HON'BLE SRI JUSTICE RAVI CHEEMALAPATI

WRIT PETITION Nos. 319, 5510, 15096 & 20841 of 2020, W.P.Nos. 9048, 20838, 23400 & 28327 of 2021 and W.P.Nos. 6065, 22921,22933, 23393, 22488, 32990, 33766,33771,33776 and 36980 of 2022

COMMON ORDER:

The Writ Petition Nos.22933, 22488, 22921 and 23393 of 2022 are filed to quash the proceedings No.30/WP No.7854 of 2022-MLC, dated 13.06.2022, 16.06.2022 and 18.06.2022 and consequently direct the respondents not to claim any refund of amounts under the labour charges borne by the petitioners in respect of supply of rice to the respondents from the period 2009-2010 to 2013-14.

2. The Writ Petition Nos. 33766 of 2022, 33771 of 2022, 32990 of 2022, 33776 of 2022 and W.P.No.36980 of 2022 are filed to quash the orders passed by the Divisional Manager, Food Corporation of India, in File No.12(1)/incidentals/2021-22 dated 19.09.2022 demanding payment of alleged excess payment of Mandi Labour Charges to the petitioners during the period KMS 2009-10 to KMS 2013-14.

3. Writ Petition No.5510 of 2020, W.P.Nos.9048 & 23400 of 2021 and W.P.No.6065 of 2022 are filed to quash the proceedings of the General manager, Food Corporation of India, in letter No.Accts/19(60)/ 2019, dated 26.12.2019 and consequential proceedings of the Vice

Chairman and Managing Director, Andhra Pradesh State Civil Supplies Corporation Limited together with notices issued by the District Manager, A.P.State Civil Supplies Corporation Limited, directing them to obtain No Due Certificate from the Divisional Manager of FCI, during the period KMS-2008-2009 to KMS 2013-14, being illegal, arbitrary and without authority of law.

4. Writ Petition No.20838 of 2021 is filed to declare the action of Food Corporation of India in demanding payment of alleged excess payment of Mandi Labour Charges to the petitioners vide Proceedings File No.Proc/26(1)/2017-18/Vol-III(1), dated 27.08.2021 being arbitrary, high handed, unauthorized and ultra vires.

5. Writ Petition No.15096 of 2020 is filed for declaring the action of the District Manager, Food Corporation of India in issuing proceedings Lr.No.Proc/MLC/Rec.2.1.1(a)/2019, dated 04.01.2020 demanding the petitioner to pay the alleged excess payment of Mandi Labour Charges paid to the petitioner during the period 2009-10 to 2012-13, being illegal, without jurisdiction, time-barred.

6. Writ Petition No.20841 of 2020 is filed to declare the action of the Divisional Manager, Food Corporation of India in demanding payment of alleged excess payment of Mandi Labour Charges to the Rice Millers during

the period KMS 2009-10 to KMS 2013-14 under proceedings No.Proc/Audit/ SLKM/2018, dated 20.10.2020,being arbitrary, whimsical, highhanded, barred by limitation and violation of rights guaranteed to the petitioners under Articles 14,19(1)(g) and 300A of the Constitution.

7. Writ Petition No.28327 of 2021 is filed to declare the action of Food Corporation of India in demanding payment of alleged excess payment of Mandi Labour Charges to the Rice Millers during the period KMS 2009-10 to KMS 2013-14 under proceedings dated 31.08.2021 and 27.08.2021,being arbitrary, ultra vires and violative of Articles 14,19(1)(g) and 300A of the Constitution.

8. Writ Petition No.319 of 2020 is filed to declare the action of Food Corporation of India in demanding payment of alleged excess payment of Mandi Labour Charges to the Rice Millers during the period KMS 2009-10 to KMS 2013-14 under proceedings dated 27.12.2019,being arbitrary, ultra vires and violative of Articles 14,19(1)(g) and 300A of the Constitution.

9. In as much as the challenge made in all these writ petitions is to the action of the Food Corporation of India in demanding the petitioners to pay back the alleged excess payment of Mandi Labour Charges to the Rice Millers during the period KMS 2009-10 to KMS 2013-14 by way of issuance of proceedings and the consequential action of the State Civil Supplies

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Corporation Limited in issuing notices to the Rice Millers requiring them to obtain 'No Due Certificate' from the Divisional Manager of FCI, during the period KMS-2008-2009 to KMS 2013-14, all these writ petitions are heard together and being dispose of by this common order.

