Delhi High Court

Sugar Mills Co. Ltd. And Anr. vs Joint Secretary (Sugar), Govt. Of ... on 19 December, 1983

Equivalent citations: AIR 1984 Delhi 282

Author: P Narain

Bench: P Narain, C Talwar

JUDGMENT

Prakash Narain, C.J.

1. The issues raised in the petition are an outcome of the concept of controlled economy. In a country like ours where despite all effort population outstrips production, the State to discharge its burden of a welfare State has to step in to ensure equitable distribution of various goods, including the consumer goods. The equitable distribution hat to be not only with regard to the quantity but also the price. It is to ensure this that the Essential Commodities Act, 1955 was enacted. As the Preamble of the Act says, it was enacted to provide, in the interest of the general public, for the control of the production, supply and distribution of, and trade and commerce in certain commodities.

2. Section 3 of this Act empowers the Central Government if it is of the opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for securing any essential commodity for the defense of India or the efficient conduct of military operations it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. It is under the provisions of Section 3 that the Levy Sugar Supply (Control) Order, 1979 was issued (for short called the Levy Sugar Order). Clause 2 of the Levy Sugar Order empowers the Central Government to issue directions to any producer or recognised dealer to supply levy sugar of such type or grade and in such quantities to such persons or organisations in such areas or markets as may be specified in the order and at a price not exceeding the price determined under Sub-section (3-C) of Section 3 of the Essential Commodities Act, Levy sugar is defined to mean the sugar requisitioned by the Central Government under Clause (f) of Sub-section (2) of Section 3 of the Essential Commodities Act.

3. Section 3(1), as noticed earlier, empowers the Central Government to issue orders in certain contingencies: and to ensure certain results. Sub-section (2) of Section 3 of the Act specifically empowers the Central Government to issue orders requiring any person holding in stock, or engaged in the production, or in the business of buying or selling, or any essential commodity, (a) to sell the whole or a specified part of the quantity held in stock or produced or received by him, or (b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him, to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order.

Therefore, reading the provisions of Section 3 of the Act along with the provisions of the Levy Sugar Order it is obvious that what is contemplated is to take away property, belonging to a person. The taking away of property without payment of price or compensation would be unconstitutional. From a producer of a commodity to take his produce compulsorily may even amount to a violation of Article 19(1)(g) or Article 31 of the Constitution. Therefore, the Essential Commodities Act lays down the principles on which compensation or price is to be calculated for being paid to the person whose property is compulsorily sought to be acquired or taken or requisitioned by virtue of an order passed under Section 3 of the Act.

4. Sub-section (3) of Section 3 of the Act lays down that where any person sells any essential commodity in compliance with an order made with reference to Clause (f) of Sub-section (2) of Section 3, there shall be paid to him the price therefore to be arrived at in one of the three manners set out in that sub-section. Sub-section (3-A) of Section 3 provides for fixation of price for a fixed period for sale of commodities where the Central Government is of the opinion that it is necessary to control the sale price to prevent rise in prices, or prevention of hoarding. Sub-section (3-B) of Section 3 deals with foodgrains, edible oilseeds or edible oils and how in certain contingencies these commodities can be sold at a price to be fixed on the basis of certain postulates. We are concerned with Section 3(3-C). It specifically deals with the commodity known as sugar. This sub-section reads as under :

"(3-C). Where any producer is required by an order made with reference to Clause (f) of Sub-section (2) to sell any kind of sugar (whether to the Central Government or a State Government or to an officer or agent of such Government or to any other person or class of persons) and either no notification in respect of such sugar has been issued under Sub-section (3-A) or any such notification, having been issued, has ceased to remain in force by efflux of time, then, notwithstanding anything contained in Subsection (3), there shall be paid to that producer an amount therefore which shall be calculated with reference to such price of sugar as the Central Government may, by Order, determine, having regard: to--

(a) the minimum price, if any, fixed for sugarcane by the Central Government under this section;

(b) the manufacturing cost of sugar;

(d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar,

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

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

Sugar requisitioned or acquired has to be paid for by the acquiring or requisitioning authority and the price is to be fixed for the acquired or requisitioned sugar in the manner and on the criteria laid down by this sub-section. It is hardly necessary to say so but we do say that if price is not fixed or paid in this manner for the sugar acquired or requisitioned, the act of acquisition or requisition, would be wholly without authority of law.

