New India Sugar Works Vs. State of
Uttar Pradesh & Ors  INSC 50 (27 February 1981)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA
REDDY, O. CHINNAPPA (J)
CITATION: 1981 AIR 998 1981 SCR (3) 29 1981
SCC (2) 293 1981 SCALE (1)422
CITATOR INFO :
R 1987 SC1802 (10) F 1987 SC2351 (5,9,12)
Retrospective operation of law-Order levying
duty on Khandsari issued-Order, whether applies to existing stocks or only to
future stocks-Price fixed less than manufacturing cost-Order, if liable to be
On the questions (1) whether an order
imposing a levy on Khandsari could have retrospective operation so as to apply
to sugar manufactured prior to the date of the order and (2) whether in fixing
the price of levy sugar the Government should consider that the price fixed
should be sufficient to cover the manufacturing cost.
HELD: 1. It is not the question of
retrospectivity of a statute but its actual working that is relevant. It is
settled law that where a statute operates in future it cannot be said to be
retrospective merely because within the sweep of its operation all existing
rights are included.
Once the notification for imposing the levy
was made it will naturally apply to the existing stocks of khandsari with the
petitioners irrespective of whether it was manufactured before or after the
order. [31B; 30G]
2. The policy of price control has for its
dominant object equitable distribution and availability of the commodity at
fair price to benefit the consumers. Individual interest, however precious,
must yield to the larger interest of the community namely the consumers. Even
if the petitioners have to bear some loss there could be no question of the
restrictions imposed on them being unreasonable. [32 B] The fixation of price
would be in the interest of consumers rather than that of the producers.
Moreover since the petitioners were allowed to sell freely at any rate they
liked, the remaining 50% of sugar after excluding the 50% which they had to
give to levey as also the produce by the second and third processes, the loss,
if any, caused to the petitioners, would be minimal. [32 G]
ORIGINAL JURISDICTION: Writ Petition Nos.
896/81, 865- 890, 577-591, 592-606, 607-621, 622-628, 629-633, 634-37, 964-88,
544, 545-575, 766-774, 775-776, 902-63, 897-901, 535-37, 532-34, 529-531, 639
(Under Article 32 of the Constitution) H.K.
Puri for the Petitioners in WP 896/81.
Vimal Dave for the Petitioners in WP
A.K. Sen, R.M. Dube and Sarva Mitter for the
Petitioners in WPs 540-43/81.
30 Soli J. Sorabjee, S.S. Ray, A.K. Sen and
R.K. Jain for the Petitioners in WPs 529-37, 544-575, 577-538, 766-776 and
S.S. Ray, Soli J. Sorabjeee and R.K. Jain for
the Petitioners in WPs 634-37/81.
Lal Narain Sinha, Attorney General, O.P.
Rana, and Mrs.
S. Dikshit for the Respondent (State of U.P.)
in WPs 540-43, 529-37, 540-43, 544-77 and 577-638/81.
M K. Banerjee Addl. Sol. Genl. and S.K.
Gambhir for the State of Madhya Pradesh.
Miss A. Subhashini for Union of India.
The Order of the Court was delivered by FAZAL
ALI, J. Having heard counsel for the parties at great length we are satisfied
that there is no violation of the fundamental right of the petitioners
enshrined in Art.
19(1)(g) of the Constitution of India nor is
Art. 14 attracted to the facts of the present case. There is, therefore, no
good ground to entertain the petitions. We would, however, like to add that on
the materials placed before us the Government may consider the desirability of
adopting such measures as may soften the rigours of the impugned orders which,
though not arbitrary or excessive so as to violate Art. 14 or 19, do merit some
consideration by the Government in order to effectuate the policy under which
the impugned notification was made.
There are, however, two arguments urged
before us which need special mention. In the first place it was submitted that
in the U.P. cases the order impugned imposing a levy on the khandsari produced
by the petitioners cannot have any retrospective operation so as to apply to
the stock of sugar manufactured prior to the date of the order and would apply
only to the sugar produced after the coming into force of the impugned
notification. So far as this argument is concerned we find no substance in the
same because it is not a question of retrospectivity of the statute but its
actual working. Once the notification imposing the levy was made it will
obviously apply to stock of khandsari produced by the petitioners either before
or after the order. This principle has been clearly laid down by the
Constitution Bench of this Court in the case of Trimbak Damodar Raipurkar v.
Assaram Hiraman Patil and Ors.(1) where Gajendragadkar, J. speaking for the
Court regarding the 31 scope of a Rent Act and Amendment in Rent Act observed as
"In this connection it is relevant to
distinguish between an existing right and a vested right. Where a statute
operates in future it cannot be said to be retrospective merely because within
the sweep of its operation all existing rights are included.
