[Cites 3, Cited by 0]

Telangana High Court

N. Pramila Raj Rice Mill vs State Of Telangana on 15 April, 2026

       IN THE HIGH COURT FOR THE STATE OF TELANGANA AT
                         HYDERABAD
        HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY
                     WRIT PETITION No.4041 OF 2026
                               Dated:15.04.2026
Between:
N.Pramila Raj Rice Mill,
Nizamabad, reptd by its
Proprietor-Nangunuri Pramila Raj
                                                                     ...Petitioner
And:
The State of Telangana, reptd., by
its Principal Secretary,
Agriculture, Marketing &
Co-Operation, Hyderabad
and five others.
                                                                 ...Respondents
ORDER:

This Writ Petition is filed to issue a writ of Mandamus declaring the

action of respondent No.4 in not allotting the custom milling paddy from the

year 2025-2026 to the petitioner in the name of dues fell by the lessee of the

petitioner, i.e., M/s Sri Vallabha Foods, and passing the order dated 28.01.2026

in CS4/62/2025, without considering its representations, dated 24.11.2025 and

28.08.2025, as illegal, arbitrary and contrary to the orders of this Court in

WP.No.29370/2025, dated 20.11.2025 and for consequential relief.

2. Heard Sri K.M.Mahender Reddy, learned counsel for the petitioner and

learned Government Pleader for Civil Supplies for the respondents.

LNA, J

3. Brief facts of the case as averred in the writ affidavit are that the

petitioner-rice mill, who is the owner, possessor of N.Pramila Rice Mill, leased

the same to M/s Sri Vallabha Foods, represented by one V.Sharadha, from

01.11.2023 to 31.10.2025 on rental basis @ Rs 2,40,000/- per annum,

Rs.13,10,000/- per annum for godown, totalling to Rs.15,50,000/- per annum.

The lessee obtained GST Reg. Certificate, dated 28.10.2023, from the

Government of India valid till 25.10.2025 and that due to non-payment of rents

by the lessee which aggregated to Rs.23,30,000/- by March 2025, the petitioner

had complained to the Commissioner of Police against the lessee and her

husband on 15.04.2025 and later, upon requests, the total paddy stock, gunny

bags of custom milling rice were lifted and the total premises was handed over

to the petitioner in April, 2025 and since then the petitioner has been in

possession of the mill.

3.1. That, on 28.08.2025, the petitioner made representation to the

respondents to allot custom milling of paddy to it, from kharif season 2025-

2026 without reference to the dues of the lessee; that aggrieved by the inaction

of the respondents in considering the said representation, the petitioner filed

WP.No.29370/2025 and this Court disposed of the said Writ Petition, vide order

20.11.2025, directing the respondents to consider the representation of the

petitioner and to pass appropriate orders in accordance with law within two

months from the date of the said order. That in purported compliance of the

LNA, J

said order, respondent No.4 passed the Order dated 28.01.2026, without

considering the representations of the petitioner and without issuing notice to

the petitioner. Hence, challenging the said order, the present Writ Petition is

filed.

4. Learned counsel for the petitioner submitted that respondent No.4 passed

the impugned order based on the Circular instructions of Commissioner of Civil

Supplies, vide CCS.Ref.No.(I(1)/914/2024, dated 26.04.202, which was issued

without any enabling provision of law; that the authorities without proceeding

against the four guarantors of the lessee, viz., Om Shri Balaji Industries, Sri

Venkateshwara Rice Mill, Sri Hari Krishna Agro Industries and Balaji Traders,

as per G.O.No.12, Consumer Affairs, Food and Civil Supplies (CS.I)

Department(CS.I.CCS) Department, dated 27.06.2024, for recovery of the dues

of the lessee, illegally denied the allotment of custom milling of paddy to the

petitioner and held the petitioner liable for the dues of the lessee.

4.1. Learned counsel further submitted that by letter dated 13.09.2024,

though the DSO office, Nizamabad, was informed that lessee stored about

20,000 quintals of paddy in DJ Godown, no action had been taken by the

authorities either to shift or to seize the said stock, which shows the collusion

between the authorities and the lessee.

4.2. Learned counsel further submitted that the petitioner-lessor is not surety

for the lessee and as such, the petitioner cannot be held liable for the dues of the

LNA, J

lessee. In support of the said submission, he relied upon the judgment of this

Court in Awari Amarender V. Shriram City Union Finance and Another 1,

wherein it is observed as under:-

"The liability of co-surety is co-extensive to that of principal debtor unless it is otherwise provided by the contract."

5. Learned counsel for petitioner finally submitted that respondent No.4

erred in passing the impugned order holding that the petitioner-lessor is

vicariously liable for the dues of the lessee and prayed to allow the Writ

Petition.

6. Learned counsel for respondent No.4, by referring to the counter-affidavit

filed on behalf of respondent No.4, submitted that as per para G-2 of Annexure-

IV to G.O.Ms.No.26, Consumer Affairs, Food and Civil Supplies (CS.I)

Department(CS.I.CCS) Department, dated 07.10.2023, which is issued based on

the Telangana Rice (Custom Milling) Order, 2015, "no paddy shall be allotted to

the default rice mills until the entire defaulted rice is delivered and dues are

cleared" and the said GO further mandates that paddy shall be allotted to the

lessee mills only after taking a guarantee from the owner of the rice mill; that as

per Circular vide PI(1)/914/2024 dated 26.04.2024, issued by Commissioner of

Civil supplies, the original miller (lessor) will have vicarious liability in

delivering the dues of CMR/recovery of penalty with interest.

