{"id":257207,"date":"2004-04-20T00:00:00","date_gmt":"2004-04-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/nagrik-uphhokta-m-manch-etc-vs-union-of-india-ors-etc-on-20-april-2004"},"modified":"2018-08-12T20:12:40","modified_gmt":"2018-08-12T14:42:40","slug":"nagrik-uphhokta-m-manch-etc-vs-union-of-india-ors-etc-on-20-april-2004","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/nagrik-uphhokta-m-manch-etc-vs-union-of-india-ors-etc-on-20-april-2004","title":{"rendered":"Nagrik Uphhokta M. Manch Etc vs Union Of India &amp; Ors. Etc on 20 April, 2004"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Nagrik Uphhokta M. Manch Etc vs Union Of India &amp; Ors. Etc on 20 April, 2004<\/div>\n<div class=\"doc_author\">Author: R Lahoti<\/div>\n<div class=\"doc_bench\">Bench: R.C. Lahoti, Ashok Bhan.<\/div>\n<pre id=\"pre_1\">           CASE NO.:\nAppeal (civil)  3249-3250 of 2002\n\nPETITIONER:\nNagrik Uphhokta M. Manch etc.\n\nRESPONDENT:\nUnion of India &amp; Ors. etc.\n\nDATE OF JUDGMENT: 20\/04\/2004\n\nBENCH:\nR.C. LAHOTI &amp; ASHOK BHAN.\n\nJUDGMENT:\n<\/pre>\n<p id=\"p_1\">J U D G M E N T<\/p>\n<p>I.A. Nos. 4-15<\/p>\n<p>R.C. Lahoti, J.\n<\/p>\n<p id=\"p_1\">\tIn the States of Madhya Pradesh, kerosene was being<br \/>\ndistributed and made available for sale to consumers through public<br \/>\ndistribution system and by appointing fair price shops and retailers.<br \/>\nBy executive instructions, the State of Madhya Pradesh evolved a<br \/>\nsystem called rounding off of the price in the name of securing<br \/>\ndistribution of kerosene at uniform prices.  The effect of the system<br \/>\nwas that the prices for sale by the wholesalers and the retailers were<br \/>\nso strategically appointed as to generate a margin which was collected<br \/>\nby Collectors in several districts and the Director of Civil Supplies at<br \/>\nthe State level.  Such fixation of prices, based on rounding off, was<br \/>\nchallenged by filing writ petitions in the High Court which were<br \/>\ndismissed.  The matter came up in appeals by special leave before this<br \/>\nCourt.  This Court allowed the appeals.  The judgment of the High<br \/>\nCourt was set aside and the system of rounding off of the prices so as<br \/>\nto build up funds available with the Director and the Collectors was<br \/>\ndirected to be quashed being ultra vires of <a href=\"\/doc\/1405898\/\" id=\"a_1\">Article 265<\/a> of the<br \/>\nConstitution and <a href=\"\/doc\/158335608\/\" id=\"a_1\">Section 3<\/a> of the Essential Commodities Act 1955 and<br \/>\npara 2(d) of the Kerosene (Restriction on Use and Fixation of Ceiling<br \/>\nPrice) Order, 1993.\n<\/p>\n<p id=\"p_2\">\tDuring the pendency of the writ petition and the appeals, the<br \/>\nState of Madhya Pradesh was reorganized into two States by carving<br \/>\nout the State of Chhattisgarh separately from out of the State of<br \/>\nMadhya Pradesh.  The State of Chhattisgarh was joined as party to the<br \/>\nappeals in this Court.  Huge funds, running into crores of rupees, were<br \/>\nfound to have been collected by the two States the figures whereof<br \/>\nwere brought to the notice of this Court.  However, the collection had<br \/>\ncontinued during the pendency of the appeals.  Vide its judgment<br \/>\ndated May 2, 2002 (reported as (2002) 5 SCC 466) apart from striking<br \/>\ndown the system of rounding off, the Court made the following further<br \/>\ndirections:-\n<\/p>\n<p id=\"p_3\">\t&#8220;However, on the facts brought to the notice<br \/>\nof this Court, the matter cannot be left at that<br \/>\nalone.  We have the figures of the collection and<br \/>\nutilization of the fund up to 31-7-2001 brought to<br \/>\nour notice.  