Madrasdated High Court · 2012

17.MURUGAN MODERN RICE MILLREP BY ITS PROPRIETOR D. AZHAGARS/O.KANNAYURAM, ANANDAPURAM,KANDANANGALAM POST, PUDUCHERRY 605 10218.JAYALAKSHMI MODERN RICE MILLREP BY ITS PROPRIETOR D. PURUSHOTHAMANS/O.THAVARASU, 21 MAIN ROAD, NETTAPAKKAM PUDUCHERRY, PUDUCHERRY 605 10619.VENKATACHALAPATHI MODERN RICE MILLREP BY ITS PROPRIETOR R.ALAVANTHARS/O. RAMANUJAM, R.S. NO.34/2 SORAPET POST, PUDUCHERRY 605 50120.VIJAYA MODERN RICE MILLREP BY ITS PROPRIETOR R.SEKARS/O.R.RAJARAM, NO. 3 MADUGARAI MAIN ROAD KARIKALAMPAKKAM, PUDUCHERRY21.SRI BAVANIAMMAN MODERN RICE MILLREP BY ITS PROPRIETOR S. SAKTHIVELS/O. SAMMANTHAM, METTU ST.,KATTERIKUPPAM, PUDUCHERRY 605 50222.GAJALAKSHMI MODERN RICE MILLREP BY ITS PROPRIETOR R. THANGAMANI S/O.RASU, NO.1 VILLIANOOR MAIN ROAD,EMABALAM, PUDUCHERRY 605 10623.SAKTHI RICE MILLREP BY ITS PROPRIETOR D.SENTHILKUMARS/O. M.DHANARAJ, CUDDALORE ROAD,THAVALAKPPAM, PUDUCHERRY24.PONDY VENKATESWARA MODERN RICE MILLREP BY P.PREMAVATHI, W/O.PAKKIRISAMYNO.28, CUDDALORE ROAD, TOLLGATE,ARIYANKUPPAM, PUDUCHERRY 605 00725.RAJARAJAN MODERN RICE MILLREP BY RAVI, S/O. KANNAN A.A-22 INDUSTRIAL ESTATETHATTANCHAVADY, PUDUCHERRY 605 00926.SHIVASHAKTHI RICE INDUSTRIESN.T. SIVAKUMAR, S/O.N.THANRAJUCUDDALORE ROAD, THAVALAKUPPAMPUDUCHERRY 605 007 https://hcservices.ecourts.gov.in/hcservices/

27.SRI RAM MODERN RICE MILLK.TAMILARASI, W/O. N. GOTHANDAPANIR.S. NO.12/1B, URUVAIYAR VILLAGE,VILLIANOOR, PUDUCHERRY28.SRI MOOGAMBIGAI MODERN RICE MILLA. SRINIVASAN, S/O.P.ARUMUGAM46, IRUSAMPALAYAM ROAD, ARIYANKUPPAM PUDUCHERRY 605 00729.SRI KRISHNA MODERN RICE MILLR.YUVARAJ, S/O.K. RADHAKRISHNAN ANDIYARPALAYAM, GENGARAMPALAYAM POST,PUDUCHERRY 605 10830.LAKSHMI KUMARAN MODERN RICE MILLLAKSHMI KANTAN, CUDDALORE ROADTHAVALAKUPPAM, PUDUCHERRY 605 007... PETITIONERS -vs-1.THE GOVERNMENT OF PUDUCHERRYREP BY ITS JOINT SECRETARY,DEPT. OF CIVIL SUPPLIES AND CONSUMER AFFAIRS,PUDUCHERRY2.THE DIRECTORDEPT. OF CIVIL SUPPLIES AND CONSUMER AFFAIRS PUDUCHERRY... Respondents.Prayer: Writ petition is filed under Article 226 of Constitution ofIndia for issuance of a Writ in the nature of Certiorari, to call forthe records on the file of the 1st respondent in amended as per orderof this Court dated 17.04.2012 in MP.No.1/2012 in WP.No.21095/2011G.O.38 dated 27.03.2012 and to quash the same as illegal, incompetent,without jurisdiction and unconstitutional.For Petitioners: Mr.V.RaghavachariFor Respondents: Mr.T.Murugesan, SC For Miss N.Mala*****O R D E RThe petitioners, who are rice mill owners, have invoked the writjurisdiction with a prayer for issuance of a writ in the nature of https://hcservices.ecourts.gov.in/hcservices/ Certiorari to quash the notification issued vide G.O.38 dated27.03.2012, being illegal, incompetent, unconstitutional and withoutjurisdiction.2.The Director, Department of Civil Supplies and ConsumerAffairs, Puducherry, entered into a statutory contract with the Millersfor procurement of single boiled rice under Clause-3 of PuducherryPaddy and Rice Procurement (levy) Order 1996.3.The petitioners, under the contract, undertook to sellsingled boiled rice to the Government at the rate acceptable to boththe parties. The petitioners agreed to supply single boiled rice underfifty percent levy system. The procurement policy of rice and paddy(levy Order) 2010, stipulated formation of a committee for implementingthe provisions of levy order.4.The Government Order 18 dated 03.09.2010 was issued forforming of committees. In order to effectively implement the scheme,the Government of Puducherry issued different Government orders fromtime to time, including the Government Orders with regard to fixing ofthe rate.5.The Government of Puducherry issued G.O.17 dated 18.08.2010to enforce fifty percent levy on licensed Millers, wherein it wasstipulated THAT;i)Food Corporation of India (FCI) will be the agent of Union ofPuducherry for procurement of rice from the rice Millers.ii)the rice will be procured at the rate fixed by the Government ofIndia from time to time for each season and the FCI was to payprocurement price to Millers.iii)the licensed rice Millers were obliged to deliver fifty percentof the total production as mill levy to FCI. The FCI was to makearrangement for procurement of 61,000 metric tonnes of singleboiled rice as per the specification approved by the Governmentof India. The Millers were also directed to deliver 17,000 metrictonnes of single boiled rice for KMS 2009-2010.iv)the committee was also constituted to fix the mill wise target 6.The Government of India in exercise of statutory function,notified the cost fixed for single boiled rice for 2009-2010. Thenotification dealt with the price for not only Puducherry, but manyStates.7.It is the submission of petitioner, that Union Territory ofPondicherry is the predominant user of single boiled rice in the entirecountry and no other State has ventured into it. It was in view of thecost factor involved for single boiled rice, that the CentralGovernment undertook to pay the price through FCI and the excess pricefor single boiled rice was to be borne by the Government of Puducherry. https://hcservices.ecourts.gov.in/hcservices/

8.It is submitted that the Union Territory of Puducherry wasaware, that the purchase of single boiled rice will be costlier thanparboiled rice or double boiled rice.9.The rate fixed by the Central Government in exercise ofstatutory powers for Grade-A during the KMS year 2009-2010, wasRs.1620.50 (Rupees One Thousand Six Hundred Twenty and Paise Fiftyonly) and for KMS 2010-2011, it was Rs.1619.20 (Rupeees One ThousandSix Hundred Nineteen and Paise Twenty only).10.The Millers expressed their difficulties in supplying singleboiled rice at the rate fixed, as in the preparation of single boiledrice, there is substantial wastage. It was therefore thought fit toconstitute a committee, for submission of the report. It was inpursuance to the report submitted, by the duly constituted committee,that the Government of Puducherry issued G.O.30 dated 05.01.2011,stipulating payment of incentive to sustain Millers.11.The stand of the petitioners is that the term incentive wasmisnomer, as in fact, it was compensation to recuperate the loss. Thebasis for incentive was the recommendation of the committee,constituted by the Government. It is the submission of petitioners,that the report of the Indian Institution of CROP Processing Technology(Ministry of Food Processing Industries, Government of India),Thanjavur, is clear on this subject. The committee had conducted adetailed study and it was thereafter that the rates for common andGrade-A paddy rice, were fixed.12.The recommendation made by the committee was as under: "As is basis yield: The overall single boiled ricemilling yield for common paddy is 62.7% and for grade A paddyis 60.7%As per Uniform specifications: The milled rice yield asper norms for common paddy is 68.7% and for Grade-A paddy is66.5%."13.The committee found, that the loss in single boiled rice wason an average 7..5%. The Director, Department of Civil Supplies andConsumer Affairs, Puducherry, was one of the member of committee, whomade recommendation, and it is for this reason, that the incentive waspaid by the Government.14.The positive stand of petitioners is that it was on therecommendation of the committee, that the Government had issued G.O.30dated 05.01.2011 in granting incentive at 3.16 per kg. It is alsosubmitted, that the petitioners had expressed their apprehension tosupply of single boiled rice at the statutory rate fixed by the https://hcservices.ecourts.gov.in/hcservices/ Government. It was at the time of entering into the contract, that thepetitioners were assured of compensation, and constitution of thecommittee to deal with the subject.15.It was on the assurance of the Government, that thepetitioners entered into the contract, and that the Government, keepingits word, had issued G.O.30 to mitigate the loss. Furthermore, it wason this assurance, that the Millers had undertaken to supply levy paddyto the Government.16.The respondent no.2 paid the amount in terms of G.O.30 dated05.01.2011. The TDS was also deducted from petitioners. The stand ofpetitioners is that if the payments are not made in terms of G.O.30,the