Delhi High Court
Hari Nagar Sugar Mills Limited & ... vs Union Of India & Ors. on 19 October, 2012
Author: Sanjay Kishan Kaul
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 25.09.2012
Date of Decision: 19.10.2012
+ WP (C) No.1394 of 1983
HARI NAGAR SUGAR MILLS LIMITED & ANR. ..... Petitioners
Through: Mr. Jayant Bhushan, Sr. Adv. with
Mr. Atul Shanker Mathur,
Mr. R.K. Aggarwal, Mr. D.N. Chhagar,
Ms. Smita Rajmohan &
Mr. Aseem Chaturvedi, Advs.
Versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr. Rajeeve Mehra, ASG with
Mr. Ruchir Mishra,
Mr. Sanjiv Kumar Saxena,
Mr. Ashish Virmani &
Mr. Mukesh Kr. Tiwari, Advs.
CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MR. JUSTICE VIPIN SANGHI
SANJAY KISHAN KAUL, J.
1. Hari Nagar Sugar Mills Limited, petitioner No.1, is a company
incorporated and registered under the Companies Act, 1956 of
which petitioner No.2 is a shareholder. Petitioner No.1 owns a
sugar factory at Hari Nagar in the District of West Champaran,
Bihar. The present writ petition filed under Article 226 of the
Constitution of India raises a dispute qua the fixation of the price
of Levy Sugar for 1982-83 season.
2. It has been averred that sugar is an essential commodity as defined
under the Essential Commodities Act, 1955 (hereinafter referred to
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as the „said Act‟). The production, supply, distribution and price
of sugar has, thus, been subject to statutory control which even
pre-dates the said Act by the Sugar and Sugar Products (Control)
Order, 1942. The history of the sugar industry has seen periods of
de-control and control. Under Section 3 (2) (f) of the said Act, the
Central Government has the power to direct any manufacturer of
sugar to sell sugar in whole or specified part of the stock to the
Central Government or a State Government or to an officer or
agent of such Government or to such other person or class of
persons for purposes of making available sugar at a fair and
remunerative price. This is called Levy sugar. The price payable
for such Levy sugar is fixed by the Central Government by an
order made under Section 3 (3C) of the said Act. Such Levy sugar
price is fixed from year to year.
3. The petition goes on to state that for the season in question of
1982-83, the percentage of sugar specified as Levy sugar was
fixed by the Central Government at 65 per cent and the remaining
35 per cent was allowed to be sold as free sugar in the open
market. Qua the Levy sugar price under Section 3 (3C) of the said
Act, the price had to be fixed keeping in mind the minimum
sugarcane price, if any, fixed for sugarcane by the Central
Government under Section 3 of the said Act, the manufacturing
cost of sugar, the duty or tax as paid or payable and securing a
reasonable return on the capital employed in the business of
manufacturing sugar. By an Order dated 27.1.1983 known as the
Sugar (Price Determination for 1982-83 Production) Order, 1983
under Section 3 (3C) of the said Act, the Central Government
determined the levy price of different grades of sugar. This price
did not include duty of excise, additional duty of excise in lieu of
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sales tax and the special duty of excise which the sugar factories
could recover at the rates in force at the relevant time but included
transport charges from factory godown and loading into Railway
wagons or buyer‟s carts, lorries, etc. The price of levy sugar so
fixed has been challenged on the ground that it is wholly arbitrary,
unreasonable, unfair and ultra vires under Section 3 (3C) of the
said Act for the following reasons:
i. The average minimum cane price fixed by the Central
Government as well as the one fixed by the State Government,
which was higher, forms part of the cost of sugarcane paid by
the sugar manufacturers and this was only reduced at the end of
the season i.e. by 4.05.1983 which, in turn could not impact or
alter the cost of production of sugar. The higher cane price had
to be paid by the sugar factories as a result of the pressure and
direction of the State Government.
ii. No sugar factory could go against the directions of the State
Government in the matter of payment of cane price even
though the minimum cane price fixed by the Central
Government is much lower.
iii. The price for levy sugar fixed by the Central Government only
took into consideration the minimum cane prices fixed by it
and the consequences of the State Advised Price (for short
„SAP‟) being higher than the minimum price fixed by the
Central Government, was not examined.
