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CASE NO.: Appeal (civil)  460 of 1997

PETITIONER: U.P. Co-operative Cane Unions Federations  

RESPONDENT: West U.P. Sugar Mills Association & Ors.

DATE OF JUDGMENT: 05/05/2004

BENCH: P. VENKATARAMA REDDI.

JUDGMENT: J U D G M E N T          WITH C.A.Nos. 461/1997, 4685/1997, 932/2001, 1639-1645/1999,1727/1999,4602/1999,6065/2001,  8117-8122/2001,SLP(c)Nos.16851/2001,1363/2002, 948/2003,T.C.(C)21-22/2003, CON.PETN.(C) No. 63/2003 in C.A.No.932/2001 AND I.A.Nos. 13-14 in C.A. Nos.3512-3513 of 1997

P. Venkatarama Reddi, J.

1.              To put it in a nut shell, the three questions that  broadly arise for consideration are : 1) the legal status and  binding nature of ’State advised cane price’, 2) the power of  the State Government to fix sugarcane price under the  provisions of U.P. Sugarcane (Regulation and Purchase) Act  1953 (hereinafter referred to as U.P. Act) and 3) in case  such power exists and is exercised, whether the State law  fixing the price becomes repugnant to the provisions of the  Central Law, namely the Sugarcane Control Order of 1966  framed under E.C.Act.  As pointed out by Srikrishna, J. the  third question need not be answered in case no power to fix  the price is discernible from the provisions of the U.P.   Act  of 1953. 2.1             Turning to first question, I find no statutory basis  for the ’State advised cane price’. The very expression  ’advised’ connotes that the State advised price has no  statutory flavour. If the fixation has been done in exercise of  statutory power traceable to any provision in the U.P. Act, it  would be most inapt to describe it as ’advised price’. The  statutorily fixed price can never take the form of advice. It  binds, enforces obedience by providing for punishment or  penal consequences and does not look for volition of the  persons concerned for its compliance. But, that is not the  case here. From year to year, the State Government has  been announcing the ’advised price’ in the hope and  expectation that the sugar factories in the private sector will  also agree to pay that price. It is worth quoting a typical  order/communication issued by the Government and the  Cane Commissioner.  The following is the communication   dt. 15.11.96 addressed by Principal Secretary to Govt. to the  Cane Commissioner of U.P. :- "As is evident, that for every crushing season  State Advised Cane Prince is announced by the  State Government. Accordingly, I have been

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directed to inform you on the above subject, that  the State Advised Cane Price payable by all sugar  factories for the season 1996-97 has been fixed as  under:

a)      For early maturing varieties at mill gate - 76.00 b)      For general varieties at mill gate           - 72.00

2. I have also been directed to inform you that  during crushing seasons 1996-97 the transport  deduction for cane supplied to the sugar factories  at their out centres will continue to be Rs.3/- per  quintal.

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

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

                                       (Sd.)                                         Principal Secretary ***  ***  *** Office order dt.15.11.96 issued by Cane Commissioner, U.P.

"The State Advised Cane Price is announced by  the State Government for every crushing season.  Keeping this in view, the sugar factories have  been paying cane price to the cane growers.  Accordingly, the State Government has announced  the State Advised Price payable by factories as  under:

a)      For early maturing varieties at mill gate - 76.00 b)      For general varieties at mill gate          - 72.00"

The above price is for the mill gate and for supply  at outcentres. Transport deduction will be  separate.  

(Sd.) Cane Commissioner, U.P.

