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PETITIONER: WELCOME HOTEL AND OTHERS

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH AND OTHERS

DATE OF JUDGMENT22/08/1983

BENCH: DESAI, D.A. BENCH: DESAI, D.A. REDDY, O. CHINNAPPA (J)

CITATION:  1983 AIR 1015            1983 SCR  (3) 674  1983 SCC  (4) 575        1983 SCALE  (2)131  CITATOR INFO :  F          1987 SC1802  (11)

ACT:      Andhra Pradesh  Catering Establishments  (Fixation  and Display of Prices of Foodstuffs) Order, 1978-Validity of.      Essential   Commodities    Act,   1955-S.   2(a)   (v)- "Foodstuffs", meaning  of-Whether it includes cooked food ?- Mechanics of  price fixation  under the  Act-Extent of scope for interference by Court.

HEADNOTE:      The Government of Andhra Pradesh, in exercise of powers conferred  under   the  Essential   Commodities  Act,   1955 promulgated  the   Andhra  Pradesh  Catering  Establishments (Fixation and  Display of  Prices of Foodstuffs) Order, 1978 fixing the  maximum prices  of seven  items of  cooked  food listed in  the Schedule  thereto. As  the hoteliers  in  the State raised a hue and cry, the State Government effected an upward revision  of the  prices fixed  by an  Amending Order dated December  11, 1980.  The hoteliers  were not satisfied with that  and negotiations  were held  between them and the Minister of  Civil Supplies  and as  a  consequence  another order dated January 5, 1981 was issued effecting yet another upward  revision  in  the  maximum  prices  fixed  and  also reducing the  number of  scheduled items  from seven to six. Ignoring this  order which  replaced the earlier orders, the petitioners approached  this Court  questioning the validity of the earlier orders and obtained an ex parte stay.      The  contentions   raised  were:  (i)  that  the  State Government was  not competent  to issue  any  price  control measure in  respect  of  ’cooked  food’  as  the  expression ’foodstuffs’ under  the Act  means raw  foodstuffs only; and (ii) that  the fixation of maximum prices of scheduled items under the  impugned orders  was arbitrary  and violative  of Art.  14   inasmuch  as   the   prices   were   economically unprofitable  as  the  same  had  been  arrived  at  without scientifically examining  the prices  of  inputs,  over-head charges, etc.      Dismissing the petitions, ^      HELD: 1.  The expression ’foodstuffs’ in s. 2(a) (v) of the Essential Commodities Act, 1955 includes cooked food. If

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power to  control prices  of raw  foodstuffs such as rice or wheat in  conferred by  s. 3,  there is no justification for that power  not comprehending  within its  fold the power to regulate prices of articles made out of such raw foodstuffs. [678 A-C]      (i) The  Essential Commodities  Act, 1955  has the same object  as   the  1946  Act  and  therefore  the  expression ’foodstuffs’ in the 1955 Act must receive 675 the same  construction which it received under the 1946 Act. Expressions such  as ’food crops’, ’spices’ and ’condiments’ indicate different  spices  of  articles  of  food  but  the general  expression  ’foodstuffs’  was  interpreted  in  the context of  the 1946  Act to  include spices  and condiments also. It  was pointed  out that  although expressions ’food’ and ’foodstuffs’  could be  used in both a wide and a narrow sense, the  expression ’foodstuffs’ had been used in a wider sense in the 1946 Act. [679 D-G]      State of  Bombay v.  Virkumar Gulabchand  Shah,  [1952] S.C.R. 877 referred to.      (ii)  The   expression  ’food’   has   generally   been understood to mean nutritive material absorbed or taken into the body of an organism which serves for purposes of growth, work or repair and for the maintenance of the vital process. What human beings consume is styled as food and what animals consume is described as animal feed. This distinction has to be borne in mind. The expression ’foodstuffs’ is made of two expressions, ’food’  and ’stuff’.  In other words, the stuff which  is  used  as  food  would  be  foodstuff.  Therefore, foodstuff is that which is taken into the system to maintain life and  growth and  to supply  for waste of tissue. If raw foodstuff with  a view  to making  it  consumable  by  human beings undergoes a change in its condition by the process of cooking, the  derivative is none the less foodstuff. [679 H, 680 A-B]      (iii) That  the expression  ’foodstuff’ as  used in the 1955 Act comprehends cooked food is also clear from the fact that ’food  crop’ has  been separately  defined in  the Act. [680 D]      2. (a)  The mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that  there is hostile discrimination against a class of operators,  the processual basis of price fixation has to be accepted in the generality of cases as valid. [681 G-H]      Prag Ice & Oil Mills & Anr. v. Union of India, [1978] 3 S.C.R. 293 relied on.      (b) The  petitioners ordinarily  do not  serve only the scheduled items, but they have large establishments catering to various  tastes and  delicacies. No  price fixation order need guarantee profit to an establishment in respect of each unit of article served or sold. It is the overall picture in the trade  or  commerce  that  needs  to  be  examined.  The petitioners have  not shown  that in  their overall turnover they have since the promulgation of impugned orders suffered losses. And this situation never fructified because the 1978 Order was  kept in  suspended animation  for a period of two years and  when the  latest order  dated January 5, 1981 was promulgated, it  was still-born  at the  hands of  the Court because  of   the  ex  parte  stay  order  obtained  by  the petitioners.                                                   [681 D-F]

