Jagannatha Shetty, J.
1. The facts in all these petitions are similar and the question raised is also common, and therefore, these petitions shall stand disposed of by this order.
2. For the purpose of determining the question, we may conveniently refer to the facts in W. P. No. 475 of 1973. The petitioner therein is a coffee planter and also holds some agricultural lands. Respondent-3, Tahsildar has called upon the petitioner to sell 68 quintals and 82-1/2 Kgs. of paddy to the agent of the State Government, that is, Large Scale Co-operative Society, Sakleshpur by the notice issued under the Karnataka Paddy Procurement (Levy) Order, 1966 (hereinafter called as 'the Levy Order'). In the Levy Order, the price of paddy of different varieties has been fixed under the schedule thereunder. The rate for the variety of paddy to be surrendered by the petitioner prescribed therein was Rs. 52/- per quintal. It was the same rate payable or paid to all the petitioners. The common contention of the petitioners was that that price was not a statutory price which they ought to have been paid for the paddy surrendered by them. They have accordingly questioned the validity of the Levy Order, and in particular, the price fixed thereon. They have further questioned the validity of S. 3(3-B) of the Act, but at the time of hearing, counsel for the petitioners have given up that contention.
3. In order to determine the question we have to refer S. 3(3-B) of the Essential Commodities Act, 1955 (hereinafter called as 'the Act'). S. 3(3-B) of the Act as it existed during the relevant time provides:
' 3 (3-B). Where any person is required by an order made with reference to Clause (f) of sub-section (2) to sell any grade or variety of food grains, edible oil seeds or edible oils to the Central Government or a State Government or to an officer or agent of such Government and either no notification in respect of such food grains, edible oil seeds or edible oils has been issued under sub-section (3-A) 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 as the price for the food grains, edible oil seeds or edible oils-
(i) the controlled price, if any, fixed under this section or by or under any other law for the time being in force for such grade or variety of food grains, edible oil seeds or edible oils; or
(ii) where no such price is fixed, the price for such grade or variety of food grains, edible oil seeds or edible oils prevailing or likely to prevail during the post-harvest period in the area to which that order applies.
Explanation.-For the purpose of this sub-section, 'post-harvest period' in relation to any area means a period of four months beginning from the last day of the fortnight during which harvesting operations normally commence.'
The section provides that where a person is required by an order to sell any grade or variety of food grains, edible oil seeds or edible oils to the Central or State Government or to the officer or agent, he shall be paid the controlled price, if any, fixed for that article; and if no such controlled price has been determined, he shall be paid the price prevailing or likely to prevail during the post-harvest period in the area to which that order applies.
The levy Order has been made by the State Government in exercise of the powers delegated by S. 3 of the Act read with Order No. GSR. 906, dated the 9th June, 1966. Clause 3 of the said Order which is relevant for determination of the question raised, reads as hereunder:
'3. Levy of Paddy.-(1) Every grower shall, out of the paddy grown in his holding and held in stock by him in respect of each crop, sell to the state Government or its authorised agent at the purchase price such quantity of paddy in accordance with the scale specified in sch. I as may be determined by the Enforcement Officer after taking into consideration the information available with him regarding the holding of the grower and the paddy grown in such holding.
(2). The Enforcement Officer shall, after determining the quantity of paddy required to be sold by a grower under sub-clause (1), Serve on such grower an Order in the manner laid down in clause (b) of sub-section (5) of S. 3, specifying the quantity of paddy to be sold, the purchase point at which and the time within which such paddy is to be delivered.
Explanation.-For the purposes of this clause and clause 5, paddy in the possession or control of the grower immediately after it is harvested shall be deemed to be paddy held in stock by the grower.'
4. In the Statement of Objections filed on behalf of the respondents, it was inter alia stated that the Government fixed the price in the Levy Order after taking into consideration the relevant facts including the market price prevailing then as well as the principles laid down in S. 3(3-B) of the Act, and the petitioners were not required to be paid the price prevalent during the post-harvest period as that price was not relevant. It was further stated that the price fixed in the Levy Order was a reasonable price and must be regarded as controlled price. The substance of the contention, in other words, was that the price fixed in sch. II of the Levy Order was itself the controlled price for the paddy.
5. If the price determined in Sch. II of the Levy Order was itself the controlled price of the paddy, then the petitioners have no case because during the relevant period in question, that is, from 29th Dec. 1971 to 22nd June, 1974, S. 3(3-B) of the Act provided that the petitioners should be paid either the controlled price or where no such price was there, the price prevalent during the post-harvest period in that area should be paid. The sub-section, however, came to be amended by Act 3 of 1974 with effect from 22nd June 1974 with which we are not concerned since all the notices issued to the petitioners were during the period from Jan. 1972 to June 1974.
6. We shall now examine what exactly is the meaning and scope of 'controlled price' and how it could be determined with reference to any essential commodity. The Act or the Levy Order does not provide any procedure to prescribe the controlled price in respect of any essential commodity. S. 3(1) read with S. 3(2), however, provides sufficient guidance in that regard. The Supreme Court in Bihar Cotton Mills Ltd. V. Union of India, : 2SCR398 had an occasion to consider the meaning and the scope of 'controlled price' in respect of an essential commodity. It was observed therein:
'The control of prices may have effect either on maintaining or increasing supply of commodity or securing equitable distribution and availability at fair prices. The controlled price has to retain this equilibrium in the supply and demand of the commodity. The cost of production, a reasonable return to the producer of the commodity are to be taken into account. The producer must have an incentive to produce. The fair price must be fair not only from the point of view of the consumer but also from the point of view of the producer. In fixing the prices; a price line has to be held in order to give preference or predominent consideration to the interest of the consumer or the general public over that of the producers in respect of essential commodities. The aspect of ensuring availability of the essential commodities to the consumer equitably and at fair price is the most important consideration.