During the pendency of these appeals,<br \/>\nfurther amount must have been collected and also<br \/>\nspent. Some directions would be required to be<br \/>\nmade for utilizing the fund so available with the<br \/>\nofficers of the State Government.  This Court would<br \/>\nalso like to know how and for what purpose the<br \/>\nfund has been utilized and whether timely audits of<br \/>\nthe fund were carried out.  For this purpose we<br \/>\nrequest the Accountant-General of Madhya Pradesh<br \/>\nto carry out the audit of the fund as available with<br \/>\nthe Director and the Collectors of the districts in<br \/>\nthe States of Madhya Pradesh and Chhattisgarh,<br \/>\nthe latter State having been carved out and formed<br \/>\nduring the pendency of these special leave<br \/>\npetitions.  Apart from carrying out the usual audit,<br \/>\nwe request the Accountant-General of Madhya<br \/>\nPradesh to compile the expenditure under different<br \/>\nheads and sub-heads so as to clearly indicate for<br \/>\nwhat purpose the fund has been utilized.  We hope<br \/>\nthe audit will be completed in a period of 4 months<br \/>\nfrom the date of communication of this order to the<br \/>\nAccountant-General of Madhya Pradesh.  On receipt<br \/>\nof the report of the Accountant-General, the same<br \/>\nshall be laid before the Court soliciting further<br \/>\ndirections.  Till then, the amount collected in the<br \/>\nsaid fund by the Director of Food and Civil Supplies<br \/>\nand the Collectors of the districts shall stand<br \/>\nfrozen.&#8221;\n<\/p>\n<p id=\"p_4\">\tThe Principal Accountant-General of Madhya Pradesh has carried<br \/>\nout the audit in terms of the directions made by this Court. It was a<br \/>\nvoluminous task and could not be completed within the appointed<br \/>\nperiod of four months and, therefore, the time was extended.  In<br \/>\nFebruary, 2003, the report has been filed on behalf of the Principal<br \/>\nAccountant-General (Audit)-I of Madhya Pradesh, Gwalior after<br \/>\ncarrying out the audit of funds available with the two Directorates of<br \/>\nFood and Civil Supplies and with the Collectors of 61 districts in the<br \/>\nStates of Chhattisgarh and Madhya Pradesh.  We record our<br \/>\nappreciation of the commendable work done by the office of the<br \/>\nPrincipal Accountant-General (Audit)-I abovesaid within a reasonable<br \/>\ntime and very expeditiously.  The report satisfies the directions made<br \/>\nby this Court.\n<\/p>\n<p id=\"p_5\">\tThe States of Madhya Pradesh and Chhattisgarh, on having<br \/>\nbeen furnished with the copies of the audit reports, have filed<br \/>\nresponses.  They took time for completing the process of<br \/>\nreconciliation, recovery and adjustments in the light of the audit report<br \/>\nand to carry out the directions made by this Court.  On 10.11.2003,<br \/>\nafter hearing the Advocates General for the States of Madhya Pradesh<br \/>\nand Chhattisgarh, the Court made the following directions:-<br \/>\n\t&#8220;There is substantial amount collected and<br \/>\nlying unspent the recovery whereof by the<br \/>\nDirectorate and Collectors of several Districts has<br \/>\nbeen held to be illegal. Such amount must be<br \/>\navailable to be utilized consistently with the<br \/>\ndirections to be made by this Court. For this<br \/>\npurpose before passing further orders, we would<br \/>\nlike to have the following information filed in a<br \/>\ntabulated form, supported by affidavit within three<br \/>\nweeks:-\n<\/p>\n<p id=\"p_6\">(i)\tThe total amount collected by way of<br \/>\nrounding up charges;\n<\/p>\n<p id=\"p_7\">(ii)\tThe amount spent out of it (Districtwise);<br \/>\nand<\/p>\n<p id=\"p_8\">(iii)\tThe amount as to which recovery is yet to be<br \/>\nmade by the Directorate\/Collectors of<br \/>\nDistricts.