The court emphasized that the action of the authority in fixing the price should be inspired by reason and that price fixation could be challenged on the ground of unreasonableness or arbitrariness.

H. V. G. RAMESH, J.

( 1 ) THE petitioner has sought for issuance of writ of mandamus or any other writ directing the respondent to refix the price of levy sugar delivered by the petitioner factory during the year 1997-98 at rs. 997. 96 per quintal and for the year 1998-99 at Rs. 1,017. 58 per quintal and to issue a writ of mandamus directing the respondent to pay an additional price of Rs. 25. 08 lakhs towards the levy sugar delivered for the year 1997-98 and Rs. 53. 93 lakhs for the year 1998-99.

( 2 ) ACCORDING to the petitioner, it is a sugar manufacturing unit manufacturing sugar by Vaccum Pan Process. It is declared as essential commodity under the provisions of the Essential Commodities Act, 1955. In exercise of the powers conferred under Section 3 of the essential Commodities Act, the Central Government has been issuing orders during every sugar season called the Levy Sugar Supply (Control) Order fixing price at which the sugar manufacturers are required to sell certain percentage of sugar produced by them to the agencies specified by the Central Government or the State Government for distribution under the Public Distribution System. The power to fix price is exercised in view of Section 3 (3c) of the Essential commodities Act. The fixation of price is required to be done by the government as per the principles laid down by the Tariff Commission and the Sugar Industry Commission mainly on (1) fair price of cane fixed by the Government (2) cess or tax payable thereon (3) manufacturing cost (4) reasonable return on the capital employed.

( 3 ) IN exercise of the power under Section 3 of the Essential commodities Act, the Central Government has also promulgated an order called Sugar Control Order 1955 and clause 5 of the said order also deals with the manner of determining the price of levy sugar. According to the petitioner, the factors mentioned in clause 5 of the sugar Control Order are substantially the same as has been mentioned in Section 3 (3c) of the Essential Commodities Act; it signifies an effective expression of opinion which ends a controversy or dispute by some authority to whom it is submitted under valid law for disposal; the price for levy sugar fixed for one year will not be valid for the subsequent year in view of the fact that the minimum cane price payable is fixed by the Government of India under the Sugarcane Control order each year by a separate notification; though the determination of price under Section 3 (3c) is a legislative function, review of the sub-ordinate legislation is permissible on the ground that it is unreasonable or repugnant to the general or some other statute; as such, in fixing the price of levy sugar under Section 3 (3c), regard must be had to clause 5 A of the Sugarcane Control Order. According to the petitioner, mopping up of entire excess realization by sale of free sugar for determination of price of levy sugar is held to be incorrect as per Clause 5 A as it would result in total denial of any return resulting in not even recovering the actual cost of production.

( 4 ) ACCORDING to the petitioner, as per the decision reported in 1991 AIR SCW 1760 the price fixing on the zonal basis taking into account the average zonal cost is valid and as per the decision reported in AIR 1973 SC 734 in Anakapalle Co-op. , Society once it is recognized that price could be fixed according to the zones, the cost schedule that have been worked out by the commission have necessarily to be different from each zone, various items which go into the cost differ from zone to zone and that it is not permissible to take only a few items and find discrimination disregarding of other items or components of costs on the basis of which price determination has to be made. Further, according to him, the determination of the levy sugar price on the basis of the zone is more practicable which has been upheld by the Supreme Court in Anakapalle's case as well as in other two cases noted above. The fixation

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