Shri Malaprabha
Co-Op. Sugar Factory Ltd. Vs. Union of India & ANR [1997] INSC 89 (28
January 1997)
S.C.
AGRAWAL, B.P. JEEVAN REDDY, G.T. NANAVATI
ACT:
HEAD NOTE:
O R D E
R
A batch
of civil appeal (including the above mentioned tow appeal), special leave
petitions, writ petitions, transfer petitions and transferred cases challenging
the fixation of price of levy sugar for the years 1974-75 to 1979-80, by orders
issued under Section 3(3-C) of Essential Commodities Act, 1955, was disposed of
by this Court held that the Act, 1955, was disposed of by this Court held that
the impugned orders/notifications were bad as the price was not fixed in
accordance with the relevant provisions of law.
However,
it did not quash the notification as they would have led to nebulous situation
during the interregnum till re-fixation of price. Instead of quashing the said
notifications it directed the Union of India to amend the notifications taking
into account the liability of producers of sugar under clause 5A of the
Sugarcane (Control) Order, 1966 (hereinafter referred to as the '1966 Order'),
having regard to the factors mentioned in Section 3(3-C) of the Act. The
Government was also directed to issue the amended notifications by December 31, 1993.
The
Union of India was not satisfied with the judgment and, therefore, filed Review
Petition Nos. 211 and 212 of 1994 of 15.5.93. They were dismissed on 23.2.94.
The Union of India had also filed and application on 24.12.93 for
directions/clarifications and extension of time. The clarification was sought
for on the following ground:
"It
is submitted that the decision of this Hon'ble Court lends itself to two
different interpretations as mentioned below:- (a) The amount of additional
cane price payable by sugar factories at the end of each season is to be added
to the SMP of sugarcane while computing the element of cost as Factor 'A' of
Section 3(3-C) of Essential Commodities Act, 1955 for purpose of price
fixation;
(b) The
levy sugar prices may be refixed taking into account only Factors 'A' to 'D' of
section 3(3- C) of the Essential Commodities Act, 1955." It wanted this
Court to clarify:
"....
whether the revised levy sugar price should be the sum total of Factors 'A',
'B', 'C' and 'D' of Section 3(3-C) of the EC Act in case of price fixation."
The application was dismissed with costs but the time for implementation of the
judgment was extended upto November 30, 1994
peremptorily. In spite of this direction the Government did not issue the
required notifications within time. It issued the following six notifications
on 22.2.95:
1. No.GSR
76 (E)/Ess.Com./Sugar dt. 22.2.1995 -1974- 75.
2. No.GSR
777 (E)/Ess.Com./Sugar dt. 22.2.1995 -1975- 76.
3. No.GSR
78 (E)/Ess.Com./Sugar dt. 22.2.1995 -1976- 77.
4. No.GSR
79 (E)/Ess.Com./Sugar dt. 22.2.1995 -1977- 78.
5. No.GSR
80 (E)/Ess.Com./Sugar dt. 22.2.1995 -1978- 79.
6. No.GSR
81 (E)/Ess.Com./Sugar dt. 22.2.1995 -1979- 80.
It is
the grievance of the applicants that the said notifications have been issued in
disregard and contravention of the judgment of this Court inasmuch as the
Government, while re-fixing the levy sugar price for the said six years, has
failed to include in such re-fixation the element of additional cane price
payable by the producers under clause 5A of the 1966 Order. They, therefore,
want this Court to give appropriate directions to the Union of India to
forthwith comply fully and effectively with the judgment by issuing
supplemental notifications providing for additional levy sugar price. Applicant
No. 1 in both these applications is the India Sugar Mills Association and it
has filed the applications on behalf of all its members. Applicant Nos. 3 to 33
are some of its members and were partied to the above referred batch of cases.
Though the Government, while issuing the said six notifications, did not take
into consideration the additional cane price payable by the producers of sugar
under clause 5A yet the stand taken by them is that the said notifications are
consistent with the judgment of this Court. The contentions raised in this
behalf by them are the same as were taken earlier while the said batch of
matters, the review applications and the applications for clarification were
heard. In order to appreciate whether there is any substance in the contentions
raised by the respondents it is necessary to recall the rival submission made
earlier and how they were dealt with by this Court.