10. The case of the petitioners, in brief, is that they are rice mills engaged in rice milling business and they are being run to the utmost satisfaction of the authorities concerned. As a part of business, they had supplied rice to the Food Corporation of India during the years 2009-10 to 2013-14 and the authorities of the corporation had cleared bills during the said period and there are no dues from the Corporation. The petitioners had received show cause notices from the Corporation on different dates during the months of August and September, 2021 demanding them to refund the component of Mandi Labour Charges to the Corporation and that they will recover the said Mandi Labour Charges from the next bills/payments to be made to the petitioners, alleging that as per the operational guidelines of the Andhra Pradesh State Civil Supplies Corporation vide G.O.Ms.No.38, dated 24.09.2007, Mandi Labour Charges (MLC) was not supposed to be paid to the miller, if paddy purchases were

made directly from the farmers and not from mandi, however the petitioners had collected the amounts under the head of Labour Charges, even though there were no regulated Mandi operations in force in Andhra Pradesh. The CAG in its report at para-2.1.1 (a) of Report No.31/2015, while pointing out absence of regulated Mandi operations in the state of Andhra Pradesh during the material period, held that the MLC paid to the petitioners was actually not payable and the same is an excess payment and hence the said amount is liable to be refunded to the Corporation. The petitioners have submitted fittest reply to the said show cause notices on different dates in the month of September, 2021 clearly pointing out that issuance of show cause notice after lapse of so many years is not sustainable and the same is barred by limitation and that the CAG report is not binding as the same was not furnished to the petitioners along with the show-cause notice and hence the same cannot be taken into consideration and basing on the alleged CAG report, the petitioners cannot be asked to repay the Mandi Labour Charges which was finalized nearly 7 or 8 years ago. Questioning the show cause notices, petitioners in W.P.Nos.22933, 22488, 22921 and 23393 of 2022 filed a writ petition vide W.P.No.7854 of 2022 and this Court disposed of the said writ petition on 06.04.2022 directing the respondents concerned to afford an opportunity

of hearing and to pass orders after hearing the petitioners. Pursuantly, the Corporation has issued notices to the petitioners in those writ petitions on 06.04.2022 asking them to submit their explanation and also fixed the date of hearing. Accordingly, the petitioners submitted their explanations, appeared through their counsel and made submissions that the show cause notice is not sustainable either in law or on facts. However, the authorities concerned without looking into the records properly, had passed the impugned orders. Aggrieved thereby, Writ Petition Nos.22933, 22488, 22921 and 23393 of 2022 are filed. The Food Corporation of India also issued proceedings to the rice millers demanding them to pay back the Mandi Labour Charges paid to them and consequently the State Civil Supplies Corporation issued proceedings to all the rice millers to obtain No Due Certificates. Questioning them, the other writ petitions were filed.

11. Union of India, represented by Secretary, Ministry of Consumer Affairs, Food and Public Distribution- filed counter affidavit denying the averments of the petitions inter alia contending that the 1st respondent extends price support to wheat and paddy through Food Corporation of India and the State Agencies. Procurement of Minimum Support Price (MSP) is open-ended i.e., whatever food grains are offered by the farmers within the stipulated procurement period and which conform to the quality

specifications prescribed by the Government of India are purchased at Minimum Support Price and bonus/ incentive, if any by the Government Agencies including FCI for Central Pool. Some States also declare State bonuses on wheat and paddy over and above Minimum Support Price. The Government agencies undertake Minimum Support Price operation at Mandis/temporary purchase centres/aggregation points. As per the report of the Comptroller and Auditor General No.31 of 2015 that during 2009-10 to 2013-14 an amount of Rs.1,771.89 Crore was incurred in respect of States selected in audit, on the element of Mandi Labour Charges. It has further been observed in that report that irregular payment of Rs.194.23 crore Mandi Labour Charges has been made to rice millers for supply of Levy Rice in Odisha, Bihar and Andhra Pradesh regions of Food Corporation of India. Further, the Audit observed that in respect of Levy Rice deliveries, only those private rice millers who purchase paddy at regulated mandis are entitled for reimbursement of the Mandi Labour Charges at the rate specified in the Government of India approved cost sheet issued for every marketing season and though the purchases were made at the farm gate/mill point, Food Corporation of India unjustifiably reimbursed Mandi Labour Charges to the private rice millers without verifying whether paddy was procured at Mandi or at farm gate and this