JUDGMENT:

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    ORIGINAL JURISDICTION:  Writ Petition  Nos. 43 of 1981, 51-53, 415-18/81,  5465-5562/83, 1751-52/81 and 7763-7890 of 1983. 676      Dr. L. M. Singhvi, B. Kanta Rao, Lakshmi Kant Pandy and J. Eswara Prasad for the Petitioners.      M. S. Ganesh, Ms. Lata Krishnamoorty and T.V.S.N. Chari for the Respondent.      The Judgment of the Court was delivered by      DESAI, J.  Should Art.  32 of the Constitution lend its assistance to petitioners in this group of petitions so that the poor  in Andhra  Pradesh can be successfully deprived of their staple  simple breakfast  ? Even an imaginary marginal dent in the profits of the hoteliers stirs it into action by an easy  resort to  a writ petition under Art. 32 and an ex- parte stay  which itself  is success  even if  the  petition ultimately fails  because in  the meantime the measure which may possibly  affect their  profits is  kept under suspended animation and  the profit  being continuously  derived  from scattered  consumers   is  not  refundable  and  the  unjust enrichment  is   enjoyed  with  impunity.  This  case  amply illustrates the point.      Hoteliers of  Andhra Pradesh  raised a hue and cry when the  Government   of  Andhra  Pradesh-the  first  respondent enacted and  proclaimed in  exercise of the powers conferred by Sec.  3 of  the Essential Commodities Act, 1955 (1955 Act for short)  read with  the notification  of the  Ministry of Agriculture and  Irrigation dated  June 9,  1978, the Andhra Pradesh Catering  Establishments (Fixation  and  Display  of Prices of  Foodstuffs) Order.  1978 (1978  Order for  short) dated September  8, 1978  whereby it was made obligatory for the catering  establishments to  display the  prices of  all foodstuffs served  by the  establishment and  simultaneously fixed the  maximum price  of seven  items of food comprising the poorman’s menu in the State of Andhra Pradesh. The seven items enumerated  in the Schedule appended to the 1978 Order include idli,  vada, upma, sada dosa, puree, coffee, tea and a rice plate (scheduled items for short). Cl. 3 of the Order prescribed maximum prices of the scheduled items of food and cl.  4  makes  it  obligatory  to  display  in  English  and principal language  of the  area the  weight or  measure and price of  every item  of foodstuff  offered for  sale in the establishment. There  were consequential  provisions such as power to  issue directions,  power to  call for information, power  of  entry,  search  &  seizure  and  power  to  grant exemption  as   also  power   to  amend   the  Schedule.   A clarificatory notification  was issued  on October  3,  1978 giving certain directions. 677 The Schedule  and the rates set out therein were modified by the Amending  Order dated  December 11,  1980. The amendment catered to  an upward  revision of the prices. It seems some further negotiations  took place  between  the  Minister  of Civil Supplies  and Labour  on the one hand and hoteliers on the other  which led to a notification dated January 5, 1981 (1981 Order  for short)  giving further  upward revision  in maximum price  of scheduled  items and  the scheduled  items were reduced  from 7 to 6 deleting rice place. Ignoring this latest  order   which  replaced   the  earlier  orders,  the petitioners approached  this Court  and obtained an ex-parte stay of the implementation of Orders dated September 5, 1978 and December  11, 1980. In fact, but for the intervention by the Court staying the operation of earlier orders, the order dated January  5, 1981  was not  stayed yet  effectively the petitioners succeeded in putting into cold storage the price

