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Cites 10 docs - [View All]
The Essential Commodities Act, 1955
Modi & Co vs Union Of India on 7 December, 1967
The Panipat Co-Operative Sugar ... vs The Union Of India on 6 November, 1972
Shri Sitaram Sugar Company ... vs Union Of India & Ors on 13 March, 1990

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Delhi High Court
Mahalakshmi Sugar Mills Co. Ltd. ... vs Union Of India (Uoi) And Ors. on 2 September, 1998
Equivalent citations: 75 (1998) DLT 760
Author: D Gupta
Bench: D Gupta, K Ramamoorthy

JUDGMENT

Devinder Gupta, J.

1. This writ petition was instituted on 11.6.1974. The petitioner prayed for; (a) quashing of the Sugar (Price Determination for 1973-74 Production) Order, 1973 (Annexure A) along with Amendment Order, 1973 (Annexure B) and the Release Orders, (Annexures C colly.) and all other orders directing petitioner No. 1 not to sell the sugar at Rs. 157.83 per quintal, which is less than the cost of sugar production amounting to Rs. 210.37 per quintal; and (b) commanding respondent No. 1 to forbear to give effect to the said Sugar (Price Determination for 1973-74 Production)Order, 1973, Amendment Order, 1973 and Release Orders (Annexures A to C) and to fix the price of sugar based on cost of production of Rs. 210/- per quintal.

2. The petitioner admittedly owns and operates sugar factory, Mahalakshmi Sugar Mills in Iqbaipur, District Saharanpur, located in the State of Uttar Pradesh and is engaged in the business of manufacture of sugar. It is alleged that prior to 1955, price of sugar had been subject to various controls imposed from time to time by respondent No. 1. Duringl958-59 to 1960-61, prices of sugar were controlled under various Sugar Control Orders. With effect from 28.9.1961, all controls over prices, distribution and movement of sugar were removed. Again w.e.f. 19.4.1963, prices were brought under control which continued during 1964-65 to 1966-67. It is claimed that the prices from 1955 to 1973 were inadequate and unrealistic. Government of India with a view to determine the cost of sugar production referred the matter to various Sugar Committees from time to time. In 1958, Tariff Commission was requested to conduct an inquiry into the cost structure. In August, 1964, Government appointed Sugar Inquiry Commission. Action of the respondents was subjected to challenge and ultimately Supreme Court in Panipat Cooperative Sugar Mills v. Union of India, and Anakapalle Co operative Agricultural and Industrial Society Limited v. Union of India, upheld the validity of price fixation of levy sugar vide Sugar Control (Price Determination for 1971-72 Production) Order, 1971 on the basis of the recommendation and cost structure prepared by Tariff Commission in its report of 1969. Supreme Court further upheld the fixation of levy sugar prices on zonal basis. It was also held that sugar manufacturers must be given a reasonable return after taking into account the overall position of the sugar manufactured in the concerned year. Government of India again fixed price of sugar for 1972-73, which was also challenged in various Courts. The matter was stated to be pending, when writ petition was filed. It is also alleged that Government of India made further reference to Tariff Commission in 1972, which submitted its report in September, 1973, which was accepted by Government of India on 22.2.1974. Before the recommendations were made and accepted by Government of India, on 30.11.1973, Sugar (Price Determination for 1973-74 Production) Order, 1973 (Annexure A) (hereinafter referred to as the Sugar Control Order, 1973) was issued under Sub-section (3C) of Sections of Essential Commodities Act. Under the above Sugar Price Determination Order, 1973, prices of sugar to be acquired from sugar manufacturers including that of petitioner No. 1 were fixed for different grades as follows: Schedule-I

Ex-factory prices (Rupees per quintal) Grade-wise for I.S.S. Grades (Exclusive of Excise duty).

