Mandip Mukar Agarwal vs. Union Of INDIA And Ors.

Facts

The petitioner, Mandip Kumar Agarwal, sought payment of dues for work done by his deceased father, Sawarmal Agarwala, for the Central Warehousing Corporation (CWC). The father had deposited Rs. 43,28,400/- as security and completed the contract for handling and transport of foodgrain at the Central Warehouse, Kharagpur. The petitioner claimed dues after submitting a succession certificate. The CWC contended that payments were withheld due to issues with the Food Corporation of India (FCI), specifically regarding bills for warehouse usage and supervision charges. The FCI, in turn, denied direct liability for the security deposit and raised objections concerning supervision lapses and inflated bills by the handling agent, which it claimed led to deductions in payments to the CWC.

Held

The Court held that the CWC was liable to refund the security deposit of Rs. 43,28,400/- to the petitioner, as it had no nexus with the allegations raised by the FCI. Similarly, the Court found the CWC liable for the bills totaling Rs. 38,81,330/- for February, March, and April 2020, August 2021, and January 2022, as the CWC offered no defence against these specific amounts. Regarding the arrear bill of Rs. 61,55,723/- for February 01 to February 18, 2022, the Court held that general allegations of security lapses against the CWC could not be shifted to the petitioner, and since the godowns belonged to the CWC, any security lapses or withholding by FCI had to be borne by the CWC. Therefore, the CWC had no legitimate ground to withhold this payment. For the "height withheld" component of Rs. 13,93,572/-, the Court found it premature to direct payment in the writ jurisdiction due to conflicting allegations between FCI and CWC regarding erroneous stacking. The petitioner was advised to pursue this claim through a regular civil suit. The Court held that the petitioner was entitled to Rs. 5,62,448/- for the specified invoices, as the CWC had not substantially opposed this claim with cogent evidence. Regarding casual labour charges, the Court directed the CWC to disburse Rs. 1,58,823/-, as admitted by the CWC, subject to the petitioner furnishing proof of GST payment. The Court also noted that the non-furnishing of a No Demand Certificate from FCI could not hinder the payment of dues by CWC, as the work was completed. The CWC and its Chairman were directed to disburse the total sum of Rs. 1,50,86,724/- to the petitioner by January 31, 2024.

Key Issues

1. Whether the CWC is liable to refund the security deposit of Rs. 43,28,400/- to the petitioner, considering the FCI's alleged withholding of payments to the CWC. (Question of law and fact, turning on contract terms and inter-party liabilities). 2. Whether the petitioner is entitled to the bills for February, March, and April 2020, August 2021, and January 2022, amounting to Rs. 38,81,330/-, despite the FCI's allegations of supervision lapses and inflated bills. (Question of law and fact, turning on the extent of CWC's liability for alleged FCI deductions). 3. Whether the petitioner is entitled to the arrear bill of Rs. 61,55,723/- for the period February 01, 2022, to February 18, 2022, given the CWC's reliance on general security lapses and FCI's withholding of 8% supervision charges. (Question of law and fact, turning on the attribution of security lapse responsibility). 4. Whether the petitioner is entitled to the "height withheld" component of Rs. 13,93,572/-, given the conflicting claims between FCI and CWC regarding erroneous stacking and layering of bags. (Question of law and fact, turning on the resolution of disputes between third parties). 5. Whether the petitioner is entitled to Rs. 5,62,448/- for certain invoices, which the FCI stated it had no comment on. (Question of law and fact, turning on the CWC's opposition to these invoices). 6. Whether the petitioner is entitled to casual labour charges of Rs. 3,00,000/-, with the CWC admitting a portion subject to GST proof. (Question of law and fact, turning on the extent of CWC's admitted liability). Petitioner's Arguments: The petitioner argued that the security deposit is a direct liability of the CWC and not linked to FCI's actions. They contended that any supervision lapses by the CWC should not prejudice their claim, as the 8% supervision charges were payable by FCI to CWC. The petitioner also argued that reductions in bills were due to CWC's own actions and that they were not connected to any issues between FCI and CWC. They further argued that the "height withheld" component and other invoices were not sufficiently opposed by cogent evidence from the CWC. Revenue/State's Arguments (CWC and FCI): The CWC argued that payments were withheld due to FCI's actions and that the handling agent (petitioner's father) was responsible for stacking issues. The FCI denied liability for the security deposit, stating it was a contract between CWC and the handling agent. Regarding supervision charges, FCI claimed deductions were made due to CWC's lapses and inflated handling agent bills. For the "height withheld" component, FCI alleged bills were not commensurate with operations and that stacking was unnatural, leading to deductions.