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The Saraswati Industrial Syndicate Ltd. and anr. Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberCivil Writ Petn. Nos. 699 and 709 of 1969
Judge
Reported inAIR1970Delhi257
ActsEssential Commodities Act, 1955 - Sections 3(3C); Essential Commodities (Amendment) Act, 1967
AppellantThe Saraswati Industrial Syndicate Ltd. and anr.
RespondentUnion of India
Appellant Advocate M.C. Chagla, Sr. Adv.,; Bishamber Lal,; M.N. Garg and;
Respondent Advocate Jagdish Swarup, Solicitor General and ; Devinder K. Kapur, Adv.
Excerpt:
.....the circular letter of august 6, 1969, requiring the petitioner-companies to supply sugar at the price determined by the earlier notification of march 5, 1969 were dubbed as arbitrary, without jurisdiction and authority of law an to be vocative of article 31 of the constitution in so far as these required the petitioner-companies to part with their property without the authority of law. that sub-section clearly provides that where any producer is required by an order made with reference to clause (f) of sub-section (2) to sell any kind of sugar then 'there shall be paid to that producer an amount thereforee which shall be calculated with reference to such price of sugar as the central government may, by order determine'.a producer is, thereforee, only entitled to the price which stands..........(f) of sub-section (2) of section 3 of the essential commodities act, 1955 (10 of 1955) at the price determined in the said notification shall be supplied in accordance with the terms and conditions including terms and conditions as to price specified insuch order as if the said notification had continued in force and this notification had not been issued.'the notification of august 1, 1969 was forwarded to the various associations of sugar mills with a circular letter, dated august 6, 1969, in which also it was mentioned: 'the revised prices of levy sugar notified on 29th july 1969 will not be applicable to sugar dispatched or to be dispatched against allotment orders issued by the directorate of sugar and vanaspati prior to 29th july, 1969 and the prices applicable in such cases.....
Judgment:

Jagjit Singh, J.

1. Writ Petns. Nos. 699 and 709 were heard together as the facts relating to those cases are nearly the same and the points involved are exactly identical.

2. The petitioner company in writ No. 699 is the Saraswati Industrial Syndicate Ltd., Yamunanagar District Ambala in Haryana State. That company owns Saraswati Sugar Mills and is engaged in the manufacture of sugar. The petitioner company in writ No. 709 is the Delhi Cloth & General Mills Co., Ltd., Bara Hindu Rao, Delhi, which is also a public limited company having two sugar factories in the District of Meerut, known as Daurala Sugar Works and Mowana Sugar Works.

3. Both the petitioner-companies manufactured sugar, an essential commodity for purposes of the Essential Commodities Act, 1955 (hereinafter referred to for facility of reference as 'the Act'), during the sugar season of the year 1968-69. The factores of the companies are situate in what was demarcated as Zone III.

4. On December 12, 1968 the Ministry of Food, Agriculture, Community Development and Co-operation (Department of Food) issued Notification No. G.S.R. 2181/Ess. Com./Sugar under sub-section (3C) of Section 3 of the act. By that Notification the Central Government determined the ex-factory price payable for I.S.S. grade of sugar produced in the year 1962-69 by all vacuum pen sugar factories situate in Zone Iii and required to be sold by the Government under clause (f) of sub-section (2) of Section 3 at Rs. 164.22 per quintal. The price so determined was revised and raised to Rs. 169.21 to meet incidence of increased excise duty by a subsequent Notification No. G.S.R. 764/Ess.Com/Sugar dated March 5, 1969. Again there was re-determination of price for sugar produced by factories in Zone Iii at Rs. 177.74 by Notification No. G.S.R. 1835/Ess. Com./Sugar, dated July 29, 1969.

5. A further Notification No. G.S.R. 1839/Ess. Com/Sugar, dated August 1, 1969, was issued by the Ministry of Food, Agriculture, Community Development and Co-operation (Department of Food), which provided for insertion of the following paragraph in the above-referred to Notification of July 20, 1969:-

'2. Notwithstanding the supersession of the notificaion of the Government of India in the Ministry of Food, Agriculture, Community Development and Co-operation (Department of Food) No. G.S.R. 764/Ess. Com./Sugar, dated the 5th March, 1969 (hereinafter referred to as the said notification) by this notification, any sugar required to be supplied under an order issued under clause (f) of sub-section (2) of Section 3 of the Essential Commodities Act, 1955 (10 of 1955) at the price determined in the said notification shall be supplied in accordance with the terms and conditions including terms and conditions as to price specified insuch Order as if the said notification had continued in force and this notification had not been issued.'

The Notification of August 1, 1969 was forwarded to the various Associations of Sugar Mills with a circular letter, dated August 6, 1969, in which also it was mentioned: 'the revised prices of levy sugar notified on 29th July 1969 will not be applicable to sugar dispatched or to be dispatched against allotment orders issued by the Directorate of Sugar and Vanaspati prior to 29th July, 1969 and the prices applicable in such cases will continue to be those fixed under Notification No. G.S.R. 764/Ess. Com./Sugar dated the 5th March, 1969'. The said Notification of August 1, 1969 and the circular letter were stated to have come to the notice of the Delhi Cloth & General Mills Co., Ltd., on the 11th of that month.