5. The petitioners have come to this Court and contend that for the sugar season 1980-81 part of the sugar produced by them was acquired or requisitioned by the Central Government by virtue of the provisions of the Levy Sugar Order without complying with the provisions of Section 3(3-C) of the Act. They pray that the Central Government be directed te fix the prices, as contemplated by Section 3(3-C) of the Act, and pay the same to the petitioners.

6. An order called the Sugar (Price Determination for 1980-81 Production) Order, 1980 was issued by the Central Government on Nov. 13, 1980 in exercise of the powers conferred by Sub-section (3-C) of Section 3 of the Essential Commodities Act. It is common case that read with the Levy Sugar Order of 1979 it was under this order of 1980 that the petitioners were asked and made to supply part of their production of sugar in the season 1980-81 to the Punjab Government by an order of the Central Government, the Punjab Government being the nominee of the Central Government to whom the sugar had to be supplied under the Levy Sugar Order.

7. The petitioners' sugar factory is located in State of Punjab. It is common case that for D-30 grade of sugar they were paid at the rate of Rs. 318.52 per quintal of sugar supplied under the aforesaid two orders of the Central Government read with the release orders issued from time to time in favor of the Punjab Government. It is also common case of the parties that out of the total production of this type of sugar 65 per cent of the production of the petitioners was requisitioned or acquired while 35 per cent of the sugar could be sold by the petitioners in the free market.

8. It is not necessary to dilate at any great length on the question of total control or partial control. Suffice it to say that the requisitioning or acquiring of part of the produce falls within the ambit of the concept of partial control. The concept is this : part of the produce is supplied by the producer at a very much lesser price leaving the producer to make up the shortfall in profit by the quantity left for free sale. All the same, even for the part of the produce which is acquired or requisitioned a price has to be paid and that price has to be fixed in accordance with the principles laid down by law. We will, therefore, have to examine what are the principles which have to be followed and the postulates which have to be observed in fixing the price for the supply of acquired or requisitioned sugar. These are given in clear terms by Section 3(3-C) of the Act.

9. The price which has to be arrived at under Section 3(3-C) of the Act has to be worked out on the basis of :--

(a) the minimum price, if any, fixed for sugarcane by .the Central Government, irrespective of the actual price paid;

(b) the manufacturing cost of sugar;

(d) securing of a reasonable return on the capital employed in the business of manufacturing sugar.

A price under Section 3(3-C) was fixed by the order dated Nov. 13, 1980. The dispute is Whether this price, as fixed, has taken into consideration all the postulates of Section 3(3-C) of the Act or not.

10. It is common knowledge that production of sugar in our country is seasonal. The duration may vary from year to year and region to region or even State to State. It is also common knowledge that the yield from sugarcane can vary from year to year, region to region, State to State or even factory to factory. Therefore, a formula had to be evolved and it is not in dispute that the same had been evolved. Prices under Section 3(3-C) of the Act for, what we may call, levy sugar are fixed Statewise or even zone-wise. They were so fixed by the order of Nov. 13, 1980. The question is whether the prices as notified by the order of Nov. 13, 1380 were estimated prices or real prices as envisaged by Section 3(3-C) of the Act. There can be no doubt, in our opinion, that for the season 1980-81 the prices notified in Schedule I to the order of November 13, 1980 could only be regarded as estimated prices having been fixed in the beginning of the season. There could not be actual prices as contemplated by Section 3(3-C) as in the beginning of the season it would not be possible to exactly know the manufacturing cost of sugar throughout the season or the reasonable return on the capital employed with reference to the entire season even if the minimum price for sugarcane fixed by the Central Government was wet varied during the entire season, nor were any changes brought about in duty or tax payable on the sugar manufactured during the season. Indeed, there have hardly been any arguments to contend to the contrary.

