Leave granted.
The controversy raised in these cases hinge upon the interpretation of sub-clause (8A) of Clause 45 of the Kerala Rationing Order, 1966 and the circular of the Union of India dated October 11, 1995. The facts of CA No.1826/89 which lie in a short compass would be sufficient for disposal of all the appeals before us and are stated as under:
The respondent is an authorised retail dealer at Kanayannur Taluk, Ernakulam Distt. He had purchased from the appellant’s godown rice on October 10, 1985 and October 11, 1985 at the pre-revised rates for public distribution to the Card-holders. On October 11, 1985, the Civil Supplies officials issued instructions to the respondent and other retail dealers that the price of rice has been increased with effect from October 13, 1985 and the closing stock on October 12, 1985, should be ascertained and the difference of the price was to be deposited in the Treasury and Challan was directed to be submitted within two days thereafter. If the difference of the rate would not be deposited in the Treasury or in the event of non-submission of the Challan, action would be taken against the defaulters. By letter dated November 28, 1985, the Assistant Manager of the appellant-Corporation called upon the respondent to pay the difference of the rate for the stock on the closing day of October 9, 1985 and the purchase from October 10, 1985 onwards till October 11, 1985. Calling in question of the said demand, writ petitions came to be filed. The learned single Judge following the decision dated June 19, 1986 of the High Court in O.P.No.7926/82 entitled Kerala State Wholesale Distributors Federation & Ors. vs. Union of India & Ors. had held that the respondent was not liable to refund the difference of the price for the stock on hand on closing day of October 9, 1986 and supplied on October 10 and October 11, 1985. The liability would arise only from the date when intimation of the revised rate thereof was given by the Civil Supply Officer. Since the intimation was given on 13.10.1985, for the stock on hand as on October 12, 1985 difference would be liable to be refunded at the revised rates from that date. The order was challenged in writ appeal and the Division Bench in the impugned order dated January 14, 1988 in Writ Appeal No.597/87 upheld the order of the learned single Judge and dismissed the appeal. Thus these appeals by special leave.
The Government of India issued Circular No.176, Ministry of Food and Civil Supplies on 11.10.1985 revising the issue price of the rice from central pool for public distribution with effect from October 10, 1985. It reads thus:
"As already intimated in Telex/Telegram
of even number dated 9.10.1985, the
revised Central issue prices of rice
supplied from the Central Pool for
distribution through the public
distribution system, which will be
effective from 10.10.1985 are as under:
(Rs.per quintal)
1.... Current Issues Revised
Prices Issue Prices
(Raw & Parboiled) w.e.f.10.10.85
(Raw Parboiled)
(i) 208.00 217.00
(ii) 220.00 229.00
(iii) 235.00 244.00
2. The aforesaid issue prices of rice
are for delivery Ex-FCI depots or F.O.R.
destination stations. The State
Government/Union Territory
Administrations are aware that
foodgrains from the Central Pool are
supplied to them at the subsidised issue
price with a view to enable them to meet
their requirements of the public
distribution system. Even after the
increase, with effect from 10.10.1985,
the issue prices of rice will be heavily
subsidised. The State Governments/Union
Territory Administrations are,
therefore, requested to arrange sale of
foodgrains, supplied to them from
Central Pool, through ration/fair price
shops at retail issue prices fixed by
them after adding only reasonable
distribution costs to the revised issue
prices effective from 10.10.1985. It may
be stressed here that the State
Government/Union Territory
Administrations, wholesalers, retailers
or any other agency that may be involved
in distribution, should not derive any
profit put of these transactions. The
new retail issue prices as will be fixed
by the State Governments/Union Territory
Administrations may be intimated to this
Department as early as possible. 3. In
order to ensure that the wholesalers,
fair price shops and other retailers who
are supplied rice from Government stocks
do not make any unintended profit on
account of enhancement of wholesale and
retail issue prices of these foodgrains,
stocks of rice available with them at
the close of transactions on 9.10.1985,
should be verified and the difference
between the old prices and the revised
prices should be recovered from them for
being credited to the Central account.
