S.K.G.
Sugar Ltd. Vs. State of Bihar & Ors [1997] INSC 41 (15 January 1997)
K.
RAMASWAMY, S. SAGHIR AHMAD, G.B. PATTANAIK
ACT:
HEAD NOTE:
O R D
E R
These two appeals arise from the judgment of the Division Bench of the Patna
High Court, made on November
13, 1984 in Order
No.11 and Review Order arising thereunder in CWJC No. 2370/84.
The
admitted position is that the appellant factory had a 'reserved area' under
Section 31 of the Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981
(for short, the 'Supply Act') and had the sugarcane supplied by the growers.
The Central Government, exercising the power under Clause 3 of the Sugarcane
(Control) Order, 1986 (for short, the 'Order') determined the minimum price for
sugarcane at Rs. 13.92 per quintal. The State Government announced on March 31, 1983 the Price of Sugarcane at Rs. 20.50
per quintal. The cane growers supplied the sugarcane to the appellant, but the
appellant admittedly had paid the minimum price determined under the Order but
the difference between the price fixed under the order and the price announced
the State Government was not paid. As a consequence, the Collector gave a
certificate of dues for realisation under the Revenue Recovery Act. Calling
those proceedings in question, the writ petition came to be filed. The
contention raised in the High Court as well as in this Court is that the
Central Government having determined the price of the sugarcane at Rs. 13.92
per quintal, the State Government was devoid of power of fix the price at Rs.
20.50 per quintal and, therefore, the Collector has no power is issue the
certificate of arrears; since what is due is the price fixed under the Order
which has already been paid, there is no due in accordance with law.
She
Y.V. Giri, learned counsel for the appellant, has contended that Section 42 of
the Supply Act prescribes only the power for fixation of the price in respect
of the unites, namely, Khandasari Unit or any unit manufacturing sugar under
open pan process. Under the proviso, the Government have no power to fix higher
price of sugarcane supplied to sugar factory that is fixed for the Khandasari
units. The fixation of the price at Rs. 20.50 per quintal is without any
authority of law or jurisdiction. For a certificate proceeding what is required
to be proceeded is the due in accordance with law but not in accordance with
any order passed by the State Government., The dues in accordance with the
price fixed under Clause 3 of the Order haveing been paid, the appellant is not
due of any sugarcane price payable to the cane growers and, therefore, tghe
view taken by the High Court is not correct in law. Even if there are dues, the
same could be recovered in a suit by the growers. We find no force in the
contentions. Sub-clause (1) of Clause 3 of the order provides thus:
"The
Central Governemnt may, after consultation with such authorities, bodies of
associations as it may deem fit, by notifiction is the Official Gazette, from
time to time, fix the minimum Price of sugarcane to be paid by producers of sugar
of their agents for the sugarcane pruchased by them, having regard to...
Provided that the Central Governemnt or, with the approval of the Central
Government, the State Government, may, in such circumstances and subject to
such condition as it may specify, allow a suitable rebate in the price so
fixed." It is seen that what is postulated under Clause 3 of the order is
the fixation of the minimum price payable to the cane growers for the sugarcane
supplied by them and purchased nby a sugar factory or its agents. Equally, Clasuse
5A prescribes payment of additional price consistent withg the returns had by
the factory. Clause 3A equally provides rebates that can be given in respect of
the price for sugarcane. A reading of these relevant Clause in the Order does
not show that there is any prohibition on the factoyr or the association of the
factories entering into an agreement to pay higher price than the minimum price
prescribed under the Oder. The object of the Order is to
ensure that the cane growers should not be compelled to sell their sugarcane at
a price minimum to the price prescribed byu the Central Government under Clause
3 of the Order. In State of Madhya Pradesh
vs. Jaora Sugar Mills Ltd. & Ors.etc. [CA No. 1811-14/96] decided on
October 10,1996 by a Bench of two judges, to which two of us (K.ramaswamy and G.B.Pattanaik,
JJ.) were members, considered the similar question and held thus:
"Rule
3[3] determines "where a producer of sugar pruchases any sugarcane from a
grower of sugarcane or froma sugarcane from a growr of sugrance or from a
sugarcane growr's co-operative society, the producer shall, unless there is an
agreement in writing to the contrary between the parties, pay within fourteen
days from thedate of delivery of the sugarcane to the seller or tender to him
the price of the cane sold at the rate agreed to between the producer and the
sugarcane grower of sugarcane growers' co-operative society or that fixed under
sub- clause (1), as the case may be, either at the gate of the factory or at the
cane collection centre or transfer or deposit the necessary amount in the Bank
Account of the seller or the co-opoerative socieyt, as the case may be".