The order of the Cane Commissioner is marked to  several officials, organisations and occupiers of sugar  factories. 2.2             Even in the counter-affidavits filed in the writ  petitions, no categorical stand has been taken by the  Government that the ’State advised price’ is the statutorily  fixed price which is legally binding on all concerned. On the  other hand, the averments in the counter-affidavit give a fair  indication that it is nothing but advised price in its literal  sense. The following excerpts from the counter-affidavit filed  in writ petition No. 36889 of 1996 (the corresponding Civil  Appeal No. being 460 of 1997) make this position clear. "So far as the State of U.P. is concerned, there are  118 sugar mills out of which 70 sugar mills belong  to either the Sugar Corporation which is the  instrumentally of the State or the cooperative  sector in which the State Government has major  share holding and only 48 sugar mills belong to  private sector. Thus, the State Government is fully  justified in law to provide a price of sugarcane for  its own mills and since the private sugar factories  are also aware that the cane growers will not

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supply sugarcane at a lower price, they have also  in the previous years agreed to pay the aforesaid  price without any objection. The State Advised  cane price also ensures that there is parity in the  price of sugarcane throughout the state and it  removes the element of disparity in any manner."

*** *** ***

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

2.3             I may also refer to the order issued by the  Government in the State of A.P. where the provisions similar  to U.P. Act exist and the averments in the counter-affidavit  filed on behalf of the Government in Writ Petition 2876/99  (corresponding to SLP (c) 16851/01).  The relevant  particulars of GOMS No. 420 (Industries & Commerce,  (Sugar) Department) dated 4.12.98 are as follows : "The Government of India has announced the  statutory Minimum Price of Rs.527.00 per M.T.  linked to a basic recovery of 8.5% to be paid by  the sugar factories to the cane suppliers, for the  year 1998-99.

2.      In the context of ensuring payment of fair and  reasonable cane price to the farmers, who  supply sugarcane to the sugar factories, the  Government elicited the views of sugar cane  growers and management of sugar factories.

3.      The Government after carefully examining the  views and various issues connected with it, it  accordingly advise all the sugar factories,  including khandasari units, whether situated  within or outside the zone of sugar factories in  the State, to pay a minimum price of  Rs.652.50 per M.T.  linked to a basic recovery  of 8.5% or 19997-98 year’s price, whichever is  higher by each factory/khandaasari Unit for  the sugar cane purchased by it for the year  1998-99 season as against the statutory  minimum price of Rs.527.00 per M.T. fixed by  the Government of India.

4.      All the sugar factories and khandasari units in  the State have to pay the State Advised cane  price without any monetary assistance from  the State Government.  The payment of  sugarcane price shall be adjusted against the  ultimate price payable under price sharing  formula under clause 5(A) of Sugarcane  (control) Order, 1966."

In the counter-affidavit, it is made clear "that the State

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Government only advised the sugar factories to pay certain  price to the cane suppliers which is fair and reasonable after  eliciting the views of the representatives of sugarcane  growers and managements of sugar factories.  It is not true  to state that the State Government have compelled the  sugar factories to pay the SAP to cane suppliers but sugar  factories have to pay the purchase tax at Rs.60 per M.T."   Again at paragraph 7, it is stated in emphatic terms that the  State Government only advises the payment of cane price  for the welfare of sugar industry and cane growers.  In fact,  in the course of arguments before the High Court, the  learned Advocate General appearing for the State rightly  took the stand that the State advice price is not an  ’Imposition’. 2.4             The stand taken by the State Governments in the  cases previously decided by this Court, viz., Jaora Sugar  Mills and SKG Sugars, which has been accepted by the  Court was that efforts were made by the official machinery  of the State to convene the meetings and to arrive at an  agreed price which was notified as the State advised price.  Thus, the real basis for compliance with the State advised  price is the agreement but not its statutory authority or  binding force. The apparent reason for not notifying  the  price under the provisions of the statute, namely, U.P. Act of  1953 seems to be the doubt cast on the State’s power to fix  such price in the light of the observations made in Tika  Ramji’s case and, it may also be attributable to the  difficulty arising on account of lack of  criteria or guidelines  under the Act and Rules regarding fixation of price.  Be that  as it may, the fact remains that the ’State advised price’  cannot be said to have been fixed in purported exercise of  any statutory power and it cannot be elevated to the level of  a statutory price fixation order. The decisions of this Court  referred to supra did not hold that the State advised price is  a statutorily fixed price and is legally binding on the sugar  factories on its own force. The observation in Jaora Sugar  Mills case at paragraph 14 to the effect that "the price fixed  or agreed is a statutory price" does not mean that State  advised price was construed as statutorily determined price.  Apparently, the learned Judges were referring to the two  concepts of price envisaged by the Sugar Control Order as  discussed in paragraph 8 of the said decision. But, it does  not appear to have reference to the ’State Advised Price’ as  such. However, I would like to clarify that the question  posed by the Court at paragraph 12 i.e. "whether the State  Government had entered into such a contract" is not  accurate and does not fit in with the actual decision in the  case. 2.5             In the light of my conclusion that the State  Advised Price has no statutory basis and legal force, is it  necessary to strike down the orders communicating the  State Advised Price? That is the next question. In my  considered opinion, it is not necessary or appropriate to do  so. The State advised price, though lacking the sanction of  law and its compliance cannot be ensured against the will of  the factory owner, it can still serve as a framework within  which an agreed price over and above the minimum price  fixed under the Central Control Order can be brought about.  The law does not prohibit the concerned authorities of the  State Government from advising or recommending a price  for adoption by the sugar factories. The authorities  entrusted with the various functions under the Act conceived  in the interests of both growers and producers can certainly  play a role, as has been pointed out in Jaora Sugar Mills   in bringing the parties to a negotiating table and forging a