11. The manufacturing cost of sugar, apart from other things, greatly depends upon the yield from sugarcane and the duration of the season of production. It is on these two factors that great emphasis has been laid during the course of arguments before us to contend that the notified price of Rs. 318.52 per quintal had to be revised. It is not disputed that the price notified by the order of Nov. 13, 1980 bad taken the yield from sugareane, technically called recovery, at 10.02 and the season's duration as 90 days in Punjab Zone. In reality at the end of the season it was found that the recovery was 8.78 and the duration Was 72 days. If this be correct then it is urged that the notified price requires to be refixed in accordance with Section 3(3-C) of the Act and the difference has to be paid primarily by the Central Government to the petitioners.

12. The other point of controversy, which arises for determination in the present case, is as to whether the factory of the petitioners has been rightly classified by being placed in Schedule V of the order of November 13, 1980. The petitioners contend that their factory should have been placed in Schedule VI being a plant which is more than 25 years' old. It is common case of the parties that on the basis of the report of a High Level Committee, known as Gundu Rao Committee, factories had been divided into two categories. The criteria for determining which are more efficient and which are less efficient factories are (a) capacity and (b) age of the plant. Those factories which have a capacity of less than, 1250 tonnes of cane crushing per day and the plant of which is more than 25 years' old were regarded as less sufficient and fell in one category. The others fell in the second category. The former were placed in Schedule VI and the latter were placed in Schedule V. The factory of the petitioners has been placed in Schedule V on the ground that both the conditions are not fulfillled in the case of the petitioners' factory as the plant was erected at Dhuri, its present location, sometime in 1954 and had its trial in 1955-56. The petitioners, however, contend that the plant is a very old plant. Though at Dhuri the plant had its trial run on re-erection in 1955-56, the plant itself was commissioned at Japaha (Bihar) in 1933. It was shifted to Ranbirsinghpura (Kashmir) in 1941 and was again shifted from there to Dhuri in 1955 as is apparent from a reading of the report of the Gundu Rao Committee which in terms has said that the plant at Dhuri was an old plant. Therefore, it is wholly irrelevant as to when the plant started functioning at Dhuri. What is relevant is to see the age of the plant.

13. Prima facie on the question of the age of plant the stand of the respondents that because it was commissioned at Dhuri in 1955-56 it cannot be regarded as a plant more than 25 years was not acceptable to this Court. Therefore, by an interim order passed by a Bench of this Court on 20-2-1981 read with order of Sept. 4, 1981 the respondents were directed to give to the petitioners the rate mentioned in Schedule VI for an old plant which meant an extra amount of Rs. 26/- per quintal against bank guarantee. We are persuaded to hold that the prima facie view taken by a Bench of this Court keeping in view the observations of the Gundu Rac Committee report has not been displaced by the respondents. The supplementary affidavit which the respondents were allowed to file to explain their position makes the matter worse for the respondents. Apart from the fact that this affidavit has not been sworn by any appropriate officer, it is said that two conditions were both required to be fulfillled, namely, (a) the capacity being less than 1250 tonnes cane crushed per day and (b) age of the plant being at that time over 25 years, i. e. units erected prior to the sugar year 1955-56 and though the petitioners' plant fulfillled the first condition the second was not fulfillled because the factory at Dhuri was not erected prior to 1955-56 sugar season and no material has been placed on the record by the petitioners to establish that the plant at Dhuri is the same which was previously at Ranbirsinghpura and earlier at Japaha. We fail to understand how such an affidavit could have been sworn when the Committee appointed by the Central Government, namely, the Gundu Rao Committee itself has in categorical terms treated the petitioners' factory as an old factory. We may quote the relevant part of Gundu Rao Committee report. Para 2.6 on page 123 of the report reads as under :--

