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1975 Supreme(All) 20

HIGH COURT OF ALLAHABAD
H.N.Seth, N.D.Ojha
SITARAM JWALA PRASAD
Versus
STATE OF U P
Decided On : 15 January 1975
Civil Misc. Writ Nos. 7322 and 7788 of 1974

Headnote:

ESSENTIAL COMMODITIES ACT - CONTROLLED PRICE - FOODGRAINS - PRICE FIXATION - VALIDITY - UTTAR PRADESH COARSE FOODGRAINS (LEVY) ORDER, 1974 - SECTIONS 3(1), 3(2)(C), 3(2)(F), 3(3-A), 3(3-B) - INTERPRETATION.

Fact of the Case:

The Uttar Pradesh Coarse Foodgrains (Levy) Order, 1974, issued under Section 3 of the Essential Commodities Act, 1955, required licensed dealers to sell 50% of their coarse foodgrains to the State Government at a scheduled price of Rs. 74/- per quintal. Petitioners, licensed dealers and arhatiyas, challenged the validity of the Order, arguing that the fixed price was arbitrary and beyond the powers conferred by the Act.

Finding of the Court:

The Court held that the impugned Order was ultra vires the powers conferred on the State Government by Section 3 of the Essential Commodities Act. The Court found that the price of Rs. 74/- per quintal fixed for the 50% of coarse foodgrains to be sold to the State Government could not be treated as the controlled price contemplated by clause (i) of sub-section (3-B) of Section 3 of the Act.

Issues: 1. Whether the fixed price of Rs. 74/- per quintal for the 50% of coarse foodgrains to be sold to the State Government was arbitrary and beyond the powers conferred by the Essential Commodities Act? 2. Whether the price of Rs. 74/- per quintal could be treated as the controlled price contemplated by clause (i) of sub-section (3-B) of Section 3 of the Act?

Ratio Decidendi: 1. The Court interpreted the provisions of Section 3 of the Essential Commodities Act, particularly sub-sections (1), (2)(c), (2)(f), (3-A), and (3-B), to determine the powers of the State Government in fixing the price of foodgrains. 2. The Court held that the controlled price contemplated by clause (i) of sub-section (3-B) refers to the controlled price fixed for a particular grade or variety of foodgrains, not for a specific transaction of sale. 3. The Court found that the price fixed in the impugned Order could not be considered the controlled price as it was not determined with reference to the grade or variety of foodgrains but was specific to the transaction of sale to the State Government.

Final Decision: The Court allowed the writ petitions in part, holding that the provisions in the impugned Order fixing the price of foodgrains to be sold to the State Government at Rs. 74/- per quintal were ultra vires the powers conferred by Section 3 of the Essential Commodities Act. The State Government was directed not to compel the petitioners to sell 50% of the foodgrains at the aforesaid price. However, the State Government could require the sale of 50% of foodgrains if it paid the price in accordance with sub-section (3-B) of Section 3 of the Act.

N. D. OJHA, J.

These two writ petitions raise a common question of law and can conveniently be disposed of together. The question raised in these writ petitions is in regard to the validity of the Uttar Pradesh Coarse Foodgrains (Levy) Order, 1974. The aforesaid Order was issued by the State Government of U. P. in exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955, read with the Order of the Government of India in the Ministry of Agriculture (Department of Food), published under G. S. R. 316 (E) dated June 20, 1972, with the prior concurrence of the Central Government. The paragraphs of the said Order relevant for determination of the question raised are paragraphs 3 and 4 which read as hereunder :-

"3. (1) Every licensed dealer shall sell to the State Government at the scheduled price at a purchasing centre :-

(a) Fifty per cent of coarse foodgrains in stock on the date of commencement of this order or coming into his custody or possession after the commencement of this Order.

(b) Fifty per cent of coarse foodgrains purchased by him or coming into his custody or possession for sale or disposal through him on commission basis or in any other manner every day beginning with the date of commencement of this order and until such time as the State Government may otherwise direct.

(2) No licensed dealer shall sell or otherwise dispose of or remove to any other place than his usual place of business or storage in a particular locality his stocks of coarse foodgrains unless he has sold the prescribed percentage to the State Government under sub-clause (1) and obtained a release certificate in token thereof in respect of stocks left in balance with him.

(3) Any person on whose behalf the licensed dealer holds any stock of coarse foodgrains, the whole or part of which such dealer is required to sent to the State Government under sub-clause (1) shall, notwithstanding any contract or instrument to the contrary not be entitled to recover from the licensed dealer on account of the value of the stock so sold anything more than the price received by the licensed dealer under the said clause.

(4) The scheduled prices referred to in clause 3 are for the fair average quality of coarse foodgrains conforming to the specifications prescribed in Schedule II and shall be subject, in relation to coarse foodgrains below that quality, to deductions specified therein. "

2. "coarse foodgrains" as defined in paragraph 2 (a) of the Order means one or more of the Coarse Foodgrains specified in Schedule I. "fair average quality" according to its definition as contained in paragraph 2 (d) means the quality containing an admixture or impurity not exceeding that specified in Schedule II. "licensed dealer" occurring in paragraph 3 has been defined in paragraph 2 (e) of the Order to mean a person holding a valid licence under the Uttar Pradesh Foodgrains Dealers Licensing Order, 1964. Sub-paragraphs (h) and (i) of paragraph 2 define "schedule" and "scheduled price. " "schedule" means a schedule appended to this Order, whereas "scheduled price" for the fair average quality means the price specified in column 3 of Schedule I.

3. In Schedule I the maximum price which has been fixed in regard to the foodgrains in question is Rs. 74/- per quintal. The petitioners in writ petition No. 7322 of 1974 are licensed dealers in the grain and do the business of wholesale sale and purchase of grain, whereas the petitioners in writ petition No. 7788 of 1974 carry on business of selling coarse grains as kachcha and pucca arhatiyas. The ground on which the validity of the impugned order has been challenged is that the price of Rs. 74/- per quintal as fixed under the Order for the 50 per cent of coarse foodgrains which are required to be sold to the State Government is arbitrary and beyond the powers conferred by Section 3 of the Essential Commodities Act. In order to appreciate the submission made for the petitioners it will be useful to quote the re































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