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mutual settlement leading to the payment of the State  advised price. The very fixation of State advised price  cannot be legally faulted so long as its compliance is ensured  by a voluntary process by which the State advised price can  very well become an agreed price. 3.1             The next and more important controversy is about  the State Government’s power to fix the price. Such power  is traced to Section 16 of the U.P. Act by the learned counsel  appearing for the State and the Cooperative Cane Unions.  There is almost a similar provision in the corresponding  enactments in force in the States of Andhra Pradesh, Punjab  and Haryana. In Bihar and Tamilnadu, there is no such  provision. In fact, Section 42 of the Bihar Act lays down that  the minimum price determined under the Act shall not  exceed the minimum price payable under any law for the  time being in force. It would suffice to confine the discussion to the  provisions of U.P. Act. Section 16 of U.P. Act carries the  heading ’Regulation of purchase and supply of cane in the  reserved and assigned areas’. Sub-Section(1) empowers the  State Government, "for the purpose of maintaining  supplies", to regulate (a) "the distribution, sale or purchase  of cane in any reserved or assigned area" and (b) "purchase  of cane in any area other than a reserved or assigned area".  After thus laying down the broad parameters of regulatory  power, it is followed by sub-Section (2) spelling out the  specific areas to which such power can extend. The fixation  of price of cane is not one of them. However, sub-Section(2)  does not exhaust the field of operation of the regulatory  power. The price fixation could still come under the  generality of the power reserved under sub-Section (1). It is  contended with much force that the power to regulate the  sale or purchase of sugarcane comprehends within its scope  the power to fix the price of sugarcane. The wide meaning  given to the expression ’regulate’ in various cases coupled  with the fact that price is an essential component of sale is  harped upon to preserve the power of the State Government  to fix the price.   Mathur, J. has also highlighted the fact that  the fixation of a remunerative price for sugarcane supplied  to factories would go a long way in accomplishing the  objective of maintaining supplies. The peculiarities  associated with harvesting and marketing of sugarcane have  been pointed out. The need to protect the interests of  sugarcane growers has also been stressed. These are no  doubt weighty considerations which go to  support  the  argument that the regulatory power can extend to fixation of  price of sugarcane supplied to the factories. But, there are  equally weighty factors which persuade me to hold, in  concurrence with the view expressed by Srikrishna, J, that  the regulatory power under Section 16 does not extend to  price fixation. 3.2             Number of cases were cited at the bar to buttress  the argument that the import of the word ’regulatory’ is wide  and expansive enough to cover price fixation. It was noticed  in more than one case (for eg. Jiyajirao Cotton Mills Vs.  M.P. Electricity Board [(1989) Suppl. 2 SCC 52]) that  the expression ’regulate’ has no precise or fixed connotation  and that it has different shades of meaning. There is no  doubt that it is a word of broad import. Its width and  content may vary according to the contextual setting in  which the expression occurs. The scheme and thrust of the  provisions of the relevant statute, the objective of  legislation, the legislative intent gathered from  the   legislative history and the run of the provisions contained in  the enactment can all be taken into account while