entire business of the petitioners will collapse.17.The respondent no.1 thereafter issued G.O.3 dated 19.08.2011to withdraw the incentive given under Clause 4 of G.O.30 dated05.01.2011. It is the stand of petitioners that Clause-4 in theGovernment Order was introduced surreptitiously. The purpose of G.O.3dated 19.08.2011 was to identify the people, who were entitled to freedistribution of rice and it has nothing to do with the rates payable tothe Millers.18.It is submitted, that there was no change in the eventsbetween 05.01.2011 and 19.08.2011, as there was no fall in the grainprice, nor production of foodgrain increased. Rather the prices havebeen continuously increasing every year. It is also the stand ofpetitioners, that the Government of India has fixed a minimum saleprice every year and no Government agency could offer anything lesserthan it.19.It is also submitted, that once the purchaser and Millers hadagreed to supply at the rate fixed, it was not open to the respondentsto reduce it unilaterally. The Order is said to be unconstitutional andarbitrary, thus, violative of Article 14 and 19 of the Constitution ofIndia.20.During the pendency of writ petition, the notificationearlier issued was withdrawn and was substituted by G.O.38 dated27.03.2012, which resulted in amending of the writ petition.21.It is submitted, that by amending the Government order withretrospective effect, the position of petitioners has been madedeplorable. It is also submitted that Puducherry Central Co-opeativeSales and Distribution Society is purchasing the rice at Rs.22 per kg.Whereas the price determined and payable to petitioners is onlyRs.16.10 paisa, that too for single boiled rice, and not for parboiledrice. The petitioners placed reliance on the proceedings of the CentralGovernment dated 13.10.2010, which reads as under: https://hcservices.ecourts.gov.in/hcservices/ "I am directed to refer to Government of Puducherryletter No.I 8/DCS & CA/Levy/2007/Costing dated 20.09.2010 onthe above subject and convey the approval of government ofIndia to the request of Govt. of Puducherry for extension ofdelivery of single boiled levy rice for KMS 2009-10 for twomonths beyond 30th September, 2010 on the rates as per theenclosed provisional cost sheet and as per the other termsand conditions stipulated in this departments letter dated02.12.2009, subject to the condition that the single boiledrice should strictly meet the specification of parboiled rice2009-10.2. The cost sheet is subject to revision on the basis ofappropriate studies for single boiled rice for out turn ratio(OTR) and milling charges" 22.It is the case of petitioners that the Central Government HADdetermined for KMS 2009-10 for common variety at the rate of Rs.15.69per kilo and for Grade-A at Rs.16.13. Based on the study by theGovernment of Puducherry in accordance with the directions of theCentral Government, had fixed the compensation amount at Rs.3.16 perkilo. Though this amount was not sufficient for securing a kilo ofsingle boiled rice in the market, as the price at the Co-operativeSociety is Rs.22/- for the same quality of rice.23.The notification is challenged on the ground, that the sameis outcome of non-application of mind, as it does not take note ofearlier proceedings, including the proceedings of the CentralGovernment dated 13.10.2010. 24.According to petitioners, the modification of Governmentorder during the pendency of writ petition besides being illegal, isalso comtemptuous. The impugned notification is challenged on thegrounds;i)that the Government of Puducherry has no authority to pass theimpugned order retrospectively;ii)that the Government has not applied its mind while passing theimpugned notification as it has failed to take note of theCentral Government's order dated 13.10.2010, where the rate fixedwas only with regard to parboiled rice and the price fixed forsingle boiled rice was provisional and subject to study of OTRfor manufacture of single boiled rice;iii)that the rates of paddy had increased, therefore, reducing therates unilaterally is hit by the principles of legitimateexpectation as also equity and justice;iv)that the impugned order amounts to breach of undertaking givento the Court on 29.12.2011, undertaking to pay compensationamount till the date of the Government order dated 18.08.2011,therefore, retrospective withdrawal is contemptuous, for which https://hcservices.ecourts.gov.in/hcservices/ the respondents are liable to be punished under Article 215 ofthe Constitution of India.25.The writ petition is opposed by the respondents on theground, that the petitioners have no locus standi to challenge theGovernment policy decision, which has been taken in the larger interestof public. It is also submitted that in the matter of granting andwithdrawal of incentive, no right is vested in any individual, nor theincentive can be claimed as a matter of right, therefore, the writpetition deserves to be dismissed on this short ground.26.It is submitted that the production, procurement anddistribution of rice were always subject to Government's regulation,even from pre-independence days. The stand of the respondents is thatthe dealing with rice is subject to Governmental supervision andregulations in exercise of statutory powers under Section 3(1) of theEssential Commodities Act.27.That India, being Socialistic Welfare State, is committed toprovide free rice to the families below poverty line and at subsidizedprice to families above the poverty line. Under the scheme of CentralGovernment, the rice is distributed to the poorest among poor and thevarious State Governments have announced different schemes for freedistribution of rice from time to time. It was in order to implementpolicies and schemes of the Central Government floated for welfare ofthe citizens, that the Government of Puducherry fixed the estimate ofprocurement of 17000 Mts of rice during KMS 2009-10 and 61000 Mts forthe KMS 2010-11.28.The Government of India through State Governments procuresrice for this purpose through its agency, Food Corporation of India, byimposing compulsory levy on the Millers. Various price orders areissued by the respective State Governments fixing the percentage oflevy.29.The Government of Puducherry vide G.O.Ms.No.32/96, passed thePondicherry Paddy and Rice Procurement (Levy) Order, 1996 and underwhich, licensed millers / dealers were obliged to sell 20% of the stockheld by them as levy rice to Government at the procurement price. Itwas under the levy order, target for each mill is fixed. If the Millerdefaults in delivering the levy, the State Government has power toseize and remove stocks.30.The Government of India thereafter vide letter dated 8thNovember, 2007, insisted to impose 50% compulsory levy on millers underEssential Commodities Act, 1955. The order in this regard was issuedvide G.O.Ms.Nos.5 & 6 dated 09.06.2010. https://hcservices.ecourts.gov.in/hcservices/

31.It is the case of respondents that the Kharif Market Seasonstarts from 1st October and ends on 30th September every year. TheGovernment of Puducherry decided to procure single boiled rice under50% levy on the local millers of Puducherry and Karaikal regions. Theuniform specification for the single boiled rice was also issued by theGovernment of India vide letter No.8-7/2010-S&I dated 16.06.2010. Theprocurement of single boiled rice was started by FCI in the month ofSeptember 2010 and was continued till November 2010 for KMS 2009-10, bygetting extension from the Government of India.32.As per the Government order No.17 dated 18.08.2010, it wasstated that levy of procurement price shall be at the rate fixed by theGovernment of India from time to time for each season and that the FCIshall pay the procurement price to the millers.33.Clause 2 (iv) (b) and Clause 2 (v)(c) of the order read asunder:"Clause 2 (iv) (b): If a miller in lieu of the quantitysaleable under sub-clause (a) above, is agreeable to sell afixed quantity of such variety or varieties of rice duringsuch period or periods and in such installments as ma beagreed upon between the miller and the Government, theDirector of Civil Supplies and Consumer Affairs may enterinto an undertaking in writing in this behalf in the Form atschedule I with such miller setting out the quantity, varietyor varieties, period or periods, installments and otherrelevant details. Notwithstanding anything contained in sub-clause(s), the liability of the miller under that sub-clauseshall remain suspended during the subsistence of suchundertaking and as long as the miller continues to dischargetheir obligations under such undertaking from time to timeand shall stand discharge fully for the year on completion ofsale in terms of such undertaking."Clause 2 (v) (c): If the miller takes the option to sell 50%of the rice produced on millers account everyday to theGovernment, the miller is entitled to receive the releasecertificates in 1:1 ratio for the quantity sold toGovernment. If the miller opt for fixed quantity under clause(iv)(b) based on agreement, the same will be divided monthwise and on fulfilling the commitments as per the undertakingevery month. During the month the miller is entitled for onerelease certificate valid till the end of the subsequentmonth without any limits or quantity." 