Allahabad High Court
West U.P. Sugar Mills Association And ... vs State Of U.P. And Ors. on 11 December, 1996
Equivalent citations: (1997)1UPLBEC540
Author: M. Katju
Bench: M. Katju, B.S. Chauhan
JUDGMENT M. Katju, J.
1. By means of this writ petition the petitioners have challenged the impugned order dated 15-11-1996 Annexure 1 to the petition and have prayed for a direction restraining the respondents from taking any coercive steps to enforce the payment of the State advised, cane price as declared by the impugned order.
2. We have heard Sri Shanti Bhushan, learned Senior Counsel for the petitioner, assisted by Sri Sudhir Chandra and Sri Tarun Agarwal, Advocates.
3. We have also heard Shri Rakesh Dwivedi, learned Addl. Advocate General for the respondents 1 and 2 and Shri Shashi Nandan for respondent No. 3.
4. Petitioners No. 1, 2 and 3 are Associations of Sugar Factories in U. P. while petitioners No. 4 to 34 are companies owing sugar factories in Uttar Pradesh.
5. The short question involved in this case is whether the State Advised cane price fixed by the State Government is legally valid.
6. The petitioners No. 4 to 34 ate engaged in the business of production and sale of sugar by the vacuum pan process. The raw-material used for the production of sugar is sugarcane which is purchased through cane growers' co-operative societies.
7. The Central Government exercising power under the Essential Commodities Act promulgated the Sugarcance (Control) Order, 1966 (hereinafter referred to as the '1966 Order'). Clause 3 (1) of the said order states as follows :
"The Central Government may, after consultation with such authorities, bodies or association as it may deem fit, by notification in the official Gazette, from time to time, fix the minimum price of sugarcane to be paid by producers of sugar or their agents for the sugarcane purchased by them, having regard to-
(a) the cost of production of sugarcane;
(b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities;
(c) the availability of sugar to the consumer at a fair price;
(d) the price at which sugar produced from sugarcane is sold by producers of sugar; and
(e) the recovery of sugar from sugarcane :
Provided that the Central Government or, with the approval of the Central Government, the State Government may, in such circumstances and subject to such conditions as specified in Clause 3-A allow a suitable rebate in the price so fixed.
Explanation.- (1) Different prices may be fixed for different areas or different quantities or varieties of sugarcane,"
8. A perusal of Clause 3 (1) shows that it is the Central Government alone which has the power to fix the minimum price of sugarcane to be paid by the producers of sugar or their agents for the sugarcane Purchased by them. Thus it is the Central Government alone which can fix the minimum price of sugarcane and no other authority. For the reason 1996-97, with which we are concerned, the minimum price of sugarcane has been fixed by the Central Government by its order dated 11-3-1996, true copy of which is Annexure 4 to the writ petition. A perusal of the said order shows that for the season 1996-97 the price of sugarcane fixed is Rs. 45.90 per quintal finked to a basic recovery of 8.5 per cent sugar subject to a premium of Rs. 0.57 for every 0.1 percentage increase in the recovery above that level. It is alleged in para 10 of the writ petition that as per the calculation made by the Association, the average statutory minimum cane price on the above basis for Uttar Pradesh as a whole is estimated to be Rs. 50.33 per quintal.
9. In addition to the statutory minimum price fixed by the order 11-3-1996 under Clause 3 (1) of the 1966 Order, the factory is also liable to pay an additional price for sugarcane purchased on or after 1-10-1974 as mentioned in Clause 5-A of the aforesaid 1966 Order. This additional price of sugarcane was fixed taking into account the Bhargava Commission Report so as to entitle the sugarcane growers ro share in the profits made by selling the non-levy sugar. The petitioners are not challenging the price fixation of sugarcane under Clause 3 (1) of the 1966 Order or Clause 5-A of the said Order. According to the petitioners they are only liable to pay the minimum sugarcane price of about 50.33 per quintal and the additional sugarcane price which comes to about Rs. 7/- per quintal and thus according to the petitioners they are only liable to pay about Rs. 57/- per quintal as the price of sugarcane purchased by them. What the petitioners are challenging is the State Advised cane price mentioned in Annexure 1 to the writ petition which is Rs. 72/-per quintal for ordinary type of sugarcane. The petitioners have alleged that they are being compelled to pay the cane growers the aforesaid price of Rs. 72/- per quintal which according to the petitioners is wholly illegal.
10. The short question involved in this case is whether the State Government can fix the State Advised cane price and enforce the same.
