TMI Blog2004 (5) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) and (2) it is not necessary to express any opinion on the constitutional issue of repugnancy between the central and the state law. The finding recorded on this aspect by the Allahabad High Court in writ petition No. 36889 of 1996 is set aside. That question of law is left open. Although the State Advised Price has no sanction of law, the action of the State government in notifying the State Advised Price and advising the sugar factories to comply with the same is not per se illegal. The State Advised Price can serve as the framework within which the agreement as to price can be reached between the cane growers and the sugar producers. Therefore, the orders issued by the state government / Cane Commissioner communicating the fixation of State Advised Price need not be set aside.There is no legal taboo against the State government machinery playing a role in evolving an agreement between the cane growers and the sugar producers as to the price, without adopting any coercive methods. Once the occupier of sugar factory reaches an agreement with the cane grower may be on the persuasion of the state authorities, to pay the price equivalent to State Advised Price either by exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.11.96 addressed by Principal Secretary to Govt. to the Cane Commissioner of U.P:- "As is evident, that for every crushing season State Advised Cane Prince is announced by the State Government. Accordingly, I have been directed to inform you on the above subject, that the State Advised Cane Price payable by all sugar factories for the season 1996-97 has been fixed as under: a) For early maturing varieties at mill gate - 76.00 b) For general varieties at mill gate - 72.00 2. I have also been directed to inform you that during crushing seasons 1996-97 the transport deduction for cane supplied to the sugar factories at their out centres will continue to be Rs.3/- per quintal. 3. Above orders will be applicable for crushing season 1996-97. 4. Please take immediate action in the above matter." (Sd.) Principal Secretary *** *** *** Office order dt.15.11.96 issued by Cane Commissioner, U.P. "The State Advised Cane Price is announced by the State Government for every crushing season. Keeping this in view, the sugar factories have been paying cane price to the cane growers. Accordingly, the State Government has announced the State Advised Price payable by f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions similar to U.P. Act exist and the averments in the counter-affidavit filed on behalf of the Government in Writ Petition 2876/99 (corresponding to SLP (c) 16851/01). The relevant particulars of GOMS No. 420 (Industries Commerce, (Sugar) Department) dated 4.12.98 are as follows : "The Government of India has announced the statutory Minimum Price of Rs.527.00 per M.T. linked to a basic recovery of 8.5% to be paid by the sugar factories to the cane suppliers, for the year 1998-99. 2. In the context of ensuring payment of fair and reasonable cane price to the farmers, who supply sugarcane to the sugar factories, the Government elicited the views of sugar cane growers and management of sugar factories. 3. The Government after carefully examining the views and various issues connected with it, it accordingly advise all the sugar factories, including khandasari units, whether situated within or outside the zone of sugar factories in the State, to pay a minimum price of Rs.652.50 per M.T. linked to a basic recovery of 8.5% or 19997-98 year's price, whichever is higher by each factory/khandaasari Unit for the sugar cane purchased by it for the year 1998-99 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the State advised price is a statutorily fixed price and is legally binding on the sugar factories on its own force. The observation in Jaora Sugar Mills case at paragraph 14 to the effect that "the price fixed or agreed is a statutory price" does not mean that State advised price was construed as statutorily determined price. Apparently, the learned Judges were referring to the two concepts of price envisaged by the Sugar Control Order as discussed in paragraph 8 of the said decision. But, it does not appear to have reference to the 'State Advised Price' as such. However, I would like to clarify that the question posed by the Court at paragraph 12 i.e. "whether the State Government had entered into such a contract" is not accurate and does not fit in with the actual decision in the case. In the light of my conclusion that the State Advised Price has no statutory basis and legal force, is it necessary to strike down the orders communicating the State Advised Price? That is the next question. In my considered opinion, it is not necessary or appropriate to do so. The State advised price, though lacking the sanction of law and its compliance cannot be ensured against the will of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprehends within its scope the power to fix the price of sugarcane. The wide meaning given to the expression 'regulate' in various cases coupled with the fact that price is an essential component of sale is harped upon to preserve the power of the State Government to fix the price. Mathur, J. has also highlighted the fact that the fixation of a remunerative price for sugarcane supplied to factories would go a long way in accomplishing the objective of maintaining supplies. The peculiarities associated with harvesting and marketing of sugarcane have been pointed out. The need to protect the interests of sugarcane growers has also been stressed. These are no doubt weighty considerations which go to support the argument that the regulatory power can extend to fixation of price of sugarcane supplied to the factories. But, there are equally weighty factors which persuade me to hold, in concurrence with the view expressed by Srikrishna, J, that the regulatory power under Section 16 does not extend to price fixation. Number of cases were cited at the bar to buttress the argument that the import of the word 'regulatory' is wide and expansive enough to cover price fixation. It was notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government