2025(1) ALT (NRC) 57

LNA, J

7. In support of his contentions, learned counsel for respondent No.4 relied

upon the judgment of the Hon'ble Apex Court in Food Corporation of India V.

V.K. Traders 2, wherein at para-12 it is held as hereunder:

"No right to seek allocation of paddy can be claimed by it unless the liabilities arising out of the previous bilateral agreement are satisfied".

7.1. Learned counsel further contended that in view of the aforesaid Circular

and G.Os., the mill in question is a "defaulting mill" and as such, it is ineligible

for allotment of fresh stock of paddy until a "No dues certificate" is produced

and hence, the petitioner's claim of immunity from the dues of its lessee is

untenable and further, since the defaulting mill failed to satisfy its existing

liabilities, it is not entitled to allotment of custom milling of paddy, and that

considering all these aspects, respondent No.4 has rightly passed the impugned

order.

8. In light of the aforesaid submissions made by learned counsel for both the

parties, the point that arises for consideration is

Whether respondent No.4 is justified in passing the impugned order holding that the petitioner-mill is vicariously liable for the dues of its lessee and not allotting the custom milling of paddy to the petitioner-mill?

(2020) 4 SCC 60

LNA, J

9. Admittedly, the petitioner is neither a party nor surety/guarantor to the

bilateral agreement entered between the lessee and the Civil Supplies

Department, which is evident from the record. Therefore, the judgment of the

Hon'ble Apex Court in Food Corporation of India's case (cited supra), relied

upon by learned counsel for respondent No.4 is not applicable to the present

case.

10. To adjudicate the issue, it is necessary to interpret the GOs referred to

above and the Circular instructions, dated 26.04.2024, issued by Commissioner

of Civil Supplies vis-a-vis to the facts of the present case. Para-G-5 of

Annexure-IV to G.O.Ms.No.26, dated 07.10.2023, mandates that the paddy

shall be allotted to the lessee mills only after taking guarantee from owner of the

rice mill.

11. In the instant case, it is not the case of the respondent authorities that

such guarantee was taken from the petitioner-mill for allotment of paddy to the

lessee. That apart, it is undisputed fact that an agreement was entered between

the lessee and the Civil Supplies Department with four guarantors and the

petitioner-mill is neither a party nor guarantor/surety to the said agreement. In

such an event, Section-128 of the Indian Contracts Act, 1872, comes into play,

as per which the liability of the co-surety is co-extensive to that of the principal

debtor.

LNA, J

12. In addition to the above, as per Clause-4.3 of G.O.Ms.No.12, dated

27.06/2-24, the authorities concern shall reserve right to recover the losses or

damages from the default millers as well as from the sureties jointly and

severally in accordance with law.

13. A reading of Section-128 of the Indian Contracts Act, 1872, coupled

with Clause-4.3 of G.O.Ms.No.12, dated 27.06/2-24, makes it clear that the

authorities concerned are empowered to recover the dues/losses/damages from

the principal debtor i.e., the defaulting miller as well as from the

guarantors/sureties of the defaulting miller.

14. In the case on hand, the petitioner-mill is neither a guarantor nor surety

to the lessee for allocation of paddy. Further, the petitioner is only the owner of

the premises leased out to its lessee, which ultimately, turned out to be

defaulting miller.

15. As regards instruction No.4 of Circular Instructions, dated 26.04.2024,

referred supra, in case of default on the part of lessee-mill, the original miller

will have vicarious liability in delivering the dues of CMR/recovery of penalty

with interest, it is to be noted that the said Circular is issued by the authority

concerned by exercising the delegated legislation.

LNA, J

16. Here, it is apposite to refer to the judgment of a two-judge Bench of the

Hon'ble Supreme Court in Gaurav kumar V. Union of India 3, wherein it has

carved out the following relevant principles in matters of delegated legislation:-

"... The delegate which has been authorized to make subsidiary rules and regulations has to work within the scope of its authority and cannot widen or constrict the scope of the Act or the policy laid down thereunder. It cannot, in the garb of making rules, legislate on the field covered by the Act and has to restrict itself to the mode of implementation of the policy and purpose of the Act."

From the above discussion, we can cull out the following principles:

                (i)     a delegate cannot act contrary to the express
                        provisions and object of the parent legislation;
                (ii)    a delegate cannot widen or constrict the scope of the

parent legislation or the legislative policy prescribed under it; and

(iii) a fiscal provision has to be construed strictly and a delegate cannot consider any circumstance, factors or condition not contemplated by the parent legislation

17. The Circular instructions, dated 26.04.2024, particular instruction No.4,

based on which respondent No.4 passed the impugned order, is explicitly issued

in exercise of the delegated legislation.

18. The aforesaid principles culled out by the Hon'ble Supreme Court are

not followed and in fact, are violated by issuing the Circular, dated 26.04.2024,

2024 INSC 558

LNA, J

since in the said Circular, the fiscal provision regarding default of the lessee-

mill appears to be issued by not considering the factors or conditions

contemplated by the parent legislation.

19. Therefore, for the foregoing discussion and reasons and in the light of

the judgment of the Hon'ble Supreme Court in Gaurav Kumar's case (cited