U.P. COOPERATIVE CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSOCIATION AND ORS.

A (a) the quantity of cane to be supplied by each cane-grower or Cane-growers' Co-operative Society in s_uch area to the factory for which the area has so been reserved or assigned;

(b) the manner in which cane grown in the reserved area B of the assigned area, shall be purchased by the factory for which the area has been so reserved or assigned and the circumstance in which the cane grown by a cane- grower shall not be purchased except through Cane- growers' Co-operative Society; c ( c) the form and the terms and conditions of the agreement to be executed by the occupier or manager of the factory for which an area is reserved or assigned for the purchase of cane offered for sale; D ( d) the circumstances under which permission may be granted -

(i) for the purchase of cane grown in reserved or assigned area by a Gur, Rab or Khandsari Manufacturing Unit or any person or factory other than the factory for which area has been reserved or assigned, and

(ii) for the sale of cane grown in a reserved or assigned area to a Gur, Rab or Khandsari Manufacturing Unit or any person or factory other than the factory for which the area is reserved or assigned;

G (e) such incidental and consequential matters as may appear to be necessary or desirable for this purpose."

The contention assiduously canvassed by the State Governments and the counsel for the cane-growers is that the power of the State Government H under Section 16 is a wide power intended for maintenance of supplies

U.P. CO-OP. CANE UNION FEOERATION v WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.J 321 empowering the State Government by order to 'regulate, inter alia, A the distribution, sale or purchase of any cane in any reserved or assigned area'. The contention is that the power to regulate a sale or a purchase of cane in a reserved or assigned area would necessarily take within its scope the power to fix the price at which such sale or purchase can be effected. B

The contention is sought to be buttressed by highlighting that the object of reservation of sugarcane area is to ensure that there is no interruption to the supply of sugarcane leading to disruption of the production of sugar, which has been declared to be an essential commodity. C Unlike other raw-materials, sugarcane needs to be grown for a specific period and harvested at a specific time to maintain its sugar content so that it will yield the maximum sugar when crushed. This determines the imperative necessity for continuous supply of sugarcane to the sugar factories depending on their crushing capacity and crushing program. It is contended that the economy of the U .P. State and its revenues depend, to a very great extent, on the crushing of sugarcane and production of sugar. Molasses, which is the bye-product, is utilised by distilleries for manufacturing rectified spirit, which in tum is used for the manufacture of potable liquor and other chemical products. It is also urged that crushing of sugarcane results in the bye-product of bagasse, which is used as fuel or by paper mills. Hence, the counsel contended that, in view of the crucial importance of timely supply and crushing of sugarcane, the 1953 Act has conferred upon the State Government the power of regulation of sale and purchase of sugarcane under Section 16 and the power under Section 17 to ensure speedy payment of cane price. This power the Government F exercises by calling for a tripartite meeting wherein conflicting points of view are put forward and ultimately a decision is arrived at as to what should be the higher price payable which is termed as the 'State Advised Cane Price'. It is contended, that this power of the State Government to fix a price higher than the minimum price fixed by the Central Government G is discernible in the State's power to 'regulate the sale and purchase of sugarcane' with a view to maintaining supplies. It is also contended that the word 'regulate' has been held to be a very wide power even empowering fixation of royalty, higher tariff for electricity, fixing rates for cinema and so on as evidenced in the following judgments :- H

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A I. Adoni Cotton Mills Ltd. & Ors. v. A.P. State Electricity Board & Ors., (1976] 4 SCC 68 [para 7]

2. State of Tamil Nadu v. Mis. Hind Stone & Ors., (1981] 2 sec 205 [para 1OJ

3. K. Ramanathan v. State of Tamil Nadu & Anr., (1985J 2 SCC 116 (paras 11, 15, 18-20 & 23J

5. Jiyajeerao Cotton Mills Ltd. & Anr. v. MP. Electricity Board & Anr., (1989J Supp (2) SCC 52 [para 32]

6. Deepak Theatre, Dhuri v. State of Punjab & Ors., (1992] D Supp I sec 684 [paras 3-1 OJ

7. Quarry Owners' Association v. State of Bihar & Ors., (2000J 8 sec 655 (paras 25, 26, 31 & 61(c)J

E Counsel for the sugarcane-growers' and the State also contended that the expression 'regulate' is used in Section 16 in the context of maintaining supplies and "sale or purchase" . The expression 'sale or purchase' would necessarily include all aspects or ingredients of sale as it cannot be gainsaid that price is certainly an important ingredient of sale. The provisions of F the Sale of Goods Act, Contract Act, Transfer of Property Act, Article 366(29) of the Constitution of India and a number of authorities were relied upon to contend that price is an essential ingredient of sale and that the State could regulate it

That the power to regulate production, supply and distribution of a G commodity may, in an appropriate context, be wide enough to include the power to fix the price, is incontestable. However, the background against and the context in which the power of regulation has been given and the scheme of the Statute determine the content of such power. The counsel for the sugar factories urge that the background, context and evolution of the Statute belie such a construction. From the Sugarcane Act of 1934

U.P. CO·OP. CANE UNI.ON FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.] 323

down to the U.P. Sugarcane Act, 1953, it would appear that after 1938 there has been a distinct shift and the power of price fixation of sugarcane was taken over by the Central Government for larger reasons of policy. They point out that in Ch. Tika Ramji & Ors. Etc. v. The State of Uttar Pradesh & Ors., (1956] SCR 393, the very Act, namely, the U.P. Sugarcane Act, 1953, was challenged as unconstitutional on several grounds including the ground that it was inconsistent with the provisions of the Essential Commodities Act, 1955. After elaborate consideration of the legislative history of the Act and an analytical contrast of the provisions of the Essential Commodities Act with the U.P. Sugarcane Act, 1953, the Constitution Bench of this Court came to the specific finding that the power to fix minimum price of sugarcane, which existed under the U.P. Act I of C 1938 had been deleted from the U.P. Sugarcane Act, 1953 since it was being exercised by the Centre under Clause 3 of the Sugar and Gur (Control) Order, 1950. In fact, the Constitution Bench of this Court in Ch. Tika Ramji's case (supra) came to the conclusion that there was no repugnancy between the Essential Commodities Act, 1955 and the U.P. D Sugarcane Act, 1953 as they operated in different spheres, there being no conflict or overlapping in the matter of price fixation. Counsel rely heavily on the following observations from Ch. Tika Ramji 's case (supra) :-

(a) "Even the power reserved to the State Government to fix minimum prices of sugarcane under Chapter V of the U.P. E Act of I of 1938 was deleted from the impugned Act the same being exercised by the Centre under clause 3 of Sugar and Gur Control Order, I 950, issued by it in exercise of the powers conferred under Section 3 of Act.XXIV of 1946. F The prices fixed by the Centre were adopted by the State Government 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. G The State Government also incorporated these prices which were notified by the Centre from time to time in the forms of the agreements which were to be entered between the cane growers, the cane-growers' co-operative societies, the factories and their purchasing agents for the supply and H

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A purchase of sugarcane as provided in the U.P. Sugarcane Supply and Purc~ase Order, 1954.

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 whlch B provided for the payment of price of sugarcane by the occupier of a factory to the sugarcane grower~. It could be recovered from such occupier as if it ~e an arrear of land revenue. This comparison goes to show that the impugned Act merely confined itself to the regulatinn of the supply and c purchase of sugarcane required for use in sugar factories and did not concern itself at all with the controlling or licensing of the sugar factories, with the production or manufacture of sugar or with the trade and commerce in, and the production, supply and distribution of, sugar.

D If that was so, there was no question whatever of its trenching upon the jurisdiction of the Centre in regard to sugar industry which was a controlled industry within Entry 52 of List I and the U.P. Legislature had jurisdiction to enact the law with regard to sugarcane and had legislative E competence to enact the impugned Act." (pp. 422-423)

(b) " ....... the only question which remained to be considered was whether there was any repugnancy between the provisions of the Central legislation and the U.P. State legislation in this behalf. As we have noted above, the U.P. State Government F did not at all provide for the fixation of minimum prices for sugarcane nor did it provide for the regulation of movement of sugarcane as was done by the Central Government in clauses (3) and (4) of the Sugarcane Control Order, 1955.