"2.6. The present age of the plants, their layout and condition of existing machinery

The following table gives the age of the various plants and their capacities--

Name of factory

Year of establishment

Age in 1963 (Years)

Original capacity (Tons/day)

Existing daily sane crushing capacity (licensed) tonnes per day 1963-64 season

Actual maximum crushing rate/24 hrs. operation attained in 1961-62 or 1962-63.

1. Phagwara

2. *Dhuri

1,016

3. -----

------

It will be seen that Phagwara, Dhuri and Yamunanagar are old plants while the rest four i.e. Rohtak, Bhogpur, Panipat and Marinda are new plants. The distribution in the various capacity ranges is as follows :--

 800 to 1000 tonnes ... ... 1
1001 to  1200 tonnes ... ... 3
1201  to 1500 tonnes ... ... 2
Above 1500 tonnes    ... ... 1
 

As regards the condition of machinery out of the seven factories, three are old factories and the remaining four (co-operative factories) were established only a few years back. Table III-A gives the important details of the milling plant. It will be seen from Table III-A, that Yamunanagar has a tandem of 21 rollers driven by 3 steam engines and the power for mill drive at Dhuri is inadequate."

We, therefore, hold that the petitioners' factory was wrongly classified by being placed in Schedule V of the order of Nov. 13, 1980. It should have been placed in Schedule VI. In consequence, it is entitled to an extra price of Rs. 26/- per quintal for the levy sugar. This extra price has since been paid to and realised by the petitioners under a bank guarantee, as ordered by this Court. Giving the above declaration we hereby discharge the bank guarantee.

14. On the first question the stand of the respondents is rather peculiar. Their contention is that the price having been notified by the order dated Nov. 13, 1980 as required by S. 3 (3-C) of the Act. It is neither necessary for nor incumbent upon the Central Government to re-fix the price. Indeed, the Central Government is not bound to do so even if the actual recovery from sugarcane and the actual season is less than what was anticipated when the price was notified in the beginning of the sugar season for 1980-81. We may again refer to the supplementary affidavit which the respondents were permitted to file as the return was not considered adequate. In this affidavit, sworn by Shri S. C. Sharma, it is stated as under :--

"..... I submit that I am advised that although the Government had fixed the ex-factory price of levy sugar more than once during some sugar season (1st October to 30th September), they are not bound to do so always. Section 3(3-C) of the Essential Commodities Act, 1955 provides, inter alia, 'and different prices may be determined from time to time, for different areas or for different factories or for different kinds of sugar. Thus the Act does not specify or lay down any frequency for determination/ fixing the price of levy sugar by Government during a sugar season. In the present system, levy price is linked to the statutory minimum cane price (fixed by Central Government under Clause 3 of the Sugarcane (Control) Order, 1966) which is fixed at the beginning of the season. Once that is a fixed factor and is known, the other variable factor, viz. actual cane price to be paid by the mill taking into account the open market sugar price level anticipated according to the best judgment of the miller, is a matter for the mill to decide. If he pays, for any reason whatsoever, a cane price higher than the statutory minimum and higher than is justified by his cost calculations and sound business principles the loss incurred is due to his own management and it does not mean that on that account the levy price should be revised upwards or downwards for all the zones or a particular zone at any intermediate point or points of time during a year/season."

