Summary
The Supreme Court upheld FCI’s refusal to allocate paddy to entities claiming leases of defaulting rice mills. The unregistered leases did not establish a valid transfer of possessory rights, and the lessees could not demand allocation while liabilities under the earlier milling agreements remained unpaid. The Court dismissed their writ petitions, permitting applications under FCI policy after payment of the original millers’ dues with penalty or interest and production of no-dues certificates.
Issues
- Whether unregistered leases established new lessees’ entitlement to paddy allocation despite the mills’ outstanding liabilities.
- Whether separate legal identity alone required FCI to allocate paddy.
Provisions considered
- Section 17(1)(d), Registration Act, 1908The leases failed the compulsory-registration requirement and could not establish a valid transfer of possessory rights. (¶¶ 10, 12)
Held
- The unregistered lease deeds did not satisfy section 17(1)(d) and could not be accepted as evidence of valid transfer of possessory rights. The High Court should not have relied on them to recognise a new entity and conclude that liabilities did not transfer. (¶ 12)
- The allegation that the documents were devised to evade the defaulting millers’ liabilities carried weight but remained a factual question. Even a longstanding firm taking over a defaulting mill could not claim paddy allocation unless liabilities arising from the earlier bilateral agreement were satisfied. (¶¶ 12, 13)
- The lessees could pay the original millers’ dues with penalty or interest, obtain no-dues certificates and then seek allocation in accordance with FCI’s policy; no unconditional allocation was ordered. (¶ 14)
Result
FCI’s appeals allowed; both High Court orders set aside and lessees’ writ petitions dismissed, with liberty to seek allocation under FCI policy after clearing dues and producing no-dues certificates. No costs.