The impugned Act did not make any provision for the same and the only provision in regard to the price of sugarcane which was to be found in the U.P. Sugarcane Rules, 1954, was contained in Rule 94 which provided that a notice of suitable size in clear bold lines showing the minimum price of cane fixed by the Government and the rates at which the cane is being purchased by the centre was to be put up by

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an occupier of a factory or the purchasing agent as the c~l]\ may be at each purchasing centre. The price of cane fi~~d by Government here only meant the price fixed by the appropriate Government which wo!:lld be the Central Government, under clause 3 of the Sugarcane Control Order, 1955, because in fact the U.P. State Government never fixed B the price of sugarcane to be purchased by the factories. Even the provisions in behalf of the agreements contained in clauses 3 and 4 of the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, provided that the price was to be the minimum price to be notified by the Government subject to such deductions, if any, as may be notified by the C Government from time to time meaning thereby the Central Government, the State Government not having made any provision in that behalf at any time whatever. The provisions thus made by the Sugarcane Control Order, 1955, did not find their place either in the impugned Act or the Rules made thereunder or the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, and the provision contained in Section 17 of the impugned Act in regard to the payment of sugarcane price and recovery thereof as if it was an arrear of land revenue did not find its place in the Sugarcane Control Order, 1955. These provisions, therefore, were mutually exclusive and did not impinge upon each other there being thus no trenching upon the field of one Legislature by the other." (vide 433-434) F (c) "Suffice it to say that none of these provisions do overlap, the Centre being silent with regard to some of the provisions which have been enacted by the State and the State being silent with regard to some of the provisions which have been enacted by the Centre. There is no repugnancy whatever G between these provisions and the impugned Act and the Rules framed thereunder as also the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954 do not trench upon the field covered by Act X of 1955. There being no repugnancy at all, therefore, no question arises of the operation of Article 254(2) of the Constitution and no H

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A provision of the impugned Act and the Rules made thereunder is invalidated by any provision contained in Act LXV of 1951 as amended by Act XXVI of 1953 or Act X of 1955 and the Sugarcane Control Order, 1955 issued thereunder." (p. 435) B These observations of the Constitution Bench in Ch. Tika Ramji's case (supra) do support the arguments of the respondents-sugar producers. A distinction is sought to be made that Ch. Tika Ramji 's case (supra) does not decide the issue as to the content of the regulatory power under the C U.P. Sugarcane Act, 1953 and, therefore, these observations are not of any avail. This argument cannot be accepted. The question posed before the Constitution Bench was one of inconsistency between Central Legislation and State Legislation, the State Legislation being the U.P. Sugarcane Act,

1953. The basis for the decision in Tika Ramji (supra) is that the two D operated on separate planes and that the provisions "were mutually exclusive and did not impinge on each other" there being no trenching upon the field of one legislature by the other. I cannot impute to the Constit:ition Bench an incomplete analysis of the provisions of the U.P. Sugarcane Act, 1953 when it made these observations. The observations necessarily suggest to me that the full extent of the State's power under the 1953 Act E was reckoned with and compared against the power of the Central Government under the Central Legislation after which only the Constitution Bench arrived at its finding that there was no conflict and upheld the constitutional validity of the U.P. Sugarcane Act, 1953. There was no tentativeness or ad hoc1sm in the observations; nor were they made only pro tern.

The very Statute (U.P. Sugarcane Act, 1953) having the subject matter of construction and interpretation by the Constitution Bench, it is not open, for this Bench at least, to take a different view with regard to its construction.

The respondents seek to counter these arguments by seeking to read Ch. Tika Ramji's case (supra) in a different manner. According to them, the contrast made by Ch. Tika Ramji 's case (supra) between the Central Legislation and the U.P. State Legislation was not on the general issue of price, but only with regard to 'minimum price' on which, there being no

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provision in the State Act, no conflict was discovered. The counsel for growers contend that Ch. Tika Ramji 's case (supra) had no occasion to examine repugnance from the stand point of higher price, nor was there an examination of the scope of Section 16 of the 1953 Act and the ambit of State's regulatory power in Ch. Tika Ramji 's case (supra).

A number of arguments were addressed to impress upon us that there is no repugnance between the Essential Commodities Act, 1953 read with Sugarcane (Control) Order, 1966 and the U.P. Sugarcane Act, 1953. It was . argued that the Central Act does not occupy the whole gamut of price fixing and as the field of 'price' was not fully occupied, leaving plenty of room available for exercise of legislative power by the State. In my view, it is unnecessary to go into this question. Even assuming that the field of price is not fully covered by the Essential Commodities Act, 1955, the question is whether the Statute before us empowers the State government to fix a price of sale/purchase of sugarcane at a price higher than the price fixed under the Sugarcane (Control) Order, 1966? The only legislation upon which the sugarcane-growers' rely is the U.P. Sugarcane Act, 1953. This very Act was the subject matter of consideration and interpretation by the Constitution Bench of this Court in Ch. Tika Ramji 's case (supra). After comparing this with the provisions of the Essential Commodities Act of 1955 and the Sugarcane (Control) Order, 1966 made thereunder, the Constitution Bench found that the two did not operate on a collision course because the provisions dealt with subjects which are "mutually exclusive and did not impinge on each other" there being no trenching upon the field of one legislature by the other. Whether the State Legislature has the power at all of fixing a purchase price for sugarcane at a price higher than the minimum price fixed under the Sugarcane (Control) Order, 1966, is a F question that need not detain me. As and when such an issue arises before some court, it will be considered by the court. For the nonce, I am concerned with the interpretation of Section 16 and 17 of the U.P. Sugarcane Act, 1953 which must necessarily proceed on the hasis of what has been found in Ch. Tika Ramji 's case (supra) after an examination of its provisions and the Statement of Objects and Reasons appended to the G Bill which preceded the said Act of 1953.

Two further points of distinction were sought to be drawn as to why the ratio of Ch. Tika Ramji 's case (supra) would not apply to the present case. First, that Ch. Tika Ramji 's case (supra) did not have the benefit of H

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A .examining the Sugarcane (Control) Order, 1966. Second, that Ch. Tika kamji's case (supra) was only concerned with comparing the power to fix the minimum price and did not concern itself with the power of the State Government to fix any higher price. In my view, these distinctions are purely chimerical.

B A comparison between the Sugarcane (Control) Order, 1955 and Sugarcane (Control) Order, 1966 brings out the hollowness of the first distinction. Under the Sugarcane (Control) Order, 1955, clause (1)(2)(c) defined 'price' to mean the price fixed by the Central Government from C time to time, for sugarcane delivered at the factory gate. It then empowered the Central Government vide clause (3) to fix in respect of any area 'the price' or 'the minimum price' to be paid for the sale/purchase of sugar. The only change made in the Sugarcane (Control) Order, 1966 is that the expression 'price' has been defined in clause (2)(g) to mean "the price or the minimu.m price fixed by the Central Government from time to time", D for sugarcane delivered, inter alia, to a sugar factory. Clause (3) empowers the fixation of minimum price of sugarcane. Sub-clause (2) of clause (3) prohibits the sale/purchase or agreement to sell/purchase sugarcane at a price lower than fixed under sub-clause (I). Sub-clause (3), however, requires the producer of sugar who purchases sugarcane from a grower, unless there is an agreement in writing to the contrary, to pay within 14 days from the date of delivery of the wgarcane or tender within the same period the price of the cane sold "at the rate agreed to between the producer and the sugarcane-grower or Sugarcane-growers' Co-operative Society or that fixed under sub-clause (1 ), as the case may be". Consequently, if the parties have agreed upon a higher price, the Sugarcane (Control) Order, 1966 recognises that and obligates such amount to be paid. This is also recognised by clause (3-A) dealing with the rebate that can be deducted. Under this clause, the producer of sugar is required to pay "either the minimum price of sugarcane fixed under clause (3) or the price agreed to between the producer or his agent or the sugarcane grower or the G Sugarcane-growers' Co-operative Society, as the case may be (hereinafter referred to as 'the agreed price')".

In addition, Section 5 and 5-A deal with the additional amount to be paid by the producer of the sugar 'in addition to the minimum sugarcane H price fixed under clause (3 )'. The distinction that is sought to be drawn,

U.P. CO-OP. CANE UNION FEDERATION'· WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.] 329

therefore, has no basis in my view. The Sugarcane (Control) Order of 1955 A talked only in terms of minimum price and did not deal with additional price. The Sugarcane (Control) Order, 1966, after enumerating the mechanism for fixation of minimum price, goes on to indicate that, if the 1 parties agree upon it, a rate higher than that minimum rate would become payable and deals with the matter of enforcement of such payment, calculation of the rebate, under clause (3-A), set-off available of the additional amounts against advances and such other issues.

