Holding

The 1997 amendment is within the State’s delegated powers, is not arbitrary or discriminatory, and does not conflict with the Sugar (Control) Order, 1966; therefore the appeal is dismissed.

Summary

The Maharashtra Government issued the 1984 Maharashtra Sugar Factories (Reservation of Areas and Regulation of Crushing and Sugarcane Supply) Order to zone sugarcane supply to factories. In 1997 it amended clause 3(2) to allow non‑co‑operative growers to sell to any factory and to bind cooperative members to supply to their co‑op in proportion to their shares, with excess sold elsewhere. Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd. and others challenged the amendment, alleging that the State exceeded its delegated power under the Sugar (Control) Order, 1966, acted arbitrarily, discriminated against factory owners and harmed the cooperative movement. The Supreme Court held that the State’s power to amend the 1984 order was valid under the delegation granted by the Central Government, that the amendment was neither arbitrary nor discriminatory, and that it did not conflict with the 1966 Order. Consequently, the appeal was dismissed.

Issues considered

The State Government’s authority to amend the 1984 zoning order under the delegation of powers in the Sugar (Control) Order, 1966 and the 16 July 1966 Notification.
Whether the 1997 amendment is arbitrary, discriminatory, or unreasonable and violates principles of natural justice.
Whether the amendment conflicts with clause 6(2) of the Sugar (Control) Order, 1966 or the Essential Commodities Act, 1955.
Whether the amendment adversely affects the cooperative sugar‑factory system.

Legislation cited

Essential Commodities Act, 1955s. 3, s. 6

Subjects

sugarcane zoningcooperative societiesreservation of areasEssential Commodities Actadministrative lawarbitrarinessdiscriminationdelegation of powersamendment ordersugar industry regulation

Judgment

MAHARASHTRA RAJY A SAHAKARI A
SAKHAR KARKHANA SANGH LTD. AND ORS. ETC. ETC.
v.
ST ATE OF MAHARASHTRA AND ORS.

APRIL 27, I 998
B
[G.N. RAY AND M. SRINIVASAN, JJ.]

T
Maharashtra Sugar Factories (Reservation of Areas and Regulation of
Crushing and Sugarcane Supply) Order, 1984 as amended by Maharashtra
Sugar Factories (Reservation of Areas of Crushing and Sugarcane Supply) C
(Amendment) Order, 1997 :

Clause 3(2)-Sugar Factories-Reservation of areas-Cane grower
not member of a Co-operative Sugar factory-Provisions allowing him to
supply sugarcane to any factory of his choice-Cane grower being member
of Co-operative Sugar factory-Provisions requiring him to supply sugarcane D
to the co-operative sugar factory in ratio of shares held by him and allowing
him to supply excess sugarcane to any factory of his choice-Held the
provisions are not unreasonable-Not vitiated by male fides-State
Government empowered to pass the Orders-Amendment order not in conflict
with the Sugar (Control) Order, 1966-State Government not acted E
arbitrarily-Nor is there any discrimination against factory owners-
Amendment made pursuant to a policy decision to protect interests offarmers
on one hand and co-operative societies on the other-Hence no interference
required-Sugarcane (Control) Order, 1966 - Clause 6.

The Government of Maharashtra, in order to regulate the supply of F
cane to sugar factories and minimum price to cane growers, issued
Maharashtra Sugar Factories (Reservation of Areas and Regulation of
crushing and Sugarcane Supply) Order, 1984. Clause 3 thereof reserved
cane growing areas for respective sl!gar factories, with a prohibition that no
sugar factory should purchase cane or accept supplies thereof from cane G
growers except from the area reserved for that factory. Clause 5 provided
that in the circumstances enumerated therein the permit officer would allow
a sugar factory to purchase cane or to accept supplies of cane from cane
growers from areas other than the area reserved for it. The 1984 Order was
challenged before the High Court in writ petitions and ultimately this Court,
while upholding the validity of the Order in Maharashtra Rajya Sahkari H
1183
1184 SUPREME COURT REPORTS [1998] 2 S.C.R.

A Sakkar Karkhana Sangh Ltd. v. State of Maharashtra & Ors, (1995( 3 SCR
377, observed that Government may take appropriate steps to amend clause
5 of 1984 order so as to protect the cane growers and to appoint a committee
of experts to improve the price structure. Accordingly, the State Government
appointed an Expert Committee, but the said committee did not go into the
B aspect of zoning.