\n<\/p>\n<p id=\"p_9\">\tWe would also like to know if the audit is<br \/>\ncomplete or something yet remains to be done for<br \/>\nwant of information made available by the Districts.\n<\/p>\n<p id=\"p_10\">I.A. No. 14-15\/2003 (filed by the State of<br \/>\nChhattisgarh)<\/p>\n<p>\tThe State Government shall take steps for<br \/>\nrecovery of rounding off charges lying deposited<br \/>\nwith the wholesalers so as to bring them into the<br \/>\nfunds available for utilization in accordance with<br \/>\nthe orders passed by this Court.&#8221;\n<\/p>\n<p id=\"p_11\">\tCompliance has been made and reported.\n<\/p>\n<p id=\"p_12\">\tThe question that remains to be decided is as to the utilization<br \/>\nof the crores of rupees lying available with the two States consisting of<br \/>\nthe principal, the interest and the recoveries effected consequent upon<br \/>\nthe directions made by this Court.\n<\/p>\n<p id=\"p_13\">\tThe two States have submitted that the funds which have been<br \/>\nfrozen under the orders of this Court may be released respectively to<br \/>\nthem for the purpose of utilization by them to strengthen the public<br \/>\ndistribution systems in the two States.  The traders (wholesalers and<br \/>\nretailers) have desired that the amount be refunded to them as it was<br \/>\ncontributed by them.\n<\/p>\n<p id=\"p_14\">\tOn 25.3.2004, an affidavit sworn in by Shri P.G. George, Under<br \/>\nSecretary in the Ministry of Petroleum and Natural Gas, New Delhi, has<br \/>\nbeen filed wherein it is stated, inter alia, as under:-<br \/>\n&#8220;5.\tThat the Central Government vide resolution<br \/>\nNo. PPD\/OPC\/IR\/75 dated 14.7.1975 had decided<br \/>\nto setup Oil Coordination Committee for<br \/>\nadministering the Pool Account, deciding on<br \/>\nallocation of crude oil and monthly production<br \/>\npatterns; and coordinating transportation<br \/>\narrangements for crude oil imports and coastal<br \/>\nmovements.  Secretary, Ministry of Petroleum and<br \/>\nNatural Gas, Government of India, was the<br \/>\nChairman of the OCC.\n<\/p>\n<p id=\"p_15\">\tThe subsidy on Public Distribution system of<br \/>\nKerosene was borne by the Oil Pool Account till<br \/>\n31.3.2002.  The subsidy on Public Distribution<br \/>\nSystem on Kerosene was funded by way of  cross<br \/>\nsubsidy on Petrol and Aviation Turbine Fuel and<br \/>\nsurcharges on petroleum products.  The Central<br \/>\nGovernment vide resolution No. P-20029\/22\/2001-<br \/>\nPP dated 28.3.2002 had decided to dismantle Oil<br \/>\nCoordination Committee w.e.f. 1.4.2002 and Oil<br \/>\nPool Accounts have been wound up.  The Central<br \/>\nGovernment has also decided that the outstandings<br \/>\nof the Oil Companies from the Oil Pool Account<br \/>\nwould be taken over by it.  The liability of Oil<br \/>\ncompanies would be discharged through issue of<br \/>\nSpecial Government Bonds.  The Oil Companies<br \/>\nhave already been issued Special Government<br \/>\nBonds for Rs.9000\/- crores and balance<br \/>\noutstandings would be liquidated after the<br \/>\ncompletion of CAG&#8217;s Audit which is in progress.\n<\/p>\n<p id=\"p_16\">\tThereafter the Central Government, has also<br \/>\ndecided vide resolution number No.P-\n<\/p>\n<p id=\"p_17\">20029\/18\/2001-PP dated 28.1.2003 that subsidy<br \/>\non Public Distribution System Kerosene and<br \/>\ndomestic LPC effective 1.4.2002 would be borne by<br \/>\nfiscal budget.  The budgetary allocation for the<br \/>\nsubsidy on Public Distribution System Kerosene and<br \/>\nDomestic LPG is as follows:\n<\/p>\n<blockquote id=\"blockquote_1\"><p>\t\t\t\t       Rs.\/Crores<br \/>\n\t\t2002-03\t\t4,495.80<br \/>\n\t\t2003-04\t\t6,300.00<\/p>\n<\/blockquote>\n<p id=\"p_18\">6.