I am, therefore; unable to accept the first distinction made for and I think that the observations in Ch. Tika Ramji 's case (supra), though made in the context of Sugarcane (Control) Order, 1955, are equally applicable in the context of the Sugarcane (Control) Order, 1966. Now to the second distinction. Ch. Tika Ramji 's case (supra) was considering the conflict between the provisions of the Central Legislation, namely, the Essential Commodities Act, 1955 and the U.P. Sugarcane Act, 1953. Under Section 3 of the Essential Commodities Act, 1955, the Central Government is specifically empowered, inter alia, to 'regulate' the production supply and distribution of the essential commodity or trade and commerce therein and also may provide for controlling the 'price' at which the essential commodity may be bought or sold. The power to 'control the price' is of the widest amplitude and takes into its fold the power to fix the minimum price, the fair price, the remunerative price or even the maximum price. It was this power which was contrasted with the power of the State Government under the U.P. Sugarcane Act, 1953. After making such a contrast, Ch. Tika Ramji 's case (supra) came to the specific conclusion that the State Act did not, in any way, impinge upon the area covered by the F Central Act as the provisions of the two Acts are "mutually exclusive and did not impinge on each other" there being no trenching upon the field of one legislature by the other. While contrasting this power of the Central Government and its exercise under the Sugarcane (Control) Order, 1955, '., as against the powers of the State Government under the provisions of the U.P. Sugarcane Act, 1953, Ch. Tika Ramji's case (supra) discerned no G power for price fixation in the State Government under the provisions of 1953 Act and that is why its constitutional validity was upheld. In fact, when Ch. Tika Ramji's case (supra) fails to discover any provision in the State Legislation for minimum price fixation with regard to sale/purchase of sugarcane, and upholds its constitutional validity on that very ground, H

330 SUPRCME COURT REPORTS [2004] SUPP. 2 S.C.R.

A it would be futile to attempt to discover in the State Act a power to fix a price higher than the minimum price.

Another interesting contention advanced on behalf of the sugarcane- growers' is that there is a distinction between 'minimum price' fixed, B which is exclusively within the province of the Central Government under the provisions of the Essential Commodities Act, 1955 and what the State seeks to fix is 'fair price' or 'remunerative price'. It is contended that the two are not repugnant, there being no conflict between the Centre's power to fix 'minimum price' and the State's power to fix the 'remunerative price' or the 'fair price'. In my view, the question is not one of repugnancy. The C question is one of tracing the source of the power, if, at all, it exists. By merely calling it 'fair price' or 'remunerative price', one cannot wish away the consequences of non-payment thereof. The coasequence of not paying the minimum price is penal liability incurred under the provisions of the Essential Commodities Act, 1955 read with the Sugarcane (Control) Order,

D 1966. I see no corresponding legislative provision for non-payment of the so-called 'fair price' or 'remunerative price' under the U.P. Act of 1953.

Even assuming that such a power of higher price fixation exists, the power can only be adjudicatory in nature. The minimum price is the price E which when fixed has to be paid by all purchasers of cane. Anything higher than that would require adjudication of rival claims for which I see no machinery under the U.P. Sugarcane Act of 1953 or under the delegated legislation made thereunder. There are also no guidelines indicated in the 1953 Act as to the basis on which the so-called fair price, rem11nerative F price or State Advised Price is to be arrived at. To fix the State Advised Price much above the centrally fixed minimum price, and that too by an executive fiat, may render the constitutionality of such power open to challenge as arbitrary and hit by Article 14 of the Constitution.

Looked at from the practical point of view, if the contention of the G cane-growers is accepted, what is payable in the State would, in reality, be the minimum price payable for sugarcane. Calling it as the 'fair price' or 'remunerative price' would merely be a matter of semantics and not substance. An illustration from the field of industrial adjudication may be considered. A minimum wage is payable under the Minimum Wages Act,

H 1948. All industries are required to pay this; or else, they have no right

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to exist and must necessarily close down [See in this connection Messrs. A Crown Aluminium Works v. Their Workmen]. Employers are not precluded from voluntarily paying wages higher than minimum wages to the workmen. However, if the workmen want to enforce a fair wage, a rate of wage higher than the minimum wage, it can only be done by an elaborate process ofadjudication envisaged under the Industrial Disputes Act, I 94 7. B It is only by such an award adjudicated by that process which can fix a rate higher than the minimum rate of wages. In my view, this principle would equally apply to a situation of fixing of the fair price for purchase of cane. I see no adjudicatory machinery, nor guidelines, under the U.P. Sugarcane Act of 1953 for doing it. Except the bald reference to 'regulation of sale and purchase of cane', there is nothing else therein to indicate the mode, conditions under which, or the guidelines subject to which such an exercise of fixing the fair price can be exercised, and that too by a mere executive fiat. I find it extremely difficult to infer such a power of fixation of price higher than the minimum price in a Statute which is utterly bereft of any adjudicatory mechanism or guidelines, particularly when the subordinate legislation is replete with references to the 'minimum price fixed by the Government', which too was interpreted by Ch. Tika Ramji 's case (supra) as the 'minimum price fixed by the Central Government'. I am, therefore, unable to accept this argument. E Based on the doctrine of contemporanea expositio, counsel for the sugarcane-growers' attempted to read the State's power by reference to some provisions of the subordinate legislation made under the U.P. Sugarcane Act, 1953.

Clause 3 of the U.P. Sugarcane Order, 1956 was referred to. Under F this clause, the occupier of a factory is required to estimate by 3 lst of October every year the quantity of cane which each grower enrolled is required to offer in Form A to supply cane grown in the reserved area to the occupier of the factory. Correspondingly, the occupier of the factory, for which the area has been reserved, is required within 14 days of the G receipt of the offer to enter into an agreement in Form B or Form C of the Appendix, with tlie cane-grower or the Cane-growers' Co-operative Society. A reference to Form B and Form C indicate that what is contemplated therein is only an agreement by the first party cane-grower to sell cane to the second party 'at the minimum price notified by H

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A Government subject to deductions, if any, .as may be notified by the Government from time to time'. There is hardly anything in this which supports the contention advanced. Thus, it would appear that the U.P. Sugarcane Order, 1954 did not contemplate anything more than the minimum price fixed by the Government to be stipulated in the form of B a statutory contract.

In the U.P. Sugarcane Rules, 1954, Chapter IX deals with payments. The only reference made in the Rules to the price, as indicated in Ch. Tika Ramji 's case (supra), is in Rule 94. Rule 94(b) requires a notice to be put C up by the occupier of a factory in suitable size in clear bold letters showing the 'minimum price' of cane fixed by the Government and the rates at which cane is being purchased at the centre. It is not the 'cane-growers' case before us that the State Government ever fixes the 'minimum price'. As observed in Ch. Tika Ramji 's case (supra), the reference here is obviously is to the minimum price of cane fixed by the Central Government. D The reference to the rates at which the cane is purchased in a particular factory could be conceivably to the agreed price between the cane-grower and the producer of sugar.

There is no doubt that the provisions of the Sugarcane (Control) E Order, 1966, the U.P. Sugarcane Act, 1953 and the subordinate legislation thereto permit the sugarcane-grower and the sugar producer to agree upon a price at a rate higher than the rate fixed by the Central Government statutorily. What may be permissible consensually between the parties does not empower the State to fix a price higher than the statutory minimum price on pain of sanction for disobedience.

It is contended for the cane-growers that the Sugarcane (Control) Order, 1966 itself recognises that the parties may, by an agreement, pay a rate higher than that fixed by the Central Government and, if there is such an agreement, the agreed rate would be substituted for the minimum rate fixed by the Central Government; such an agreement need not be evidenced by any writing as it car. be an ora! agreement also, since oral agreements are permitted under Section I 0 of the Indian Contract Act, 1872 in the absence of a law to the contrary. Such oral agreements are also capable of enforcement as much as an agreement in writing. Section 16(2)(c) of the U.P. Sugarcane Act, 1953 confers powers to prescribe forms and terms

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of the agreement to be executed by the occupier or manager of the factory for purchase of sugarcane. Chapter IX of the Rules prescribed thereunder deals with payment of cane price and issuance of parchas. By reason of the Rules and the U.P. Sugarcane Order, 1954, vide clause 3(3) requiring agreements to be entered into by prescribed forms, requisition, slips/ parchas are issued which would indicate the cane price, total quantity of cane supplied and the total amount payable. Once such a parcha has been issued indicating the quantity of cane supplied, the rate at which the cane is supplied and the total amount payable, the agreed rate indicated becomes payable in lieu of the minimum rate fixed by the Central Government and would have the same legal efficacy as the minimum rate fixed by the C Central Government.