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appreciating the correct meaning of the expression ’regulate’  in a particular statute. I agree with Srikrishna, J. that the  decision in Tika Ramji’s case is the main hurdle for giving  an amplified meaning to the expression ’regulate’ so as to  cover price fixation. After giving anxious consideration to the  issue, I find it difficult to distinguish the judgment in the  manner in which it was sought to be done by the learned  counsel appearing for the State and the Union of cane  growers. Though the Constitution Bench did not directly deal  with the question of interpretation of Section 16 vis-‘-vis  the power of price fixation, going by the observations made  therein and the basis of reasoning adopted to arrive at the  conclusion that there was no repugnancy, it is fairly clear  that the  Constitution Bench negatived the existence of  any  provision empowering the State Government to fix the price.  The Court in addition observed that factually, there was no  fixation of minimum price by the State Government.  On a  comparative analysis of the provisions, this Court found no  repugnancy between the impugned Act (U.P. Act of 1953)  and the Sugarcane Control Order of 1955. The provisions  were held to be mutually exclusive and did not impinge upon  each other. It is appropriate to refer to the relevant  observations made and the  reasons given by the  Constitution Bench which are crucial. While dealing with the  point No.1, i.e., whether the U.P. Act of 1953 had trenched  upon the subject of notified industries falling within the  exclusive domain of Parliament, this Court noticed that the  provisions in the repealed U.P. Act 1 of 1938 dealing with  the minimum price of sugarcane were deleted. The following  observations may be noticed: "Even the power reserved to the State Government to  fix the minimum prices of sugarcane under Chapter 5 of U.P.  Act 1 of 1938 was deleted from the impugned Act, the same  being exercised by the Centre under Clause (3) of Sugar and  Gur Control Order, 1950 issued by it in exercise of the  powers conferred under Section 3 of Act 24 of 1946." "The prices fixed by the Centre were adopted by the  State and the only thing which the State Government  required under Rule 94 was that the occupier of a factory or  the purchasing agent should cause to be put up at each  purchasing centre a notice showing the minimum price of  cane fixed by the Government meaning thereby the Centre."  Again it was observed in the next para: "the only provision  which was retained by the State Government in the  impugned Act for the protection of the sugarcane growers  was that contained in Section 17 which provided for the  payment of price of the sugarcane by the occupier of a  factory to the sugarcane growers. It could be recovered from  such occupier as if it were an arrear of land revenue. This  comparison goes to show that the impugned Act mainly  confined itself to the regulation of the supply and purchase  of sugarcane required for use in sugar factories\005.." 3.3             Turning then to the question of repugnancy (point  No.2), the Court after clarifying that both the Parliament and  the U.P. State Legislature had the concurrent power of   legislation under Entry 33 of the List III in regard to  sugarcane, found no repugnancy between the Central and   State legislations. Central to the reasoning of the case are  the following observations : "As we have noted above, the U.P. State  Government did not at all provide for the  fixation of minimum prices for sugarcane nor  did it provide for the regulation of movement  of sugarcane as was done by the Central  Government in Clauses (3) and (4) of the

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Sugarcane Control Order, 1955.

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

The price of cane fixed by Government here  only meant the price fixed by the appropriate  Government which would be the Central  Government, under Clause (3) of the  Sugarcane Control Order, 1955, because in  fact the U.P. State Government never fixed  the price of sugarcane to be purchased by  the factories. * * * * * * * * * * ** * * * * *  * ** * * * * * * ** * * * * * * * * * * * * * The provisions thus made by the Sugarcane  Control Order, 1955, did not find their place  either in the impugned Act or the Rules made  thereunder or the U.P. Sugarcane Regulation  of Supply and Purchase Order, 1954, and the  provision contained in Section 17 of the  impugned Act in regard to the payment of  sugarcane price and recovery thereof as if it  was an arrear of land revenue did not find its  place in the Sugarcane Control Order, 1955.  These provisions, therefore, were mutually  exclusive and did not impinge upon each  other there being thus no trenching upon the  field of one Legislature by the other."

