Allahabad Canning Co. Vs. Union of
India [1984] INSC 126 (24 July 1984)
BHAGWATI, P.N.
BHAGWATI, P.N.
SEN, AMARENDRA NATH (J) MISRA RANGNATH
CITATION: 1984 AIR 1741 1985 SCR (1) 207 1984
SCALE (2)227
ACT:
Levy Sugar Price Equalisation Fund Act,
1976-Proviso to s. 6 (1)-When attracted-Scope of.
HEADNOTE:
Section 3 (1) of the Levy Sugar Price
Equalisation Fund Act, 1976 established a fund known as the Levy Sugar Price
Equalisation Fund. Sub-sec. (2) of section 3 provided that there shall be
credited to the Fund amounts representing all excess realisations made by the
manufacturers. Section 6 (1) provided that where any amount of excess
realisation was credited to the fund, the buyer of levy sugar from whom such
excess realisation as made by the manufacturers shall be entitled to the refund
of such excess realisation from the Fund. There was a proviso to section 6 (1)
which inter alia precluded buyers of levy sugar to claim refund of excess
realisation in certain cases. The appellants, who carried on the business of
manufacture of syrups, squashes, jams and jellies, preservation of vegetables
and other food products and from whom excess realisation was made and credited
to the Fund, applied for refund of such realisation. The Central Government
rejected the appellants' application for refund on the ground that they had not
been able to establish fully and clearly that the incidence of higher sugar
price was not passed on by them to the consumers of the end products. The
appellants preferred a writ petition which was dismissed by the High Court on
the same ground.
Hence this appeal by special leave.
Allowing the appeal, ^
HELD: The proviso on its plain terms applies
only where the party claiming refund of the amount of excess realisation is a
wholesale or a retail dealer who has passed on the incidence of the excess over
the controlled price of levy sugar to the retail dealer or to the consumer, as
the case may be. The proviso obviously cannot apply to a case where a claim for
refund has been made, by a consumer of sugar from whom excess realisation has
been made by the manufacturer of sugar. [106C-D] In the instant case the
appellants were admittedly consumers of sugar 208 and not dealers in sugar and
since they were not dealers in sugar, there could be no question of any
incidence of excess being passed on by them to the retail dealer or to the
consumer. [106D] The proviso to section 6 (1) contemplates a case where a
dealer-whether wholesale or retail-sells sugar to a retail dealer or consumer
as the case may be and not where a person sells a manufactured product
containing sugar as one of its ingredients. [106G] In the instant case the
appellants sold manufactured product containing sugar as one of its ingredient.
Therefore, the proviso to section 6 (1) was
not attracted and the appellants were entitled to claim refund of the excess
realisation from the Fund. [106H]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1487 of 1984.
Appeal by Special leave from the Judgment and
Order dated the 21st August, 1981 of the Allahabad High Court in Civil Misc,
Writ Petition No. 9820 of 1981 Harbans Singh for the appellant.
Abdul Kader and G.S. Narayanan for the
Respondent.
The Judgment of the Court was delivered by
BHAGWATI, J. This is an appeal by Special Leave directed against an order of
the High Court of Allahabad dismissing a writ petition filed by the appellants
claiming refund of a sum of Rs. 22681.88 from the Levy Sugar Price Equalisation
Fund under Section 6, sub-section (1) of the Levy Sugar Price Equalisation Fund
Act, 1976 (hereinafter referred to as the Equalisation Fund Act). The facts of
the case are few and may be briefly stated as follows:
The appellants carry on business of
manufacture of syrups, squashes, jams and jellies, preservation of vegetables
and other food products. One of the essential raw materials for these products
manufactured by the appellants is sugar. There was at the material time Sugar
Control Order 1966 issued under S. 3 of the Essential Commodities Act, 1955,
clause 4 of which provided that no purchaser shall sell or agree to sell or
otherwise dispose of sugar or deliver or agree to deliver sugar or remove any
sugar from the bonded godown of the factory in which it is stored, except under
and in 209 accordance with the directions issued in writing by the Central
Government or the Chief Director. Pursuant to this Order the Central Government
introduced the policy of partial decontrol of sugar in August, 1967 and under
this policy, the Central Government adopted a scheme of acquiring levy sugar
from the factory. The price of levy sugar acquired by the Central Govt. was
fixed every year in accordance with the principles set out in Section 3 (3c) of
the Essential Commodities Act, 1955 and during the period in question the price
of levy sugar was determined under the sugar (Price Determination) Order 1972.