11. The learned counsel for the petitioners has alleged that there is no legal basis for fixing the State Advised cane price. According to learned counsel it is only the Central Government which can fix the minimum price of sugarcane under Clause 3 (1) of 1966 Order, and the additional cane price under Clause 5-A, but there is no statutory provision permitting the State Government to fix what is known as the State Advised cane price. Learned counsel for the petitioners has submitted that the expression 'State advised cane price' is not a legal expression at all as it is not mentioned in any statutory enactment, rule or order, and hence fixation of such State advised price of sugarcane is wholly illegal and without jurisdiction.
12. Learned counsel for petitioners submitted that the petitioners are being compelled to pay the cane-growers the State advised cane price, and such compulsion makes it the minimum price of sugarcane which the petitioners are being illegally compelled to pay.
13. Learned counsel for the petitioners has invited our attention to paras 17 to 21 of the writ petition and has urged that in view of this illegal State advised price which the State Government is compelling the sugar factories to pay to the cane-growers such sugar factories are suffering huge losses and have run into huge arrears of sugarcane dues It is alleged in para 17 that several representations were made by the petitioners association in this connection. True copy of one of the representations is Annexure 7 to the writ petition. In para 18 of the writ petition it is alleged that the sugar factories in Uttar Pradesh were undergoing extreme financial stringency due to the fixation of excessively high State advised cane price, which is also borne out by the fact that the arrears of cane price during 1995-96 were the highest ever at Rs. 910 crores as on 31-5-1996. It is alleged that even on 31-10-1996 the arrears are a staggering figure of Rs. 273 crores. Copies of statements of cane price arrears from 30-4-1996 to 31-10-1996 are contained in Annexure 8 to the writ petition. In paragraph 19 of the writ petition it is stated that the State Government has given a subsidy of about Rs. 100 crores during the 1995-96 to the sugar factories under the U. P. State Sugar Corporation and the factories in the Co-operative Sector to enable them to clear cane price arrears which had accumulated on account of huge losses incurred by them as a result of unjust and excessively high State advised cane price fixed by the State Government. No such relief was given to the private sector factories and they were left to fend for themselves. Similar subsidies were given in 1990-91 and 1992 also. In para 27 of the writ petition it is alleged that anticipating serious complications in case the State Government was to declare a State advised cane price for the coming sugar season 1996-97, the U. P. Sugar Mills Association of which all the petitioners factories are members wrote a letter dated 6-9-1996 to the Principal Secretary, Sugar Industry and Sugarcane Development, Government of U. P. pointing out the legal position and the heavy losses that have been suffered by the industry and requested that the State Government may refrain from announcing any State advised cane price for the season 1996-97. True copy of the representation dated 6-9-1996 is Annexure 12 to the writ petition. It is alleged that no reply has been received in response to this representation as well as the report dated 27-9-1996.
14. Shri Shanti Bhushan, learned Senior counsel for the petitioners submitted that the first legislation regarding fixation of cane price was the Sugarcane Act 1934. Section 3(2) of the said Act entitled the State Government to fix by notification the minimum price for purchasing in any controlled area sugarcane intended for use in any factory. No doubt this Act permitted the State Government to fix the minimum cane price but according to the learned counsel this Act was by implication repealed by the Essential Commodities Act, 1955 which is a Parliamentary Law under which the 1966 Order was made. Shri Shanti Bhushan submitted that in view of Clause 3 of the aforesaid 1966 Order the power of the State Government Under Section 3(2) of the Sugarcane Act, 1934 by necessary implication came to an end, and now it is the Central Government alone which can fix the minimum sugarcane price. As regards the U. P. Sugarcane {Regulation of Supply and Production) Act, 1953 (hereinafter referred to as the 1953 Act'), Shri Shanti Bhushan has submitted that this Act does not deal with price fixation of sugarcane at all.
15. Learned counsel for the petitioners submitted that Section 16 of the 1953 Act only permits the State Government to regulate the purchase and supply of cane in reserved or assigned areas and it does not provide for fixation of a minimum cane price. Similarly Section 17 only deals with speedy payment of price of sugarcane and does not provide for fixation of cane price.
16. Learned counsel for the Petitioners invited our attention to paras U. P., AIR 1956 SC 676. It has been held therein that sugarcane is an essential commodity within the meaning of the expression in the Essential Commodities Act as it is a foodstuff, and the price of sugarcane can be fixed under the Essential Commodities Act. In the said decision the Supreme Court has also dealt with the question as to whether there is repugnancy between the Essential Commodities Act and the 1953 Act and it has Answered the question in the negative.
