New Delhi, April 24
The Supreme Court has stayed criminal proceedings against the owners of four rice mills in Punjab in cases arising out of a legal wrangle over the custody of paddy supplied to them by the Punjab Civil Supplies Corporation (PUNSUP) for shelling.

The owners and partners of R.K Rice Mills, Karuna Exports, Sachdeva Traders and another mill, had filed appeals in the apex court against the order of Punjab and Haryana High Court justifying the launch of criminal proceedings against them for criminal breach of trust under Section 405 of the IPC and “entrustment” provisions under Section 363.

While rejecting their petitions for quashing criminal proceedings on November 20, 2006, the High Court had termed the case a major “rice scam”.

A Bench of justices C.K Thakker and Tarun Chatterjee stayed the proceedings against the millers after their counsel Nidesh Gupta said the matter did not fall under the purview of criminal law as it was essentially a civil case but still PUNSUP had launched criminal cases against them.

The court directed the Punjab government and PUNSUP to file reply explaining why the criminal proceedings against them should not be quashed.

Gupta said this was not an isolated instance of launching prosecution against only the four mills whose petitions were rejected by the High Court. Several other identical cases against mill owners were pending in trial courts across Punjab and the High Court is flooded with similar petitions by the mill owners.

The PUNSUP had charged the millers of supplying it rice far less in quantity than the paddy supplied to them for shelling and claimed that this amounted to criminal breach of trust and they were liable to be prosecuted under Sections 405 and 363 of the IPC.

As per the special leave petitions (SLP) moved by the owners of the four mills, there was agreement, essentially a civil contract, between them and the PUNSUP for shelling of paddy according to which they would make good of any loss and pay 21 per cent interest from the date of actual realisation of the due amount on account of this.

The case against the millers is at present pending before the Judicial Magistrate, Rajpura, who had framed charges against them in December 2005.

Besides, there was an “arbitration” clause for settling the dispute arising out of the agreement and the mill owners were supposed to furnish a guarantee bond, Gupta argued when the case was taken up by the court yesterday.

He said his clients had given advance rice to PUNSUP in lieu of the paddy lifted by them, and, therefore, there was no criminal breach of trust.