That there is sufficient leeway for consensual payment of a rate higher than the minimum rate is beyond doubt. If such a rate has been agreed upon, orally or in writing, then that higher rate substitutes itself in the place of the minimum rate fixed by the Central Government. The question before us is not as to what can be consensually done. The question is, in the absence of consensus, does the State have the power under the 1953 Statute concerned to determine a higher rate than the minimum rate as the rate payable for the cane supplied? I am afraid, the argument begs the question and does not indicate the manner in which such a power, if it exists, can be discovered,

It is not necessary for me to notice or discuss in detail the authorities relied upon by the parties to show that there is no conflict between the provisions of the U.P. Sugarcane Act, 1953, the provisions of the Essential F Commodities Act, 1955 and the subordinate legislation thereunder. This exercise has already been done by the Constitution Bench of this Court in Ch. Tika Ramji 's case (supra) and it is only after this exercise was done that the constitutional validity of the Act was upheld. I, therefore, decline to go into the question of 'occupied field', on which much stress has been ~- G Another contention urged on behalf of the cane-growers' is that, under Article 162 of the Constitution, as expounded by the decision of this Court in Rai Sahib Ram Jawaya Kapur & Ors. v. The State of Punjab, [ 1955] 2 SCR 225, it is open to the State to issue executive orders even H

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A ifthere is no legislation in support thereof, provided the State had the power to legislate on the subject in respect of which action is taken. It is contended that the instant legislation falls within Entries 33 and 34 of List III - Concurrent List and, therefore, the State Legislature is fully competent to legislate with reference to these entries. Consequently, the executive is B equally empowered to issue an order to the same extent by reason of Article 162 of the Constitution. Hence, even if there is no statutory basis for the State Advised Price, it is legal and valid by reason of the exercise of executive powers within the meaning of Article 162.

C The contention is unsound and cannot be accepted. A Constitution Bench of this Couit in State of Madhya Pradesh & Anr. v. Thakur Bharat Singh, [1967] 2 SCR 454, was presented with the same argument and rejected it in the following words :-

"In our judgment, this argument involves a grave fallacy. All D executive action which operates to the prejudice of any person must have the authority of law to support it, and the terms of Article 358 do not detract from that rule. Article 358 expressly authorises the State to take legislative or executive action provided such action was competent for the State to make or take, but for the provisions contained in Part III of the ::onstitution. Article 358 does not purport to invest the State with arbitrary authority to take action to the prejudice of citizens and others".

The observations in Rai Sahib Ram's case (supra) were also explained away in Thakur Bharat Singh 's case (supra) by pointing out that the action taken there did not amount to infraction of the guarantee under Article 19(1)(g) of the Constitution, since no fundamental rights of the petitioners were violated by the executive act of the Government done in furtherance of their policy of nationalisation of text-books for students. This judgment in effect rejects this contention. It is obvious that fixing of a higher price of sugar, compulsorily payable, is a restriction on the fundamental right guaranteed under Article 19(1 )(g) and cannot be legally done except under a law.

Much debate was carried out with regard to realisations made by the H States by sale of molasses and bagasse and as to how the fixing of State

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Advised Price by the States at rates higher than the minimum prescribed by the Central Government had resulted in financial loses to the sugar producers. Certain amount o~ data was also placed on record with a view to persuading us to take the particular view which was canvassed. After scrutiny of the data on record, I am of the view that the. data on record is insufficient to draw any conclusions as urged by both sides. In any event, according to me, the discovery of the State's power is a question of law, which turns upon the construction of statute in question, and not upon the consequences that may have flowed from the exercise of such power. If there is such power, then the consequences are justified; conversely, if there is none, the consequences are not justified. It is needless, therefore, to be drawn into this controversy with regard to the economic consequences of the State Advised Price.

The construction of the U.P. Sugarcane Act, 1.953 has to be made against the legislative background. Under Section 3(2) of the Sugarcane Act, 1934, the State Governments were empowered to fix a minimum price or minimum prices for the purchase of sugarcane in a controlled area intended for use in any factory. In Section 21 of the U.P. Act I of 1938, there was a specific power vested with the Provincial Government to fix the minimum price. In respect of any area, the minimum price to be paid by the occupier of the factories or purchasing agents for cane purchased in that area could be determined by a notification issued by the Governor, E after consultation with the Board. A contrast with the provisions of the U.P. Sugarcane Act, 1953 indicates total absence of such a power to fix a price. If the 1953 Act intended to grant to the State the power to fix any price - State Advised Price, remunerative price or fair price as is called - the Statute would have in terms indicated it and not left it to guesswork or p inference from the general words used in Sections 16 & 17 of the Act. A reference to the Statement of Objects and Reasons attached to the Bill which was moved supports this construction of the U.P. Sugarcane Act, 1953.

Much was urged before us as to whether the fixation of State Advised G Price was merely a populist measure intended to pacify the clamour of one section of the society, namely, the cane-growers'. Despite the vehemence with which each side presented its view, it appears to me that this debate is wholly unnecessary, and misplaced, in a court of law where the provisions of the Statute have to be construed to ascertain the State's H

p. 336 Copy page pinpoint

A power. It was contended that the State exercises its powers by taking into account various factors as to what they are and what they ought to be. There is no indication whatsoever of these in the Statute. As far as the Statute is concerned, it lays down no guidelines for exercise of such power, if any. Against the background of legislative history, and the observations made B in Ch. Tika Ram.Ji 's case (supra), I am of the view that it is difficult to discern any such power in the State to fix the State Advised Price, called by whatever name, at a rate higher than the minimum rate fixed by the Central Government, which could be made binding on the parties.

Learned counsel for the sugar producers urged that given the Central C Legislation on the subject, namely, the Essential Commodities Act, 1955 and the statutory orders made thereunder, the State Government had no legislative power at all to fix the price of sugarcane. In my view, it is not necessary to consider this larger question or to answer it presently. We are, for the present, concerned with the U.P. Sugarcane Act, 1953. I see no basis D for exercise of such power by the State Government in that Statute. As to whether any other suitably worded Statute investing such a power in the State Government would conflict with the Essential Commodities Act, 1953 or not, is not the question that needs to be answered presently. Hence, I refrain from expressing any opinion thereupon.

E In the judgments in S.K.G. Sugar Ltd. 's case (supra) and Jaora Sugar Mill's case (supra), it was found, as a matter of fact, that there existed valid consensual agreements between the factories and the sugarcane-growers. Hence, it was held that higher price which had been agreed had to be paid by the sugar factories. In the present case before us, it is pointed out that F U.P. Sugar Mills Association had written detailed letters to the Government of U.P. in September 1996 to refrain from fixing any State Advised price which, the Association declared, would not be binding on the sugar mills [see pages 109-116, Vol. II ofC.A. No. 460of1997]. Despite such strong protest, the State Advised Price was announced by the U.P. Government on 15th November 1996. Immediately thereafter, the associations and the factories have filed their writ petitions before the High Court challenging the State Advised Price on 18th November 1996. Consequently, there was no occasion for the State Government to exercise its diplomacy and bring out a consensual price between the parties; nor was there any occasion for the State Government in U.P. to declare a State Advised Price on the basis of consensus. The Division Bench of the Allahabad High Court in the

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judgment impugned in C.A. No. 460 of 1997, while allowing the writ A petition, has held that there was no agreement for paying the State Advised Price.