iv. The manufacturing cost of sugar is vitally dependent on the
duration of the crushing season and the recovery of sugar from
cane, which factor had been ignored.
v. The Bihar Finance Act, 1981 effective from 1.4.1981 had
imposed a purchase tax @ 8 per cent and surcharge @ 1 per
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cent on sugarcane purchased by the sugar factories situated in
the State of Bihar, which would form a part of the cost of
manufacture but the Central Government failed to take its
effect into account.
vi. Bihar Agricultural Produce Market Act, 1960, requires all
sugar factories to pay 1 per cent by way of market fee on
sugarcane purchased which was also not taken into account by
the Central Government.
vii. Increase in transport charges including Railway freight, cost of
diesel and petrol, spare parts for vehicles, wages of the workers
engaged in loading and unloading the cane, transportation cost
from the cane purchasing centre to the factory has been ignored
and the maximum rebate of 32 Paise per quintal has remained
constant despite this tremendous increase in transport costs.
viii. Salaries and wages of the workmen employed in sugar mills
impact the cost of production of sugar and statutory provisions
qua fixing these were ignored.
ix. Power, fuel, stores, repairs, maintenance, etc. have been
ignored while determining the manufacturing cost of sugar.
x. Interest on Loans and advances obtained by the manufacturers
of sugar from Banks are factors which ought to have been
taken into account.
xi. A reasonable return on capital employed should have been
calculated taking into consideration the SAP.
4. The petitioners have sought a writ of prohibition against the
respondents for acting on the basis of 1983 Order being contrary
to Section 3 (3C) of the said Act and for a direction in the nature
mandamus to respondent nos. 1 to 4 for re-fixation of the Levy
sugar price.
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5. The writ petition has been contested by the respondents and
various pleas have been taken in the counter affidavit. It is,
however, not necessary for the purposes of the present
adjudication to examine these aspects in greater detail. There
were a number of petitions filed and interim orders were passed in
C.W. No.1390/1983 on 8.08.1983, which were also made
applicable to the present petition.
6. It appears that while other writ petitions were decided, this writ
petition somehow remained pending and was ultimately dismissed
for non-prosecution on 10.2.2005. The application for restoration
was filed in the year 2009, which was dismissed by the Division
Bench on 12.1.2010. However, this order was set aside by the
Supreme Court by an Order dated 30.04.2010 observing that in the
facts of the case the application ought to have been allowed. That
is how the writ petition has come up for final disposal.
7. We may notice that there are various pronouncements rendered
from time to time qua different years in question.
8. It was the say of learned senior counsel for the petitioners that in
view of the judgement of the Supreme Court in Mahalakshmi
Sugar Mills Vs. Union of India & Ors. (2009) 16 SCC 569, the
present writ petition was liable to be allowed. However, he
conceded that the said position does not prevail now in view of
Essential Commodities (Amendment & Validation) Act, 2009
(hereinafter referred to as the „Amending Act‟) which in effect
changed the law retrospectively and sought to deny the benefit
which would ensue to the petitioner and other sugar mills in view
of the judgement in Mahalakshmi Sugar Mills case (supra). The
validity of this Amending Act which sought to change the law
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retrospectively was challenged and that matter is pending
consideration before the Supreme Court.
9. In view of the aforesaid position we had put to learned counsels
for the parties as to whether the petition could be disposed of with
the direction that fate of the present writ petition would abide by
the decision to be rendered in the challenge laid to the aforesaid
Amending Act. This was so as learned senior counsel for the
petitioners conceded that if the challenge to the Amending Act
failed, he could get no relief in the present petition while if the
challenge succeeded the petitioner was entitled to the benefit of
the directions contained in Mahalakshmi Sugar Mills case (supra).
10. However, the aforesaid position was contested by the learned ASG
appearing for the respondents. The principal reason for the same
was that according to the respondents so far as the issue of pricing
of levy sugar qua 1982-83 is concerned, the same had become
final in view of the judgements of the Supreme Court in Union of
India Vs. Triveni Engineering Works Ltd. & Ors. (1999) 9 SCC
244; Modi Industries Limited Vs. Union of India (connected
matter) and Bharat Sugar Mills Vs. Union of India & Ors. (also a
connected matter). It was, thus, the submission that the petitioner
was not entitled to the benefit of the judgement in Mahalakshmi
Sugar Mills case (supra) which pertained to the year 1983-84. In
this behalf reliance was also placed on the judgement of the
learned Single Judge of this Court in WP (C) No.2452/2001 titled
M/s. Saraswati Industrial Syndicate Ltd. & Anr. Vs. Union of
India decided on 29.1.2007 pertaining to the year 1982-83.
