TMI Blog2016 (2) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... te of Andhra Pradesh after the two states of Telangana and residuary State of Andhra Pradesh came into existence from 2.6.2014 with well defined boundaries. This is an irrelevant consideration and ought to have been eschewed by 1st respondent from consideration. Thus, the price fixation of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 based on the OER of the Oil Palm Processing Unit at Aswaraopet, Khammam District, State of Telangana vide G.O.Ms No.2 Agriculture and Cooperation (Horti.& Seri) Department dt.18.2.2015 is based on the irrelevant considerations and is clearly arbitrary and violative of Article 14 of the Constitution of India. Therefore the contention of 1st respondent that petitioners are estopped by their alleged accpetance in the meeting of 6.1.2015 to adopt the OER of Aswarraopet Oil Palm Processing Unit and so they cannot challenge the G.O.Ms No.2 Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015, cannot be countenanced. The contention of the 5th respondent that the Oil Palm Processing Unit at Aswaraopet had the latest equipment which is not there at Pedavegi also cannot be countenanced since this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following matters set out in Section 4: a) Extension of the areas under cultivation of oil palm; b) Problems relating to the cultivation of oil palm; c) Problems faced by the oil palm processing industry; d) Co-ordination between the oil palm growers and industry and sorting out of all matters which may arise; e) To bring to the notice of the Government any measures that will suit the orderly development of the oil palm cultivation and industry; f) Such other matters as may be prescribed. 6. Section 8 thereof contemplates appointment of an officer as an Oil Palm Commissioner and Section 5 empowers him to declare areas specified in a notification issued by him attached to a processing factory as a zone. 7. Section 10 directs the occupier of the factory, where manufacturing process connected with the processing of oil palm FFB is carried on with the aid of mechanical power, to maintain a register of oil palm growers in the zone attached to the factory. 8. Sub section (2) of Section 11 provides that if a particular area is declared as a factory zone under sub section (1), the oil palm growers in that area shall supply the fresh fruit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmittee. After obtaining inputs from all the stake holders, CACP submitted a report in January 2012 to 4th respondent proposing formula for pricing for FFBs. 14. In its report, it recommended that formula for pricing of FFBs be fixed at 13.54% of net Crude Palm Oil (for short CPO ) weighted average price plus 75.25 % on 9% recovery of palm kernel nuts weighted average price. This was arrived at based on estimated cost of cultivation at 75.25% in the total cost of production of CPO from farm level to factory level and, for the purpose of calculation, Oil Extraction Ratio (for short OER ) was taken as 18%. The Additional Secretary, Ministry of Agriculture and Cooperation vide letter dt.02-02-2012 sought for the comments of 1st respondent on the recommendations made by CACP. 15. The 2nd respondent forwarded the said report to the petitioners as well as 5th respondent farmers association seeking remarks on recommendations of CACP. 16. Petitioners contend that even though they objected to the recommendations of the CACP, ignoring the said objections, the 1st respondent by letter dt.18-05- 2012, informed 4th respondent that the recommendations of CACP were acceptable to the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was situated not in the State of Andhra Pradesh and that the OER of the said plant cannot be the basis for fixing FFB price for the State of Andhra Pradesh when there exists a Government plant within the said State of Andhra Pradesh. 23. This is however disputed by the respondents who allege that the members of 1st petitioner Association, and in particular its representatives, had agreed to the OER of 17.55% as obtained in AP Oil Fed, at Ashwaraopeta, Telangana State as the basis for fixing for FFB price for the State of Andhra Pradesh also. 24. Petitioners contend that alternatively they agreed for an OER of 17.4% obtained in the erstwhile State of Andhra Pradesh for the year 2012-13 as the basis for price fixation for the year 2014-15. They allege that even though they sought for minutes of the meeting which took place on 06-01-2015, the same had not been supplied to them and that they had addressed a letter dt.22-01-2015 to 2nd respondent in regard to the minutes of the meeting which took place on 06-01-2015. 25. However, during the course of hearing in this Writ Petition, the minutes of the meeting which took place on 06-01-2015 were produced by the learned Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pradesh is being taken since the APOILFED was not yet bifurcated. CONTENTIONS OF PETITIONERS 29. Petitioners contend that the impugned G.O.Ms.No.2 dt.18-02-2015 issued by 1st respondent for the oil year 2014-15, taking the OER of 17.55% on the basis of the OER obtained in the AP Oil Fed Oil Palm Processing Unit at Aswaraopet in Telangana State, and applying it post- bifurcation (of the erstwhile composite State of Andhra Pradesh into the State of Telangana and the residuary State of Andhra Pradesh) in the residuary State of Andhra Pradesh while ignoring the OER of producers and manufacturers of oil palm in the residuary State of Andhra Pradesh (particularly the OER of Oil Palm Processing Unit at Pedavegi in West Godavari District which falls in the residuary State of Andhra Pradesh), is arbitrary, illegal