BHOPAL SUGAR INDUSTRIES LIMITED Vs. STATE OF MADHYA PRADESH
LAWS(SC)-1982-3-6
SUPREME COURT OF INDIA (FROM: MADHYA PRADESH)
Decided on March 23,1982

BHOPAL SUGAR INDUSTRIES LIMITED Appellant
VERSUS
STATE OF MADHYA PRADESH Respondents

JUDGEMENT

Tulzapurkar, J. - (1.) Two questions were raised for our determination in this appeal by 4 certificate:(a) Whether the Sugar-cane Development Council, Sehore (respondent No. 2) can charge commission under S. 21 (1) of the Madhya Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1958 on purchases of sugar-cane made by the appellant-company from outside the "reserved area" and (b) Whether the Sugar Cane-Growers Development Co-operative Union Ltd., Sehore (respondent No. 3:the concerned Cane Growers Cooperative Society) can charge commission under S. 21 (1) (a) of the Act in respect of the purchases of sugar-cane made by the appellant through the Union when there is no quid pro quo by way of rendering any services by Union to the appellant-company
(2.) The short facts giving rise to the above questions may be stated:The appellant-company crushes sugar-cane in its factory at Sehore in Madhya Pradesh. For its business it purchases sugar-cane from "reserved area" as well as from outside both directly from the cane-growers as well as through respondent No. 3, a Cane-growers, Co-operative Society, Sehore, S. 21 of the Act imposes an obligation upon the appellant-company to pay commission on all its purchases of cane at prescribed rates and it has to pay such commission in respect of purchases made through the Society to the Society and the Development Council and in respect of purchases made directly from the cane-growers to the Development Council. According to the appellant-company judicial decisions rendered by Madhya Pradesh High Court as well as this Court have settled the position that the commission chargeable under S. 21 of the Act s in the nature of a fee the imposition of which is supported on the basis of quid pro quo in the shape of services rendered by the Development Council to a factory (vide:Jaora Sugar Mills (P.) Ltd. v. State of Madhya Pradesh, (1966) 1 SCR 523). It appears that during the seasons 1960-61 to 1964-65 the appellant-company purchased cane directly from the cultivators of "reserved area" as well as from the cultivators of "non-reserved area" and respondent No. 2 (Development Council, Sehore) made a demand of commission from the appellant-company in respect of such purchases both from "reserved area" as well as from "non-reserved area". Similarly, during the crushing seasons 1963-64 to 1966-67 the appellant-company made purchases of cane from or through respondent No. 3 (Co-operative Society) in respect whereof a demand of commission was made by respondent No. 3 from the appellant-company. By a writ petition (being Misc. Petition No. 246 of 1967) filed in the Madhya Pradesh High Court at Jabalpur the appellant-company challenged the validity of the demand made by respondent No. 2 insofar as it related to purchases made from non-reserved area on the ground that it (Council) was established for the reserved area of the appellant-company's factory and its functions were confined to that area and as such no commission (fee) could be recovered by it in respect of purchases made by appellant-company from non-reserved area; similarly, the demand made by respondent No. 3 (Co-operative Society) was challenged on the ground that no services of any kind whatsoever were rendered by it to the appellant-company, and the charge would be invalid in the absence of any quid pro quo. The High Court negatived both the contention and dismissed the petition. It is. this decision of the High Court that is challenged before us in the appeal and counsel for the appellant-company raised the two questions mentioned at the commencement of the judgment.
(3.) S. 21. which deals with commission oil purchase of cane, runs thus: "(1) There shall be paid by the occupier a commission for every one maund of cane purchased by the factory - (a) where the purchase is made through a Cane-growers' Co-operative Society, the commission shall be payable to the Cane-growers' Co-operative Society and the Council in such proportion as the State Government may declare; and (b) where the purchase is made directly from the cane-grower, the commission shall be payable to the Council. (2) The Commission payable under clauses (a) and (b) of sub-section (1) shall be at such rates as may be prescribed provided, however, that the rate fixed under clause (b) shall not exceed the rate at which the commission may be payable to the Council under clause (a)." Section 30 confers power on the State Government to make rules for the purpose of carrying into effect the provisions of the Act and under Cl. (j) of sub-s. (2) such Rules may provide for "the rate at which and the manner in which commission shall be paid to the Cane-growers' Co-operative Society on the supply of cane by them". Under the aforesaid provisions certain rules called the Madhya Pradesh Sugar-Cane (Regulation of Supply and Purchase) Rules, 1959 have been framed by the State Government. Rules 45 and 46 occurring in Chapter X of the Rules are material and they are as follows:- "45. The occupier of factory shall pay a commission for the cane purchased at the following rates, namely:- (i) Where the purchase is made through a Cane-growers' Co-operative Society, at the rate of 5 Naya Paise per maund out of which 2 Naya Paise shall be payable to the Society and 3 Naya Paise to the Council; (ii) Where the purchase is made directly from the cane-growers, at the rate of 3 Naya Paise per maund, payable to the Council. 46. In determining the proportion to which payments out of commission shall be made to the Council and the Cane-growers' Co-operative Society of an area the State Government may take into consideration the financial resources and the working requirements of the Council and the Cane-growers' Co-operative Society.";


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.