Kerala High Court
Mahsooq Trading Company vs State Of Kerala on 9 September, 2025
Author: N.Nagaresh
Bench: N.Nagaresh
2025:KER:66477
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 9TH DAY OF SEPTEMBER 2025/18TH BHADRA, 1947
WP(C) NO. 29985 OF 2024
PETITIONER:
MAHSOOQ TRADING COMPANY
REPRESENTED BY ITS PROPRIETOR,
MR.MUHAMMAD KUNJI K.A.,
MENATH SHOPPPING COMPLEX, CHERKALA,
CHENKALA P.O, KASARGOD DISTRICT,
PIN - 671541.
BY ADVS.
SRI.P.JINISH PAUL
SMT.SNEHA V.
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY ITS PRINCIPAL SECRETARY,
DEPARTMENT OF INDUSTRY & COMMERCE,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM., PIN - 695001.
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W.P.(C) No.29985/2024
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2 KERALA STATE CASHEW WORKERS APEX INDUSTRIAL
CO-OPERATIVE SOCIETY LTD (CAPEX), P.B NO.262,
INDUSTRIAL DEVELOPMENT PLOT, H &C COMPOUND,
MUNDAKKAL WEST, KOLLAM DISTRICT,
REPRESENTED BY ITS MANAGING DIRECTOR,
PIN - 691001.
BY ADVS.
SMT.ANIMA M., GOVERNMENT PLEADER
SRI.P.C.SASIDHARAN, STANDING COUNSEL
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 29.07.2025 AND THE COURT ON 09.09.2025
DELIVERED THE FOLLOWING:
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W.P.(C) No.29985/2024
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N. NAGARESH, J.
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W.P.(C) No.29985 of 2024
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Dated this the 9th day of September, 2025
JUDGMENT
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The petitioner, who has entered into an agreement
with the 2nd respondent-Kerala State Cashew Workers Apex
Industrial Co-operative Society Limited for purchase of
Kerala origin raw cashew from the farmers, has approached
this Court seeking to direct the respondents to release the
payment of ₹1,18,08,144/- to the petitioner with interest.
2. The petitioner states that the 2nd respondent used
to collect Kerala origin raw cashew from the farmers. As the
farmers do not have GST registration, the petitioner agreed
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to facilitate the supply using its registration. Ext.P1
agreement dated 20.04.2019 was entered into by the
petitioner with the 2nd respondent. Pursuant to Ext.P1, the
petitioner purchased raw cashew from farmers and supplied
to the 2nd respondent.
3. The petitioner has complied with the terms of the
agreement and made payment to the farmers in 2019 itself
taking OD facility from Bank. The 2nd respondent has not paid
an amount of ₹1,19,75,901/-. The petitioner demanded the
amount from the 2nd respondent. The Government then
sought clarification as to whether permission is required from
the Government for payment to the petitioner, in view of the
report submitted by the Accountant General regarding
dropping of proceedings.
4. The 2nd respondent informed the 1st respondent
that there is no issue in making payment to the petitioner
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going by the report of the Accountant General. However, to
the surprise of the petitioner, the Government issued Ext.P4
letter dated 24.02.2022 stating that the remaining payment
cannot be released since the Chief Minister has ordered a
Vigilance Enquiry based on a report submitted by the
Financial Inspection Wing of the Government.
5. The petitioner states that Ext.P4 is illegal and
unsustainable as the contents of the enquiry report relied on
in Ext.P4 have not disclosed any involvement of the
petitioner. The Accountant General has already conducted
audit for the year 2016-2019 and has dropped the remarks
with regard to the purchase of Kerala origin raw cashew
nuts.
6. The petitioner states that when finally the
Vigilance Report came out, there was no finding regarding
any illegal transactions as alleged by the Finance Inspection
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Wing of the Government. Ext.P7 is the Vigilance Report. By
Exts.P8 judgment and P9 order, this Court had directed the
1st respondent-Government to take a decision on the claim of
the petitioner within six weeks. Finally, the Government
passed Ext.P10 order denying the dues to the petitioner.
Hence, the petitioner is before this Court.
7. The petitioner states that there is no evidence to
show that the supplied cashew nuts were purchased from
outside the State. In Ext.P6 report, an Authorised Testing
Agency has stated that the supplied cashew nuts were of
Kerala origin. The calculations regarding the loss of revenue
is therefore unsustainable.
8. The 1st respondent filed counter affidavit. The
1st respondent stated that the petitioner had supplied Kerala
origin raw cashew nuts to the 2nd respondent in the year
2019 and 80% of the deal amount was paid. The balance
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amounts were not released as a Vigilance Enquiry was
ordered by the Government based on a report submitted by
the Finance Inspection Wing. The Government had not
given a clean chit to the purchase from the petitioner.
9. The Finance Inspection Wing conducted a
comprehensive prob in the Head Office of the 2nd respondent
and its affiliated cashew factories. The enquiry report stated
that from the e-way bills, it is evident that the petitioner had
purchased raw cashew nuts from outside the State. The
Finance Inspection Wing, as per its report, recommended not
to pay the balance 20% to the petitioner.
10. The 2nd respondent also filed a counter affidavit.
The 2nd respondent stated that the proceedings against the
petitioner are not dropped. In the enquiry conducted, it was
revealed that the petitioner violated the terms of agreement.
The Accountant General has not exonerated the petitioner.
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11. I have heard the learned counsel for the petitioner,
the learned Government Pleader representing the 1st
respondent and the learned Standing Counsel appearing for
the 2nd respondent.