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fixation  order  leaving  them  free  to  charge  any  price unhampered and uninhibited by any governmental action.      Dr. L.M.  Singhvi, who led on behalf of the petitioners made two  submissions which  have nothing  to  do  with  the validity or  legality of  the impugned  Orders. He submitted that  the  Court  should  give  a  direction  to  the  State Government to  re-examine the  prices of inputs and overhead charges so  as to  arrive  at  such  maximum  price  of  the scheduled commodities  as to  ensure a  reasonable return on the investment  which would  render the  restriction on  the fundamental right  to carry on trade, reasonable and satisfy Art. 19  (1) (g) of the Constitution. He next submitted that there are  certain directions  in the  1978 and  1981 orders which are  impossible  of  compliance  and,  therefore,  the petitioners should  be heard  before they  are compelled  to implement the conditions. Neither of the submissions has any impact on  the validity  of the  impugned  Orders.  It  may, however, be  pointed out  how  the  petitioners  suppressing material facts  succeeded  in  obtaining  an  ex-parte  stay order.  In   the  counter-affidavit  filed  by  one  Mr.  D. Muralikrishna, Director  of Civil  Supplies, it  was  stated that after  the Order dated December 11, 1980 was issued the hoteliers resorted  to  some  agitation  which  led  to  the Minister  of   Civil  Supplies  calling  a  meeting  of  the hoteliers. What  transpired at this meeting may be extracted from the counter-affidavit:           "The  Minister   for  Civil   Supplies   therefore      convened a  meeting at  Hyderabad on  31.12.80 with the      representatives of hoteliers all over the State and the      Joint Collectors.  At the  said meeting  all the issues      involved were thoroughly 678      discussed. After  prolonged discussions,  the hoteliers      of the  districts have  agreed unanimously for reducing      the  prices   in  respect  of  6  items  of  foodstuffs      excluding meals  and an  undertaking to that effect was      signed by the hoteliers at 1.30 a.m. on 1.1.1981." A copy of the undertaking is produced at Annexure ’B’ to the counter-affidavit which  inter alia  also provided  that the rates of  the scheduled items determined with the consent of the hoteliers  will be  reviewed after three months. What is now demanded is that the State Government should examine the prices of  inputs and  overhead charges and determine afresh the maximum  prices of  the scheduled  items, which was very much an  integral part  of an over all agreement between the State Government  and the  hoteliers. After suppressing this material  fact   from  the   Court  in   the  petition,  the petitioners obtained  an ex-parte  stay order on January 12, 1981 and  this was  suppression of  such a  material fact as would disentitle  the petitioners to any relief at the hands of this  Court. That  apart review at reasonable interval is implicit in any price fixation measure.      The second  submission that the petitioners be heard to point out  the impossibility  of complying  with some of the conditions of  the Orders  is merely  to  be  stated  to  be rejected. If  the real  bone of  contention was  the maximum price of  scheduled items  which was  to be  thrashed out by discussion, it is not possible to accept the submission that the petitioners  would not  have put  forth their grievances about the  impossibility  of  complying  with  some  of  the conditions of  the impugned  orders. There  is not a whisper about it  in the  agreement Annexure  ’B’ and we do not find anything very  unusual or  impracticable in  the  conditions prescribed in the impugned orders.      Mr.  B.   Kanta  Rao  who  appeared  for  some  of  the