The judgment of this Court in Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd. & Ors. v. State ofMaharashtra & Ors., [1995] Supp. B 3 sec 475, is distinguishable, since it was decided on its peculiar facts. The distinguishing feature in that case was that the bye-Jaws under which the co-operative society was formed, empowered the State Government to determine the price for supply of sugarcane to be paid to the members as long as the loans advanced to the co-operative society were not fully paid. It is in exercise of the power under this bye-law that the State Government C fixed what it called the 'State Advised Price'. The power of the State was thus upheld because of the peculiar provision in the bye-laws under which the sugar producer co-operative society was formed. The Bench further took the view that if the price fixed by the Government is good for members of co-operative society, who are as much cane-growers as non- D members, then there is no reason to hold that such price was bad or it operated unreasonably for non-members. In view of the fact that zoning or reservation or fixation of price for each zone were interlinked, the Bench expressed its view as under :- E "It is difficult to visualise that they would opt or fix a price for the sugarcane which would be unremunerative. As explained earlier, the price fixed by the Cabinet Committee in exercise of power under the bye-law is the State Advised Price. It applies uniformly to all cane-growers irrespective of whether they are members of non-members and whether they are in reserved area of outside it. To confine it to the members as they having entered .into agreement and being members of the cooperative societies are bound by it is ignoring the entire price mechanism. Nowhere in the country the State Advised ·Price is fixed for one class of growers only. 1n absence of any material to show that the fixation by the Government was one-sided or with a view to exploit the cane-growers the submission that it did not apply to non-members cannot be accepted. The order does not make any distinction between members and non-members. Nor does it visualise separate mechanism for price fixation for the two. The price is fixed, may H

p. 338 Copy page pinpoint

A be, by the Board of Directors or by the State Government under bye-laws but the prices are for the reserved area."

The decision of the Division Bench of this Court in Jaora Sugar Mill's case (supra), does not address the question with which we are B concerned. The finding was that there was consensus ad idem to pay higher price of the sugarcane than the minimum price fixed by the Central Government and the parties acted thereupon. It was not in dispute that the sugarcane-growers had supplied the sugarcane to the sugar factories who had utilised the sugarcane for the production of sugar. In the circumstances, it was held that the said higher price was the price payable c in lieu of the minimum price fixed under the Sugarcane (Control) Order, 1966.

In Kothari Sugar & Chemicals Co. Ltd. 's case (supra), the issue arose in the context of imposition of the cane purchased tax on the additional price paid over and above what was payable under clause 3 and 5-A of the Sugarcane (Control) Order, 1966. In this context, it was observed as under :-

"Thus, unless there be an agreement between the grower and the producer for purchase of the sugarcane at a higher rate, the obligation of the purchaser is to pay to the grower only the aggregate of the amounts fixed under clauses 3 and 5-A. In other words, under the Statute there is no liability of the purchaser to pay to the grower any amount in excess of this aggregate amount. Thus, without any contractual or statutory basis fixing the sale price of sugarcane at an amount higher than the minimum cane price fixed under clause 3 and the additional cane price fixed under clause 5-A, any sum paid by the purchaser to the grower as advance prior to fixation of the additional cane price under clause 5-A cannot form part of the price of cane sugar"[See vide para 5].

Further, it was held that :-

"However, as indicated earlier, for treating the entire amount paid by the purchaser as the price of sugarcane supplied, it must be

U.P. CO-OP. CANE UNION FEDERATION••. WESTU.P. SUGAR MILL ASSON. [SRIKRISHNA, J.] 339

found proved as a fact that the higher price including the excess amount was paid as the price of sugarcane under an agreement between the grower and the purchaser irrespective of a lower amount being fixed as the aggregate of the price fixation under clauses 3 and 5-A of the Control Order. Unless a clear finding to that eflect is recorded, the amount paid by the purchaser in excess of the aggregate of the minimum price fixed under clause 3 and the additional price fixed under clause 5-A , as a part of the amount paid as advance prior to fixation of the additional price under clause 5-A, cannot be treated automatically as a part of the total price of sugarcane." c In S.K.G. Sugar Ltd. 's case (supra), it was merely observed that there was no prohibition under clause 3 of the Sugarcane (Control) Order, 1966 read with clauses 3 and 5-A for "factories entering in.to an agreement to pay higher price than the minimum price prescribed under the order, the object of the order is to ensure that the cane-growers should not be compelled to sell their sugarcane at a price lower than the minimum price prescribed by the Central Government under clause 3 of the Order". As a matter of fact, it was found that there was an agreement by the Sugar Factory Owners' Association with sugarcane-growers regarding fixing of the price of sugarcane at a rate higher than the centrally fixed minimum price. In view thereof, it was held that the State Government was justified in fixing the price of cane at 20.50 per quintal, since this was agreed to in the tripartite meeting convened by the State Government in which representatives of both growers and the sugar producers participated. Hence, the Bench held that this price would be the price payable in lieu of the minimum price fixed by the Central Government.

None of these decisions is of help in deciding the question before us today. G In the result, I would summarise my conclusions as under :-

(I) It is not necessary to opine on the question as to whether the entire field of price is occupied by the Central Legislation, namely, the Essential Commodities Act, 1955. H

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A (2) The source of the State's power claimed in C.A. No. 460of1997 is the U.P. Sugarcane Act, 1953 which has been the subject matter of careful analysis by the Constitution Bench of this Court in Ch. Tika Ramji 's case (supra). Its constitutional validity was upheld on the footing that the said Act did not trench upon the field of pricing.

B (3) There is no power discernible in the provisions of the U.P. Sugarcane Act, 1953 with the State Government to fix a price for sale/ purchase of sugarcane so as to make it binding on the parties or legally enforce its payment.

c (4) The Sugarcane (Control) Order, 1966 itself enables parties to consensually agree to a rate higher than the rate prescribed therein. If such higher rate is agreed, then that would become the rate which the sugar producers would be obliged to pay and would also become substituted for the minimum rate so as to enable the State Government under the D provisions of the U.P. Sugarcane Act, 1953 to enforce it in case of default by treating it as arrears of land revenue.

Hence, the following Order:-

ORDER

E STATE OF UTTAR PRADESH

In C.A. No. 460of1997, the Division Bench of the Allahabad High Court allowed the writ petition No. 36889/96 by its judgment dated 11.12.1996 and quashed the Government's Order fixing the State Advised F Price.

I would dismiss C.A. 460 of 1997. Consequently, C.A. No. 461 ~(. 1997 filed by the State of Uttar Pradesh and I.A. No. 3 in C.A. No. 460 of 1997 shall also stand dismissed.

G C.A. No. 932 of 2001 stands dismissed.

C.A. No. 1727 of 1999 is allowed and the judgment of the Division Bench appealed against in W.P. No. 2086 (M/B) of 1997 is set aside.

C.A. No. 4602 of 1999 rendered in writ petition No. 775 of 1997 H dated 1.2.1999 by Lucknow Bench of the High Court of Allahabad is

U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.] 34]

allowed and the judgment of the Division Bench appealed against is set A aside.

C.A. Nos. 3512-3513 of 1997 are directed against an interim orders dated 27.2.1997 and 21.3.1997 made by the Division Bench of the Allahabad High Court (Lucknow Bench) in C.W.P No. 775 (M/B) of 199~ B pending before it. In view of the fact that the law has been declared by this Court, the High Court shall decide the pending writ petition in accordance therewith. There is no reason to interfere with the interlocutory orders. Hence, C.A. Nos. 3512 and 3513 of 1997 are dismissed.

C.P. No. 63 of 2003 in C.A. No. 932 of 2001 alleges contempt of C the interim order dated 31.01.2001 made by this Court in Civil Appeal No. 460 of I 997. It may be placed before an appropriate Bench for hearing on merits.

STATE OF BIHAR D

The applicable Statute in the State of Bihar is the Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981. Sections 42 and 43 deal with the question of 'minimum price' of cane supplied to ~ unit. Section 42 deals with the payment of price of cane supplied to a unit. Although E this Section empowers the State Government, after consulting the Board, to determine by notification the minimum price of cane payable by owners of units to the cane-growers' or co-operative societies for cane supplied, the proviso to Section 42 clearly sa¥s that 'the minimum price so determined shall not exceed the minimum price payable by the occupier F of a factory under any law for the· time being in force' in respect of the cane supplied. Thus, it is clear that this Section does not contemplate payment of any price more than the one paid under the Suga~cane (Control) Order, 1966. There is no other provision in the Act empowering the State Government to fix higher price for sugarcane. G The High Court was, therefore, justified in allowing the writ petition filed by the sugar producers.

C.A. No. 4685 of 1997 filed by the State of Bihar is hereby dismissed. H

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A STATE OF ANDHRA PRADESH

The State Govemmen(s power was sought to be traced to the provisions of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961 which appears to be pari materia with the legislation B in U.P. Following the judgment in Ch. Tika Ramji's case (s~), the Division Bench of the Andhra Pradesh High Court in its judgment dated 8.5.2001 in writ appeal No. 902 of 1999 held that no such power of fixing a higher rate for purchase of sugarcane was discerned in the State Government under the said Act. I agree with this view.