The
challenge to the fixation of price of levy sugar was two-fold. It was
challenged on the ground that it was not determined in accordance with Section
3(3-C) of the Act inasmuch as the price was fixed without regard to the four
Factors specified therein. The submission in that behalf was that while fixing
the price under Section 3(3-C) regard must be had to the producer's liability
under clause 5A of the 1966 Order which provides for payment of additional
minimum price to be paid by the producer of sugar to the sugarcane grower and, therefor,
what is statutorily payable to the grower has necessarily to be included as a
element of Factor 'A' of Section 3(3-C). Moreover, the minimum price payable
under Section 3(3-C) and the additional minimum price payable under clause 5A
are integral components of manufacturing cos under Factor 'B'. The second
ground of challenge was that mopping up of the entire excess realisation by
sale of free sugar was also incorrect in view of clause 5A as that would result
in total denial of any return on the capital employed in the business of
manufacturing sugar, resulting in not even recovering the actual cost of
production. Though prior to October 1, 1974, the date on which clause 5A was
added, 100% mopping up, that is, taking the entire realisation by sale of free
sugar into consideration for fixing fixing price of levy sugar was permissible,
after that date only 50 % could be considered for that purpose.
On the
other hand, it was contended that the objectives of Section 3(3-C) and clause
5A are different. Whereas Section 3(3-C) deals with fixing of price of levy
sugar, clause 5A deals only with the amount payable to the cane grower. Thus,
clause 5A deals only with the amount payable to the cane grower. Thus, clause
5A cannot have any relevance for determination of price of levy sugar. It was
submitted that price of levy sugar has to be fixed in advance whereas determination
of the share of cane grower under clause 5A comes into operation only after the
sugar year is over. The liability of payment of additional cane price under
clause 5A would arise only in case of surplus from sales of both levy and free
sugar after adjustment of the unit cost production. This surplus may or may not
arise.
Therefore,
it canner be regarded as a statutory or mandatory payment. As regards mopping
up of the extra realisation by sale of free sugar, the contention raised by the
Government was that even after introduction of clause 5A, It being and
independent provision , it was open to the Government to mop up the entire
extra realisation by sale of free sugar, the contention raised by the
Government was that even after introduction of clause 5A, It being an
independent provision, it was open to the government to mop up the entire extra
realisation, even though clause 5A entitles the producer to retain 50 % of the
extra realisation as his share to meet with his other financial obligations and
liabilities.
This
Court rejected the contention that Section 3(3-C) and clause 5A are totally
independent and held that "if the determination of minimum price of sugar
and fixation of the price of levy sugar under quantity of sugar to be supplied
by the producer are inter-connected, then they must be read as a whole and not
separately as though each is distinct".
With
respect to mopping up of extra realisation on sale of free sugar for the
purpose of determining price of levy sugar this Court held that according to
the new pricing policy contained in clause 5A the producer became entitled to
50% of such excess realisation from October 1. 1974 and, therefore, it was not
open to the Government to mop up his share also while fixing the price of levy
sugar. We need not refer to this aspect of mopping up further because that is
really not relevant for deciding these applications. we may only state under
Factor 'D' of Section 3(3-C) extra realisation on sale of levy free sugar is a
relevant consideration and, therefore, the Government can take it into account
to enable it to fix levy price at a lower level. As explained by this Court in
that judgment the effect of mopping up is to depress or reduce the levy sugar
price.
This
Court construed clause 5A as introducing a new pricing policy which conferred a
benefit on the producer by providing that he shall be entitled to retain 50% of
the extra realisation from sale of levy free sugar. At the same time, it
created a new liability for him by providing that he shall share the extra realisation
from sale of levy free sugar with the can grower on 50:50 basis. In view of
this new liability this Court held that the Government was bound to take that
also into account while fixing the price of levy sugar, without specifying as a
whether that liability became a component of Factor 'A' or Factor 'B' or both
those Factors of Section 3(3-C).