Immediate action may, therefore, kindly
be taken to arrange for ........... the
stocks of rice issued from the Central
stocks available with the wholesalers,
fair price shops and other retailers, if
any. 4. The State Governments/Union
Territory Administrations will also have
to credit to the Central account the
difference between the old prices and
the enhanced prices of rice in respect
of stocks that the State
Governments/Union Territory
Administrations had with them at the
close of transactions on 9.10.1985. For
the purpose of calculation, stocks held
by the State Governments/Union
Territory, at the close of 9.10.1985 and
still in transition that date will also
be included. 5. Arrangements may also be
made to notify to the Government of
India, latest by the 31st October, 1985,
the quantity of rice available with the
State Governments/Union Territory
Administrations, the wholesalers, fair
price shops and other retailers at the
close of transactions on 9.10.1985 so
that the Controller of Accounts may be
requested to raise necessary details for
the difference between the old and
revised prices."
The respondent is bound by the Kerala Rationing Order, 1966 issued under Section 3(1) and (2) of the Essential Commodities Act, 1955. Sub-clause (8A) of Clause 45 of the order enjoins that whenever the existing issue price of rationed articles, i.e., the price at which the stock has to be released from the Food Corporation of India or Central Storage Depot, is revised by the Government of India or State Government either upward or downward, the stock of rationed articles with the authorised retail distributor as on the beginning of the day from which day the revised issue price will come into force, should be assessed by the authorised retail distributor and intimated to the Taluk Supply Officer/City Rationing Officer or any officer authorised by the State Government for the purpose. In the case of revision of price upward, differential cost on the quantity of rationed articles so held in stock should be remitted to the State Government. Similarly, in the case of revision of price downward, a refund claim for the differential cost shall be submitted by the authorised retail distributor to such officers of the State Government authorised for the purpose. In this behalf, the retailer has also entered into an agreement under cl.45(6) of the Order which reads thus:
"Whenever the existing issue price of
rationed articles (i.e. the price at
which the stock has to be released from
the Food Corporation of India or Kerala
State Civil Supplies Corporation Depot)
is revised by the Government of India or
State Government either upward or
downward, the stock of rationed articles
in the hands of the Bounden as on the
beginning of the day from which the
revised issue price shall come into
force shall be assessed by the Bounden
and intimated to the Taluk Supply
Officer/City Rationing Officer or any
Officer authorised by the State
Government for this purpose. In the case
of upward revision of price differential
cost on the quantity of rationed
articles so held in stock shall be
remitted by the Bounden to the State
Government, within such time as the
Taluk Supply Officer/City Rationing
Officer or other authorised officer as
the case may be, may order in writing.
Similarly, in the case of downward
revision of price a refund claim for the
differential cost shall be submitted by
the Bounden to such officers as the
State Government may authorise for this
purpose. Any sum found-due to Government
on account of excess transport charges,
handling charges, profit and the like
gained by the bounden due to incorrect
fixation of price or any other defect in
calculation when the mistake is
subsequently decide should be remitted
to Government by the Bounden.
Under the above provision, an
authorised retail distributor is bound
to ascertain the stock in hand on the
date with effect from which the price of
rationed articles was revised.
Differential cost consequent on upward
revision of price held in stock on the
relevant date was also to be remitted by
the dealer to the State Government." In terms thereof the authorised distributor, either wholeseller or retailer, is enjoined to make good the difference of the price of stock on hand as on the previous closing day, in these cases as on October 9, 1985, consequential to the revision of the issue price by the Central Government with effect from October 10, 1985. Para 2 of the Government Circular referred to hereinbefore authorised the State Government/Union Territory to revise the rates of issue price consequent upon the revision of the price including the distribution cost with effect from October 10, 1985. In terms thereof, on revision of retail price by the State/Union Territory Government and on issue of instructions from the State Government, the Taluk officials as stated earlier, had intimated to the retail dealers that the revised prices would come into effect from October 13, 1985 and they were directed to pay the difference on the stock on hand on 12.10.1985.
