Holding

FCI, as a State agency, must ensure that sub‑standard rice suitable for human consumption is upgraded under its supervision before sale, and rice unsuitable for human consumption must be disposed of for non‑human purposes.

Summary

The Food Corporation of India (FCI) had a stock of sub‑standard rice and issued a tender inviting licensed dealers to purchase it on the condition that they would upgrade the rice before it entered the market for human consumption. Two licensed dealers challenged the tender, alleging it violated the West Bengal Rice and Paddy (Licensing & Control) Order, 1967 and a government circular. The Calcutta High Court initially granted an injunction, which was later vacated by a Division Bench with conditions for upgrading and certification. On appeal, the Supreme Court examined whether FCI, as a State agency, could sell such rice with merely an undertaking from dealers and whether this complied with the corporation’s statutory powers under the Food Corporation Act, 1964 and the State’s constitutional duty under Article 47 to protect public health. The Court held that sub‑standard rice suitable for human consumption must be upgraded by FCI (or under its supervision) and only sold after certification, while rice unsuitable for human consumption must be disposed of for non‑human uses. Accordingly, the Court directed FCI to upgrade the suitable stock and dispose of the unsuitable stock, and disposed of the appeal.

Issues considered

The legality of FCI's tender to sell sub‑standard rice to licensed dealers with an undertaking to upgrade it.
Whether such a tender violates the West Bengal Rice and Paddy (Licensing & Control) Order, 1967 and related government circulars.
Whether FCI, under Section 13(2)(b) of the Food Corporation Act, 1964, may sell sub‑standard rice without ensuring its upgrade before human consumption.
Whether the State’s constitutional obligation under Article 47 requires FCI to prevent sub‑standard rice from entering the market for human consumption.

Legislation cited

Constitution of Indias. Article 47
Prevention of Food Adulteration Act, 1954

Subjects

Food Corporation of Indiasub‑standard ricepublic healthArticle 47food safetytenderupgradationdisposalState dutyPrevention of Food Adulteration ActWest Bengal Rice Order

Judgment

TAPAN KUMAR SADHUKHAN A
v.
FOOD CORPORATION OF INDIA

AUGUST 20, 1996

[A.M. AHMADI, CJ., N.P. SINGH AND S.C. SEN, JJ.] B

Food Corporatio11 Act, 1964: Section 13(2)(b).

Food Corporation---Fzmctions of-Processi11g of foodgrains-Upgrad-
ing of sub-standard ricr:-Setting up plant fo,-.Being an agency of State, it c
must co11fon11 to Art. 47 of Constitutio11 to improve public health-Sub-sta11d-
ard rice suitable for huma11 consumptio11 should be duly upgraded a11d sold
to /ice11sed rice dealers:-Such sub-sta11dard rice could 11ot be sold as such on
mere undertaki11g by dealm· that they would upgrade the 1ice before marketi11g
the samr:-Corporatio11 itself should preferably set up pla11t to upgrade sub-
standard ric~Alteniatively, concen1ed Ministry in Govenunent of India D
should evolve guidelines so that sub-standard rice did not enter market for
human consumption before upgradi11g----Third altemative would be to use
"" such untreated sub-standard rice for any other p1upose, such as cattle/chicken
feed etc-Huweve1; sub-standard rice itnsuitable for lzunzan consuniption
should be disposed of for purposes other than hun1an consunzption in E
conipliance of Gove1n111ent directions.

Constitution of India, 1950 : Article 47.

Obligatio11 of State to raise level of 11utritio11 a11d improve public
health-Food Co1poratio11 of l11dia being 011 agency of State should evolve F
foolproof system so that sub-sta11dard rice does ;zot enter market for hwnan
consumption before upgrading-Poverty stricke11 people who were consumers
of sub- standard rice 11eeded State's protectio11 from injurious effect of such
sub-standard rice.

The respondent-Corporation issued a ,tender notice inviting tenders G
• from the registered/licensed rice dealers for sale of sub-standard rice unlit
for human consumption. The purchasers were required to give an under-
taking to upgrade the said sub-standard rice before issuing for human
consumption. Tuo licensed dealers filed writ petition before the High
Court challenging the tender notice as being violative of the West Bengal H
775
776 SUPREME COURT REPORTS (1996] SUPP. 4 S.C.R.

