Karnal Rice Mill Defaults: A Decade of Evasion and Enforcement Failures
In a startling revelation from Karnal, Haryana, numerous rice mills have been defaulting on deliveries of custom-milled rice (CMR) to the government for over ten years, accumulating dues of approximately Rs 520 crore. Despite this, these mills have persistently received fresh allocations of paddy, raising serious questions about accountability and enforcement mechanisms in the agricultural procurement sector.
The Core Issue: Persistent Defaults and Lack of Consequences
Following a review of defaulting cases, Deputy Commissioner Uttam Singh established a three-member committee to scrutinize the properties of 58 defaulting millers and their guarantors spanning from 2013-14 to 2024-25. The investigation uncovered that procurement agencies had initiated actions such as filing FIRs, but critically, they failed to auction attached properties to recover the massive dues. This oversight has enabled defaulters to avoid financial penalties and, in many instances, secure new allotments under the CMR scheme by merely altering the names of their mills.
The absence of property auctions has not only allowed existing defaulters to escape consequences but has also encouraged a rise in the number of defaulters over the years. The probe highlighted that without robust recovery measures, millers face minimal repercussions, undermining the integrity of government procurement processes.
Authorities' Failure: The Auction Gap and Its Impact
When rice millers default on delivering CMR, procurement agencies are empowered to recover dues by attaching and auctioning their assets. However, the failure to execute these auctions has severely weakened recovery efforts. Without such financial penalties, defaulters retain control over their assets, often allegedly with the connivance of officials, or shift operations under new identities. This lack of enforcement creates a perverse incentive for others to default, as there are no tangible consequences.
Why Were Attachment and Auction Proceedings Not Completed?
According to the committee's report, procurement agencies did not act swiftly, allowing millers to transfer assets and evade enforcement. Sources indicate that some millers leveraged connections to stall or avoid legal actions, further complicating recovery efforts.
Enforcement Lapses: Ownership Changes and Coordination Failures
Inspections revealed multiple lapses, including mills that had changed ownership, been sold, or were operating under new names at the same locations. In some cases, properties were not attached at all, while in others, they were attached but never auctioned. Instances were noted where properties were transferred or registered without proper departmental consent, pointing to significant coordination failures between government departments.
For example, a mill in Nilokheri cited ongoing arbitration as a reason for not attaching property, but physical verification showed that original owners had already transferred ownership, with another unit operating at the site. In another case, a rice mill that defaulted in 2013-14 with dues of about Rs 7.75 crore was sold in 2019-20. Although authorities claimed the owners were jailed and released, field inspections found the land had been levelled, and the concerned department no longer held possession.
Steps Toward Resolution: Auctioning Properties and Fixing Accountability
District Food Supplies Controller Mukesh Kumar stated that efforts are underway to auction properties and hold individuals accountable for defaults and enforcement lapses. He emphasized that the process is ongoing and all attached properties will soon be auctioned to recover dues and restore credibility to the system.
This situation underscores the urgent need for stricter enforcement and transparency in government procurement to prevent such large-scale defaults and ensure fair practices in the agricultural industry.