resulted in irregular payment of Mandi Labour Charges and consequential undue benefits to millers to an extent of Rs.194.23 crore in Bihar, Odisha and Andhra Pradesh Regions of Food Corporation of India, during 2009-10 to 2013-14. To the demand notices issued for refund of excess/undue payment pertaining to Mandi Labour Charges, no evidence was produced by the petitioner to prove that the said charges were actually incurred. The 1 st respondent delegated the power to the 2nd respondent Corporation to initiate the legal proceedings against the Rice Millers in Andhra Pradesh for recovery of money, which was paid in excess towards Mandi Labour Charges to the private rice millers. The excess money paid was drawn from the public exchequer and hence can be recovered within 30 years as per the provisions of Article 112 of the Limitation Act, 1963. Even after issuing demand notices in the months of December, 2019 and January, 2020 for recovery of the money to all the concerned millers, the petitioners did not make repayment of the money in spite of several opportunities given to them. The writ petitions are totally misconceived and devoid of any substance. Therefore, the writ petitions are liable to be dismissed.

12. Food Corporation of India, filed counter affidavit denying the averments of the petition and while reiterating the contents of the counter affidavit filed by Union of India, further contended that the corporation

being a statutory authority constituted under the Food Corporation Act, 1964, comes within the meaning of State under Article 12 of the Constitution of India. The Corporation had rightly issued show cause notices to the Rice Millers seeking repayment of excess amount paid by the corporation towards Mandi labour charges. The payment made towards Mandi Labour Charges from the KMS 2009-10 to KMS 2013-14 is based on the claim made by the petitioners after submission of undertaking that any excess payments made will be refunded; hence the same is to be recovered from each petitioners. The payments to the incidental costs that occurred during the procurement of the products are decided by the Ministry of Consumer Affairs, Food and Public District and accordingly every year provisional cost sheet is being issued to the Food Corporation of India field offices for its execution/ implementation. The writ petitions are not tenable due to the fact that the petitioners have resorted to suppression of material facts. The process of recovery is not initiated solely on the basis of CAG Report No.31 of 2015 but also on the letter of the Ministry of Consumer Affairs, Food and Public Distribution, Government of India vide Letter No. F.No.198(1)/2015-FC A/cs. Dated 31.07.2018 has requested FCI to initiate a recovery process for the excess payment against the said millers through possible means like demand notice and

legal means. The Corporation had never said that recovery of Mandi Labour Charges will be done from the next bills/payments of the millers, which is a wrong claim made by the petitioner. The allegation that calculations are incorrect is baseless. The calculations are made based on the CMR deliveries made to Food Corporation of India during the material period, only after taking into due consideration of the component of Mandi Labour Charges that were fixed by the Government of India for each cropping year subsequently communicated to Food Corporation of India. The recovery proceeding initiated by the respondent corporation is not barred by time. The limitation for taking steps for recovery of dues as per Article 112 of the Limitation Act, 1963 is 30 years, since the amount paid in excess has been drawn from the public exchequer. It is pointed out by the Comptroller and Auditor General of India in its Report No.31 of 2015 that as per the Government Order issued by the Government of Andhra Pradesh vide G.O.Ms.No.38 of Consumer Affairs, Food and Civil Supplies (CSI) Department, dated 24.09.2007 at clause No.23 of Operational Guidelines it is stated that, for the purchases at farm gate, the transport and handling charges shall be fixed uniformly for the entire district by the Collector and the rate paid after deducting the transport and handling charges so fixed by the Collectors, shall be treated as the MSP. Mandi

