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PETITIONER: SHRI MALAPRABHA CO-OP. SUGAR FACTORY LTD.

       Vs.

RESPONDENT: UNION OF INDIA AND ANR.

DATE OF JUDGMENT:       28/01/1997

BENCH: S.C. AGRAWAL, B.P. JEEVAN REDDY, G.T. NANAVATI

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      A batch  of civil appeal (including the above mentioned tow  appeal),   special  leave  petitions,  writ  petitions, transfer petitions  and transferred  cases  challenging  the fixation of  price of  levy sugar  for the  years 1974-75 to 1979-80, by  orders issued under Section 3(3-C) of Essential Commodities Act,  1955, was  disposed of  by this Court held that the  Act, 1955, was disposed of by this Court held that the impugned  orders/notifications were bad as the price was not fixed in accordance with the relevant provisions of law. However, it  did not  quash the  notification as  they would have led  to nebulous  situation during the interregnum till re-fixation  of   price.  Instead   of  quashing   the  said notifications it  directed the  Union of  India to amend the notifications taking into account the liability of producers of sugar  under clause  5A of the Sugarcane (Control) Order, 1966 (hereinafter  referred to  as the ’1966 Order’), having regard to  the factors  mentioned in  Section 3(3-C)  of the Act. The  Government was  also directed to issue the amended notifications by December 31, 1993.      The Union  of India was not satisfied with the judgment and, therefore,  filed Review  Petition Nos.  211 and 212 of 1994 of  15.5.93. They  were dismissed on 23.2.94. The Union of India  had also  filed and  application on  24.12.93  for directions/clarifications  and   extension  of   time.   The clarification was sought for on the following ground:           "It  is   submitted  that  the      decision  of   this  Hon’ble  Court      lends  itself   to  two   different      interpretations    as     mentioned      below:-           (a)  The amount  of additional      cane   price   payable   by   sugar      factories at the end of each season      is  to  be  added  to  the  SMP  of      sugarcane   while   computing   the      element of  cost as  Factor ’A’  of      Section   3(3-C)    of    Essential      Commodities Act,  1955 for  purpose      of price fixation;

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         (b)  The levy sugar prices may      be refixed taking into account only      Factors ’A’  to ’D’ of section 3(3-      C)  of  the  Essential  Commodities      Act, 1955."      It wanted this Court to clarify:      "....  whether   the  revised  levy      sugar price should be the sum total      of Factors ’A’, ’B’, ’C’ and ’D’ of      Section   3(3-C) of  the EC  Act in      case of price fixation."      The application  was dismissed  with costs but the time for  implementation   of  the  judgment  was  extended  upto November 30,  1994 peremptorily.  In spite of this direction the Government  did not  issue  the  required  notifications within time.  It issued  the following  six notifications on 22.2.95:      1.   No.GSR 76 (E)/Ess.Com./Sugar dt. 22.2.1995 -1974-           75.      2.   No.GSR 777 (E)/Ess.Com./Sugar dt. 22.2.1995 -1975-           76.      3.   No.GSR  78 (E)/Ess.Com./Sugar dt. 22.2.1995 -1976-           77.      4.   No.GSR  79 (E)/Ess.Com./Sugar dt. 22.2.1995 -1977-           78.      5.   No.GSR  80 (E)/Ess.Com./Sugar dt. 22.2.1995 -1978-           79.      6.   No.GSR  81 (E)/Ess.Com./Sugar dt. 22.2.1995 -1979-           80.      It is  the grievance  of the  applicants that  the said notifications   have    been   issued   in   disregard   and contravention of  the judgment of this Court inasmuch as the Government, while  re-fixing the  levy sugar  price for  the said six  years, has  failed to  include in such re-fixation the  element   of  additional  cane  price  payable  by  the producers  under   clause  5A   of  the  1966  Order.  They, therefore, want this Court to give appropriate directions to the Union of India to forthwith comply fully and effectively with the  judgment  by  issuing  supplemental  notifications providing for  additional levy  sugar price. Applicant No. 1 in  both   these  applications  is  the  India  Sugar  Mills Association and  it has filed the applications on  behalf of all its  members. Applicant  Nos. 3  to 33  are some  of its members and  were partied  to the  above referred  batch  of cases. Though  the Government,  while issuing  the said  six notifications,  did   not  take   into   consideration   the additional cane  price payable  by the  producers  of  sugar under clause 5A yet the stand taken by them is that the said notifications are  consistent  with  the  judgment  of  this Court. The contentions raised in this behalf by them are the same as  were taken earlier while the said batch of matters, the   review   applications   and   the   applications   for clarification were  heard. In  order to  appreciate  whether there is  any substance  in the  contentions raised  by  the respondents it  is necessary  to recall the rival submission made earlier and how they were dealt with by this Court.      The challenge   to  the fixation of price of levy sugar was two-fold.  It was  challenged on  the ground that it was not determined  in accordance with Section 3(3-C) of the Act inasmuch as  the price  was fixed without regard to the four Factors specified therein. The submission in that behalf was that while fixing the price under Section 3(3-C) regard must be had  to the  producer’s liability  under clause 5A of the 1966 Order  which provides for payment of additional minimum price to  be paid  by the producer of sugar to the sugarcane