and contrary to the recommendations of the CACP report which had been accepted by the erstwhile Government of Andhra Pradesh by the letter dt.18-05-2012. They point out that in the Lr.No.F.No.12- 22/2010-TMOP dt.13.8.2013 received from the Under Secretary of the Govt. of India, Ministry of Agriculture, Dept. of Agriculture and Co-Op, New Delhi specifically directed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en into account and also on the ground that there is violation of rights guaranteed by Article 14 of the Constitution of India. According to him, once the Government of India through the CACP directed that the OER to be determined as per the actual oil content extracted in the past by the processing industry established by the State Government concerned, after 02- 06-2014 (when the erstwhile combined State of Andhra Pradesh was divided into the State of Telangana and the residuary State of Andhra Pradesh), the 1st respondent ought not to have taken into account the OER of the AP Oil Fed plant at Aswaraopet, Khammam District, Telangana State instead of the OER of AP Oil Fed plant at Pedavegi in West Godavari District in the State of Andhra Pradesh for arriving at the minimum price of the oil palm FFBs. He pointed out that as per the CACP report (para 3.11), the OER is a measure of the efficiency of the entire palm oil production process, that it is influenced both by condition of the plantation and the efficiency of the processing mill and the determinants of the OER include climatic parameters, source of planting material, management practices, harvesting standard, method of FFB pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the fixation of the oil palm FFB price formula is in accordance with the recommendation of the Commission for Agriculture Costs and Prices (CACP) to whom the Government of India has entrusted the responsibility recommending the formula for pricing of FFBs of oil palm. It was denied that there was any arbitrariness or unreasonableness in fixing the oil palm FFBs pricing formula under the impugned G.O. 33. She contended that the OER, as per the letter dt.13-08-2013 by the Under Secretary, Government of India, Ministry of Agriculture, Agriculture and Cooperation Department, was to be determined as per the actual oil content extracted in the past by the processing centre as established by the State Government concerned. She relied upon the decision alleged to have been taken in the meeting held on 06-01- 2015 between members of the petitioner Association, members of the 5th respondent and the Hon ble Minister for Agriculture and Horti Culture and stated that only after consensus on the issue , it was decided to take 17.55% OER obtained by the oil palm processing unit, Aswaraopet, AP Oil Fed during the year 2013-14 as basis for price fixation. She further contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Oil Palm FFBs and this includes the authority to fix the formula for determination of the price of the Oil Palm FFBs. Both the petitioners as well as respondents do not dispute the fact that the Government of India had constituted the CACP to recommend the formula for pricing of FFBs of Oil Palm and that the said Commission had comprehensively studied the entire issue and had recommended a suitable formula for the pricing of FFBs of Oil Palm to be made applicable in all the States in the country uniformly. While the petitioners contend that the CACP recommendations have not been taken into account by 1st respondent, this is denied by 1st respondent. 37. It is not disputed that the Additional Secretary, Government of India, Ministry of Agriculture Department of Agriculture and Cooperation, New Delhi had addressed a letter F.No.12-22/2010 (TMOP)-33 dt.02- 12-2012 enclosing the report of the CACP submitted to the said department on oil palm. It is not disputed that the CACP recommended the price policy in the following terms: 1. (i) It is recommended that formula for pricing of Fresh Fruit Bunches (FFBs) be fixed at 13.54 percent of net Crude Palm Oil (CPO) weighted average ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FBs grown in the State of Andhra Pradesh after the bifurcation of the erstwhile composite State of Andhra Pradesh into the State of Telangana and the residuary State of Andhra Pradesh for the oil palm year 2014-15 (01-11-2014 to 31-11-2015)? 41. In Cynamide India Ltd. and another (1 supra), the Supreme Court dealt with the aspect of price fixation under the Drugs (Prices Control) Order, 1979 which contained provisions for fixing maximum selling prices of indigenously manufactured bulk drugs and retail prices of formulations. It held that price fixation is more in the nature of Legislative activity than any other and that a price fixation measure does not concern itself with the interest of an individual manufacturer or producer. It held that it is general in relation to a particular commodity or class of commodities or transactions and it is a direction of a general character, not directed against a particular situation and it is intended to operate in the future. The Court held that it is a concept in the interest of the general consumer public. Being a Legislative activity, the Court held that it would not attract the principles of natural justice. It however held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of a legislative or administrative or quasi-judicial exercise of power, is liable to attract the prohibition of Article 14 of the Constitution. As stated in E.P. Royappa v. State of Tamil Nadu equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch . Unguided and unrestricted power is affected by the vice of discrimination: Maneka Gandhi v. Union of India. The principle of equality enshrined in Article 14 must guide every State action, whether it be legislative, executive, or quasi-judicial: Ramana Dayaram Shetty v. International Airport Authority of India; Ajay Hasia v. Khalid Mujib Sehravardi and D.S. Nakara v. Union of India. 