M/s.ChamundeswariAgolnduskiesPvt.Ltd v. 1 State of Telangana

Petition under Article 226 of the Constitution of lndia praying that'in the circumstances stateo in tne'aFilrit tii"o tn"r"*ith, the High court may be pleased to- issue an apcropriate writ, order or direction more particularly one in the nature of writ of Merndamus, de_cl-aring the letter bearing Lr.wo.tr, ittg.lu 2ll6tpaddy- Auction/Rabi 2022-23 dt.25.02.2026 issued by Respondent No.8 herein requiring Respondent Nos. 11 and 12 to freeze the bank accounts of the petitioner, as wholly illegal, arbitrary, unreasonable, high-handed, and in violation of the principles of natural justice, the terms and conditions of the custom Milling Agreement entered into between the petitioner and relangana state civil supplies corporation Lirnited, and the law laid down bythis Honblebourt, and consequenfly to set aside thr-'said letter dt. 2s.02.2026 and all actions taken pursuant thereto. lA NO: 1 OF 2026 Petition under Section 151 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to suspend the retter bearing Lr.No. Mktg/M2l16lpaddy-Auction/Rabi2b22-23 dt. 25-.02 2026 issued by Respondent No.8 herein requiring Respondent Nos. 1 1 and 12 to treeze the bank accounts of the petitioner. Counsel for the Petitioner: SRI R.N. HEMENDRANATH REDDY, SR. COUNSEL REP, FOR SRI LOHIT SANNAPANENI Counsel for the Respondent No.1,3 to 5,7,9 &i0: Gp FOR CIVIL SUPPLIES Counsel for the Respondent No.2,6 & 8: SRI K. DEVENDER, SC FOR TGSCSCL Counsel for the Respondent No.11 & 12 - - - - The Court made the following: ORDER IN THE HIGH COURT TOR THP STATE OF TELANGANA AT HYDEABAD HON'BLESRIJUSTICELAXMINARAYANAALISHETTY WRIT PETITION No.6759 of 2o26 DATE : O6.O ir. 2o26 Between: M/s. Chamundeswari Agro Industrics l)vt' Ltd', Rep. by its Managing Director ...Petitioner AND The State of Telangana, Rep. by its PrinciPal Affairs, Foods and Hyderabad and othcrs. Secretary, l)epartment of Consumer Civil Supplies, Secretariat l3uildings, ...Respondents ORDER: This writ petition is filed to declare the letter bearing Lr. No. Mk tg. I M2 I 1 6 I l)i-r cldy- fi 11ct i<;n / Rabi2o22- 2 3 dated 25.O2.2026, issued by respondent. No.8, hercin requiring respondent Nos. 11 and 12 to [reeze the bank accoilnts of the Petitioner, as illegal, arbitrary and lor consequential relief. Fleard sri IR.N. I-lenrendranath Reddy, learned senior 2. counsel representing sri Lohit sannapaneni, learned counsel for the petitioner on record, lcarncd Got, erlrlnent Plcader for Civil Supplies as well as Sri K. Deven<.lcr, Iearned standing counsel flor respondent Nos.2, 6 and 8. ?. 3' Learned senior counscr.for the petitioner represented that the isr; ue raised in the present writ petition is squarely covered by tlte common order dated 31.12.2024, passecl w'P.Nr,s.31sg3 and 32262 of 2024. wherein a simirar issue was considerecr b-r'the lcarned Singrc. Judge of this court, and after. extensive rrearing and referri,g to relevant pr.ovisions of law, has allowerl thc writ petition setting aside the li.eezing of the ba,k accourrt of the petitioners and further gra.ted riberty to the respondents to proceed in accordance with law. 4' l'earned Government pleader for civil supplies as well as learnecl Standing counsel fbr respondent Nos.2, 6 and g did not disputer the submissions madc b5z the learned Senior counsel for the petitioner 5' Accordingry, this writ petition is disposecr of in terms of the cornmon order dated 3L.12.2024 in w.p.Nos.31sg3 and 32262 of 2024. Therc shall bc no orcler as to costs. IVliscellaneous petitions pending, if &oy, shall stand closed. SD/. M. OSMAN ALI BAIG STANT REGISTRAR //TRUE COPYII SECTION OFFICER To,

#1. The Principal_Sec-retary, Department of Consumer Affairs, Foods and Civil _ !.uppt-le:;, State of Telangana, Secretariat Buildings, Hyderabad. 2. The vic,= chairman ano -ManSging p.!rgc!o_L Teh[dnd state civit suppties corporation Ltd., Having its offiie"at_o--s-os5ltA gIoC[- q cirii S,[tri", Bhavan Somajiguda, Hyderabad - 5000g2.

#3. The District Cotector, N-algonda District, Telangana. I IF 9qtlgptor (Civit SyonJlep), Natgonda oGirici,'teiunsuna. 5. I he Additional co.llector.(civil supplies), Nalgonda Dist'rict, tntegrated Collectcrate Buitdings, Nltqonda, tetariban;:- -- \

#6. Additional Collector'and Ex--Officio Execirtive Director, TGSCSCL, Nalgonda. 7. The District Civil Supplies Officer, Nalgonda District, lntegrated Collectorate Buildings, Nalgonda, Telangana.

