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1975 Supreme(Kar) 174

Karnataka High Court
INDIA SUGARS and REFINERIES LTD. - Appellant
Versus
UNION OF INDIA - Respondent
Decided On : 12-04-75
W.P. : 432 of 1974

Advocates:
B.G.Naik, B.R.L.IYENGAR, B.TILAK HEGDE, G.R.ETHIRAJULU NAIDU, G.V.SHANTHARAJU, G.VASANTHA PAI, K.A.SWAMY, K.J.SHETTY, M.P.ESVARAPPA, U.L.NARAYANA RAO

Headnote:

Sugar Industry - Validity of Sugar (Price Determination for 1974-75 production) Order, 1974 and Sugar (Price Determination for 1974-75 Production) second Amendment Order, 1975 - Essential Commodities Act, 1955, S. 3(3c), Sugarcane (Control) Order, 1966, C1. 5a - The court quashed the 1975 Order in so far as it related to the Karnataka region and directed the Central Govt to re-determine the price of levy sugar and issue an appropriate notification within four weeks. The petitioners were to be paid for the quantity of levy sugar sold by them after 11-7-1975 at the rates to be determined by the Central Govt. The amount of additional price payable by the petitioners to the canegrowers was to be determined in accordance with the levy price to be fixed by the Central Government within a reasonable time after the issue of the notification.

Fact of the Case:

The petitioners, sugar manufacturers in Karnataka, challenged the validity of the Sugar (Price Determination for 1974-75 production) Order, 1974 and the Sugar (Price Determination for 1974-75 Production) second Amendment Order, 1975 issued by the Central Govt. The orders controlled the supply of sugar-cane to the sugar factories, the quantity of sugar to be supplied to the Central Govt, the price payable by the Central Govt for such sugar, and the distribution of sugar under the Essential Commodities Act, 1955.

Finding of the Court:

The court dismissed the petitions challenging the 1974 Order but allowed the petitions challenging the 1975 Order in so far as it related to the Karnataka region. The court quashed the 1975 Order and directed the Central Govt to re-determine the price of levy sugar and issue an appropriate notification within four weeks. The petitioners were to be paid for the quantity of levy sugar sold by them after 11-7-1975 at the rates to be determined by the Central Govt.

Issues: Validity of Sugar (Price Determination for 1974-75 production) Order, 1974 and Sugar (Price Determination for 1974-75 Production) second Amendment Order, 1975 under the Essential Commodities Act, 1955.

Ratio Decidendi: The court held that the Central Govt was not right in taking into consideration the actual extra price paid by the producer of sugar to the canegrower over and above the minimum cane price, which was extraneous to the provisions of S. 3(3c) of the Act. The court directed the Central Govt to re-determine the price of levy sugar and issue an appropriate notification within four weeks.

Final Decision: The court dismissed the petitions challenging the 1974 Order but allowed the petitions challenging the 1975 Order in so far as it related to the Karnataka region. The court quashed the 1975 Order and directed the Central Govt to re-determine the price of levy sugar and issue an appropriate notification within four weeks. The petitioners were to be paid for the quantity of levy sugar sold by them after 11-7-1975 at the rates to be determined by the Central Govt.

( 1 ) THE petitioners in the above petitions are all manufacturers of sugar having their factories in the State of Karnataka. They have questioned in these petitions the validity of the Sugar (Price Determination for 1974-75 production) Order, 1974 (hereinafter referred to as the 1974 Order) issued on 28-11-1974 and the Sugar (Price Determination for 1974-75 Production) second Amendment Order, 1975 (hereinafter referred to as the 1975 Order) issued on 11-7-1975, by the Central Govt in so far as they relate to the sugsr manufactured by the factories in the State of Karnataka. The supply of sugar-cane to the sugar factories, the quantity of sugar which the sugar factories have to supply to the Central Govt or any of its nominees, the price payable by the Central Govt for such sugar and the distribution of sugar, are controlled by the provisions of the Essential commodities Act, 1955 (hereinafter referred to as the Act) and various orders made by the Central Govt in exercise of its powers under the Act. Under s. 3 of the Act if the Central Govt is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order provide for regulating or prohibiting the production, supply and distribution thereof, and trade and commerce therein. Under that section it is open to the Central Govt to make an order providing for controlling the prices at which any controlled commodity may be bought or sold, for regulating by licence, permit or otherwise, the transport, distribution, acquisition or consumption of any essential commodity, for requiring any person holding in stock any essential commodity to sell the whole or a specified stock to the Central Govt or a State Govt or to an officer or agent of such Govt or to such other person or class of persons and in such circumstances as may be specified in the Order. Sugar-cane and sugar are treated as essential commodities under the Act. In exercise of its power under S. 3, the Central govt promulgated the Sugar-cane (Control) Order, 1966 on 16-7-1966, empowering the Central Govt under C1. 3 thereof to determine the minimum price payable to sugar-cane growers by the producers of sugar. The relevant, part of that Clause reads as follows :"3. Minimum price of sugarcane payable by producer of sugar : (1) The Central Govt may, after consultation with such authorities, bodies or associations as it may deem fit, by notification in the Official gazette, from time to time fix the minimum price of sugarcane to be paid by producers of sugar or their agents for the sugarcane purchased by them, having regard. to- (a) the cost of production of sugar-cane; (b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities; (c) the availability of sugar to the consumer at a fair price; (d) the price at which sugar produced from sugarcane is sold by producers of sugar; and (e) the recovery of sugar from sugarcane. Provided that the Central Govt or with the approval of the Central Govt, the State Govt. may, in such circumstances and subject to such conditions as it may specify, allow a suitable rebate in the price so fixed. Explanation : Different prices may be fixed for different areas or different qualities or varieties of sugarcane. (2) No person shall sell or agree to sell sugarcane to a producer of sugar or his agent, and no such producer or agent shall purchase or agree to purchase sugarcane, at a price lower than that fixed under sub-clause (1 ). "

( 2 ) UNDER C1. 2 of the Levy Sugar Supply (Control) Order, 1972, made on 15-6-1972, the Central Govt may from time to time by order issue direction to any producer or recognised dealer to supply levy sugar of such type or grade and in such quantity, (a) to such pers





























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