Bihar Sugar Mills Association And ... vs Union Of India (Uoi) And Ors.
2003 Latest Caselaw 520 Del

JUDGMENT

S.K. Mahajan, J.

1. Petitioner No. 1 which claims to be an association of sugar mills in Bihar and U.P. has filed this writ petition Along with some of the sugar mills challenging the Sugar (Price Determination for 1974-75 Production) Amendment Order, 1999 issued by the Government of India vide the notification dated 13.4.1999. By this notification levy sugar price for the sugar season 1974-75, was revised by the Government pursuant to the judgment of the Supreme Court in Shri Malaprabha Coop. Sugar Factory Ltd. Versus Union of India and another (in short referred to as `Malaprabha-I') and the judgment of the Supreme Court in IA No. 5-6/1995 in Civil Appeal Nos. 122-123/1981 reported as Shri Malaprabha Coo. Sugar Factory Ltd. Versus Union of India and Another (in short referred to as `Malaprabha-II'). The fixation of levy sugar price for the season 1974-1975 has been challenged on the ground that the same has not been properly fixed by the respondents in accordance with the provisions of Section 3 (3C) of the Essential Commodities Act read with Sugarcane (Control) Order, 1966 and in terms of the guidelines laid down by the Supreme Court in Malaprabha-I and Malaprabha-II. A few facts relevant for deciding this petition are:-

For equitable distribution of an essential commodity, including sugar, not only regarding its quantity but also the price to the consumers, the Government under Section 3 of the Essential Commodities Act, is empowered to issue a notification/order fixing the price of an essential commodity. Under Section 3 of the Act, the Government of India issued an order known a Levy Sugar Supply (Control) Order, 1972 (in short referred to as `Levy Sugar Order'). This order provides for compulsory supply or sale of sugar from a producer or recognised dealer of a specified quantity to a person or organisation or to such State Governments as it may direct from time to time and at a price not exceeding the price determined under Section 3 (3C) of the Essential Commodities Act. While fixing the price under Section 3 (3C), the Government is required to have regard to the four factors, namely, (i) minimum price of sugarcane (ii) manufacturing cost (iii) taxes and duties and (iv) reasonable return on the capital employed by the sugar factories. The sugar season normally starts from October 1 of every year and continues up to 30th September of the next year. Pending finalisation of the price to be fixed under Section 3(3C) of the Act, the Government in the first instance notifies the levy sugar price almost at the beginning of the sugar season by way of an interim measure. This interim price is normally the levy sugar price of the last sugar season. In the present case, this Court is concerned with the fixation of the levy sugar price for the sugar season 1974-75. The fixation of levy sugar price involves an elaborate exercise such as forecasting the cane availability for sugar production, duration, recovery etc. Pending finalisation of all these, prices notified for the year 1973-74 were repeated by notification dated November 28, 1974 as an interim measure. It had to be so done because the Government had to release 1974-75 sugar season production. Without such a price fixation, sugar could not have been released and the same would have resulted in disruption of sugar through public distribution system. By notification dated 28.11.1974, the Government had fixed the price of levy sugar at Rs.168.80paise per quintal. In January, 1975 the Government increased the free sale quantity of sugar from 30 to 35%. However, a decision was taken not to review the price immediately as the increase in free sale quota could have given some relief to the industry by way of higher realisation. By July, 1975, the final working results of the season were available for almost all the zones. The free sale prices were high compared to the levy sugar price and the Government was, therefore, required to determine prices in a suitable manner. The Government having regard to Section 3 (3C) and taking into consideration the minimum price of cane as fixed by the Government, manufacturing cost of sugar, duties and taxes thereon and ensuring a reasonable return to the producer on the entire production issued a notification on 11.7.1995 revising the levy sugar price w.e.f. 12.7.1975 at Rs.223/- per quintal. Before the issue of second notification dated 11.7.1975, the recommendations of the Bhargava Commission which was constituted to go into the question of fixation of price of sugar had been received and on the basis of the recommendations, the Government issued an order by adding Clause 5-A in the Sugarcane (Control) Order, 1966) under the provisions of the Essential Commodities Act. In terms of Clause 5-A of the Sugarcane (Control) Order, 1966 the excess realisation from the sale of free sugar was to be shared on 50:50 basis between the producers and the growers. Both the notifications dated 28.11.1974 and 11.7.1975, fixing the price of levy sugar were challenged by the association of sugar mills and some of the sugar mills by filing writ petitions in different High Courts. The matter was finally taken to the Supreme Court and the same was decided on 22.9.1993 and is (already referred to as `Malaprabha-I'). The Supreme Court while deciding the case observed that while fixing the price of levy sugar, the Government had not taken into consideration the impact of Clause 5-A of the Sugarcane (Control) Order. The Court, therefore, in paragraph 109 of the judgment observed that "the impugned notifications except the one dated November 28, 1974 cannot be upheld. The reason why we leave out the notification dated November 28, 1974 is that the same came to be issued before the new pricing policy was introduced. We hereby direct the Union of India to amend the notifications taking into account the liability of the manufactures under Clause 5-A of the Sugarcane (Control) Order, as regards cane price and refix the price of levy sugar having regard to the factors mentioned in Section 3 (3C) of the Act." On these directions being issued the matter was considered by the Government and order was issued on 22nd February, 1995 fixing the levy sugar price for the sugar season 1974-75, at Rs.206.48paise per quintal. This notification was also challenged by making an application before the Supreme Court. The Supreme Court by a judgment (Malaprabha-II) set aside this order as well and again directed the Government to issue orders/notifications in terms of the directions given by the Court. On these directions being given, the Government issued the impugned notification on 13th April, 1999 reiterating the price of levy sugar for North Bihar region at Rs.206.48paise. This notification has now been challenged by the petitioners by filing the present writ petition.