#8. The District Manager, TGSCSCL, Nalgonda District, Nalgonda, Telangana. 9. Revenue Divisional Officer, Nalgonda Division, Nalgonda District, Telangana 10. Tahsildar, Kethepally Mandal, Nalgonda District, Telangana. 1 'l . The Branch Manager, Union Bank of lndia, Vanasthalipuram Branch, Medchal.

#12. The Branch Manager, Bank of Baroda, Suryapet Branch, Suryapet, Suryapet

#13. One CC to SRI LOHIT SANNAPANENI, Advocate [OPUC] 14. Two CCs to GP FOR CIVIL SUPPLIES, High Court for the State of District, Telangana. Telangana.IOUTI

#15. One CC to SRI K. DEVENDER, SC FOR TGSCSCL [OPUC] (Annex the common order dated 31.12.2024 in WP No.31583 & 32262 of 2024) Aw,

#6. Two CD Copies BN HIGH COIJRT DATED:06/03/202O ORDER WP.No.6759 of 2026 1 tt E iTrl ) U 1l t{fin ?029 z * t.j"'. * DISPOSING OF THE WRIT PETITION WITHOUT,COSTS 4) 1\ THE HONOURABLE SMT. JUSTICE T. MADHAVI DEVI NN COMMON ORDER: In both the Writ Petitions, though the petitioners are different, they are both aggrieved by the orders of the respondents in issuing proceedings directing the freezing of their bank accounts for recovery of the dues under the Custom Milling Rice agreement for the concerned periods.

#2. Sri R. N. Hemendranath Reddy, learned Senior Counsel appearing for the petitioner in W.P.No.32262 of 2024 and also the learned counsel for the petitioner in W.P.No.3l583 of 2024, have both submitted that no notices were given to the parties before issuing the orders of freezing their bank accounts and therefore, the same are bad in law. [t is further submitted that this Court in W.P.Nos.l7985 of 2024 and batch has observed that without determining or crystallizing the demand, the respondents could not have resorted to recovery 2 procedur() under the Telangana Revenue Recovery Act, lg64 (for stt! J-Lla vL Lvaa short, 'R.R. Act').

#3. Thr: respondents have filed a counter affidavit in w.p.N o.32262 of 2024 and submitted that the same is to be adopted in another case as well. [n view thereof, both matters have been heard extensively and after hearing the relevant parties, this Court passes the following order.

#4. Learned Senior counsel for the petitioner in w.p.No.32262 of 2024, has extensively taken this Court through various clauses of the Telangana Rice (custom Milling) order, zol5 (for short, .order, 2015') to demonstrate that the millers are required to take delivery of the paddy from the State corporation and after milling, deliver rice as per the ra':io fixed by the State corporation/Food corporation of India as orderecl by the State Corporation from time to time. It is submitted that if the petitioner fails to conform to the fair average quality or does not deliver the rice within the prescribed period, the respondents have the authority to levy a penalty for the short supply of the agreed rice. Learned S,enior counsel submitted that the Government of India has extended the period for receipt of cMR dues, including the payment of 3 w.P.N"',Jis;i and32262of 2024 penalties, for the seasons Rabi 201.g-zo, Rabi 2020-21, Kharif 20zl- 22,Rabi202l-22 and Kharif 2ozz-23 by a period of 60 days from the date of the memo dated l8.l I .2024. Therefore, according to him, there is still time for the petitioners to pay the cMR dues for the above seasons, as is evident from the impugned order, the CMR dues for Rabi 2021-22 and Kharif 2022-23 are sought to be recovered from the petitioner in W.P.No.32262 while rhe CMR dues for Rabi2022-23 and Kharif 2023-24 are sought to be recovered in the case of W.P.No.3l583 of 2024. Learned Senior Counsel submitted that the authorities under the Essential Commodities Act, 1955 (for short, .the E.c. Act, 1955') have no power to order the seizure of the bank accounts even for recovery of the dues. Learned Senior Counsel further submitted that unless and until the demand is crystallized, the authorities cannot resort to recovery of the amounts under the R.R. Act and as seen from the impugned order, no notice was given to the petitioner prior to raising of the demand under the letter dated