A Rice and Paddy (Licencing & Control) Order, 1967 and also being violative
of the Government Circular issued in that regard. A Single Judge of the
High Court made an interim order directing the Quality Control Commit-
tee of the respondent-Corporation to submit a report as to whether the
rice which was the subject Patter of the tender notice was capable of being
upgraded for human consumption. This interim order was challenged in
B appeal before a Division Bench of the High Court which vacated the
injunction issued by the Single Judge and also issued detailed instructions
to deal with the aforesaid sub-standard stock of rice.

The appellant claimed to be interested in the subject matter of the
C case as proprietor of a company dealing in manufacture and supply of
cattle feed, poultry feed, manure etc., as a registered contractor of the
respondent-Corporation. His plea was that rice which was unfit for human
consumption was sought to be sold as sub-standard/damaged rice, subject
to upgradation by the purchasers.

D Disposing of the appeal, this Court

HELD : 1.1. The Food Corporation of India, i.e., respondent No. 1,
is to secure a commanding position in the foodgrains trade of the country.
Being an important factor in the n1arket of foodgrains and being an agency
of the State, it must conform to the letter and spirit of Article 47 of the
E Constitution. Such being the position of respondent No. 1, the trading
activity in rice and other foodgrains must be done keeping in view the
obligation to improve public health. [787-D]

1.2. The stocks found unsuitable for human consumption cannot be
F sold to any rice dealer and have to be disposed of for purposes other than
human consumption in the manner prescribed by the Government. The
stock that is found suitable again cannot be immediately used fur human
consumption for that can be so used only after being upgraded. If sub-
standard rice is released and sold in the open market it would be highly
injurious to the consumers. Publics health would be jeopardised if such
G rice is consumed by members of the public. Poverty in our country is quite
rampant and illiterate, ignorant and poor persons would not hesitate to
consume such rice if sold at cheap rates. That would undoubtedly be
exposing the poor to the risk of consuming sub-standard rice. A mere
under-taking is no guarantee that the dealer "ill upgrade the rice before
H marketing the same. What action could be taken against a defaulting
T.K. SADHUKHAN v. F.C.I. 777

dealer who markets the rice without upgrading the same? At the most, he A
may be blacklisted but the damage or injury caused to the consumers
cannot be remedied. Therefore, in addition to the undertaking, something
more by way of a sanction against misuse seems necessary. [787-E-G]

2.1. The most ideal solution is that FCI should itself upgrade the rice
before sale. A corporation dealing with such huge quantities of rice can B
certainly set up a plant to upgrade the sub-standard rice before release to
the dealer. The concerned Ministry of the Government of India should
seriously examine this proposal. If, however, the idea of FCI itself setting
up a plant to treat the sub-standard rice is not feasible, the next alternative
is that the concerned Ministry in the Government of India should evolve c
guidelines which would secure a foolproof system which ensures that sub-
standard rice does not enter the market for human consumption before it
has been upgraded and made fit for human consumption, because the

- consumers of such rice are likely to be people who are downtrodden and
stricken with poverty. Such a segment of society needs the State's protection
in this behalf. If a reasonable and safe arrangement cannot be worked out, D
the third alternative would be to use such sub-standard rice for any other
purpose, such as, for cattle-feed, chicken-feed, etc. [787-H; 788-A-C]

2.2. It is left to the State authorities to determine the course which
it considers most appropriate, keeping in mind this Court's anxiety to E
ensure that the poor segment of society is not exposed to the risk of
consumption of such rice without it being upgraded. A copy of this judg-
ment shall be forwarded by the Registrar General of this Court by a letter
to the Cabinet Secretary who will ensure that the appropriate Ministries
in the Government of India initiate action in this behalf within a
F
reasonable time and complete the exercise without loss of time keeping in
mind the fact that it concerns the lives of the poor and downtrodden
masses. Decision taken in this behalf should be communicated to the
Registrar General of this Court within a reasonable time, preferable not
later than six months from the receipt of this judgment. [788-D-E]
G
3. Accordingly, in the instant case it is directed (i) that the entire
stock of rice in question, to the extent it is suitable for human consumption,
be duly upgraded by the respondent No. 1 either under its active super-
vision and dispose of the same by selling it to the licensed dealer only after
the upgraded rice is tested and certified by its quality control team; (ii) the H
778 SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A portion of the rice stock found by the Expert Committee appointed by this
Court to be unsuitable for human consumption be disposed of for purposes
other than human consumption as may be deemed proper by the respon·
dent No. 1 in compliance of government directions in the field. [788-F-G]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 10685 of
B 1996.