17. In State of Tamil Nadu and Ors. v. Kohtari Sugars and Chemicals Ltd. etc. JT 1996 (2) SC 47, it has been held by the Supreme Court in paragraph 6 of the said decision :
"On a Perusal of the relevant provisions of the Sugar-cane (Control) Order, 1966 particularly Clauses 3 and 5-A therein it is clear that the total price of sugar-cane fixed thereunder is the aggregate of the minimum cane price fixed under Clause 3 and the additional cane price fixed under Clause 5-A Thus unless there be an agreement between the grower and the purchaser for purchase of the sugar-cane at a higher price he obligation of the purchaser is to pay to the grower only the aggregate of the amounts fixed under Clauses 3 and 5-A In other words, under the Statute there is no liability of the purchaser to pay to the grower any amount in excess of this aggregate amount. Thus, without any contractual or statutorv basis fixing the sale price of sugar-cane at an amount higher than the minimum cane price fixed under Clause 3 and the additional cane price fixed under Clause 5-A, any sum paid by the purchaser to the grower as advance prior to fixation of the additional cane price under Clause 5-A cannot form part of the price of cane sugar."
18. The above observation in paragraph 6 of the aforesaid decision of the Supreme Court shows that the total price of sugar-cane fixed thereunder is the aggregate of the minimum cane price fixed under Clause 3 and the additional cane price fixed under Clause 5-A of the Sugar Cane (Control) Order, 1966.
19. In paragraph 7 of the aforesaid decision, the Supreme Court has observed thus :
"In these matters there is admittedly no statutory basis since the 'State advice' to the purchasers to pay a certain amount in addition to the minimum cane price fixed under Clause 3, in anticipation of fixation of the additional cane price under Clause 5-A, does not have any statutory basis, The amount paid as advance under the State advice also does not have any contractual basis since this was not paid as a result of agreement between the grower and the purchase The amount of advance was paid in anticipation of fixation of the additional cane price under Clause 5-A which means that in case the fixation under Clause 5 A was at a higher that in than the amount paid as advance then the amount would have to pay the deficit amount Similarly, when amount of advance Was in excess, the purchaser would be entitled to refund of the excess amount, irrespective of the fact whether the refund was actually made or not. For the purpose of determining the price of sugar cane for computation of the purchase tax, the only significant amount is the aggregate of the minimum price fixed under Clause 3 and the additional cane price fixed under Clause 5-A, unless a higher price, is paid to the grower by agreement between the purchaser and grower."
20. The aforesaid observation really clinches the matter because it has been clearly held therein that there is no statutory basis for the State advised price to pay a certain amount in addition to the minimum cane price.
21. In our opinion when there is no privision for fixing a State advised cane price we cannot understand how such State advised cane price has been fixed by the State Government year after year. We asked the learned Additional Advocate General as to whether this expression "State advised cane price" occurs in any Statute, Rule or Regulation, but learned counsel could not point out any enactment. Rule or Regulation containing this expression.
22. In our opinion, the State advised cane price is illegal for two reasons;
(i) The minimum cane price can only be fixed by the Central Government as is evident from Clause 3 (1) of the Sugar Cane (Control) Order 1966 ; and not by any other authority.
(ii) There is no privision in any statute, Rule or Regulation permitting the State Government to fix the State Advised can price.
23. It is of course open to the State Government to give advice to the Central Government regarding the fixation of the minimum cane price in Uttar Pradesh but this advice remains only an advice and it is for the Central Government to accept the advice or not. The State Government cannot simply declare the State Advised cane price unilaterally and seek enforcement of the price to the Central Government to fix different cane prices for different States in view of the Explanation to Clause 3 (1) or it may fix one uniform cane price for the whole country. Nevertheless the legal position remains that it is only the Central Government which can fix the minimum price of cane and not the State Government The State Government as well as the cane growers unions may make representations to the Central Government regarding fixation of minimum cane prices but it is for the Central Government to fix the cane price having regard to the considerations mentioned in Clause 3 (1) of the Sugar-Cane (Control) Order, 1966. The State Government cannot usurp the power of the Central Government in this connection.