3.4             No doubt, the content of regulatory power under  Section 16 was not discussed by the Constitution Bench.  But, as viewed by Srikrishna, J., the observations made by  the Court necessarily suggest that the State Government  was not invested with the power to fix the price of  sugarcane. It was argued that the question of repugnancy  was considered from the stand point of minimum price but  not the price in general. I find it difficult to accept this  contention. The tenor of discussion more especially the  observations extracted supra would unmistakably indicate  that the Constitution Bench did not consider the question of  repugnancy only from such narrow angle but it was  considered in the broader perspective of the provisions  relating to price and the exercise of  power of price fixation  by the State Govt.  No particular significance can be  attached to the use of the expression ’minimum price’ in the  judgment of Constitution Bench because in one sense, the  price ordained to be paid by the State government, will  become minimum price.  In another sense, it may be a more  remunerative or higher price than what is fixed by the  Central Government. 3.5             On a careful reading and analysis of the judgment,  I am inclined to think that the Constitution Bench did not  discern any power to fix the price under the Act.  If under  Section 16, the power to fix price was to be inferred, I have

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no doubt that the Constitution Bench would have paused  and considered the effect of it on repugnancy. It is only on  the premise that there was no such provision, the Court  recorded its conclusion on the issue of repugnancy. In other  words, the Court proceeded on the basis that the subject of  price fixation\027minimum or otherwise was not dealt with by  U.P. Act of 1953. It is also not possible to distinguish the  decision on the ground that what was uppermost in the mind  of the Constitution Bench was  the factual non fixation of the  price by the State Government but not the power to fix the  price.  It was on both aspects. Even if the Constitution  Bench recorded its conclusion on the question of repugnancy  without specifically considering Section 16 and the power to  regulate the price that could possibly flow therefrom, this  coordinate Constitution Bench cannot express a contrary  view at this distance of time. 3.6             In any case, apart from what was held in Tika  Ramji’s case, there are certain features and indicators  discernible from the scheme of the U.P. Act and the  legislative history which lead to the irresistible conclusion  that price regulation was not within the contemplation of the  Act. In contrast to the preamble of the predecessor Act,  namely, the U.P. Sugar Factories Control Act, 1938 (as  amended by Act 16 of 1952) the expression ’to regulate the  price of the sugarcane’ has been omitted.  Then, the specific  provision contained in the earlier Act (Section 21 of U.P. Act  1 of 1938) conferring power on the State Government to fix  minimum price and Section 22A empowering the State  Government to direct payment of additional price was  omitted, the reason for such omission being the  promulgation of the Sugar and Gur control Order, 1950 by  the Central Government, as noticed by this Court in Tika  Ram ji’s case. Having omitted to reenact those provisions, if  the U.P. legislature wanted to retain the power to fix higher  price over and above the minimum fixed by the Central  Government, it is reasonable to expect the legislature to  make a specific provision to that effect rather than leaving it  to the general regulatory power under Section 16 to take  care of it. It cannot be gainsaid that the power to fix the  price and to regulate dealings between the parties  accordingly is a matter of great importance. When a parallel  legislation in the Central field was in operation in regard to  price fixation, the State legislature would not have omitted  to enact the specific provision empowering the Government  to fix the price higher than the minimum level prescribed by  that legislation if that was the intention of the legislature.  Such provision would have contained norms, criteria or  guidelines governing the higher price fixation or at least left  them to be prescribed by Rules. This is also one of the  factors which persuades me to think that the price fixation in  the guise of regulatory power under Section 16 was not  within the contemplation of the U.P. State Legislature.  Srikrishna, J. has also referred to this aspect in his  judgment. The learned Judge’s observations in this behalf  are quite pertinent. The conspicuous absence of a specific  provision relating to price fixation must be viewed in the  back drop of legislative history and the  parallel central  legislation operating in the field.  Both the external and  internal aids to construction reasonably point to the  conclusion that price regulation was not within the  contemplation of State legislature. In fact, that aspect was  consciously left out.  Above all, the observations in Tika  Ramji’s case cannot be explained away by clear cut  distinguishing features as discussed earlier.  I am, therefore,  of the view that Section 16 of the U.P. Act 1953 cannot be

