1997 (11) TMI 532 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of procurement price fixed by the Andhra Pradesh Government.
2. Applicability of the 1975 Levy Order beyond the crop year 1975-76.
3. Legal effect of the Memorandum dated 2.11.1976.
4. Right of the Government to recover excess payments.
5. Retrospective effect of subordinate legislation.

Issue-wise Detailed Analysis:

1. Validity of procurement price fixed by the Andhra Pradesh Government:
The appellants, rice millers, supplied rice to the Food Corporation of India (FCI) at the procurement prices fixed by the Andhra Pradesh Government under the Andhra Pradesh Rice (Procurement Ex-Mill Prices) Order, 1975. The dispute arose when the Government of Andhra Pradesh issued a new order on 8th October 1975, which rescinded the previous order but continued to procure rice and pay the appellants the price fixed by the 1975 Order. The appellants argued that the procurement price should continue until a new order is promulgated, while the State contended that the 1975 Order was only applicable to the crop year 1975-76.

2. Applicability of the 1975 Levy Order beyond the crop year 1975-76:
The appellants contended that the 1975 Order, which came into force on 1st October 1975, was intended to apply not only to the Khariff crop of 1975-76 but also to subsequent crops until a new order was issued. The State argued that the order was only operative for the crop year 1975-76 and did not apply beyond that period. The Court noted that the appellants supplied rice to FCI even after the crop year 1975-76, and the FCI paid the price fixed by the 1975 Order based on a Memorandum issued on 2.11.1976.

3. Legal effect of the Memorandum dated 2.11.1976:
The Memorandum dated 2.11.1976 extended the procurement price of rice for the crop year 1975-76 to the crop year 1976-77. The State argued that the Memorandum had no legal effect as it was not notified in the Official Gazette. The Court held that the issuance of the Memorandum was not denied, and rice was procured in terms of this order. The Court found it inequitable for the State to claim the Memorandum was of no legal effect after acting upon it and compelling the millers to sell rice based on it.

4. Right of the Government to recover excess payments:
The Andhra Pradesh Government claimed that the payment for the levy of rice from 7.9.76 was made at an excessive rate and sought to recover the excess amount paid. The Court held that the Government could not take advantage of its failure to notify the Memorandum and that it was inequitable to permit the Government to argue that the Memorandum was of no legal effect. The Court emphasized that the Government had a statutory duty to pay for the rice procured at the market rate calculated as per the statute.

5. Retrospective effect of subordinate legislation:
The High Court had held that the notification dated 24.2.1977, which reduced the procurement price with retrospective effect from 7.9.1976, was not truly retrospective. The Supreme Court disagreed, stating that the vested right of the appellants to be paid the procurement price was affected by the retrospective subordinate legislation. The Court held that the retrospective legislation attempted to take away a portion of the money lawfully obtained by the appellants. The Court concluded that the recoveries sought by the State were unlawful and unjust.

Conclusion:
The appeals were allowed, and the judgment under appeal was set aside. The Court found the contentions of the Andhra Pradesh Government untenable in law and held that the recoveries sought were unlawful and unjust. The appellants were entitled to be paid the procurement price as per the 1975 Order until a new order was promulgated. The Court emphasized the statutory duty of the Government to pay for the rice procured at the market rate in the absence of an agreed or controlled price.