24. Counter affidavits have been filed on behalf of the respondent No. 2, the Cane Commissioner as well as by the U. P. Co-operative Cane Unions Federation Ltd. and we have perused the same. In paragraph 9 of the counter affidavit of the Cane Commissioner it has been alleged that the Central Government merely fixes the minimum price at which transaction of sale and purchase of sugar cane is to be made and it does not restrict the power of the State Government to fix a higher price of sugarcane in the State. It is also stated in paragraphs 9 and 11 that the statutory minimum price as fixed by the Central Government is basically linked with the price of the levy sugar and it is deliberately kept low and it can not in any manner be linked with the actual price of the sugar-cane. In paragraph 13 of the said counter affidavit it is alleged that till date no additional price as contemplated by Clause 5-A of the sugar cane Control Order, 1966 has been paid in the State of U. P. and it is only the State advised price which is paid to the cane growers. In paragraph 14 it is stated that since 1973-74 the State Government has been fixing the State advised cane price to be paid by the sugar factories throughout the State. It is stated that the said price is fixed by the State Government keeping in view the fact that the cane growers being poor and small farmers ate not in a position to negotiate the price of their produce with the powerful sugar lobby and hence the intervention of the State Government is basically for the benefit of the poor cane growers in order to ensure that they are not economically exploited and they get proper remunerative price of their produce. It is further stated that the sugar factories belonging to the private sector have also been accepting the State advised cane price without any objections continuously and the payment of the cane price has been made by them to the cane growers every year. It was denied that the sugar factories are incurring any loss and as a matter of fact huge profits have been made by the sugar mills in the previous years. So far as Uttar Pradesh is concerned, there are 118 sugar mills out of which 70 sugar mills belong to either the Sugar Corporation which is an instrumentality of the State, or the Co-operative sector in which the State Government has major share holding, and only 48 sugar mills belong to the private sector. Thus the State Government is fully justified in law to provide a price of sugar cane for its own mills and since the private sugar factories are also aware that the cane growers will the not supply sugar cane 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 a parity in the price of the sugar cane throughout the State. The chart which is filed as annexure-5 to the writ petition showing the difference in the price between the statutory minimum price and the State advised price does not give the correct pricture. In paragraph 15 of the counter affidavit, it is alleged that since 1973 the policy of the State advised price is in existence in Uttar Pradesh and many other sugar producing areas in the country. The cane growers require protection of the State Government against the exploitation by the sugar mill owners and hence the State Government has been advising cane price to be paid by the sugar factories every year, which has been accepted by all the sugar factories.n It is denied that the State advised price is excessively high.
25. In the short counter affidavit filed by the U. P. Co-operative Cane Unions Federation Limited, it has been stated in paragraph 3 that the State advised cane price has always been accepted by the private sugar mills in Uttar Pradesh and the payment of cane price has been made to the cane growers at the aforesaid rate. In paragraph 5 it is stated that the State advised cane price is for the benefit of the common cane growers who are not in a position to effectively negotiate the proper price of their produce. In paragraph 7, it is stated that the U. P. Co-operative Cane Unions Federation Limited has passed a resolution dated. 24-10-1994 requesting the State Government to fix the State advised cane price at Rs. 85/- vide annexure 1 to the affidavit. In paragraph 8, it is stated that in 1995-96 all the sugar mills in the State have paid Rs. 70/-per quintal as the price of the sugar cane vide annexure 2. In paragraph 9, it is stated that the petitioners resorted to issuing 'Parchi' without mentioning the price of the sugarcane, which has led to considerable resentment amongst the farmers and serious law and order situation has arisen. The Co-operative Cane Unions have also passed a resolution against the aforesaid action of the petitioners and they have resolved not to supply sugar cane to them at a price lower than the State advised cane price. One such resolution dated 18-11 -1996 is annexure 3 to the writ petition.
26. Learned Additional Advocate General submitted that the power Under Section 16 of the 1953 Act, which is the power to regulate the purchase and supply of the cane in reserved areas includes the power to fix the price and he has relied on the decisions of the Supreme Court in The Adoni Cotton Mills Ltd. etc. v. The Andhra Pradesh State Electricity Board and Ors., AIR 1976 SC 2414, Paragraphs 27 and 29, D. K. Trivedi v. State of Gujarat AIR 1986 SC 1323 Paragraph 40, Jiyajeerao Cotton Mills Ltd. and Anr. v. The Madhya Pradesh Electricity Board and Anr., AIR 1989 SC 788, Paragraph 32, K. Ramanathan v. State of Tamil Nadu AIR 1985 SC 660, etc., for the proposition that the power to regulate includes the power to fix the price.
