P. Kalaiyarasan, J
1. The present writ appeal is to challenge the order of the learned single Judge, dated 17.07.2012 made in W.P.No.21095 of 2011.
2. The averments of the respondents / writ petitioners in nutshell are as follows :
(i) The petitioners are rice millers in Union Territory of Puducherry. The second respondent had entered into statutory contract with the millers for procurement of single boiled rice, as per Clause 3 of Puducherry Paddy and Rice Procurement (levy) Order, 1996. The petitioners undertook to sell to the Government at the rate acceptable to both parties. The millers supplied single boiled rice under 50% levy system. On 18.08.2010, Government of Puducherry, issued G.O.Ms.No.17, fixing the guidelines for the proper implementation of the levy system.
(ii) The Government directed in that G.O., as follows :
"(a) Food Corporation of India shall be agent to the Union of Puducherry for procurement of rice from rice millers.
(b) Levy procurement rice shall be at the rate fixed by Government of India from time to time for each season. FCI shall pay procurement price to millers.
(c) Licensed to rice millers shall delivery fifty percent of total production as mill levy to FCI. FCI shall make arrangement of procurement 61,000 metric tonnes of single boil rice as per specification approved by Government of India. The Millers also called upon to delivery 17,000 metric tones of single boiled rice for KMS 2009- 2010.
(d) Committee was constituted to fix the mill wise target."
(iii) The Government of India, on 13.10.2010 informed the first respondent, the cost fixed for single boiled rice for the period 2009-2010. It had also fixed the rate for various States. The Millers expressed their difficulty in supplying at the rate fixed, as in the preparation of the single boiled rice, there is substantial wastage.
(iv) In response to their representation, the Government constituted a Committee. Consequence to the report submitted by the Committee, the Government issued G.O.Ms.No.30, Department o
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Civil Supplies & Consumer Affairs, dated 05.01.2011. This Government Order notified the payment of incentive at Rs.3.16/- per Kg to millers, who have deposited single boiled rice to FCI under 50% levy order. The term incentive is a misnomer and in reality it is compensation to recuperate the loss. The recommendation and its conclusion of the Committee specifically found that out turn for single boiled rice is 62.7% and for Grade A paddy is 60.7% as against the common paddy 68.7% and for Grade A paddy is 66.5% respectively. The second respondent also paid the amount, as per G.O.Ms.No.30, Department of Civil Supplied & Consumer Affairs, dated 05.01.2011.(v) The first respondent had issued G.O.Ms.No.3, Department of Civil Supplies & Consumer Affairs, dated 18.08.2011, which is impugned in the writ petition, whereby the incentive given was withdrawn under Clause 4 of the G.O. Though, there is no change in the events between 05.01.2011 and 18.08.2011, the Government withdrew the incentive given to the millers. Once the purchaser and seller had agreed for a rate fixed, it is not open for the respondents to reduce it unilaterally.(vi) The price fixed for the product cannot be reduced at the whims and fancies of the respondents. G.O.Ms.No.30, dated 05.01.2011 was issued only to alleviate the difficulties of the millers. The enhanced rate in the name of incentive was withdrawn without any notice to the petitioners, which offends all canons of natural justice, equity and fair play. Once the rates are fixed and implemented, as per the control order, it is not open to the Government to withdraw it. Therefore, G.O.Ms.No.3, dated 18.08.2011 is to be quashed.3. The respondents in their counter contends as follows : (i) The writ petition is not maintainable, as the petitioners are seeking to challenge the policy decision of the Government taken with the larger interest of the public. No vested right exists in favour of any individuals in the matter of granting and withdrawal of incentives. Rice as a commodity having included to Schedule 1 of Essential Commodities Act, 1950, it has always been subject to Governmental supervision and Regulations. (ii) As per Section 3 (1) of the Essential Commodities Act, the Central Government for maintaining or increasing supplies of any essential commodity or for securing the equitable distribution and availability at fair price, it may by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. The cost of the single boiled rice is paid to the millers by the Food Corporation of India, according to the rate fixed by the Government of India. Levy is just like tax to the millers, it is not a business. The motto of the Government of India is to procure the grains for the Central pool for the distribution of rice under Public Distribution System to the needy people of India.