15. It was strenuously urged on behalf of the respondents that once the price is determined and notified there is no obligation whatsoever to revise the notified price irrespective of whether the sugar crushing season was more or less and whether the recovery from the cane was more or less, According to the learned counsel for the respondents the four factors mentioned in Section 3(3-C) of the Act have only to be taken into consideration. That is the meaning of the phrase "having regard to". This phrase does not mean that all the four postulates must be completely satisfied. Though the Government in some years has re-fixed the price of levy sugar during the season or at the end of the season it is not obliged to do so on the basis of actuals. It is discretionary for it to do so or not to do so so long as in the notified price it has taken into consideration the four factors mentioned in Section 3(3-C). In support of this contention reliance is placed on Ryots of Garabandho v. Zamindar of Parlakimedi, AIR 1943 PC 164.

16. The Judicial Committee of the Privy Council in the appeal before it was concerned with a question as to whether a writ of certiorari should issue in respect of the decision of the Collective Board of the Board of Revenue, Madras which did not interfere with a decision of a single member of the Board of Revenue increasing the rent by 12 1/2% on a revision against an order of the Special Revenue Officer who had declined to double the previous rent in an enquiry to fix fair and equitable rent under Section 168 of the Madras Estates Land Act. The phrase "shall have regard to" in Sub-section (2) of Section 168 of that Act was construed and it was observed that in the context of the provisions of that statute the Collective Board was right in construing this phrase to mean that the provisions of the Act for determining rates of rent payable by a pay to had to be taken into consideration but it did not mean that the embargo to an increase more than 2 as, in a rupee upon the rent previously payable, contemplated by proviso (b) of Clause (1) of Section 30 of the Act, was binding. Basing himself on this observation learned counsel for the respondents submitted that taking into consideration the various factors would be sufficient. It was not obligatory that the actual data alone would be the basis for determination of the price under Section 3(3-C) of the Act. In our opinion, the decision of the Privy Council which is relied upon has been misread by the learned counsel. When the Privy Council made the above observation it was on a question of fact that the rent that was being fixed by the Special Revenue Officer on a direction from the Government was not a revision of rent, as contemplated by Section 30 of the Act, but that it was a fresh and initial settlement where everything had to be reclassified afresh and new rates of rent had to be fixed.

17. Reliance was placed on the decisions reported as Saraswati Industrial Syndicate Ltd. v. Union of India, ; The Saraswati Industrial Syndicate Ltd. v. Union of India, and Sri Krishna Rice Mills v. Joint Director (Food), Govt. of India, (1974) 1 SCR 418. It is not necessary to deal with each of these decisions as none of them really construes the provisions of Section 3(3-C) of the Act with which we are concerned. This provision has been construed by a 5 Judges Bench of the Supreme Court in Panipat Co-operative Sugar Mills v. Union of India, . We may with advantage quote a few of the observations made in this judgment :--

"22. Sub-section (3-C), with which we are presently concerned, was inserted in Section 3 by Section 3 of Act 36 of 1967. The sub-section lays down two conditions which must exist before it applies. The first is that there must be an order made with reference to Sub-section (2), Clause (f), and the second is that there is no notification under Sub-section (3-A) or if any such notification has been issued it is no longer in force owing to efflux of time. Next, the words "notwithstanding anything contained in Sub-section (3)" suggest that the amount payable to the person required to sell his stock of sugar would be with reference to the price fixed under the sub-section and not the agreed price or the market price in the absence of any controlled price under Sub-section (3-A). The sub-section then lays down two things; firstly, that where a producer is required by an order with reference to Sub-section (2) (f) to sell any kind of sugar, there shall be paid to that producer an amount therefore, that is for such, stock of sugar as is required to be sold, and secondly, that such amount shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to the four factors set out in Clauses (a), (b), (c) and (d). Unlike the preceding three subsections under which the amount payable is either the agreed price, or the controlled price, or where neither of these prices is applicable at the market or average market price, the amount in respect of sugar required to be sold is to be calculated at the price determined by the Central Government. The last words of the sub-section empower the Central Government to determine prices either from time to time or for different areas, which means that it may determine zonal or regional prices, or for different kinds or grades of sugar.