Clause
(3A) to Rule 3 ws introduced by way of an amendment made in GSR 62(E), dated
2.2.1978. For payment of the price within 15 days with interest on the delayed
payment at the rate of 15% per annum for the period of such delay beyond 14
days has been introduced. Earlier, it was covered by the Act. Clause (1) of
Rule 3 fixes the minimum price of sugar payable by the pruchser of the
sugarcane as fixed by the Central Governemnt in the manner indicated therein, Clasue
(2) of Rule 3 is relevant for the purpose of this case which shows that
"no person shall sell or agree to sell sugarcane to a producer of sugar or
his agent, and no such producer or agent shall pruchase or agree to puchase
sugarcane, at a price lower than that fixed under sub-clasuse (1)".
Section 23(3) of the Act, also couched in similar language, enables to novate
by contract the minimum price fixed by the Central Government in respect of cess
payable to Government.
This
would clearly indicate that despite the fixation of minimum price under clause
(1) of Rule 3, by agreement between the sugarcane grower and the purchase of
the sugarcane, they would be at liberty to agree to sell or purchase the
sugarcane at a higher price thatn that wass fixed by the Central Government
under clause (1) of Rule
3.
Only for postponement of payment bey9nd 14 days, there should be an agreemtnt
in writing between the parties obviously with the concurrence of the Central
Government or authoriesed authority in that behalf. Thus, there is no statutory
prohibition in that behalf to pay higher price. That would be further clear by
Rule 3(2) which speaks of the contract between the parties for payment of
higher price of sugarcane fixed under clause (1) of Rule 3 pursuant to the
agreement or pursuant to the minimum price fixed by the Central Government
under Rule 3(1) of the Order.
Under
Rule 3(1) and additional price fixed under Rule 5A, it was within the domain of
the contract between the sugarcane growers and the factories who could agree to
pay price higher than the minimum price fixed under the order.
What
sub-rule (2) of Rule 3 prohibits is the purchase or sale or agreement in that
behalf, for bargain to pay price lesser that the minimum price fixed by the
Central Government. In other words, the sugarcane growers should not be
compelled to sell the sugarcane at a price lesser that what was prescribed by
the Order. Thus, we hold that there was no statutory prohibition at the
relevant time to agree to pay higher price than was fixed under the
order." There is, thus, no prohibition on payment of higher price. it is
seen and it is not disputed that there was an agreement by the sugar factory
Owners Association with growers of sugarcane entered hn january 1983 wjereom tje
[roce tp tje sigarcame at Rs. 20.50 per quintal was agreed to be paid. It is
stated in the judgement of the High Court that this was fixed after the
agreement between the Millers Association and the farmers at a meeting convened
by the Stte Government and the agreement was notified by the State Governemt.
The High Court has also stated that the appellant had played prominent part in
fixation of the price and it acted upon it till Mrach 31,1983. What was
contended in the High Court was that though the agreement was there, since the
company is an independent entity in the eye of law, it is not bound by such an
agreement and, therefore, the appellant is entitled to resile from the
agreement with the farmers at that meeting convened by the State Government. In
Jaora's case this court had held thus:
"The
question is; whether usch a hgher price has been agreed to be paid to thge
sugarcane growers, whe contrt has come into existence between the respondents
and the cane growers with the aegis of the appellants? As a facts. except kaluram,
all reprsentatives of other factories were present at the time to the agreement
dated mrch 21,1976. As far as Kaluram is concerned, on the first occasion he
was present, but on the second occasion when the meeting was adjorned, he was
not present. it has been averred in the counter- affidavit that the Sercretary
of the sugracene factories owners' Association had contracteed him when he was
in the hospital and thereafter, the agreement was entered into. Though,
subsequently, an attempt was made by the Secretary to wriggle out form it, the
Government have stated that and the sugarcane growers have also agreed for the
same, we are of the considered view that he was consenting party and there was consensue
ad idem to pay higher price of sugarcane than the minimum price fixed by the
Central Government and they acted upon it.