11. The respondents in their additional written submissions have
raised a further plea that for the year 1982-83 there was no
„mopping up‟ of the profits from the sale of free sugar and that
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forms the basis of the rejection to the challenge for fixation of the
price of levy sugar for that year by the Supreme Court. The
concept of „mopping up‟ is sought to be explained as the process
by which monetary realization from sale of free sugar by sugar
factories is taken into account for fixation of the final price of levy
sugar, i.e. a lower final price for levy sugar is fixed since profits
were being made by the sugar industries from the sale of free
sugar resulting in mopping up of profit from the sale of free sugar.
This plea is stated to have been raised in the additional affidavit
filed by the Union of India in Modi Industries Ltd. case (supra).
The rational for non-interference in the levy price of sugar for
1982-83 is stated to be this reason.
12. We may notice that during the oral submissions no such plea was
at all advanced but is now sought to be slipped in through the
additional written submissions. On a perusal of the counter
affidavit also we do not find a specific plea in this behalf though
there is an averment in para 25 that the realization made by sugar
mills on the sale of non-levy sugar should also have been taken
into account to determine whether sugar industry has earned a
reasonable return or not. Not only that, it appears that the
respondents merely on the basis of the averments contained in
their additional affidavit seem to suggest that there is an
imprimatur of the Supreme Court on this aspect while coming to
the conclusion that the said case was not covered by the decision
of the Supreme Court in Shri Malaprabha Coop. Sugar Factory Vs.
Union of India (1994) 1 SCC 648. In our view no such conclusion
can be drawn, more so when the subsequent judgement in
Mahalakshmi Sugar Mills case (supra) has clearly set out the
necessity of taking the SAP into account.
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13. Learned senior counsel for the petitioners did concede that the
levy price for sugar for the year 1982-83 had undoubtedly been
upheld but despite that claim, the benefit of Mahalakshmi Sugar
Mills case (supra) can be derived by the petitioners. The sole
basis for such a plea is that the petitioners had specifically raised
the issue of the consequences which would flow from fixing the
levy price for sugar by the Central Government on account of the
SAP being higher than the minimum price fixed for sugarcane by
the Central Government, which aspect has not been examined in
any of the matters pertaining to determination of price for 1982-
83. This aspect had been examined only in Mahalakshmi Sugar
Mills case (supra) albeit for the year 1983-84 where it was held
that this is a factor to be taken into account while determining levy
sugar price. The relevant observations are as under:
"55.Modi [Modi Industries Ltd. v. Union of India,
(1999) 9 SCC 245] , Bharat Mills (2) [(1999) 9
SCC 246] and Triveni [(1999) 9 SCC 244] dealt
with sugar year 1982-1983 only. It proceeded on
the basis that in that year, the mopping up having
not been done and levy in terms of Clause 5-A had
not been applied, the factors laid down under
Section 3(3-C) stood complied with. It is for the
aforementioned limited extent,Malaprabha
(1) [(1994) 1 SCC 648] was distinguished. No
reason has been assigned in support of its decision.
Rival contentions had not been noticed. The effect
of payment of additional price as also SAP
effect in determining the price did not fall for
consideration therein. Godavari [(2009) 17 SCC
685 : JT (2001) 10 SC 527] as noticed
hereinbefore, was decided on the same line,
particularly, having regard to the fact that the
prayers made by the appellant therein are sought to
be amended which was not allowed.
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56. It is in the aforementioned
situation, Malaprabha (2) [(1997) 10 SCC 216]
assumes significance. It not only explained the
ratio laid down in Malaprabha (1)[(1994) 1 SCC
648] but also took into consideration Modi
Industries [Modi Industries Ltd. v. Union of India,
(1999) 9 SCC 245] as also fresh arguments
advanced on behalf of the Central Government. All
contentions of the Central Government were
specifically rejected.