2. The contention of Mr. Sudhir Chandra, learned senior advocate appearing on behalf of the petitioners is that at the time of fixation of the revised price, the Government is required to take into consideration the losses suffered by the sugar mills by supplying sugar at the price fixed at the start of the sugar season by way of an interim measure. It is submitted that the levy sugar price fixed by the Government was the actual levy sugar price and the same had not taken into consideration the losses suffered by the Mills up to July 11, 1975 because of their supplying sugar at the interim price fixed by the notification dated November 28, 1974. It is submitted that the price fixed by notification dated 22nd February, 1995 and the notification dated 13th April, 1999, reiterating the earlier notification, was merely repetition of the `L' factor which clearly shows that the Government had not taken into consideration the losses suffered by the mills prior to the issue of the notification fixing the final price of the levy sugar. It is submitted that if it was the actual levy sugar price constituted of only the `L' factor, the same should have been fixed for the entire year and not w.e.f. 12th July, 1975. It is submitted that the losses of the earlier period were not taken into consideration is clear from the counter affidavit of the respondent and the petitioners are entitled to the final price fixed by the notification dated 13th April, 1999 for the entire sugar season and not w.e.f. 12th July, 1995 alone. Reliance for this is placed upon the judgment of the Supreme Court passed on 29th April, 1994 in SLP (C) No. 13513/1990 titled as Kanoria Industries Ltd. Versus Union of India and ors. By this judgment the Supreme Court had held "the object underlying the fixation of price in the order dated March 28, 1985 appears to be to secure to the Sugar Mills for the levy sugar supplied by them for the entire sugar season 1984-85 the price that was determined for the said season which is evident from the provision of additional amount by way of adjustment for release in February-March 1985 at prices notified in the order dated January 31, 1985. (It is, therefore, but appropriate that the appellant Sugar Mills are paid for the entire supply of levy of sugar for the season 1984-85 at the price which was determined for that year for the particular zone I.e. the price arrived at after excluding the extra payment by way of adjustment for the supply made in February-March 1985 at the prices notified in the order dated January 31, 1985 from the price fixed in the order dated March 28, 1985). After the price for the supplies to levy sugar for the entire season 1984-85 are calculated on that basis adjustment can be made of the amount that has been paid to the mills for the total supplies including the payments made for the supplies made on or after April 1, 1985 on the basis of release orders issued prior to April 1, 1985 under the interim orders passed by the High Court. In a case where it is found that a Sugar Mill has been paid less amount than what should have been paid on the basis of the price as determined the said deficit should be made good so as to ensure that the mill receives the price as determined."