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so construed as to confer the power on the State  Government to fix the price.  Section 17 of the Act and the  Rules are only provisions to ensure prompt payment of price  and to provide for recovery in case of default.  It is only to  this extent a provision exists in regard to price. 4.              I agree with Srikrishna, J, that there is no need to  decide the constitutional question whether the fixation of  price by the State Government clashes with the provisions of  Sugar Control Order 1966 promulgated under the Essential  Commodities Act.  As and when the legislation is enacted by  the State and the price is fixed by the State Government or  other designated authority in terms of such statutory  provision, the need may arise to test the validity of such  provisions in the light of Article 254 of the Constitution.  It is  a well settled practice of this Court not to render a decision  on a constitutional issue on hypothetical basis or in  anticipation of future law, especially when the Union of India  is not a party to these proceedings.  I, therefore, express no  view on the Constitutional issue relatable to Article 254.  5.1             Having considered the main points at issue,  certain aspects concerning the inter-relation between  Agreements and State advised price and the role of State  machinery in this regard need to be dealt with. The ratio of  certain decisions of this Court cited at Bar in a bid to impart  binding force to the State advised price should also be  considered. 5.2             First, I would like to clarify that the signing of an  agreement incorporating the State recommended Price  should not cloud the issue whether the State Government  has statutory authority to fix such price.  I agree with  Srikrishna, J. that the existence or otherwise of an  agreement is not determinative of the crucial controversy  relating to the power of the State Legislature or its delegate.   If there is no authority to fix the price, the fact that the  Agreement is entered into adopting the ’State advised price’  does not impart statutory basis to such price.  On the other  hand, if there is power under the Statute and such power  has been demonstrably exercised by the State, there is no  need to have recourse to the agreement to sustain the  power.  It needs to be clarified here that once the  agreement is arrived at or executed, the price specified  therein, even if it be ’State advised price’, has to be paid  irrespective of the question whether such price has statutory  flavour. At the same time, it must be made clear, as   pointed out by Mathur, J., that the agreement cannot be  said to have been vitiated on the ground of statutory  compulsion for the reason that the statutorily fixed price is  incorporated  into the agreement.  A fortiori, the agreement  giving effect to the State advised price is perfectly valid and  enforceable unless any vitiating factors under the law of  contract are established. I would however like to make it  clear that the State Government or its agents cannot compel  or coerce the sugar factories to enter into agreements to  pay to the growers the ’State Advised Price’, even though it  has no statutory power to fix the price. In the absence of  such statutory authority, the only course left open to it to  ensure higher price to the farmers is to strive to evolve an  agreement on price by way of consensus.  In such a case,  the State advised price can enter into the terms of  agreement. Such mutual agreement should be the result of  negotiations and voluntary acceptance.  In some of the  decisions, it has been said that agreed price is the ’State  Advised Price’.  It may or may not be always so.  It depends  on the fact whether voluntary agreement as regards the  price has been arrived at or not.  The super-imposition of