From the Judgment and Order dated 13.10.93 of the Calcutta High
Court in F.M.A.T. No. 2947 of 1993.

G.L. Sanghi, Ranjit Kumar, Ms. Sarla Chandra, Y.P. Rao, J. Gupta,
C R. Mukherjee, Ms. S. Mukherjee and Goodwill Indeevar for the appearing
. parties.

D
The Judgment of the Court was delivered by

AHMADI, CJ!. Leave granted.

The present civil appeal arises out of an order of the Division Bench
-
of the High Court of Calcutta dated 13.10.1993 vacating an interim order
of injunction passed by a Single Judge of the same Court. The sequence
of events upto the filing of this special leave petition may be narrated as
E under:

The Food Supply Department of the Government of India. issued
instructions to the Senior Regional Manager, Food Corporation of India,
West Bengal region, the respondent No. 2 herein, on 28.4.1986 regarding
disposal of sub-standard par-boiled rice unacceptable to the Government
F of West Bengal through auction/tender. The Food & Supplies Department
of the Government of West Bengal laid down certain conditions for dis-
posal of such stocks of rice by the Food Corporation of India. The
important conditions relevant for the present matter are as under :

"(1) All the stocks proposed to be auctioned should at first be
G jointly inspected by the Quality Control Staff of this department
and the Food Corporation of India. Clear markings should be
made on the stocks unfit for human consumption to prevent any
mixture of these stocks with the stocks fit for human consumption.

H (2) Sub-standard stocks should be sold to established cattle/poultry
T.K. SADHUKHAN v. F.C.I. [AHMADI, CJ.) 779

feed manufacturers only. A
(3) Stocks for human consumption should be sold tc licensed rice
dealers only."

By a subsequent communication, the Department of Food & Civil
Supplies substituted the word "sub-standard" appearing in para 2 of the B
aforesaid communication by the word "damaged". On 2.8.1993, the Food
Corporation of India issued a tender notice inviting tenders from the
registered/licensed rice dealers for sale of 11,683 M.T. of sub-standard rice.
The relevant clauses of the tender notice dated 2.8.1993 are as under:

"The above stock of rice is presently not fit for human consumption, c
so it will be subject to upgradation by the purchasers before issue
for human consumption.

Out of the above quantity some stock in which the percentage
of damaged grains are presently beyond PFA limits, which will D
have to be brought within the said limit by the purchasers as they

- are not fit for human consumption so long they remain beyond
PFA limits. Tenderers shall have to give an undertaking to the
effect that no stock will be issued for human consumption without
upgradation and without bringing them in the PFA limits.
E
Stocks lying in S.R. Areas will have to be moved out of S.R.
Areas by the purchasers after obtaining movement permits from
Food & Supplies Department, West Bengal.

Tender documents containing details of terms and conditions
for sale of sub-standard rice can be had from Commercial Division F
of F.C.I., 6, Royd street, Calcutta-16, on payment of Rs. 100 in
cash from 6.8.93 to 17.8.93 between 11-00 AM to 2-00 PM."

Two licensed rice dealers who are respondents No. 6 and 7 in the
present civil appeal filed writ petitions before the High Court challenging G
th.e tender notice as being violative of the West Bengal Rice and Paddy
(Licencing & Control) Order, 1967 as amended from time to time and also
being violative of the Government circular issued in that regard. The
learned Single Judge of the Calcutta High Court made an interim order
dated 3rd September, 1993 directing the Quality Control Committee of the
Food Corporation of India to submit a report as to whether the rice which H
780 SUPREME COURT REPORTS [1996) SUPP. 4 S.C.R.

A was the subject matter of the tender notice dated 2nd August, 1993 was
capable of being upgraded for human consumption. Before submitting the
report, the Quality Control Committee was also to invite the food tech-
nologists from the Central Government for their views. This interim order
was challenged in appeal which was heard and disposed of by a Division
Bench by an order dated 13.10.1993 which is the impugned order in this
B case. The injunction issued by the Single Judge was vacated and detailed
instructions to deal with the stock of rice were issued. The relevant portion
of the' order is as under :