3. In view of the aforesaid observations of the Supreme Court in Kanoria Industries Ltd. Versus Union of India and ors. (supra) the contention of Mr. Chandra is that the levy sugar price now fixed by the Government w.e.f 12th July, 1975, should be directed to be paid for the entire sugar season and the difference in the price fixed by notification dated 28th November, 1974 and the notification dated 13th April, 1999 for the period 1st October, 1974 till 11th July, 1975 should be directed to be paid to the petitioners.

4. In support of his arguments that the levy sugar price now fixed by notification dated 13th April, 1999 was comprised of only the `L' factor and other factors required to be taken into consideration while fixing the price under Section 3(3C) of the Essential Commodities Act, Mr. Chandra has referred to the counter affidavit filed by the Government. It is submitted by him that the Government in paragraphs 5,6,9 and 15 of the counter affidavit has stated that if the levy sugar price provisionally notified at the beginning of the sugar season, which is exactly the same as the previous sugar season levy price, is taken as `X' and the final levy sugar price notified for the relevant sugar season is taken as `Y', then the difference of `Y' and `X' i.e. Y-X is paid to the sugar factories, if `Y' higher than `X' and recovered if `X' is higher than `Y'. It is submitted that the Government has further in its counter affidavit stated that the final price cannot be rectified at that stage because the detailed break of the levy sugar price notified vide the notification dated 11th July, 1975 is not available as the relevant records were lost in a fire that broke out at Krishi Bhawan in 1992. It was further stated in the counter affidavit that while notifying the levy sugar price of 1974-75, sugar season (w.e.f 12th July, 1975) under notification dated February 22, 1995 the `L' factor was notified as the levy sugar price of the said sugar season as the record of the Directorate of Sugar had been destroyed in fire that broke out in Krishi Bhawan where the office of the Directorate was located. It is stated in the counter affidavit that the Government was not required to notify the levy sugar price for the entire sugar season as the Supreme Court had upheld the notification dated 28th November, 1974 which was valid up to 11th July, 1975. It is submitted by Mr. Sudhir Chandra that as the Supreme Court has already held in Kanoria Industries Ltd. Versus Union of India and ors. (supra) that price fixed by the Government is for the entire season and not for the period subsequent to the issue of the notification, this Court should direct the respondents to fix the levy sugar price for the sugar season 1974-75 by taking into account the loss caused to the producers on account of the lower interim price fixed by order dated 28th November, 1974 and the price should be fixed in such a manner so as to secure to the producers a price in accordance with Section 3 (3C) of the Essential Commodities Act for the entire production of sugar for the whole year 1974-75.

5. Mr. Maninder Singh, learned Standing Counsel of the Union of India has argued that the petitioners by filing the present writ petition were seeking to re-open the questions already decided by the Supreme Court in Malapraba-I and Malaprabha-II. It is contended that the Supreme Court in Malaprabha-I had upheld the validity of the notification dated 28th November, 1974 and what was directed was to refix the final price taking into consideration Clause 5A of the Sugar Control Order issued on 25th September, 1974. It is submitted that taking into account the fact that after the addition of Clause 5-A in the Sugar Control Order, 50% of the excess realisation of the sale price of sugar is now retained by the sugar mills, the government has rightly fixed the levy sugar price by notification dated April 13, 1999 to be effective from 12th July, 1975. It is also the contention of learned counsel for the respondent that after the issue of notification dated 13th April, 1999, an application was filed by the sugar mills before the Supreme Court for initiating proceedings for contempt against the respondent and its officers for their having not fixed the levy sugar price in terms of the judgment given by the Court in Malaprabha-II. It is submitted that as the Supreme Court by an order dated 16th November, 2000, on that application of the sugar mills, has upheld the validity of the notification dated 13th April, 1999 this Court cannot now re-examine the same question as to whether the price fixed by the 1999 notification was improper or has not been fixed taking into consideration the provisions of Section 3 (3C) of the Essential Commodities Act and the directions given by the Supreme Court in Malaprabha-I and Malaprabha-II.

