K. N. Seth, J. - (1.) IN exercise of the powers conferred by Clause '3' of the Sugarcane (Control) Order, 1966, the Central Government issued Notification No. GSR 484 (E)/ESS. Com/Sugarcane dated 1st October, 1978 fixing the basic minimum price of sugarcane for the crushing season 1978-79 at Rs. 10/- per quintal linked to a recovery of 8.5% or below with a premium of 11.7647 paise per quintal for every 0.1% increase in recovery over 8.5%. The notification also specified in the schedule annexed thereto the minimum price payable by the owners of the vacuum pan process sugar factories for the aforesaid crushing season. Different prices have been fixed for different sugar factories for sugarcane that they may purchase. The petitioners have challenged the validity of the notification both with regard to the fixation of the basic minimum price of sugarcane and the different prices for the petitioner companies specified in the schedule. IN some of the petitions the validity of the order fixing the same price for the last year's standing sugarcane crop has also been challenged.
(2.) IN this State the purchase and supply of Sugarcane is governed by the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 (U.P. Act 24 of 1953), the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 and the U.P. Sugarcane Supply and Purchase Order, 1954. Each sugar factory is required to furnish to the Cane Commissioner an estimate of the quantity of cane required by the factory during the crushing season. The Cane Commissioner on receiving the estimate reserves or assigns an area of sugarcane in consultation with the factory and the Cane Growers Co-operative Society. The factory has to purchase all the cane grown in the reserved area which is offered for sale to it and has to purchase such quantity of sugarcane grown in the assigned area and offered for sale as may be determined by the Cane Commissioner. The agreement entered into between the factory and the cane cooperatives or the cane growers envisages payment of cane price notified by the Government. Clause '3' of the Sugarcane (Control) Order, 1966 empowers the Central Government to fix the minimum price of sugarcane payable by the producer of sugar. The relevant part of clause '3' run as follows :- "The Central Government may, after consultation with such authorities, bodies or associations as it may deem fit, by notification in the official gazette, from time to time, fix the minimum price of sugarcane to be paid by producers of sugar or their agents for the sugarcane purchased by them, having regard to- (a) the cost of production of sugarcane; (b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities; (c) the availability of sugar to the consumer at a fair price; (d) the price at which sugar produced from sugarcane is sold by producers of sugar, and (e) the recovery of sugar from sugarcane : Provided that the Central Government or, with the approval of the Central Government, the State Government may, in such circumstances and subject to such conditions as it may specify, allow a suitable rebate in the price so fixed. Explanation - (1) Different prices may be fixed for different areas or different quantities or varieties of sugarcane." This clause specifies the factors that have to be taken into consideration in fixing the minimum price of sugarcane payable by the producer of sugar. It was urged that the Central Government is empowered to fix the minimum price of sugarcane only after consultation with such authorities, bodies or associations as it may deem fit. It requires consultation with persons who are interested in the fixation of price of sugarcane. The consultation should not be a mere empty formality but it should provide an opportunity to the interested parties to consider and weigh each other's viewpoint. The authorities, bodies or associations with whom the Central Government holds consultation must be chosen honestly so that views of all concerned parties are placed before it. It was contended that before issuing the impugned notification no genuine consultation was held with the sugar factory owners or their association who were vitally interested in fixation of the price. In the counter-affidavit it has been averred that in fixing the minimum price of sugarcane for the year in question the recommendation of the Agricultural Prices Commission, an expert body appointed by the Government to advise it on fixation of prices of agricultural commodities including sugarcane, has been taken into consideration. Its recommendations are based on datas collected by it. The Central Government also took into consideration the report of the Bhargava Commission on sugar industry. The Indian Sugar Mills Association of which the petitioners are members had also made a representation. The file relating to the representation of the Association was produced before us in Court. The notings on the file clearly indicate that the representation made by the Sugar Mills Association was fully considered. In our opinion, it was not at all necessary that the office bearers of the Association and the officers of the Central Government should have sat across the table and discussed and debated every relevant factor or material taken into consideration in fixing the price of the sugarcane. In the representation made by the Association no request was made for any personal discussion. The petitioners are not justified in making the grievance that proper consultation was not done with the manufacturers of sugar. In our opinion, requirement of law regarding consultation with authorities, bodies or associations was fully satisfied by considering the recommendation of the Agricultural Prices Commission, the Bhargava Commission Report on sugar industry and the representation of the Sugar Mills Association.