Labour Charges are only payable to the millers when procurement of paddy is carried out in Mandis. If the paddy is procured at the farm gate, the transport and handling charges as fixed by Collectors should be deducted from the Minimum Support Price. The authority appointed by FCI, upon considering the replies submitted by the petitioners and further considering all the facts and figures, having found that the reply submitted to the show cause notice is not satisfactory, issued the impugned orders. The writ petition is nothing but an effort to evade responsibility to answer the show cause notices and delay tactics. Mandi Labour Charges is a component of the cost sheet issued by the 1st respondent for every marketing season, the same is payable only if the function is carried out at the designated place i.e. in this case at Mandis. The show cause notices/ speaking orders issued to millers are based on information/data available in the records of respondents i.e. Food Corporation of India and on the basis of well-documented resource, in precise quantitative terms and they cannot be dismissed as vague, incomprehensible and lacking necessary details and self-prepared. The Corporation has never said the Rice Millers have not sustained any labour charges at all. But as per the G.O.Ms.No.38 of Consumer Affairs, Food & Civil Supplies Department, dated 24.09.2007, those charges are not to be borne by Food Corporation of India. In fact,

the Corporation had elaborately discussed in the personal hearing about the said G.O., as well as the directions of the 1st respondent dated 31.07.2018 before issuance of speaking orders to the Rice Millers. The petitioners stated that they could not get any receipts from any of the lorry transporters or from the labourers for the period 2009 to 2014, which were incurred by them. But the FCI had never asked for any of the receipts to produce. The Component of Mandi Labour Charges does not include the loading and transportation of paddy at mill points, transportation charges are included in the milling charges component of the provisional cost sheet. Any action in pursuance of any findings of CAG cannot be dismissed as an action caused by undue influence. Further, in case of any differences in the interpretation of any circular dealing with financial matters, the interpretation of CAG will always prevail over other interpretations by the executing/ implementing agencies. The observations made by CAG are based on the operational guidelines issued vide G.O.Ms.No.38 dated 24.09.2007. There are no merits in the writ petitions and they are liable to be dismissed.

13. Heard Sri Venkateswara Rao Gudapati, P.S.P.Suresh Kumar, Sri Srinivasa Rao Kudupudi, Sri S.Krishna Murthy, Sri K.Srinivasa Rao, Sri S.V.S.S.Sivaram, Sri Balaji Varma and Sri C.Subodh, learned counsel for

the writ petitioners; Sri Pelleti Rajesh Kumar, learned Central Government Counsel for respondent no.1 and Sri S.Syam Sunder Rao, learned Standing Counsel for Food Corporation of India.

14. Learned counsel for the petitioners, while reiterating the contents of the writ affidavits, further contended that the impugned orders passed by the Authorized Officer of the Food Corporation of India directing the petitioners to pay within 30 days from the date of receipt of the order, the Mandi Labour Charges for the rice supplied by them for the period from 2009-10 to 2013-14 is illegal, arbitrary, not only in violation of principles of natural justice but also the provisions of the Limitation Act, for the reasons that the CAG report which was made basis for issuance of show-cause notices was not furnished to the petitioners and that the amount which is sought to be recovered/repaid was paid to the petitioners about 7 or 8 years prior to issuance of the show cause notice and passing the impugned orders. Therefore, there is sheer violation of principles of natural justice and also the impugned orders came to be passed in utter ignorance of the provisions of Limitation Act. The reasons assigned by respondent no.3 that limitation for recovering the amount is 30 years as per Article-112 of Limitation Act is misconceived and illogical and the respondent no.3 failed to understand the subtle distinction between

'Government' and the 'Corporation'. The Corporation does not fit into the category 'Central or State Government' referred to in Article-112. Therefore, the claim for recovery of the amount allegedly excess paid is hopelessly barred by limitation. The reasoning given by respondent no.3 for coming to the conclusion that the claim is within the period of limitation, is improper, illogical and irrational. Non-furnishing of CAG report along with the show cause notices is a fundamental flaw and the same vitiates the entire proceedings, since there is a clear violation of the principles of natural justice. The show cause notices issued suffers for vagueness and they do not contain proper calculations as to how the authorities could arrive at the amount specified therein. On that ground also the impugned notices are void for vagueness and so also the orders impugned passed pursuant to such vague show cause notices.

The learned counsel for the petitioners further contended that the Corporation initiated recovery proceedings alleging that as per the CAG report no.31 of 2015 it was found that even though there were no organized Mandis in the States of Andhra Pradesh, Odisha and Bihar, the rice millers of these three States were paid Mandi Labour Charges. Mere non existence of Mandi per se does not mean that the millers did not and need not incur any expenditure towards labour charges and it is not even

the case of the Corporation that the rice millers did not incur any expenditure towards labour charges.

