2024 (12) TMI 1016 - SC - Indian Laws

Recovery initiation proceedings for the alleged sums due from the Rice Millers as public demand - initiation of recovery proceedings under the Act against the Rice Millers as the nodal agency of the State Government - adherence of principles of natural justice or not - availing alternate statutory remedies to challenge the recovery certificate - Procurement of Custom Milled Rice (CMR) for the procurement year 2011-12 in the State of Bihar. Whether the recovery by the Civil Supplies Corporation qualifies as a public demand under the Act and the Rules? - HELD THAT - The definition of public demand under section 3(6) is broad and inclusive. It incorporates any arrears mentioned in Schedule I and allows for recovery of such arrears under the Act. Clause 8-A further clarifies that any loan or advance payable to the State Government, its departments, or officials constitutes a public demand. The provision uses broad language, such as any loan and anybody whatsoever, indicating the legislative intent to create an all-encompassing framework for recovery. Clause 15 additionally specifies that debts owed to certain banks and statutory bodies also qualify as public demands, provided that the liability is acknowledged in writing. As held by the Full Bench of the Patna High Court in Ram Chandra Singh 1986 (11) TMI 394 - PATNA HIGH COURT , the term public demand is of wide amplitude and encompasses all arrears or dues explicitly mentioned or implied in Schedule I. The deliberate legislative design of section 3(6) and Schedule I reinforces the inclusive scope of the term. Upon examination of admitted circumstances and the alleged default in delivery of CMR, it is unable to subscribe to the view taken by the Learned Single Judge on the existence of jurisdictional facts. A cause of action is stated to be a bundle of facts set out in the plaint. Similarly, jurisdictional facts are determined by the totality of circumstances in a given case. It is as simple as not omitting from consideration what is obvious. Likewise, a relevant circumstance, even if obfuscated, is not omitted from consideration while deciding a jurisdictional fact. Jurisdictional facts consist of a sequence of events or a bundle of circumstances. The relevant circumstances are determined on a case-to-case basis. Whether the Civil Supplies Corporation can initiate recovery proceedings under the Act against the Rice Millers as the nodal agency of the State Government? - HELD THAT - The argument that the absence of a specific clause in the agreement authorising recovery under the Act, thus negating the jurisdiction of the certificate officer, is untenable. The Act itself provides a comprehensive framework for the recovery of public demands. The nature of the transaction, the public interest involved, and the role of the Civil Supplies Corporation as the State s nodal agency allows for the initiation of recovery proceedings before the Certificate Officer. The finding in the impugned judgement that the initiation of proceedings under the Act by the Civil Supplies Corporation, i.e., as the nodal agency of the state government upheld. The unaccounted deposit of rice at the depots of FCI certainly comes within the fold of public demand of the state government under section 3(6) of the Act. Therefore, the proceedings under the Act are maintainable before the certificate officer. Further, the jurisdictional fact on the initiation of recovery proceedings under the Act is available and legal - The impugned judgement correctly determined that the recovery proceedings initiated by the Civil Supplies Corporation were valid and justified. The court has appreciated the facts of the case and applied the law correctly. The nature of the transaction between the State Government and the Rice Millers, involving the procurement, milling, and distribution of public grain, clearly falls within the ambit of public demand as defined in the Act. The certificate officer s jurisdiction to initiate recovery proceedings is thus established. Whether the procedural safeguards under the Act and principles of natural justice have been adhered to during certificate proceedings? - HELD THAT - The initiation is not in accordance with the procedure stipulated under the Act, the procedure prescribed by the Act is not followed, and the principles of natural justice are violated. Whether the Rice Millers can avail alternate statutory remedies to challenge the recovery certificate? - HELD THAT - The Rice Millers invoked the writ remedy by raising a jurisdictional fact against realising the sums as a public demand under the Act. As a writ court or in an appeal under Article 136, we are not examining the contentions on alleged procedural deviations. It is left open to the respective Rice Millers to avail a statutory remedy as may be available under the Act. For availing a statutory remedy, we grant thirty days from today to the Rice Millers. In the event of a Rice Miller availing a statutory remedy as permitted by this Judgment, the said authority shall entertain the case without reference to the delay and the period of limitation in availing a remedy before the said authority. Appeal dismissed.

Summary

Issues Involved:

1. Whether the recovery by the Civil Supplies Corporation qualifies as a 'public demand' under the Bihar and Orissa Public Demands Recovery Act, 1914.
2. Whether the Civil Supplies Corporation can initiate recovery proceedings under the Act against the Rice Millers as the nodal agency of the State Government.
3. Whether the procedural safeguards under the Act and principles of natural justice have been adhered to during certificate proceedings.
4. Whether the Rice Millers can avail alternate statutory remedies to challenge the recovery certificate.

Issue-Wise Detailed Analysis:

1. Public Demand Qualification:

The core issue was whether the recovery by the Civil Supplies Corporation qualifies as a 'public demand' under the Act. The definition of 'public demand' under section 3(6) of the Act is broad and inclusive, encompassing any arrears mentioned in Schedule I, including loans or advances payable to the State Government, its departments, or officials. The judgment emphasized that the term 'public demand' is of wide amplitude and is designed to include all arrears or dues explicitly mentioned in Schedule I. The court noted that the Civil Supplies Corporation, acting as a nodal agency, provided paddy to Rice Millers for custom milling and subsequent delivery to FCI depots. The claim for recovery of the cost of undelivered CMR aligns with this definition, thus qualifying as a 'public demand' recoverable under the Act.

2. Recovery Proceedings by Civil Supplies Corporation:

The judgment addressed whether the Civil Supplies Corporation, as a nodal agency of the State Government, could initiate recovery proceedings under the Act against the Rice Millers. The court held that the Civil Supplies Corporation, recognized as the nodal agency, was acting on behalf of the State to ensure the smooth functioning of the Public Distribution System (PDS). The court found that all jurisdictional facts to accept the role of the Civil Supplies Corporation as the nodal agent of the State Government were satisfactorily established. The nature of the transaction, involving the procurement of public grain and its distribution, clearly fell within the definition of 'public demand.'

3. Procedural Safeguards and Natural Justice:

The Rice Millers argued that the initiation and conclusion of proceedings by the certificate officers were vitiated by procedural irregularities and violations of natural justice. The court noted that the Act provides adequate safeguards for parties facing recovery actions, including procedures for filing, serving, and contesting recovery certificates, as well as provisions for appeal, revision, and review. The Division Bench rightly emphasized the availability of these statutory remedies to the aggrieved persons. The court found no procedural infirmity in the respective certificates issued in favor of the Civil Supplies Corporation.

4. Alternate Statutory Remedies:

The judgment also considered whether the Rice Millers could avail alternate statutory remedies to challenge the recovery certificate. The court observed that the Rice Millers, by invoking writ jurisdiction, failed to exhaust statutory remedies at the first instance. The court granted the Rice Millers thirty days to avail a statutory remedy as may be available under the Act, without reference to the delay and the period of limitation in availing a remedy before the said authority.

Conclusion:

The Supreme Court upheld the finding in the impugned judgment that the recovery proceedings initiated by the Civil Supplies Corporation were valid and justified. The nature of the transaction between the State Government and the Rice Millers, involving the procurement, milling, and distribution of public grain, clearly fell within the ambit of "public demand" as defined in the Act. The certificate officer's jurisdiction to initiate recovery proceedings was thus established. The civil appeals were dismissed, with no order as to costs.