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). 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 appellantFCI, 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]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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