- (1.) THESE six connected writ petitions have been filed to challenge a notification issued by the State Government under R. 114 of the Defence of India Rules, 1971, directing the Khandsari units to sell to the State Government at the price specified in the order one third of the Khandsari Sugar manufactured by the Khandsari units in the first process. The price specified is Rs. 200.00 per quintal to be delivered under the conditions prescribed in the order at the purchasing centres. The petitioners have licenses for working Khandsari units and are manufacturers of Khandsari sugar. They have challenged the order of the State Government under Rule 114 of the Defence of India Rules on various grounds. As all the petitions raise similar questions of facts and law, they are heard together and are being decided by a common judgment.
(2.) LEARNED counsel for the petitioners clarified in the very beginning that what actually affects them is the fixation of levy price at a figure below the cost price. The contention that the levy price is below the cost price has not been challenged by the respondents. On the other hand, in the counter-affidavit it has been stated that the cost price is Rs. 245.00 per quintal while the levy price is Rs. 200.00. The contention of the respondents is that the State Government has power to make a levy at a figure below the cost price provided the total money to be received by the Khandsari industry from the sale of total produce brings to the producers a fair return. According to the State Government the levy price has been fixed in such a manner that the petitioners will on the whole make a profit in the industry and will suffer no loss. The first contention raised by the learned counsel for the petitioners is that Rule 114 does not give any power to the State Government to direct a producer or stockist to sell the goods at any price below the market price. It has been urged that Rule 114 does not confer any power at all on the State Government to fix the levy price. The contention is that the power under Rule 114 (2)/(3) is only to direct the sale of a commodity at the market price and in no case at below the fair price or reasonable price as contemplated by Section 9 of the Sale of Goods Act. According to the petitioners such sale price can never be below the cost price.
(3.) THE basic question, therefore, that arises in the case is whether Rule 114 permits the State Government to make a levy by paying an amount below the cost price. Rule 114 (2) provides : "If the Central Government or the State Government is of opinion that it is necessary or expedient so to do for securing the defence of India and civil defence, the efficient conduct of military operations or the maintenance or increase of supplies and services essential to the life of the community or for securing the equitable distribution and availability of any article or thing at fair prices, it may, by order, provide for regulating or prohibiting the production, manufacture, supply and distribution, use and consumption of articles or things and trade and commerce therein or for preventing any corrupt practice or abuse of authority in respect of any such matter." Sub-rule (3) of Rule 114 provides : "Without prejudice to the generality of the powers conferred by sub-rule (2), an order made thereunder may provide for - (d) Requiring any person holding in stock any article or thing to sell the whole or a specified part of the stock to the Government or to an officer or agent of the Government or to such other person or class or classes of persons and in such circumstances as may be specified in the order and if the order relates to foodgrains, edible oil seeds or edible oils at such price as may be specified in the order having regard to - (i) the maximum price, if any, fixed by order under clause (h) or by or under any other law for the time being in force, for the grade or variety of food-grains, edible oil seeds or edible oils to which the order under this clause applies; and (ii) where no maximum price as referred to in sub-clause (i) is fixed, the price for that grade or variety of foodgrains, edible oil seeds or edible oils prevailing or likely to prevail during the post-harvest period in the area to which the order applies." Sub-rule (2), has, in the present case, been brought into service by the State Government on the assertion in the notification that it had become in the opinion of the State Government necessary and expedient to pass the order for securing the equitable distribution of khandsari sugar and to make it available at fair price. ;