The question, therefore, that emerges is whether the retailers are liable to refund the difference of the price for the opening stock held by the retailer on October 10, 1985 and purchased on October 10 and 11, 1985 as intimated in the letter of the Superintendent of the appellantCorporation. It is true that the wholesale or retail dealer were not entitled to have windfall of the differential price when they had sold at revised rates of the stock on hand supplied at pre-revised rates. The differential rate should be credited to the Central Account as it was releasing the stock at subsidised rate. It is seen that the Government Order clearly indicates that the closing stock as on October 9, 1985 should be verified and the stock on hand as on that date should be revised and distributed at the revised price. The difference of the price was directed to be credited to the account of the Central pool. But until the State Government or Union Territory Authorities revised the retail price including distribution costs and intimation of the revision of the prices is given to the whole-seller or retailer, it may be difficult for them to know, in the normal circumstances, whether the price of the essential commodities, namely, the rice, in these cases, meant for distribution was revised and at what rate it should be distributed to the card-holders at the pre-revised or revised rates. In this behalf, as rightly held by the High Court, an intimation thereof is necessary. The reasons are obvious. In terms of the conditions of licence and the Order and in terms of the provisions of the Essential Commodities Act, the violation of the conditions of licence entails cancellation of the licence of the whole-sale or retail dealer and prosecution under Section 7 of the Essential Commodities Act. Intimation of the revised price would be necessary to the retail dealers. In terms of para 2 of the Central Government Circular dated 11.10.1985, the State Government in turn is required to revise the retail price for the distribution to the card-holders. On that basis the distributor is enjoined to distribute the essential commodities at the revised price. In view of these facts, it is necessary that they should get an intimation of the revision of the price of the essential commodities.
It is true, as rightly pointed out by Mr. S.K. Gambhir, the learned counsel appearing for the appellant-Corporation, that the difference of the price of the released stock will be of considerable magnitude and may be a loss to the public exchequer since the rice is supplied at a subsidised rates to the card-holders. But retail dealers must equally have knowledge of the revision of the prices at which they are required to distribute to the card-holders as per the price fixed by the State Government/Union Territory Authorities under the relevant orders. Until that is done and intimated, it is difficult for him to know at what price he is required to distribute to the card-holders. Consequentially, he should distribute to the card-holders at pre-revised rate only.
Considered from this perspective, it would be desirable to avoid loss to public exchequer and unintended windfall to whole-sale or retail dealers that before enforcing the revised rates of the rice, an infrastructure is built, revision by State Government or Union Territory Authorities is made and intimation thereof and the date of its becoming effective is made public through media, i.e., Radio, T.V. or press so that the revised rates would come into effect from that date and the stock held at the close of the previous date would be assessed in terms contained in the Government of India Order so that there would not be any hiatus between fixation of revised rates and its enforcement and the liability of the retail dealer to refund the differential price in that behalf. If this procedure is adopted, there would be no difficulty for the retail dealers to account for the differential price of the stock on hand on the previous closing day and to credit the same to the Treasury account as intimated by the concerned officer.
In view of the fact that admittedly such an intimation was in fact given by the Taluk officer on October 13, 1985 and that a direction was given that the difference of the price of the stock on October 12, 1985 should be accounted, the respondent-retailer cannot be made liable to account for the difference of the revised price of the closing stock on October 9, 1985 or the stock purchased on October 10 and 11, 1985. It may be reiterated that under the Order and Licence held by the retailers he is enjoined to distribute to the card-holders at the rates revised by the State Government and until that is done he is obliged to distribute the essential commodity, namely, rice at the pre-revised rates. If any contravention is made that would be a contravention is made that would be a contravention of the licence of distribution or the Order. But that would be ascertained on the facts in each case. No general principle can be laid down in that behalf.
Considered from this perspective, we think that the High Court was right, though for different reasons, in negativing the claim of the appellant for accounting for the difference of the held at the close of October 9, 1985 and purchases by the respondents on October 10 and 11, 1985.
The appeals are accordingly dismissed. But in the circumstances without costs.
The respondent No.1 in C.A. No.405/89 had already deposited the amount as demanded by the appellantCorporation. In view of the law laid down above, the appellant is directed to refund the amount within one month from the date of the receipt of this order.