Ryatar Sahakari Sakkare Karkhane Niyamit vs. State Bank Of INDIA

Held

The Court held that the Government of India's order dated February 14, 2019, issued under the Essential Commodities Act and the Sugar Price (Control) Order 2018, was applicable only to producers of sugar and State Governments/Union Territory Administrations. Since respondent No. 1, the State Bank of India, is neither a producer nor a government entity, the order did not apply to its actions. The Court also noted that the appellant itself had sought time to sell the sugar, indicating its inability to find buyers. Regarding the absence of a base price in the tender notice, the Court found that while desirable, its omission was not fatal to the proceedings, especially given the context of recovering public money. The sugar was sold at Rs. 29 per kg, which was not considered a "throw away price." The Court agreed with the learned Single Judge's decision, albeit for different reasons, and directed that respondent No. 2 would pay GST on the sale price. The appeal was dismissed.

Facts

The appellant, Ryatar Sahakari Sakkare Karkhane Niyamit, a cooperative society, obtained financial assistance of Rs. 20 crores from respondent No. 1, State Bank of India, between 2013 and 2017. The appellant defaulted on repayment, leading the bank to initiate steps for auctioning sugar offered as collateral security. A notice inviting tenders for e-auction of 5200 metric tonnes of sugar was issued on April 24, 2019. The e-auction was held on May 2, 2019, with only one bid received from respondent No. 2 at Rs. 29 per kg. The bank evaluated this bid and fixed the reserve price at Rs. 2890 per metric tonne on May 6, 2019, declaring respondent No. 2 the successful bidder. The appellant challenged the e-auction proceedings in a writ petition, which was dismissed by the learned Single Judge.

Key Issues

1. Whether the order dated February 14, 2019, issued by the Government of India, fixing the sale price of sugar at Rs. 31 per kg, was binding on respondent No. 1, thereby invalidating the sale at Rs. 29 per kg to respondent No. 2, and whether this sale was valid without payment of GST? (Question of law) Petitioner's Arguments: - Respondent No. 1 was bound by the Government of India's order dated February 14, 2019, which fixed the sale price of sugar at Rs. 31 per kg, and thus could not sell it for Rs. 29 per kg. - The sale was invalid as no GST was paid. - The notice inviting tender dated April 24, 2019, lacked a base price, making the auction arbitrary. - Clause 10 of the agreement, dealing with inventory value, was relevant. Revenue/State's Arguments: - The order dated February 14, 2019, is not applicable to respondent No. 1 as it is neither a producer of sugar nor the State Government. - Respondent No. 1 was within its rights to recover public money due, approximately Rs. 15 crores. - The appellant itself sought time to sell sugar, indicating an inability to find buyers. - Respondent No. 1 valued the inventory under Clause 10 of the notification. - The auction was to recover public money from a defaulter, and no interference was warranted. - Respondent No. 2 would pay GST on the purchase price.