Banarasi Das vs Cane Commissioner, U. P.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1962 Supreme(SC) 409

SUPREME COURT OF INDIA
S.K. DAS, J.L. KAPUR A.K. SARKAR, M. HIDAYATULLAH AND RAGHUBAR DAYAL, JJ.
Banarsi Das, Appellant
Versus
Cane Commissioner, Uttar Pradesh and another, Respondents.
Civil Appeal No. 226 of 1960.
Advocates appeared
Mr. M. C. Setalvad, Attorney General for India, and Mr. Veda Vyasa, Senior Advocate, (M/s. R.K. Garg, S. C. Agarwal, Shiv Shastri and K.K. Jain. Advocates, with them), for Appellant; Mr. S. T. Desai, Senior Advocate and Mr. K. S. Hajela, Senior Advocate (Mr. C.P. Lal, Advocate, with them) for Respondent 1; Mr. C. K. Daphtary, Solicitor General of India (M/s. Radhey Lal Agarwal and P. C. Agarwalla Advocates, with him) for Respondent No.2

Advocates:
C.K.DAFTARY, C.P.LAL, K.K.JAIN, K.S.Hajela, M.C.SETALVAD, P.C.AGRAWAL, R.GARG, RANHEY LAL AGARWAL, S.C.AGRAWAL, S.T.DESAI, SHIV SHASTRI, Veda Vyasa

Headnote:
CONSTITUTION OF INDIA, 1950 - ARTICLE 14 - EQUAL PROTECTION OF LAWS - ARTICLE 13 - RIGHT TO PROPERTY - U.P. SUGAR FACTORIES CONTROL ACT, 1938 - SECTION 18(2) - AGREEMENT FOR SUPPLY OF SUGAR CANE - FORM PRESCRIBED - SIGNATURE OF PARTIES - WHETHER ESSENTIAL - U.P. SUGAR FACTORIES CONTROL RULES, 1938 - RULE 23 - ARBITRATION - WHETHER DISCRIMINATORY - RULE 23(6) - APPEAL AGAINST AWARD - WHETHER ULTRA VIRES.
Fact of the Case:

The appellant, a lessee and occupier of a sugar mill, entered into an agreement with the respondent, a cane marketing society, for the supply of sugar cane. The agreement was in the form prescribed by the U.P. Sugar Factories Control Act, 1938, and the rules framed thereunder. However, the appellant did not sign the agreement, and there were some blanks in the schedule to the agreement. The respondent moved the Cane Commissioner under Rule 23 of the U.P. Sugar Factories Control Rules, 1938, for arbitration of the dispute arising out of the agreement. The appellant challenged the validity of the arbitration proceedings on the ground that the agreement was not a valid agreement as it was not signed by the appellant and there were blanks in the schedule. The appellant also contended that Rule 23 was discriminatory as it provided two different methods of decision of disputes - one by the Cane Commissioner and the other by arbitration - leaving it to the arbitrary will of the Cane Commissioner to choose which it should be in a particular case. The appellant further contended that the provision in sub-rule (6) of Rule 23, which provided for an appeal against the award of the arbitrators, was beyond the rule-making power of the Provincial Government as no such power was conferred on it by Section 30 of the Act and that sub-rule (6) being unseverable, the whole of Rule 23 must fail.
Finding of the Court:

The Court held that the agreement was a binding agreement as the form prescribed had been used, and the blanks in the schedule were not material as the details were already mentioned in Form No. 10. The Court also held that the absence of the appellant's signature did not render the agreement void as the appellant could not take advantage of his own default. The Court further held that Rule 23 was not discriminatory as the arbitration was purely on a voluntary basis and the parties could not be compelled to go to arbitration against their will. The Court also held that sub-rule (6) of Rule 23 was not ultra vires the Provincial Government as it was within the rule-making power conferred by Section 30 of the Act.
Issues: 1. Whether the agreement between the appellant and the respondent was a valid agreement? 2. Whether Rule 23 of the U.P. Sugar Factories Control Rules, 1938, was discriminatory? 3. Whether sub-rule (6) of Rule 23 was ultra vires the Provincial Government?
Ratio Decidendi: 1. An agreement in the prescribed form is a binding agreement even if it is not signed by the parties and there are some blanks in the schedule, provided the terms of the agreement are not altered or new terms added. 2. Rule 23 of the U.P. Sugar Factories Control Rules, 1938, is not discriminatory as the arbitration is purely on a voluntary basis and the parties cannot be compelled to go to arbitration against their will. 3. Sub-rule (6) of Rule 23 is not ultra vires the Provincial Government as it is within the rule-making power conferred by Section 30 of the Act.
Final Decision: The appeal was dismissed with costs.

