N. Pramila Raj Rice Mill vs. State Of Telangana

Heard Sri K.M.Mahender Reddy, learned counsel for the petitioner and learned Government Pleader for Civil Supplies for the respondents.

That, on 28.08.202s, the petitioner made representation to the respondents to allot custom milling of paddy to it, from kharif season 2025- 2026 without reference to the dues of the lessee; that aggrieved by the inaction of the respondents in considering the said representation, the petitioner filed WP'No'2937012025 and this Court disposed of the said Writ petition, vide order 20'll'2025, directing the respondents to consider the representation of the petitioner and to pass appropriate orders in accordance with law within two rnonths from the date of the said order. That in purported compliance of the ry I wPNo.4047 of 2026 said order, respondent No.4 passed the Order dated 28.01 .2026, without considering the representations of the petitioner and without issuing notice to the petitioner. Hence, challenging the said order, the present Writ petition is filed.

Leamed counsel for the petitioner submitted that respondent No.4 passed the impugned order based on the Circular instructions of Commissioner of Civil Supplies, vide ccs.Ref.No.(r(l)191,412024, dated 26.04.202, which was issued without any enabling provision of law; that the authorities without proceeding against the four guarantors of the lessee, viz., Om Shri Balaji Industries, Sri Venkatesh waraRice Mill, Sri Hari Krishna Agro lndustries and Balaji Traders, as per G.o.No.12, Consumer Affairs, Food and civil Suppties (cS.I) Department(CS.I.CCS) Department, dated 27.06.2024, for recovery of the dues of the lessee, illegally denied the allotment of custom milling of paddy to the petitioner and held the petitioner liable for the dues of the lessee.

Leamed counsel further submitted that by letter dated l3.Og.2OZ4, though the DSO office, Nizamabad, was informed that lessee stored about 20,000 quintals of paddy in DJ Godown, no action had been taken by the authorities either to shift or to seize the said stock, which shows the collusion between the authorities and the lessee. 4.2- Learned counsel further submitted that the petitioner-lessor is not surety for the lessee and as such, the petitioner cannot be heldlliable for the dues of the "e e*'

Leamed counsel for petitioner finally submitted that respondent No.4 erred in passing the impugned order holding that the petitioner-lessor is vicariously liable for the dues of the lessee and prayed to allow the Writ Petition.

Learned counsel for respondent No.4, by referring to the counter-affidavit filed on behalf of respondent No.4, submitted that as per para G-2 of Annexure- IV to G.O.Ms.No.26, Consumer Affairs, Food and Civil Supplies (CS.l) Department(CS.I.CCS) Department, dated 07.10.2023, which is issued based on the Telangana Rice (Custom Milling) Order, 2015, "no paddy shall be allotted to the default rice mills until the entire defaulted rice is delivered and dues are cleared" and the said GO further mandates that paddy shall be allotted to the lessee mills only after taking a guarantee from the owner of the rice mill; that as per Circular vide PI(1y91412024 dated 26.04.2024, issued by Commissioner of Civil supplies, the original miller (lessor) will have vicarious liability in delivering the dues of cMR/recovery of penalty with interest. ' zozsltlAlr (NRc) s7

In support of his contentions, leamed counsel for respondent No.4 relied upon the judgment of the Hon'ble Apex Court in Food Corporotion of India V V.K. Traders2, wherein atpara-I2 it is held as hereunder: "No right to seek allocation of paddy can be claimed by it unless the liabilities arising out of the previous bilateral agreement are satisfied". 7 .

In light of the aforesaid submissions made by learned counsel for both the parties, the point that arises for consideration is Whether respondent No.4 l's justiJied in passing the impugned order holding that the petitioner-mill is vicariously liable for the dues of its lessee and not allotting the custom milling of paddy to the petitioner-mill? '(zozol4;cqgo

Admittedly, the petitioner is neither a party nor surety/guarantor to the bilateral agreernent entered between the lessee and the Civil Supplies Department, which is evident from the record. Therefore, the judgment of the Hon'ble Apex Court in Food Corporation of India's case (cited supra), relied upon by learned counsel for respondent No.4 is not applicable to the present case.