As
regards the direction to take into account the liability of the produce of
sugar under clause 5A what is now submitted on behalf of the respondents is as
under:- "......It is submitted that this part of the directions was
complied with by not mopping up the extra realisations on account of sales of
free-sale sugar. While determining the originally notified prices, the extra realisations
were mopped up for purpose of determination of the prices. This had resulted in
a reduction in the prices. This had resulted in a reduction in the prices to a
level lower than the price to which the sugar producers would have been
entitled to in terms of the provisions of the aforesaid Section 3(3-C)."
The respondents have also tried to support their action by contending that
clause 5A is inter-connected with clause 3 of the 1966 Order and Section 3(3-C)
is an independent provision. Therefore, the direction given by this Court
cannot be interpreted to mean that the additional cane price fixed in terms of
clause 5a should also be taken into account as a cost element in addition to
those specified in Section 3(3-C). It is also submitted that it is also not
feasible to include the additional cane price payable under clause 5A in the
minimum cane price payable under Section 3(3-C) as the two exercises are
required to be dome at two different stages and the additional cane price is
payable only in case of surplus. It was lastly contended that a tree- judge
Bench of this Court has upheld on 20.2.96 the levy prices fixed for 1982-83 in
T.C. No.9 of 1990 and that would mean that c Court has now accepted the
contention of the Government that it is not required to include the additional
can price payable under clause 5A while determining the price of levy sugar
under Section 3(3-C).
All
these contentions except the last one were raised by the respondents earlier
while the above batch of matters, the review applications and the applications
for clarifications have been rejected and, therefore, it is really not open to
the respondents to raise them again. It appears to us that the respondents,
like an ordinary litigant, are trying to find excuses for not complying with
the judgment of this Court in Paragraph 109 of the judgment is quite clear and
does not lend itself to two interpretations or any confusion as contened by the
respondents. In unambiguous terms this Court has directed the Government of
India to take into account the liability of the manufacturer under clause 5A of
the 1966 Order as regards cane price and re-fix the price of levy sugar.
Obviously,
the price of levy sugar has to be fixed having regard to the Factors mentioned
in Section 3(3-C) of the Act and, therefore, this Court while giving the
aforesaid direction also directed them to re-fix the price of levy sugar having
regard to those Factors also. The doubt or confusion, if any, appears to us to
be the Ernest of unwillingness of the Government to give up its views and accept
and implement the decision of this Court.
The
observation, in Paragraph 104 of judgment that the amount which the producer of
sugar is entitled to retain cannot be taken into consideration for
determination of price of levy sugar. was made in the context of mopping up of
the extra realisation. The issue was whether the entire extra realisation or
only 50% thereof could be mopped up, in view of the new pricing policy
contained in clause 5A, for depressing the levy price. Since by the new pricing
policy a benefit was sought to be conferred on the producer of sugar by making
him entitled to retain 50% of the extra realisation, this Court held that the
said amount cannot be taken into consideration for determination of price of
levy sugar. That was entirely a different aspect. The observation which is made
in Paragraph 109 and the direction given therein is with respect to the aspect
of sugar producer's liability to pay additional sugarcane price. Clause 5A
being inter-connected with Section 3(3-C), this new liability would certainly
get projected into Factors 'A' and 'B' of Section 3(3-C). Thus the contentions
raised on behalf of the respondents even otherwise also do not deserve to be
accepted.
The
order that was passed by this Court on 20.2.96 in Transferred Case (Civil) No.9
of 1990 was in respect of levy sugar price for the year 1982-83 and, therefore,
it cannot have any bearing on the fixation of price of levy sugar for the years
1975-76 to 1979-80. Moreover, this Court, wile passing the said order, has
clearly stated that "...this matter is not covered by the decision of this
Colurt in Shri Malprabha Co-operative Sugar Ltd. vs. Union of India and Anr. 1994(1)
SCC 648". Even if the Government has omitted to take into consideration
one unfavourable element, namely, mopping up of excess realisation it cannot
justify its omission to take into consideration another relevant element which
is favourable to the producer of sugar.
We,
therefore, allow these applications and direction the Government to issue additional
orders/notifications in terms of the directions given by this Court in the
above referred batch of cases.
Back