23. The two concepts viz., the amount payable to the producer and the price to be determined by Government in interpreting the sub-section would be dispelled if they Were seen distinctly. The words "amount therefore" mean the amount to be paid to the manufacturer in respect of such quantity of his stock as is required to be sold under an order made with reference to Subsection (2) (f). That amount is, therefore, referable to the stock of sugar specified in such order, that is to say, the levy sugar. The words "such price of sugar", relate to the price which the Central Government has to determine having regard to Clauses (a), (b), (c) and (d). The price to be so determined is not relatable or confined to the stock required to be sold, for the words are "such price of sugar" and not "the price for such sugar". This construction is fortified by the penultimate part of the sub-section which authorises the Central Government to determine zonal or unitwise prices or price to be determined by the Central Government is to be the rate at which the amount payable to the producer of such of his stock as is required to be sold is to be calculated. There is thus a clear distinction between the amount payable to the producer whose stock is either, wholly or in part required to be sold under an order made under Sub-section (2) (f), and the price of sugar to be determined by the Government having regard to the minimum price of cane fixed by it, the manufacturing cost of sugar, the duty and tax paid or payable thereon and securing a reasonable return on the capital employed in the business of manufacturing sugar.

24. In order to appreciate the meaning of Clauses (a), (b), (c) and (d), it must be remembered that ever since control on sugar was imposed, Government had set up expert committees to work out cost schedules and fair prices. Starting in the beginning with an All India cost Schedule worked out on the basis of the total production of sugar, the factories were later grouped together into zones of regions and different cost schedules for different zones of which fair prices were worked out at which sugar was distributed and sold. The Tariff Commission in 1958 and the Sugar Enquiry Commission in 1965 had worked out the zonal cost schedules on the basis of average recovery and duration, the minimum and not the actual price of cane, the average conversion costs and recommended a reasonable return on the capital employed by the industry in the business of manufacturing sugar This experience was before the legislature at the time when Sub-sections (3-C) was inserted in the Act. The legislature therefore incorporated the same formula in the new sub-section as the basis for working out the price. The purpose behind enacting the new sub-section was three-fold, to Provide an incentive to increase production of sugar, encourage expansion of the industry, to devise a means by which the cane producer could get a share in the profits of the industry through prices for his cane higher than the minimum price fixed and secure to the consumer distribution of at least a reasonable quantity of sugar at a fair price. Whether these objectives have, through the working of the new sub-section, been realised or not is a different matter. But there can be no doubt that these were the objectives for which the sub-section Was passed. The incentive to secure increased production and expansion of the industry was to leave a certain portion of the stock free for sale in the open market, the assumption being that the industry would get a better price in; such market than the Pries determined under the formula incorporated in Sub-section (3-C).

25. The fair price, therefore, has to be determined on the minimum price of cane fixed by Government, the manufacturing cost on the basis of zonal cost-schedules, the tax or duty applicable in the zones and must be so structured as to leave in the ultimate result to the industry a reasonable return on the capital employed by it in the business of manufacturing sugar .....

26. .....

27. ..... As explained earlier, the sub-section provides two things; (a) the determination by Government of a fair price during the process of which regard shall be had to the four matters set out therein and (b) payment to the manufacturer, part of whose stock is levied, an amount "therefore" calculated with reference to "such price" as the Central Government may determine. Though the payment would of course be with respect to that part of the stock of a particular manufacturer which is required to be sold to Government.

28 and 29. .....

30. ..... We are, therefore satisfied, both on the language of the sub-section, the background in which it Was enacted and the mischief the legislature sought to remedy through its working that the true construction is that a fair price has to be determined in respect of the entire produce, ensuring to the industry a reasonable return on the capital employed in the business of manufacturing sugar. But this does not mean that Government can fix any arbitrary price, or a price fixed on extraneous considerations or such that it does not secure a reasonable return on the capital employed in the industry. Such a fixation would at once evoke a challenge both on the ground of its being inconsistent with the guidelines built in the sub-section and its being in contravention of Articles 19(1) (f) and (g) and 31."