34.The stand of the respondents is that uniform specification ofparboiled rice is also applicable for single boiled rice. TheGovernment of India had issued costing for parboiled rice vide letter https://hcservices.ecourts.gov.in/hcservices/ No.2(2)/2009-PY-1 dated 02.12.2009 for KMS 2009-10. Later, aprovisional costing sheet for KMS 2009-10 was issued by the Governmentof India vide Lr.No.167(51)/2008-PY-1 dated 13.10.2010 of the US to theUnion of India. This was subject to revision on the basis of properstudies for single boiled rice for the out turn ratio and the millingcharges.35.The petitioners had accepted 50% compulsory levy fixed by theGovernment of Puducherry and also procurement price of Grade-A rice(applicable to the Single Boiled Rice) at Rs.1613.20 per Qtl. TheGovernment of Puducherry, taking into consideration the low out turnration of the single boiled rice, when compared to double boiled rice,announced a financial incentive of Rs.3.16 per kg to the millers, whohave deposited single boiled rice to FCI as per the target fixed forthem.36.In the order, it was clearly stated, that the payment offinancial incentive will be subject to the availability of funds underthe relevant head of account and fulfillment of certain otherconditions laid down under G.O.Ms.No.30 dated 05.01.2011. Thesubmission of the respondents is that after assuming of new Governmentand keeping its election promises, it was decided to distribute ricefree of cost in the following scale:i)AAY beneficiary - 35kgii)BPL beneficiary – 25kgiii)APL beneficiary - 15kg As per the stand of respondents, the financial implication under thenew policy is as under:CardCategoryPresentCardStrengthScale ofSupply /card/month SellingPrice/KgatFPSTotalRequirement ofriceG.O.I.'sunderTPDSQtyinMtC.I.P.(in MtincludingTransportation &handingchargesFinancialimplication/Month @C.I.PRateAddl.RequirementofRiceinMTGoI'sallotment ateconomiccostincludingtransportation &handingcharges/MTFinancialImplicationEconomiccostmonthAAY322035KgFreeofcost11291129Rs.4800Rs.5419200NilNil https://hcservices.ecourts.gov.in/hcservices/ CardCategoryPresentCardStrengthScale ofSupply /card/month SellingPrice/KgatFPSTotalRequirement ofriceG.O.I.'sunderTPDSQtyinMtC.I.P.(in MtincludingTransportation &handingchargesFinancialimplication/Month @C.I.PRateAddl.RequirementofRiceinMTGoI'sallotment ateconomiccostincludingtransportation &handingcharges/MTFinancialImplicationEconomiccostmonthBPL12244725KgFreeofcost30612441Rs.7450Rs.1818545062013650Rs.8463000APL18455715KgFreeofcost2769700Rs.10100Rs.7070000206913650Rs.28241850TOTALRs.30674650Rs.36704850Whereas additional funds required for distribution of PDS rice at freeof cost for 2011-12 is as under: DetailsNon PlanPlanSCSCPAmount provided in BE2011-12Rs.32,00,00,000Rs.1,56,86,000Rs.6,23,14,000Amount Booked uptoSeptember 2011Rs.18,34,67,750Rs.57,34,983Rs.1,62,77,310Balance amount availableRs.13,65,32,250Rs.99,51,017Rs.4,60,36,690Fund required fromOctober 2011 to March2012Rs.40,42,77,000Less-Balance amountavailableRs.19,25,19,957Additional fund requiredRs.21,17,57,04337.The fund requirement for payment of incentive, even ifcontinued, would come to Rs.24,64,80,000/- (Rupees Twenty Four Crores https://hcservices.ecourts.gov.in/hcservices/ Sixty Four Lakhs and Eighty Thousand only) p.a., therefore, keeping inview of the fact, that the Government of Puducherry has already stoppedthe fund, which was not possible to continue with the incentive grantedto the millers, therefore, it was decided to withdraw it.38.It is submitted, that for withdrawing the scheme, no noticewas required to be issued to the beneficiaries or give any explanationthereof. It is the stand of respondents that the Government is atliberty to implement any new scheme and also withdraw such scheme, ifnot viable. The rate is being paid to petitioners for single boiledrice as fixed by the Government of India from time to time, which takesinto consideration all the factors.39.Though initially it was stated that incentive was notwithdrawn retrospectively and it was undertaken that applicableincentive to all the millers will be paid as on date of withdrawal ofincentive, but subsequently this order stands modified and the benefithas been withdrawn retrospectively.40.The basic point raised and the reply is that the decision ofwithdrawing of incentive was based on larger public objective andkeeping in view the availability of fund position. It is denied in thecounter, that the principle of promissory estoppel or legitimateexpectation are applicable to the facts of this case, as the obligationto deliver the levy rice is statutory obligation under the EssentialCommodities Act, 1955, which is not dependent of the incentive of theState Government.41.Thus, on the averments made herein above, it is pleaded thatthe prayer in the writ petition, being without any merit, be dismissed.42.In the additional counter filed to the amended writ petition,the stand taken is that the Government of Puducherry has ampleauthority to pass the impugned order retrospectively. The stand takenis that the price fixation is within the domain of the CentralGovernment and the study for variance of price is also conducted by theCentral Government, in which the Union Territory of Pondicherry has norole to play.43.Learned counsel for the petitioners in support of this writpetition vehemently contended, that the Government of India, videLetter No. 167(51)/2008-PY-1 dated 13.10.2010, while accepting therequest of Government of Puducherry for extension of delivery of singleboiled rice for KMS 2009-10 for two months beyond 30th of September,2010, had categorically observed that the provisional price was subjectto revision, on the basis of proper studies for single boiled rice forthe out turn ratio and the milling charges. https://hcservices.ecourts.gov.in/hcservices/

44.It was contended, that the approval by Central Governmentitself shows, that the rate for common rice at the rate of Rs.1569/-(Rupees One Thousand Five Hundred Sixty Nine only) and Grade-A rice atthe rate of Rs.1613.20 (Rupees One Thousand Six Hundred Thirteen andPaise Twenty only), was provisional, and was subject to revision on thebasis of appropriate studies.45.Learned counsel for the petitioners referred to the report ofIndian Institution of CROP Processing Technology, regarding MillingTrials for Single Boiled White belly Rice, wherein it was pointed outthat the overall single boiled rice milling yield for common paddy is62.7% and for grade A paddy is 60.7% as against the yield of 68.7% forcommon paddy and 66.5% for Grade-A.46.The contention of learned counsel for the petitioners,therefore, was that it was taking note of studies by the Institution ofCROP Processing Technology, that G.O.30 dated 05.01.2011 was issuedfor grant of incentive of 3.16 per kg for deposit of single boiledrice to the FCI as per the contract, though it was made subject to theavailability of fund under the relevant head of account and subject tofulfilling conditions laid thereunder.47.The stand of petitioners was, that the fixation of price bythe Central Government being provisional and keeping in view thestudies conducted, the Government Order, though termed as incentive,was in fact an additional price for single boiled rice, and notincentive for supplies, as stated by the respondents. In case, thestand of the respondents is accepted, then it was to be applicable toboth categories of rice, i.e., double boiled rice/ parboiled rice aswell as single boiled rice. 48.The very fact, that it was limited to single boiled riceshows, that it was in the form of additional price, which was to befixed by the State Government on the basis of studies. The incentivetherefore formed part of statutory price, which could not have beenwithdrawn, by the respondents. 