M/S. BEJGAM VEERANNA VENKATA NARASIMLOO ETC. versus STATE OF ANDHRA PRADESH AND ORS.

Citation: [1997] SUPP. 5 S.C.R. 389 · Decided: 21-03-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

M/S. BEJGAM VEERANNA VENKATA NARASIMLOO ETC. 
A 
v. 
STATE OF ANDHRA PRADESH AND ORS. 
MARCH 21, 1997 
[S.P. BHARUCHA AND SUHAS C. SEN, JJ.) 
Essential Commodities Act 1955, S. 3(1)-Andhra Pradesh Rice 
(Procurement Ex-Mill Prices) Order, 1975 requiring rice millers to supply 
B 
to Food Corporation of India at 'notified' procurement prices-!975 Order C 
coming into force on October 1, 1975 and operative for Kharif crop 1975-
76 and subsequent crop-State by order dated November 2, 1996 continuing 
rates fixed by 1975. Order for supplies made subsequent to September 7, 
1976--0rder not gazetted-Thereafter State issuing gazette notification on 
February 24, 1977 lowering procurement Prices with retrospective effect 
from September 7, 1976-Recoveries of excess price paid sought to be made D 
from appellants-State government contending that November, 1976 Order 
not gazetted and had no legal effect and 1975 Order not operative beyond 
September 7,1976- Held, it would be inequitable to permit government to 
plead irregularity of its order after procuring rice on the basis of that order; 
even otherwise government was statutorily bound to pay market rate- E 
Contract Act 1872, s. 70. 
Administrative Law-Subordinate Legislation-:-Retrospective effect a/-
Procurement Order requiring rice millers to supply at notified price-State 
by subsequent gazette notification lowering price with retrospective effect-
Recoveries sought to be made from appellants-High Court upholding validity . F 
of subsequent order as it did not take awey any vested right-Held, appellants 
had acquired vested right to be paid at notified price; recoveries sought to 
be made retrospectively were unlawful and myust. 
Under the Andhra Pradesh Rice (Procurement Ex-Mill Prices) Order, 
1975, effective October 1, 1975, the appellants (rice millers) were entitled to 
be paid the 'notified price' fixed thereunder for supplies to be made to the_ G 
Foods Corporation oflndia (FCI) of rice of"Kharif 1975-76 or subsequent 
crop". 
By an Order issued on November 2, 1976, the procurement price of rice 
in force for the year 1975-76 was made payable for the crop year 1976-77. H 
389 
390 
SUPREME COURT REPORTS [1997] SUPP. 5 S.C.R. 
A The appellants thus continued to sell rice to FCI after September 7, 1976 at 
the procurement price fixed for the crop year 1975-76. 
By a subsequent order dated February 24, 1977, the procurement price 
for various varieties of rice fixed in the 1975 Order was brought down with 
retrospective effect from September 7, 1976. Recoveries were sought to be 
B made from the appellants for the difference. 
The High Court held that merely because it was given effect to from an 
anterior date, the 1977 Order could not be said to be a retrospective 
subordinate legislation since it did not take away vested rights of the appellants. 
C 
Before this Court, the State contended that the 1977 Order had not 
D 
been gazetted and, therefore, had no legal effect. The 1975 Order could not 
be given effect to beyond September 7, 1976. 
Allowing the appeals, this Court 
HELD: I.I. It would be inequitable to permit the Government to take 
the plea of irregularity of its own Order after procuring rice on the basis of 
that order. If the Memorandum was required to be notified, the Government 
could not take advantage of its failure to notify it. Having acted on the basis 
of the unnotified Memorandum and having collected rice compulsorily from 
the millers on its strength and also having paid the millers at the rate fixed 
E by the Memorandum, the Government could not be heard to say that the 
Memorandum was of no legal effect and the payment was made under mistake 
of law. [398-E; DI 
1.2. Even ifthe contention of the State Government was upheld and the 
Memorandum was held to be void and of no legal effect, the State Government 
F had a statutory duty to pay for the rice procured by it at the market rate 
calculated in the manner laid down by the statute. (398-G I 
2. The recoveries sought to be made from the appellants were unlawful 
and unjust. Rice had been sold under a procurement order and a right to be 
paid in terms of that order had accrued to the seller as soon as sale of rice 
G was effected. The appellants not only had acquired a vested right to be paid 
but actually received pllyment for the rice sold. The retrospective subordinate 
legislation tried to take away a portion of the money the appellants had 
lawfully obtained. [399-H; 400-AI 
CIVIL 

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