Authorities in Peddapalli have initiated legal action against rice millers who failed to return custom milled rice to the Food Corporation of India. Two mill owners were arrested as officials intensified measures to recover dues and curb misuse of the CMR system
Published Date – 15 March 2026, 08:22 PM
Peddapalli: The government has begun initiating action against rice millers who failed to return custom milled rice (CMR) in the district. Cases have been registered against defaulting millers based on complaints lodged by officials of the Civil Supplies department.
Apart from registering cases against seven millers, owners of two mills were recently arrested and produced before a court. Paddy worth Rs 490 crore was supplied to various rice mills in the district between 2014-15 and 2023-24. Instead of milling the paddy and returning the rice to the Food Corporation of India (FCI) within the stipulated time, some millers allegedly sold the CMR rice in the open market and amassed money.
The millers claimed they suffered losses due to the supply of discoloured and soaked paddy. However, when officials conducted inspections and issued notices to the mills, paddy worth Rs 266 crore was returned. About 47 rice millers are yet to return paddy worth Rs 222 crore to the FCI. As they failed to respond even to notices issued by the Civil Supplies department, a penalty of 25 per cent was imposed on them, increasing the amount to Rs 354 crore.
Despite being given sufficient time, the millers did not return the rice. Consequently, the government initiated legal action and registered cases against seven mills. Two mills from Godavarikhani and three from Manthani were booked eight years ago, while a case was registered against a mill from Sultanabad last year. In a recent development, a case was registered against Sai Mahalaxmi Industries, Sultanabad, for failing to return paddy worth Rs 19.89 crore (6,165.35 metric tonnes). The owner of the mill was arrested and produced before the court.
On Thursday, police also arrested the owner of Vijayasri Rice Mill in Peddapalli for defaulting on paddy worth Rs 4.49 crore. Officials said the CMR system had become a source of easy gains for some millers, enabling them to invest the money in other businesses without using their own funds. Instead of returning rice to the FCI, they allegedly sold it in the open market and diverted the proceeds.
While some millers reportedly invested the money in the real estate sector, others purchased gold, and a few even travelled abroad. To curb such practices, the government has introduced a 25 per cent bank guarantee system.