Pursuant to an agitation by the farmers, the Government appointed
another Committee to take a decision on zoning, and on the recommendations
of the said committee, the Government of Maharashtra, in exercise of powers
under clauses 6 and 9 of the Sugarcane (Control) Order 1966, passed the
Maharashtra Sugar Factories (Reservation of Areas of Crushing and
c Sugarcane Supply) (Amendment) Order, 1997, introducing certain provisions
to clause 3(2) of the 1984 order. The effect of the Amendment Order 1997
was that those cane growers, who were not members of cooperative society
would be free to supply their cane to any factory of their choice; and a
member of a co-operative society would supply cane to the co-operative sugar
D factory, in the ratio of shares held by him and would be free to sell excess
cane to any factory of his choice. This Amendment Order was challenged by
the appellants Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd.
and others by filing a writ petition before the High Court, which dismissed
the writ petition holding that the Amendment order was not in any way illegal
E or unreasonable and the order would appear to ensure better sugarcane
price to the farmers who were not members of any cooperative sugar factory.
Aggrieved, the appellants filed the present appeals. Later the two transfer
petitions were also filed for transferring to this Court some other matters
pending before the High Court.

p It was contended for the appellants that the State Government being a
delegatee from the Central Government, the Amendment Order being passed
in exercise of power conferred under clause (1) of Clause 6 of the Sugar 1"

(Control) Order, 1966 could not run counter to Clause 6(2) there of; that
the State Government ex.ercised its power arbitrarily and discriminated
against factory owners; end that the amendment was wholly unreasonable
G and would put an and to the cooperative movement.

Dismissing the appeal, this Court

HELD : 1. It cannot be said that the Government of Maharashtra had
no power to pass the Maharashtra Sugar Factories (Reservation of Areas
H and Regulation of Crushing and Sugarcane Supply) (Amendment) Order,
SAKHAR KARKHANA SANGH, MAHARASHTRA v. STATE 1185
1997. Clause 6(1) of Sugar (Control) Order, 1966 only prescribes the A
matters with reference to which the Central Government may pass orders
by notifying in the official gazette. By virtue of the Notification dated 16.7.1966
the State Government is also empowered to do so. Sub-clause (2) of Clause
6 of the 1966 Order is dependent upon an order made under clause 6(1)(c),
and there is no such order passed by the Central Government. Such an order B
was made by the State Government in 1984, viz the Maharashtra Sugar
Factories (Reservation of Areas and Regulation of Crushing and Sugarcane
Supply) Order, 1984, which is amended by the Amendment Order, 1997. The
Amendment Order cannot be said to be in conflict with the Sugar (Control)
Order, 1966. [1195-A-C)

2. The State Government cannot be said to have acted arbitrarily in
c
amending the 1984 Order. Nor is there any discrimination against the
factory owners. In fact, this Court has in its earlier judgment* taken note
of the plight of the growers of sugarcane and directed the State Government
to take appropriate steps to amend clause 5(1) of the 1984 Order. The Expert
Committee appointed pursuant to the directions given by this Court, did not D
consider the aspect of zoning and confined itself to the price of sugarcane.
The present amendment was made pursuant to the suggestions made by
another Committee appointed by the State Government in order to protect the
interest of the member and the non-member cane growers by permitting
them to sell their sugarcane outside the zone of the factory so that they could E
get the most remunerative prices for their sugarcane. the State Government
has instead of amending clause 5(1) amended Clause 3(2) in order to improve
the position of cane growers and in particular those who are not members
of cooperative societies. (1195-E; 1197-B)

*Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd. & Ors. v. F
State of Maharashtra, (1995[ 3 SCR 377, referred to.

3.1. There is no justification in the facts and circumstances of the
case for the contention that the cooperative system would be affected by the
present amendment. It is a balancing act on the part of the State Government
to protect the interest of farmers who are not members of cooperative societies. G
After the passing of the 1984 Order it has been found by the State Government
that the provisions thereof could not enable the Government to achieve the
objects with which it was passed and, therefore the State Government had to
re-consider the zoning order of 1984. (1197-F-G[

3.2. It is also pointed out that the impugned amendment is pursuant H
1186 SUPREME COURT REPORTS [1998] 2 S.C.R.

A to a policy decision of the State Government to protect the interests of the
farmers on the one hand and the co-operative societies on the other. Nothing
has been placed on record to show that the impugned order is vitiated by mala
fides. In such circumstances, it is not possible for this Court to interfere
with the Order issued by the State Government There is nothing unreasonable
B in the impugned amendment. [ll98-D-E]

4. There is uo necessity to withdraw to t~is Court the proceedings
pending on the file of the High Court. The High Court may dispose of those
proceedings in accordance with this judgment. [ll98-F]

CIVIL APP ELLA TE JURISDICTION : Civil Appeal No. 2369 of
c 1998.
From the Judgment and Order dated 15. l 0.97 of the Bombay High Court
in W.P. No. 3390 of 1997.
WJTH
Transfer Petition (c) No. 596/97 and 6/98.
D Under Article 139-A (!)of the Constitution of India.
F.S. Nariman, V.A. Bobde, G.L. Sanghi, N.N. Goswami, Ranjit Kumar, Ms.
Anu Mohla, D.M. Nargolkar, A.S. Bhasme, Manoj Kumar Mishra (Sharad
Joshi) for S.V. Deshpa11de, Intervenor-in-person, S.C. Birla, V.K. Chowdhary,
Subhash Chowdhary, A.M. Khanwilkar, Viswajit Singh, T.C. Sharma, Ms. Binu
E Tamta and D.S. Mehra for the appearing parties.