The learned counsel for the petitioners would further submit that as per G.O.Ms.No.38, Consumer Affairs, Food and Civil Supplies (CSI) Department, dated 24.09.2007, the Minimum Support Price would be the rate paid after deducting the transport and handling charges fixed by the Collectors. It is the contention of the respondents that as per the said G.O., if the paddy is procured at the farm gate, the transport and handling charges as fixed by the Collectors should be deducted from the Minimum support price. In the absence of any proof or evidence as to deduction of the transport and handling charges from the ryots by the petitioners from out of the Minimum Support Price, it is not known as to how on basis of which material the respondent authorities and even the CAG came to the conclusion that the petitioners had double benefited stating that they deducted the transport and handling charges while paying Minimum Support Price to the farmers at the time of purchase of paddy at farm gate and also claimed the benefit of Mandi Labour Charges from the Food Corporation of India. It is not as though that the proceedings for recovery had been initiated based on the complaint made by any of the farmers from whom the petitioners had purchased paddy. Thus, the recovery

process initiated by the respondent authorities basing on CAG report is wholly untenable and unsustainable and that too on mere surmises and conjectures not backed by any evidence, either oral or documentary. Therefore, the impugned orders are liable to be set aside and also the proceedings issued by the Food Corporation of India demanding the petitioners to pay back the Mandi Labour Charges and the consequential proceedings issued by the State Civil Supplies Corporation directing the petitioners to obtain No Due Certificate from Food Corporation of India are liable to be quashed. Accordingly, prayed to allow the writ petitions.

15. Per contra, Sri Pelleti Rajesh Kumar, learned Central Government counsel for the 1st respondent and Sri S.Syam Sunder Rao, learned Standing Counsel for Food Corporation of India for respondent nos. 2 to 4, in one voice contended that the Corporation being owned and controlled by the Central Government, comes within the expression 'Central or State Government' referred to in Article 112 of the Limitation Act. Therefore, the limitation for filing suit is 30 years. In view of the same, the contentions contra raised by the learned counsel for the petitioners are unsustainable and they are to be rejected. The process of recovery was not initiated solely on the basis of CAG Report but also on the request made by the

Ministry of Consumer Affairs, Food and Public Distribution, Government of India to the Food Corporation of India vide Letter dated 31.07.2018.

The learned counsel have further submitted that G.O.Ms.No.38 of Consumer Affairs, Food and Civil Supplies (CSI) Department, dated 24.09.2007 at clause 23 of Operational Guidelines in specific terms state that for the purchases at farm gate, the transport and handling charges shall be fixed uniformly for the entire district by the Collector and it define the 'Minimum Support Price' as the rate paid after deducting the transport and handling charges fixed by the Collectors. Hence, the petitioners having paid amount to the ryots for the purchases made by them at farm gate, after deducting handling and transport charges incurred by them, are not permitted to claim and be paid the Mandi Labour Charges. Therefore, in the Comptroller and Auditor General report, it is rightly pointed out that as there are no organized Mandis in the State of Andhra Pradesh, the petitioners, who are operating their rice milling business in the State of Andhra Pradesh by purchasing the paddy within the State at farm gate, are not entitled to claim and be paid the Mandi Labour Charges. The petitioners have not raised any valid and tenable grounds warranting interference of this Court with well versed orders passed by the 2nd respondent, which were passed taking into consideration all the aspects in

a right respective. The writ petitions are meritless and they are liable to be dismissed.

In support of their contention, they relied on the decisions in Workmen of the Food Corporation of India vs. M/s. Food Corporation of India¹ and Union of India vs. M/s. Gaurav Enterprises and another² of the High Court of Punjab and Haryana at Chandigarh.

16. Perused the material available on record and considered the submissions made by the learned counsel for both the parties.

17. There is no dispute regarding supply of rice by the petitioners to the Food Corporation of India and also regarding payment of the bills payable to the petitioners by the Food Corporation of India. It is also not in dispute regarding issuance of show cause notices, submission of explanations, affording an opportunity of being heard to the petitioners, before passing the impugned orders.

