IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7508 OF 2005
WEST U.P. SUGAR MILLS ASSOCIATION & ORS. ...Appellants
Versus
STATE OF UTTAR PRADESH & ORS. ...Respondents
WITH Civil Appeal No. 7509-7510 of 2005
[BASTI SUGAR MILLS CO. LTD. V. STATE OF U.P. & ORS.]
Civil Appeal No. 150 of 2007
[WEST U.P. SUGAR MILLS ASSN. & ORS. V. STATE OF U.P. &ORS.]
Civil Appeal No. 2664 of 2007
[BAJAJ HINDUSTAN LTD. V. STATE OF U.P. & ORS.]
Civil Appeal No. 4026 of 2009
[KISAN MAZDOOR SANGATHAN V. BASTI SUGAR MILLS CO.LTD. & ORS.]
Civil Appeal No. 4024 of 2009
[COOP. CANE DEVT. UNION LTD. V. BASTI SUGAR MILLS CO. LTD. & ORS.]
Civil Appeal No. 4025 of 2009
[SHAHKARI GANNA VIKAS SAMITI LIMITED V. BASTI SUGAR MILLS CO.LTD. & ORS.]
Civil Appeal Nos. 4014-4023 of 2009
[STATE OF U.P. & ANR. V. BASTI SGUAR MILLS CO. LTD. &ORS.]
Contempt Petition (C) No. 169 of 2006 in C.A. No.7508/2005
[STATE OF U.P. & ANR. V. S.K. KANORIA & ORS.]
Contempt Petition (C) No.253 of 2007 in C.A. No.7508/2005
[U.P. CANE UNION FEDERATION LTD. V. S.K. KANORIA &ANR.]
Contempt Petition (C) No. 254 of 2007 in C.A. No.7508/2005
[U.P. CANE UNION FEDERATION LTD. V. SATYAJEET SINGH MAJITHIA & ANR.]
Civil Appeal Nos. 3911-3912 of 2009
[TIKAULA SUGAR MILLS LTD. & ORS. V. STATE OF U.P. &ORS.]
Civil Appeal No. 3925 of 2009
[BAJA HINDUSTHAN LTD. & ANR. V. STATE OF U.P. & ORS.]
Civil Appeal Nos. 3996-3997 of 2009
[M/S UTTAM SUGAR MILLS LTD. & ORS. V. STATE OF UTTARKHAND & ORS.]
Contempt Petition (C) Nos.263-264 of 2008 in C.A. Nos.3996-3997/2009
[COOP. CANE DEV. UNION, UTTARAKHAND V. RAJ KUMAR ADLAKHA & ANR.]
Contempt Petition (C) Nos.265-266 of 2008 in C.A. Nos.3996-3997/2009
[[COOP. CANE DEV. UNION. UTTARAKHAND V. MANMOHAN SHARMA]
Contempt Petition (C) Nos.267-268 of 2008 in C.A. Nos.3996-3997/2009
[COOP. CANE DEV. UNION, HARIDWAR, UTTARAKHAND V S.M. MITTAL & ANR.]
Civil Appeal No. 4764 of 2009
[WEST U.P. SUGAR MILLS ASSN. & ORS. V. STATE OF U.P. & ORS. SLP(C) NO. 21576-21581 of 2008
[U.P. CO-OPERATIVE CANE UNION FEDERATION V. BASTI SUGAR MILLS CO. LTD. & ORS.] SLP(C) NO. 21585-21587 of 2008
[STATE OF U.P. & ANR. V. BASTI SUGAR MILLS CO. LTD. &ORS.] SLP(C) NO. 18681 of 2008
[[EAST U.P. SUGAR MILLS ASSOCIATION & ORS. V. STATE OF U.P. & ORS.]
SLP(C) NO. 19183 of 2008
[M/S. MAWANA SUGARS LTD. V. STATE OF U.P. & ORS.]
(With prayer for interim relief)
SLP(C) NO. 20205 of 2008
[MODI SUGAR MILLS & ANR. V. STATE OF U.P. & ORS.]
SLP(C) NO. 20206 of 2008
[M/S SBEC SUGAR LIMITED & ANR. V. STATE OF U.P. &ORS.]
SLP(C) NO. 23202 of 2008
[KISAN MAZDOOR SANGATHAN V. BASTI SUGAR MILLS CO.LTD. & ANR.]
SLP(C) NO. 26026 of 2008
[UTTAM SUGAR MILLS LIMITED & ANR. V. STATE OF UTTARKHAND & ORS.]
J U D G M E N T
Dalveer Bhandari, J.
1. The crucial issue involved in this group of matters is
whether the State of Uttar Pradesh has the authority to fix the
State Advised Price (for short, `SAP'), which is required to be
4
paid over and above the minimum price fixed by the Central
Government?
