The court affirmed the validity of the Essential Commodities Act, ruling that "fair price" is a sufficient principle for compensation under Art 31(2) and that "published figures" for price determination must be generally available to the public, excluding private account books.

Headnote:(A) Essential Commodities Act, 1955 - Section 3(1), 3(2)(c), 3(3A) - Constitution of India - Articles 14, 19(1)(f), 19(1)(g), 31(2) - Control of prices and procurement of foodstuff - Validity of the Act - The provisions of the Act imposing controls on the acquisition, holding, and disposal of property and the practice of trade are not unreasonable restrictions and do not violate fundamental rights.

(B) Article 14 - Classification of districts for price control - Fixation of maximum prices in surplus producing districts is a valid classification and does not amount to discrimination as it serves the purpose of stabilizing prices.

(C) Article 31(2) - Compensation for requisitioned property - The requirement to provide for compensation is satisfied if the law specifies the principle of "fair price," as the legislature has provided sufficient indication of the principle on which the price should be fixed.

(D) Section 3(3A) - Determination of average market rate - Where no controlled price is fixed, the price is determined by the average market rate prevailing in the locality during the three months preceding the notification. "Published figures" refers to data made generally available to the public, such as through newspapers or radio, and does not include private account books. The use of published figures from the nearest available locality, adjusted for transport and quality, is permissible. The determined average market rate is final and not subject to court questioning unless serious injustice is shown.

Facts of the case:
The Central Government issued notifications under the Essential Commodities Act to control the price of rice and paddy and delegated powers to an officer to procure stocks. Procurement occurred in three phases: first, where no controlled price existed and rates were based on average market rates; second, where a maximum price was fixed; and third, where the maximum price was reduced following the arrival of a new crop. The appellants challenged the validity of the Act and the method of price fixation, arguing that the reduction in price was unfair and that the determination of average market rates was incorrect because the officer did not use the appellants' own account books.

Findings of Court:
The court held that the Act and the notifications issued thereunder are constitutionally valid. The reduction of prices due to the arrival of a new crop reflects normal market economic factors and the risk borne by traders. Regarding price fixation in the absence of a controlled price, the officer correctly relied on published figures from the nearest locality and made necessary adjustments for quality and transport.

Issues: Whether the Act violates Articles 14, 19, and 31(2) of the Constitution; whether the reduction of maximum prices applies to stocks purchased at higher rates; and whether private account books constitute "published figures" for determining average market rates.

Ratio Decidendi: The court reasoned that "fair price" constitutes a valid principle for compensation under Article 31(2). It further held that "published figures" must be interpreted in their ordinary sense as information available to the general public, excluding private ledgers. Market fluctuations, including price drops due to new harvests, are inherent risks of trade and do not violate fundamental rights.

Result: Appeals dismissed.

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Judgment

WANCHOO, J.-These ten appeals on certificates granted by the Andhra Pradesh High Court raise common questions and will be dealt with together. The brief facts necessary for present purposes are these. On June 6, 1957, a notification was issued by the Central Government under s. 3(3A) of the Essential Commodities Act, No. 10 of 1955, (hereinafter referred to as the Act). The notification said that in the opinion of the Central Government it was necessary to control the rise in prices, and prevent the hoarding of rice and paddy in the States and Union territories. Consequently the Central Government directed by the notification that the price at which rice or paddy shall be sold in any locality in the said States and Union territories in compliance with an order made with reference to cl. (f) of sub-s. (2) of the said s. 3 shall be regulated in accordance with the provisions of sub-s. (3A). This order applied amongst other States to the State of Andhra Pradesh and was to be in force for a period of three months. On July 31, 1957, the Central Government made another notification directing that the powers conferred on it by s. 3 of the Act to make orders providing for the matters specified in cl. (f) and for the matters specified in cls. (h), (i) and (j), insofar as they relate to cl. (f) of sub-s. (2) of s. 3 in relation to stocks of rice and paddy held in any locality in the State of Andhra Pradesh shall be exercisable also by Shri K. S. Krishnan, Deputy Director (Food), Government of India, Vijayawada. This order wag also to be in force for three months. Further on the same day the Central Government issued another notification by which in pursuance of cl. (iv) of sub-s. (3A) of s. 3 of the Act, the Central Government authorised the said Shri Krishnan to determine the average market rate of rice and paddy prevailing in any locality in the State of Andhra Pradesh.

On August 20, 1957, Shri Krishnan in exercise of the powers conferred upon him by the notifications mentioned above directed a number of rice millers in Tadepalligudem to sell to the Assistant Director (Food), Government of India, certain quantities and kinds of rice at the price calculated in accordance with cls. (iii) and (iv) of sub-s. (3A) of s. 3 of the Act. In consequence of this order, such quantities of rice as were ordered to be sold were delivered to the Assistant Director (Food) on various dates upto September 13, 1957. It may be mentioned that there was no control of price upto September 13, 1957 and in consequence the price to be paid to the rice millers had to be determined under s. 3 (3A)(iii)(c) read with s. 3(3A) (iv) of the Act. This is the first period with which we are concerned in the present appeals. It may be mentioned that prices are claimed to have been fixed by Shri Krishnan for the rice procured under the orders passed on August 20, 1957 and on subsequent dates in accordance with the provisions of the Act in September 1957. The appellants dispute that the prices have been properly fixed under the provisions of the Act and that is the first matter to be considered in these appeals, the details of which we shall refer to later.

On September 14, 1957, the Central Government issued a notification fixing the maximum price at which rice and paddy of various kinds was to be sold in any one transaction of more than ten maunds in the districts of Krishna, West Godavari and East Godavari in the State of Andhra Pradesh under cl. (c) of sub-s. (2) of s. 3 of the Act. Following this fixation the Deputy Director made requisitions between September 14, 1957 and December 29, 1957 of different varieties of rice from various appellants under the powers vested in him by the notifications already referred to under cl. (f) of sub-s. (2) of s. 3 of the Act and fixed prices therefor. He claims to have fixed price therefor in accordance with s. 3 (3A) of the Act, though actually the maximum prices fixed by the Central Government were paid. The contention of th

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1965 Supreme(SC) 15

The court affirmed the validity of the Essential Commodities Act, ruling that "fair price" is a sufficient principle for compensation under Art 31(2) and that "published figures" for price determination must be generally available to the public, excluding private account books.

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Cases Referred (2)

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