06.04.2023 and hence according to him, the demand has not yet been crystallized. Learned Senior Counsel therefore relied upon the 4 and 32262 of 2024 Criminal pr.ocedure. decision of the learned Single Judge of this Court in W.p.Nos. 179g5 of 2024 and batch, dated Zg.Og.2I24.for the proposition that unless and untir the <temand is crystalrized, the respondents cannot resort to the R.R. Act and cannot direct seizure of the bank account. Learned senior cc'unsel further placed reliance upon the decision of the Hon'ble Supreme Court in the case of Ratatt Babulal Lath v. State of Karnatakat, for the proposition that where the Act is a code by itselfl, the responrrents cannot take recourse to Section 102 0f the code of Learned Senior Counsel submitted that the E.C. Act' 1955 i:; a code by itserf as it contains both the substantive as we, as machinery provisions and therefore, the recourse can only be under the said Act, not in any other Act for freezing of the bank account, and as there is rro provision under the E.C. Act, 1955 for freezing of the bank account, the impugned orders are liable to be set aside. Learned Senior Courrsel placed reliance upon the judgment of the Hon, ble Supreme Corrrt in the case of Bharat petroleum Corporation Ltd. v. N.R. Vairamani2, for the proposition that circumstantial flexibility, t (zo2z) I 6 scc 2al - 2004 (7) Supremc I:t6 W.P.Nos.3l583 and32262 of?024 one additional or different fact, may make a world of difference 5 between conclusions in two cases and disposal of cases by blindly placing reliance on a decision is not proper. According to learned Senior Counsel, the facts of each case have to be gone into before applying the law of precedents and in support of the same, he relied upon the decision of the Hon'ble Supreme Court in the case of ,S. Kasi v. State through Inspector of Police3. Learned Senior Counsel placed reliance upon the decision of the Hon'ble Supreme Court in the case of State of Karnata v. Shree Rumeshwara Rice Mills, Thirthahallf , for the proposition that a party to the agreement cannot be an arbiter in his own cause. Therefore, he has drawn the attention of this Court to the CMR agreement under which it is the Civil Court, which can decide the dispute, if any, between the parties to the agreement. Learned Senior Counsel relied upon the decision of the Hon'ble Supreme Court in the case of Tulsi Narayan Garg v. M.P. Roud Development Authority, Bhopals, for the proposition that the respondents cannot ' (zozt) r 2 scc r o (rsgz) 2 scc 160 ' (zozz) l7 scc 750 Ui-:' E!' TMD.J W.P.Nos. 31583 afi32262 of 2024 6 initiaterecoveryproceedingsunlessthedisputeremainedpending crystaltization or fi nalization'

#5. LearnedGovernmentPleaderforCivilsupplies, appearingfor respondelrts No. |,3 &4, on the other hand, relied upon the averments madeinthecounteraffidavitandsubmittedthatthepetitionerhas defaultectinsupplyingCMRriceandtherefore, thedemandhasbeen raised a;gainst the petitioner and for non-payment of the demanded amount, therespondentshadnootheroptionbuttofreezetheaccount ofthepetitioner. Insupportofhiscontentions, learnedGovernment PleaderplacedrelianceuponthedecisionoftheHon, bleSupreme 6' for the Court irr the case of Teesta Atul Setulvud v' State of Gujara' propos:'tionthatissuanceofpriornoticetotheaccountholderbefore seizure of the bank account is not required'

6..Flavingregardtotherivalcontentionsandthematerialon record, thisCourtfindsthatthepetitioners, aswellastherespondents, arebrlundbytheCMRagreementandthepetitionersareboundto provi, le the rice as per the allotment of paddy made to it' The t (zotg) 2scc372 7 TMD,J W.P.Nos. 31583 and32262 of2O24 respondents are also entitled to impose a penalty for short supply of rice. However, the demand wourd have to be crystarized before the respondents can initiate and undertake the recovery proceedings under the R.R. Act. As seen from the impugned order dated 06.04.2023 in w.P.No.32z62 of 2024, except for references to G.o.Ms.No.r3 dated 16.10-2021, G.o.Ms.No.23 dated rg.r0.2022, thereporr of the Deputy Tahsildar dated 0L-04.2023 and the coilecror rerter dated 02.04.2023, there is no reference to any notice to the petitioner or the explanation of the petitioner before coming to the conclusion that the amount to be recovered is Rs.27,76,09,996/-. Therefore, as observed by the rearned single Judge of this court in w.p.No.r79g5 of 2024 and batch, the respondents did not foilow the procedure laid down under the R.R. Act while issuing a destraint order in Form No.l under Section g of the R.R. Act; demand notice prior to the attachment of land in Form No.4 under Section 25 of the R.R. Act and therefore, notice of attachment of the bank account in this case is not sustainable. As held by the Hon, ble Supreme court in the case of Teesta Atun setalvad (cited supra), it is not required to issue a notice to the account holder before the seizure TMD,J W.P.Nos.3l583 and32262 of2024 of the bank account, but a notice to the petitioner for crystallization of B the demand before freezing of the bank account of the petitioner is definitely necessary i.e., before any coercive Steps are taken under the R.R. Act. The respondents also cannot seize the amount in the bank account vrhich is exceeding the demand amount. Therefore, it is necessary that the demand has to be crystallized before taking any coercive steps. This principle is applicable to the facts in W.P.No.31583 of 2024 as well

#7. In rriew of the same, the freezing of the bank account of the petitioners are accordingly set aside and the petitioners are free to operate the bank accounts. The respondents all are at liberty to proceed in accordance with law. Accordingly, both the Writ Petitions are allowed. There shall be no order as to costs. Pending miscellaneous petitions, if atry, shall also stand dismissed. Date: 31.12.2024 PRN JUSTICE T. MADHAVI DEVI