Tuesday, January 24, 2012

WEST U.P. SUGAR MILLS ASSOCIATION & ORS.V/s.STATE OF UTTAR PRADESH & ORS.-Civil Appeal No. 7509-7510 of 2005-January 17, 2012

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7508 OF 2005

WEST U.P. SUGAR MILLS ASSOCIATION & ORS. ...Appellants

Versus
STATE OF UTTAR PRADESH & ORS. ...Respondents


WITH  Civil Appeal No. 7509-7510 of 2005

[BASTI SUGAR MILLS CO. LTD. V. STATE OF U.P. & ORS.]
Civil Appeal No. 150 of 2007

[WEST U.P. SUGAR MILLS ASSN. & ORS. V. STATE OF U.P. &ORS.]
Civil Appeal No. 2664 of 2007

[BAJAJ HINDUSTAN LTD. V. STATE OF U.P. & ORS.]
Civil Appeal No. 4026 of 2009

[KISAN MAZDOOR SANGATHAN V. BASTI SUGAR MILLS CO.LTD. & ORS.]
Civil Appeal No. 4024 of 2009

[COOP. CANE DEVT. UNION LTD. V. BASTI SUGAR MILLS CO. LTD. & ORS.]
Civil Appeal No. 4025 of 2009

[SHAHKARI GANNA VIKAS SAMITI LIMITED V. BASTI SUGAR MILLS CO.LTD. & ORS.]
Civil Appeal Nos. 4014-4023 of 2009

[STATE OF U.P. & ANR. V. BASTI SGUAR MILLS CO. LTD. &ORS.]

Contempt Petition (C) No. 169 of 2006 in C.A. No.7508/2005

[STATE OF U.P. & ANR. V. S.K. KANORIA & ORS.]
Contempt Petition (C) No.253 of 2007 in C.A. No.7508/2005

[U.P. CANE UNION FEDERATION LTD. V. S.K. KANORIA &ANR.]
Contempt Petition (C) No. 254 of 2007 in C.A. No.7508/2005

[U.P. CANE UNION FEDERATION LTD. V. SATYAJEET SINGH MAJITHIA & ANR.]
Civil Appeal Nos. 3911-3912 of 2009

[TIKAULA SUGAR MILLS LTD. & ORS. V. STATE OF U.P. &ORS.]
Civil Appeal No. 3925 of 2009

[BAJA HINDUSTHAN LTD. & ANR. V. STATE OF U.P. & ORS.]
Civil Appeal Nos. 3996-3997 of 2009

[M/S UTTAM SUGAR MILLS LTD. & ORS. V. STATE OF UTTARKHAND & ORS.]
Contempt Petition (C) Nos.263-264 of 2008 in C.A. Nos.3996-3997/2009

[COOP. CANE DEV. UNION, UTTARAKHAND V. RAJ KUMAR ADLAKHA & ANR.]
Contempt Petition (C) Nos.265-266 of 2008 in C.A. Nos.3996-3997/2009

[[COOP. CANE DEV. UNION. UTTARAKHAND V. MANMOHAN SHARMA]

Contempt Petition (C) Nos.267-268 of 2008 in C.A. Nos.3996-3997/2009

[COOP. CANE DEV. UNION, HARIDWAR, UTTARAKHAND V S.M. MITTAL & ANR.]
Civil Appeal No. 4764 of 2009

[WEST U.P. SUGAR MILLS ASSN. & ORS. V. STATE OF U.P. & ORS. SLP(C) NO. 21576-21581 of 2008

[U.P. CO-OPERATIVE CANE UNION FEDERATION V. BASTI SUGAR MILLS CO. LTD. & ORS.] SLP(C) NO. 21585-21587 of 2008

[STATE OF U.P. & ANR. V. BASTI SUGAR MILLS CO. LTD. &ORS.] SLP(C) NO. 18681 of 2008

[[EAST U.P. SUGAR MILLS ASSOCIATION & ORS. V. STATE OF U.P. & ORS.]