C C.A. Nos. 8117-8122uf2001 and the Civil Appea/@SLP (C) No. 16851 of 2001 are dismissed.

STATE OF PUNJAB

D In this State, the corresponding legislation is the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 together with the Rules made thereunder. The power of the State Government to fix the price is sought to be derived from Section 3. Upon interpretation of this provision of the State Legislation, the Division Bench of the High Court of Punjab E & Haryana, by its judgment dated 23.12.1998 in CWP No. 19816of1996, held that there was no such power in th'! State Government and struck down the orders for payment under the State Advised Price holding that the sugar producers cannot be compelled to pay a price for the sugarcane over and above the minimum price fixed by the Central Government. The Division Bench also took the view that this did not preclude the parties from entering F into agreement for payment of higher price. The State Government, being aggrieved, is in appeal.

I would agree with the view expressed by the High Court and dismiss Civil Appeal No. 6065 of 2001. G STATE OF HARYANA

The Civil Appeal arising out of SLP (C) No. 948 of 2003 is directed only against an order in Writ Petition No. 11702 of2002 dated 20.12.2002 H by which the Division Bench of the High Court of Punjab & Haryana

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vacated the interim orders which had been passed in favour of the A petitioner. The said writ petition is presumably pending before the High Court. The instant appeal is, therefore, dismissed. The High Court shall decide the pending writ petition in accordance with the law declared by this Court. B The Civil Appeal arising out ofSLP (C) No. 1363 of2002 is directed against the judgment of the Division Bench of the High Court of Punjab & Haryana in writ petition CWP No. 19816 of 1996 dated 23.12.1998. Here, the High Court has allowed the writ petition of the sugar producers by holding that the State Government had no power to fix the State Advised Price at a rate higher than the centrally fixed minimum price for purchase C of sugarcane and that the purchasers cannot be compelled to pay such higher price except when there is an agreement between the purchasers and the cane-growers to pay such higher price.

I would dismiss the appeal arising out of SLP (C) No. 1363 of D 2002.

Civil Appeal Nos.1639-45/99 are directed against the common judgment of the Punjab and Haryana High Court in C.W.P.Nos. 558/97, 3847/97, 3921/97, 16035/97,15316/97, 14761/97 and 6802/97. The High E Court had in these judgments held that the appellants before us had not made full payment along with interest towards the purchase price of sugarcane supplied to the appellant by relying on the provisions of section I SA of the Punjab Sugarcane (Regulation of Purchase and Supply) Act,

1953. The High Court rightly dismissed the writ petitions. I see no reason F to interfere with the judgment of the High Court. I would, therefore, dismiss Civil Appeal Nos.1639-45 of 1999.

STATE OF TAMIL NADU

In T.C. Nos. 21-22 of2002 arising out ofT.P. (C) Nos. 648-649 of G 2000, the sugar producers filed writ petitions before the High Court of Madras challenging the fixation of the State Advised Price by the State Government. In the counter-affidavits filed by the State, it is expressly admitted before the High Court that there is no statutory provision for fixation of any State Advised Price at a rate higher than the centrally fixed H

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A minimum rate for purchase of sugarcane.

The two transferred cases are remitted back to the High Court which shall dispose of the pending writ petitions in accordance with the law declared by this Court. B P. VENKATARAMA REDDI, J. : I. To put it in a nut shell, the three questions that broadly arise for consideration are : 1) the legal status and binding nature of 'State advised cane price', 2. the power of the State Government to fix sugarcane price under the provisions ofU.P. Sugarcane C (Regulation and Purchase) Act, 1953 (hereinafter referred to as U.P. Act) and 3. in case such power exists and is exercised, whether the State law fixing the price becomes repugnant to the provisions of the Central Law, namely the Sugarcane Control Order of 1966 framed under Essential Commodities Act. As pointed out by Srikrishna, J. the third question need not be answered in case no power to fix the price is discernible from the provisions of the U.P. Act of 1953.

2.1. Turning to first question, I find no statutory basis for the 'State advised cane price'. The very expression 'advised' connotes that the State advised price has no statutory flavour. If the fixation has been done in exercise of statutory power traceable to any provision in the U.P. Act, it would be most inapt to describe it as 'advised price'. The statutorily fixed price can never take the form of advice. It binds, enforces obedience by providing for punishment or penal consequences and does not look for volition of the persons concerned for its compliance. But, that is not the case here. From year to year, the State Government has been announcing the 'advised price' in the hope and expectation that the sugar factories in the private sector will also agree to pay that price. It is worth quoting a typical order/communication issued by the Government and the Cane Commissioner. The following is the communication dt. 15.11.96 G addressed by Principal Secretary to Govt. to the Cane Commissioner of U.P. :-

"As is evident, that for every crushing season State Advised Cane Price is announced by the State Government. Accordingly, I have H been directed to inform you on the above subject, that the State

U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!;!.] 345 Advised Cane Price payable by all sugar factories for the season A 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 B

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. C

3. Above orders will be applicable for crushing season 1996-97.

4. Please take immediate action in the above matter."

(Sd.) D Principal Secretary *** *** *** Office order dt.15.11.96 issued by Cane Commissioner, UP. E "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 factories as under: F

a) For early maturing varieties at mill gate - 76.00

b) For general varieties at mill gate - 72.00" G The above price is for the mill gate and for supply at outcentres. Transport deduction will be separate.

(Sd.) Cane Commissioner, U.P. H

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A The order of the Cane Commissioner is marked to several officials, organisations and occupiers of sugar factories.

2.2. Even in the counter-affidavits filed in the writ petitions, no categorical stand has been taken by the Government that the 'State advised B price' is the statutorily fixed price which is legally binding on all concerned. On the other hand, the averments in the counter-affidavit give a fair indication that it is nothing but advised price in its literal sense. The following excerpts from the counter-affidavit filed in writ petition No. 36889 of 1996 (the corresponding Civil Appeal No. being 460 of 1997) make this position clear. c "So far as the State of U.P. is concerned, there are 118 sugar mills out of which 70 sugar mills belong to either the Sugar Corporation which is the instrumentally of the State or the cooperative sector in which the State Government has major share holding and only 48 sugar mills belong to private sector. Thus, the State Government D is fully justified in law to provide a price of sugarcane for its own mills and since the private sugar factories are also aware that the cane growers will not supply sugarcane at a lower price, they have also in the previous years agreed to pay the aforesaid price without any objection. The State Advised cane price also ensures that there E is parity in the price of sugarcane throughout the state and it removes the element of disparity in any manner."

*** *** *** "It has already been stated above that since 1973 the policy of F State Advised cane price is in existence in the State of U.P. and it is in existence in all other sugar producing areas of the country. The aforesaid policy has been invoked merely for the purposes of ensuring that the sugarcane continues to be a cash crop and that the cane growers do not resort to any other alternative crop. It is G for this purpose that the State Government intervenes and advise a price which is remunerative and is comparable to the prices of sugar in the State during the relevant period."

2.3. I may also refer to the order issued by the Government in the H State of A.P. where the provisions similar to U.P. Act exist and the

U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!, J.] 34 7 averments in the counter-affidavit filed on behalf of the Government in A Writ Petition 2876/99 (corresponding to SLP (c) 16851/01). The relevant particulars QfGOMS No. 420 (Industries & Commerce, (Sugar) Department) dated 4.12.98 are as follows :

"The Government oflndia has announced the statutory Minimum B Price of Rs. 527 .00 per M.T. linked to a basic rec~overy 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 1997-98 year's price, whichever is higher by each factory/khandasari Unit fqr the sugar cane purchased by it for the year 1998-99 season as against the statutory minimum price ofRs.527.00 per M.T. fixed by the Government of India.

4. All the sugar factories and khandasari units in the State have to pay the State Advised cane price without any monetary assistance from the State Government. The payment of sugarcane price shall be adjusted against the ultimate price payable under price sharing formula under clause 5(A) of Sugarcane (control) Order, 1966." G In the counter-affidavit, it is made clear "that the State Government only advised the sugar factories to pay certain price to the cane suppliers which is fair and reasonable after eliciting the views of the representatives of sugarcane growers and managements of sugar factories. It is not true to state that the State Governml!nt have compelled the sugar factories to H

p. 348 Copy page pinpoint

A pay the SAP to cane suppliers but sugar factories have to pay the purchase tax at Rs.60 per M.T." Again at paragraph 7, it is stated in emphatic tenns that the State Government only advises the payment of cane price for the welfare of sugar industry and cane growers. In fact, in the course of arguments before the High Court, the learned Advocate General appearing for the State rightly took the stand that the State advice price is not an 'Imposition'.

