UTTARAKHAND SUGAR MILLS ASSOCIATION Vs. STATE OF UTTARAKHAND
LAWS(UTN)-2012-5-7
HIGH COURT OF UTTARAKHAND
Decided on May 04,2012

UTTARAKHAND SUGAR MILLS ASSOCIATION Appellant
VERSUS
STATE OF UTTARAKHAND Respondents

JUDGEMENT

- (1.) HEARD Mr. Vishal Gupta, Advocate with Mr. A. K. Joshi, Advocate for the petitioners, Mr. P. C. Bisht, learned Brief Holder for the State, Mr. Manav Sharma, Advocate for respondent no. 4 and Mr. Shobhit Saharia, Advocate for respondent no.8.
(2.) THIS writ petition has been filed by Uttarakhand Sugar Mills Association and other sugar factories situated in the State of Uttarakhand, challenging the State Advised Price (from hereinafter referred to as "SAP") on sugarcane determined by the State Government under the powers vested with the State under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (from hereinafter referred to as "1953 Act"). In the present writ petition, the principal contention of the learned counsel for the petitioners while challenging the SAP was that the Central Government has already determined a price of sugarcane i.e. rate on which the sugarcane has to be purchased by the sugar factories in the entire country under Section 3(3C) of the Essential Commodities Act, 1955 (from hereinafter referred to as "EC Act"), and thereafter there is no occasion for the State Government to do the same things. Moreover the earlier price so fixed by the Central Government was called as the "Minimum Price", but now after the 2010 Amendment it is not "Minimum Price" but a "Fair and Remunerative Price" (from hereinafter referred to as "FRP"). This being the admitted position, since an FRP of sugarcane, throughout the country, has already been determined by the Central Government, it was wrong on the part of the State Government to further declare an SAP under the powers vested with the State Government under Section 16 of 1953 Act. He though admits that there is a provision of law under which the State Government can do what it has done but then such a provision has now become repugnant he submits. In other words, a question of repugnancy has been raised by the learned counsel appearing for the petitioners. All the same, when the matter was being argued today, the Lucknow Bench of Allahabad High Court, which was also ceased with the same matter, has given a judgment on 10.2.2012 in a bunch of writ petitions, the leading being Writ Petition (M/B) No. 11417 of 2011 (East U.P. Sugar Mills Association Lko, through its Secy. and ors. Vs. State of U.P. through Prin. Secy. Sugar Industry & Ors). In the above referred matter contention which is absolutely similar to the one raised before this Court has been rejected. The findings of the Division Bench of the Lucknow Bench of Allahabad High Court in the said judgment are as follows:- "(1) It is incorrect to say that the cane price fixation is exclusively occupied by the Union of India. The Legislature of the State has legislative competence to legislate law under Entries 14 and 27 of List II read with Entry 33 of List III whereas the Union of India may exercise its power under Entry 22 of List III. Thus, subject to rider imposed by Art. 254, State Legislatures are competent to legislate law with regard to cane price fixation. (2) Sugarcane (Control) Order, 1966 should be read along with Explanation II of Section 3 (3C) of the Essential Commodities Act which empowers the State Government to fix State Advised Price which may be higher than FRP fixed by the Government of India. By change of nomenclature in the form of 'FRP', the State Government is not deprived to exercise its statutory function under 1953 Act read with Explanation II of Section 3(3C) of the Essential Commodities Act. (3) Reserved area is provided by the State Government in pursuance to power conferred by Section 15 of 1953 Act. The Government of India does not fix reserved area. The State Governments exercise its statutory function including the reserved area in pursuance to 1953 Act. Hence, it cannot be said that with regard to price fixation, it lacks jurisdiction but for other issues, it may discharge its obligation under 1953 Act. The regulatory power envisaged by Section 16 of the 1953 Act includes fixation of price for supply of cane by the cane growers to the sugar mills (supra) with the rider that it shall not be less that FRP fixed by the Government of India. (4) Ordinarily, fixation of price being a legislative function is not open to judicial review unless it is discriminatory or violative of some statutory provisions. It is also not open for the Court, to reapreciate the material or evidence relied upon by the government for fixation of cane price under the process of judicial review. In a welfare State, it is for the government to secure the public interest by fixing the price on the basis of available material while discharging its statutory obligation. (5) State Advised Price (SAP) fixed by the State Government is neither excessive nor unreasonable; rather it is on lower side and the government could have fixed higher price than Rs.250/- on the basis of cost of production and dearness, hike in cost of living, inflation and per hectare yield of sugarcane. (6) Fair and Remunerative Price is not based on actual cost of production of sugarcane and yield in the State of U.P. It is the moderate price or floor price as stated by the learned Addl. Solicitor General of India and the State has got right to fix higher price keeping in view the cost of production, ground realities, yield of sugarcane etc." Moreover , the Division Bench of Allahabad High Court (Lucknow Bench) has taken a rather serious note of the fact that the petitioners in the said writ petitions failed to disclose the fact that Amendment Act No. 35 of 2010 whereby Section 3(3C) has been inserted with Explanation II, which would mean that the FRP fixed by the Central Government under Section 3 (3C) of the EC Act does not include the price paid or payable under any order or any enactment