49.Learned counsel for the petitioners referred to G.O.Ms.No.3dated 18.08.2011, to contend that the reading of this order shows, thatthe object of this letter was for distribution of rice at free of costand to revise the scale of supply of rice under the Universal PDSorders and was not to deal with fixation of prices for levy rice.50.Learned counsel for the petitioners referred to Clause-4 ofthe order, under challenge prior to withdrawal, to contend that theobject of incentive was to compensate the low percentage of Out TurnRatio (OTR) for single boiled rice. Even though this letter stoodmodified, but the intention was clear, that though termed as incentive, https://hcservices.ecourts.gov.in/hcservices/ it was in fact additional price to compensate the low percentage ofOut Turn Ratio (OTR) for single boiled rice, which could not bewithdrawn.51.Learned counsel for the petitioners also contended, thatsubsequent G.O.38 dated 27.03.2012 vide which G.O.Ms.No.3 dated18.08.2011 was modified, cannot be sustained in law, firstly for thereason, that the reading of G.O.Ms.No.3 shows, that it was an incentiveto compensate low percentage of Out Turn Ratio for single boiled rice,which could not be withdrawn and in any case, it could not be withdrawnretrospectively.52.The impugned notification, therefore on the face of it, isarbitrary, thus, violative of Article 14 of the Constitution.53.It was also contended by learned counsel for the petitioners,that the respondents, after supply, cannot now withdraw the incentiveannounced on the principle of promissory estoppel, as it was inpursuance to the grant of incentive, that the decision to fix finalprice for single boiled rice was not taken, in view of the fact, thatthe price fixed by the Central Government was provisional, and subjectto revision on receipt of study report.54.The impugned order is also challenged on the ground, that itis violative of legitimate expectation of the millers to get theincentive for timely supply of single boiled rice, keeping in view thecost factor involved. 55.In support of the contention, that the impugned order of theGovernment of Puducherry is arbitrary, thus, violative of Article 14 ofthe Constitution of India, learned counsel for the petitioners placedreliance on the judgment of the Hon'ble Supreme Court in Mahabir AutoStores and Others vs. Indian Oil Corporation and Others, (1990) 3 SCC752, wherein the Hon'ble Supreme Court was pleased to lay down asunder:"12. It is well settled that every action of the Stateor an instrumentality of the State in exercise of itsexecutive power, must be informed by reason. In appropriatecases, actions uninformed by reason may be questioned asarbitrary in proceedings under Article 226 or Article 32 ofthe Constitution. Reliance in this connection may be placedon the observations of this Court in M/s Radha KrishnaAgarwal v. State of Bihar.1t appears to us, at the outset,that in the facts and circumstances of the case, therespondent-company IOC is an organ of the State or aninstrumentality of the State as contemplated under Article 12of the Constitution. The State acts in its executive powerunder Article 298 of the Constitution in entering or notentering in contracts with individual par- ties. Article 14 https://hcservices.ecourts.gov.in/hcservices/ of the Constitution would be applicable to those exercises ofpower. Therefore, the action of State organ under Article 14can be checked. See Radha Krishna Agarwal v. State of Bihar,at p. 462, but Article 14 of the Constitution cannot and hasnot been construed as a charter for judicial review of Stateaction after the con- tract has been entered into, to callupon the State to account for its actions in its manifoldactivities by stating reasons for such actions. In asituation of this nature certain activities of the respondentcompany which constituted State under Article 12 of theConstitution may be in certain circumstances subject toArticle 14 of the Constitution in entering or not enteringinto contracts and must be reasonable and taken only uponlawful and relevant consideration, it depends upon facts andcircumstances of a particular transaction whether heating isnecessary and reasons have to be stated. In case any rightconferred on the citizens which is sought to be interfered,such action is subject to Article 14 of the Constitution, andmust be reasonable and can be taken only upon lawful andrelevant grounds of public interest. Where there isarbitrariness in State action of this type of entering or notentering into contracts, Article 14 springs up and judicialreview strikes such an action down. Every action of the Stateexecutive authority must be subject to rule of law and mustbe informed by reason. So, whatever be the activity of thepublic authority, in such monopoly or semi-monopoly dealings,it should meet the test of Article 14 of the Constitution. Ifa Governmental action even in the matters of entering or notentering into contracts, fails to satisfy the test ofreasonableness, the same would be unreasonable. In thisconnection reference may be made to E.P. Royappa v. State ofTamil Nadu & Anr., Maneka Gandhi v. Union of India & Anr.,Ajay Hasia & Ors. v. Khalid Mujib Sehravardi & Ors.,R.D.Shetry v. International Airport Authority of India &Ors., and also Dwarkadas Marlaria and sons v. Board ofTrustees of the Port of Bombay. It appears to us that rule ofreason and rule against arbitrariness and discrimination,rules of fair play and natural justice are part of the ruleof law applicable in situation or action by Stateinstrumentality in dealing with citizens in a situation likethe present one. Even though the rights of the citizens arein the nature of contractual rights, the manner, the methodand motive of a decision of entering or not entering into acontract, are subject to judicial review on the touchstone ofrelevance and reasonableness, fair play, natural justice,equality and non-discrimination in the type of thetransactions and nature of the dealing as in the presentcase. https://hcservices.ecourts.gov.in/hcservices/

13. The existence of the power of judicial reviewhowever depends upon the nature and right involved in thefacts and circumstances of the particular case. It is wellsettled that there can be "malice in law". Existence of such"malice in law" is part of the critical apparatus of aparticular action in administrative law. Indeed "malice inlaw" is part the dimension of the rule of relevance andreason as well as the rule of fair play in action."56.Learned counsel for the petitioners thereafter placedreliance on the judgment of the Hon'ble Supreme Court in MahalakshmiSugar Mills Company Limited and another vs. Union of India and others,(2009) 16 SCC 569, to contend that determination of price in exerciseof powers under Section 3(2)(f) of Sugar (Control) Order, underEssential Commodities Act, 1955, though is a legislative function andthe Superior Courts normally do not interfere with those functions, butwhen the functions are carried out in contravention of statutoryrequirements, the Courts are not powerless.57.The Hon'ble Supreme Court held that in case the price isdetermined without applying the principles underlying factorsenunciated under Section 3(3-C) of the Act, it is open to the Courts toissue the desired directions to enforce statutory obligations.58.Learned counsel for the petitioners also referred to thejudgment of the Hon'ble Supreme Court in The Panipat Co-operative SugarMills vs. The Union of India, (1973) 1 SCC 129. This judgment does notdeal with determination of price of sugar, therefore, cannot be said tobe relevant