17, 2011 (RANJIT SINGH ) khurmi JUDGE