This Court followed the dictum of Buckley,
L.J. in the case of West v. Gwynne.(1) In the aforesaid case Buckley, L.J.
while construing an amendment in the Act by which the contract was governed
observed as follows:- "The Act of 1881 thus expressed that in the case of
leases made either before or after the commencement of the Act a covenant not
to assign without licence should be enforceable just as before.....This section
is to be read as if it were contained in the Act of 1881, and is dealing with a
subject-matter mentioned in the Act of 1881, and as to which there is in that
Act a provision that the enactment shall apply to leases made either before or
after commencement of the Act." Hardy, M.R. in a concurring judgment while
construing second amendment in section 14 of the Conveyancing Act pointed out
thus:- "In the First place, the language of the section is perfectly
general, "in all leases," and there is nothing in the section itself
to confine it to leases subsequent to the Act.
Almost every statute affects rights which
would have been in existence but for the statute." In these circumstances,
therefore, once the notification for imposing the levy was made it will
naturally apply to the stock of sugar which was with the petitioners irrespective
of the fact that it was manufactured before or after the Order.
It was next strongly contended that in
fixation of the price of levy sugar the Government has not taken into
consideration the fact that the petitioners would undergo a serious loss because
the price would not be sufficient even to cover their manufacturing cost. We 32
are, however, unable to agree with this argument. The policy of price control
has for its dominant object equitable distribution and availability of the
commodity at fair price so as to benefit the consumers. It is manifest that
individual interests, however, precious they may be must yield to the larger
interest of the community namely, in the instant case, the large body of the
consumers of sugar. In fact, even if the petitioners have to bear some loss
there can be no question of the restrictions imposed on the petitioners being
unreasonable. In Shree Meenakshi Mills Ltd. v. U.O.I.(1) this Court observed as
"If fair price is to be fixed leaving a
reasonable margin of profit, there is never any question of infringement of
fundamental right to carry on business by imposing reasonable restrictions.
In determining the reasonableness of a
restriction imposed by law in the field of industry, trade or commerce, it has
to be remembered that the mere fact that some of those who are engaged in these
are alleging loss after the imposition of law will not render the law
unreasonable." (Emphasis Supplied) Similar view was taken by this Court in
the case of Prag Ice and Oil Mills and Anr. etc. v. Union of India(2) where the
Court speaking through Beg, C.J., observed as follows:
"It has also to be remembered that the
object is to secure equitable distribution and availability at fair prices so
that it is the interest of the consumer and not of the producer which is the
determining factor in applying any objective tests at any particular
time." In this view of the matter the primary consideration in the
fixation of price would be the interest of the consumers rather than that of
the producers. Moreover, we think that since the petitioners are allowed to
sell freely at any rate they like the remaining fifty per cent of sugar (after
excluding the fifty per cent which they have to give for levy) as also the
produce by the second and third processes, the loss if any caused to the
petitioners would be minimal.
Lastly, it was urged that Sub-Clause
(5)-which is Sub- Clause (3) in the notification issued by the Madhya Pradesh
Government- 33 in the impugned notification issued by the U.P. Government is
extremely arbitrary inasmuch as by insisting on certificates it deprived the
petitioners of the free sale of sugar of the remaining amount of fifty per cent
as also the Khandsari produced by second and third processes. We see some force
in this argument but the Attorney General frankly conceded that he will see
that no inconvenience on this score is caused to the petitioners. He gave an
undertaking to the Court that he will get the respective Sub-Clauses 5 and 3 of
the impugned orders of the U.P. and Madhya Pradesh Governments deleted or
withdrawn so as to allow the petitioners to sell the remaining amount of sugar
as also the stock produced by the second and third processes without any hitch
or hindrance. This will, however, be subject to routine and quick inspection.
In view of this undertaking, therefore we feel that a substantial part of the
grievances of the petitioners would be removed. To be on the safe side, however
we allow the stay granted in all the petitions to continue until the provisions
of respective Sub-Clauses 3 and 5 passed by the State Governments concerned are
We may also emphasise the fact that the
amount of sugar taken by the Government through levy should be properly stored
and duly protected from rain and rot and be despatched to the various control
depots expeditiously in order to ensure a quick and equitable distribution of
the commodity amongst the people at moderate rates.
The Government may also consider the
desirability of giving a bare minimum hearing to the representative of the
owners of the cane crushers in future before fixing the rate at which the levy
is taken from the owners so as to see that the owners of the crushers are not
put to such great loss that they are completely wiped out from business.
With these observations the petitions are
N.K.A. Petitions dismissed.