to fix the minimum prices of sugarcane under Chapter 5 of U.P. Act 1 of 1938 was deleted from the impugned Act, the same being exercised by the Centre under Clause (3) of Sugar and Gur Control Order, 1950 issued by it in exercise of the powers conferred under Section 3 of Act 24 of 1946." "The prices fixed by the Centre were adopted by the State and the only thing which the State Government required under Rule 94 was that the occupier of a factory or the purchasing agent should cause to be put up at each purchasing centre a notice showing the minimum price of cane fixed by the Government meaning thereby the Centre." Again it was observed in the next para: "the only provision which was retained by the State Government in the impugned Act for the protection of the sugarcane growers was that contained in Section 17 which provided for the payment of price of the sugarcane by the occupier of a factory to the sugarcane growers. It could be recovered from such occupier as if it were an arrear of land revenue. This comparison goes to show that the impugned Act mainly confined itself to the regulation of the supply and purchase of sugarcane required for use in sugar f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State Government was not invested with the power to fix the price of sugarcane. It was argued that the question of repugnancy was considered from the stand point of minimum price but not the price in general. I find it difficult to accept this contention. The tenor of discussion more especially the observations extracted supra would unmistakably indicate that the Constitution Bench did not consider the question of repugnancy only from such narrow angle but it was considered in the broader perspective of the provisions relating to price and the exercise of power of price fixation by the State Govt. No particular significance can be attached to the use of the expression 'minimum price' in the judgment of Constitution Bench because in one sense, the price ordained to be paid by the State government, will become minimum price. In another sense, it may be a more remunerative or higher price than what is fixed by the Central Government. On a careful reading and analysis of the judgment, I am inclined to think that the Constitution Bench did not discern any power to fix the price under the Act. If under Section 16, the power to fix price was to be inferred, I have no doubt that the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the State legislature would not have omitted to enact the specific provision empowering the Government to fix the price higher than the minimum level prescribed by that legislation if that was the intention of the legislature. Such provision would have contained norms, criteria or guidelines governing the higher price fixation or at least left them to be prescribed by Rules. This is also one of the factors which persuades me to think that the price fixation in the guise of regulatory power under Section 16 was not within the contemplation of the U.P. State Legislature. Srikrishna, J. has also referred to this aspect in his judgment. The learned Judge's observations in this behalf are quite pertinent. The conspicuous absence of a specific provision relating to price fixation must be viewed in the back drop of legislative history and the parallel central legislation operating in the field. Both the external and internal aids to construction reasonably point to the conclusion that price regulation was not within the contemplation of State legislature. In fact, that aspect was consciously left out. Above all, the observations in Tika Ramji's case cannot be explained away by clear c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived at or executed, the price specified therein, even if it be 'State advised price', has to be paid irrespective of the question whether such price has statutory flavour. At the same time, it must be made clear, as pointed out by Mathur, J., that the agreement cannot be said to have been vitiated on the ground of statutory compulsion for the reason that the statutorily fixed price is incorporated into the agreement. A fortiori, the agreement giving effect to the State advised price is perfectly valid and enforceable unless any vitiating factors under the law of contract are established. I would however like to make it clear that the State Government or its agents cannot compel or coerce the sugar factories to enter into agreements to pay to the growers the 'State Advised Price', even though it has no statutory power to fix the price. In the absence of such statutory authority, the only course left open to it to ensure higher price to the farmers is to strive to evolve an agreement on price by way of consensus. In such a case, the State advised price can enter into the terms of agreement. Such mutual agreement should be the result of negotiations and voluntary acceptance. In some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No question arose in that case regarding interpretation of Section 16 of U.P. Sugarcane Act or the conflict between the State and Central law. 7. Now, a Summary of conclusions : 1) The State Advised Price has no statutory flavour. It is not fixed or purportedly fixed in exercise of any statutory power. It is only persuasive or recommendatory in nature. The sugar factories cannot be compelled or coerced to pay that price by taking any steps not sanctioned by law. 2) The U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 does not confer the power on the state government to fix the price of sugarcane. Such power cannot be spelt out from section 16. 3) In view of conclusions (1) and (2) it is not necessary to express any opinion on the constitutional issue of repugnancy between the central and the state law. The finding recorded on this aspect by the Allahabad High Court in writ petition No. 36889 of 1996 is set aside. That question of law is left open. 4) The writ or direction issued in some of the writ petitions to 'enforce' the State Advised Price irrespective of the consent of the occupier of sugar factory is declared illegal and hereby set aside. 5) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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