To adjudicate the issue, it is necessary to interpret the GOs referred to above and the Circular instructions, dated 26.04.2024, issued by Commissioner o[ Civil Supplies vis-a-vis to the facts of the present case. Para-G-S of Annexure-lV to G.O.Ms.No.26, dated 07.10.2023, mandates that the paddy shall be allotted to the lessee mills only after taking guarantee from owner of the rice mill. 1 t. In the instant case, it is not the case of the respondent authorities that such guarantee was taken from the petitioner-mill for allotment of paddy to the lessee. That aparr, it is undisputed fact that an agreement was entered between the lessee and the Civil Supplies Department with four guarantors and the petitioner-mill is neither a party nor guarantor/surety to the said agreement. In such an event, Section-128 of the Indian Contracts Act, 1872, comes into play, as per which the liability of the co-surety is co-extensive to that of the principal ,t i I i li i debtor.

In addition to the above, as per Clause-4.3 of G.O.Ms.No.I2, dated 27.0612-24, the authorities concern shall reserve right to recover the losses or damages from the default millers as well as from the sureties jointly and severally in accordance with law.

A reading of Section-l28 of the Indian Contracts Act, 1872, coupled with Clause-4.3 of G.O.Ms.No.12, dated 27.0612-24, makes it clear that the authorities concerned are empowered to recover the dues/losses/damages from the principal debtor i.e., the defaulting miller as well as from the guarantors/sureties of the defaulting miller.

In the case on hand, the petitioner-mill is neither a guarantor nor surety to the lessee for allocation of paddy. Further, the petitioner is only the owner of the premises leased out to its lessee, which ultimately, turned out to be defaulting miller.

As regards instruction No.4 of Circular Instructions, dated 26.04.2024, referred supra, in case of default on the part of lessee-mill, the original miller will have vicarious liability in delivering the dues of CMR/recovery of penalty with interest, it is to be noted that the said Circular is issued by the authority concerned by exercising the delegated legislation.

Here, it is apposite to refer to the judgment of a two-judge Bench of the Hon'ble Supreme Court in Gaurav kumar V. Union of Indid, wherein it has carved out the flollowing relevant principles in matters of delegated legislation:- "... The delegate which has been authorized to make subsidiary rules and regulations has to work within the scope of its authority and cannot widen or constrict the scope of the Act or the policy laid down thereunder'. It cannot, in the garb of making rules, legislate on thefield covered by the Act and has to restrict itself to the mode of impletnentation of the poricy and purpose of the Act.,, From the above discussion, we can cuil out the following principle.s: o o delegate cannot act contrary to the express provisions and object of the parent legislation; (i, a delegate cannot widen or constrict the scope of the parent legislation or the legislative policy prescrtbed under it: and (iii) a Jiscal provision has to be construed strtctly and a delegate cannot consider any circumstance, factors or condition not contemplated by the parent legtslation 17 ' The Circular instructions, dated 26.04.2024, particular instruction No.4, based on which respondent No.4 passed the impugned order, is explicitly issued in exercise of the detegated legislation. l8' The aforesaid principles culled out by the Hon'ble Supreme Court are not followed 1a in fact, are violated by issuing the Circular, dated 26.04.2024, i '202a trvsc ss8

As a sequel, Miscellaneous petition, if any, pending shall stand closed. P. PONNA KRISHNA ASSISTANT REGISTRAR //II 6' To, sEcTtoN oFFtcER

The commissioner, civirsupplies corporation, Erramanjil, Hyderabad- TS

The Collector (Civil Supplies), Nizamabad _TS

The Dist. Supply officer, Nizamabad - TS

The Dist. Manager, civirsuppries corporation, Nizamabad. 7- one cc to sRr K.M.MAHENDER REDDY, Advocate [opuc]

One CC to SRI K.DEVENDER, SC FOR TSCSCL IOPUC]

Two ccs to Gp FoR ctvtL sup&s, High court for the State of Telangana, at Hyderabad [OU[ 10.Two CCs to GP FOR COOPERAT|ON, High Court for the State of Telangana at Hyderabad [OUT] 11.Two CD Copies BSRYDAN W