27. In our opinion, whether the power to regulate will include the power to fix the price will depend on the context of the particular statute or rule. In certain contexts, the power to regulate may include the power to fix the price but in our opinion, the power to regulate Under Section 1 6 does not include the power to fix the cane price. This is for two reasons :-
(i) The power to fix sugar cane price had been given to the State Government in the Sugar cane Act, 1934 and hence it would be a redundancy to say that the same power to fix cane price also flows from Section 16 of the 1953 Act. It may be mentioned that Section 3 (2) of the Sugarcane Act, 1934 which entitled the State Government to fix the minimum cane price continued till 1955 when it was impliedly repealed by the Sugarcane (Control) Order, 1955 (which was letter replaced by the 1966 Order). Thus when the 1953 Act was enacted there was already a law, viz. the Sugarcane Act, 1934, which enabled the State Government to fix the minimum cane price. Hence it could not have been the intention of the U. P. legislature when enacting the 1953 Act that Section 16 thereof would include the power to fix the minimum cane price, for such a power was already there with the State Government Under Section 3 (2) of the Sugarcane Act of 1934.
Hence, in our opinion Section 16 of the 1953 Act only gave power to the State Government to regulate the supply and purchase of sugar cane in the narrower since, and not in the wider sense so as to include the power to fix the minimum price.
(ii) Even assuming that there was such power to fix minimum cane price Under Section 16 of the 1953 Act, this Dower to came to end in view of Article 254(1) of the Constitution on the enactment of the Essential Commodities Act, 1955 and the promulgation of the Sugarcane Control Order 1955 (later replaced by the 1966 Order) which now gives exclusive power to the Central Government to fix the minimum sugarcane price.
28. Learned Additional Advocate General then submitted that it is open to the State Government to fix a fair price which may be above the minimum price fixed by the Central Government. His submission was that while the Central Government fixes the minimum cane price for the whole of the country, it is open for each state to fix a higher price, which may be called a fair price, taking into consideration the circumstances prevailing in that particular state. He pointed out that the expression 'fair price' occurs in Section 3(1) of the Essential Commodities Act. We are unable to accept this submission, In our opinion, apart from any agreed price the only price which the sugar mills can be compelled to pay the growers is the minimum price fixed under Clause 3(1) of the Sugarcane (Control) Order 1966 and the additional cane price under clause 5-A of the said Order. Of course, it is open to the parties to enter into any agreement to pay a higher price but such agreement should be a voluntary transaction between two or more parties and the State cannot resort to any compulsion in this connection. If compulsion is made then by no stretch of imagination can the price be regarded as an agreed price. There is no agreement whether written or oral regarding this state advised cane price between the sugar factories and the cane growers, and hence we cannot call it an agreed price.
29. Merely because the sugar factories have been paying the State advised price since 1973, it does not follow that they must keep paying it forever even if it is illegal and there is no statutory basis for the same. It is no answer to a plea of illegality that the illegality has been going on for a long time.
30. Learned Additional Advocate General has relied on a decision of the Supreme Court in Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd. etc. v. State of Maharashtra and Ors. etc., JT 1995 (3) SC 581. Paragraph 11 of the said decision states as follows :
"The next is the State Advised Price. Every State has its own method to determine it. The power is assumed under Acts of the State Legislature or orders issued by the Government. For instance, in the State of Haryana a Sugarcane Central Board is constituted Under Section 3 of the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 headed by the Chief Minister and other high officials of the Agricultural and Co-operative Department, the Director of Sugar Mills etc. to advise the Government and the Cane Commissioner on various matters including the price of cane to be paid to growers. Similarly in U. P. and Andhra Pradesh it is done under orders issued under the U. P. Suqarcane (Regulation of Supply and purchase) Act, 1953 and the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961. In Maharashtra 95 per cent of sugar factories in the co-operative sector. They are governed by the Co-operative Societies Act and the bye-laws framed thereunder. Bye-laws 63, 64, 64-A, 65-A and 65-B deal with fixation of price of cane. Bye-law 61 empowers the State Government to fix the price of cane so long the amount invested by it in setting up of sugar factory is not repaid. The exercise is undertaken by a Committee constituted by the Government known as Ministerial Cabinet Committee'. It comprises of the Chief Minister and other concerned Minister. It takes into account the ex-gate minimum price declared by the Central Government, the estimated sugar production and its availability for production by the sugar factories, the estimated average of sugar factories, the estimated conversion charges and the present day levy and free sale sugar price while fixing the price. In the written submission filed by the appellants it is stated that in the year 1993 while the statutory minimum