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Judgment
Ravi S. Dhavan, C.J. & Aftab Alam, J.—These matters have been pending since 1975. In between the petitioners were unsuited on a technicality that a writ may not lie against the Food Corporation of India. In this context some of the petitioners filed special leave to appeal before the Supreme Court. The matters were considered in Civil Appeal Nos. 975-979 of 1980 : Jarnuna Floor & Oil Mills (P) Ltd. etc. etc. vs. Food Corporation of India etc. etc. The appeals before the Supreme Court were against the judgment and order dated 4.12.1978 of this court. The present petitioner was also a petitioner before the Supreme Court. The writ petition had been dismissed as not being maintainable as no writ would lie against the Food Corporation of India; so the High Court had held. The Supreme Court set aside this order. When the matters were taken up before the Supreme Court, the Food Corporation of lndia though represented did not appear at the bar of the Supreme Court. Thus, these matters now need to be considered on merits.
In between 1975 and as of date what has happened is that the controls and the licence Raj has gone. The genesis of the cases were the obligation of the petitioners to purchase wheat from the Food Corporation of India and process it into Atta, Maida and Suji for ultimate distribution in the net work of the public distribution system. The Supreme Court has already mentioned in its order of 14.8.96 that whatever relationship there may have been between the petitioners as roller flour mills and the Food Corporation of India, they could not be assumed to be contracting parties with the free consent in the making of a contract. What is the subject matter of dispute in these cases is the demand made by the Food Corporation of India against the petitioners to pay additional taxes under the Bihar Sales Tax Act, 1959. At the time when the demand was raised (1975) the Food Corporation of India, though it has no statutory sanction for raising such a demand was in a position to enforce its demand by the simple device of not making any sale of wheat to a flour mil! defaulting in making payment. At the material time, under the relevant Control Orders, the petitioners were obliged to purchase wheat only from the Food Corporation of India and from no one else for the purpose of processing it into by products for ultimate sale in the ration shops,
The issue has become academic particularly when the licence Raj is no longer existing. The petitioners are no longer under the statutory restraint to purchase the wheat only from the Food Corporation of India. And they are now free to purchase all the wheat that they should desire from the open market. The Food Corporation of India, thus, no longer enjoys the position to have its demand enforced by means of refusing to sell to the petitioners.
On record lies a counter affidavit which has been filed on behalf of the Food Corporation of India. This counter affidavit had been affirmed on 12.1.1978. In para 5 of the counter affidavit, the Corporate states that whereas such sale transactions as made by the Stat Food Corporation had been exempted from the levy of additional sales tax, exemption had not been made applicable to the Food Corporation of India; thus, the later was justified in levying additional sales tax on the roller flour mills.
Otherwise, at the bar counsel for the petitioners i.e. the roller flour mills and the Food Corporation of India are not at issue that the State Food Corporations are the creatures of the same statute, the statute being the Food Corporation of India Act, 1964. State Food Corporations are established u/s 17 of this enactment. The Food Corporation of India does not have the sanction to levy a tax. It may at best be the collecting agent to transmit the tax. If the State Food Corporations had received the exemption on such transactions which were the subject matte of the Control Orders, then, plainly the Food Corporation of India ought to have sought exemption in the context of the matters of wheat which was sold by it to the roller flour mills.
In the circumstances the roller flour mills like the petitioners are not obliged to pay the tax which was being imposed by the Food Corporation of India. In the result, these writ petitions are allowed. There will be, however, no order as to costs.