18. The impugned orders contained a direction for payment of the amount to the Food Corporation of India, representing the Mandi Labour Charges for the material period of 2009-10 to 2013-14. The material

$1.1985$ AIR 670

^&lt;sup>2</sup>. Civil Revision No.85 of 2022 (O&M), dated 30.05.2022

available on record and also the contentions advanced by the respective counsel for the parties make it clear that show cause notices were issued to the petitioners pursuant to the report submitted by the Comptroller and Auditor General of India vide Report No.31 of 2015. 2.1.1(a) of the Comptroller and Auditor General of India vide Report is relevant for the present purpose and for benefit and expediency, the same is extracted hereunder:

"(a) Irregular payment of Rs.194.23 crore MLC to rice millers for supply of Levy Rice in Odisha, Bihar and Andhra Pradesh regions of FCI

In respect of Levy Rice deliveries, only those private rice millers who purchase paddy at regulated mandis are entitled for reimbursement of the MLC at the rate specified in the GoI approved cost sheet issued for every marketing season. Audit observed that though the purchases were made at farm fate/mill point, FCI unjustifiably reimbursed MLC to the private rice millers without verifying whether paddy was procured at mandi or at farm gate. This resulted in irregular payment of MLC and consequential undue benefits to millers to an extent of Rs.194.23 crore in Bihar, Odisha and Andhra Pradesh regions of FCI during 2009-10 to 2013-14.

Though irregular payment during KMS 2007-08 to 2009-10 in the case of Andhra Pradesh (AP) region was pointed out by Audit and brought out in the C&AG's Audit Report (Para no.6.2 of Report No.8 of 2012- 13), yet FCI AP Region continued to release MLC for subsequent KMS vis., 2010-11 to 2013-14 without checking the quantum of purchase at farm gate/mill point.

FCI, in its reply, stated that it is following the prescribed cost sheet and the GoI has not specified the mandi labour rates payable for respective purchases. It was further stated that private rice mills were incurring labour charges in case of purchases made at locations other than at mandi and FCI has to reimburse the same.

The reply is not acceptable in view of the fact that in case of incurrence of labour charges by private rice mills, the State Government in its operational guidelines has stated that the same may be deducted from the MSP and only the net MSP is to be released to the farmers.

The Ministry stated (June 2015) that MLC allowed to the private rice millers are based on normative costs and generally fixed at lower level than that of the actual costs incurred by various SGAs.

The reply is not acceptable as the reimbursement for the incidental not actually incurred by the millers is undue benefit being passed on to millers which should have been checked at the time of making payment and necessary recoveries need to be made."

19. According the Audit observations, in respect of levy rice deliveries, only those private rice millers who purchase paddy at regulated mandis are entitled for reimbursement of the Mandi Labour Charges at the rate specified in the Government of India approved cost sheet issued for every marketing season.

20. Further audit observations are to the effect that though the purchases were made at farm gate/mill point, Food Corporation of India unjustifiably reimbursed mandi labour charges to the private rice millers without verifying whether paddy was procured at Mandi or at farm gate.

21. The material placed on record would indicate that the Government of India, Ministry of Consumer Affairs, Food & Public Distribution (Department of Food & Public Distribution) will be issuing procurement prices for levy rice during every Kharif Marketing Season

(KMS) in respect of every State. The same contains costing sheet of Levy Rice for that particular year both for common and Grade-A raw rice. The same mentions the Minimum Support Price of Paddy, Market fee, R.D.cess, Mandi Labour, Milling Charges. Summation of all the above would be the cost of paddy. To the same, upon addition of the rate of extraction of rice from paddy, cost of rice would be arrived. Upon addition of costs of two new 50 kg. gunny bags, the grand total of Levy Price would be arrived. The said communication also contained a note with as many as eight (08) points. Point No.6 of the note appended would specify that " In view of the APMC Act, payments relating to statutory charges, such as purchase tax/trade tax, mandi charges, market fee, arhatia commission/dami, RD cess etc. would be payable, only on production of the relevant official/statutory receipts evidencing payments.

22. Admittedly, as rightly observed in the CAG report, there were no organized mandis in the State of Andhra Pradesh. For no stiff resistance from the writ petitioners, it can be safely concluded that levy of rice supplied to the Food Corporation of India was procured either at the farm gate or mill point.

23. The contention of the petitioners is that mere absence of organized mundi would not absolve them of the burden of meeting out the expenditure for travelling and handling charges since the goods purchased at the farm gate is to be brought to the mill for milling the paddy. According to the respondents, G.O.Ms.No.56, dated 30.10.2009 states at point No.34 that the handling charges should include weighment, stitching and stacking/loading at PPCs/AMCs and the Hamali charges, thus, fixed will have to be borne by the buyers of the stocks at PPCs/AMCs including the State Procuring Agencies and therefore the said charges are akin to Mandi Labour charges.