"Accordingly considering the facts and circumstances of the case,
c the balance of convenience and all other relevant factors, we are
of the view that interim order of injunction should be vacated on
this condition that the tender should be finalised and the goods
may be delivered to the successful tenderers on condition that the
same is brought within the required standard as laid down in the
Prevention of Food Adulteration Act and that after the upgrada-
D
tion is made, the same should be checked and examined by the
Directorate of Inspection, Quality Control, Govt. of West Bengal
and only after the said authority gives a certificate and clearance
that the same was fit for human consumption and not damaged
and/or unfit for human consumption. For this purpose the lifted
E stock should be stored at a place which should be immediately
notified to the Directorate of Inspection and quality control
department of Food and Supplies, Govt. of India, 11, Mirza Galib
St., Calcutta-7 and without the permission and obtaining a
clearance certificate from the authority who would examine the
stock upon upgradation that it is fit for human consumption. The
F
successful tenderers shall also file written undertaking before the
trial Judge to the extent that they will keep the stock after lifting
on a particular godown to be notified to that quality control .
directorate within 24 hours from the storage and shall not remove
from that place without standardisation and without obtaining a
G certificate and clearance on examination of the goods certifying
that the same is fit for human consumption. Further no part of the
said stock of rice should be released in public distribution system
without having such certificates from the competent authority."

H The appellant, Tapan Kumar Sadhukhan, claims to be interested in
T.K. SADHUKHAN v. F.C.l. [AHMADI, CJ.) 781

the subject matter of the case as proprietor of one M/s. Ma Kali Trading A
Company dealing in manufacture and ~\lpply of cattle food, poultry food,
manure etc., as a registered contractor of the Respondent No. 1. His plea
is that rice which was unfit for human consumption was sought to be sold
as sub-standard/damaged rice, subject to upgradation by the purchasers.

The appellant further claims that the Quality Control Manual issued B
by the respondent No. 1in1992.relating to the Central Legislation regard-
ing foodgrain handling n-t>o~s no provision for sale of sub-stand-
ard/damaged rice for human tonsumption and does not prescribe that such
sub-standard/damaged rice can be upgraded for making it fit for human
consumption. The appellant expresses concern that while selling sub-stand- c
ard rice in question, the respondent No. 1 was not taking any responsibility
about the manner in which the seller would sell the same after having
purchased the sub-standard rice and it depended entirely on the undertak-
ing to be submitted by the purchaser for upgradation of the products to
the standard quality before selling the same for human consumption.
D
The appellant further says that even according to the manual of the
respondent No. 1 the stock being sub-standard/damaged could be sold only
to cattle/poultry feed manufacturers or used as manure. The appellant
claims locus standi to file the special leave petition as being a cattle/poultry
feed mam:facturer interested in buying the stock in question. E
On 5.11.1993, this Court stayed the implementation of the impugned
order pending notice to the respondents .
.. In respondent, the respondent No. 1 submitted that the appellant had
no locus standi whatsoever to file the petition as he was not a party before F
the Calcutta High Court. The respondent No. 1 further submitted that
"sub-standard" rice is far better than 'damaged" rice and that the petitioner
is trying to buy such sub-standard rice at the price of damaged rice and
thereby attempting to make profit at the cost of the exchequer. The
respondent No. 1 denies that the rice is not capable of being upgraded for G
human consumption and submits that since the Corporation did not have
the necessary infrastructure for the upgradation process, it had to sell the
stock to the purchasers who could upgrade the rice. The respondent No.
1 says that rice is categorised as category 'A' - (good quality), category 'B'
(very fair quality) category 'C' (fair quality) and category 'D' (average
quality), and that rice of category C & D require to be upgraded or H
782 SUPREME COURT REPORTS (1996] SUPP. 4 S.C.R.

A improved before being sold for human consumption and that if the rice
contains less than 15% damaged grains and fo1 eign matter, it is said to be
sub-standard and if the lot contains more than 15% damaged grain and
foreign matter apart from defective appearance, smell, colour and con-
tamination, etc., the same is categorised as damaged rice which is fit only
for cattle/poultry feed manufacture. The respondent No. 1 claims that the
B
tender notice was within the authority granted liy the Government of India
and Within the provisions of the Food Adulteration Act. The respondent
No. 1 had accordingly taken a specific undertaking from the tenderers that
they would sell the stock only after upgradation to make the rice fit for
human consumption. The respondent No. 1 submits that the impugned
c order is correct since it prevents the chances of the rice being sold for
human consumption Without upgradation while ensuring that the stock of
rice does not further deteriorate in the godowns of the respondent No. 1