Area

A-30

D-30

E-30

A-29

D-29

E-29

B-30

B-29

C-30

C-29

(1)

(2)

(3)

(4)

(5)

(6)

(7)

West

154.62

153.47

152.93

153.62

152.62

152.12

UP

3. It is alleged that on 14.12.1973, respondent No. 1 amended the earlier Notification under which prices were fixed as follows: Schedule-I

Ex-factory prices (Rupees per quintal) Grade-wise (Exclusive of Excise duty). for I.S.S. Grades

Area

A-30

D-30

E-30

A-29

D-29

E-29

B-30

B-29

C-30

C-29

(1)

(2)

(3)

(4)

(5)

(6)

(7)

West

159.83

158.68

158.13

158.83

157.83

157.33

UP

4. It is also alleged that the petitioner's factory is located in Western U.P. where there are 19 sugar factories. The levy price has been fixed for all 19 factories. Challenge in the petition is to the aforementioned Sugar Price Determination Orders, 1973, as amended by subsequent Notification (Annexures A and B), on various grounds, inter alia, that levy price fixed by the respondent is inadequate and much less the actual cost of sugar production. Minimum statutory sugar cane prices were not taken into consideration and the same are not in accordance with the guidelines contained in Sub-section (3C) of Section 3 of Essential Commodities Act The respondent while fixing levy price of sugar in West U.P. Zone ought to have taken into account the cost of sugar production for 1972-73. Sugar prices fixed by the impugned notifications do not provide for the cost of sugar production and suitable or reasonable return of all the components. Rather it compels petitioner No. 1 to sell such sugar at much lower price than that of the cost of sugar production. Thus, the sugar price fixed is inadequate, imaginary, arbitrary and unjust.

5. The writ petition has been pending and as per the order dated 18.7.1977, it was directed to be heard with CW No. 772/74 (Gangeshwar Limited v. Union of India), Common counter-affidavit was filed.

6. It was pointed out that the aforementioned CW No. 772/74 was decided on 25.7.1997 and was allowed. The respondents were directed to amend the impugned notifications taking into account the relevant factors mentioned in Section 3(3C) of the Act. The respondents in the said writ petition were allowed time till 21.10.1997 to issue amended notification in the light of the decision of the Supreme Court in Shri Malaprabha Co-operative Sugar Factory Limited v. Union of India and Anr., .

7. Learned Counsel for the petitioner contended that in the light of the Gangeshwar limited case (supra), the present writ petition also deserves to be allowed with similar directions. Learned Counsel for the respondent urged that while deciding CW No. 772/74, judgment of Supreme Court in Shri Malaprabha's case (supra) was not fully appreciated. In Malaprabha's case (supra), Hon'ble Supreme Court had considered the impact of Clause 5-A, which is not at all applicable to the facts of the instant case. Applying the ratio of Malaprabha's case (supra) along with decision in the cases of Panipat Cooperative Sugar Mills; and Anakapalle Cooperative Agricultural and Industrial Society Limited case (supra) and that of Allahabad High Court in Modi Industries Limited and Anr. v. Union of India and Ors. (CW No. 1169/74) decided on 20.10.1976, the petition deserves to be dismissed.

8. Learned Counsel for the petitioner in response to the submissions of learned Counsel for the respondent contended that the decision of this Court in CW 772/74, Gangeshwar Limited (supra) has become final as no appeal was preferred and it does not lie in the mouth of the respondent now to contend that this Court should take a different view in this than the one taken in Gangeshwar Limited's case (supra). The decision in Gangeshwar Limited case amounts to res-judicata and estops the respondent from challenging the same.

9. Having considered the submissions made at the Bar and gone through the affidavits and the decisions cited, we are of the view that the petition deserves dismissal.

