Telangana High Court

M/S. Shriram Bioseed Genetics ... vs The State Level Committee, Hyd And ... on 26 September, 2023

Bench: Alok Aradhe, N.V.Shravan Kumar

       THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
                                        AND
        THE HON'BLE SRI JUSTICE N.V.SHRAVAN KUMAR
                               W.A.No.797 of 2009
JUDGMENT: (Per the Hon'ble the Chief Justice Alok Aradhe)

        Heard Mr. S.Dwarakanath, learned Senior Counsel

appearing for Mr. Karthik Ramana Puttamreddy, learned

counsel for the appellant- M/s. Shriram Bioseed Genetics

India Limited and Ms. G.Jyothi Kiran, learned Government

Pleader for Agriculture representing the respondents.


2.      This intra court appeal emanates from an order

dated 18.02.2009, by which a writ petition preferred by the

appellant viz., W.P.No.18291 of 2002 has been dismissed.


3.      Facts

giving rise to filing of this appeal briefly stated are

that the appellant is a public limited company and is engaged

in the production and marketing of hybrid seeds. The

erstwhile Government of Andhra Pradesh, with a view to

protect the interest of the farmers, introduced a scheme for ::2::

providing compensation whenever a farmer suffers because of

substandard quality of seeds.

4. In pursuance of the aforesaid scheme, Memorandum of

Understanding (MOU) dated 20.04.2001 was entered between

the Government of Andhra Pradesh and the appellant. The

appellant, under the aforesaid MOU, agreed to take the

responsibility and accountability on the quality of seeds to be

supplied and to pay compensation awarded by the District

Level Monitoring Committee constituted for the purpose.

Clause 3.1 of the MOU provided for constitution of District

Level Monitoring Committees to assess the loss sustained by

the farmers due to poor germination or genetic impurity of the

seeds. Clause 3.5 of the MOU provided a remedy of appeal to

the aggrieved seed producer to such of the authority

nominated by the State Government.

5. The appellant entered into MOU with the State

Government on 20.04.2001 and sold the hybrid bio-seed 6567

and 6569 to different farmers. Some of the farmers of ::3::

Warangal District, to whom the cotton seeds were supplied by

the appellant, could not get proper crop. Thereupon,

complaint was made to agricultural department, pursuant to

which, the District Level Monitoring Committee visited the

field and by communication dated 04.01.2002 directed the

appellant to pay compensation @ Rs.6375/- per acre to the

farmers. The Committee also directed payment of

interest @ 24% p.a. in case compensation is not paid within a

period of thirty days.

6. Being aggrieved by the aforesaid order, the appellant

filed an appeal before the State Level Monitoring Committee,

which was dismissed by an order dated 23.05.2002. The

appellant was therefore asked to make payment of

compensation of Rs.27.60 lakhs to the farmers. The appellant

challenged the orders passed by the State Level Monitoring

Committee as well as the State Government in a writ petition.

7. Learned Single Judge, however, by an order

dated 18.02.2009 inter alia held that the MOU executed ::4::

between the parties dated 20.04.2001 has not been executed in

exercise of statutory powers and the terms and conditions of

the MOU are not regulated by any statute. It was further held

that even if it is assumed that the impugned action is in breach

of the terms and conditions, the remedy of the appellant is to

file a suit and no relief, in exercise of powers under Article 226

of the Constitution of India, can be granted to the appellant.

Accordingly, the writ petition, as preferred by the appellant,

was dismissed with the liberty to it to take recourse to such

remedy as may be available to it in law. In the aforesaid

factual background, this appeal arises for our consideration.

8. Learned counsel for the appellant submitted that the

action of the respondents in asking the appellant to pay

damages is de hors the terms and conditions of the MOU and

in an appropriate case, writ petition against a State or

instrumentality of a State arising out of contractual obligation

is maintainable. It is submitted that no disputed question of

fact arises for consideration in this matter and the learned ::5::

Single Judge, therefore, erred in relegating the appellant-writ

petitioner to avail of the remedy of the civil suit. In support

of the aforesaid submission, reliance has been placed on a

decision of the Hon'ble Supreme Court in ABL International

Ltd. V. Export Credit Guarantee Corporation of India

Ltd. 1

9. On the other hand, learned Government Pleader for

Agriculture submits that the learned Single Judge has rightly

relegated the appellant-writ petitioner to avail the alternative

remedy of filing a civil suit and the liability of the appellant

cannot be examined by this Court in exercise of powers under

Article 226 of the Constitution of India. It is further

submitted that the order passed by the learned Single Judge

does not call for any interference.

10. We have considered the submissions made on both

sides and have perused the record.

(2004) 3 SCC 553 ::6::

11. The Hon'ble Supreme Court, in ABL International

Ltd. (supra), held that the writ petition involving serious

disputed questions of fact, which require consideration of

evidence, will not normally be entertained in exercise of

powers under Article 226 of the Constitution of India.

However, it is not an absolute rule that in all cases involving

disputed questions of fact, parties should be relegated to avail

the remedy of a civil suit. The relevant extract of para 23 of

the aforesaid decision, reads as under:

It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably, which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the abovesaid requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to ::7::

set right the arbitrary actions of the first respondent.