SLP(C) NO. 19183 of 2008

[M/S. MAWANA SUGARS LTD. V. STATE OF U.P. & ORS.]

(With prayer for interim relief)
SLP(C) NO. 20205 of 2008

[MODI SUGAR MILLS & ANR. V. STATE OF U.P. & ORS.]
SLP(C) NO. 20206 of 2008

[M/S SBEC SUGAR LIMITED & ANR. V. STATE OF U.P. &ORS.]
SLP(C) NO. 23202 of 2008

[KISAN MAZDOOR SANGATHAN V. BASTI SUGAR MILLS CO.LTD. & ANR.]
SLP(C) NO. 26026 of 2008

[UTTAM SUGAR MILLS LIMITED & ANR. V. STATE OF UTTARKHAND & ORS.]

J U D G M E N T



Dalveer Bhandari, J.


1. The crucial issue involved in this group of matters is



whether the State of Uttar Pradesh has the authority to fix the



State Advised Price (for short, `SAP'), which is required to be


4




paid over and above the minimum price fixed by the Central



Government?




2. It is submitted by the appellants that the power to



regulate distribution, sale or purchase of cane under Section



16 of the U.P. Sugarcane (Regulation of Supply and Purchase)



Act, 1953 (hereinafter referred to as the `U.P. Sugarcane Act')



does not include the power to fix a price. According to the



appellants, this aspect has been comprehensively dealt with



by the Constitution Bench judgment of this court in Ch. Tika


Ramji and others etc. v. State of Uttar Pradesh and


others (1956) SCR 393. In this case this Court enumerated


the legislative history of laws relating to sugar and sugarcane



of both Centre and States. This Court came to the specific



conclusion that the power reserved to the State Government to



fix the minimum price of sugarcane which existed in U.P. Act



1 of 1938 was deleted from the U.P. Sugarcane Act since that



power was being exercised by the Centre under Clause 3 of the



Sugar and Gur Control Order, 1950. The relevant paragraphs



from pages 422, 433 and 434 of the Tika Ramji's case are



reproduced as under:


5




"... ... ...Even the power reserved to the State

Government to fix minimum prices of sugarcane

under Chapter V of U.P. Act I of 1938 was deleted

from the impugned Act the same being exercised by

the Centre under clause 3 of Sugar and Gur Control

Order, 1950, issued by it in exercise of the powers

conferred under Section 3 of Act XXIV of 1946. The

prices fixed by the Centre were adopted by the State

Government required under rule 94 was that the

occupier of a factory or the purchasing agent should

cause to be put up at each purchasing centre a notice

showing the minimum price of cane fixed by the

Government meaning thereby the Centre. The State

Government also incorporated these prices which

were notified by the Centre from time to time in the

forms of the agreements which were to be entered

between the cane growers, the cane growers

cooperative societies... ... ..."



... ... ... ...



"... ... ...As we have noted above, the U.P. State

Government did not at all provide for the fixation of

minimum prices for sugarcane nor did it provide for

the regulation of movement of sugarcane as was

done by the Central Government in clauses (3) and

(4) of the Sugarcane Control Order, 1955. The

impugned Act did not make any provision for the

same and the only provision in regard to the price of

sugarcane which was to be found in the U.P.

Sugarcane Rules, 1954, was contained in Rule 94

which provided that a notice of suitable size in clear

bold lines showing the minimum price of cane fixed

by the Government and the rates at which the cane

is being purchased by the centre was to be put up by

an occupier of a factory or the purchasing agent as

the case may be at each purchasing centre. The

price of cane fixed by Government here only meant

the price fixed by the appropriate Government which

would be the Central Government, under clause 3 of

the Sugarcane Control Order, 1955, because in fact


6




the U.P. State Government never fixed the price of

sugarcane to be purchased by the factories. Even

the provisions in behalf of the agreements contained

in clauses 3 and 4 of the U.P. Sugarcane Regulation

of Supply and Purchase Order, 1954, provided that

the price was to be the minimum price to be notified

by the Government subject to such deductions, if

any, as may be notified by the Government from time

to time meaning thereby the Central Government, the

State Government not having made any provision in

that behalf at any time whatever. ... ... ..."




