JUDGMENT
P.S. Sahay, J.
1. The petitioners are the owners and proprietors of Roller Flour Mills in this State, engaged in the process of manufacturing of Aata, Sooji, Maida etc. All the applications have been, heard together and will be governed by this common order. In C.W.J. C. No. 3183 of 1932 a prayer has been made to quash a direction of the Central Government as contained in teleprinter, message dated 27-7-1982 (Annexure-6) whereby the sale price of wheat to he sold by the Food Corporation of India to the petitioners’ Mills has been revised and also for quashing the telegraphic message, dated 31-7-1982, as contained in Annexure-7, directing the petitioners to give an undertaking in writing to pay the difference in price of the stock of wheat and wheat products as held by them on the 1st of August. 1982 and failure to do so will lead to the stoppage of allotment of wheat quota to them.
2. In order to appreciate the points involved in all these applications it will be necessary to state some facts, which are to be found in C. W. J. C. 3183 of 1982. Similar facts have been set out in other petitions also. All the petitioners an; licencees under the Wheat Roller Flour Mills (Licensing and Control) Order, 1957 (hereinafter to be referred to as Licensing Order). The aforesaid Licensing Order has been made by the Central Government under the Powers conferred on it under Section 3 of the Essential Commodities Act. The licensing authorities had issued directions that licensees will have to purchase wheat only from the Food Corporation of India and had been prohibited to purchase from the Open market. But on 8-5-1979 there was some relaxation, and petitioners were allowed to purchase from the open market for a limited period of three months only. The State Government for the purpose of making wheat available to different Roller Flour Mills fixed quotas and also fixed Purchase and sale price of wheat products and by Annexure-3 the price of wheat for sale to the petitioners’ Mill was fixed at the rate of Rs. 155/- per quintal exclusive of sale tax and other taxes. In pursuance of the aforesaid order wheat was purchased from time to time from the Food Corporation of India. The Central Government, by its letter dated 27-7-1982, as contained in Annexure-G, revised the sale price of the wheat to be sold by the Corporation from Rs. 155/- to Rs. 185/- per quintal with effect from 1-8-1982 and further directed the authorities to ascertain the stock of the petitioners as on 1-8-1982 and realise the difference of price which was to be deposited in Government account. In pursuance of the aforesaid order of the Central Government the State Government issued, an order as contained in Annexure-7, and directed the petitioners to pay the price difference and future quota of allotment was to be released only after the petitioners had given an undertaking to the State Government. The difference of the price will be Rs. 30/- per quintal and the additional price of stock lying with the petitioners in C. W. J. C. 3183 of 1982 will come to Rs. 1,16,298.90 paise. Similar is the case with the other petitioners though the amount differs in each case but they are quite substantial. Being aggrieved by the aforesaid two orders the petitioners have moved this Court and at the time of admission the operation of the two orders were stayed till the pendency , of these applications.
3. A counter affidavit has been -filed
on behalf of the Union of India in which
it is stated that the petitioners are all
licencees under the Licensing Order and.
therefore, it is their duty to abide by the
directions issued by the Licensing Authority under the provisions of the order.
It is further stated that wheat is sup
plied to the Roller Flour Mills at subsidized rate and the price of wheat pro
ducts is also fixed after allowing milling
margins so that the consumers are ultimately benefited. It has further been
averred that the supply of wheat to the
Flour Mills is not a sale of wheat to them
under a normal trade but under the terms
and conditions of the licence and by
making such supply the petitioners are
not given the full liberty to deal with the
articles in any manner they like. Regarding the- payment of the difference of
price, it is stated that in view of the pro
visions of the order of the Government
has the right to realise the differential
cost on account of price rise of wheat
and wheat products in respect of the
stock lying with the Flour Mills on 1-8-
1982 and the petitioners are legally bound
to abide by the directions. Thus, the
Flour Mills cannot be allowed to get un
intended benefit at the cost of the consumers. It is further stated that after
the supply of wheat is made to the Mills
and they lift them and stock them in their
godowns, the transactions do not attain
finality as in normal trade and the State
Government is within its power to re
cover the differential cost as and when
the prices are revised. In this way the
Government do not earn any profit but
at the same time the benefit cannot go to
the Mills at the cost of the public exchequer.
