SARKAR - (1.) THE following judgments of the court were delivered by:
(2.) THESE appeals arise out of suits filed for recovery of money from the government. The appellants were the plaintiffs and the respondent in each appeal is a State, the defendant in the suits. In the years 1947 and 1948 there was rice scarcity in certain distincts in Madras as it was then constituted. These districts are now in Andhra Pradesh. The government of Madras took action under the Essential Supplies (Temporary Powers) Act, 1946 and passed various orders for the procurement and distribution of rice. Rice thereafter could be procured only by the government or by the procuring agents appointed by it and disposed of according to the orders of the government Under these orders licensed wholesalers and retailers were also appointed. The appellants were procuring agents and wholesalers under this system. They entered into various agreements with the government for the purpose. Their duty was to procure rice from specified areas at prices specified by the government from time to time and to deliver it at prices so specified, to the government or to persons nominated by it or to other licensed purchasers. The procurement price was in each case lower than the selling price and the procuring agents were under the contract entitled to the difference between the two prices. During the period with which we are concerned, three successive orders were made by the Government specifying the prices arid in each case there was an increase. The first increase in prices took effect on 27/07/1947, the second on or about 6/12/1947 and the third on 21/11/1948. On the dates on which each of these orders came into force, each appellant had lying with him in stock certain quantity of rice. This had been procured by the agents earlier and therefore at the then prevailing lower purchase price. The appellants had to sell this rice at the new increased price and hence became automatically entitled to a larger sum than they were before the increase. The enhancement of the procuring agents' profit was entirely due to the government action in increasing the prices and the government thought that they were not entitled to it and insisted that the excess sums should be paid to it by them. The appellants paid these moneys to the government under protest and it is for the recovery of the moneys so paid that, broadly speaking, the suits were filed.
(3.) NOW various methods had been employed by the government for realising these excess amounts which have been described in these proceeding as 'surcharges'. Thus in some cases the procuring agents or wholesalers refusing to pay were threatened with cancellation of their licences and to avoid this they made the payments. In other cases, these surcharges were deducted from moneys payable by the government to them for rice supplied by them. The third method which concerned the increase made in November 1948 was to requisition the stock of rice lying with the procuring agents on the day immediately preceding the coming into force of the increased price at the rate then obtaining and thereafter releasing such rice to the procuring agents only upon their paying the surcharge or on their executing an agreement to pay the same. It is clear that if the government was not entitled to the amount of the surcharge, it could not retain the moneys paid by the appellants to it on that account. The principal question is, Was the government entitled to those moneys ? In regard to the moneys collected except by the method of requisition and release, the government's contention was that the appellants were its agents and that being so, any excess amount which was coming to them as a result of the orders was profit made by them in connection with the business of the agency for which they were liable to account to the government. It was also said that if the appellants were not the government's agents strictly speaking, they at least stood in a fiduciary relationship to it which made them liable to account for the extra profit. My learned brother Ayyangar has dealt with this question and there is nothing that I have to add to that. I am in full agreement with his view that no relationship of principal and agent or of a fiduciary character had ever come into existence between the appellants and the government. I wish, however, to observe that I do not see how, even if the appellants were the government's agents, government was entitled to the extra profit. Admittedly under the contract between a procuring agent and the government, even if that contract was of agency, the procuring agent was to procure and sell rice at the prices fixed and prevailing at the time respectively of the procurement and sale. It is not disputed that the difference belonged to him. It was in fact said that was the commission to which he was entitled under the contract as an agent. If this is so, the procuring agent would under the contract be entitled to keep the larger difference caused by the selling price having been increased after his procurement. Hence it seems to me that under the contract, irrespective of whatever kind it was, the difference, even though it became larger, belonged to the procuring agent and the government had no right to it.;