24. It is relevant here to note that the Government of Andhra Pradesh issued G.O.Ms.No.38, Consumer Affairs, Food and Civil Supplies (CSI) Department, dated 24.09.2007 whereby orders were issued regarding procurement policy of paddy and rice for KMS 2007-08. Clause No.23 of Operational Guidelines (Annexure-III), it is stated that the Minimum Support Price would be the rate paid after deducting the transport and handling charges. For benefit, the same is extracted hereunder:

"23. For the purchases at farm gate, the transport and handling charges shall be fixed uniformly for the entire district by the Collector and the rate paid after deducting the transport and handling charges so fixed by

the Collectors, shall be treated as the MSP. For example: if the transport and handling charges fixed is Rs.15/- per quintal, the rate paid for Grade A variety of paddy at farm gate i.e. Rs.660/- (Rs.675- Rs.15) towards transport and handling charges shall be treated as MSP."

24. It is the specific contention of the respondents that the petitioners, who purchased paddy at farm gate would have deducted the transport and handling charges as fixed by the Collectors and paid rate to the farmers. Thus, the petitioners, having been benefited by paying the ryots the rate after deducting the transport and handling charges, illegally claimed the amount under the head 'Mandi Labour Charges'.

25. Curious enough to note here that action for reimbursement of excess paid Mandi Labour Charges was initiated basing on the observations made in Comptroller and Auditor General report. It is not as though the authorities resorted to reimburse the Mandi Labour Charges based on any complaint made by any of the ryots from whom the petitioners had purchased paddy that they were only paid the price after deducting the transport and handling charges from out of the Minimum Support Price.

26. Admittedly, there is no oral or documentary proof that the petitioners had deducted from the ryots the charges mentioned in clause-23 of the operational guidelines mentioned in G.O.Ms.No.38, dated 24.09.2007. It is only an assumption of the respondents and the terms of

the above G.O.was made basis for this supposition. No doubt, the said G.O. takes care of the travelling and handling charges to be borne out by the purchasers in case the stocks were procured from farm gate by giving directions to the buyers to pay the rate after due deduction of the charges incurred for the above acts. However, there is no evidence available with the respondents or with the personnel that audited the accounts of the Food Corporation of India and prepared the CAG report relied on by the respondents to initiate action for recovery of the Mandi Labour Charges. Admittedly, the petitioners did not produce any material before the respondent authorities when they were heard pursuant to the show cause notices issued, as rightly contended by the respondents. It is relevant here to note that action for recovery of the allegedly excess paid Mandi Labour Charges was initiated after a long lapse of 7 or 8 years from the actual date of occurrence. Thus, the petitioners cannot be blamed for their failure to produce any proof as to the actual amount paid by them to the ryots during the relevant years.

27. In view of the above, it is evident that the CAG report and the pursuant initiation of action by the respondents for recovering the amount is not on any concrete evidence but only on surmises, suppositions and conjectures that the petitioners would have deducted the transport and

handling charges and would only have paid the rest of the amount of the Minimum Support Price fixed for the respective years. Such a supposition however strong it might be would not be a substitute for truth.

28. Further, in the decision in Centre for Public Interest Litigation and others, (2012) 3 SCC 1, the Hon'ble Supreme Court held that CAG's Report was subject to scrutiny of the Public Accounts Committee and the Joint Parliamentary Committee, it would not be proper to refer to findings and conclusions contained therein. Parliamentary debates and it is possible that PAC can accept the ministry's objection to the CAG Report or reject the report of the CAG. In Arun Kumar Agarwal vs. Union of India and others reported in (2013) 7 SCC 1, the Hon'ble Supreme Court held that the CAG's Report is always subject to parliamentary debates, and it is possible that PAC can accept the ministry's objection to the CAG Report or reject the report of the CAG.

29. Further, the said audit report will be laid before the Legislature of the State in terms of the procedure laid down under Article 151 of the Constitution of India is the final document. No material whatsoever was placed before this Court to show that the said CAG report was tabled in

Parliament and the said report was accepted by the Ministry. Thus, issuing the impugned notices based on CAG is per se illegal.