of any State Government and any price agreed to between the producer and the grower or a sugarcane growers' cooperative society, and therefore the Division Bench of Allahabad High Court (Lucknow Bench) in view of two judgments of Hon'ble Apex Court, namely, Salem Advocate Bar Association (II), Vs. Union of India reported in (2005) 6 SCC 344 and Rameshwari Devi and others versus Nirmala Devi and others reported in 2011 (8) SCC 249 came to the conclusion that the writ petitions were liable to be dismissed with costs of Rs.50 lacs (Fifty lacs only), hence the Division Bench of Allahabad High Court has dismissed the writ petitions with cost of Rs.50 lacs (Fifty lacs only). This Court has also been informed that the petitioners before the Allahabad High Court have challenged the said order before the Hon'ble Apex Court and Hon'ble Apex Court, after issuing notice on Special Leave Petition, have directed the petitioners to deposit the cost in the Registry of Supreme Court.
(3.) SECTION 3(3C) with Explanation II of the EC Act reads as under:- "3. Powers to control production, supply, distribution, etc., of essential commodities. � (1)... (2)... (3)... (3-A)... (3-B)... (3-C) Where any producer is required by an order made with reference to clause (f) of sub-section (2) to sell and kind of sugar (whether to the Central Government or to a State Government or to an officer or agent of such Government or to any other person or class of persons) whether a notification was issued under sub-section (3-A) or otherwise, then, notwithstanding anything contained in sub-section (3), there shall be paid to that producer only such amount as the Central government may, by order, determine, having regard to- (a) the fair and remunerative price, if any, determined by the Central Government as the price of sugarcane to be taken into account under this section; (b) the manufacturing cost of sugar; (c) the duty or tax, if any, paid or payable thereon; and (d) a reasonable return on the capital employed in the business of manufacturing of sugar: Provided that the Central Government may determine different prices, from time to time, for different areas or factories or varieties of sugar: Provided further that where any provisional determination of price of levy sugar has been done in respect of sugar produced up to the sugar season 2008-2009, the final determination of price may be undertaken in accordance with the provisions of this sub- section as it stood immediately before the 1st day of October, 2009. Explanation I ... Explanation II.- For the removal of doubts, it is hereby declared that the expressions "minimum price" referred to in clause (a), "manufacturing cost of sugar" referred to in clause (b) and "reasonable" return on the capital employed" referred to in clause (d) of this sub-section do not included the price paid or payable under any order or enactment of any State Government and any price, agreed to between the producer and the grower or a sugarcane growers' co-operative society." Learned counsel for the petitioners though fairly admits that there is already a Division Bench judgment of Allahabad High Court, as referred above, and therefore, by and large, matter before this Court has also been settled by Division Bench of Allahabad High Court, yet learned counsel for the petitioners would argue that in the present case he has an additional ground for challenging the SAP as determined by the State of Uttarakhand. This ground is as follows: According to the petitioners, for the year 2010-11 again SAP was determined by the State Government. Although the Writ Petition (M/B) No. 204 of 2008 of the petitioners was dismissed on 31.3.2008, the SAP as determined by the State Government was upheld and the certain directions were given to the State Government in the said order which read as under:- "(i) The State of Uttarakhand is directed to constitute the Sugarcane (Control) Board as provided under section 3 and 4 of the U.P. Act, 1953 within a period of two months from today. (ii) The Sugarcane (Control) Board would submit its advice about the fixation of the price (S.A.P.) to the State Government in future and the advice rendered by the Sugarcane (Control) Board would be effectively considered by the State Government while fixing the S.A.P." Alternatively (i) If the State of Uttarakhand deletes the provisions of sections 3 and 4 of the U.P. Act, 1953 as alleged in the counter affidavit, the Government of Uttarakhand shall constitute a committee consisting of at least three experts pertaining to the filed of sugarcane and agriculture. The experts of the Committee should have sufficient experience in the field. (ii) This committee would have the power to seek necessary information, documents and files from the Government pertaining to sugarcane for the purpose of its recommendations of the price (S.A.P.) of sugarcane. The expert committee would advise the State Government with regard to the fixation of S.A.P. well in advance so that the occupier of the factories and the cane growers would not suffer due to the non-declaration of S.A.P. (iii) The committee as indicated above would also consider the cost of production of the sugarcane; the recovery of sugar from the sugarcane; the prices at which the sugarcane is sold from the producers of the sugarcane; the return to the growers from alternative crops and general trend of price of agricultural commodities. (iv) If the factories are suffering losses it would be found as to whether the occupier of the factories are employing the new techniques. The occupier of the sugar factories will produce the returns of production of sugar, Molasses, Bagasse and Press-mud and they will also provide the balance sheets to the expert committee. The Committee would also consider all the relevant factors which it may deem fit and proper while advising the State Government about the fixation of the price (S.A.P.) of sugarcane." ;


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