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TMI Blog1958 (3) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... These transactions relate to a period when immediately after the war, food stuffs had to be controlled for the proper and even distribution of food throughout India. It necessitated the Government to have resort to passing 'Control Orders' thereby restricting and controlling the sale of paddy and rice. The policy of laissez faire received as it were! a set back during this time. The Indian Legislature passed the Essential Supplies (Temporary Powers) Act, XXIV of 1949 with a view to maintain and increase the supplies of essential commodities and have them distributed equitably at fair prices. Under Section 3 (1) of the Act, the Central Government may, for the implementation of the above object by a notified order, provide for regulating or prohibiting the production and supply of any essential commodity. Section 3 (2) of the above Act empowered the Government to regulate the production and supply of essential commodities by licences and permits to control the prices thereof. It also empowered the Government to require any person holding stock of an essential commodity to sell the whole or a specified pact of the stock at such prices and to such persons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the price was passed on to the consumer. The new prices were to take effect from 7th Dec. 1947. In order to see that the producers got the increased price, procurement agents were appointed in every procurement area. This had the desired effect in that it gave a stimulus to intensive cultivation and increased production. Similarly the Government decided upon the payment of bonus on all millets during the months of September and October, 1947. This increase was also passed on to the consumer and the amount realised on account of this increase was paid over to the ryots. 5. Likewise, with regard to the procurement of paddy and millets the Government passed orders in exercise of its delegated powers. It passed an order on 15th June, 1946, (G.O. Ms. 467, Food), which directed that any occupier, tenant or lessee or anyone in any other capacity was cultivating land with paddy or who was receiving any portion of such paddy as rent or otherwise, should sell the surplus of such paddy as may be determined by the Collector alter each harvest to the District Collector or an agent appointed by him in this behalf. There was a procedure laid down for determining as to what would be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plaintiff on the evening of 20-11-1948 (6-12-1947 in the case of O. S. No. 78/1950) are the exclusive property of the Plaintiffs? (2) Whether the plaintiffs are agents of the Government in respect of the sale of paddy and rice? (3) Whether the plaintiffs are entitled to the benefit of the increase in the price of the paddy and rice under the notification dated 19-11-1948 (6-12-1947 in the case of O. S. No. 78/1950)? (4) Whether the order of the Government directing the collection of surcharge comes under the provisions of Section 3 of the Essential Supplies (Temporary Powers) Act, 1946? (5) Whether the order of the Government directing levy of the surcharge is illegal and ultra vires and contrary to the terms of the licence and the agreement? (6) Whether under Section 16 of the Essential Supplies (Temporary POWERS) Act, the plaintiffs arc not entitled to call in question the orders passed under the said Act, in a Court of law? (7) To what relief is the plaintiff entitled? 8. Evidence in the case consisted mainly of documents. Naturally in a case of this kind oral evidence would be of little value. The Subordinate Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Subordinate Judge of East Godavari, the Subordinate Judge of Krishna at Masulipatam took a different view, According to him the directions issued by the Government under the licence granted to the food procurement agents viz., the plaintiffs, were within the competence of the Government and that, therefore, the orders were legal and valid in law. He further held that if under the terms of the licence the procurement agent had merely to carry out the directions of the Government, the amount received by the sale of the paddy at a higher price should go to the Government for disbursement as they like and not to the licensee. In the result he dismissed the suits. We have therefore before u; appeals on behalf of the State against the decreeing of the suit, and appeals by the parties against the dismissal. 10. According to the plaintiffs the relationship between themselves and the Government was only that of a seller and buyer and not that of principal and agent as alleged by the Government and inasmuch as the relationship was not that of an agent, the difference in the price accrued to them, because they paid the price of the food stuffs, they stocked them in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and were subjected to (he direction and control of the Government. There was no scope for the exercise of any discre:ion on the part of the plaintiffs. 12. Agent has been defined in the Indian Contract Act, as a person employed to do any act for another or to represent another in dealings with third persons. the first portion of the definition would appear to lend support to the view that in this case also inasmuch, as the plaintiffs, the licensees, were employed to procure paddy and rice from the producers for the Government and sell them, they could be said to satisfy the requirement of an 'agent' under Section 182 of the Contract Act and could be styled agents. But it has to be observed that the other factors which generally are to be found to constitute 'agency' are absent here. The agent, for example, acts on his own judgment, of course, within the limits of his authority. In the case of the licensees, the plaintiffs, there is no scope for the; exercise of their discretion or their judgment. The plaintiffs merely acted as they are directed to do. They did not represent the Government in their dealings with the producers. They were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the instance of the plaintiffs. They were enabled to sell at a higher price because of the order of Government In the absence of any such order by the Government they could not have sold the goods at a higher price to enable them to earn a profit. It can never be regarded as a profit which accrued to them by reason of a rise in the market price of the commodities. It is futile to contend that they became entitled to the difference in the price, in the face of the express condition to sell at a higher price and make it over. It explicitly says : Sell it at a particular