to the question involved in this writ petition.59.In support of the contention, that it was not open to therespondents to withdraw the incentive retrospectively, learned counselfor the petitioners placed reliance on the judgment of the Hon'bleSupreme Court in the case of Kusumam Hotels (P) Ltd., vs. Kerala StateElectricity Board & Ors. (Civil Appeal No.101 of 2007) decided on16.05.2008, wherein the Hon'ble Supreme Court was pleased to lay downas under:16. There cannot be any doubt whatsoever that a policydecision canbe reviewed from time to time. It is also beyondany doubt that the concessions granted can be withdrawn inpublic interest. Indisputably, the State is also entitled tochange or alter the economic policies. Appellants do not haveany vested right to enjoy the concessions granted to themforever, particularly when the Board is constituted andincorporated under the provisions of Electricity (Supply)Act, 1948. Any policy decision adopted by the State would notbebinding on the Board, save and except provided for in theAct. The Board being an independent entity, the duties andfunctions of the Boardvis-a-vis the State are enumerated in https://hcservices.ecourts.gov.in/hcservices/ the Act. The Board, however,would be bound by any directionissued by the State Government on questions of policy. Adispute which may arise as to whether a question is or not aquestion of policy involving public interest, CentralGovernment is the final arbiter. The policy decision adoptedby the State on the basis whereof the Board felt obligated togrant electrical connection in favour of the appellants onthe basis of industrial tariff must, therefore, be understoodin the context of Section 78A of the 1948 Act. What isbinding on the Board is the policy of the State. Thedirection of the State was to apply a particular category oftariff to the appellants. Such directions could have beenwithdrawn while making another tariff. The State indisputablyhas the power to grant subsidy from its own coffer instead ofdirecting the Board to grant concession.17. It is now a well settled principle of law that thedoctrine of promissory estoppel applies to the State. It isalso not in dispute that all administrative orders ordinarilyare to be considered prospective in nature. When a policydecision is required to be given a retrospective operation,it must be stated so expressly or by necessary implication.The authority issuing such direction must have power to doso. The Board, having acted pursuant to the decision of theState, could not have taken a decision which would beviolative of such statutory directions. 15.5.1999 was fixedas the cut off date by the Board. It, by itself, could nothave done so. But the State for issuing the GO dated26.9.2000 could have fixed the said cut off date on its own.We although do not agree that by granting retrospectivity tothe said order, the entirety of the Government Order shouldbe set aside the same or per se would be held to beunreasonable, but what we mean to say is that it could begiven effect to only from the date of the order, i.e.,prospectively and not from an anterior date, i.e.,retrospectively.18. It was held in Lohia Machines Ltd. and Anr. v. Unionof India (UOI) and Ors. [(1985) 2 SCR 686]:"On the other hand it is quite clear that if the reliefgranted is to be withdrawn with retrospective operationfrom 1972 the assessees who have enjoyed the relief forall those years will have to face a very gravesituation. The effect of the withdrawal of the reliefwith retrospective operation will be to impose on theassessee a huge accumulated financial burden for nofault of the assessee and this is bound to create aserious financial problem for the assessee. Apart from https://hcservices.ecourts.gov.in/hcservices/ the heavy financial burden which is likely to upset theeconomy of the undertaking, the assessee will have toface other serious problems. On the basis that therelief was legitimately and legally available to theassessee, the assessee had proceeded to act and toarrange its affairs. If the relief granted is nowpermitted to be withdrawn with retrospective operation,the assessee may be found guilty of violation ofprovisions of other statutes and may be visited withpenal consequences..."Yet again in M/s. Indian Metals and Ferro Alloys Ltd. & Anr.v. State of Orissa & Ors. [(1987) 3 SCC 189], it was opined :"25...we hold that the High Court was not right inobserving that the orders under Section 22-B of the Actimposing restrictions on consumption of power could notlegally and validly be passed by the Government "withretrospective effect" in the middle of a water year. Butthe position regarding disallowance of clubbing standson an entirely different footing. If a consumer had beenallowed the benefit of clubbing previously, that benefitcannot be taken away with retrospective effect therebysaddling him with heavy financial burden in respect ofthe past period where he had drawn and consumed power onthe faith of the orders extending to him the benefit ofclubbing..."19. It is not necessary for us to notice a large numberof decisions on promissory estoppel as the principle thereofhas recently been noticed by this Court in SouthernPetrochemical Industries Co. Ltd. v. Electricity Inspector &Etio & Ors. [(2007) 5 SCC 447] wherein it was stated:"We are also unable to agree with Mr. Andhyarujina thatexemption from tax is a mere concession defeasible bythe Government and does not confer any accrued right tothe receipient. Right of exemption with a validnotification issued gives rise to an accrued right. Itis a vested right. Such right had been granted to thempermanently. "Permanence" would mean unless altered bystatute. Thus, when a right is accrued or vested, thesame can be taken away only by reason of a statute andnot otherwise. Thus, a notification which was dulyissued would continue to govern unless the same isrepealed."It was further held: https://hcservices.ecourts.gov.in/hcservices/ "126. This Court distinguished its earlier decision inKasinka Trading v. Union of India55 whereupon Mr Andhyarujinaplaced strong reliance, in the following terms:"40. The case of Kasinka Trading v. Union of Indiacited by the appellant is an authority for theproposition that the mere issuance of an exemptionnotification under a provision in a fiscal statute suchas Section 25 of the Customs Act, 1962, could not createany promissory estoppel because such an exemption by itsvery nature is susceptible to being revoked or modifiedor subjected to other conditions. In other words, thereis no unequivocal representation. The seeds ofequivocation are inherent in the power to grantexemption. Therefore, an exemption notification can berevoked without falling foul of the principle ofpromissory estoppel. It would not, in the circumstances,be necessary for the Government to establish anoverriding equity in its favour to defeat thepetitioner's plea of promissory estoppel. The Court alsoheld that the Government of India had justified thewithdrawal of exemption notification on relevant reasonsin the public interest. Incidentally, the Court alsonoticed the lack of established prejudice to thepromises when it said :`The burden of customs duty, etc. is passed on tothe consumer and therefore the question of theappellants being put to a huge loss is notunderstandable.'