2.4. The stand taken by the State Governments in the cases previously decided by this Court, viz., Jaora Sugar Mills and SKG Sugars, which has been accepted by the Court was that efforts were made by the official machinery of the State to convene the meetings and to arrive at an agreed price which was notified as the State advised price. Thus, the real basis for compliance with the State advised price is the agreement but not its statutory authority or binding force. The apparent reason for not notifying the price under the provisions of the statute, namely, U.P. Act of 1953 D seems to be the doubt cast on the State's power to fix such price in the light of the observations made in Tika Ramji 's case and, it may also be attributable to the difficulty arising on account of lack of criteria or guidelines undei the Act and Rules regarding fixation of price. Be that as it may, the fact remains that the 'State advised price' cannot be said to have been fixed in purported exercise of any statutory power and it cannot be elevated to the level of a statutory price fixation order. The decisions of this Court referred to supra did not hold that 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, 1 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.

2.5. 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

U.P. CO·OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!, l.] 349

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 oflaw and its compliance cannot be ensured against the will of the factory owner, it can still serve as a framework within which an agreed price over and above the minimum price fixed under the Central Control Order can be brought about. The law does not prohibit the concerned authorities of the State Government from advising or recommending a price for adoption by the sugar factories. The authorities entrusted with the various functions under the Act conceived in the interests of both growers and producers can certainly play a role, as has been pointed out in Jaora Sugar Mills in bringing the parties to a C negotiating table and forging a mutual settlement leading to the payment of the State advised price. The very fixation of State advised price cannot be legally faulted so long as its compliance is ensured by a voluntary_ process' by which the State advised price can very well become an agreed price. D

3. I. The next and more important controversy is about the State Government's power to fix the price. Such power is traced to Section 16 of the U.P. Act by the learned counsel appearing for the State and the Cooperative Cane Unions. There is almost a similar provision in the corresponding enactments ~n force in the States of Andhra Pradesh, Punjab E and Haryana. In Bihar and Tamilnadu, there is no such provision. In fact, Section 42 of the Bihar Act lays down that the minimum price determined under the Act shall not exceed the minimum price payable under any law for the time being in force. F It would suffice to confine the discussion to the provisions of U.P. Act. Section I6 of U.P. Act carries the heading 'Regulation of purchase and supply of cane in the reserved and assigned areas'. Sub-Section(!) empowers the State Government, "for the purpose of maintaining supplies", to regulate (a) "the distribution, sale or purchase of cane in any reserved G or assigned area" and (b) "purchase of cane in any area other than a reserved or assigned area". After thus laying down the broad parameters of regulatory power, it is followe~ by sub-Section (2) spelling out the specific areas to which such power can extend. The fixation of price of cane is not one of them. However, sub-Section(2) does not exhaust the field H

p. 350 Copy page pinpoint

A of operation of the regulatory power. The price fixation could still come under the generality of the power reserved under sub-Section (!). It is contended with much force that the power to regulate the sale or purchase of sugarcane 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.

3.2. 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 noticed in more than one case (for eg. Jiyajirao Cotton Mills v. MP. Electricity Board, (1989] Suppl. 2 SCC 52 that the expression 'regulate' has no precise or fixed connotation and that it has different shades of meaning. There is no doubt that it is a word of broad import. Its width and content may vary according to the contextual setting in which the expression occurs. The scheme and thrust of the provisions of the relevant statute, the objective of legislation, the legislative intent gathered from the legislative history and the run of the provisions contained in the enactment can all be taken into account while appreciating the correct meaning of the expression 'regulate' in a particular statute. I agree with G Srikrishna, J. that the decision in Tika Ramji 's case is the main hurdle for giving an amplified meaning to the expression 'regulate' so as to cover price fixation. After giving anxious consideration to the issue, I find it difficult to distinguish the judgment in the manner in which it was sought to be done by the learned counsel appearing for the State and the Union H of cane growers. Though the Constitution Bench did not directly deal with

U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!, J.] 35 J

the question of interpretation of Section 16 vis-a-vis the power of price A fixation, going by the observations made therein and the basis of reasoning adopted to arrive at the condusion that there was. no repugnancy, it is fairly clear that the Constitution Bench negatived the existence of any provision empowering the State Government to fix the price. The Court in addition observed that factually, there was no fixation of minimum price by the B State Government. On a comparative analysis of the provisions, this Court found no repugnancy between the impugned Act (U.P. Act of 1953) and the Sugarcane Control Order of 1955. The provisions were held to be mutually exclusive and did not impinge upon each other. It is appropriate · · to refer to the relevant observations made and the reasons given by the C Constitution Bench which are crucial. While dealing with the point No.I, i.e., whether the U.P. Act of 1953 had trenched upon the subject of notified industries falling within the exclusive domain of Parliament, this Court noticed that the provisions in the repealed U.P. Act I of 1938 dealing with the minimum price of sugarcane were deleted. The following observations may be noticed:

"Even the power reserved to the State Government to fix the minimum . , prices of sugarcane under Chapter 5 of UP. Act I 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 factories ..... " H

p. 352 Copy page pinpoint

A 3.3. Turning then to the question of repugnancy (point No.2), the Court after clarifying that both the Parliament and the U.P. State Legislature had the concurrent power of legislation under Entry 33 of the List III in regard to sugarcane, found no repugnancy between the Central and State legislations. Central to the reasoning of the case are the following observations :

"As we have noted above, the U.P. State Government did not at all provide for the fixation of minimum prices for sugarcane nor did it provide for the regulation of movement of sugarcane as was done by the Central Government in Clauses (3) and (4) of the Sugarcane Control Order, 1955.

The impugned Act did not make any provision for the same and the only provision in regard to the price of sugarcane which was to be found in the U.P. Sugarcane Rules, 1954, was contained in D R.94 which provided that a notice of suitable size in clear bold lines showing the minimum price of cane fixed by the Government and the rates at which the cane is being purchased by the centre was to be put up by an occupier of a factory or the purchasing agent as the case may be at each purchasing centre. (emphasis E supplied)

The price of cane fixed by Government here only meant the price fixed by the appropriate Government which would be the Central Government, under Clause (3) of the Sugarcane Control Order, F 1955, because in fact the U.P. State Government never fixed the price of sugarcane to be purchased by the factories. * * * * * * * * * * ** * * * * * * ** * * * * * * ** * * * * * * * * * * The provisions thus made by the Sugarcane Control Order, 1955, did not find their place either in the impugned Act or the Rules G made thereunder or the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, and the provision contained in Section 17 of the impugned Act in regard to the payment of sugarcane price and recovery thereof as if it was an arrear of land revenue did not find its place in the Sugarcane Control Order, 1955. These H provisions, therefore, were mutually exclusive and did not impinge

p. 353 Copy page pinpoint

upon each other there being thus no trenching upon the field of A one Legislature by the other."

3.4. No doubt, the content of regulatory power under Section 16 was not discussed by the Constitution Bench. But, as viewed by Srikrishna, J., the observations made by the Court necessarily suggest that the State Government was not invested with the power to fix the price of sugarcane. B 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.

3.5. 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 Constitution Bench would have paused and considered the effect of it on repugnancy. It is only on the premise that there was no such provision, the Court recorded its conclusion on the issue of repugnancy. In other words, the Court proceeded on the basis that the subject of price fixation minimum or otherwise was not dealt with by F U.P. Act of 1953. It is also not possible to distinguish the decision on the ground that what was uppermost in the mind of the Constitution Bench was the factual non fixation of the price by the State Government but not the power to fix the price. It was on both aspects. Even if the Constitution Bench recorded its conclusion on the question of repugnancy without G specifically considering Section 16 and the power to regulate the price that could possibly flow therefrom, this coordinate Constitution Bench cannot express a contrary view at this distance of time.