12. While dealing with the issue of maintainability arising

out of a breach of contractual obligations, in para 27 of the

aforesaid decision, the Hon'ble Supreme Court has further

held as under:

From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition:

(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

(c) A writ petition involving a consequential relief of monetary claim is also maintainable.

13. The aforesaid legal principles were followed

subsequently in three Judge-Bench decisions of Hon'ble

Supreme Court in State of Uttar Pradesh vs. Sudhir ::8::

Kumar 2 and Unitech Limited and others v. Telangana

State Industrial Infrastructure Corporation (TSIIC) and

others 3.

14. Thus, the instrumentality of the State, which is a party

to the contract, has an obligation in law to act fairly, justly and

reasonably and in consonance with the mandate contained in

Article 14 of the Constitution of India.

15. Clauses 3.3 and 3.4 of the MOU read as under:

3.3. The District Level Committee after examining the complaint shall decide the quantum of compensation to the affected farmers after ascertaining the facts and finding the reasons responsible for sub-standardness in seed quality.

3.4. (i) If it is a case of germination failure due to poor quality of seeds and not a case of soil condition, moisture stress etc. the compensation shall be as under:

For Paddy, 150% of the cost of seed shall be paid, (OR) replacing equal quantity of

2020 SCC Online SC 847

2021 SCC OnLine SC 99 ::9::

quality seed free of cost, plus 50 percent cost of the seed within seven (7) days from the date of receipt of complaint.

In case of dry crops, replacement of seed free of the cost or cash payment equal to the cost of the seed plus cash payment @ Rs.250/- per acre (0.4 Hectares).

However, in case of cotton, the cultivation charges of Rs.350/- per acre besides replacement of seed free of cost or cash payment equal to the cost of the seed shall be compensated, within seven (7) days from the date of receipt of complaint.

ii. If it is a case of genetic impurity, after establishing the case, compensation shall be paid not less than the cost of difference in yield of the crop in question and that of normal yield of that particular crop or variety in the locality. The compensation so awarded by the district level committee shall be paid to the affected farmers within 30 days. In case of delayed payments, 24% in cost shall be levied and wherever no payment is made, penalty shall be imposed as decided by the Government.

::10::

16. Thus, from a perusal of the aforesaid clauses, it is

evident that the District Level Monitoring Committee has the

power to evaluate the loss sustained by the farmers due to

poor germination or genetic impurity of the seeds. Therefore,

in case the farmers suffer on account of poor germination or

due to genetic impurity of the seeds, they are entitled to

compensation.

17. In the instant case, the District Level Monitoring

Committee, in its order, has recorded as follows:

Cotton Bio-Seed Genetically pure, shedding of floral parts ---

6567 & due to high incidence of Heliothes and 6569 Physiological affect.

18. Thus, it is evident that the District Level Monitoring

Committee has found that the seeds supplied by the appellant

were genetically pure. However, there has been shedding of

floral parts due to high incidence of heliothes and

physiological affect.

::11::

19. Being aggrieved by the order of the District Level

Monitoring Committee, the appellant had filed an appeal

before the appellate authority i.e., the State Level Monitoring

Committee. The appellate authority vide order

dated 23.05.2002, inter alia held as follows:

The State Level Committee, while confirming the decision of District Level Committee made on 3.1.2002, observed that the crop loss was due to non-adaptability of the two cotton hybrids, but not attributed to genetic impurity of the seed supplied by the appellant, and felt that though crop failure due to non- adaptability is not covered under terms and conditions of MOU, but the appellants are morally bound to compensate crop loss to the aggrieved farmers, as the suitability of a variety is always specific to agro-climatic region and soil type.

Since the Joint Director of Agriculture, in his report on yield loss, stated that in the absence yield date on Mandal average yields, crop loss was arrived taking into account, the averages of C.C. experiments of insurance units, which does not fully represent Mandal average, ::12::

and therefore, the state level committee felt that instead of district average yield of last (5) years i.e., 937 Kgs kapas per hectare (or 375 Kgs/acre) the yield range of 2001-2002, be taken as the basis of computing crop loss, since the yields of cotton during 2001-2002 were comparatively less than the district average. The members of the committee were of the opinion that yields in light soils, were ranging from 200 to 250 kgs kapas per acre during 2001- 2002, and the Bio Seed hybrids in question were raised mostly in light soils, the minimum of 200 Kgs/acre Yield may be considered as average. Thus, difference between average per acre yield obtained by the farmers due to raising of bio Seed hybrids i.e., (200-119) = 81 Kgs/acre will be the actual yield loss and appellants are required to compensate loss to the tune of Rs.27.60 lakhs for an area of 852 hectares of 2130 acre taking into account the market rate of Rs.1600/- per quintal. The Joint Director of Agriculture is requested to communicate farmer wise crop loss to the appellants as decided by the committee.

::13::

20. From a perusal of the finding recorded by the appellate

authority itself, it is evident that the crop failure was due to

non-adaptability of two cotton hybrids which is not covered

under the terms and conditions of MOU. The appellate

authority also found that the crop failure has occurred due to

agro-climatic region and soil type. Despite the aforesaid

finding, appellate authority proceeded to award damages to the

farmers.

21. Therefore, the appellant cannot be held liable as there

are no terms and conditions in the MOU which provide for

grant of compensation to farmers in case the crop failure is