12. The petitioner entered into Ext.P1 agreement with
the 2nd respondent. The agreement was for purchasing raw
cashew nuts from the farmers and supplying the same to the
2nd respondent. The petitioner has supplied the quantity of
raw cashew nuts. 80% of the purchase price has been paid
by the 2nd respondent. However, an amount of
₹1,19,75,901/- has been withheld based on vigilance
proceedings.
13. Ext.P3 communication of the 2nd respondent
addressed to the 1st respondent would show that in respect
of the allegations made, the Accountant General has
reconsidered objections regarding "Kerala origin RCN" and
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the Accountant General has dropped the objections. The 2nd
respondent therefore specifically stated that there is no
objection in releasing the balance amount to the petitioner.
There are no enquiries pending now. The 2nd respondent
pointed out that the Managing Director of the 2nd respondent
was suspended in connection with raw cashew nuts. Later,
on the basis of the report of the enquiry officer, the
Government reappointed the Managing Director. Ext.P3
communication was issued on 20.09.2021.
14. The Government informed the petitioner as per
Ext.P4 letter dated 24.02.2022 that the Chief Minister has
ordered a Vigilance Enquiry and hence the balance amount
cannot be paid. Ext.P6 is the certificate of quantity and
quality of the raw cashew nuts sold by the petitioner. Ext.P6
would show that the raw cashew nuts sold by the petitioner
were of Kerala origin.
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15. Ext.P7 is the Vigilance Report made pursuant to
the directions of the Government. Ext.P7 report categorically
states that the local farmers have supplied 451.950 metric
tonnes of cashew to the petitioner. The petitioner has paid
price at the rate of ₹123/- per Kg. to the farmers. Ext.P7
categorically states that there is no way to find out whether
those cashew nuts were of Kerala origin or not.
16. Ext.P7 report of the Vigilance and Anti Corruption
Bureau does not conclude that the raw cashew nuts were
purchased from other States. There is nothing in Ext.P7 to
come to a conclusion that the petitioner has committed any
illegality. In Ext.P10, the 1st respondent has come to a
conclusion that the purchase from the petitioner has resulted
in loss.
17. In Ext.P10, the 1st respondent has concluded that
the 2nd respondent has purchased raw cashew nuts without
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ascertaining whether those were purchased from Kerala
farmers. Based on certain e-way bills raised by the
petitioner, the 1st respondent has concluded that the supplied
cashew nuts are not of Kerala origin. Ext.P10 report is
based on surmises and conjunctures. The findings go
against the reports of the Accountant General and Ext.P6
test report issued by a competent testing agency. Ext.P10
therefore cannot be sustained.
The writ petition is therefore allowed.
Ext.P10 is quashed. The respondents are directed to
release the payment of ₹1,18,08,144/- to the petitioner. The
payment shall be effected within a period of three months.
Sd/-
N. NAGARESH, JUDGE
aks/01.09.2025
2025:KER:66477
APPENDIX OF WP(C) 29985/2024
PETITIONER'S EXHIBITS
Exhibit P1 TRUE COPY OF THE AGREEMENT DATED
20.04.2019 IN BETWEEN THE PETITIONER
AND THE 2ND RESPONDENT
Exhibit P2 TRUE COPY OF THE LETTER DATED
13.09.2021 ISSUED BY THE 1ST
RESPONDENT TO THE 2ND RESPONDENT
Exhibit P3 TRUE COPY OF THE LETTER DATED
20.09.2021 ISSUED BY THE 2ND
RESPONDENT TO THE 1ST RESPONDENT
Exhibit P4 TRUE COPY OF THE LETTER DATED
24.02.2022 ISSUED BY THE 1ST
RESPONDENT TO THE PETITIONER
Exhibit P5 TRUE COPY OF STATEMENT (WITHOUT
ANNEXURE) FILED BY THE GOVERNMENT IN
W.P.(C).9720/2021 ON THE FILES OF THIS
HON'BLE COURT DATED 31-08-2021
Exhibit P6 TRUE COPY OF THE TEST REPORT DATED
18.05.2019
Exhibit P7 TRUE COPY OF THE VIGILANCE REPORT
DATED 29.07.2023
Exhibit P8 TRUE COPY OF THE JUDGMENT DATED 08-08-
Exhibit P9 TRUE COPY OF ORDER DATED 11-09-2023 IN
Exhibit P10 TRUE COPY OF THE ORDER DATED
03.04.2024 ISSUED BY THE 1ST
RESPONDENT
Exhibit P11 TRUE COPY OF THE INFORMATION REPLY
RECEIVED FROM THE PRL. ACCOUNTANT
GENERAL DATED 08-05-2024 UNDER RTI
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Exhibit P12 TRUE COPY OF THE INFORMATION REPLY
RECEIVED FROM THE 2ND RESPONDENT DATED
14-05-2024 UNDER RTI
Exhibit P13 TRUE COPY OF THE ENQUIRY REPORT
SUBMITTED BY MRS.ANNIE JULA THOMAS
IAS, OFFICER ON SPECIAL DUTY (O.S.D.),
INDUSTRIES DEPARTMENT
RESPONDENT'S EXHIBITS
Exhibit R1(a) A TRUE COPY OF THE LETTER DATED 23-02-
2024 BY THE OFFICE OF THE ACCOUNTANT
GENERAL (AUDIT), THIRUVANANTHAPURAM.
Exhibit R1(b) A TRUE COPY OF THE FINANCE INSPECTION
WING REPORT