(iii) The Government of Puducherry taking into consideration the low out turn ratio of the single boiled rice, when compared to double boiled rice had announced a financial incentive of Rs.3.16/- per Kg to the millers, who have deposited single boiled rice to the FCI as per the target fixed for them and issued a G.O.Ms.No.30, dated 05.01.2011 of the Department of Civil Supplies and Consumer Affairs, Puducherry. In the said order, it was clearly stated that the payment of financial incentive will be subject to the availability of funds under the relevant head of account and fulfillment of certain other conditions.(iv) Out of 36 mills who have deposited the rice to the FCI, 35 mills have received the incentive. Incentive has not been paid to one mill, as the same could not produce the Electricity consumption bill. The Government has not withdrawn the incentive with any retrospective effect and undertakes to pay the applicable incentive to all the millers as on the date of the withdrawal of incentive.(v) The application to deliver the levy rice is a statutory obligation and it is in the nature of compulsory obligation under the Essential Commodities Act, 1955. The withdrawal of the incentive is not whimsical or arbitrary and came about due to the change in Government policy, when it introduced a new scheme to give free rice to a larger percentage of the population and also the quantum of such rice to be distributed to all was also increased. Therefore, the writ petition has to be dismissed.4. The learned single Judge, after he aring the divergent submissions of both sides, allowed the writ petition, by quashing the impugned G.O, mainly on the ground that the Government failed to satisfy the test of reasonableness in revoking the incentive, which was given to the millers on the basis of the recommendation of the Committee constituted and also considering the poor out turn in single boiled rice compared to the other rice. The learned single Judge also observed that though the word "incentive" was used, it is to be treated as "price raise".5. The fact remains that rice is an essential commodity, as the same was included to Schedule 1 of the Essential Commodities Act, 1950. Section 3 (1) of the EC Act reads as follows:"If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, (or for securing any essential commodity for the defence of India or the efficient conduct of military operations), it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein."6. The Puducherry Government in exercise of the powers conferred under Section 3 of the Essential Commodities Act, 1950, issued Pondicherry Paddy and Rice Procurement (Levy) Order, 1996 in G.O.Ms.No.32 / 96, dated 10.12.1996. Clause 3 of the G.O reads thus :"3. Levy on transport of paddy or rice – Every licensed miller and licensed dealer who transports paddy or rice to any place outside the Union territory of Pondicherry shall, before commencing such transport, sell to the Purchase Officer at the procurement price thirty percent of the total quantity of each variety of paddy or rice so transported and shall also obtain separate permit in this behalf from the Director of Civil Supplies, Pondicherry in Pondicherry region and the Regional Executive Officer, Karaikal in Karaikal region, as the case may be. "7. Pursuant to the communication from the Government of India, Government of Puducherry, issued G.O.Ms.No.6, dated 09.06.2010, notifying the amendment to Clause 4 of levy order increasing from "ten percent" to "fifty percent". The request of the Government of Puducherry for extension of delivery of single boiled levy rice for KMS 2009-10 for two months beyond 30th September 2010 and the rates, as per the enclosed provisional cost sheet was approved.8. On 05.01.2011, the Government of Puducherry issued G.O.Ms.No.30, notifying the payment of incentive at Rs.3.16/ per Kg to millers, who have deposited single boiled rice to FCI under 50% levy order. On 18.08.2011, Government of Puducherry issued G.O.Ms.No.3, notifying revised scheme under PDS, wherein the incentive paid to the millers under the levy system was withdrawn under Clause 4. The Government of India, fixed the rate for the levy rice procured from the millers.9. It is well settled that the Government sanction must be subject to Rule of Law and must be informed by reason. No doubt, rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the Rule of Law.10. The learned counsel appearing for the respondents vehemently contended that without giving any opportunity to the millers and also without noticing the grant of incentive only on the basis of the recommendations of the report of the Committee and poor out turn of single boiled rice, the Government revoked the incentive without any reasons, through the impugned G.O. In support of the contention, they cited the Hon'ble Supreme Court Judgment in the case of Kusuman Hotels (P) Ltd., vs. Kerala State Electricity Board and Ors, (Civil Appeal No.101 of 2007), decided on 16.05.2008. In the said Judgment, it has been held that it is now a well settled principle of law that doctrine of promissory estoppels applies to the State. It is also not in dispute that all