higher price and pass on the difference to the Government. The appointment of the plaintiffs as licensees under the Food Procurement Order has to be considered in the light of the policy of the Government underlying the appointment of procurement agents. The memorandum issued by the Government explaining their policy in relation to the price of food grains, clearly indicates that in view of the growing discontent among the producers of food grains that the procurement prices fixed were relatively low, having regard to the prevailing high prices of commodities other than food grains, the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome special advantage. This case bears no analogy to the case now under consideration before us. Likewise is the case of Venkatasubbayya v. Satyanarayana Murty, 1940-1 Mad LJ 465 : (AIR 1940 Mad 489). There the learned Judge, Patanjali Sastri, J. relying upon a passage in Bowstead On Agency explained the position that where a person buys goods on behalf of another the property in the goods does not pass to the latter until the price for the goods has been paid bv the latter. It therefore follows that the relationship of the plaintiffs qua the Government could never be likened to that of a buyer and seller. If the relationship inter se between the Government and the plaintiffs is not that of principal and agent nor could it be regarded as that of a buyer and seller, the question arises as to whether the Government is not entitled to recover the difference in price from the plaintiffs, the millers. The plaintiffs in this case, as has been observed, are appointed to act for the Government and under a licence granted to them to carry out the directions contained in the licence. If such is the position, then a fiduciary relationship would be deemed to have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing an equitable one is enforceable. The learned Chief Justice further observed : There is no necessity to find an actual contract or to impute the function of a contract, in asmuch as every Court can treat the question as one not merely of contract but of trust fund where necessary. Lord Haldane in John v. Dodwell and Co. 1918 AC 563 : (AIR 3918 PC 241) ruled that law and equity have been administered by the same Courts as aspects of a single system in Ceylon, and therefore an action analogous to that for money had and receiveed was maintainable in all cases. Coutts Trotter C. J., in the aforementioned case ILR 52 Mad 207 : (AIR 1929 Mad 409) thought that those observations of Lord Haldane not merely applied to Ceylon but to British India as well and, therefore, so far as British India was concerned, there was no divergence between equitable and legal remedies. 18. The question could be looked at from another point of view. Are the plaintiffs entitled to retain the difference in the price to which they could not be said to have become entitled, having regard to the terms of the licence under which they acted. They have benefited themselves unjustly. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement of the price. The question in the English case clearly was whether the levy of 2d. was authorised by statute. The Law Lords held that there was no sanction of Parliament for this levy and so could not be imposed. That clearly held that it was a tax that was being imposed. That case can have no relevancy whatsoever. 20. Learned counsel called in aid a decision of the Madras High Court in Tata Iron and Steel Co. v. State of Madras, 1955-1 Mad LJ 346 and urged that there was no obligation to pay to the Government an amount that he collected unlawfully. That case can never apply to the facts of this case. While construing Section 3 together with Section 8(b) of the Madras General Sales-tax Act the learned Judges held that what was expected of a Registered dealer under the Sales-tax Act was to collect the tax that is leviable lawfully on the purchases, and to make over the tax thus collected to the Government. The Act envisaged the collection of a tax as enjoined by the Act and not any other amount, and this amount the dealer is expected to make over to the Government and not any amount that he might have recovered illegally. In the instant case there is no levy of a tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may provide (c) for controlling the prices at which any essential commodity may be bought or sold (d) for regulating the licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption. (e) ...... (f) for requiring any person holding stock of an essential commodity to sell the whole or A specified part of the stock at such prices and to such persons or class of persons or in such circumstances as may be specified in the order. Clause (f) extracted above clearly gives the power to the Government to direct the stock-holders of rice and paddy to sell them to persons designated by the Government. Therefore, there could be said to be no want of authority. A direction in the manner mentioned in the licence could also be said to fall within the ambit of the power vested in the Government. The Supreme Court in the case of Santosh Kumar v. The State dealing with the scope of the powers, under Section 3(1) and (2) of the Act ruled that the power to provide for regulating or prohibiting production, distribution and supply, conferred on an executive body may well include the power to regulate, prohibit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries Ltd. v. Hull and Netherlands Steam Ship Co., 1921-2 KB 608 at p. 612. 24. The plaintiffs have failed to show how the increase in prices consequent on the orders enhancing the prices was one which accrued to the benefit of the plaintiffs alone. Issue No. 3 which is as follows : whether the plaintiffs are entitled to the benefit of the increase in the price of paddy and rice under the Notification dated 19-11-1948 throws the onus on the plaintiffs which, in our opinion, the plaintiffs have not discharged. 25. It was raised in the written statement and argued before us on behalf of the State that if the order was one under Section 3(2) read with Section 4 of the Act, and the granting of the licences was in pursuance thereof, such an order could not be called in question in any Court and Section 14 of the Act operated as a bar to the filing of a suit. In the view that we have taken, that the impugned I order was in exercise of the power conferred by the Act we feel that Section 14 would come into operation and the suits filed must be held to be not maintainable. As the whole case was argued and the arguments did not confine to the preliminary point of the maint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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