57. The decision in Malaprabha (2) [(1997) 10
SCC 216] that while taking into consideration
the unfavourable factor, the Central
Government cannot refuse to consider the
factor which is favourable to the mill owner
assumes significance. We say so for two reasons
-- (1) it is possible that while confining mopping
up to the extent of 50%, the fact of additional price
paid in terms of Clause 5-A of the Order would be
neutralised or adjusted but the same would not
mean that the exercise shall not be carried into
effect; and (2) the effect of payment of an extra
amount in terms of State advisory price cannot
be refused to be taken into consideration.
58. We are not unmindful of the fact that the
learned counsel for the appellant
inMahalakshmi before the High Court confined its
case only to SAP but then in Hari Nagar Sugar
Mills the Delhi High Court accepted the
contentions which have been raised before us.
59. When the legislative policy is reflected in a
statutory provision, the court, while being called
upon to determine as to whether the same has been
complied with or not, must apply the rule of
purposive construction. It is idle, in a case of this
nature, to contend that as the element of
additional price paid under Clause 5-A of the
Order and SAP had not been specifically
provided for in Section 3(3-C), they should be
kept out of consideration for the purpose of
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determination of the price of levy sugar. If the
actual price payable to the cane growers is
absolutely relevant for determining the price of
levy sugar, we have no doubt in our mind that
consideration of the said elements would come
either under clause (b) or clause (d) of Section 3(3-
C) of the Act. It was so held in Malaprabha
(1) [(1994) 1 SCC 648] . It is interesting to note
that the Constitution Bench of this Court in U.P.
Coop. Cane Unions Federations [U.P. Coop. Cane
Unions Federations v. West U.P. Sugar Mills
Assn., (2004) 5 SCC 430] rejected a contention
raised by the parties that in the event the State is
held to have the legislative competence to impose
the same, it will have an adverse effect on the price
of levy sugar required to be determined under
Section 3(3-C) of the Act as noticed supra.
...
66. Reliance placed by the learned Additional
Solicitor General on Malaprabha-III[(2002) 9
SCC 716] is not apposite. This Court therein found
the action of the Central Government to be not an
act of contempt presumably because the directions
were held to have been substantially complied
with. We are not exercising any contempt
jurisdiction. Contempt is a matter between the
court and the contemnor. We are herein called
upon to determine as to which view of the Delhi
High Court in Hari Nagaror Mahalakshmi is
correct. We cannot refuse to lay down the law
having been called upon to do so. We must lay
down a law for the future. We, therefore, while
directing the Central Government to refix the
price of levy sugar, would keep this direction
confined only to the parties before us including
the interveners. The reason therefor is that the
other mill owners were not aggrieved thereby.
The parties before us are fighting their grievance
for more than 22 years. They should not be
allowed to go empty handed.
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67. We are, therefore, of the opinion
that Mahalakshmi has wrongly been decided
whereas Hari Nagar has correctly been decided."
(emphasis supplied)
14. In substance, the plea of the petitioners is that other petitioners
before this Court while challenging the levy price for sugar for
1982-83 had not raised the issue of non-consideration of SAP, as
is obvious from the adjudication qua matters of that year and the
petitioners cannot be deprived of the benefits of this plea for the
default of other petitioners not having raised this plea.
15. It is not in dispute before us that while upholding the price for
1982-83 the issue of non-consideration of SAP does not form part
of any adjudication at least of the Supreme Court as shown to us.
We have even examined the records of WP (C) No.2452/2001
decided on 29.01.2007 and have found that the ground regarding
non-consideration of higher SAP has not been raised in the writ
petition.
16. The question which, thus, arises for consideration is whether the
petitioners should be deprived the benefit of the consequences
which flow from Mahalakshmi Sugar Mills case (supra) qua non-
consideration of the effect of the SAP.
17. Learned senior counsel for the petitioners has relied upon
judgements of the Supreme Court in Munical Corporation of Delhi
Vs. Gurnam Kaur (1989) 1 SCC 101 and State of UP & Anr. Vs.
