CAG report: ‘Haryana procurement agency favoured millers’

The Comptroller and Auditor General (CAG) has blamed the Haryana Agro-Industries Corporation (HAIC) for not conducting regular physical verification of paddy stocks, a violation of state government guidelines, resulting in misappropriation of paddy by the miller.

The auditors in their report said the HAIC favoured the miller by not encashing cheques and delaying legal actions to recover its dues which resulted in loss of ₹6.64 crore.

Though the corporation was required to carry out 16 physical verifications between November 2017 to June 2018, it did the first physical verification only on May 25, 2018, when shortage of 1,687 metric tonne custom milled rice (CMR) was found, the audit observed.

The HAIC issued notice to miller on May 4, 2019, after one year to supply the balance CMR and return of bardana and other stocks lying with the miller intimating the recovery of ₹6.02 crore along with interest. Had the company conducted physical verification of stocks fortnightly, it could have come to know the status regarding maintenance of the ratio for delivery of CMR and its own milling of rice.

Further, it could have shifted the un-milled paddy to the other millers as per milling guidelines. The signed cheques of ₹2 crore obtained from the miller were not presented to the bank for recovery of its dues till October 2020.

However, the HAIC encashed in December 2019 a fixed deposit receipt of ₹20 lakh after lapse of more than 17 months from the notice of shortage. The HAIC, in October 2019 initiated arbitration proceedings against the miller though cases of fraud, theft or misappropriation were to be dealt through appropriate legal proceedings as per the milling guidelines.

The state government, in its reply, said physical verification could not be done due to shortage of staff. Further, a settlement scheme for all the defaulting rice millers has been introduced in December 2020 for recovery of dues. During exit conference, the HAIC said the matter regarding appointment of arbitrator was pending in the high court and inquiry for lapses by its officials was at final stage. It said efforts for recovery of dues will be made under the settlement scheme.

The auditors, however, said the reply was not acceptable as the HAIC has failed to comply with government guidelines which resulted in misappropriation of paddy by the millers and now the government has brought in a settlement scheme for all the defaulting rice millers to recover some amount. It is recommended that the HAIC fix responsibility for violation of the government guidelines, the audit said.