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petitioners urged that the State Government is not competent to issue any price control measure in respect of cooked food because the  Essential Commodities  Act, 1955  which confers power to  issue orders  in respect  of essential commodities does not  confer any  power to issue any order in respect of cooked food.  Sec. 3  of  Essential  Commodities  Act,  1955 confers power  on the  Central Government  by  an  order  to provide  for   regulating  or  prohibiting  the  production, distribution and  supply and trade in essential commodity or for securing  their equitable  distribution and availability at  fair  prices.  The  power  to  fix  price  of  essential commodity is implicit in the power conferred by 679 Sec. 3 of the Act and what is implicit in Sec. 3 (1) is made explicit by  cl. (c)  of sub-section  (2) of  Sec.  3  which provides that an order made under Sec. 3 (1) may provide-(c) for controlling  the price  at which essential commodity may be bought  or sold.  Clause (a) of Sec. 2 defines ’essential commodity’ to  mean any  of the  items  which  include...(v) foodstuffs,  including   edible  oilseeds   and  oils.   The submission  is  that  the  expression  ’foodstuffs’  in  its etymological and grammatical sense would mean raw foodstuffs or appropriately  called food  grains such  as wheat,  rice, jawar, bazra,  maize etc.  but not  cooked food  which is  a perishable commodity.  We see  no justification for giving a restricted meaning  to the expression ’foodstuffs’. If power to control prices of raw foodstuffs such as rice or wheat is conferred by  Sec. 3, we see no justification for that power not comprehending  within its  fold the  power  to  regulate prices  of   articles  made  out  of  such  raw  foodstuffs. Expression such  as ’foodcrops’  ’spices’  and  ’condiments’ indicate different  species of  articles  of  food  but  the general expression  ’foodstuffs’ was  interpreted to include spices and  condiments also.  In  the  State  of  Bombay  v. Virkumar  Gulabchand   Shah(1)  this   Court  construed  the expression ’foodstuffs’  in cl.  (3) of  the Spices (Forward Contract Prohibition)  Order of 1944 read with Sec. 2 (a) of the Essential  Supplies  (Temporary  Powers)  Act,  1946  to include  turmeric.   After  examining   the  definition   of expression ’foodstuffs’  in Oxford  English  Dictionary  and Webster’s  International   Dictionary  and   some  decisions bearing on the subject, this Court held that the expressions ’food’ and  ’foodstuffs’ can  be used  in both  a wide and a narrow sense  and that  the circumstances and background can alone determine  which is  proper in  any given  case. After examining the object and the intendment underlying enactment of Essential  Supplies (Temporary  Powers) Act,  1946,  this Court held  that if turmeric is a commodity essential to the life of  the community  it must be covered by the expression ’foodstuffs’. Accordingly,  it was  held that the expression ’foodstuffs’ has  been used in a wider sense in 1946 Act. It may be recalled that the Essential Commodities Act, 1955 was enacted for  the  control  of  the  production,  supply  and distribution  of   and  trade   and  commerce  in  essential commodities. It  has the  same object  as the  1946 Act  and therefore, the  expression ’foodstuffs’  in  1955  Act  must receive the same construction. If that be so, the expression ’foodstuffs’ must obviously include cooked food also.      Further  the   expression  ’food’  has  generally  been understood to mean nutritive material absorbed or taken into the body of an 680 organism which  serves for purposes of growth work or repair and for  the maintenance  of the  vital process.  What human beings consume is styled as food and what animals consume is

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described as  animal feed.  This distinction has to be borne in mind. Expression ’foodstuffs’ is made of two expressions, ’food’ plus ’stuff’. In other words, the stuff which is used as food  would be  foodstuff. Therefore,  foodstuff is  that which is  taken into  the system to maintain life and growth and to  supply waste  of tissue. If the raw foodstuff with a view to  making it  consumable by  human beings  undergoes a change of  its condition  by the  process  of  cooking,  the derivative is  none the  less  foodstuff.  If  raw  rice  is foodstuff, does  rice when  boiled  in  water  cease  to  be foodstuff. As  the Chinese  by an  accidental fire  in a hut where there  were pigs  learnt the  advantage  of  consuming cooked food  in place  of raw  food, the  submission of  Mr. Kanta Rao would make us march backward by centuries and be a disgrace to  modern culinary art. And ’food crop’ is another expression  defined   in  the   1955  Act.   Therefore,  the expression ’foodstuff’  as used  in the 1955 Act comprehends cooked food.  The contention  of Mr.  Kanta Rao,  therefore, must be negatived.      It  was  next  contended  that  the  maximum  price  of scheduled  items   fixed  under   the  impugned   orders  is economically unprofitable  and the same have been arrived at without scientifically  examining the  price of  inputs  and overhead charges and the reasonable return on investment and therefore, the exercise of fixing maximum price suffers from the   vice   of   arbitrariness   and   must   be   declared unconstitutional  as  being  violative  of  Art.  14.  While canvassing the submission, some attempt was made both on the side of  the petitioners as well as on the side of the State to take  us through  the labyrinth of the tables drawn up by both side  showing prices of inputs and overhead charges. We declined  to   be  involved  in  the  vortex  of  this  cost accountant’s exercise  as we  are  neither  experts  of  the subject nor  we consider  it  necessary  to  undertake  this exercise. The  argument proceeded  that the prices of inputs have escalated so high that the maximum prices determined by the impugned  orders  have  become  uneconomical.  For  this malaise, petitioners have to thank themselves because it was an integral  part of  their agreement  with the  Minister of Civil Supplies  on December 31, 1980 that the maximum prices fixed by  the impugned  orders would  be re-examined  on the expiration  of  the  three  months  from  the  date  of  the agreement.  Instead   of  honoring   this   agreement,   the petitioners within  a span  of 12  days rushed to this Court and obtained ex-parte stay order wholly suppressing the fact that the orders 681 impugned in  these petitions  have already  been replaced by the latest order dated January 5, 1981. Petitioners who have behaved in this manner are not entitled to any consideration at the hands of the Court.      In order  to illustrate  how the Court is not the forum for scientifically structuring prices of commodities, it may be pointed out that the petitioners in their price structure tables have  added in  respect of each scheduled item 24% of wages. Totalling  the wages  for seven  items the  wage bill accumulates at  175%. And  that is  equally  true  of  other overhead charges.  Add to  this numerous other items of food sold by  petitioners in  their establishments  and the utter unsustainability of their claim becomes manifest.      We would  however,  reject  the  contention  about  the mechanics  of  price  fixation  on  the  short  ground  that petitioners, ordinarily  do not  serve  only  the  scheduled items,  but  they  have  large  establishments  catering  to various tastes  and delicacies. No price fixation order need