6. It is also submitted by Mr. Maninder Singh that the petitioner had earlier filed a writ petition in the Calcutta High Court challenging not only the notification dated 28th November, 1974 but also the notification dated July, 1975. It is submitted that the said writ petition of the petitioners was dismissed by the Calcutta High Court on 1st March, 2000, in view of the judgment of the Supreme Court. It is submitted that by an interim order passed by the Calcutta High Court, the Government was directed to pay to the petitioner for the levy sugar released by the petitioners against the release order for the season year 1974-75, at the rate of Rs.257.04paise per quintal and the petitioner was directed to furnish the bank guarantee for re-payment of the difference between the price fixed by the Sugar (Price Determination for 1974-75 Production) Order, 1974 and the realisation made by the petitioners @ Rs.257.04paise per quintal. It is submitted that after the writ petition was dismissed by the Calcutta High Court, the High Court had directed that the bank guarantee lying with the Registrar (General) would be encashed by the respondents UOI and the principal sum will be adjusted against their claim and interest accrued thereon would be returned to the petitioner. It is submitted that without disclosing the orders passed by the Calcutta High Court in the writ petition of the petitioners and without disclosing that the contempt application filed by the sugar mills was dismissed by the Supreme Court by its order dated 16th November, 2000, the petitioners with a view to mislead the Court filed the present writ petition and secured an order on 15th May, 2002, whereby the Court directed that the bank guarantees shall not be encashed by the respondents provided they were kept alive by the petitioners. It is submitted that in view of the orders passed by the Calcutta High Court, the petitioners were not entitled to any interim order restraining the respondents from encashing the bank guarantee and the order might not have been granted had the petitioners not concealed material facts from the court. It is submitted that as the petitioners have not come to the Court with clean hands, this petition is liable to be dismissed on this short ground alone.

7. It is finally submitted by Mr. Singh that as the levy sugar price fixed by notification dated 13th April, 1999 has been upheld by the Supreme Court by its order dated 16th November, 2000, this Court should not interfere with the said price. It is also submitted that the price having been fixed by experts, there is no occasion for this Court to interefer with the same.

8. The short question involved in the present case is whether the levy sugar price now fixed by the Government by notification dated 13th April, 1999 pursuant to the judgment of the Supreme Court reported as Malaprabha-I and Malaprabha-II and pursuant to the order dated 16th November, 2000, passed on the application filed by the sugar mills, is there any scope for interference by this Court. While, it is true that the levy price fixed by the sugar control order has to be for the entire sugar season, however, if the final sugar price is fixed by the Government after taking into consideration the factors under Section 3 (3C) of the Essential Commodities Act and also taking into consideration losses which might have been suffered by the sugar mills by sale of sugar at the interim price prior to the fixation of final levy sugar price, there is no scope for interference with the final levy sugar price fixed by the order dated April 13, 1999. There is nothing on record to suggest that while fixing the levy sugar price by notification dated 13th April, 1999 the respondents had not taken into consideration all these factors. In the counter affidavit it is no doubt stated that while notifying the levy sugar price for the 1974-75 sugar season w.e.f 12th July, 1975, under notification dated 22nd February, 1995, the `L' factor was notified as the levy sugar price for the said sugar season as record of the Directorate of Sugar Office at Krishi Bhawan were lost in a fire that had broke out in the Office of the Directorate, however, in view of the order of the Supreme Court passed on 16th November, 2000 on the application of the contempt filed by the sugar mills that is not material. I am clearly of the opinion that in view of the order dated 16th November, 2000, passed by the Supreme Court, the question about re-fixation of levy sugar price for the sugar season cannot be reagitated.

