The Supreme Court of India upheld the Bihar State Food and Civil Supplies Corporation’s authority to initiate recovery proceedings under the Bihar and Orissa Public Demands Recovery Act, 1914, against defaulting rice millers. A two-judge bench, comprising Justice Hrishikesh Roy and Justice S.V.N. Bhatti, delivered the judgment in a series of appeals led by Pawapuri Rice Mills v. Bihar State Food and Civil Supplies Corporation Ltd. (Civil Appeal No. 1889 of 2023).
The Court ruled that the dues owed by rice millers for failing to supply Custom Milled Rice (CMR) under government procurement policies constituted a “public demand” recoverable through the Act. The decision resolves a decade-long dispute concerning the procurement year 2011-12, wherein rice millers defaulted on their contractual obligations to deliver processed rice to the Food Corporation of India (FCI) depots.
Background of the Case
The dispute stemmed from a 2011 shift in Bihar’s rice procurement policy, which replaced the “levy rice” scheme with the CMR system. Under this scheme, rice millers received paddy from the Bihar State Food and Civil Supplies Corporation, a nodal agency of the State Government, for processing into rice to be supplied for the Public Distribution System (PDS). Non-compliance by several millers, including Pawapuri Rice Mills, triggered recovery proceedings.
The rice millers challenged recovery certificates issued under the Public Demands Recovery Act, asserting that the dues were contractual and did not qualify as “public demand.”
Legal Issues
1. Definition of “Public Demand”: The rice millers contended that dues to the Civil Supplies Corporation did not fall under the statutory definition of public demand in Section 3(6) of the Act, read with Schedule I.
2. Authority of Civil Supplies Corporation: Whether the Corporation, acting as a nodal agency, could initiate recovery proceedings under the Act.
3. Procedural Compliance: Allegations of violations of natural justice and procedural safeguards in the recovery process.
4. Alternative Remedies: Availability of statutory remedies for challenging recovery certificates.
Supreme Court’s Observations and Decision
The Court reaffirmed the Division Bench judgment of the Patna High Court, holding that the transactions involving the procurement, milling, and distribution of rice fell squarely within the ambit of public demand. Key observations include:
– Public Demand of Wide Amplitude: Referring to the Full Bench decision in Ram Chandra Singh v. State of Bihar, the Court noted that public demand encompasses all arrears or dues explicitly mentioned in Schedule I of the Act. It emphasized the legislative intent to allow the State to expeditiously recover dues essential for public welfare.
– Nodal Agency Status: The Civil Supplies Corporation, being a government-owned entity acting as the State’s nodal agency, was deemed competent to recover dues under the Act. Justice Bhatti remarked, “The Civil Supplies Corporation is not acting in a purely commercial capacity but as an integral arm of the State’s welfare scheme.”
– Undelivered CMR as Public Demand: The Court classified the monetary value of undelivered rice as public demand, aligning with the Act’s objectives to safeguard public interest and ensure uninterrupted PDS functioning.
– Procedural Safeguards: Addressing allegations of procedural lapses, the Court acknowledged the existence of statutory remedies, including appeals, revisions, and reviews under the Act. It granted rice millers a 30-day window to approach statutory authorities without limitation issues.
Key Quotes from the Judgment
1. On Public Demand: “The deliberate legislative design of Section 3(6) and Schedule I reinforces the inclusive scope of public demand, ensuring expeditious recovery for the public good.”
2. On the Role of Civil Supplies Corporation: “The Corporation acts as the nodal agency under the State’s procurement policy, and the dues arising from its transactions serve the larger public purpose of ensuring food security.”
3. On Jurisdiction: “The jurisdictional facts to accept the role of the Civil Supplies Corporation as the nodal agent of the State Government have been satisfactorily established in this case.”
Key Parties:
– Appellants: Pawapuri Rice Mills and others (rice millers in Bihar)
– Respondents: Bihar State Food and Civil Supplies Corporation and the State of Bihar