Keeping in view the conflicting claims of the parties and the risk to
D the health of the citizens, we made an order on 28.2.1994 directing the
respondent No. 1 "(l) to state the process of upgradation; (2) what
measures can be taken to ensure that before the rice enters the market it
is upgraded and (3) what objection, if any, it has to the learned Single
Judge's direction for a report to be submitted by a Quality Control Com-
mittee of the FCI itself.' The respondent No. 1 in its additional affidavit
E stated that the rice could be upgraded by a process of sieving, cleaning,
WinnoWing, polishing, remilling processing, reconditioning, etc. To ensure
that the stocks of rice enter the. market only after upgradatiun, the respon-
dent No. 1 has taken the folloWing measures : (1) Stocks are sold to
licensed dealers after being specifically informed that the rice is unfit for ...
F human consumption and the sale of stocks to the dealers is intimated to
the State Government; (2) Stocks are sold on a specific stipulation that
such stocks can be sold to the public only after the same are upgraded and
made fit for human consumption; (3) on the basis of information given to
the State Government, the statutory authorities will ensure that the stocks
are not sold to public Without making the same fit for human consumption
G and bringing the same within PFA limits.

As for the last direction, the respondent No. 1 stated that the
compliance of the directions of the learned Single Judge of the Calcutta
High Court would result in loss of time during which the stock of rice
H would further deteriorate and that it was in the interest of the Corporation
T.K.SADHUKHANv. F.C.L [AHMADI, CJ.] 783

as well as the public that the stocks were immediately sold to the tenderers. A
The respondent No. 1 also constituted a Committee comprising of senior
Officers from the quality control wing, who first checked 427 lots of lower
category sub-standard rice representing about 11683 MT held in 24 FCI
depots in the State of West Bengal which were the subject matter of the
tender dated 2.8.1993 on random clieck basis and also scrutinised the
B
results/findings of the analysis done by the earlier categorisation Commit -
tees at different levels. The Committee found that the stocks which are the
subject matter of the present case are capable of being upgraded by
tenderers by employing various processes of upgrading, viz., sieving clean-
ing, winnowing, polishing, remilling reprocessing and reconditioning to
make the rice fit for human consumption. The report of the Committee c
was also filed. Appended to the report were statements showing stockwise
analysis results in respect of different stocks, all of which contain a remark
to the following effect :

"All stocks/stacks of LC/Sub-standard rice have developed an D
unpleasant smell and have become dull in appearance in prolonged
storage."

The respondent No. 1 did not have the infrastructure for upgradation
and so the dealers would have to be entrusted with the responsibility of
upgrading the stock. The counsel for the appellant, however, insisted that E
the rice was not fit for human consumption and that the report of the
Quality Control Committee of the respondent No. 1 could not be taken as
an independent report. On 2.5.1994, we, on the basis of the above, made
the following order :
F
"Taking into consideration the above submissions we appoint a
two-member Committee comprising one expert to be nominated
by each of the Director of Indian Agriculture Research Institute
and Indian Council of Agricultural Research who will submit a
report to this Court within a fortnight form today. The Registrar G
of the Court will sent an intimation at once. The officers of the
Food Corporation of India will extend all necessary assistance to
the said two members for enabling them to complete their task.
The expenses for the same will be reimbursed by the Food Cor-
poration of India. We direct lhe Food Corporation of India to
deposit a sum of Rs. 20,000 in this Court in the first instance. The H
784 SUPREME COURT REPORTS (1996] SUPP. 4 S.C.R.

A Directorate may initially bear the cost and communicate the same
to the Food Corporation of India under advice to this Court. As
· soon as the communication is received the Food Corporation of
India will fully reimburse the cost and charges incurred by the said
two experts. Let .the matter come up after the report is received."

B The Committee consisted of Dr. S.L. Mehta, Head of the Division
of Biochemistry, !ARI and Dr. R.P. Kachra, formerly Head, Post Harvest
Engineering Division at Central Institute of Agricultural Engineering,
Bhopal, and presently Assistant Director General (Process Engineering),
!CAR, New Delhi. They collected the samples from the FCI Godowns at
c Cossipore, Midnapore and Shalimar. The samples were sent to Delhi for
analysis. The Committee observed as under :

"All th.e rice samples had developed off flavour and also dis-
colouration. This varied from stack to stack and from godown to
godown. The stocks at Midnapore were better stored than samples
D
at Cossipore and Shalimar. The samples were infested in a large
number of cases specially at Cossipore and Shalimar. At Shalimar,
many of the stocks had developed deep yellow colour. In the
present form, the samples were certainly not suitable for human
consumption and did not conform to standards. The major ques-
E tion before the committee was whether the stocks could be
upgraded to make them fit for human consumption. For this
reason, the samples were taken to !ARI, New Delhi for cleaning,
milling and cookability etc.