2. It is submitted by the appellants that the power to
regulate distribution, sale or purchase of cane under Section
16 of the U.P. Sugarcane (Regulation of Supply and Purchase)
Act, 1953 (hereinafter referred to as the `U.P. Sugarcane Act')
does not include the power to fix a price. According to the
appellants, this aspect has been comprehensively dealt with
by the Constitution Bench judgment of this court in Ch. Tika
Ramji and others etc. v. State of Uttar Pradesh and
others (1956) SCR 393. In this case this Court enumerated
the legislative history of laws relating to sugar and sugarcane
of both Centre and States. This Court came to the specific
conclusion that the power reserved to the State Government to
fix the minimum price of sugarcane which existed in U.P. Act
1 of 1938 was deleted from the U.P. Sugarcane Act since that
power was being exercised by the Centre under Clause 3 of the
Sugar and Gur Control Order, 1950. The relevant paragraphs
from pages 422, 433 and 434 of the Tika Ramji's case are
reproduced as under:
5
"... ... ...Even the power reserved to the State
Government to fix minimum prices of sugarcane
under Chapter V of U.P. Act I 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 XXIV of 1946. The
prices fixed by the Centre were adopted by 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. The State
Government also incorporated these prices which
were notified by the Centre from time to time in the
forms of the agreements which were to be entered
between the cane growers, the cane growers
cooperative societies... ... ..."
... ... ... ...
"... ... ...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 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 Rule 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. 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
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the U.P. State Government never fixed the price of
sugarcane to be purchased by the factories. Even
the provisions in behalf of the agreements contained
in clauses 3 and 4 of the U.P. Sugarcane Regulation
of Supply and Purchase Order, 1954, provided that
the price was to be the minimum price to be notified
by the Government subject to such deductions, if
any, as may be notified by the Government from time
to time meaning thereby the Central Government, the
State Government not having made any provision in
that behalf at any time whatever. ... ... ..."
3. It has been specifically held in Tika Ramji's case that
there was no power to fix a price for sugarcane under the U.P.
Sugarcane Act or rules and orders made thereunder.
4. It is also submitted by the appellants that even if such a
power had existed under Section 16 of the U.P. Sugarcane Act,
even then such power would be totally repugnant to the power
of the Central Government to fix the minimum price under
clause 3 of the Sugarcane Control Order, 1955. This Court in
Tika Ramji's case has not commented on whether such a
power with the State Government would be repugnant to the
Central legislation, since it found no such power with the
State Government, however, the majority judgment in the later
Constitution Bench judgment of 2004 in U.P. Cooperative
7
Cane Unions Federations v. West U.P. Sugar Mills
Association and others (2004) 5 SCC 430 held as under:
"The inconsistency or repugnancy will arise if the
State Government fixed a price which is lower than
that fixed by the Central Government. But, if the
price fixed by the State Government is higher than
that fixed by the Central Government, there will be
no occasion for any inconsistency or repugnancy as
it is possible for both the orders to operate
simultaneously and to comply with both of them. A
higher price fixed by the State Government would
automatically comply with the provisions of sub
clause (2) of clause 3 of the 1966 Order. Therefore,
any price fixed by the State Government which is
higher than that fixed by the Central Government
cannot lead to any kind of repugnancy."
5. According to the appellants, the aforementioned
conclusion of the U.P. Cooperative Cane Unions
Federations is contrary to Tika Ramji's case.
6. We have heard learned counsel for the parties at length.
We have also carefully perused and analysed both the
aforementioned judgments delivered by the two Constitution
Benches of this Court in Tika Ramji and U.P. Cooperative
Cane Unions Federations's cases.
7. In our considered view, there is a clear conflict in the
aforementioned judgments of the Constitution Benches. It
8
may be pertinent to mention that almost every year a spate of
petitions are filed before the Allahabad High Court and
thereafter before this Court on similar issues and questions of
law. Therefore, in the interest of justice, it is imperative that
the conflict between these judgments be resolved or decided by
an authoritative judgment of a larger Bench of this Court.
8. The learned counsel for the appellants in one voice
asserted that these cases be referred to a larger Bench so that
at least in future the parties would have benefit of a clearer
enunciation of law by an authoritative judgment of a larger
Bench.
9. Following questions of law may be considered by a larger
Bench of this Court:
1) Whether by virtue of Article 246 read with
Entry 33 of List III to the Seventh Schedule of
the Constitution the field is occupied by the
Central legislation and hence the Central
Government has the exclusive power to fix the
price of sugarcane?
9
2) Whether Section 16 or any other provision of
the U.P. Sugarcane (Regulation of Supply and
Purchase) Act, 1953 confers any power upon
the State Government to fix the price at which
sugarcane can be bought or sold?
