CORPORATION OF INDIA AND ANOTHER versus M/S. V.K. TRADERS AND OTHERS

Citation: [2020] 4 S.C.R. 110 · Decided: 06-03-2020 · Supreme Court of India · Bench: S.A. BOBDE, BHUSHAN RAMKRISHNA GAVAI, SURYA KANT · Disposal: Appeal(s) allowed

Judgment (excerpt)

A
B
C
D
E
F
G
H
110
SUPREME COURT REPORTS
[2020] 4 S.C.R.
FOOD CORPORATION OF INDIA AND ANOTHER
v.
M/S. V.K. TRADERS AND OTHERS
(Civil Appeal No. 2070 of 2020)
MARCH 06, 2020
[S. A. BOBDE, CJI, B. R. GAVAI AND SURYA KANT, JJ.]
Rice Mills: Ban on allocation of paddy to rice mills for custom
milling – In this case, quality of rice supplied post milling by the
rice mills was found to be defective – Ban imposed on these rice
mills for allocating paddy for custom milling for three years for
‘Beyond Rejection Limit’ rice and for five years for ‘Beyond
Prevention of Food Adulteration’ rice – Demand notice issued to
them for compensating the appellant-FCI for the losses caused to it
for supply of sub-standard rice – However, rice mills refused to
accept liability and failed to make any payment to FCI – As a result
blacklisted rice mills were not allocated any paddy for custom milling
– Allegedly with a view to wriggle out of the ban period, the mill
owners leased out their rice mills to other similar partnership/
proprietorship firms – Such lease deeds were unregistered – These
new lessees consequently applied to the appellant-FCI for allocation
of paddy and asserted that none of them had committed any default
or been blacklisted and that the disqualification attached to their
lessors would not traverse onto their lawful entitlements – Whether
Respondents who took over on leasehold basis certain blacklisted
rice mills were entitled to allocation of paddy for custom milling –
Held: The lease deeds allegedly executed between the defaulting
rice millers and the respondents were not reliable as they did not
satisfy the statutory requirements of s.17(1)(d) of the Registration
Act, 1908 – These Lease-deeds thus were not acceptable as evidence
of valid transfer of possessory rights – Even in a case where a
proprietorship/partnership firm has been in existence for long and
took over a mill-in-default only on-word basis, no right to seek
allocation of paddy can be claimed by it unless the liabilities arising
out of the previous bilateral agreement were satisfied – Thus, High
Court erred gravely in setting aside the orders through which the
FCI declined to allocate paddy to the new lessees of the defaulting
rice mills – Registration Act, 1908 – s.17(1)(d).
110
[2020] 4 S.C.R. 110
A
B
C
D
E
F
G
H
111
Allowing the appeals, the Court
HELD: 1. No reliance can be placed upon the lease deeds
allegedly executed between the defaulting rice miller(s) and
the17(1)(d) respondent(s), as they do not satisfy the statutory
requirements of Section 17(1)(d) of the Registration Act, 1908.
These Lease-deeds thus cannot be accepted as evidence of valid
transfer of possessory rights. The plea taken by the appellant-
FCI, that such documentation was made only to escape the
liability fastened on the defaulting rice millers, carries some
weight, though it is a pure question of fact. Even in a case where
a proprietorship/partnership firm has been in existence for long
and took over a mill-in-default only on-word basis, no right to
seek allocation of paddy can be claimed by it unless the liabilities
arising out of the previous bilateral agreement are satisfied.
[Paras 12, 13][115-C-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2070
of 2020.
From the Judgment and Order dated 21.10.2013 of the High Court
of Punjab and Haryana at Chandigarh in Letters Patent Appeal No. 989
of 2012(O&M).
With
C.A. No. 2075, 2071, 2072, 2076, 2073 and 2074/2020.
Gaurab Banerjee, Sr. Adv., Ajit Pudussery, Vijanan K. and Ajeet
Singh Verma, Advs. for the Appellants.
Subhasish Bhowmick, N. S. Dalal, Sushil Kumar, R. C. Kaushik
and Ms. Ranjeeta Rohatgi, Advs. for the Respondents.
The following Judgment of the Court was delivered:
JUDGMENT
1. Leave granted.
2. These appeals have arisen from an order dated 21.10.2013
passed by a Division Bench of the Punjab and Haryana High Court
whereby a batch of letters-patent appeals filed by the Food Corporation
of India (FCI) challenging a learned Single Judge’s order of 15.03.2012
was dismissed.
3. The primary issue before the High Court was whether or not
the respondents, who had taken over on leasehold basis certain blacklisted
rice mills, were entitled to allocation of paddy for custom milling.
FOOD CORPORATION OF INDIA AND ANOTHER v.
M/S. V.K. TRADERS AND OTHERS
A
B
C
D
E
F
G
H
112
SUPREME COURT REPORTS
[2020] 4 S.C.R.
Facts:
4. It was common practice in Punjab for different government
agencies to allocate paddy for custom milling to hundre

Excerpt shown. Read the full judgment & AI analysis in Lexace.