B. SUDERSHAN REDDY, J.

( 1 ) IN this second round of litigation the constitutional validity of Section 12-A of the andhra Pradesh Co-operative Societies Act, 1964 (Act No. 7 of 1964) (for short the Act ) as substituted by Act No. 16 of 2003 is once again challenged and put in issue. The attack is based upon more or less similar grounds that were raised in the previous round of litigation that resulted in the decision in M. Krishnama Naidu and others v. State ofa. P. Factual backdrop:

( 2 ) THE petitioners herein are mainly aggrieved by the action of the respondents in proposing to transfer the assets or assets and liabilities of the co-operative sugar factories in question, in whole or in part, to any other society or person, etc. The orders passed by the Registrar of Co-operative societies, Andhra Pradesh under section 12-A (1) of the Act in purported public interest are challenged; and so also the consequential proceedings about which we shall refer in detail hereinafter.

( 3 ) IN M. Krishnama Naidu, this Court noticed the background facts leading to the policy decision of the State Government to make a provision for transfer of assets and liabilities of sick co-operative sugar factories to non-co-operative institutions by suitably amending the Act. We do not propose to burden this judgment by reincorporating those background facts leading to the policy formulation by the State Government.

( 4 ) THERE is no dispute that for whatever reason most of the sugar factories in the co-operative sector are continuously incurring losses resulting in erosion of their net worth. The losses may be for a variety of reasons, such as cyclical nature of industry, high cost of production and untimely expansion of some of the units. The market forces to whom the unlimited freedom appears to have been granted in the wake of ongoing process of globalisation may have made their own contribution.

( 5 ) THE State Government claims to have invested Rs. 146 crores in the share capital of 18 co-operative sugar factories in the state. These co-operative sugar factories, according to the State, owe an amount of rs. 87 crores as dues to various financial institutions, State Government and Sugar development Fund. The accumulated losses in 14 co-operative sugar factories, which are in operation, are to a tune of about rs. 198 crores.

( 6 ) THE petitioners and respondents blame each other for this unfortunate situation in which the sugar factories in the co-operative sector are placed practically resulting in their extinction. The entrustment of the management of the affairs of the co-operative sugar factories to the officers of the State Government in the place of elected management, according to the petitioners, resulted in colossal loss on account of mismangement by the said official persons in-charge. It is unnecessary to further dilate on this issue.

( 7 ) THE Central Government in exercise of its power under the provisions of the essential Commodities Act, 1955 has issued several Control Orders regulating the production, distribution, etc. , of the sugar and sugarcane. Under clause (3) of the sugarcane (Control) Order, 1966, the central Government is authorised to fix minimum price of the sugarcane to be paid by the producers or their agents for the sugarcane purchased by them. The price so fixed by the Central Government is called statutory Minimum Price (SMP ).

( 8 ) THE State Government fixed the State advisory Price (SAP) in the perceived interest of the farmers and in order to sustain the sugar industry itself. There is no dispute that the SAP fixed by the State Government is more than the SMP fixed by the Central government in exercise of the power under clause (3) of the Control Order, 1966. A division Bench of the this Court is government of Andhra Pradesh v. KCP sugars and Industries Corporation Limited declared that the State Government has no such power whatsoever to fix any SAP over and above the SMP fixed by the Central government.

( 9 )

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