4. A supplementary counter affidavit has also been filed in which it is stated that prior to 1-8-1982 when the price of wheat was fixed at the rate of Rs. 155/- per quintal the prices of Maida and Sooji were also fixed at Rs. 212/- per quintal. Now with the revision of the price from Rs. 155/- to Rs. 185/- per quintal the corresponding price of Maida and Sooji has been fixed at Rs. 250/- per quintal with effect from 1-3-1382 and in consequence thereof there was a corresponding increase of Rs. 38/- per quintal in the price of wheat products whereas demand was made only for Rs. 30/-. A reply to the counter affidavit has been filed on behalf of the petitioners in which it is stated that after the stock of wheat is lifted and the prices are paid the sale is complete in all respects and the Mills become the absolute owner of the stock of wheat. It has been stated that price was lowered down on 23-6-1976 by An-nexure-8 and again in September, 1976 by Annexure-9 and the Mills had to undergo heavy losses for which they were never compensated. In reply to the supplementary counter affidavit filed on behalf of respondent No. 1, it is stated that prices were revised by a letter which was received on 13-8-1982 though it was dated 1-8-1982 and in that period the old stocks of wheat products, which were manufactured, had already been sold.
5. A counter-affidavit has been filed on behalf of the Food Corporation of India which is on the similar terms as the counter affidavit filed on behalf of the Union of India and it has been averred that the supply of wheat to the Roller Mills by making – payments does not give them the right to deal with the articles in any manner they like as it is understood under the normal trade. The power to give directions to realise the differential amount has been supported under the provisions of the order. Similar counter affidavits have also been filed in other applications. In C. W. J. C. 3238 of 1982, in the counter affidavit filed on behalf of the Food Commissioner it has been averred that though the supply of wheat to Roller Flour Mils is termed as a sale but the petitioners (Flour Mills) are all agents of the Government and they are liable to give the benefit of price increase to the Government on the stock available on 1-8-1982. It has also been averred that simply because the petitioners’ Mills removed the quota of wheat from the godown on payment of price the transaction does not attain its finality.
6. Mr. A. K. Sen, learned counsel appearing on behalf of the petitioners has contended that the direction of the Central Government and the Order of State Government for the recovery of Rs. 30/-per quintal from the stock as on 1-8-1982 will be in the nature of a tax for the property which has passed on to the petitioners after the payment of the purchase price. This, according to Mr. Sen, is beyond the powers of the authorities, without any sanction of law, wholly without jurisdiction and, therefore, fit to be quashed. In support of his contention reliance has been placed on a decision of the Supreme Court which will be considered in great detail. Mr. Shree Nath Singh, appearing on behalf of one of the petitioners has adopted the submissions of Mr. Sen but has submitted that previously the prices of wheat had been lowered resulting in heavy loss to his client for which he was never compensated, therefore, the State had no authority to demand the extra price. Mr. Ram Balak Mahto, learned Additional Advocate General appearing on behalf of the State has submitted that it was within the powers of the authorities to re-determine the price in exercise of the powers conferred on them under the provisions of the order and also under the terms and conditions of the licence. In support of his contention reliance has been placed on Clause 10 of the order and Clause V of Form-II, the licence granted to the petitioners. He has, further, submitted that the sale even after payment of the price and lifting of the stock by the petitioners is not complete and reliance has been placed on Section 25 of the Sale of Goods Act. He has further submitted that by increase of the price from Rs. 155/- to Rs. 185/- per quintal there has been corresponding increase of the price of wheat products and the petitioners having taken advantage of one part of the order cannot be allowed to repudiate the other part, which is not favourable to them. Mr. Aftab Alam, learned Additional Standing Counsel of the Central Government, and Mr. Narmadeshwar Pandey, for the Food Corporation of India, have virtually adopted the submissions made by the learned Additional Advocate General.
7. Before considering the submissions made at the Bar it will be necessary to refer to the relevant provisions of the order which came into force with effect from 1-10-1957. Licensing authority is defined under Section 2 (c). Clause 2 (e) defines wheat products which includes –Majda, Aata, Sooji, Rawa, resultant Aata and bran. Clause 3 may be usefully quoted:–
“No owner or person in charge of a Roller Mill shall manufacture, or cause to be manufactured any wheat products except under and in accordance with the terms and conditions of a licence issued under this Order.”