(See also Shrijee Sales Corpn. v. Union of India56 andSTO v. Shree Durga Oil Mills) We do not see therelevance of this decision to the facts of this case.Here the representations are clear and unequivocal"."In LML Ltd. v. State of U.P. & Ors. [2007 (14) SCALE 469],this Court opined :"38. Those suppliers, who keeping in view oftheir capacity to supply uninterrupted electricalenergy had made a representation and pursuant theretothe consumers had altered their position, cannot bepermitted to take a different stand as the doctrine ofpromissory estoppel would apply against them. The saiddoctrine is premised on the conduct of party making arepresentation to the other so as to enable him toarrange its affairs in such a manner as if the saidrepresentation would be acted upon. It provides for acause of action. It need not necessarily be adefence." https://hcservices.ecourts.gov.in/hcservices/ Yet again in U.P. Power Corporation Ltd & Anr. v. Sant Steel& Alloys (P) Ltd. & Ors. [2007 (14) SCALE 36], it was held :"In this background, in view of various decisionsnoticed above, it will appear that the Court'sapproach in the matter of invoking the principle ofpromissory estoppel depends on the facts of eachcase. But the general principle that emerges is thatonce a representation has been made by one party andthe other party acts on that representation and makesinvestment and thereafter the other party resiles,such act cannot stated to be fair and reasonable.When the State Government makes a representation andinvites the entrepreneurs by showing various benefitsfor encouraging to make investment by way ofindustrial development of the backward areas or thehill areas, and thereafter the entrepreneurs on therepresentations so made bona fidely make investmentand thereafter if the State Government resile fromsuch benefits, then it certainly is an act ofunfairness and arbitrariness. Consideration of publicinterest and the fact that there cannot any estoppelagainst a Statute are exceptions."In State of Orissa & Ors. V. Mangalam Timber Products Ltd.[(2004) 1 SCC 139], a Three Judge Bench of this Court, held :"... The State Government having persuaded therespondent to establish an industry and the respondenthaving acted on the solemn promise of the StateGovernment, purchased the raw material at a fixedprice and also sold its products by pricing the sametaking into consideration the price of the rawmaterial fixed by the State Government and supplied;the State Government cannot be permitted to revise theterms for supply of raw material adversely to theinterest of the respondent and effective from a backdate and place the respondent in a situation which itwill not be able to resolve. The respondent could nothave revised its price from a back date and recoveredit from innumerable consumers to whom its finishedproducts were supplied at a fixed price."20. Our attention, however, has been drawn to a decisionof this Court in Kasinka Trading & Anr. v. Union of India &Anr. [(1995) 1 SCC 274]. Therein the power of the State tochange its policy decision in public interest was emphasized.It was held that the power which can be used for grant ofconcession, namely, Section 25(1) of the Customs Act itselfis the source to rescind the earlier notification, stating : https://hcservices.ecourts.gov.in/hcservices/ "Since, the notification had been issued underSection 25(1) of the Act, the very same power wasavailable to the authority for rescinding ormodifying that notification and appellant ought tohave known that the said notification was capable ofor liable to be revoked, modified or rescinded at anytime even before the expiry of 31.3.1981 if the`public interest' so demanded. To hold that after theGovernment had issued the Notification No.66 of 1979indicating that it was to remain operative till31.3.1981, it could not be rescinded or modifiedbefore the expiry of that date would amount toprohibiting the Government from discharging itsstatutory obligation under Section 25(1) of the Act,if it was satisfied that it was in the `publicinterest' to withdraw, modify or rescind the earliernotification. The plain language of Section 25 of theAct is indicative of the position that it is thepublic interest and public interest alone which isthe dominant factor. It is not the case of theappellants that the withdrawal of Notification No.66of 1979 by the impugned notification was not in`public interest'. Their case, however, is thatrelying upon the earlier notifications they had actedand the Government should not be permitted to go backon its assurance as otherwise they would be put tohuge loss. The courts have to balance the equitiesbetween the parties and indeed the courts would bindthe Government by its promise `to prevent manifestinjustice or fraud'."It was further held :"23. The appellants appear to be under theimpression that even if, in the altered marketconditions the continuance of the exemption may nothave been justified, yet, Government was bound tocontinue it to give extra profit to them. Thatcertainly was not the object with which thenotification had been issued. The withdrawal ofexemption "in public interest" is a matter of policyand the courts would not bind the Government to itspolicy decisions for all times to come, irrespectiveof the satisfaction of the Government that a change inthe policy was necessary in the "public interest". Thecourts, do not interfere with the fiscal policy wherethe Government acts in "public interest" and neitherany fraud or lack of bona fides is alleged much lessestablished. The Government has to be left free todetermine the priorities in the matter of utilisation https://hcservices.ecourts.gov.in/hcservices/ of finances and to act in the public interest whileissuing or modifying or withdrawing an exemptionnotification under Section 25(1) of the Act."21. We are not concerned with the exercise of astatutory power in this case. We are concerned with issuanceof a direction by the State which is binding on the Board asalso how and to what extent it can be rescinded.22. We may, however, notice that in Motilal PadampatSugar Mills v.State of U.P. [(1979) 2 SCR 641, this Courtheld :"Public bodies are as much bound as privateindividuals to carry out representations of facts andpromises made by them, relying on which other personshave altered their position to their prejudice* * * If our nascent democracy is to thrive differentstandards of conduct for the people and the publicbodies cannot ordinarily be permitted. A public bodyis, in our judgment, not exempt from liability tocarry out its obligation arising out ofrepresentations made by it relying upon which acitizen has altered his position to his prejudice."23. Another Bench in Jit Ram v. State of Haryana [(1980)3 SCR 689] took a different view. Jit Ram was overruled inUnion of India v. Godfrey Philips India Ltd. Ltd. [(1985) 4SCC 369].24. If the doctrine of promissory estoppel applies forthe purpose of enforcing the concession granted in favour ofentrepreneurs, it can be withdrawn, inter alia, in publicinterest. Despite absence of an overriding public interest,however, although a different policy decision can be takenbut therefor adequate notice should be given. It was so heldin Shrijee Sales Corporation & Anr. v. Union of India [(1997)3 SCC 398]in the following terms :"Once public interest is accepted as the superiorequity which can override individual equity, theprinciple should be applicable even in cases where aperiod has been indicated. The Government iscompetent to resile from a promise even if there isno manifest public interest involved, provided, ofcourse, no one is put in any adverse situation whichcannot be rectified. To adopt the line of reasoning https://hcservices.ecourts.gov.in/hcservices/ in Emmanuel Ayodeji Ajay v. Briscoe quoted in M.P.Sugar Mills even where there is no such overridingpublic interest, it may still be within thecompetence of the Government to resile from thepromise on giving reasonable notice which need notbe a formal notice, giving the promise a reasonableopportunity of resuming his position, provided ofcourse, it is possible for the promise to restorethe status quo ante. If, however, the promise cannotresume his position, the promise would become finaland irrevocable."The same principle was reiterated in Sales Tax Officer & Anr.v.Shree Durga Oil Mills & Anr. [(1998) 1 SCC 572].25. In Pawan Alloys & Casting Pvt. Ltd. v. U.P. StateElectricity Board & Ors. [(1997) 7 SCC 251], it was held :"60. So far as Point No. 3 is concerned theappellants are on a weaker footing. It is true thatby earlier notifications dated 29-10-1982, 13-7-1984and 28-1-1986 the scheme of incentives by way ofdevelopment rebate of 10% was continued to be offeredto new industries to be established in the plains ofState of U.P. Identically worded Item 9 in theearlier notifications and Item 8 in the lastnotification dated 28-1-1986 had continued the saidincentive scheme. By virtue of the last notificationof 28-1-1986 it was clearly laid down by the Boardthat all new industries which might be established onand after 28-1- 1986 will earn this developmentrebate