TMI Blog2008 (3) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 3(3C) of the Act which includes: (a) The minimum price, if any fixed for Sugarcane by the Central Government. (b) The manufacturing cost of sugar. (c) The duty or tax, if any, paid or payable thereon; and (d) Securing a reasonable return on the Capital employed in the business of manufacturing, and different price may be determined from time to time for different areas or for different factories or for different kind of sugar. 6. In these appeals, we are concerned with the determination of price of sugar for the sugar years 1983-84 and 1984-85. 7. The Central Government, in exercise of its power conferred upon it under Section 3 of the Act, made an order known as the Sugarcane Control Order. Clause 5A of the said order reads, thus : Clause 5A. Additional price for sugarcane purchased on or after 1st October 1974: (1) Where a producer for sugar or his agent purchases sugarcane, from a sugarcane grower during each sugar year, he shall, in addition to the minimum sugarcane price fixed under Clause 3, pay to the sugarcane grower an additional price, if found due, in accordance with the provisions of the second Schedule annexed to this Order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1938. The Legislature of the State of Uttar Pradesh, furthermore, enacted UP Sugarcane (Regulation of Supply and Purchase) Act, 1953. 10. We may divide the mode and manner in which the prices for levy sugar were to be fixed by the Central Government in three different periods. 11. Prior to 1.10.1974, the Central Government, for arriving at the price of levy sugar, used to mop up the entire excess realization of amount received by the owners of the sugar mills out of sale of free sugar as no restriction thereupon was imposed. 12. Levy sugar price also used to be premised on Statutory Minimum Price (SMP), a factor specified in clause (a) of Section 3(3C) of the Act which is to be determined in terms of clause (3) of the Sugarcane Control Order, 1966 and not on the actual cane prices paid by the sugar factories to the cane growers. 13. The Central Government, however, appointed a Committee commonly known as Bhargava Commission. It gave its recommendations, inter alia, opining that mopping up of the extra sale realization should be confined to 50%. 14. The Central Government, relying on or on the basis of the recommendations of the said Commission, introduced clause 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy sugar. 21. One of the matters which came up before this Court is Shri Malaprabha Cooperative Sugar Factor v. Union of India (Malaprabha-I) since reported in [(1994) 1 SCC 648] wherein this Court, inter alia, held : 102. In paragraph 2.15 the details of the scheme were given as follows: SUGARCANE SUPPLIES STABILISATION SCHEME 2.15 The details of the scheme are as follows: (1) A statutory minimum price for sugar-cane related to a basic recovery of 8.6 per cent with a premium for every 0.1 per cent increase in recovery on proportionality basis will be fixed by the Government of India. (2) The minimum price payable by individual factories will be fixed on the basis of the recovery of the factory for the normal crushing period of the previous season. (3) The statutory minimum price as fixed above shall be paid to all the cane growers subject to clauses (18) and (19) of this scheme. (4) The factories shall share their extra sales realisation from sugar with the cane growers who execute agreements for supply of cane and fulfil contracts. (5) The extra sales realisations shall be calculated according to the following formula: S=R-L Where S stands fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e price is referable to clause (3) of Sugar-cane (Control) Order. The additional price payable to the cane grower under Clause 5-A will arise after the expiry of the sugar year. Sugar price will have to be met only from the extra realisation made by the producer by the sale of sugar in free market which will naturally be more than the levy price. 109. In view of the above discussion, the impugned notifications except the one dated November 28, 1974 cannot be upheld. The reason why we leave out the notification dated November 28, 1974 is that the same came to be issued before the new pricing policy was introduced. We hereby direct the Union of India to amend the notifications taking into account the liability of the manufacturers under Clause 5-A of the Sugar-cane (Control) Order as regards cane price and refix the price of levy sugar having regard to the factors mentioned in Section 3(3-C) of the Act. The Government will have time to issue the amended notifications as directed above till December 31, 1993. 22. Indisputably, a review application filed thereagainst was dismissed by this Court by an order dated 23.2.1994. The Central Government filed an application praying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in Modi on the premise that the sugar year involved therein was also 1982-83. 24. It is, however, of some significance to notice that in the case of Bharat Sugar Mills, the Central Government in its counter affidavit filed on 16.4.1998, in response to the Court's order in regard to the sugar year 1983- 84 and 1984-85 to re-fix the price, stated : It is submitted that in regard to the Levy Sugar (Price Determination 1982-83 Production) Order, the Supreme Court has already upheld the notification issued under Essential Commodities Act in M/s Modi Industries Ltd. v. Union of India Anr. [TC (C) No.9 of 1990 (Annexure-I)]. In the case of Malaprabha Co-operative Sugar Factory Ltd. v. Union of India the Supreme Court had in their order dated 22.9.1993 [(1994) 1 SCC 648] and order dated 28.1.1997 directed the refixation of ex-factory price of levy sugar for the season 1974-75 to 1979-80. The Supreme Court had in its order dated 28.1.1997 held that their order dated 20.2.1996 in TC (C) No.9 of 1990 was applicable only in respect of sugar year 1982-83 and it cannot have any bearing for the years 1975- 76 to 1979-80. Based on the judgment delivered by the Supreme Court Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3C) of the Act and clause 5A were totally independent, in Malaprabha-I, held : 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 interconnected, then they must be read as a whole and not separately as though each is distinct . 