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grower and,  therefor, what  is statutorily  payable to  the grower has necessarily to be included as a element of Factor ’A’ of  Section 3(3-C).  Moreover, the minimum price payable under  Section  3(3-C)  and  the  additional  minimum  price payable  under   clause  5A   are  integral   components  of manufacturing cos  under Factor  ’B’. The  second ground  of challenge  was   that  mopping   up  of  the  entire  excess realisation by sale of free sugar was also incorrect in view of clause  5A as  that would  result in  total denial of any return  on   the  capital   employed  in   the  business  of manufacturing sugar,  resulting in  not even  recovering the actual cost  of production. Though prior to October 1, 1974, the date on which clause 5A was added, 100% mopping up, that is, taking the entire realisation by sale of free sugar into consideration for  fixing   fixing price  of levy  sugar was permissible, after  that date  only 50 % could be considered for that purpose.      On the other hand, it was contended that the objectives of Section  3(3-C) and  clause  5A  are  different.  Whereas Section 3(3-C)  deals with  fixing of  price of  levy sugar, clause 5A  deals only  with the  amount payable  to the cane grower. Thus,  clause 5A  deals only with the amount payable to  the  cane  grower.  Thus,  clause  5A  cannot  have  any relevance for  determination of  price of levy sugar. It was submitted that  price of  levy sugar  has  to  be  fixed  in advance whereas  determination of  the share  of cane grower under clause  5A comes  into operation  only after the sugar year is  over. The  liability of  payment of additional cane price under  clause 5A  would arise  only in case of surplus from sales  of both  levy and free sugar after adjustment of the unit cost production. This surplus may or may not arise. Therefore, it canner be regarded as a statutory or mandatory payment. As  regards mopping  up of the extra realisation by sale of  free sugar, the contention raised by the Government was that  even after introduction of clause 5A, It being and independent provision , it was open to the Government to mop up the  entire extra  realisation by sale of free sugar, the contention raised  by the  Government was  that  even  after introduction     of  clause  5A,  It  being  an  independent provision, it  was open  to the  government to  mop  up  the entire extra realisation, even though clause 5A entitles the producer to  retain 50  % of  the extra  realisation as  his share to  meet with  his  other  financial  obligations  and liabilities.      This Court  rejected the contention that Section 3(3-C) and clause  5A are totally independent and held that "if the determination of  minimum price of sugar and fixation of the price of  levy sugar  under quantity of sugar to be supplied by the  producer are inter-connected, then they must be read as a  whole and  not separately as though each is distinct". With respect  to mopping  up of extra realisation on sale of free sugar  for the  purpose of  determining price  of  levy sugar this  Court held  that according  to the  new  pricing policy contained  in clause  5A the producer became entitled to 50%  of such excess realisation from October 1. 1974 and, therefore, it  was not  open to the Government to mop up his share also while fixing the price of levy sugar. We need not refer to  this aspect  of mopping up further because that is really not  relevant for deciding these applications. we may only  state   under  Factor  ’D’  of  Section  3(3-C)  extra realisation on  sale  of  levy  free  sugar  is  a  relevant consideration and,  therefore, the  Government can  take  it into account  to enable  it to  fix levy  price at  a  lower level. As  explained by  this Court  in  that  judgment  the effect of  mopping up is to depress or reduce the levy sugar