10. In the instant case, challenge is only to the Sugar (Price Determination for 1973-74 Production) Order, 1973 and the amended Notification (Annexures A and B). As the amended Notification dated 15.12.1974 (Annexure B) superseded the earlier Notification dated 28.11.1973 (Annexure A), therefore, it is the (Sugar Price Determination for 1973-74 Production) Order, as amended by Notification dated 15.12.1974, which is under challenge in this petition. Needless to add that in the case of Modi Industries Limited & Anr. (supra), the same Price Determination Order was under challenge by M/s Modi Industries Limited, which is one of the 19 factories located in West U.P. the Allahabad High Court in its judgment dated 20.10.1976, on the ratio of the decisions in Panipat Cooperative Sugar Mills' case and Anakapalle Co-operative Agricultural and Industrial Society Limited's case (supra)held: "We, therefore, in agreement with the contention of the learned Counsel for the respondent, find that the reasonable return on the capital provided in clause (d) of Sub-section (3C) means the return on the whole of the sugar production. In this year, the return/ which was provided by the Central Government, was Rs. 12.80 paise. This refers the sugar as whole and not only to levy sugar as such or to levy sugar and free sugar individually, the consideration of return, therefore, cannot be consigned to levy sugar, and the actual return secured by the petitioner in this season on the whole of its production can be seen for the purpose of finding whether it is entitled to revision of the Price Determination Order and any relief from this Court, as stated above, the cost of production per quintal incurred by the petitioner in this year was Rs. 209.44 paise, whereas the average realisation from sale of sugar was Rs. 214.30 paise. Accordingly, the petitioner having gained more than what it was entitled to under Sub-section (3C) is not entitled to any relief. The Central Government has acted, in the instant case, in conformity the scheme of Clauses (a) to (d) of Sub-section (3C)."

11. In Shri Malaprabha Co-operative Sugar Mills' case (supra) for the year 1975-76, the three Sugar Price Control Orders and for the year 1977-78, two Sugar Control Orders were under challenge. The Sugar Control Order of 1973 for 1973-74, which is the subject matter of this petition, was not under challenge. When Gangeshwar Limited case (CW No. 772/74) was heard, as it will appear from the judgment that the fact that the Sugar Control Order of 1973 for 1973-74 was not under challenge in Shri Malaprabha's case, was neither taken note of by us nor was brought to our notice. Obviously, our attention could not be drawn as learned Counsel for the respondent therein was not ready with the arguments and had sought adjournment, which we had declined. In ignorance of the fact that the Sugar Control Order, 1973 or the Amended Order of 1973 was not under challenge in Shri Malprabha Co-operative Sugar Mills' case (supra) before the Supreme Court and on the erroneous assumption that the said Orders of 1973 were under challenge, directions as were issued in Shri Malaprabha Cooperative Sugar Mills' case, were issued in the said case. Shri Malaprabha Co-operative Sugar Mills' case cannot be made applicable to the facts and circumstances of the instant case, as mainly it was impact of Clause 5-A of the Sugar (Control) Order, which was promulgated on the basis of the recommendation of the Bhargava Commission Inquiry Report, 1974, which was considered in Malaprabha's case. This Clause 5-A of the Sugar (Control) Order had been promulgated subsequent to the Sugar Control Order of 1973. Clause 5-A of Sugar Cane Control Order became effective from 25.9.1974. The impugned Notification dated 28.11.1974 in Malaprabha's cases was upheld. The other Notifications were not upheld for which we may make reference to para-99 of the decision which reads: "In view of the above discussion, the impugned notifications except the one dated 28.11.74 cannot be upheld. The reason why we leave out the notification dated 28.11.74 is that the same came to be issued before the new pricing policy was introduced. We hereby direct the Union of India to amend the notifications taking into account the liability of the manufacturers under Clause 5A of the Sugarcane (Control) Order as regards cane price and refix the price of levy sugar having regard to the factors mentioned in Section 3(3c) of the Act The Government will have time to issue the amended notifications as directed above till 31st of December, 1993."

12. As we find from the counter-affidavit filed in the instant case, Government had applied its mind to the factors mentioned in Clauses (a) to (d) of Sub-clause (3C) of Sections of Essential Commodities Act, which are the relevant factors for determination of prices with due regard to the norms laid down in the said subsection. Therefore, in view of decisions in Panipat Co-operative Sugar Mills' case; Anakapatle Co-operative Agricultural and Industrial Society Limited's case; Sitaram Sugar Company Limited v. Union of India, and that of Allahabad High Court in M/s. Modi Industries Limited case (supra), there is no force in the instant petition.

13. The contention of learned Counsel for the petitioner that our decision in Gangeshwar Limited case (supra) amounts to res-judicata, has also no force since the said decision was rendered by ignoring the dictum of Shri Malaprabha Cooperative Sugar Mills' case (supra)and for the purpose of the instant case, the said decision in Gangeshwar Limited case has to be taken as per inquriam. Consequently, the writ petition is dismissed with no order as to costs.