Synthetics & Chemicals Ltd. & Anr. (1991) 4 SCC 139 to contend
that the principles of sub silentio would come into play. The
relevant observations in those two judgements at paras 11 and 41
respectively, read as under:
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"11. Pronouncements of law, which are not part of
the ratio decidendi are classed as obiter dicta and
are not authoritative. With all respect to the
learned Judge who passed the order in Jamna Das
case [ Writ Petitions Nos. 981-82 of 1984] and to
the learned Judge who agreed with him, we
cannot concede that this Court is bound to follow
it. It was delivered without argument, without
reference to the relevant provisions of the Act
conferring express power on the Municipal
Corporation to direct removal of encroachments
from any public place like pavements or public
streets, and without any citation of authority.
Accordingly, we do not propose to uphold the
decision of the High Court because, it seems to us
that it is wrong in principle and cannot be justified
by the terms of the relevant provisions. A decision
should be treated as given per incuriam when it is
given in ignorance of the terms of a statute or of a
rule having the force of a statute. So far as the
order shows, no argument was addressed to the
court on the question whether or not any direction
could properly be made compelling the Municipal
Corporation to construct a stall at the pitching site
of a pavement squatter. Professor P.J. Fitzgerald,
editor of the Salmond on Jurisprudence, 12th Edn.
explains the concept of sub silentio at p. 153 in
these words:
A decision passes sub silentio, in the technical
sense that has come to be attached to that phrase,
when the particular point of law involved in the
decision is not perceived by the court or present to
its mind. The court may consciously decide in
favour of one party because of point A, which it
considers and pronounces upon. It may be shown,
however, that logically the court should not have
decided in favour of the particular party unless it
also decided point B in his favour; but point B
was not argued or considered by the court. In such
circumstances, although point B was logically
involved in the facts and although the case had a
specific outcome, the decision is not an authority
on point B. Point B is said to pass sub silentio."
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"41. Does this principle extend and apply to a
conclusion of law, which was neither raised nor
preceded by any consideration. In other words can
such conclusions be considered as declaration of
law? Here again the English courts and jurists
have carved out an exception to the rule of
precedents. It has been explained as rule of sub-
silentio. "A decision passes sub-silentio, in the
technical sense that has come to be attached to
that phrase, when the particular point of law
involved in the decision is not perceived by the
court or present to its mind." (Salmond on
Jurisprudence 12th Edn., p. 153). In Lancaster
Motor Company (London) Ltd. v. Bremith Ltd. [
(1941) 1 KB 675, 677 : (1941) 2 All ER 11] the
Court did not feel bound by earlier decision as it
was rendered „without any argument, without
reference to the crucial words of the rule and
without any citation of the authority‟. It was
approved by this Court in Municipal Corporation
of Delhi v. Gurnam Kaur. [(1989) 1 SCC 101]
The bench held that, „precedents sub-silentio and
without argument are of no moment‟. The courts
thus have taken recourse to this principle for
relieving from injustice perpetrated by unjust
precedents. A decision which is not express and is
not founded on reasons nor it proceeds on
consideration of issue cannot be deemed to be a
law declared to have a binding effect as is
contemplated by Article 141. Uniformity and
consistency are core of judicial discipline. But
that which escapes in the judgment without any
occasion is not ratio decidendi. In B. Shama
Rao v. Union Territory of Pondicherry [ AIR
1967 SC 1480 : (1967) 2 SCR 650 : 20 STC 215]
it was observed, „it is trite to say that a decision is
binding not because of its conclusions but in
regard to its ratio and the principles, laid down
therein‟. Any declaration or conclusion arrived
without application of mind or preceded without
any reason cannot be deemed to be declaration of
law or authority of a general nature binding as a
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precedent. Restraint in dissenting or overruling is
for sake of stability and uniformity but rigidity
beyond reasonable limits is inimical to the growth
of law."
18. In effect the plea is that since this is a ground never raised earlier
in the other petitions, and those other petitions not being filed by
the petitioners herein, the petitioners are not precluded from
raising this plea. This is more so since the plea is not sought to be
raised by even amending the writ petition on account of the
subsequent development of law but forms a part of the original
challenge laid to the order fixing the levy price of sugar.
19. Once again, though no submissions in this behalf were made
during the course of hearing on behalf of the respondent on the
aforesaid aspect, some arguments are sought to be slipped in
through the written submissions. A reference has been made to
the judgement of the Supreme Court in Asst. Commissioner of
Central Excise Vs. Dunlop India Ltd. & Ors. AIR 1985 SC 330
where the observations in Cassel & Co. Ltd. Vs. Broome (1972)
AC 1027 were cited with the approval. The Court of Appeal
found that label of per incuriam is relevant only to the right of an
appellate court to decline to follow one of its own previous
decisions and not to its right to disregard a decision of the higher
appellate court or to right of a Judge of the High Court to
disregard a decision of the Court of Appeal.