The Committee on scrutiny of the records furnished by FCI
..
F
observed that the stocks at Cossipore, Midnapore and Shalimar
represented less than half of the total stock under dispute. Since
the rice was stored in different godowns throughout the State, it
was not feasible for the Committee to go to different places in the
short time at its disposal. The Committee therefore, directed Mr.
G M.K. Mitra, DM (QC), Zonal Officer, Calcutta and Mr. S.K.
Dutta, DM (QC), Regional Office, Calcutta to go to different
places indicated by the Committee, where large stocks are held
and to draw saraples personally and send these to !ARI for
analysis. 32 samples weredrawn by them from rice stocks held in
H different places as per the list attached. These also included
T.K. SADHUKHAN v. F.C.I. [AHMADI, CJ.] 785

additional samples drawn from Cossipore and Shalimar because A
earlier quality control team of FCI had not tested the samples from
many of these stocks which in the opinion of the Committee,
represented larger stock."

The Committee proceeded to give specific recommendations stack-
wise as to which stocks were suitable and could be upgraded for human B
consumption and which were not suitable and could not be upgraded. The
Committee conduded thus :

"The total stocks tested by the Committee represents little over
.. 50% of the total stocks. The Committee felt that wherever all the
samples are suitable for upgradation, the remaining stocks may
c
also be taken up for upgradation. Whereas in other depots, the
quality control team of FCI may be requested to test each stock
after cleaning, milling etc. and then give suitable recommendations
as has been done by this Committee. The stocks which have been
marked as NS (not suitable for upgradation) cannot be made fit D
for human consumption, because we have tested it even by milling.
After milling, there is no off· flavour in the samples, but discoloura-
tion which is light deep yellow cannot be removed."

The report shows that all the samples from FSD Midnapore were
E
suitable for human consumption but most of the samples from the other
depots, viz., FSD Cossipore, FSD Sitarampur, ARDC Gopalpur, FSD
Shalimar and CWC Shyamnagar South Jute Mill were not suitable for
...
___;
human consumption. Needless to say, the stocks found unsuitable for
human consumption cannot be sold to any rice dealer and have to be
disposed of for purposes other than human consumption in the manner F
prescribed by the Government. The stock that is found suitable again
cannot be immediately used for human consumption for, as the expert
report says, that can be so used only after being upgraded.

The next question is whether the upgradation can be left to the
G
... volition of the dealers or whether they should be bound by some further
conditions in the matter. It is to be remembered that Article 47 of the
Constitution pirects that State to raise the level of nutrition and the
standard of living and to improve public health.

The first respondent, FCI, is an agency of the State. It was estab- H
786 SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A lished under the Food Corporation Act, 1964. The functions of the Cor-
poration are mentioned in Section 13 of the Act as under : "'··

13. Fu11ctio11s of Copora/ion. - (1) Subject to the provisions of this
Act, it shall be the primary duty of the Corporation to undertake
the purchase, storage, movement, transport distribution and sale
B of foodgrains and other foodstuff.

(2) Subject as aforesaid, the Corporation may also, with the pre-
vious approval of the Central Government, --

(a) promote by such means as it thinks fit the production of
c foodgrains and other foodstuffs;

(b) set up, or assist in the setting up of, rice mills, flour-mills and
other undertakings for the processing of foodgrains and other
foodstuffs; and
D
(c) discharge such other functions as maybe prescribed or as are
supplemental, incidental or consequential to any of the func-
tions conferred on it under this Act."

Thus the processing of foodgrains and other foodstuffs is also one of
E the functions which the respondent No. 1 may perform with the prior
approval of the Central Government. For such ·processing of foodgrains
and other foo.dstuffs, the respondent No. 1 can also set up or assist in
setting up of rice mills, flour mills and other undertakings.

F
In the Statement of Objects and Reasons, the Government, while . -...
introducing the Bill, inter alia, stated :

"l. It is considered desirable, in the interests of increased agricul-
tural production as well as in the interests of the common con-
sumer, to set up a State Agency for the purpose of undertaking
G trading in foodgrains in a commercial manner but within the
framework of an over-all Government policy..........