18. The rule laid down by the five Judges Bench was re-affirmed by the Supreme Court in Prag Ice & Oil Mills v. Union of India, . Both the majority and the minority in the seven Judges decision quoted with approval the earlier decision in Panipat Co-operative Sugar Mills. Therefore, the scope and meaning of Section 3(3-C) is no longer res integra.

19. Learned counsel for the respondents, however, invited our attention to the case reported as New India Sugar Works v. State of U. P., , to contend that any toss in levy price can be made up in free sale sugar and, therefore, the price once fixed under Section 3(3-C) need not be revised. In that case the real question was whether Article 19(1)(g) or Article 14 of the Constitution were attracted in issuing an order under Section 3(3-C) of the Act. Loss of profit was not in issue nor was the scope of Section 3(3-C). It was in that context that their Lordships observed that the primary consideration in the fixation of price would be the interest of the consumers rather than the producers. Their Lordships went on to observe, "Moreover, we think that since the petitioners are allowed to sell freely at any rate they like the remaining fifty per cent of sugar (after excluding the fifty per cent which they have to give for levy) as also the produce by the second and third processes, the loss if any caused to the petitioners would be minimal". The case relied upon is, therefore, not an authority on the scope of compliance of Section 3(3-C) of the Act.

20. As we have observed earlier, the Supreme Court having already laid down the scope and the precise meaning of Section 3(3-C), it is not open for anyone in this Court to contend that the price that is to be fixed or determined under Section 3(3-C) can ignore any of the four postulates provided in that section. Therefore, the contention on behalf of the respondents that the price notified by the notification of Nov. 13, 1980 on estimates for the sugar season of 1980-81 was not required to be reconsidered and, if necessary, revised when either the exact figures or date or more or less exact figures or date were available at the end of the season or towards the end of the season is not correct. Indeed, the stand taken by the respondents in their counter-affidavits is contrary to the respondents' own record which was produced on our direction.

File No. 4-1/81-CC (Volume III), which was shown to us, reveals that in July, 1981 the Joint Secretary (S), Directorate of Sugar, directed that a quick calculation of levy prices be made based on the final working results of the factories during the season 1980-81 so that a view may be taken regarding the need to revise the prices. In consequence, detailed calculations were made adopting the criteria laid down by the Tariff Commissions and keeping in view the requirement of Section 3(3-C). The results so obtained, it is recorded, clearly showed that in more than half the number of zones increase in prices was justifiable by Rs. 10/-per quintal and in four zones the increase was to range from Rs. 28/- to Rs. 70/- per quintal. At the time when this exercise was completed in August, 1981 a query was raised that in case the levy prices are decided to be increased whether the same should be given to benefit the industry in respect of the then un dispatched 25 per cent of the levy sugar. It was pointed out that if it was so decided the retail uniform distribution prices will have to be stepped up by Re. 0.10 per kg. It was mentioned that if, on the other hand, a view was taken not to increase the levy prices, then the decision will have to be taken how to nullify the inter-zonal differences in the benefits to be afforded to the industry. On the above proposition being placed before the appropriate authorities a recommendation was made that the levy price need not be changes for the season 1980-81 as it had been changed in some of the earlier seasons because the uniform levy prices would have to be increased by 10 paisa per kg. This recommendation was made despite the fact that the Joint Secretary (Sugar) who made the recommendation was conscious of the legal infirmity in making this recommendation. We may with advantage quote from the file the relevant paragraph in this regard which reads :--

"It is, therefore, recommended that we need not change the levy price for the season 1980-81. It should, however, be clearly understood that the attitude the Courts will take as to what extent within Section 3(3-C) of the Essential Commodities Act they will give weight to open market realisation is not certain. To this extent there is a risk of facing an adverse decision in future without being able to recover it in the consumer levy price. This is unavoidable, in fact, in almost every price decision. If such a contingency arises, we may have to think in terms of recovering it from future levy issue price to the extent necessary and feasible."