28. The factors which were to be taken into consideration, therefore, were necessary to depress and reduce the levy sugar price. It was also noticed that clause 5-A was introduced as a new pricing policy creating a new liability upon the owners of the sugar mills observing : 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 to whether the liability became component of Factor A' or Factor 'B' or both those factors of Section 3(3-C). 29. Dealing with a new contention which was raised by the Union of India visa-vis the decision in Modi, it was observed that the direction given in paragraph 109 of Malaprabha-I was quite clear and did not lend itself to two interpretations and there was no confusion in relation thereto as thereby th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Mahalakshmi Sugar Company disposed of on 9.11.2006. 34. Before noticing the respective contentions of the learned counsel appearing for the parties herein, we may notice two other decisions of this Court. 35. In The Godavari Sugar Mills Ltd. v. Union of India Anr. [JT 2001 (10) SC 527] wherein the relevant sugar year was 1985-86, a question arose as to whether after a long lapse of time, the petitioner therein should be permitted to raise new contentions through a writ petition. This Court refused to exercise its discretionary jurisdiction in permitting the petitioner therein to do so holding that the same will have great financial impact on the Central Government. The Bench chose to follow Modi (supra). 36. A contempt petition was also filed by Malaprabha-I for non- implementation of the decisions of this Court wherein a Bench of this Court opined that no contempt has been committed by the Central Government. The said decision is reported in Malaprabha Coop. Sugar Factory Ltd. v. Union of India Anr. (Malaprabha-3) [(2002) 9 SCC 716]. It was held : This Court in the aforesaid two decisions has said that the retention of 50 per cent is a factor which can be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hermore held : The second reasoning given by the High Court is that even if the State Government had the power to fix the minimum cane price under Section 16 of the 1953 Act, this power came to an end in view of Article 254(1) of the Constitution on the enactment of the EC Act and the promulgation of the Sugarcane (Control) Order, 1955 (later replaced by the 1966 Order), which now gives exclusive power to the Central Government to fix the minimum price. As discussed earlier, we are not in agreement with the aforesaid reasoning as the question of repugnancy does not arise. The High Court has also held that the Central Government, while fixing the price of sugar under Section 3(3- C) of the EC Act, takes into consideration the minimum price of sugarcane fixed under the 1966 Order and if the sugar mills are compelled to pay a higher price than that fixed by the Central Government, it will disturb the price of the levy sugar and such an eventuality could not have been contemplated by the legislature. Over a period of time, the quota of levy sugar has gone down from 40 per cent to 10 per cent of the total production of sugar and the sugar mills are now free to sell 90 per cent of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Determination of price of levy sugar being a statutory legislative function, the Central Government could not have ignored any of the factors laid down therefor. 2. As in Malaprabha-I, levy of additional price in terms of Clause 5A of the order was held to be a relevant factor within the meaning of clause (b) of Section 3(3C) of the Act, the Central Government could not have ignored the same only on a specious plea that the mopping up of the excess amount realized by the sugar mill owners have come down from 100% to 50%. 3. In view of the clear and unambiguous directions of this Court in Malaprabha-I, as clarified in Malaprabha-II, the Central Government was obligated to take into consideration the fact that the liabilities of the owner towards the cane grower in terms of Clause 5A of the Order as also the State Advice Price would follow in purview of clauses (b) and (d) of Section 3(3C) of the Act. 4. A Constitution Bench of this Court having opined that imposition of SAP being statutory in nature and as the same enhanced the liability of the sugar mill owners to be a relevant factor for determination of the price of levy sugar both under clauses (b) and (d) thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the interest of general public, the control of production, supply and distribution of, and trade and commerce, in certain commodities. Section 3(3C) of the Act reads as under : 3.(3C) Where any producer is required by an order made with reference to clause (f) of sub section (2) to sell any kind of sugar (whether to the Central Government or a State Government or to an officer or agent of such Government or to any other person or class of persons) and either no notification in respect of such sugar has been issued under sub-section (3A) or any such notification, having been issued, has ceased to remain in force by efflux of time, then, notwithstanding anything contained in sub-section (3), there shall be paid to that producer an amount therefor which shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to- (a) the minimum price, if any, fixed for sugarcane by Central Government under this section ; (b) the manufacturing cost of sugar; (c) the duty or tax, if any, paid or payable thereon; and (d) the securing of a reasonable return on the capital employed in the business of manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anr. v. Advocate-General to Government of HP Ors. [(1990) 4 SCC 356, Para 15]; Delhi Farming Construction (P) Ltd. v. Commissioner of Income Tax, Delhi [(2003) 5 SCC 36, Para 26]. 