20. However, in order to appreciate the plea we would like to expound
the principles of per incuriam and sub silentio. A decision should
be considered per incuriam when it is given in ignorance of the
terms of a statute or of a rule having the force of a statute. The
Latin expression per incuriam means through inadvertence. On
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the other hand sub silentio is a phrase used, in the technical sense,
when a particular point of law involved in a decision is not
perceived by a court or present to its mind. The abovementioned
principles have been discussed and explained in the Gurnam Kaur
case (supra) at para 11. In the present case the impact of SAP was
not even urged when the issue of pricing was decided for the year
1982-83 as possibly that was not a plea taken in the pleadings.
However, 1983-84 such a plea was taken and found favour in
Mahalakshmi Sugar Mills case (supra). The petitioners in the
present case have taken a specific plea as distinct from the other
cases where the plea of SAP was not taken and, thus, cannot be
bound by a judgement where the plea which the petitioner seeks to
advance has never been examined.
21. We are of the view that since the petitioners have raised a specific
plea qua the importance of SAP being higher than the price fixed
by the Central Government for procurement of sugarcane and that
is an aspect which has been held to have a material bearing on the
price fixation by the Central Government in view of the judgement
of the Supreme Court in Mahalakshmi Sugar Mills case (supra),
the petitioners cannot be precluded from raising this plea merely
on the ground that other petitioners while challenging the pricing
of 1982-83 had not raised this plea and the challenge having been
repelled by the Hon‟ble Supreme Court, it is not open to the
petitioners to raise such a plea. We are of the view that clearly all
principles of sub silentio would apply.
22. We see no reason for the apprehension expressed on behalf of the
respondents that such a course of action would open a Pandora‟s
Box as others would follow. However, if others have not raised
this plea and apparently there are no other matters pending the
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benefit would only go to a party who has chosen to take such a
plea from the beginning and whose petition is still pending. This is
what was done in Mahalakshmi Sugar Mills case (supra) while
granting relief only to petitioners therein. Thus, the effect of SAP
would have to be examined by the Central Government in re-
fixing the levy sugar price for the year 1982-83 at least qua the
petitioners.
23. We are conscious of the fact that such an occasion would only
arise, an aspect conceded by learned senior counsel for the
petitioners, if the challenge to the Amending Act succeeds as
otherwise no relief whatsoever would flow to the petitioners.
Thus, the two parties would have to await the judgement of the
Supreme Court qua the challenge laid to the Amending Act and to
that extent the interim arrangement envisaged in this petition
would continue to enure for the benefit of the parties till such time
as the Hon‟ble Supreme Court renders its opinion on the challenge
to the Amending Act.
24. It is in case the petitioners and other sugar mills succeeds in their
challenge to the Amending Act would the question arise of giving
effect to the directions contained as aforesaid for re-fixing the
price of levy sugar for 1982-83 qua the petitioners by giving effect
to the consequences of a higher SAP than the price fixed by the
Central Government for procurement of sugarcane in terms of the
judgement in Mahalakshmi Sugar Mills case (supra) though that
judgement has been rendered for the pricing of 1983-84.
25. The third aspect which has also been sought to be slipped in
through the written submissions is that a reference to a larger
Bench of the Supreme Court is pending qua the question as to
whether any State Advisory Price can be fixed by the State
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Governments over and above minimum support price fixed by the
Central Government in Civil Appeal No.7508/2005 titled West UP
Sugar Mills Association Vs. State of Uttar Pradesh in terms of the
order dated 17.1.2012. However, no details of the same have been
pointed out to us nor any submissions made in this regard. As to
what would be the ultimate impact of any adjudication in this
behalf can be deciphered only when the final view is taken by the
Supreme Court.
26. The writ petition accordingly is disposed of leaving the parties to
bear their own costs.
SANJAY KISHAN KAUL, J.
OCTOBER 19, 2012 VIPIN SANGHI, J.
b'nesh
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