Judgment

HIDAYATULLAH, J. : (Majority judgment: Das, Kapur, Sarkar and Hidayatullah, JJ.) : This is an appeal on a certificate granted by the High Court of Allahabad under Article 133 (1) (c) of the Constitution against its judgment and order D/- 2-2-1956* By the judgment, under appeal, which was passed in a Letters Patent Appeal, the Divisional Bench confirmed the order of a learned single Judge dismissing the petition of the appellant under Article 226 of the Constitution. Seth Banarsi Das the appellant before us, was the petitioner in the High Court and the two respondents before us, namely, the Cane Commissioner, U.P., Lucknow, and the Cane Marketing Society Ltd., Bijnor, were the opposite parties. The petition asked for a number of writs in the alternative, but its purport was to seek to prohibit the two respondents from continuing certain proceedings pending before the Cane Commissioner under Rule 28 of the United Provinces Sugar Factories Control Rules, 1938. That rule provides for arbitration in disputes touching agreements entered into by sugar cane factories and cane growers for supply of sugar cane as laid down by the United Provinces Sugar Factories Control Act, 1938.

* Reported in AIR 1956 A11 725 - Ed

2. The facts of the case are as follows :

The appellant was at the material time the lessee and "Occupier" of Shiva Prasad Banarsi Das Sugar Mills, Bijnor, for five years from the crushing season 1946-47 to 1950-51. The second respondent is the Cane Marketing Society Ltd., Bijnor, which is a society registered under the Uttar Pradesh Co-operative Societies Act, and one of its objects is to supply sugar cane grown by its members to the sugar mills. Before the control of sugar cane growers, whether they belonged to a co-operative society or not, sold sugar cane directly to the factories and made supplies from any area as it suited them. The United Provinces Sugar Factories Control Act was passed for the purpose of licensing of sugar factories and for regulating the supply of sugar cane intended for use in such factories and the price at which it may be purchased and for such other matters as may be incidental thereto. The broad outline of the Act and the rules framed thereunder may be given here.

3. Under the Act the control of sugar cane grown in the State was vested in an officer known as the Cane Commissioner and Advisory Committees and Sugar Control Board were to be appointed to advise upon and effectuate control of sugar and sugar cane. There was a scheme for licensing of factories with which we are not concerned in this case. Chapter IV of the Act made provision for regulating the purchase of sugar cane. Under Section 14, the State Government could require the Occupier of any factory to submit to the Cane Commissioner an estimate in the prescribed form and manner of the quantity of sugar cane which would be required in his factory during a crushing season. This estimate was examined by the Cane Commissioner who, after consulting the Advisory Committee in that area, published it with such modifications, if any, as he thought fit to make. Under Section 15 the Cane Commissioner, in consultation with the Advisory Committee (if any) and the Occupier of the factory could issue an order declaring an area to be a reserved area for the purpose of supply of sugar cane to a particular factory. Section 18 then provided as follows :

"18, Purchase of cane in reserved area .

(1) A cane-.grower or a Cane-growers Co-operative Society in a reserved area may offer in the form and by the date prescribed, to supply to the occupier of the factory for which the area is reserved cane grown by the cane grower or by the members of such Cane-growers Co-operative Society as the case may be, not exceeding the quantity, if any, prescribed for such grower or Cane-growers Co-operative Society.

(2) The occupier or manager of a factory for which an area is reserved shall enter into an agreement, in such form, by such date and on such terms and co

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