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guarantee profit to an establishment in respect of each unit of article served or sold. It is the over all picture in the trade or  commerce that  needs to  be examined.  Petitioners have not  shown that  in their  over all  turnover they have since the  promulgation of  impugned orders suffered losses. And this  situation never  fructified because the 1978 Order was kept  in suspended  animation for  a period of two years and  when  the  latest  order  dated  January  5,  1981  was promulgated, it  was still-born  at the  hands of  the Court because  of   the  ex-parte   stay  order  obtained  by  the petitioners.  And   we  reject   this  contention   for  the additional reason  as laid  down by  a Constitution Bench of seven learned Judges of this Court in Prag Ice & Oil Mills & Anr. etc.  v. Union  of  India(1)  where  Chandrachud,  C.J. observed as under;           "In the  ultimate analysis, the mechanics of price      fixation has  necessarily to be left to the judgment of      the executive  and unless  it is  patent that  there is      hostile discrimination  against a  class of  operators,      the processual  basis  of  price  fixation  has  to  be      accepted in the generality of cases as valid." 682 Not the  slightest case  is made  out for departure from the proposition  laid   down  by   this   Court   as   extracted hereinabove.      Before we  conclude, we  would like  to  pin-point  the unfair advantage  which the petitioners have obtained by ex- parte stay  suppressing the  material fact  that  the  later order had already replaced the earlier orders and the latest order was  issued with  their consent.  In the Writ Petition No. 43/81 the prayer clause reads as under:           "Issue a writ of mandamus or any other appropriate      writ or  order holding  that G.O.  Ms.  No.  548  dated      8.9.1978 and  G.O. Ms.  No. 626 dated 11.12.1980 of the      Government  of  Andhra  Pradesh  and  the  notification      issued by  the Collector,  the second respondent herein      dated 16.12.1980  in pursuance  of  the  said  impugned      Orders as  ultra vires,  unconstitutional and  void and      quash the same." The bone  of contention  was not  the power exercised by the State Government but the maximum prices fixed in exercise of the power  conferred on  the State  Government. The  maximum prices were  to be  regulated as per the order dated January 5, 1981,  and even  though this Court was moved for ex-parte stay on  January 12,  1981, the  fact that  the latest order dated January  5, 1981  has replaced  the earlier orders was suppressed  from   the  Court.   And  peculiarly  the  State Government did not pursue vigorously its latest notification dated January  5, 1981  because its operation was not stayed by the  Court. However,  the entire  notification fixing the price of  the menu  of the  poormen was  put under suspended animation leaving  the hoteliers to extort any price to suit their greed.  Now that we are dismissing these petitions and vacate the  stay orders, the notification fixing the maximum prices will  revive and can be enforced. But in the meantime the poor  of Andhra  Pradesh were  made to pay by their nose for their  simplest menu  and the difference between maximum price fixed  by the  impugned notification  and  the  prices charged by  the hoteliers  would be unjust enrichment of the hoteliers undeservedly  enjoyed with  the assistance  of the court by the exercise of the constitutional power under Art. 32 of  the Constitution,  and there  is no  way of depriving this unjust enrichment The Court 683 set  up   for  justice,  including  socio-economic  justice,

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unfortunately lent  its assistance to such unjust enrichment and yet we are helpless.      For the  reasons herein discussed, we find no merits in any  of   the  contentions   canvassed  on   behalf  of  the petitioners and therefore, these petitions fail and they are dismissed with costs in each. H.L.C.                                   Petition dismissed. 684