price fixed by the Government of India was Rs. 345/- per metric tonne the State advised price for the State of Maharashtra was Rs. 360/- to Rs. 400/-per metric tonne it is explained that although such price in other states, for instance Andhra Pradesh, Madhya Pradesh and Uttar Pradesh was Rs. 400/-, 530/- 560/- Rs. 580-600/-per metric tonne respectively but these prices were ex-gate whereas in the State of Maharashtra it was ex-field. That is a cane grower apart from the price determined by the State Government is paid harvesting and transportation charges etc. And when all this is totalled then the price paid to cane grower in the State is highest in the country. The advance cane price or the price for harvesting and transportation is paid to the cane growers irrespective of whether they are members of any co-operative society or not. The advance according to the appellants was paid by the sugar factories under agreement entered with growers whereas according to the respondents it was paid by the banks and the non-members did not enter into any agreement, Since the parties were at variance on an issue of fact they were granted time on 24th February 1995 to file further affidavits clarifying their stand. From the affidavits filed it now transpires that the loans are normally advanced by the village societies or the rural bank to the farmers on the certificate issued by the sugar factories showing cane plantation, acreage, date of plantation etc. Although the factum of agreement between the cultivator and the sugar factory is not clearly admitted in the reply filed on behalf of the respondent but apart from those cultivators who do not need any loan for growing the crop whose percentage appears to be negligible it appears by and large rather the uniform practice is that a tripartite arrangement is arrived between the cultivator, the loaning society and the sugar factory. The loan is advanced on basis of the certificate issued by the sugar factory and it is the sugar factory which ultimately repays the amount due to the loaning society out of the price of cane to be paid to the cultivator. Such agreements were recommended by the Bhargava Commission as well. Even otherwise no bank or society would advance any loan unless it is assured of its repayment. It is, therefore, reasonable to assume that the advance is paid to the cultivators by the rural banks or societies on the certificate issued by the sugar factories."
31. We have carefully perused the aforesaid decision of the Supreme Court and we have noticed that there is no discussion at all in the aforesaid judgment as to whether the State Advised price has a legal basis or not. Paragraph 1'l of the said judgment makes only factual statements but it does not discuss whether the State Advised price is valid or not. Hence no help can be derived by the respondents from the aforesaid decision of the Supreme Court. Moreover, this decision arose from Maharashtra where the position regarding the sugar industry is totally different as compared to that in Uttar Pradesh. In Maharashtra 95 per cent of the sugar factories are in the Co-operative sector, and the question arose whether the cane growers who were not members of the Co-operative Societies which took loans were required to supply the cane under the reservation order or Control Order to sugar factories with which they were attached at the price fixed by the Government or the market price. In that context it was held by the Supreme Court that such cane growers who were not members of any Co-operative Society were only entitled to the State Advised price and not the market price. Bye-laws 64 and 64-A in Maharashtra were relied upon. This decision has no application at all to the facts of the present case. There is no law in U. P, similar to bye-laws 64 and 64-A in Maharashtra, and the factual position in U. P. is totally different from that in Maharashtra. Moreover, as already pointed out, it has not at all touched on the issue whether the State Advised Cane price has any legal basis or not. Hence the aforesaid decision has no application to the present case.
32. It may be pointed out that in fixing the minimum price of sugarcane under Rule 3 of the Sugarcane (Control) Order 1966, the Central Government, inter alia, has to take into consideration the cost of production of sugarcane, the return to the growers from alternative crops, the general trend of prices of agricultural commodities, and the recovery of sugar from the sugarcane. Thus the point of view of the cane growers is taken into account by the Central Government in fixing the minimum price of sugarcane under Clause 3 (1). Hence, it is always open to the cane growers through their Co-operative Unions or Federation to make representations to the Central Government stating their point of view and these should be taken into account by the Central Government while fixing the minimum cane price. However, the legal position remains that it is the Central Government alone which can fix the minimum price of sugarcane and not the State Government.
33. It may also be pointed out that Under Section 3(3-C) of the Essential Commodities Act while fixing the price of sugar, the Central Government has to take into consideration the minimum price if any fixed for sugarcane by the Central Government, and the price fixation of levy sugar is done taking into consideration the minimum price fixed by the Central Government for sugarcane. If the mill owners are compelled to pay the minimum price of sugarcane other than that fixed by the Central Government it will disturb the price fixation of sugar Under Section 3(3-C). This could obviously not have been contemplated by the legislature.
