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P&H HC | Principle of Natural Justice demands petitioner-miller to be associated with stock verification by Food Corporation of India; physical verification set aside

Punjab and Haryana High Court

Punjab and Haryana High Court

Punjab and Haryana High Court: The question before Jaishree Thakur J., was whether physical verification conducted by Food Corporation of India was arbitrary, incomplete and in violation of principles of natural justice when the agreement of the petitioner was made with Punjab State Co-operative Supply & Marketing Federation Ltd. (MARKFED).

Petitioner-miller had been allotted paddy for custom milling under the policy framed by the Government of Punjab. An agreement was signed between the petitioner and MARKFED. As per the agreement the petitioner was bound to deliver the resultant rice to the Food Corporation of India (FCI) within the prescribed period. However, the period of delivery was extended and the Government of India while allowing the extension imposed a condition that the Food Corporation must ensure that the paddy was physically available on the premises of the miller before accepting the consignment. The Branch Manager of the FCI along with other members visited the mill for physical verification of stock. As per the physical verification done, it was reported that 57713 bags of rice were short in the mill premises.

 Submissions:

Decision and Analysis:

The Court analysed the stand of the MARKFED that the physical verification is done by the MARKFED at its level after every fourteen days and in the instant case, the last physical verification was done 3 days before the physical verification done by the FCI and even at that time, the stocks were found intact and there was no shortfall.

It was found that no prior intimation was provided to the petitioner which violated Clause 16 of the agreement. Also, no proper representative was present at the time of verification. It was also found that in the subsequent verification the stock was intact and no discrepancy was found. The Court while applying the principles of natural justice found that at time of verification it was the right of the petitioner to be present.

The Court observed that, “The petitioner has a privity of contract with the procurement agency and is bound by the terms and conditions therein. As per clause 16 of the policy, the physical verification report is to be signed by the miller, which signatures are not available in the instant case when FCI did its own physical verification of stock available at the petitioner’s Mill. Even the rules of natural justice would demand that a person would be associated at the time of doing any stock verification.”

The impugned verification was held unsustainable.[Gurdial Mal  v. Union of India, 2022 SCC OnLine P&H 764, decided on 25-03-2022]


Appearances:

Mr. Sushant Kareer, Advocate for the petitioner.

Mr. Kanisth Ganeriwala, AAG Punjab.

Mr. K.K. Gupta, Advocate for the FCI.

Mr. A.P.S. Mann, Advocate for the MARKFED.


Aastha Sharma, Editorial Assistant has reported this brief.

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