The producer should not be driven out of his producing business. He may have to bear loss in the same way as he does when he suffers losses on account of economic forces operating in the business. If an essential commodity is in short supply or there is hoarding concerning or there is unusual demand, there is abnormal increase in price. If price increases, it becomes injurious to the consumer. There is no justification that the producer should be given the benefit of price increase attributable to hoarding or cornering or artificial short supply. In such a case if an escalation in price is contemplated at intervals, the object of controlled price may be stultified. The controlled price will enable both the consumer and the producer to tide over difficulties. Therefore, any restriction in excess of what would be necessary in the interest of general public or to remedy the evil has to be very carefully considered so that the producer does not perish and the consumer is nor crippled.'
In Jinaraja Hegde v. State of Mysore (1970) 2 Mys LJ 224 at p. 227: (AIR 1971 Mys 12 at p. 14) a Bench of this Court, while considering a similar question, observed that the controlled price has necessarily reference to the object of the State fixing up a maximum price beyond which sale cannot be legally made by the grower or the dealer and the price fixed under Sch. II of the Levy Order, 1966, was not such price.
Again, in M/s. A. S. Kasarkod & Sons v. State of Karnataka, W. P. No. 2126 of 1974, etc., D/- 2-7-1974 (Kant), the same question was considered. In that case Chandrashekhar, J. (As he then was) observed at para 31 as follows:
'.......... The price fixed under clause (c) of S. 3(2) of the Act in respect of an essential commodity, in my opinion, governs both sales and purchases of that commodity. The price fixed under clause (c) of S. 3(2) in respect of an essential commodity is, in my opinion, intended to control all sales and purchases generally of that commodity. If clause (c) of S. 3(2) is intended to control the price of a particular category of sales only or a particular category of purchases only, then the very object of controlling the price, namely, making that commodity available at fair prices, will be frustrated I am unable to accept the contention that under clause (c) of sub-s. (2) of S. 3 of the Act the Government can control only the price at which an essential commodity should be sold under clause (f) of that sub-section, without controlling the price at which all other sales or purchases of that commodity can take place.'
From these observations, it becomes clear that the controlled price is a price which is required to be determined by taking into consideration all the circumstances like the interest of the grower, the consumer and the general public. It must be fair from the point of view of the producer and also from the point of view of the consumer. It has to be determined in such a way that the producer does not perish and the consumer is not crippled. The controlled price once fixed must be applicable to all sales and purchases. It should not be intended to control the price of a particular type of transaction. The price which the State Govt. Fixed in the Levy Order or paid to the petitioners was evidently intended to govern the particular type of transaction, i.e. compulsory sale by the grower to the State. Such a price, in our opinion cannot automatically become the controlled price as contended for the Sate Government.
7. In this context, we were helpfully referred to a decision of the Allahabad High Court in Sitaram Jwala Prasad v. State of Uttar Pradesh, : AIR1975All272 . It was observed at page 274, para 7 thus:
'............. We are in agreement with the learned Advocate-General that it is open to the Government to fix the controlled price and to require a certain percentage of food grains to be sold to the State Government at that price in one and the same order. The question, however, is whether the requirement that 50% of food grains are to be sold to the State Government at the price mentioned in Sch. I viz. Rs. 74/- per quintal can be treated as controlled price of the grade or variety of food grains required to be delivered to any person in pursuance of an order made under S. 3(2)(c) of the Act, as contemplated by clause (i) to S. 3(3-B). Clause (i) of sub-s. (3-B) speaks of controlled price, if any, for the grade or variety of food grains, edible oilseed or edible oil and not in regard to a particular transaction of sale of such food grain, edible oil-seed or edible oil. The controlled price contemplated by clause (i), therefore, has to be with reference to either the grade of food grain or its variety. If the Government issues a direction, as in the instant case, that 50% of the food grains are to be sold to it, it will have to pay to the seller a price as contemplated either by clause (i) or clause (ii) of sub-s. (3-B). It cannot say that whatever price it chooses to mention in the order as price payable in respect of the stock requisitioned by it would automatically become the controlled price of the grade or variety of the concerned food grain, as contemplated by cl (i).'
We would hold, therefore that the price fixed in the Levy Order and the price paid to the petitioners was not a controlled price. When there was no controlled price, the growers were entitled to be paid the price prevailing or likely to prevail during the post harvest period in the area to which the Levy Order applied.
Some of the petitioners have surrendered a portion of their levy paddy as per the notices of demand. Therefore, they must be paid either the controlled price during the relevant period or the price prevalent during the post-harvest period in that area.
8. In the result, all these petitions are allowed in part. The impugned notices issued against the petitioners are quashed. The State Government shall pay to the petitioners for the quantity of paddy delivered the revised price as may be determined in the light of this order, with liberty to the respondents to issue a revised notice of demand for the concerned year.
9. The parties are entitled to their costs. Advocates fee Rs. 100/- in each.
Writ petitions partly allowed.