administrative orders ordinarily are to be considered prospective in nature. When a policy decision is required to be given a retrospective operation, it must be stated so expressly or by necessary implication.11. They also relied another Judgment of the Hon'ble Supreme Court in Mahabir Auto Stores and Others vs. Indian Oil Corporation and Others reported in (1990) 3 SCC 752. In this Judgment, the Hon'ble Supreme Court held that even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract are subject to judicial review on the touch stone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of transactions and nature of the dealing.12. Learned Senior counsel appearing for the appellants argued that promissory estoppel will not come into play when there is supervening public interest in withdrawing the promise and cited the Judgment of the Hon'ble Supreme Court, in State of Rajasthan v. Mahaveer Oil Industries, reported in (1999) 4 SCC 357. The Hon'ble Supreme Court in the said Judgment has held as follows :"14. Are the respondents justified in holding the State to the promise made by it in the form of an Incentive Scheme which is made available for a specified period of time, when new industries are set up on the basis of that Scheme relying on the promise of benefits held out by it? Public interest requires that the State be held bound by the promise held out by it in such a situation. But this does not preclude the State from withdrawing the benefit prospectively even during the period of the Scheme, if public interest so requires. Even in a case where a party has acted on the promise, if there is any supervening public interest which requires that the benefit be withdrawn or the Scheme be modified, that supervening public interest would prevail over any promissory estoppel.15. After examining a large number of authorities, this Court in the case of Kasinka Trading v. Union of India (1995) 1 SCC 274, held that when there was a supervening public interest in withdrawing the promise held out, the Government cannot be estopped from withdrawing the benefit held out under an existing Scheme. In the case of Shrijee Sales Corpn. v. Union of India (1997) 3 SCC 398, once again this Court after examining a number of authorities has held that if any supervening public interest so demands, the benefit under any incentive Scheme can be withdrawn. The same view has again been reiterated in Union of India v. Godhawani Bros (1997) 11 SCC 173."13. Learned Senior counsel further argued that withdrawal of exemption in public interest is a matter of policy and the Courts should not bind the Government in its policy decision, by citing the Judgment of the Hon'ble Supreme Court in State of Haryana v. Mahabir Vegetable Oils (P) Ltd., reported in (2011) 3 SCC 778.In this Judgment, the Hon'ble Supreme Court has held as follows :"27. In cases where the Government on the basis of material available before it, bona fide, is satisfied that public interest would be served by granting, withdrawing, modifying or rescinding an exemption already granted, it should be allowed a freehand to do so. The withdrawal of exemption “in public interest” is a matter of policy and the courts should not bind the Government in its policy decision. The courts should not normally interfere with fiscal policy of the Government more so when such decisions are taken in public interest and where neither fraud nor lack of bona fides is alleged, much less established.28. An exemption is nothing but a freedom from an obligation which an assessee is otherwise liable to discharge. In a fiscal statute, an exemption has been held to be a concession granted by the State so that the beneficiaries of such concession are not required to pay the tax or the duty they are otherwise liable to pay under such statute. The beneficiary of a concession has no legally enforceable right against the Government to grant a concession except to enjoy the benefits of the concession during the period of its grant. The right to exemption or concession is a right that can be taken away under the very power in exercise of which the exemption was granted."14. It is better to extract the two G.Os, one notifying the payment of incentive and the second one is the impugned G.O, wherein the incentive was withdrawn. (i) The first G.O in G.O.Ms.No.30, dated 05.01.2011 reads as follows :"In the Government order reads above, 50% Millers levy has been imposed in Puducherry and Karaikal region to meet the requirement of food grains for PDS and other welfare schemes and the target for millers has been fixed for deposit of rice to the FCI. An incentive of Rs.3.16/- per KG will be paid to the millers who have deposited the single boiled rice to the FCI as per the target fixed for them. Payment of financial incentive will be subject to the availability of funds under the relevant Head of Account and the following conditions :(i) Production of acceptance certificate from the Food Corporation of India.(ii) Production of electricity bills for the concerned period to establish that the rice has been hulled in the respective mill.