34. Learned Addl. Advocate General then submitted that the State Government can fix a fair price above the minimum price fixed by the Central Government and he sought to draw a distinction between minimum price and fair price and for this purpose he invoked the analogy from Industrial Law of the difference between minimum wage and fair wage, in our opinion, this analogy is totally misplaced. Firstly, we cannot borrow principles from one branch of law and apply them automatically to any other branch of law regardless of the context, the scheme of the Act and other such considerations. Secondly, in Industrial law the minimum wage is that which the employer has to pay even if he runs at a loss, whereas the fair wage is fixed taking into consideration the financial capacity of the employer vide Hindustan Times Ltd. v. Their Workmen, 1963(1) LLJ 108 SC. These principles have nothing to do with the fixation of the price of sugarcane. In fact, the minimum price of sugarcane is fixed after taking into consideration the cost of production of sugarcane and other considerations mentioned in Clause 3 (1) of the Sugarcane (Control) Order 1966. Thus in fixing the minimum price of sugarcane the financial considerations are taken into consideration unlike the fixation of minimum wage for labour laws. In our opinion, there is no distinction between the minimum price and fair price, and the distinction sought to be made by the learned Addl. Advocate General is misconceived and not tenable.
35. Sri Shashi Nandan appearing for the Co-operative Cane Union Federation has submitted that the additional cane price contemplated under Rule 5-A of the sugarcane (Control) Order 1966 has never been paid by the mill owners to the cane growers. To this the reply given by the learned counsel for the petitioner is that the mill owners have been compelled to pay the State advised cane price which is much more than the aggregate of the statutory minimum price under Clause 3 (1) and the additional cane price under Clause 5-A. Hence there was no question of paying the additional cane price over and above the State advised cane price. This contention of the learned counsel for the petitioner appears to be correct because obviously the State advised cane price is much above the statutory minimum price plus the additional cane price. Learned counsel for the respondent also invited our attention to the resolution of the cane growers Society, copy of which is Annexure-1 to the short counter affidavit. By this resolution the cane growers Society has demanded Rs. 85/- per quintal as the price of sugarcane. In our opinion, this is wholly irrelevant because we have to see the legal position and not demands made by anyone.
36. Sri Shanti Bhushan invited our attention to the representation of the U. P. Sugar Mills Association dated 20-8-1996, Annexure-7 to the petition and in particular he laid emphasis on Annexure-1 to this representation as well as on Annexure-3 to the writ petition to show that the sugar industry is suffering heavy losses due to the excessive price fixed by the State Government. In our opinion, it is not necessary to go into these submission because we are of the opinion that this writ petition deserves to be allowed on the short ground that fixation of the minimum price of sugarcane can only be done by Central Government, and the State advised cane price is wholly illegal and without jurisdiction.
37. It is no doubt open to any one to give advice to the Central Government but there is a difference between the advice given by the private individuals and advice given by the State Government. The advice by the State Government may have serious repercussions and exercise pressure, whereas the advice of individuals may not. At any event, the State Government can give advice to the Central Government regarding the fixation of the minimum price and it cannot itself fix the minimum cane price nor can it compel the sugar mill to pay that price. Also, this advice should be couched in such language and publicized (if at all) in such manner as to make it clear to everyone that it is only an advice and not binding on anyone.
38. As regards the submission that the statutory minimum cane price fixed by the Central Government is interlinked with the fixation of price of levy sugar and as such is deliberately kept low, in our opinion this contention is not acceptable. Firstly, a perusal of Clause 3(1) of the Sugarcane (Control) Order 1966 shows that the fixation of minimum sugarcane price by the Central Government has to be done on certain considerations, e.g., the cost of production of sugarcane, return to the growers from the alternative crops, general trend of price of agricultural commodities, recovery of sugar from the cane etc. Thus the Central Government cannot fix the minimum price of sugarcane arbitrarily at a low figure ignoring the considerations mentioned in Clause 3 (1). Secondly, over and above the statutory minimum cane price the mill owners are also liable to pay the additional cane price mentioned in Rule 5-A at the end of the season and this is given for the reason that the cane growers are entitled to share in the profits obtained from sale of free sugar. At any event, it is open to the Central Government to reconsider the minimum cane price under Clause 3 (1) taking into consideration the factors mentioned in Clause 3 (1).
39. The contention that the intervention of the State Government is necessary for the benefit of poor cane growers who are economically exploited as they are not in a bargaining and negotiating position need not detain us long. Sympathy and sentiments can have no place when the legal position is clear. As held by this Court in Smt. Rampatti Jaiswal v. State of U. P. and Ors., 1996 AWC 1373, equity can supplement the law but not supplant. In M. Ramappa and Anr. v. M. Bojjappa, AIR 1963 SC 1633, the Supreme Court has held :
"What is administered in courts is justice according to law, and considerations of fair play and equity however important they may be, must yield to clear and express provisions of the law."