3) If the answer to this question is in the
affirmative, then whether Section 16 or the
said provision of the U.P. Sugarcane
(Regulation of Supply and Purchase) Act, 1953
is repugnant to Section 3(2)(c) of the Essential
Commodities Act, 1955 and Clause 3 of the
Sugarcane (Control) Order, 1966? and if so,
the provisions of the Central enactments will
prevail over the provisions of the State
enactment and the State enactment to that
extent would be void under Article 254 of the
Constitution of India.
4) Whether the SAP fixed by the State
Government in exercise of powers under
Section 16 of the U.P. Sugarcane (Regulation
1
of Supply and Purchase) Act, 1953 is arbitrary,
without any application of mind or rational
basis and is therefore, invalid and illegal?
5) Does the State Advisory Price (for short `SAP')
constitute a statutory fixation of price? If so, is
it within the legislative competence for the
State?
6) Whether the power to fix the price of
sugarcane is without any guidelines and
suffers from conferment of arbitrary and
uncanalised power which is violative of Articles
14 and 19 (1) (g) of the Constitution of India?
10. We are conscious of the fact that ordinarily a Bench of
three Judges should refer the matter to a Bench of five
Judges, but, in the instant case since both the aforementioned
conflicting judgments have been delivered by the Constitution
Benches of five Judges of this Court and hence this
controversy can be finally resolved only by a larger Bench of at
least seven Judges of this Court.
1
11. Recently, a three-Judge Bench of this court in Mineral
Area Development Authority and others v. Steel Authority
of India and others (2011) 4 SCC 450 dealt with somewhat
similar situation and this Court in para 2 of the said judgment
observed as under:
"Before concluding, we may clarify that normally the
Bench of five learned Judges in case of doubt has to
invite the attention of the Chief Justice and request
for the matter being placed for hearing before a
Bench of larger coram than the Bench whose
decision has come up for consideration (see Central
Board of Dawoodi Bohra Community v. State of
Maharashtra (2005) 2 SCC 673). However, in the
present case, since prima facie there appears to be
some conflict between the decision of this Court in
State of W.B. v. Kesoram Industries Ltd. (2004)
10 SCC 201 which decision has been delivered by a
Bench of five Judges of this Court and the decision
delivered by a seven-Judge Bench of this Court in
India Cement Ltd. v. State of T.N. (1990) 1 SCC
12, reference to the Bench of nine Judges is
requested. The office is directed to place the matter
on the administrative side before the Chief Justice
for appropriate orders."
12. Reference of these matters to a larger Bench is made so
that the controversy which arises almost every year is settled
by an authoritative judgment of a larger Bench of this Court.
13. However, in the peculiar facts and circumstances of these
cases, we direct the sugar factories to pay the balance
1
outstanding principal amount to the cane growers or to the
cooperative societies according to the SAP of the relevant
crushing seasons. In other words, in all those cases where the
sugar factories and other buyers have not paid the balance
outstanding principal amount to the cane growers or to the
cooperative societies because of the stay orders obtained by
them from this Court or from the High Court, they are now
directed to pay the balance outstanding principal amount
according to the SAP as fixed by the State Government from
time to time. All the stay orders granted by this court or by
the High Court are modified/vacated in the aforesaid terms.
Let the balance outstanding principal amount be paid by the
sugar factories within three months from the date of this
judgment.
14. In case the balance outstanding principal amount, as
directed by this Court, is not paid within three months from
the date of this judgment then the sugar factories/buyers
would be liable to pay interest at the rate of 18% per annum
on the delayed payment to the cane growers or to the
cooperative societies, as the case may be.
1
15. It is made clear that the payment of the balance
outstanding principal amount by the sugar factories is of
course without prejudice to the main submissions advanced
by them (sugar factories) that the State Government lack
legislative competence to impose the SAP.
16. It may be pertinent to mention that all these cases are
covered by separate individual agreements where the sugar
factories had undertaken to pay the SAP to the cane growers.
We are not examining the veracity of these agreements.
17. It may be relevant to note that the SAP has been
continuously increasing every year. In all those cases, where
for any reason, the SAP was not fixed in a particular year,
then, the sugar factories/buyers would be liable to pay the
balance outstanding principal amount to the cane growers at
the rate of the SAP of the previous year. On consideration of
all the facts and circumstances of these cases, we request
Hon'ble the Chief Justice of India to refer these matters to a
larger Bench, preferably to a Bench consisting of seven
Judges.
1
18. All these Civil Appeals and other petitions are accordingly
referred to a larger Bench.
...............................J.
(Dalveer Bhandari)
..............................J.
(T.S. Thakur)
..............................J.
(Dipak Misra)
New Delhi;
January 17, 2012
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