\tThat from the resume of the facts, it would<br \/>\nbe in the interest of justice that the State<br \/>\nGovernments, that is, Madhya Pradesh and<br \/>\nChhattisgarh are directed to deposit all this amount<br \/>\nin the General Receipts of the Central Government<br \/>\nas kerosene subsidy is being funded by the Central<br \/>\nGovernment.&#8221;\n<\/p>\n<p id=\"p_19\">\tWe have heard the learned Addl. Solicitor General appearing for<br \/>\nthe Union of India, Advocates General\/Standing Counsel for the States<br \/>\nof Madhya Pradesh and Chhattisgarh and the learned counsel<br \/>\nappearing for the several interveners.  We do not find any merit in the<br \/>\nclaim of the traders.  Whatever amount they have contributed to the<br \/>\nfunds generated by the State Governments in the name of rounding<br \/>\noff, the burden thereof has been passed on to the hundreds and<br \/>\nthousands of consumers.  A refund to them would amount to their<br \/>\nunjust enrichment and would not reach the ultimate consumers who<br \/>\nhave really parted with the amount.\n<\/p>\n<p id=\"p_20\">\tWe do not also see any merit in the claims of the two State<br \/>\nGovernments.  Firstly, they were responsible for illegally collecting the<br \/>\nfund.  The information made available by the two State Governments<br \/>\nand the facts collected by the report of the Principal Accountant-<br \/>\nGeneral reveal misutilisation of the funds and several irregularities ___<br \/>\nsome of them termed serious.  To a large extent recoveries have been<br \/>\neffected  which would not have been possible but for the Court&#8217;s<br \/>\nintervention.  Substantial amounts have ceased to be recoverable.<br \/>\nApart from suggesting that the amount of the fund would be utilized<br \/>\nfor strengthening the public distribution system, the State<br \/>\nGovernments have not come out with any concrete plan suggesting<br \/>\nutilization of funds.  We do not think the claims of the State<br \/>\nGovernments can be countenanced.\n<\/p>\n<p id=\"p_21\"> \tWe do find merit in the submission made on behalf of the<br \/>\nCentral Government.  The most appropriate thing to do, in our opinion,<br \/>\nis to direct the funds lying with the two State Governments to be made<br \/>\nover to the Central Government so that the same can be utilised by<br \/>\nway of general receipts of the Central Government as the Central<br \/>\nGovernment is funding the kerosene subsidy.\n<\/p>\n<p id=\"p_22\">\tThe States of Madhya Pradesh and Chhattisgarh are directed to<br \/>\nmakeover the amount of fund lying frozen with them, including the<br \/>\nprincipal and interest, alongwith such recoveries as have been effected<br \/>\nor may be effected hereafter to the Ministry of Petroleum and Natural<br \/>\nGas, New Delhi to be utilized for the purpose of funding kerosene<br \/>\nsubsidy by the Central Government.  Funds available at hand shall be<br \/>\nhanded over in six weeks.  Amounts, which are in the process of being<br \/>\nrecovered, shall be so recovered and handed over to the Central<br \/>\nGovernment in 4 months from today.\n<\/p>\n<p id=\"p_23\">\tThe matters stand disposed of.\n<\/p>\n<p id=\"p_24\">\tAll the pending intervention applications be treated as<br \/>\ndismissed.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Nagrik Uphhokta M. Manch Etc vs Union Of India &amp; Ors. Etc on 20 April, 2004 Author: R Lahoti Bench: R.C. Lahoti, Ashok Bhan. CASE NO.: Appeal (civil) 3249-3250 of 2002 PETITIONER: Nagrik Uphhokta M. Manch etc. RESPONDENT: Union of India &amp; Ors. etc. DATE OF JUDGMENT: 20\/04\/2004 BENCH: R.C. LAHOTI [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-257207","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Nagrik Uphhokta M. Manch Etc vs Union Of India &amp; Ors. 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