3. It has been specifically held in Tika Ramji's case that



there was no power to fix a price for sugarcane under the U.P.



Sugarcane Act or rules and orders made thereunder.




4. It is also submitted by the appellants that even if such a



power had existed under Section 16 of the U.P. Sugarcane Act,



even then such power would be totally repugnant to the power



of the Central Government to fix the minimum price under



clause 3 of the Sugarcane Control Order, 1955. This Court in


Tika Ramji's case has not commented on whether such a


power with the State Government would be repugnant to the



Central legislation, since it found no such power with the



State Government, however, the majority judgment in the later



Constitution Bench judgment of 2004 in U.P. Cooperative


7




Cane Unions Federations v. West U.P. Sugar Mills


Association and others (2004) 5 SCC 430 held as under:


"The inconsistency or repugnancy will arise if the

State Government fixed a price which is lower than

that fixed by the Central Government. But, if the

price fixed by the State Government is higher than

that fixed by the Central Government, there will be

no occasion for any inconsistency or repugnancy as

it is possible for both the orders to operate

simultaneously and to comply with both of them. A

higher price fixed by the State Government would

automatically comply with the provisions of sub

clause (2) of clause 3 of the 1966 Order. Therefore,

any price fixed by the State Government which is

higher than that fixed by the Central Government

cannot lead to any kind of repugnancy."




5. According to the appellants, the aforementioned



conclusion of the U.P. Cooperative Cane Unions


Federations is contrary to Tika Ramji's case.




6. We have heard learned counsel for the parties at length.



We have also carefully perused and analysed both the



aforementioned judgments delivered by the two Constitution



Benches of this Court in Tika Ramji and U.P. Cooperative


Cane Unions Federations's cases.




7. In our considered view, there is a clear conflict in the



aforementioned judgments of the Constitution Benches. It


8




may be pertinent to mention that almost every year a spate of



petitions are filed before the Allahabad High Court and



thereafter before this Court on similar issues and questions of



law. Therefore, in the interest of justice, it is imperative that



the conflict between these judgments be resolved or decided by



an authoritative judgment of a larger Bench of this Court.




8. The learned counsel for the appellants in one voice



asserted that these cases be referred to a larger Bench so that



at least in future the parties would have benefit of a clearer



enunciation of law by an authoritative judgment of a larger



Bench.




9. Following questions of law may be considered by a larger



Bench of this Court:



1) Whether by virtue of Article 246 read with



Entry 33 of List III to the Seventh Schedule of



the Constitution the field is occupied by the



Central legislation and hence the Central



Government has the exclusive power to fix the



price of sugarcane?


9




2) Whether Section 16 or any other provision of



the U.P. Sugarcane (Regulation of Supply and



Purchase) Act, 1953 confers any power upon



the State Government to fix the price at which



sugarcane can be bought or sold?




3) If the answer to this question is in the



affirmative, then whether Section 16 or the



said provision of the U.P. Sugarcane



(Regulation of Supply and Purchase) Act, 1953



is repugnant to Section 3(2)(c) of the Essential



Commodities Act, 1955 and Clause 3 of the



Sugarcane (Control) Order, 1966? and if so,



the provisions of the Central enactments will



prevail over the provisions of the State



enactment and the State enactment to that



extent would be void under Article 254 of the



Constitution of India.




4) Whether the SAP fixed by the State



Government in exercise of powers under



Section 16 of the U.P. Sugarcane (Regulation


1




of Supply and Purchase) Act, 1953 is arbitrary,



without any application of mind or rational



basis and is therefore, invalid and illegal?