Under Clause 4, petition for licence has to be filed in Form-I and licence is granted under Form-II. Clause-V of Form-II may also be usefully quoted.
“The licensee shall abide by any direction issued by the licensing authority in regard to the purchase of wheat, extraction of maida, sooji and rawa and also in regard to the distribution or disposal of wheat products.”
The licensing authorities have been empowered to issue directions to the licensees under Clause 10 of the order which runs as follows:
“Powers of Licensing Authority and specified Authority to issue directions to licensees-
(1) The licensing authority or as the case may be, the specified authority may issue directions to licensee in regard to-
(a) the source from which and the manner in which wheat shall be obtained for the purpose of manufacture of wheat products;
(b) the production or manufacture of different kinds of wheat products and also the size of the packing, the method of packing and the like;
(c) the disposal of wheat products.
Provided that no direction under item (a) shall be issued by the specified authority without obtaining the prior concurrence of the Central Government.
(2) Every licensee or as the case may be, the specified authority shall be bound to carry out the directions of the licensing authority under sub-clause (1).”
8. Now the point for consideration will be whether the authorities had the power to issue directions which has been challenged by these petitioners. Mr. Sen has relied on a decision of the Supreme Court in the case of A. Venkata Subbarao v. State of Andhra Pradesh, AIR 1965 SC 1773 and has submitted that the instant case is completely covered by this decision and the impugned orders have to be quashed. I, therefore, propose to consider this decision in great detail. After the last world war there was scar city of rice in the State of Madras and the State Government in exercise of its power under Essential Supplies (Temporary Powers) Act, 1946, which is similar to Essential Commodities Act, issued foodgrains procurement order and food-grains licensing order and procuring agents were appointed and the prices of procurements and selling price to the licensed dealers were also fixed from time to time by notification. There was an agreement between the millers and the authorities and in case the procurement price was less than the selling price, the millers were entitled to the difference. The prices were increased by the Government on three different dates; 27-7-1947, 6-12-1947 and 21-11-1948 and a direction was issued by the authorities to pay the excess price which the millers obtained by the aforesaid action of the Government. The millers paid the price under protest and made demands which were not accepted. Suits were filed against the Government for the recovery of the amount. Some were allowed and some cases were dismissed and the matter ultimately came to the High Court of Andhra Pradesh at the instance of aggrieved parties. The stand of the State was that the miners were really the agents of the Government and thus they were accountable for extra profit which they would had made by the reason of the increase of the price by the Government. This contention was not accepted by the High Court but it was held that they were under the fiduciary obligation to the Government which was align to though not exactly the same as an agency and, therefore, they were liable to pay to the Government the extra profit they had earned. The contention of the millers that the surcharge was in reality a tax, illegally levied by an executive order was rejected by the High Court. The millers thereafter moved the Supreme Court and it was held that there was no relationship of principal and agent. The alternative argument on behalf of the State was that even if they were absolute owners, direction to pay surcharge was feasible under Clause 9 of the Order, which runs as follows:
“The licensee shall comply with any direction that may be given to him by the Government or by the Officer issuing the licence in regard to purchase, sale or storage for sale of any of the foodgrains mentioned in paragraph 1.”
The contention of the State that the demand in the nature of surcharge was permissible under the aforesaid clause was rejected. Their Lordships held as follows:
“If the theory that the plaintiffs were the agents of the Government be discarded as untenable, there would be no legal basis at all for the surcharge. It would then be in effect a tax imposed by an executive fiat without any legislative sanction on the capital value of the stocks of foodgrains held on a Particular date.”