for the three years' period from the date ofcommencement of supply of electricity. It was alsoprovided that all the existing new industries whichmight have earlier been established before 28-1-1986and which had still some part of unexpired period ofthree years of development rebate available with themalso were given the continued benefit of thedevelopment rebate for the unexpired period from 1-2-1986. What the impugned notification of 31-7-1986sought to do was to delete this first para of Item 8of the notification of 28-1-1986. The result was thatfrom 1-8-1986 whatever unexpired period for gettingdevelopment rebate of 10% was available with the newindustries covered by the sweep of the saidnotification, got withdrawn. It could not be said andit is also not the case of the respondent-Board thatin the light of the notification of 31-7-1986 https://hcservices.ecourts.gov.in/hcservices/ whatever development rebate was granted to these newindustries earlier as per the then existing schemewould stand withdrawn or any recovery would beeffected against them for the said amount. The caseof the Board is that despite any unexpired period forearning the incentive rebate of 10% was available tothe existing new industries on 31-7-1986, they wouldlose that benefit of development rebate for the restof the unexpired period with effect from 1-8-1986onwards. Hence it is not possible to agree with thecontention of learned counsel for the appellants thatthe said notification had any retrospective effect.It was purely prospective and had resulted into twoconsequences -- (i) any new industry which enteredinto an agreement with the Board for supply ofelectricity for the first time on and after 1-8- 1986could not get the benefit of incentive of 10%development rebate; and (ii) all existing newindustries which were armed with the guarantee of 10%development rebate under the earlier notificationsand had unexpired period out of the three years fromthe date of earlier commencement of supply ofelectricity to their concerns lost the benefit forthat unexpired period which otherwise would have beenavailable to them from 1-8-1986 onwards till theentire three years' period which had alreadycommenced would have been over. Both these effects ofthe notification of 31-7-1986 were purely prospectivein character and had no retrospective effect.Consequently it cannot be said that the saidnotification was liable to be struck down on thescore of being retrospective in nature. The thirdpoint for consideration, therefore, is answered inthe negative."Similar view has been taken in Bannari Amman Sugars Ltd. v.Commercial Tax Officer & Ors. [(2005) 1 SCC 625]; KuldeepSingh v. Govt. of NCT of Delhi [(2006) 5 SCC 702]; and M.P.Mathur & Ors. v.DTC & Ors. [(2006) 13 SCC 706].26. The law which emerges from the above discussion isthat the doctrine of promissory estoppel would not beapplicable as no foundational fact therefor has been laiddown in a case of this nature. The State, however, would beentitled to alter, amend or rescind itspolicy decision. Sucha policy decision, if taken in public interest, should begiven effect to. In certain situations, it may have an impactfrom a retrospective effect but the same by itself would notbe sufficient to be struck down on the ground ofunreasonableness if the source of power is referable to a https://hcservices.ecourts.gov.in/hcservices/ statute or statutory provisions. In our constitutionalscheme, however, the statute and/or any direction issuedthereunder must be presumed to be prospective unless theretrospectivity is indicated either expressly or by necessaryimplication. It is a principle 24 of rule of law. Apresumption can be raised that a statute or statutory ruleshas prospective operation only."60.Learned Senior Counsel appearing on behalf of the respondentsopposed this writ petition by contending that the impugned GovernmentOrder, G.O.Ms.No.3, which was under challenge, stands modified and theincentive has been withdrawn with effect from 01.07.2011. Thecontention of the learned Senior Counsel was that it is always open tothe State Governments in exercise of legitimate legislative functions,to issue notifications with retrospective effect. The petitioners donot have any locus standi to challenge the order, by contending thatthe incentive could not be withdrawn with retrospective effect.61.It was also the contention of learned Senior Counsel for therespondents, that once it is not disputed that the price for levy riceis fixed by the Central Government and not the Government ofPuducherry, the petitioners can only claim the price fixed by theCentral Government. The incentive by the Government of Puducherry,therefore, could be withdrawn, as the petitioners did not have anyvested right to claim incentive for the timely supply. The petitionersotherwise also were under statutory obligation in view of thePondicherry Paddy and Rice Procurement (Levy) Order, 1996, as amendedto supply the levy rice. In order to butter this argument, learnedSenior Counsel for the respondents referred to the procedure ofpurchase, and pointed out that the price was to be paid by the FCI andnot by the Union Territory of Pondicherry. 62.Learned Senior Counsel for the respondents in support of thecontention, that it was open to the Government of Puducherry towithdraw the incentive with retrospective effect, placed reliance onthe judgment of the Hon'ble Supreme Court in the case of DuncanIndustries Ltd., and another vs. Union of India, (2006) 3 SCC 129,wherein the Hon'ble Supreme Court was pleased to hold as under:"Retrospectivity in the Scheme 27. At the outset, we must note that the Retention PriceScheme, both conceptually and in its actual operation, hasalways had an retrospectivity built in. Indeed, thecorrespondence between the parties indicates that theretention price was always fixed and made applicable ex postfacto from the beginning of the pricing period withadjustments to be made towards payments and recoveries.However, Dr. Dhavan seeks to differentiate the process fordetermining the policy norms from the actual process ofcomputing the retention price. According to learned counsel, https://hcservices.ecourts.gov.in/hcservices/ what was ad hoc and could be retrospectively changed were thesubsidies payable or recoverable in line with actuals. On theother hand, according to him, the pricing norms (the formulafor calculating retention prices) could not beretrospectively changed. We cannot, however, accept thisdistinction.28. At the outset, the first appellant had voluntarilyentered into the undertaking dated 10-12-1977, where itpromised inter alia:“… to abide by the decision of the Committee, which isfinal and binding on all matters relating to thedetermination of retention price, net realisation,equated freight, etc.” (emphasissupplied)Firstly, neither the abovementioned undertaking, nor theevidence on record, appears to indicate that there exists anydistinction on the lines suggested by Dr. Dhavan. Secondly,in our view, “… all matters relating to the determination ofretention price …” unambiguously includes the power todetermine the norms and policy that would be used forcomputing the retention price. Also, as we have alreadymentioned, from its inception, the Retention Price Scheme hasalways had an element of retrospectivity built in. Therefore,the undertaking entered into by the manufacturers clearlyallows the Government to retrospectively revise the pricingnorms/policy for the Retention Price Scheme. Further, as weshall see, the first appellant was at all stages fully awareof and party to the deliberations that went into determiningthe norms for calculating the retention prices. Hence, in ourview, the distinction sought to be made between the norms fordetermining retention price and the actual computation of theretention price is not tenable.63.Learned Senior Counsel for the respondents contended, thatthis Court can only interfere with the policy decision of theGovernment of Pondicherry, only when the decision is in violation ofStatute, constitutional provision or is arbitrary, and not otherwise.The decision of the Government of Puducherry in this case is neither inviolation of any statute or constitutional provision and cannot be saidto be arbitrary, to enable this Court to enter into judicial review inexercise of powers under Article 226 of the Constitution. In support ofthis contention, reliance was placed on the judgment of the Hon'bleSupreme Court in Bajaj Hindustan Limited vs. Sir Shadi Lal EnterprisesLimited and another, (2011) 1 SCC 640.64.Reference to the judgment was also made in support of thiscontention, that in case of policy / policy matter, the doctrine oflegitimate expectation plays no role, therefore, the impugned decision https://hcservices.ecourts.gov.in/hcservices/ of the Government of Puducherry cannot be challenged on the ground oflegitimate expectation. 