There
was no prohibition for oral agreement between growers and owners through the
service of the Cane Commissioner, a statutory authority to effect such
agreement.
It
would thus be clear that the Cane Commissioner having power to compel th cane
growers to supply cane to the factory khandsari unit, he has incidental power
and duty bound to ensure payment of the price of the sugarcane supplied by the
sugarcane grower. The price fixed or agreed is a statutroy price and bears the
stamp of statutory first charge on the sugar and assets of the factory over any
other contracted liabilities to recover the price of the sugarcane supplied to
the factory of Khandsari unit.
Thus,
it would be seen that the Act regulates the recovery as arrears of land
revenue. Accordingly, demand has been for payment of the amount n a sum of Rs.
6,34,166/- in CA No. 1813/80, Rs.13,40,700/- in CA No. 1814 and Rs. 2,71,000/-
in CA No.1812/80. Thus, the demands issued against the respondents are in
accordance with the provisions of the Act and they ar liable to pay the
same".
It is
not in dipute that under Section 31 of the Supply Act, the State Government has
power to fix the reserved area, in other words, zone was carved out for the
appellant for the supply of sugarcane to the factory. All the farmers who are cultifating
the sugarcane within that zone ar bopund the State action to supply sugarcane
to the factories within that reserved area. Consequently, the factory also is
bound by the actions of the State Government. Obviously, pursuant to the
obligation had by the State under the supply Act, the meeting was convened by
the state Government whereat the factory owners' Association and farmers
participated anf agreed to fixed the price at Rs.20.50 per quintal of
sugarcane. As a consequence, both the cane growers as well as the owners of the
factory are bound by the decision. This haveing been agreed upon, the price
fixed by the State Government in excess of the minimum price fixed by the
Central Government under Clause 3 of the Order would be the price fixed for upply
of sugarcane and the Governemnt would beentitled to enforce the liablity. As a
consequence, the Collector was empowered and duty dbound to issue a vcertrificate
of the dues as arrears of land revenue for recoery under the Revenue Recorvery
Act. The certificate obviously relates to the difference between the minimum
price fixed by the Central government, i.e., Rs. 13.92 per quintal and the
price of Rs.20.50 determined by the agreement between the parties. Under the
circumstances, there neednot be any sparte agreement to be entered into between
the cane growers in the reserved area and the appellant's factory to be
enforceable. We hold that the cerfificate issued by the Collector is vaild in
law. As held earlier, the State Government acted in their statutory capacity to
fix the increased price of the sugarcane. There is no need for the growers to
file separate suit to recover the difference of the price. The recovery
proceedings are the appropriate course of action rightly adopted by the State
Government.
Shri Giri
next sought to contened that the appelahnt- factory was notified to be taken
over and denotified for dvestment and in the interretgum sales and purchases
have taken place and the consequence thereof requires to be considered. The
appellant had crushed the sugarcane though vacuum pan process in producing
sugar in the relevant period. So it alone is liable to pay the cane price. We
find that the question in this case of sharing the liablity by the State
Government does not arise. Therefore, it is unnecessary for us to go into the
question in these appeals.
By
order dated February 29,1996 passed by this Court, the State
Government was directed to work out the amount due and payable to the cane
growers in terms of the undertaking given to this courtr at the time of passing
the interim order. Pursuanat thereto, it appears and it is not in dispute that
the Government has worked out the dues at Rs. 62,90,398.72 and made a demand on
March 22,1996 and in furtherance thereof, the
appellant has deposited the amount on April 3,1996. In view of the above, if there is
any other demand than what was directed, the respondents are at liberty to
proceed in accordance with law andif there is no demand and the demand has
already been satisfied, than it is needless to mention that the respondents may
not take any further steps in that behalf.
The
appeals are accordingly dismissed with the above observations. No costs.
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