47. Power delegated by statute is limited by its terms and subordinate to its objects. The delegate must act in good faith, reasonably, intra vires the power granted, and on relevant consideration of material facts. All his decisions, whether characterised as legislative or administrative or quasi-judicial, must be in harmony with the Constitution and other laws of the land. They must be reasonably related to the purposes of the enabling legislati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of essential commodity at fair prices in the best interest of the general public, is a matter for decision exclusively within the province of the Central Government. Such matters do not ordinarily attract the power of judicial review. (emphasis supplied) 43. Keeping in mind the above principles, I will now consider the question framed in this case. 44. It is not disputed that growers of oil palm FFBs are compelled under Section 11 of the Act to sell their produce only to the occupier of the factory located within the factory zone specified under Section 11(1) of the Act. Thus a grower of palm produce oil palm FFBs cannot sell his produce to the occupier of a factory located outside the factory zone notified under the Act. So he cannot sell to an occupier of factory in a different zone or in a different State. 45. There is no dispute that in the CACP report itself in clause 2 (iv) stated that OER varies a great deal from one garden to another and being a measure of the efficiency of entire palm oil production process, the OER is influenced by both the condition of plantation and efficiency of processing mill (3.11 of the report of CACP). The CACP report mentions the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Oil palm processing unit located in Pedavegi in West Godavari District in the residuary State of Andhra Pradesh. This is precisely what was done by 1st respondent. 49. So in my opinion, relevant considerations of OER of Oil Palm Processing Unit in the State of Andhra Pradesh for fixing price of FFBs of Oil Palm in the said State which is indicated by Section 11(2) and Section 12 of the Act, were not taken into account while issuing the impugned G.O. Also the advice of the Union of India contained in the letter F.No.12-22/2010 (TMOP) dt.13.08.2013 of the Under Secretary, Ministry of Agriculture, Department of Agriculture and Cooperation that the OER as per actual Oil Content extracted in the past by the Processing Industry established by the State Government concerned, was clearly ignored. 50. I am of the opinion that the non-bifurcation of the APOILFED by the date G.O.Ms No.2 Agriculture and Co-operation (Horti. Seri) Department dt.18.2.2015 was issued cannot be the reason for taking the OER of the Aswarraopet Unit in Telangana State as basis for price fixation of Oil Palm FFBs in State of Andhra Pradesh after the two states of Telangana and residuary State of Andhra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Pedavegi, in the West Godavari District should be taken into account as per Government of India guidelines or 17.40% which was fixed for the previous Oil Year should be taken into consideration. Therefore it is difficult to accept the plea of respondent no.1 that petitioners had agreed in the meeting held on 6.1.2015 for taking of the OER of the Oil Palm Processing Unit at Aswaraopet, Khammam District, State of Telangana as the basis for fixation of Oil Palm FFBs in the residuary State of Andhra Pradesh although the minutes seem to suggest it to be so. 55. The main contention of petitioners is that the impugned G.O.Ms. fixing price of Oil Palm FFBs is violative of Art.14 of the Constitution. There cannot be any estoppel against the Constitution as held in Olga Tellis v. v . Bombay Municipal Corpn. (1985) 3 SCC 545, at page 569 In that case the Supreme Court held: 28. The doctrine of estoppel is based on the principle that consistency in word and action imparts certainty and honesty to human affairs. If a person makes a representation to another, on the faith of which the latter acts to his prejudice, the former cannot resile from the representation made by him. He mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swarraopet Oil Palm Processing Unit and so they cannot challenge the G.O.Ms No.2 Agriculture and Co-operation (Horti. Seri) Department dt.18.2.2015, cannot be countenanced. 56. The contention of the 5th respondent that the Oil Palm Processing Unit at Aswaraopet had the latest equipment which is not there at Pedavegi also cannot be countenanced since this is not the reason assigned in the impugned G.O. or in the counter-affidavit filed by the 1st respondent. 57. In this view of the matter, the Writ Petition is allowed and a Writ of Mandamus is issued declaring G.O.Ms.No.2, Agricultural Cooperation (Horti Seri.) Department, dt.18.02.2015 issued by the 1st respondent fixing the formula for the pricing of Oil Palm Fresh Fruit Bunches (FFBs) as arbitrary, illegal and violative of Art.14 of the Constitution of India. Consequently the 1st respondent is directed to fix the price of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 in accordance with the Act and keeping in mind the observations made in this Order within eight (08) weeks from the date of receipt of a copy of this order. 58. On 10.04.2015, in this Writ Petition this Court had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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