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price.      This Court  construed clause  5A as  introducing a  new pricing policy  which conferred a benefit on the producer by providing that  he shall  be entitled  to retain  50% of the extra realisation  from sale of levy free sugar. At the same time, it  created a  new liability for him by providing that he shall  share the extra realisation from sale of levy free sugar with  the can  grower on  50:50 basis. In view of this new liability  this Court held that the Government was bound to take  that also  into account  while fixing  the price of levy sugar,  without specifying  as a whether that liability became a component of Factor ’A’ or Factor ’B’ or both those Factors of Section 3(3-C).      As regards  the direction  to  take  into  account  the liability of  the produce  of sugar  under clause 5A what is now submitted on behalf of the respondents is as under:-           "......It  is  submitted  that      this part  of  the  directions  was      complied with by not mopping up the      extra realisations  on  account  of      sales  of  free-sale  sugar.  While      determining the originally notified      prices, the extra realisations were      mopped   up    for    purpose    of      determination of  the prices.  This      had resulted  in a reduction in the      prices.  This  had  resulted  in  a      reduction in  the prices to a level      lower than  the price  to which the      sugar  producers  would  have  been      entitled  to   in  terms   of   the      provisions of the aforesaid Section      3(3-C)."      The respondents have also tried to support their action by contending  that clause 5A is inter-connected with clause 3 of  the   1966 Order  and Section 3(3-C) is an independent provision. Therefore,  the direction  given  by  this  Court cannot be interpreted to mean that the additional cane price fixed in  terms of  clause 5a  should  also  be  taken  into account as  a cost element in addition to those specified in Section 3(3-C).  It is  also submitted  that it  is also not feasible to  include the additional cane price payable under clause 5A  in the  minimum cane  price payable under Section 3(3-C) as  the two  exercises are required to be dome at two different stages  and the  additional cane  price is payable only in  case of  surplus. It  was lastly  contended that  a tree- judge  Bench of  this Court  has upheld on 20.2.96 the levy prices  fixed for 1982-83 in T.C. No.9 of 1990 and that would mean  that c  Court has now accepted the contention of the Government  that it  is  not  required  to  include  the additional  can   price  payable   under  clause   5A  while determining the price of levy sugar under Section 3(3-C).      All these  contentions except  the last one were raised by the respondents earlier while the above batch of matters, the   review   applications   and   the   applications   for clarifications have  been rejected  and,  therefore,  it  is really not  open to  the respondents to raise them again. It appears  to  us  that  the  respondents,  like  an  ordinary litigant, are  trying to find excuses for not complying with the judgment  of this Court in Paragraph 109 of the judgment is  quite   clear  and   does  not   lend  itself   to   two interpretations  or   any  confusion   as  contened  by  the respondents. In  unambiguous terms  this Court  has directed the Government  of India  to take into account the liability of the  manufacturer under  clause 5A  of the  1966 Order as

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regards cane  price and  re-fix the  price  of  levy  sugar. Obviously, the  price of  levy sugar  has to be fixed having regard to the Factors mentioned in Section 3(3-C) of the Act and,  therefore,  this  Court  while  giving  the  aforesaid direction also  directed them  to re-fix  the price  of levy sugar having  regard to  those Factors  also. The  doubt  or confusion, if  any, appears  to  us  to  be  the  Ernest  of unwillingness of  the Government  to give  up its  views and accept and implement the decision of this Court.      The observation,  in Paragraph 104 of judgment that the amount which  the producer  of sugar  is entitled  to retain cannot be  taken into  consideration  for  determination  of price of  levy sugar.  was made in the context of mopping up of the  extra realisation.  The issue was whether the entire extra realisation or only 50% thereof could be mopped up, in view of  the new  pricing policy contained in clause 5A, for depressing the levy price. Since by the new pricing policy a benefit was  sought to be conferred on the producer of sugar by  making   him  entitled   to  retain  50%  of  the  extra realisation, this  Court held that the said amount cannot be taken into  consideration for determination of price of levy sugar. That was entirely a different aspect. The observation which is  made in  Paragraph 109  and  the  direction  given therein is  with respect  to the  aspect of sugar producer’s liability to pay additional sugarcane price. Clause 5A being inter-connected with  Section  3(3-C),  this  new  liability would certainly  get projected  into Factors  ’A’ and ’B’ of Section 3(3-C). Thus the contentions raised on behalf of the respondents  even  otherwise  also  do  not  deserve  to  be accepted.      The order  that was  passed by this Court on 20.2.96 in Transferred Case (Civil) No.9 of 1990 was in respect of levy sugar price  for the  year 1982-83 and, therefore, it cannot have any  bearing on the fixation of price of levy sugar for the years  1975-76 to  1979-80. Moreover,  this Court,  wile passing the  said order,  has clearly  stated that  "...this matter is not covered by the decision of this Colurt in Shri Malprabha Co-operative  Sugar Ltd.   vs.  Union of India and Anr. 1994(1) SCC 648". Even if the Government has omitted to take into  consideration one  unfavourable element,  namely, mopping up  of excess  realisation  it  cannot  justify  its omission to take into consideration another relevant element which is favourable to the producer of sugar.      We, therefore,  allow these  applications and direction the Government  to issue  additional orders/notifications in terms of  the directions  given by  this Court  in the above referred batch of cases.