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State Specified Price into the terms of the agreement by  means of an unilateral action on the part of the Government  does not obviously pass the muster of agreed price.  In  short, an agreement cannot be forced on the parties in the  absence of statutory backing, though the State machinery  can play a role to evolve an agreement through a voluntary  process. 6.1             The next point which needs to be clarified is that  the judgments in Jaora Sugar Mills  case and S.K.G.  Sugars  case relied on by Mathur, J. are of little assistance  in answering the crucial issues arising in the present case.   As rightly pointed out by Srikrishna, J., in those cases it was  found as a matter of fact that there existed valid consensual  agreements between the factories and the sugarcane  growers.  It may be that the official machinery was  instrumental in bringing about such agreements, but that is  an immaterial factor.  Once the agreement is entered into  the price specified therein (whether equivalent to State  advised price or otherwise), is liable to be paid without  raising further questions. 6.2             No support can be drawn even from the decision  in Maharashtra Rajya Sahakari Shakkar Kharkhana  Sangh’s  case.  The following are the observations of R.M.  Sahai, J. at para 21 :- "\005..the Central Government did not fix any  maximum price obviously because the conditions  in the agricultural sector differed from State to  State.  Therefore, it having fixed a minimum price  expects the State to offer remunerative price to its  cultivators.  In a controlled economy, the price  fixation machinery is to be determined by the  Government or under the 1966 Order in the  manner provided therein\005.."

       The observations must be confined to the facts and the  issue arising therein. The distinguishing feature in that case,  as pointed out by Srikrishna, J., is that the bye-laws of the  co-operative society empowered the State Government to  determine the price of the sugarcane to be paid to the  members so long as the loans advanced to the co-operative  society were not fully paid.  It is this bye-law that  empowered the State Government to fix the price.  No  question arose in that case regarding interpretation of  Section 16 of U.P. Sugarcane Act or the conflict between the  State and Central law. 7.              Now, a Summary of conclusions :

1)      The State Advised Price has no statutory flavour.  It is not fixed or purportedly fixed in exercise of  any statutory power. It is only persuasive or  recommendatory in nature. The sugar factories  cannot be compelled or coerced to pay that price  by taking any steps not sanctioned by law.

2)      The U.P. Sugarcane (Regulation of Supply and  Purchase) Act, 1953 does not confer the power on  the state government to fix the price of  sugarcane. Such power cannot be spelt out from  section 16.

3)      In view of conclusions (1) and (2) it is not  necessary to express any opinion on the  constitutional issue of repugnancy between the  central and the state law. The finding recorded on  this aspect by the Allahabad High Court in writ

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petition No. 36889 of 1996 is set aside. That  question of law is left open.

4)      The writ or direction issued in some of the writ  petitions to ’enforce’ the State Advised Price  irrespective of the consent of the occupier of sugar  factory is declared illegal and hereby set aside.

5)      Although the State Advised Price has no sanction  of law, the action of the State government in  notifying the State Advised Price and advising the  sugar factories to comply with the same is not per  se illegal. The State Advised Price can serve as the  framework within which the agreement as to price  can be reached between the cane growers and the  sugar producers. Therefore, the orders issued by  the state government / Cane Commissioner  communicating the fixation of State Advised Price  need not be set aside.

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

7)      Once the occupier of sugar factory reaches an  agreement with the cane grower \026 may be on the  persuasion of the state authorities, to pay the  price equivalent to State Advised Price either by  executing a formal agreement in this behalf or  otherwise, the occupier of the factory is bound to  pay such price and in case of default it can be  recovered by the State authorities by coercive  process laid down in the statute.

8)      Whether or not there is an agreement to pay  particular price is a question of fact. In the  absence of express agreement, it is not  impermissible to look into other evidence, if there  is a dispute on the question of the price agreed to  be paid.

The writ petitions and transferred cases shall be  disposed of by the respective High Courts de novo in the  light of the declaration of law and the observations made  above. Accordingly Civil Appeals/S.L.Ps. other than those  mentioned in the last paragraph stand disposed of. However, I.A.Nos. 13-14 in C.A. Nos.3512-3513 of  1997, S.L.P.(C) Nos. 948 of 2003 and 1363 of 2002 arising  out of interim orders and C.A. Nos.1639-1645 of 1999  relating to recovery of agreed price are dismissed. Contempt  case to be posted before the appropriate Bench.