49. Section 3(3C) of the Act specifies four factors. The Statutory Protected Price, as specified by the Order, would be a factor which would be covered by clause (a). The Central Government, however, cannot ignore the other factors. 50. How the statutory direction to pay additional price to the cane growers, as envisaged under clause 5A of the Order or the State Advisory Price as mandated by the States in exercise of their regulatory power ,would be applied in determining the price of levy sugar was the subject matter of various decisions of this Court. 51. In Malaprabha-I, this Court noticed the statutory change effected by reason of insertion of Clause 5A in the Order w.e.f. 1.10.1974. The question raised before this Court was that in price fixation, the Central Government had not taken into consideration the relevant criteria laid down under Section 3(3C) of the Act while issuing notifications in regard to the fixation of price of levy sugar. Noticing the decision of this Court in Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, held that the Central Government cannot ignore any of the factors specified in Section 3(3C) of the Act for the purpose of fixation of price for levy sugar. What was relevant was the actual cane price paid and excess realization from free market sales therefor. 55. In Sitaram Sugar (supra) payment of price of sugarcane to the growers has been found to constitute 70% of the total price. Therefore, it indisputably had a great role to play for determining the price of levy sugar. Only with a view to determine the price, it was also necessary to take into consideration the manufacturing cost and reasonable return on the capital employed. The Essential Commodities Act does not contemplate that manufacturers of sugar must continue their activities although the units were running at a loss. Purported object for which Clause 5A was introduced was to see that the sugar industry became entitled to excess realization of free sugar which would give them a reasonable margin for meeting their requirements including modernization and expansion of the Plant. 56. Sub-clause (iv) of Clause 5A of the Order mandates that the additional price determination under sub-clause (ii) shall be paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment cannot refuse to consider the factor which is favourable to the mill owner assumes significance. We say so for two reasons (1) it is possible that while confining mopping up to the extent of 50%, the fact of additional price paid in terms of Clause 5A of the Order would be neutralized or adjusted but the same would not mean that the exercise shall not be carried into effect; and (2) the effect of payment of an extra amount in terms of State Advisory Price cannot be refused to be taken into consideration. 61. We are not unmindful of the fact that the learned counsel for the appellant in Mahalakshmi before the High Court confined its case only to SAP but then in Hari Nagar Sugar Mills, the Delhi High Court accepted the contentions which have been raised before us. 62. When the legislative policy is reflected in a statutory provision, the Court, while being called upon to determine as to whether the same has been complied with or not, must apply the rule of purposive construction. It is idle, in a case of this nature, to contend that as the element of additional price paid under Clause 5A of the Order and SAP had not been specifically provided for in Section 3(3C), they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lords in any situation to plead in regard to its need for the public premises. It could just terminate the tenancy without specifying any cause for eviction. 50. Except in the first category of cases, as has been noticed by us hereinbefore, Sections 4 and 5 of the Act, in our opinion, may have to be construed differently in view of the decisions rendered by this Court. If the landlord being a State within the meaning of Article 12 of the Constitution of India is required to prove fairness and reasonableness on its part in initiating a proceeding, it is for it to show how its prayer meets the constitutional requirements of Article 14 of the Constitution of India. For proper interpretation not only the basic principles of natural justice have to be borne in mind, but also principles of constitutionalism involved therein. With a view to read the provisions of the Act in a proper and effective manner, we are of the opinion that literal interpretation, if given, may give rise to an anomaly or absurdity which must be avoided. So as to enable a superior court to interpret a statute in a reasonable manner, the court must place itself in the chair of a reasonable legislator/ author. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Malaprabha-I. It explicitly said so in the counter affidavit filed in Bharat Sugar Mills. Indisputably, for the purpose of determination of the price of levy sugar, it called for the relevant materials from each of the owner of the sugar mill. It is, therefore, too late in the day for the Central Government to contend contra. 67. Rules of executive construction in a situation of this nature may also be applied where a representation is made by the maker of legislation at the time of introduction of the Bill or construction thereupon is put by the executive upon its coming into force, the same carries a great weight. 68. In this regard, we may refer to the decision of the House of Lords in the matter of R.V. National Asylum Support Service [(2002) 1 W.L.R.2956] and its interpretation of the decision in Pepper v. Hart [(1993) A.C. 593]. on the question of 'executive estoppel'. In the former decision, Lord Steyn stated:- If exceptionally there is found in the Explanatory Notes a clear assurance by the executive to Parliament about the meaning of a clause, or the circumstances in which a power will or will not be used, that assurance may in principle be admitted agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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