- (1.) The petitioners challenged Notifications No. CER/ 3/73 dated 13 March, 1973 and CER/ 16/73 dated 13 March, 1973 described as the first and the second impugned notifications.
(2.) There was unprecedented and phenomenal rise in cotton prices in the closing months of 1970 and in January, 1971. There was a very low cotton crop in 1970-71 season . There was a perceptible drop in yarn production. Yarn is produced in hanks for handloom and cones, beams and prins for powerlooms and cones for hosiery industry. There was rise in prices. This strengthened the hands of the weavers in their agitation. The Yarn Pool Scheme was devised in February, 1971. This was a voluntary effort on the part of the cotton mill industry to afford some relief to small weavers in the handloom and powerloom sector. The scheme covered cotton yarn in counts of 20s, 30s and 40s both in hanks and hosiery cones and in counts of 20s, 24s, 30s, 34s and 40s in weaving cones. Under this scheme the mills participating in it had to supply yarn at prices equivalent to the average of prices ruling in the last quarter of 1970. As a compensation the participating mills were allotted foreign cotton at a concessional rate of premium and were permitted to sell such cotton in the market. The yarn thus made available was allocated to the various States by the Textile Commissioner. The quantity of yarn covered by the Pool Scheme depended upon the quantum of foreign cotton made available for the purpose.
(3.) In the second quarter of 1972 prices of superfine counts, namely, 60s and above began to rise. The causes were first, shortfall in production caused by prolonged labour strike in Coimbatore and other textile centres in Tamil Nadu; second, an increase in the spindle cost of foreign cotton; third revival of export demand for cotton yarn, and fourth, large scale unauthorised despatch to foreign countries. In order to arrest this trend the industry reached an understanding with the Textile Commissioner in July, 1972. Under this agreement the mills were to supply 50 per cent of the yarn of 60s and above meant for sale in the market at agreed prices. The agreed prices were the average of the highest contract price in January, 1972 and the highest contract price on 1 June, 1972 or near about the date. This price was known as the "regulated price". The arrangement came into force from 1 August, 1972.;