(3.) FIXATION of the basic minimum price of Rs. 10/- per quintal has been challenged on the ground that the Central Government totally ignored or failed to take into consideration the relevant factors set out in clause '3' of the Sugarcane (Control) Order, 1966 (hereinafter referred to as the Control Order). It was urged that the basic minimum price of sugarcane of Rs. 8.50 fixed for the year 1977-78 was arbitrarily enhanced to Rs. 10/- although the cost of production of sugarcane had not increased nor had the return to the grower from alternative crops and general trend of price of agricultural commodities undergone any change. In the petitions it has been asserted that there has been no increase in the cost of production of sugarcane since last year and that there has also been no increase in the return to the growers from alternative crops or in the general trend of prices of agricultural commodities. On behalf of the respondents it has been asserted in the supplementary-counter affidavit sworn by Sri S. Bansi, Deputy Secretary to the Government of India. Ministry of Agriculture and Irrigation, Department of Food, that cost of several inputs has increased resulting in increase in the cost of production, such as cost of agricultural labour, electricity charges, irrigation rates and fertilizers. The return available to the growers from alternative crops has also increased. The Government itself has increased its procurement price of wheat, rice and some other grains. Neither in the petition nor in the counter affidavits filed on behalf of the respondents any material has been furnished regarding cost of production of sugarcane or return to the grower from alternative crops and the general trend of prices of agricultural commodities. However, we see no reason to doubt the averment made on behalf of the respondents that these factors were taken into consideration in fixing the minimum price of sugarcane. According to the respondents the Central Government took into account the recommendations of the Agricultural Prices Commission. The recommendations of the Commission are based on datas collected by it regarding cost of production, return to the growers from various agricultural commodities and the prevailing market price etc. Since the recommendation of the Commission were taken into account by the Central Government while fixing the minimum price of sugarcane, it may be accepted that factors (a) and (b) set out in Clause 3(1) of the Control Order were in fact taken into consideration while fixing the basic minimum price of sugarcane. In this connection it was also urged that the criteria of availability of sugar to the consumer at a fair price and the expected market price of sugar in the current season have not been taken into consideration in fixing the basic minimum price of sugarcane. According to the petitioners sugar was decontrolled with effect from 16-8-1978 and the distinction between the 'levy sugar' and 'free sugar' came to an end. In view of the record production of 65 lac tons of sugar in the year 1977-78 and discontinuance of the policy of supplying sugar to the consumers at the controlled rate out of the levy sugar, the Central Government must have anticipated considerable fall in the price of Sugar and there could be no justification for enhancing the basic minimum price. A chart has been annexed to the petitions indicating a decline in the market price of sugar since the commodity was decontrolled. The average prevailing price of about Rs. 210/- per quintal before de-control came down to about Rs. 189/- per quintal in October, 1978. On the basis of these figures it was urged that obviously the Central Government did not take into consideration the decline in price of sugar while fixing the minimum price of sugarcane. On behalf of the respondents it was urged that though immediately after de-control, price of sugar disclosed a declining trend but subsequently the price again started moving up. The stand taken by the respondents was that the Central Government did take into consideration the factors of availability of sugar to the consumer at a fair price and also the question of the likely market price of sugar in determining the minimum price of sugarcane. Its decision to enhance the minimum price of sugarcane from Rs. 8.50 to Rs. 10/- per quintal was based on the factors set out in Clause '3' of the Control Order and also the fact that the petitioners during the past seasons voluntarily and willingly paid prices which were substantially higher than the minimum price fixed by the Government of India. Taking by way of example the case of the Neoli Sugar Factory run by M/s. Shervani Sugar Syndicate it was pointed out that during the year 1974-75 while the minimum price for sugarcane fixed by the Central Government was Rs. 9.20 the factory actually paid at the rate of Rs. 12.50 to 14.50 per quintal. Similarly in the year 1975-76 while the minimum price fixed was Rs. 9.50 the factory actually paid Rupees 11.30 to 13.25 per quintal and in the year 1977-78 while the minimum price fixed was Rs. 10.10 the factory actually paid Rs. 13.50. On the basis of these figures it was urged that the minimum price fixed by the Central Government for the sugar season 1978-79 in respect of the aforesaid factory at Rs. 12.12 per quintal was much less than the price actually paid by the factory in the previous year. The fact that the factories paid higher price for the sugarcane than the price fixed by the Central Government has not been disputed but it was urged that the higher price was paid under coercion exercised by the State Government. It was further urged that this was an extraneous and irrelevant consideration not contemplated by Clause '3' of the Control Order and could not be legally taken into consideration for fixing the minimum price of sugarcane. It was contended that sub-clauses (a) to (e) exhaustively set out the factors which could validly be taken into consideration in determining the basic minimum price. The price actually paid by the factories could not form the basis for determining the basic minimum price.;