(iii) Production of necessary vouchers to prove that the paddy is procured at MSP / above MSP by the millers.(iv) Submission of B Register to establish that the mill has deposited targeted quantity of rice as levy to the Food Corporation of India.(v) Incentive will be paid only for the targetedquantity.(vi) Creation of a separate Head of Account." The impugned G.O.Ms.No.3, dated 18.08.2011 is as follows :"2. Now it has been decided to distribute rice under the Universal Public Distribution Sytem at free of cost and wheat at the rate of Rs.7.90/- per Kg to all the card holders, viz, AAY, BPL and APL of this Union Territory w.e.f 01.07.2011. While the free distribution of rice to the Targeted Public Distribution System (TDPS), the APL families will be covered with the additional allocation received from the Government of India over and above the TPDS quota.3. Accordingly His Excellency the Lieutenant Governor is pleased to revise the scale and rate of supply of rice under the Universal Public Distribution System in the Union Territory of Puducherry as detailed below :Rice at Free of CostBPL card holders 25 Kg at free of cost (Rice)AAY card holders 35 Kg at free of cost (Rice)APL card holders 15 Kg at free of cost (Rice) &Wheat 5 Kg/ @ Rs.7.90/- Kg / card / month to all the card holders.4. Incentive hitherto paid to the Millers under Levy system to compensate the lowpercentage of out-turn ration of single boiled rice is hereby stopped.5. Financial concurrence has been obtained vide U.O.No.912 / CM / PS / 2011, dated 11.08.2011. "15. The G.O.Ms.No.3, dated 05.01.2011, by which an incentive of Rs.3.16/- per KG was granted to the millers for the single boiled rice does not whisper that the incentive was ordered either as per the recommendation of the Committee to alleviate the millers for the low out turn of single boiled rice. It is also pertinent to note that the G.O, specified that payment of financial incentive will be subject to the availability of funds under the relevant Head of Account and also under certain conditions.16. In the impugned G.O, pursuant to the expansion of the universal Public Distribution System at free of cost with increase of quantity to different type of card holders, incentive paid to the millers is stated to be stopped.17. In the counter filed by the appellants as respondents in the writ petition, it is clearly stated that the impugned G.O, is not given with retrospective effect and will operate prospectively and incentive for the single boiled rice supplied as on the date of the impugned G.O will be paid to the millers. Therefore, in public interest, the incentive already granted to the millers has been withdrawn by the Government.18. When an essential commodity is ordered to be procured under levy system from the millers, the Government is empowered to fix the rate under the Regulations framed as per the Essential Commodities Act.19. Rs.3.16/- per Kg was given to a miller depositing single boiled rice only as an incentive, that too subject to the availability of the fund under G.O.Ms.No.30, dated 05.01.2011.20. As per the Judgment of the Hon'ble Supreme Court above cited, the beneficiary of a concession has no legally enforceable right against the Government. Further, the withdrawal of the concession is also in public interest and the same is a matter of policy of the Government and the Courts cannot interfere with 22 the policy decision, that too where neither fraud nor lack of bonafide is alleged. As already pointed out, the promissory estoppel is also not applicable in this case, as the Government withdrew the incentive in public interest.21. The withdrawal of the incentive is not without reasons. In the G.O, revoking the incentive, public interest is shown as predominant reason. We do not see any arbitrariness or violation of Rule of Law in revoking the incentive.22. Learned counsel appearing for the respondents pointed out that in the impugned order, it is mentioned that incentive to the millers under levy system was paid to compensate the low percentage of out turn ratio of single boiled rice and therefore, Rs.3.16/- per Kg was given only as compensation and not as incentive. Even if Rs.3.16/- per Kg is deemed to be given to compensate the low percentage of out turn ratio of single boiled rice, it cannot be construed as a price, in addition to the price fixed per Kg by the Government. It is to be treated only as concession and not as a price. Therefore, the contention of the learned counsel for the respondents is not acceptable.23. For the aforesaid reasons, this Court is of the considered view that the impugned G.O, does not suffer from any arbitrariness or any violation of Rule of Law. Therefore, the writ appeal has to be allowed.24. In fine, this writ appeal is allowed and the order of the learned single Judge, dated 17.07.2012 made in W.P.No.21095 of 2011 is set aside. No costs. Consequently, connected miscellaneous petition is closed.
"2016 (4) LW 912" == "2017 (1) CWC 91,"