65.On consideration, I find that this writ petition deserves tosucceed. The Central Government in exercise of power conferred underSection 3 of the Essential Commodities Act, had fixed the provisionallevy cost for single boil rice. It was also made clear by the CentralGovernment, that the price for levy rice was subject to revision, onthe basis of appropriate studies for single boiled rice for Out TurnRatio (OTR) and milling charges.66.It is not in dispute that report was submitted by the IndianInstitution of CROP Processing Technology, pointing out that theoverall single boiled rice milling yield for common paddy is 62.7% asagainst 68.7% for common paddy and 60.7% for Grade-A paddy as against66.5% for common paddy. It was on the basis of study, that G.O.Ms.No.30dated 05.01.2011 was issued for grant of incentive at Rs.3.16 per kg tothe millers, as is clear from the reading of impugned G.O.Ms.No.3 dated18.08.2011, where it was clearly mentioned, that the incentive was paidto Millers to compensate the low percentage of Out Turn Ratio (OTR) forsingle boiled rice.67.The contention of learned Senior Counsel for the respondents,that it is the Central Government, which fixed the price for levy rice,and that the petitioners, therefore, have no right to claim incentive,is misconceived. The levy price fixed by the Central Government is theminimum price payable, which did not bar the Union Territory ofPondicherry to give higher price. It is well settled that in a givencase, it is open to State Government to give higher price than the onefixed by Central Government, which is normally called the state advisedprice.68.Furthermore, in this case, the price fixed by the CentralGovernment was provisional, which was subject to revision on the basisof appropriate studies for single boiled rice. Learned counsel for thepetitioners therefore is right in contending, that though it was termedas incentive, but in fact is levy price payable by the Union Territoryof Pondicherry, keeping in view the study conducted, as advised byCentral Government, while fixing the levy price. 69.The contention of the learned Senior Counsel for therespondents, that the policy decision by the State Governments can bewithdrawn, in public interest at any stage, also deserves to be noticedto be rejected, as grant of incentive was not the policy decision, butstatutory obligation under Section 3 of the Essential Commodities Act,which stipulates that fixation of levy price by taking note of relevantcost factors involved in the process. It was not open to the Governmentof Puducherry to arbitrarily withdraw the incentive. https://hcservices.ecourts.gov.in/hcservices/

70.Even if for the sake of argument, the grant of incentive istaken to be concession, as contended by the learned Senior Counsel forthe respondents, in that event also, the public interest or publicpolicy cannot be invoked to unilaterally rescind a contract ofpurchase, on the terms specified by the Government, in view of the lawlaid down by the Hon'ble Supreme Court in Sunil Pannalal Banthia vs.City & Industrial Development Corporation of Maharashtra, (2007) 10 SCC674, wherein it was held as under: "On the legal question, it is quite obvious that havingacted and held out assurances to the appellants which causedthe appellants to alter their position to their prejudice, itwas not open to CIDCO to take a unilateral decision to cancelthe allotment on the ground that it had acted withoutjurisdiction and/or in excess of jurisdiction and inviolation of its rules and regulations."71.The impugned notification also cannot be sustained, as it wasnot open to the Government of Puducherry to withdraw the incentiveretrospectively, after the petitioner had acted on it. In case,notification is taken to have been issued, in exercise of powers underthe Pondicherry Paddy and Rice Procurement (Levy) Order, 1996, it couldnot be withdrawn, being statutory obligation under Section 3 of theEssential Commodities Act to take relevant factor into considerationfor fixing the price, and even if it is taken to be non statutorynotification or a concession, then also the notification issued by wayof Executive decision, cannot be withdrawn retrospectively, in view ofthe law laid down by the Hon'ble Supreme Court in Vice Chancellor,M.D.University vs. Jahan Singh, (2007) 5 SCC 77, on the principle ofpromissory estoppel.72.There is also force in the contention of the learned counselfor the petitioners, that on the principle of promissory estoppel, itwas not open to the respondents to withdraw the incentive, as it wasunder the assurance given at the time of execution of contract, keepingin view of the provisional fixation of price, that the levy rice wassupplied, and after the supply was made, it was not open to theGovernment of Pondicherry to withdraw, in view of the principle ofpromissory estoppel. The Hon'ble Supreme Court in M.R.F.Ltd.,Kottayamvs. Asst. Commissioner (Assessment) Sales Tax and Others, (2006) 8 SCC702, has laid down that doctrine of promissory estoppel applies even tostatutory notifications.73.The learned Senior Counsel for the respondents however wasright in contending that the plea of legitimate expectation was notavailable to the petitioners, in case of policy decisions.74.The contention of the learned Senior Counsel for therespondents, that this Court, in exercise of jurisdiction under Article226, cannot question the policy / policy decision and policy matter, is https://hcservices.ecourts.gov.in/hcservices/ also not sustainable, as the Hon'ble Supreme Court in Bajaj HindustanLimited vs. Sir Shadi Lal Enterprises Limited and another, (supra), hasclearly laid down, that judicial review in case of policy decision ispermissible, if there is violation of statute, the constitutionalprovisions or if the act of State is totally arbitrary.75.In this case, it was statutory obligation of the respondentsto fix price by taking into statutory consideration under Section 3 ofthe Essential Commodities Act, and having done so in fixing theadditional price by way of incentive, it could not be arbitrarilywithdrawn, that too, with retrospective effect.76.The judgment in Duncan Industries Ltd., and another vs. Unionof India, (supra) has no application to the facts of the present case,as that was not the case of withdrawal of benefit retrospectively, butit was the matter relating to principle to be followed for determiningthe price, and other norms and policy use for computing the retentionprice. It was therefore, that the Hon'ble Supreme Court held thatRetention Price Scheme had an element of retrospectively built in, andtherefore change of criteria could not be challenged on the ground,that it had an element of retrospectivity. The Hon'ble Supreme Courtdid not lay down, that the benefit / incentive granted could bewithdrawn retrospectively, as contended by learned Senior Counsel.77.For the reasons stated herein-above, this writ petition isallowed. The impugned G.O.Ms.No.3 dated 18.08.2011, as modified videG.O.38 dated 27.03.2012, is ordered to be quashed, but with no order asto the costs. 78.Connected miscellaneous petition is closed.arSd/-Asst. Registrar(CS-V)//True Copy//Sub Asst. RegistrarTo1.THE JOINT SECRETARY,GOVERNMENT OF PUDUCHERRYDEPT. OF CIVIL SUPPLIES AND CONSUMER AFFAIRS,PUDUCHERRY https://hcservices.ecourts.gov.in/hcservices/

2.THE DIRECTORDEPT. OF CIVIL SUPPLIES AND CONSUMER AFFAIRS PUDUCHERRY+ 1 cc to M/s. V. Raghavachari, Advocate SR No.41349+ 1 cc to Senior Government Pleader for Puducherry SR No.41601 Order inW.P.No.21095 of 2011TAM(CO)SR/24.7.2012.