40. In our opinion, when there is a conflict between the law and equity it is the law which is to prevail in accordance with the Latin maxim "Dura Lex Sed Lex", which means "the law is hard but it is law." In this connection reference can also be made to the decision of the Supreme Court in Gauri Shanker v. State of U. P. AIR 1994 SC 169.
41. Learned Additional Advocate General submitted that the State Government has to intervene in order to do justice to the cane growers. We are fully conscious of the fact that the theory of laissez faire as propounded by Adam Smith in the 18th Century (See The Wealth of Nations') has been replaced in the 20th Century by the theory of John Maynard Keynes (See 'The General Theory') and others which envisages active State intervention in social and economic relations. The modern State is a welfare State, and it looks after not only law and order and defence but also the social and economic welfare of the citizens. However, in our opinion the courts can only enforce legal principles and not general notions which have not crystallised into law.
42. In our opinion the legal position is very clear that the State advised price has no legal basis at all, and hence it is wholly illegal and without jurisdiction, and the mere fact that this price has been prevailing for many years will not make it legal.
43. In the circumstances this petition is allowed. The impugned order dated 15-11-1996 is quashed, and the State Government is restrained from enforcing the State advised price as declared by the impugned order. However, it will be open to the Cane Co-operative Federation and other unions of cane growers as well as the State Government to approach the Central Government for reconsideration of the minimum cane price fixed under Clause 3(1) of the Sugar-Cane (Control) Order 1966 and if they do so the Central Government after hearing them as well as the petitioner's representatives may pass a fresh order after taking into consideration the relevant factors mentioned in Clause 3 (1) of the Sugarcane (Control) Order 1966.
44. It is, however, made clear that where an agreement in Form B or Form C of the Appendix to the U. P. Sugarcane Supply and Purchase Order, 1954 has been reached between the occupier of the factory and the cane grower or Cane Growers Co-operative Society then the occupier of the factory will have to pay the cane price in accordance with the said agreement.
45. There may be an anamoly that a factory owned by the State or State instrumentality may pay at the State advised price whereas the private factories may not, causing resentment among farmers supplying cane to the latter. This anamoly may also be considered by the Central Government.
46. Similarly, the Central Government may also consider any anamoly between the cane price paid to farmers on the border of neighbouring States like Haryana and U. P.
47. Before parting with this case we would like to mention that the laws relating to the sugar industry and sugarcane appear to be totally out dated in India and need to be immediately reviewed by a High Powered Committee to be appointed by the Central Government. In this connection it may be mentioned that in the early thirties of this century the British Government felt that the sugar industry needed to be protected and developed in this country, and hence various laws were made at that time and subsequently and even after independence in this connection (see Bhargava Commission Report). The purpose of making these laws was to encourage setting up of sugar factories and to encourage sugar cane plantation. Since promulgation of these laws several decades have expired and many of these laws have served their purpose and are no longer needed- In fact many of these laws are actually acting as a fetter on production, and are obstructing the modernization of the sugar industry in our country. Many of the sugar factories in the State of U. P. are using out dated machinery and have not introduced the latest technology which is prevalent in many sugar producing countries in the world. In our opinion there is pressing need of a thorough review of the existing laws relating to sugar and sugarcane in the country, and this needs to be done as quickly as possible so as to scrap the out dated laws and encourage modernization and introduction of latest technology. This will not only greatly enhance sugar production in the country but will also make sugar available at a much cheaper price to the general public.
48. We are of the opinion that a High Powered Committee should be immediately set up by the Central Government consisting of technical experts conversant with the sugar industry as well as representatives of business, the cane growers, as well as the Central and State Governments. This Committee should study the sugar Industry in other sugar producing countries and study the laws and regulations prevailing there and then make recommendations to the Central Government to thoroughly revise the laws prevailing in India relating to sugar and sugarcane so as to help modernise the same. The Committee may consider whether it is time now to deregulate the sugar and cane industry to achieve modernization and increase production.
49. We, therefore, direct that the Central Government will set up a High Powered Committee within three months of the date of this judgment, and this High Powered Committee will study all aspects of the matter including the factual position and the regulations and rules prevailing in other sugar producing countries as well as in our country and will make its recommendations within six months of setting up of the committee. The whole exercise by the Committee must be to aid the modernization of the sugar industry so as to increase production and reduce the price of sugar for the general public. On receipt of the report of the Commission the Central Government may pass such order or make such rules as it deems fit in the interest of the nation.