6. On July 1, 1969, the petitioner-companies had already been required by the Govenment of India, under clause (f) of sub-section (2) of Section 3 of the Act to sell certain quantities of sugar to the Governments of Haryana and Uttar Pradesh or their nominees, subject to the conditions which were specified in the orders issued for the purpose. The delivery of sugar was to commence immediately and was to be completed within fortyfive days from the date of the orders. The price to which the producers were entitled was to be as provided in the above referred Notifications of March 5, 1969.

7. Part of the supplies were made by the petitioner-companies in pursuance of the orders of July 1, 1969 before the Notification of July 29, 1969 was issued determining the price at Rs. 177.74 per quintal instead of Rs. 169.21 per quintal as provided in the Notification of March 5, 1969.

8. It was averred in the petitions that the price determined by the Notification of July 20, 1969, was the final price after the close of the sugar season on the basis of the actual recovery and duration of the season without any adjustment for the lower price fixex previously on estimated basis. After the fixation of the final price the Central Government was stated to be not competent to revise the price for sugar to be supplies after the date of such determination. It was as well mentioned that the Notification of March 5, 1959 having been superseded by the new Notification of July 20, 1969 could not be revived under the provisions of sub-section (3C) of Section 3 of the Act by issuing another Notification dated August 1, 1969.

The Notification of August 1, 1969 and the directions contained in the circular letter of August 6, 1969, requiring the petitioner-companies to supply sugar at the price determined by the earlier Notification of March 5, 1969 were dubbed as arbitrary, without jurisdiction and authority of law an to be vocative of article 31 of the Constitution in so far as these required the petitioner-companies to part with their property without the authority of law. The petitioner-companies, thereforee, desired issue of a writ, order or direction in the nature of certiorari for quashing the Notification dated August 1, 1969 and the directions contained in the circular letter dated August 6, 1969 and also issue of mandamus directing the Union of India, the respondent in the case to cancel or withdraw the said Notification and the circular letter.

9. Some of the relevant provisions of the Act may be noticed as this stage. 'Essential commodity' is defind in Section 2(a). Sugar being one of the foodstuffs is covered by that definition. Section 3 relates to powers of the Central Government to control production, supply and distribution etc., of essential commodities. Sub-section (1) provides that if the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, it may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.

Sub-clause (2), which is without prejudice to the generality of the powers conferred by sub-section (1), specifies certain matters which may be provided by order to be made. Clause (f) of sub-section (2) enables an oder to be made requiring any person holding any stock in essential commodity to sell the whole or a specified part of the stock to the Central Government or a State Government or to an officer or agent of such Government or to such other erson or class of persons and in such circumstances as may be specified in the order, Sub-section (3C) reads as under:-

'(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 thereforee 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 the 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 manufacturing sugar,

and different prices may be determined from time to time for different areas or for different factories or for different kinds of sugar.

Explanationn:- For the purposes of this sub-section, producer means a person carrying on the business of manufacturing sugar.'

10. Mr. Chagla, learned counsel for the petitioner-companies, submitted that the material date for payment of price to the producer is the date of delivery and not the date of allotment orders. It was, thereforee, contended that for deliveries made after July 29, 1969, the producer was entitled to price as determined by the Notification of that date. There could not be two prices, it was urged, for deliveries of sugar made after July 29, 1969. According to the learned counsel the crushing season having come to an end in June the determination of price by the Notification of July 29, 1969 was final and no change couldbe made in the price so determined by the subsequent Notification of August 1, 1969, more particularly when the change was given retrospective effect.

11. It will, however, be seen that the Notification of August 1, 1969 did not change the price as notified on July 29, 1969 with retrospective effect or even otherwise. It sought to clarify, by addition of a paragraph in the order of July 29, 1969, that any sugar required to be supplies, under an order issued under clause (f) of sub-section (2) of Section 3 of the Act before supersession of the Notification of March 5, 1959, shall be supplied in accordance with the terms and conditions including terms and conditions as to price specified in such order. In other words, it merely meant that after the issue of Notification dated March 5, 1969 and before the issue of Notification dated July 29, 1969, any orders made by the Central Government, under clause (f) of sub-section (2) of Section 3, to producers for selling stocks of sugar had to be executed on the terms mentioned in those orders including the price specified therein. As in the allotment orders made on July 1, 1969 it was specifically mentioned that the producer shall be entitled to price as determined by Notification of March 5, 1969, the Notification of August 1, 1969 did not in any way affect the price to be paid for supplies of sugar required to be made with reference to allotment orders issued before July 29, 1969.

12. We are unable to agree with the learned counsel for the petitioner-companies that the price to be paid was the price prevalent on the date of making delivery. Orders for sale of sugar are issued by the Central Government keeping in view actual stocks with prodcuers. These supplies are to be made on the terms specified in the orders. The price to be paid is that which stands determined on the date an order is made under clause (f) of sub-section (2) of Section 3 of the Act. Any re-determination of price subsequent to the making of such an order can only affect supplies to be made with reference to allotment orders issued after the re-determination of price.