5) Does the State Advisory Price (for short `SAP')



constitute a statutory fixation of price? If so, is



it within the legislative competence for the



State?




6) Whether the power to fix the price of



sugarcane is without any guidelines and



suffers from conferment of arbitrary and



uncanalised power which is violative of Articles



14 and 19 (1) (g) of the Constitution of India?




10. We are conscious of the fact that ordinarily a Bench of



three Judges should refer the matter to a Bench of five



Judges, but, in the instant case since both the aforementioned



conflicting judgments have been delivered by the Constitution



Benches of five Judges of this Court and hence this



controversy can be finally resolved only by a larger Bench of at



least seven Judges of this Court.


1




11. Recently, a three-Judge Bench of this court in Mineral


Area Development Authority and others v. Steel Authority


of India and others (2011) 4 SCC 450 dealt with somewhat


similar situation and this Court in para 2 of the said judgment



observed as under:



"Before concluding, we may clarify that normally the

Bench of five learned Judges in case of doubt has to

invite the attention of the Chief Justice and request

for the matter being placed for hearing before a

Bench of larger coram than the Bench whose

decision has come up for consideration (see Central

Board of Dawoodi Bohra Community v. State of

Maharashtra (2005) 2 SCC 673). However, in the

present case, since prima facie there appears to be

some conflict between the decision of this Court in

State of W.B. v. Kesoram Industries Ltd. (2004)

10 SCC 201 which decision has been delivered by a

Bench of five Judges of this Court and the decision

delivered by a seven-Judge Bench of this Court in

India Cement Ltd. v. State of T.N. (1990) 1 SCC

12, reference to the Bench of nine Judges is

requested. The office is directed to place the matter

on the administrative side before the Chief Justice

for appropriate orders."




12. Reference of these matters to a larger Bench is made so



that the controversy which arises almost every year is settled



by an authoritative judgment of a larger Bench of this Court.




13. However, in the peculiar facts and circumstances of these



cases, we direct the sugar factories to pay the balance


1




outstanding principal amount to the cane growers or to the



cooperative societies according to the SAP of the relevant



crushing seasons. In other words, in all those cases where the



sugar factories and other buyers have not paid the balance



outstanding principal amount to the cane growers or to the



cooperative societies because of the stay orders obtained by



them from this Court or from the High Court, they are now



directed to pay the balance outstanding principal amount



according to the SAP as fixed by the State Government from



time to time. All the stay orders granted by this court or by



the High Court are modified/vacated in the aforesaid terms.



Let the balance outstanding principal amount be paid by the



sugar factories within three months from the date of this



judgment.




14. In case the balance outstanding principal amount, as



directed by this Court, is not paid within three months from



the date of this judgment then the sugar factories/buyers



would be liable to pay interest at the rate of 18% per annum



on the delayed payment to the cane growers or to the



cooperative societies, as the case may be.


1





15. It is made clear that the payment of the balance



outstanding principal amount by the sugar factories is of



course without prejudice to the main submissions advanced



by them (sugar factories) that the State Government lack



legislative competence to impose the SAP.




16. It may be pertinent to mention that all these cases are



covered by separate individual agreements where the sugar



factories had undertaken to pay the SAP to the cane growers.



We are not examining the veracity of these agreements.




17. It may be relevant to note that the SAP has been



continuously increasing every year. In all those cases, where



for any reason, the SAP was not fixed in a particular year,



then, the sugar factories/buyers would be liable to pay the



balance outstanding principal amount to the cane growers at



the rate of the SAP of the previous year. On consideration of



all the facts and circumstances of these cases, we request



Hon'ble the Chief Justice of India to refer these matters to a



larger Bench, preferably to a Bench consisting of seven



Judges.


1




18. All these Civil Appeals and other petitions are accordingly



referred to a larger Bench.





...............................J.

(Dalveer Bhandari)





..............................J.

(T.S. Thakur)





..............................J.

(Dipak Misra)


New Delhi;

January 17, 2012


No comments:

Post a Comment