30. The respondents made an attempt to put forth contentions that the show cause notices were not solely issued on the CAG report but also the Ministry of Consumer Affairs, Food and Public Distribution, Government of India vide Letter No.F.No.198(1)/2015-FC A/cs., dated 31.07.2018 has requested the Food Corporation of India to initiate recovery process and therefore, whether or not the CAG report had attained finality is not germane for resolving this issue. Perusal of the said letter filed along with the written submissions filed by the Food Corporation of India shows that the said letter has been issued basing on the CAG report itself. Thus, this would not improve the case of the respondents any further.

31. In view of the above, the impugned orders passed by the respondent are not supported any material or evidence placed before him but based on surmises, imaginations and suppositions, which have no place in law. Hence, interference of this Court is warranted and the impugned orders are liable to be said aside. So also the proceedings issued by Food Corporation of India demanding the petitioners for payment of Mandi Labour Charges and the consequential notices issued by the State

Civil Supplies Corporation of India directing the petitioners to obtain No Due Certificate from Food Corporation of India for the period KMS 2008-09 to KMS 2013-14 are liable to be quashed.

32. Therefore, this Court feels it unnecessary to delve into the aspect of limitation, since even an affirmative finding on this issue would not have any bearing, in view of the findings already given above that the genesis of the claim itself is not supported by any documents but only an outcome of mere inferences.

33. In the above view of the matter, these writ petitions are allowed:

• (1) The orders vide File No.Proceedings 30/WP NO.7854 of 2022- MLC, dated 13.06.2022, 16.06.2022 and 18.06.2022 impugned in W.P.No.22933 of 2022, 22488 of 2022, 22921 of 2022 and W.P.No.23393 of 2022 are set aside.
• (2) The Proceedings issued by the Food Corporation of India vide File No.12(1)/incidentals/2021-22, dated 19.09.2022 impugned in W.P.Nos.33766 of 2022, 33771 of 2022, 32990 of 2022, W.P.No.33776 of 2022, W.P.No.36980 of 2022 are quashed.
• (3) Proceedings of the Vice-chairman & Managing Director, APSCSCL, dated 03.12.2019 in Letter Lr.No.Accts.19(60)/2019

and the consequential proceedings of the District Manger, APSCSCL and notices of the Divisional Manager, FCI dated 27.08.2021 vide Lr.No.Proc/26(1)/2017-18-Vol-III impugned in W.P.No.5510 of 2020, W.P.No.6065 of 2022, W.P.No.9048 of 2021 and W.P.No.23400 of 2021 are quashed. The State Civil Supplies Corporation is directed not to insist for 'No Due Certificate' of the Food Corporation of India for the period KMS 2008-09 to KMS 2013-14.

• (4) Proceedings dated 31.08.2021 and 27.08.2021 of the Food Corporation of India impugned in W.P.No.28327 of 2021 is hereby quashed.

• (5) Proceedings No.Proc/Audit/SLKM/2018, dated 20.10.2020 of the District Manager, Food Corporation of India impugned in W.P.No.20841 of 2020 is hereby quashed.

• (6) Lr.No.Proc./MLC/Rec.2.1.1(a)/2019, dated 04.01.2020 of the Divisional officer, Food Corporation of India impugned in W.P.No.15096 of 2020 is hereby quashed.

• (7) Proceedings of the Divisional Manager, FCI vide Lr.No.Proc/26(1)/2017-18-Vol-III (1) dated 27.08.2021 impugned in W.P.No.20838 of 2021 is hereby quashed.

• (8) Proceedings dated 27.12.2019 of Food Corporation impugned in W.P.No.319 of 2020 is hereby quashed.

There shall be no order as to costs.

As sequel thereto, miscellaneous petition, if any, pending shall stand closed. Interim orders, if any, shall stand vacated.

_________________________ JUSTICE RAVI CHEEMALAPATI

11th March, 2024 RR

HON'BLE SRI JUSTICE RAVI CHEEMALAPATI

W.P.Nos.319, 5510, 15096 & 20841 of 2020, W.P.Nos. 9048, 20838, 23400 & 28327 of 2021 and W.P.Nos. 6065, 22921,22933, 23393, 22488, 32990, 33766,33771,33776 and 36980 of 2022

11th March, 2024

RR