13. The above view follows from the provisions of sub-section (3C) of Section 3 of the Act. That sub-section clearly provides that where any producer is required by an order made with reference to clause (f) of sub-section (2) to sell any kind of sugar then 'there shall be paid to that producer an amount thereforee which shall be calculated with reference to such price of sugar as the Central Government may, by order determine'. A producer is, thereforee, only entitled to the price which stands determined on the date on which he is required by an order made with reference to Cl (f) of sub-section (2) to sell any kind of sugar. The date of delivery is of no consequence and if before the supplies or part of the supplies are delivered a different price is determined, the newly determined price does not affect the supplies made or to be mae in pursuance of previous orders.

14. The learned Solicitor General urged on behalf of the respondent and it seems to us quite justifiably, that the Notification of August 1, 1969, did not make any material modification or change in the Notification of July 29, 1969 and was issued to clarify the existing position. It was stated that even if the Notification of August 1, 1969 had not been issued and had not been circulated through a leter of August 6, 1969 the liability of the petitiner-companies to complete delivery of sugar of the required kind at the price determined by Notification of March 5, 1969, pursuant to allotment orders of July 1, 1969 made under Cl (f) of sub-section (2) of S. 3 of the Act, would have remained unaffected.

15. By Notification of August 1, 1969 different prices were not detrmined in respect of sugar required to be sold by producers with reference to orders made after July 29, 1969, under Cl (f) of sub-section (2) of S. 3 of the Act. For all such allotment orders price was to be paid as determined by the Notification of July 29, 1969. It was only in respect of orders made under Cl (f) of sub-section (2) of Section 3 before July 29, 1969 that price was to be paid at the rate which stood determined when the allotment orders were issued.

16. We are, thereforee, of opinion that the Notification of August 1, 1969 and the circular letter of August 6, 1969 did nto materially modify or affect the determination of price made by Notification of July 29, 1969 as the said determination of price was with reference to orders to be made thereafter under Cl (f) of sub-section (2) of S. 3 of the Act for selling any kind of sugar whether to the Central Government or a State Govt., or to an officer or agent of such Government or any other person or class of persons. The impugned Notification and the circular letter appear to have been issued by way of abundant caution and even if these had not been issued supplies made in pursuance of allotment orders of July 1, 1969 were to be paid for at the price determined by Notification of March 5, 1969.

The Notification of August 1, 1969 and the circular letter dated August 6, 1969 cannot thereforee, be regarded to have been issued arbitrarily or without jurisdiction. At least these did not in any way affect the existing liabilities or rights of the petitioner-companies regarding the allotment orders of July 1, 1969. Thus the grievance of the petitioner-companies that they were made to part with sugar at a somewhat lower price without the authority of law or that there was any contravention of Art. 31 of the Constitution is without any real basis. For Zone Iv price was determined by the Notification of July 29, 1969 at the rate of Rs. 153.75 per quintal instead of Rs. 158.20 per quintal as was determined by the Notification of July 29, 1969 at the rate of Rs. 153-75 per quintal instead of Rs. 158-20 per quintal as was determined by the Notification of March 5, 1969. If the price determined by Notification of July 29, 1969 for Zone Iii, in which sugar mills of the petitioner-companies are situate, had been lower than the price determined by Notification of March 5, 1969 the petitioner-companies obviously, would have been entitled tobe paid the higher price on the ground that the supplies were to be paid for at the price which stood determined when allotment orders were issued to them.

17. Another contention raised on behalf of the petitioner-companies was that sale of sugar could only be completed on delivery being made and the saleprice must, thereforee, have reference to the date of delivery and not the date of making an order under Cl (f) of sub-section (2) of Section 3 of the Act.

18. The above submission is part of the general argument that the price which stands determined on the date of supply of sugar has to be paid to the producer rather than the price prevalent on the date of making an order under Cl (f) of sub-section (2) of S. 3 of the Act and which price is specifically mentioned in the order as the price to which the producer is entitled. As already discussed the date of delivery is not the material date. As the Central Government has the power to require any producer holding any stock of sugar to sell the whole or a specified part of the stock and to determine the price to be paid to the producer thereforee the date on which sale is completed or delivery of sugar is made is not the relevant date. For supplies made in pursuance of an order under Cl (f) of sub-s. (2) of S. 3 of the Act the producer is only entitled to the price already determined, at which he is required to make the supplies. A Bench of this Court had also held in Saraswati Industrial Syndicate Ltd., v. Union of India, Civil Writ NO. 1218 of 1967, D/- 10-10-1967 (Delhi) that the price determined from time to time is not liable to adjustment on the basis of price determined at the end of the crushing season.

19. There being no merit in the writ petitions the same are dismissed with costs. The counsel fee for each case shall be assessed at Rs. 300/-.

Hardy, J.

20. I agree.

21. Petitions dismissed.


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