This order was however challenged by factories manufacturing sugar and an
interim order was passed by the High Court of Allahabad permitting them to
charge a price higher than that fixed under the order, on condition that they
furnished bank guarantee for the difference in price in favour of the Registrar
of the High Court. Now, different prices were fixed under the sugar (Price
Determination) order, 1972 for different zones and so far as the East U.P. Zone
was concerned, the price fixed was Rs. 175 per quintal exclusive of excise
duty, sales tax etc. with the result that the price inclusive of these taxes
and duties amounted to Rs. 190 per quintal. The appellants purchased from K.M.
Sugar Mills Limited, Motinagar, Faizabad a certain quantity of sugar under a
release order issued by the Central Government under the Levy Sugar Supply
(Control) order 1972 and they lifted an aggregate quantity of 400 quintals of
sugar on 12- 8-1972 and 16-8-1972. Now, under the sugar (Price Determination)
order, 1972 K.M. Sugar Mills Limited were not entitled to recover from the
appellants price at a rate exceeding Rs. 190 per quintal but by virtue of the
stay order granted by the High Court of Allahabad they recovered from the
appellants price at the rate of Rs. 234.89 per quintal and the total excess
amount charged by K.M. Sugar Mills Limited from the appellants thus came to Rs
22681.88 for which bank guarantee was given by K.M. Sugar Mills Limited in
favour of the Registrar of the High Court. The writ petition filed by K.M.
Sugar Mills Limited against the Sugar (Price Determination) Order, 1972 along
with other similar writ petitions filed by other manufacturers of sugar was
however, ultimately dismissed by the Allahbad High Court in November, 1974 with
the result that the Registrar of the High Court became entitled to encash the
bank guarantee given by K.M. Sugar Mills Limited and a sun of Rs. 22,681.88 was
accordingly recovered by the Registrar under the bank guarantee.
Since the excess amount recovered by the
various manufacturers of sugar, including K.M. Sugar Mills Limited really
belonged to the consumers to whom sugar had been sold by these manufacturers,
Parliament enacted Levy Sugar Price Equalisation Fund Act, 1976 with effect
from 1-4-1976 for the purpose of ensuring that the excess amount so recovered
should not remain in the hands of manufacturers of sugar so as to unjustly
enrich them but should be paid to the consumers of sugar from whom it had been
unlawfully recovered by the manufacturers. Section 3(1) of the Equalisation
Fund Act established a Fund known as the Levy Sugar Price Equlisation Fund. Sub
Section (2) of Section 3 provided that there shall be credited to the Fund
amounts representing all excess realisations made by the manufacturers,
irrespective of whether such realisations were made before or after the
commencement of the Equalisation Fund Act. Pursuant to this provision, the
Registrar of the High Court deposited a sum of Rs. 22681.88 to the Credit of
the Fund. Section 6 of the Equalisation Fund Act then proceeded to enact that
where any amount of excess realisation is credited to the Fund, the buyer of
Levy sugar from whom such excess realisation was made by the manufacturer shall
be entitled to the refund of such excess realisation from the Fund. This
Section is material for the purpose of determination of the controversy arising
in the present appeal and we would, therefore, reproduce it as follows:
(1) Where any amount is credited to the Fund
a refund shall be made from the Fund to the buyer of Levy Sugar from whom any
excess realisation was made by the producer or dealer, Provided that no buyer
shall be entitled to claim as refund under this sub-section if he- (a) being
the wholesale dealer, had passed on the incidence of such excess over the
controlled or fair price of levy sugar to the retail dealer by whom the price
of such sugar was paid or (b) being a retail dealer, had passed on the
incidence of such excess over the controlled or fair price of levy sugar to the
consumer by whom the price of such sugar was paid." Since a sum of Rs.
22681.88 represented excess realisation 211 made by K.M. Sugar Mills Limited
from the appellants and this amount was credited to the Fund by the Registrar
of the High Court, the appellants filed an application in form IV making a
claim for refund of this amount from the Fund. This application was filed by
the appellants, on 30th April, 1979, admittedly within the prescribed period of
six months.