The judgment of Andhra Pradesh High Court was set aside and the amount, which was paid under protest, was ordered to be refunded, I have gone through this decision carefully and have also considered the relevant provisions of the licensing Order, and I am of the opinion that the contention of Mr. Sen is well founded and must be accepted. Direction to pay the differential amount must flow from the Licensing Order either by express provision or even by implication. I find that both these are completely absent in the instant case. No doubt the licensing authorities have power under Clause 10 to issue direction from time to time and the licencees are also bound to carry out the direction. A similar provision is also in Form-II of the Licence as contained in Clause V which has been quoted above. But, these powers cannot be stretched to the extent of asking for extra amount which the petitioners have received due to the enhancement of the price. These provisions are almost similar to Clause 9 of the Madras Order, quoted above, and it has been held that the authorities were not empowered to give the directions, which are also the subject matter of controversy in these cases. The authorities have no authority to redetermine the price when the sale has become complete and make such demand. It may be stated here and now, that the prices have not been enhanced at the instance of the petitioners but by the authorities themselves. The theory of unjust enrichment cannot be pressed into service in the instant case because there is neither any agreement nor any mistake on behalf of the parties. The contention of the Additional Advocate General that by the corresponding increase of the price of wheat products all the petitioners will be benefited is of no consequence at all in the instant cases.
As it has been stated that the petitioners have also suffered loss due to decrease in the price, for which they have never been compensated. These considerations are wholly immaterial and, what has to be seen, is the source of power and in my considered opinion neither under Clause 10 nor under Clause V of Form-II such direction is contemplated under the law.
9. The contention of the learned Additional Advocate General that the sale is not complete in view of Sec. 25 of the Sale of Goods Act is only stated to be rejected. Section 25 reads as follows:
“25. (1) Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.
(2) Where goods are shipped or delivered to a railway administration for carriage by railway and by the bill of lading or railway receipt, as the case may be, the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal.
(3) Where the seller of goods draws on the buyer for the price and transmits to the buyer the bill of exchange together with the bill of lading or, as the case may be, the railway receipt, to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading or the railway receipt if he does not honour the bill of exchange; and, if he wrongfully retains the bill of lading or the railway receipt the property in the goods does not pass to him.”
Similar argument had also been advanced before the Andhra Pradesh High Court and had been rejected and, therefore, deserves no consideration at all. On the other hand, the decision relied upon by Mr. Sen in the case of Vishnu Agency Pvt. Ltd. v. Commercial Tax Officer, AIR 1978 SC 449 is a complete answer to the contention raised by the Additional Advocate General. In that case the question relating to sales tax was involved on transactions between growers and processing agent and also between the rice millers on one hand and the wholesalers or retailers on the other and it was held that they were sales within the meaning of the Act and Sales Tax and purchase tax was exigible on the turnover. Another contention of Mr. Additional Advocate General that the petitioners having taken advantage of one part of the agreement cannot repudiate the other is equally unsound and has to be rejected. Reliance, in this connection, has been placed in the case of New Bihar Bin Leaves and Co. v. State of Bihar, AIR, 1981 SC 679. In order to regulate trade in relation to Kendu Leaves law was enacted and after areas were demarcated agents were appointed and all of them had to enter into an agreement with the State and in pursuance of the agreement demand was made. In that context it was held that the persons having taken advantage of one part of the order cannot be allowed to repudiate the other. In the instant cases there is no such agreement and I may also state that agreements were also entered into in the Andhra Pradesh cases which went to the Supreme Court and still it was held that the millers were not liable to pay the extra price. Thus, all the contentions raised. On behalf of the respondents have to be rejected.
10. In the result all the writ applications are allowed, Annexure-7 of C. W. J. C. 3183 of 1982 is hereby quashed and part of Annexure-6, as stated hereunder, is quashed.
“State Government/Union Territory Administration are requested to verify stocks of wheat in State Government Godowns and with Fair Price shops Authorised Public Distribution Agencies as well as Roller Flour Mills as on close of transaction on thirtyfirst July, 1982, and calculate difference between old and revised prices and recover it from the party concerned and credit it to Central Account Stocks in transit of thirty-first July, 1982, will also be included in computing the total stocks on which the difference in price will have to be paid to the Central Government. Detailed letter follows.
Similar directions given in the other writ applications, which have been challenged, are quashed to the extent as mentioned above and the Central and State Government are directed not to demand any extra price as contained in the two letters mentioned earlier. In the facts and circumstances of this case, there will be no order as to costs.
S.S. Sandhawalia, C.J.
I agree.