- (1.) In the State of Madhya Pradesh, Kerosene was being distributed and made available for sale to consumers through public distribution system and by appointing fair price shops and retailers. By executive instructions, the State of Madhya Pradesh evolved a system called rounding off of the price in the name of securing distribution of Kerosene at uniform prices. The effect of the system was that the prices for sale by the wholesalers and the retailers were so strategically appointed as to generate a margin which was collected by Collectors in several districts and the Director of Civil Supplies at the State level. Such fixation of prices, based on rounding off, was challenged by filing writ petitions in the High Court which were dismissed. The matter came up in appeals by special leave before this Court. This Court allowed the appeals. The judgment of the High Court was set aside and the system of rounding off of the prices so as to build up funds available with the Director and the Collectors was directed to be quashed being ultra vires of Article 265 of the Constitution and Section 3 of the Essential Commodities Act, 1955 and para 2(d) of the Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993.
(2.) During the pendency of the writ petition and the appeals, the State of Madhya Pradesh was reorganized into two States by carving out the State of Chhattisgarh separately from out of the State of Madhya Pradesh. The State of Chhattisgarh was joined as party to the appeals in this Court. Huge funds, running into crores of rupees, were found to have been collected by the two States the figures whereof were brought to the notice of this Court. However, the collection had continued during the pendency of the appeals. Vide its judgment dated May 2, 2002 (reported as (2002) 5 SCC 466) apart from striking down the system of rounding off, the Court made the following further directions:-- "However, on the facts brought to the notice of this Court, the matter cannot be left at that alone. We have the figures of the collection and utilization of the fund up to 31-7-2001 brought to our notice. During the pendency of these appeals, further amounts must have been collected and also spent. Some directions would be required to be made for utilizing the fund so available with the officers of the State Government. This Court would also like to know how and for what purpose the fund has been utilized and whether timely audits of the fund were carried out. For this purpose we request the Accountant-General of Madhya Pradesh to carry out the audit of the fund as available with the Director and the Collectors of the Districts in the States of Madhya Pradesh and Chhattisgarh, the latter State having been carved out and formed during the pendency of these Special Leave Petitions. Apart from carrying out the usual audit, we request the Accountant-General of Madhya Pradesh to compile the expenditure under different heads and sub-heads so as to clearly indicate for what purpose the fund has been utilized. We hope the audit will be completed in a period of 4 months from the date of communication of this order to the Accountant-General of Madhya Pradesh. On receipt of the report of the Accountant-General, the same shall be laid before the Court soliciting further directions. Till then, the amount collected in the said fund by the Director of Food and Civil Supplies and the Collectors of the Districts shall stand frozen."
(3.) The Principal Accountant-General of Madhya Pradesh has carried out the audit in terms of the directions made by this Court. It was a voluminous task and could not be completed within the appointed period of four months and, therefore, the time was extended. In February, 2003, the report has been filed on behalf of the Principal Accountant-General (Audit)-I of Madhya Pradesh, Gwalior after carrying out the audit of funds available with the two Directorates of Food and Civil Supplies and with the Collectors of 61 Districts in the States of Chhattisgarh and Madhya Pradesh. We record our appreciation of the commendable work done by the office of the Principal Accountant-General (Audit)-I abovesaid within a reasonable time and very expeditiously. The report satisfies the directions made by this Court.;