The Central Government, however, rejected the
claim made by the appellants on the ground that they had not been able to
establish fully and clearly that the incidence of higher sugar price was not
passed on by them to the consumers of the end products.
The appellants thereupon preferred a Writ
Petition in the High Court but the High Court also rejected the Writ Petition
on the same ground, namely, that according to the finding recorded by the
Central Government the appellants had not been able to establish fully and
clearly that the incidence of higher sugar price was not passed on to the
consumers of the end products and since this was a finding of fact base on
evaluation of the material and evidence produced by the appellants before the
competent authority, the High Court would not be justified in interfering with
the order of the Central Government. The appellants thereupon preferred the
present appeal with special leave obtained from this Court.
The main point of controversy between the
parties centres round the true interpretation of S. 6 Sub-section (1) of the
Equalisation Fund Act. This provision lays down as a condition precedent to its
applicability that the excess realisation made by the manufacturer of sugar
should have been credited to the Fund. Now, the application made by the
appellants in from IV stated in so many terms that the amount in question had
been deposited by the Registrar of the High Court in terms of the Levy Sugar
Price Equalisation Fund Rules, 1972, through the Chief Pay & Accounts Officer,
Govt. Of India, Ministry of Agriculture & Irrigation, Department of Food,
New Delhi. This statement was not at any time disputed on behalf of the Central
Government either in the order made by the Central Government rejecting the
claim of the appellants or in the proceedings before the High Court. It is
indisputable that a sum of Rs. 22681.88 representing the excess realisation
made from the appellants by K.M. Sugar Mills Limited was credited to the Fund
by the Registrar of the High Court. And in any event, this must be 212 presumed
to have been done because the Equalisation Fund Act having been enacted for
this purpose, the Registrar of the High Court would naturally be expected to
carry out his obligation under the statute by depositing the amount of excess
realisation recovered by him under the bank guarantee given by K.M. Sugar Mills
Limited. There can, therefore, be no doubt that in terms of Section 6,
Sub-section (1) the appellants were entitled to claim refund of the sum of Rs. 22681.88
from the Fund. The only question is whether the proviso to section 6,
Sub-section (1) precluded the appellants from claiming refund of that amount.
The proviso on its plain terms applied only where the party claiming refund of
the amount of excess realisation is a wholesale or a retail dealer who has
passed on the incidence of the excess over the controlled price of levy sugar
to the retail dealer or to the consumer, as the case may be. The proviso
obviously cannot apply to a case where a claim for refund has been made by a
consumer of sugar from whom excess realisation has been made by the
manufacturer of sugar. The appellants were admittedly consumers of sugar and
not dealers in sugar and since they were not dealers in sugar, there could be
no question of any incidence of excess being passed by them to the retail
dealer or to the consumer.
The learned counsel appearing on behalf of
the respondent contended that the excess over the controlled or fair price of
levy sugar must have been passed on by the appellants to the consumer when they
sold the manufactured products to them, because the higher price paid by them
for the sugar purchased from K.M. Sugar Mills Limited must have been taken into
account by them in fixing the price of the manufactured products. This may be so
or may not be so. It is not necessary for us to examine this question because
it is irrelevant on the terms of the proviso to Section 6, Sub- section (1).
That proviso deals with a situation where a wholesale or retail dealer passes
on the incidence of excess over the controlled or fair price of levy sugar to a
retail dealer or consumer, who purchases such sugar. It contemplates a case
where a dealer-whether whole sale or retail-sells sugar to a retail dealer or
consumer as the case may be and not where a person sells a manufactured product
containing sugar as one of its ingredients, we have, therefore, no doubt that
the proviso to Section 6, Sub- section (1) was not attracted in the case of the
appellants and, consequently, the appellants were entitled to claim refund of
the sum of the Rs. 22681.88 from the sum of Fund.
213 We accordingly allow the appeal, set
aside the judgment of the High Court and issue a Writ directing the respondent
to pay to the appellants a sum of Rs. 22681.88 together with interest thereon
at the rate of 6 per cent per annum from today until payment. The respondent
will pay the costs of the appeal to the appellants.
H.S.K. Appeal allowed.
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