- (1.) THIS is an application by one Gokul Chandra Dey and Sons a partnership firm which carries on business dealing in sugar. The petitioner has a licence for the purpose under the relevant provisions of law. The petitioner states that the petitioner buys sugar from various large sugar dealers of West Bengal on principal to principal basis. The sugar so purchased was then sold by the petitioner in wholesale to the various small dealers. The petitioner challenges in this application, under Article 226 of the Constitution,' mainly the order dated 17th December, 1979 being Annexure-D to the petition,' which is an order called Sugar (Retention and Sale by Recognized Dealers) Order, 1979. As this is the subject matter of main challenge, it is material to set out the relevant portion of the said order. But before, I do so, it will be necessary to refer to certain provisions of the Essential Commodities Act, 1955. Under section 3 of the said Act, the Central Government has the power to control production, supply, and distribution of essential commodities. Incidentally, it may be mentioned that there is no dispute in the instant case, that sugar is an essential commodity. Sub-section (1) of Section 3 of the Essential Commodities Act, 1955 enjoins that if the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of india or the efficient conduct of military operations, the Central Government may provide by an order for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Sub-section (2) of Section 3 of the said Act enjoins that without prejudice to the generality of the powers conferred by sub-section (1), by an order certain other powers can be provided. Clause (f) of sub-section (2) of Sec. 3 empowers the Central Government to Control the price at which any essential commodity may be bought or sold. Clause (f) of this sub-section also empowers the Government by an order to require any person holding any stock or engaged in production or in the business of buying or selling of any essential commodity to sell the whole or a specified part of the quantity held in stock or produced or received by him or in the case of any such commodity which is likely to be produced or received by him to sell the whole or a specified part of such commodity when produced or received by him to the Central Government or a State government or to an officer or agent of such government or to a Corporation owned or controlled by such Government or to such person or class of persons and in such circumstances as may be specified in the order, it is not necessary for me to refer to the Explanations and other clauses of sub-section (2) of Section 3 of the said Act. But it would be relevant to refer to sub-section 3) of Section (3) of the said Act which is in the following terms : " (3) Where any person sells any essential commodity in compliance with an order made with reference to clause (f) of sub-section (2), there shall be paid to him the price there for as hereinafter provided : (a) Where the price can, consistently with the controlled price, if any, fixed under this section, be agreed upon, the agreed price ; (b) where no such agreement can be reached, the price calculated with reference to the controlled price, if, any ; (c) where neither clause (a) nor clause (b) applies, the price calculated at the market rate prevailing in the locality at the date of sale. " My attention was drawn to Sub-sections, (3a), (3b) and (3c) as well as to Sub-Section (6a) of section 3 in order to emphasize the contra-distinction to the provisions of sub-section (3) of Sec. 3 of the present Act.
(2.) THE challenge in this case, as I have mentioned before, is to the order dated 17th December, 1979 which was issued in exercise of the powers conferred by Sec. 3 of the Essential Commodities Act, 1955. The Clause (3) of the said order provides as follows : "3. Retention of stocks of sugar (1) Every recognized dealer shall retain sixty five per cent of the stock of sugar held by him at the close of business on the date of commencement of this order for the purpose of sale to the State Government, or to an officer of agents of such Government or to a corporation owned or controlled by such Government, or to such other person or class of persons as may be specified by the State Government, under the provisions of this order and subject to such terms and conditions as may be specified by the State Government. Explanation : For the purpose of this sub-clause, sugar delivered or despatched to a recognized dealer by a producer of sugar or any other recognized dealer prior to the commencement of this order but which is received by such recognized dealer at any time after such commencement shall be deemed to be sugar held by the recognized dealer on the commencement of this order. (2) Where sugar has been retained under sub-clause (i) by a recognized dealer, he shall immediately thereafter intimate the quantity of sugar so retained by him to the State Government. (3) Where a recognized dealer sells sugar under the provisions of this order, there shall be paid to him the price there for as hereinafter provided ; (a) where the price can consistently with the controlled price fixed under clause 4 be agreed upon, the agreed price ; (b) where no such agreement can be reached, the price calculated with reference to such controlled price. " Clause 4 is as follows : "4. Controlled pricefor the purpose of Clause 3 the controlled price of sugar shall be rupees two hundred and eighty only per quintal:" It is important to remember that the order applies to the stock held by the dealer only on 17th December, 1979. The other clauses are not necessary for my present purpose.
(3.) IN order to appreciate the circumstances under which this order came to be passed, it is necessary to refer to certain facts. On the 16th August, 1978 control price on price, sale and distribution of sugar was lifted. On the 6th June, 1979 monthly release system was reintroduced by the Government to prevent steep fall in sugar prices in order to protect the sugar growers or cane growers. On the 12th September, 1979 Sugar (Price Control) Order, 1979 was made under Sec. 3 of the Essential Commodities Act, 1955. The said order fixed the maximum ex-factory price at which sugar could be sold or agreed to be sold by producers and the maximum retail price at which it would be sold in retail. The ex-factory for mills situate in U. P. was fixed at Rs. 268/- per quintal, and the retail price in West Bengal was fixed at Rs. 300/- per quintal. On the 20th September. 1979 the Sugar (Price Control) Amendment Order, 1979 was made clarifying that the ex factory price fixed in the order dated 12th September, 1979 would include the additional duty of excise also. On the 30th November, 1979 the Sugar (Price Control) Amendment Order, 1979 was made. The ex factory price and the retail price fixed in the order dated 12th september, 1979 were increased. For Uttar Pradesh Mills the new ex factory price was fixed at Rs. 298/- per quintal and the retail price in West Bengal was fixed at Rs. 335/-per quintal. The excise duty on Sugar was also increased by Rs. 30/- per quintal and the increased price was to off set extra imposition of excise duty. On the 17th December, 1979 two orders were passed, one order was rescinding the Sugar (Price Control) Order, 1979 that is to say, fixing the price of sugar, as I have indicated hereinbefore. On the same date, Sugar (Retention and Sale by Recognized Dealers) Order, 1979 was made the relevant portion of which I have set out hereinbefore. On that very date, there was another order passed viz. The Levy Sugar Supply (Control) Order, 1979 made where by producers were directed to supply the levy sugar. On the same date another order viz. Sugar (Price Determination for 1978-79 Production) Order, 1979 was made determining the price of levy sugar for sugar produced in 1978-79. On that very date the Sugar (Price Determination) for (1979-80 Production) Order, 1979 was made fixing the price of sugar for 1979-80 ). Learned Advocate for the Union of India drew my attention to the Press Note issued by the Government of India on the 17th December, 1979 explaining the dual pricing mechanism for sugar. He also drew my attention to the Levy Sugar (Supply and Control) Order, 1979 in order to impress upon me the background of the circumstances in which the impugned order came to be passed, that is to say, in order to ensure supply of sugar to the consumers at reasonable prices and at the same time to ensure reasonable return of prices of the cane growers of their production.;