9. The Supreme Court while passing the order dated 16th November, 2000, was dealing with an application of the sugar mills for initiating proceedings for contempt against the respondents and its officials. In that application it was contended by the sugar mills that they were entitled to an increase in the levy sugar price to the full extent of the amount paid under Clause 5A and that the entire amount paid under Clause 5A was required to be added to the price initially fixed by the Government. To this argument of the petitioner the contention of the Government was that prior to 1974, the entire excess realisation of the sale price of sugar at the end of the sugar year used to be taken by the Government. However, the result of incorporation of Clause 5A in the Sugarcane Control Order was that instead of 100% of the excess amount being taken by the Government, 50% of the excess realisation went to the cane growers and 50% was retained by the sugar manufactures. It was observed that in that way, the sugar manufactures were benefited by retaining 50% of the excess realisation whereas prior to 1974, the entire excess realisation used to go to the Government. The Court observed that the working statement produced before the Court by the Government shows that it had taken the retention of 50% of the said realisation while determining price under Section 3 (3C) of the Essential Commodities Act. It was held that since these factors were taken into consideration while fixing the levy sugar price by notification dated April 13, 1999, the directions given by the Court were duly complied with. The Court was, therefore, of the opinion that neither case for contempt was made out nor there was any justification for giving directions to the Government to refix the levy sugar price under Section 3 (3C) of the Essential Commodities Act. If on consideration of the retention of 50% of the excess realisation of the sale price of sugar by the sugar manufactures, the price has come down to Rs.206.48paise, in my opinion, no fault can be found with the same. The Supreme Court having upheld the Sugar Control Order dated 13th April, 1999, there is no scope for this Court to re-examine the question again.

10. Moreover, the petitioner in the application for initiating contempt had not objected to the fixation of price by not considering the losses allegedly suffered by the sugar mills due to the supply of sugar at the interim price fixed by the Government. All that had been directed by the Supreme Court in Malaprabha-I and Malaprabha-II was to fix the levy sugar price after considering the impact of Clause 5A added in the Sugar Control Order pursuant to the recommendations of Bhagava Commission. No grievance was ever made before the Supreme Court that the price fixed by the Government by notifications dated 22.2.1995 and dated 13.4.1999 was not in accordance with the provisions of Section 3(3C) of the Essential Commodities Act. By notification dated 11th July, 1975 price of levy sugar was fixed w.e.f. 12th July, 1975. Again by notification dated 22nd February, 1995 the price was fixed w.e.f. 12th July, 1975. By notification dated 13.4.1999 price of levy sugar was again fixed w.e.f. 12.7.1975. In none of the two cases viz. Malaprabha-I and Malaprabha-II nor even in the application for initiating contempt any grievance was made by the mill owners that price ought to have been fixed for the entire sugar season and not from July 12, 1975 nor was it the contention of the Mills that the losses alleged to have been suffered by them because of supplies made at the interim price were not taken into consideration at the time of fixing the final price w.e.f. 12th July, 1975. The stand now taken by the petitioners for refixation of the levy sugar price is, therefore, clearly an after thought and cannot be accepted. The Supreme Court having categorically held that there was no justification to issue directions to the Government to re-fix the levy sugar price for the sugar season 1974-75, no such direction can be given by this Court.

11. For the foregoing reasons, this Court is of the opinion that no case is made out by the petitioner for setting aside the sugar control order dated 13th April, 1999 or to issue a direction to the respondent to refix the levy sugar price for the sugar season 1974-75. The petition, in my opinion, has no merits and the same is, accordingly, dismissed with no order as to costs.