3.6. In any case, apart from what was held in Tika Ramji 's case, there are certain features and indicators discernible from the scheme of the U.P. H

p. 354 Copy page pinpoint

A Act and the legislative history which lead to the irresistible conclusion that price regulation was not within the contemplation of the Act. In contrast to the preamble of the predecessor Act, namely, the U.P. Sugar Factories Control Act, 1938 (as amended by Act 16 of 1952) the expression 'to regulate the price of the sugarcane' has been omitted. Then, the specific provision contained in the earlier Act (Section 21 of U.P. Act 1 of 1938) conferring power on the State Government to fix minimum price and Section 22A empowering the State Government to direct payment of additional price was omitted, the reason for such omission being the promulgation of the Sugar and Gur control Order, 1950 by the Central Government, as noticed by this Court in Tika Ram j i's case. Having omitted to reenact those provisions, if the U.P. legislature wanted to retain the power to fix higher price over and above the minimum fixed by the Central Government, it is reasonable to expect the legislature to make a specific provision to that effect rather than leaving it to the general regulatory power under Section 16 to take care of it. It cannot be gainsaid that the power to fix the price and to regulate dealings between the parties accordingly is a matter of great importance. When a parallel legislation in the Central field was in operation in regard to price fixation, 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 F 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 cut distinguishing features as discussed earlier. I am, therefore, of the view that Section 16 of the U.P. Act 1953 cannot be so construed as to confer the power on the State Government to fix the price.

p. 355 Copy page pinpoint

Section 17 of the Act and the kules are only provisions to ensure prompt payment of price and to provide for recovery in case of default. It is only to this extent a provision exists in regard to price.

4. I agree with Srikrishna, J, that there is no need to decide the constitutional question whether the fixation of price by the State Government clashes with the provisions of Sugar Control Order 1966 promulgated under the Essential Commodities Act. As and· when the legislation is enacted by the State and the price is fixed by the State Government or other designated authority in terms of such statutory provision, the need may arise to test the validity of such provisions in the light of Article 254 of the Constitution. It is a well settled practice of this Court not to render a C decision on a constitutional issue on hypothetical basis or in anticipation of future law, especially when the Union of India is not a party to these proceedings. I, therefore, express no view on the Constitutional issue relatable to Article 254.

5.1. Having considered the main points at issue, certain aspects concerning the inter-relation between Agreements and State advised price and the role of State machinery in this regard need to be dealt with. The ratio of certain decisions of this Court cited at Bar in a bid to impart binding force to the State advised price should also be considered.

5 .2. First, I would like to clarify that the signing of an agreement incorporating the State recommended Price should not cloud the issue whether the State Government has statutory authority to fix such price. I agree with Srikrishna, J. that the existence or otherwise of an agreement is not determinative of the crucial controversy relating to the power of the State Legislature or its delegate. If there is no authority to fix the price, the fact that the Agreement is entered into adopting the 'State advised price' does not impart statutory basis to such price. On the other hand, if there is power under the Statute and such power has been demonstrably exercised by the State, there is no need to have recourse to the agreement to sustain the power. It needs to be clarified here that once the agreement is arrived 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 nurst 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 H

p. 356 Copy page pinpoint

A 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 of the decisions, it has been said that agreed price is the 'State Advised Price'. It may or may not be always so. It depends on the fact whether voluntary agreement as regards the price has been arrived at or not. The super-imposition of State Specified Price into the terms of the agreement by means of an unilateral action on the part of the Government does not obviously pass the muster of agreed price. In short, an agreement cannot be forced on the parties in the absence of statutory backing, though the State machinery can play a role to evolve an agreement through a voluntary process.

6.1. The next point which needs to be clarified is that the judgments in Jaora Sugar Mills' case and S.K.G. Sugars 2 case relied on by Mathur, E J. are of little assistance in answering the crucial issues arising in the present case. As rightly pointed out by Srikrishna, J., in those cases it was found as a matter of fact that there existed valid consensual agreements between the factories and the sugarcane growers. It may be that the official machinery was instrumental in bringing about such agreements, but that is an immaterial factor. Once the agreement is entered into the price specified therein (whether equivalent to State advised price or otherwise), is liable to be paid without raising further questions.

6.2. No support can be drawn even from the decision in Maharashtra Rajya Sahakari Shakkar Kharkhana Sangh 's3 case. The following are the observations of R.M. Sahai, J. at para 21 :-

" .... the Central Government did not fix any maximum price obviously because the conditions in the agricultural sector differed

1. [19971 9 sec 201

2. [19971 9 sec 362

H 3. [995) Supp. sec 475

p. 357 Copy page pinpoint

from State to State. Therefore, it having fixed a minimum price expects the State to offer remunerative price to its cultivators. In a controlled economy, the price fixation machinery is to be determined by the Government or under the 1966 Order in the manner provided therein ....."

The observations must be confined to the facts and the issue arising therein. The distinguishing feature in that case, as pointed out by Srikrishna, J., is that the bye-laws of the co-operative society empowered the State Government to determine the price of the sugarcane to be paid to the members so long as the loans advanced to the co-operative society were not fully paid. It is this bye-law that empowered the State Government to fix the price. 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 : D I) 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 Jaw. E

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. F 3) In view of conclusions(!) 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 Jaw is left open. G

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. H

p. 358 Copy page pinpoint

A 5) 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. B Therefore, the orders issued by the state government I Cane Commissioner commur.icating the fixation of State Advised Price need not be set aside.

6) There is no legal taboo against the State government machinery c playing a role in evolving an agreement between the cane growers and the sugar producers as to the price, without adopting any coercive methods.

7) Once the occupier of sugar factory reaches an agreement with the cane grower - may be on the persuasion of the state D authorities, to pay the price equivalent to State Advised Price either by executing a formal agreement in this behalf or otherwise, the occupier of the factory is bound to pay such price and in case of default it can be recovered by the State authorities by coer>:ive process laid down in the statute. E 8) Whether or not there is an agreement to pay particular price is a question of fact. In the absence of express agreement, it is not impermissible to look into other evidence, if there is a dispute on the question of the price agreed to be paid.

F The writ petitions and transferred cases shall be disposed of by the respective High Courts de nova in the light of the declaration of law and the observations made above. Accordingly Civil Appeals/S.L.Ps. other than those mentioned in the last paragraph stand disposed of.

G However, I.A.Nos. 13-14 in C.A. Nos.3512-3513of1997, S.L.P.(C) Nos. 948 of2003 and 1363 of2002 arising out of interim orders and C.A. Nos.1639- I 645 of 1999 relating to recovery of agreed price are dismissed. Contempt case to be posted before the appropriate Bench.

G.P. MATHUR, J.: V.M. Singh has preferred this appeal against the H judgment and order dated 11.12.1996 of Allahabad High Court in Civil

U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. (G.P. MATHUR, J.] 359

Misc. Writ Petition No. 36889of1986. The appellant V.M. Singh was not A a party to the writ petition. We have set aside the impugned judgm<;nt and order dated 11.12. I 996 of the High Court in Civil Appeals No. 460 and 461 of 1997. Therefore, no separate order is required to be passed in the present appeal. The appeal is accordingly disposed of.

ORDER B

In view of the majority judgment.

C.A. Nos. 460/97 and 461/1997 are allowed and the judgment and order dated 11.12.1996 of the I:Iigh Court is set aside; C C.A. Nos. 1727/99 and 4602/ I 999 are dismissed and the judgment and order dated I .2.1999 of the High Court is affirmed;

C.A. Nos. 4685/97 is allowed and the judgment and order dated 4.2.1997 of the High Court is set aside and the writ petition is remitted back D to the High Court for fresh consideration in accordance with Jaw;

C.A. No. 6065/2001 & SLP (C) 1363/2002: Leave granted in SLP(C) 1363/2002. The appeals are allowed; The writ petitions are remitted back to the High Court for fresh consideration. E C.A. Nos. 8117-22/2001 and SLP(C) 16851/2001 : Leave granted in SLP (C) No. 16851/2001. The appeals are allowed; the writ petition is remitted back to the High Court for fresh consideration.

TC Nos. 21 & 22/2003 : These transferred cases are disposed of; F SLP(C) No. 948/2003 : The special leave petition is dismissed;

I. A. No. 3/2002 In CA 460/J 997 is dismissed;

C.A. No. 932/2001 is disposed of; and G C.A. Nos. 1639-45/99, CP No. 63/2002 in CA No. 932/2001 and IA Nos. 13-14 in CA Nos. 3512-3513/97: List before an appropriate Bench.

S.K.S. Appeals/Petition disposed of.