21. The Financial Adviser and Joint Secretary in the Ministry then considered the above recommendation of the Joint Secretary (S) and, inter alia, recorded a note as under :--

"It may be seen from para 2 of JS (S)'s note above that globally, for all the factories put together, the variation between the actual conversion cost and that estimated at the beginning of the season 1980-81, is not significant. Such variations with reference to estimates cannot be ruled out and should not warrant a revision in the levy price for the season, particularly when it can always be a.rgued by us that the overall return to the industry has been quite high. As suggested by JS(S), even if we were to lose the cases, the impact would be nominal and can always be recovered by including the element in the future levy price."

22. We may, therefore, agree with the recommendations of JS(S) in para 5 of his above note. Surprisingly enough the above recommendation was accepted by the Secretary to the Government of India in the Ministry of Food and even by the then Hon'ble Minister, it is, therefore, hardly appropriate on the part of respondents to have contested the legal proposition on which the petitioners had come to Court. The respondents were aware of the legal position and it is settled. We need not say any more.

23. The result of our above discussion is that this petition has to be allowed. The question that now arises is as to what relief, besides the relief of Rs. 26/- per quintal already directed by us, should be given visa is the levy price for the season 1980-81.

24. Arguments have been addressed and statistics have also been placed before us to show that the exact price can be worked out and the difference can be directed to be paid in terms of actuals. We can no doubt work it out and in doing so take the assistance of the above file to which reference has already been made. All the same, we feel that in detailed calculations of this type it is possible to make errors. This is best left to those who have the necessary expertise to do so. Furthermore, the petitioners have restricted their claim before us only on two aspects, namely, the difference in the recovery from sugarcane and the difference in the period for which the factory worked in that season. Also, it has to be taken note of that individual recovery or individual working is not relevant. What has to be seen is the average recovery in the zone in which the petitioners' factory is situate and the average working days in that zone. Although it is clear that the recovery was 8.78 as against the earlier estimated 10.02 and the duration of working was 72 days as against the estimated 90 days, all the same we would leave the exact working out of the prices on this basis to the experts in the respondents' departments. Not much work will be required to be done as the various work-sheets in the above noted file are available on which this has already been worked out. Perhaps, some rechecking alone would be necessary. Accordingly, while making the rule absolute, we hold that the prices vis-a-vis the levy sugar supplied by the petitioners which have to be finally paid will not be in accordance With the notification and order dated November 13, 1980 but on the basis of recalculations on the principles set out by us earlier. Further, the petitioners' factory will be treated as one which was included in Schedule VI in the notification dated November 13, 1980 instead of being included in Schedule V as it has been done. To that extent a writ is issued quashing Schedules V and VI vis-a-vis the petitioners with a direction to revise the Schedules. We further issue a writ of mandamus to the Central Government to revise the prices fixed for the Punjab zone in Schedules I to IV of the aforesaid notification dated November 13, 1980 on the basis of actual duration and recovery in the Punjab zone for the sugar season 1980-81. Since the season is already over, the difference in Prices so arrived at shall be paid to the petitioners, the difference being between the price notified in the said notification dated November 13, 1980 and the price to be arrived at on re-calculation. The revision shall be completed within six weeks from today and payment made within four weeks of the completion of the revision. The revised price may be notified by an order issued under Section 3(3-C) of the Act within six weeks from today. The payment shall be made by the Central Government direct or through the Punjab Government within the period already specified by us. Inasmuch as consciously and knowingly the respondents have denied the petitioners the legitimate price payable to them for levy sugar, the Central Government would also be liable to pay interest at the rate of 12 per cent p. a. on the difference in price found payable from the date of the filing of this petition, namely, February 6, 1981 till payment. The petitioners will also be entitled to costs.