2............ .

3. The Corporation will engage itself primarily in the purchase,
H storage, movement, distribution and sale of foodgrains. Provision
T.K. SADHUKHAN v. F.C.I. [AHMADI, Cl.] 787

has also been made in the Bill enabling the Corporation to deal A
in other foodstuffs if considered necessary by the Government. The
Corporation may also discharge certain incidental functions as
provided for in the Bill in consultation with the Central Govern-
ment.

4. The Corporation will be encouraged to function generally as an B
autonomous organisation working on commercial lines. It is ex-
pected to secure for itself a strategic and commanding position in
the foodgrains trade of the country. Bearing in mind the several
large spheres in which the Corporation will ultimately have to
operate, this Bill is being introduced to enable it to function as a C
statutory Corporation wholly owned by the Government."

The Food Corporation of India, i.e., respondent No. 1, is to secure
a commanding position in the foodgrains trade of the country. Being an
important factor in the market of foodgrains and being an agency of the
State, it must conform to the letter and spirit of Article 47 of the Constitu- D
tion. Such being the position of the respondent No. 1, the trading activity
in rice and other foodgrains must be done keeping in view the obligation
to improve public health.

There can be little doubt that if sub-standard rice is released and
E
sold in the open market it would be highly .injurious to the consumers.
Public health would be jeopardised if such rice is consumed by members
of the public. Poverty in our country is quite rampant and illiterate,
ignorant and poor persons would not hesitate to consume such rice if sold
at cheap rates. That would undoubtedly be exposing the poor to the risk
of consuming sub- standard rice. A mere undertaking is no guarantee that F
the dealer will upgrade the rice before marketing the same. What action
could be taken against a defaulting dealer who markets the rice without
upgrading the same? At the most, he may be blacklisted but the damage
or injury caused to the consumers cannot be remedied. Therefore, in
addition to the undertaking, something more by way of a sanction against G
.. misuse seems necessary.

It seems to us that the most ideal solution is that FCI should itself
upgrade the rice before sale. A corporation dealing with such huge quan-
tities of rice can certainly set up a plant to upgrade the sub-standard rice
before release to the dealer. The concerned Ministry of the Government H
788 SUPREME COURT REPORTS (1996] SUPP. 4S.C.R.

A of India should seriously examine this proposal. If, however, the idea of
FCI itself setting up a plant to treat the sub-standard rice is not feasible,
the next alternative is that the concerned Ministry in the Government of
India should evolve guidelines which would secure a foolproof system
which ensures that sub-standard rice does not enter the market for human
consumption before it has been upgraded and made fit for human con-
B sumption. We are particularly anxious because the consumers of such rice
are likely to be people who are downtrodden and stricken with poverty.
such a segment of society needs the State's protection in this behalf. If a
reasonable and safe arrangement cannot be worked out, the third alterna-
tive would be to use such sub-standard rice for any other purpose, such as,
c for cattle-feed, chicken-feed, etc.

We leave it to the State authorities to determine the course which it
considers most appropriate, keeping in mind this Court's anxiety to ensure
that the poor segment of society is not exposed to the risk of consumption
of such rice without it being upgraded. A copy of this judgment shall be
D forwarded by the Registrar General of this Court by a letter to the Cabinet
Secretary who will ensure that the appropriate Ministries in the Govern-
ment of India initiate action in this behalf within a reasonable time and
complete the exercise without loss of time keeping in m.ind the fact that it
concerns the lives of the poor and downtrodden masses. We would ap·
E predate it if the decision taken in this behalf is communicated to the
Registrar General of this Court "ithin a reasonable time, preferably not
later than six months from the receipt of this judgment.

Accordingly, (i) we direct that the entire stock of rice in question, to
the extent it is suitable for human consumption, be duly upgraded by the
F respondent No. 1 either in its own undertaking or under its active super-
vision and dispose of the same by selling it to the licensed dealer only after
the upgraded rice is tested and certified by its quality control team; (ii) the
portion of the rice stock found by the Expert Committee appointed by us
to be unsuitable for human consumption be disposed of for purposes other
G than human consumption as may be deemed proper by the respondent No.
1 in compliance of government directions in the field.

The appeal is disposed of accordingly. No costs.

v.s.s. Appeal disposed of.