The Judgment of the Court was delivered by

SRINIVASAN, J. Leave granted.

The appellants are aggrieved by the dismissal of their writ petitions by
F the High Court of Bombay in which the appellants had challenged the validity
of the Maharashtra Sugar Factories (Reservation of Areas and Regulation of
Crushing & Sugarcane ·Supply) (Amendment) Order, 1997. This order was 1
passed in exercise of the powers conferred by Paragraphs (a), (c) and (f) of
sub-cl.(!) of Clause 6 and sub-cl. (a) of Clause 9 of the Sugarcane (Control)
Order, 1966 read with Notification of Govt. Of India, Ministry of Food,
G Agriculture, Community Development and Corporation (Department ofFood).
No.GSR. 1127/ESS. Com. Sugarcane, dated 16th July 1966.

2. Sugarcane (Control) Order, 1996 was passed by the Govt. of India
under section 3 of the Essential Commodities Act 1955. Clause 6 (a), (c) and
(f) thereof reads as follows:
H "(a) reserve any area where sugarcane is grown (hereinafter in this
Y-
" SAKHAR KARKHANA SANGH, MAHARASHTRA v. STATE [SRINIVASAN, J.] 1187

clause referred to as reserved area) for a factory having regard to the A
crushing capacity of the factory, the availability of sugarcane in the
reserved area and the need for production of sugar, with a view to
enabling the factory to purchase the quantity of sugarcane required
by it;

(b) ************************ B
(c) fix, with respect to any specified sugarcane growers or
sugarcane growers generally in reserved area, the quantity or
percentage of sugarcane grown by such grower or growers as the
case may be, which each grower by himself or, if he is a member of
a cooperative society of sugarcane growers operating in the reserved c
area, through such society, shall supply to the factory concerned:

(d) *************************

(e) *************************

(f) prohibit or restrict or otherwise regulate the export of sugarcane
D
-"'. from any area including a reserved area except under and in accordance
_.._ with a permit issued in this.behalf."

Clause 11 of the said Order enables the Central Government to direct by
Notificatfon in official gazette that powers conferred upon it by that order
E
shall be exercisable also by any officer or authority of the Central Government
or a State Government subject to such restrictions, exceptions, conditions, if
any, as may be specified in the direction. In exercise of the said power under
clause 11, the Central Government issued a Notification dated 16th July 1966
in the following terms:
F
"NOTIFICATION
~
New Delhi, the 16th July, 1966

G.S.R. 1127/Ess. Com./Sugarcane :- In exercise of the powers conferred
by clause (11) of the Sugarcane (Control) Order, 1966 and in
supersession of the notification of the Government of India in the
G
late Ministry of Food and Agriculture (Department of Food) No.
G.S.R. 263/Ess.com./Sugarcane dated the 20th February, 1964 the
Central Government hereby directs that powers conferred on it by
clauses 6,7,8 and 9 of the said Order shall be exercisable also by the
State Governments of Andhra Pradesh, Assam, Bihar, Gujrat, Kerala, H
1188 SUPREME COURT REPORTS (1998] 2 S.C.R.

A Madhya Pradesh, Madras, Maharashtra, Mysore, Orissa, Funjab,
Rajasthan, Uttar Pradesh, and the Lieutenant governor of Pondicherry
within their or , as the case may be, his respective jurisdiction.

[No.~(6)/66-S.Py]
K.L. PASRICHA, JT. SECY."
B
3. Thus the power conferred on the Central Government by Clause 6 of
the Sugar (Control) order, 1966 was exercisable also by the State Governments
mentio;1ed in the aforesaid Notification which included the State of
Maharashtra. In 1984, the State Government passed the Maharashtra Sugar
Factories (Reservation of Areas and Regulation of Crushing & Sugarcane
C Supply) Order 1984. The necessity for passing the said order was set out in
detail in the preamble to the order itself. It is unnecessary to reproduce the
same h<:re.

4. Clause 2(1) of the said order defines a 'reserved area' as the area
D reserved for factory as specified in the schedule pertaining to that factory.
Clauses 3 and 5 thereof are in the following terms:

"3. Reservation of areas - (I) Having regard to the crushing
capacity of sugar factories and, the yield of sugarcane in the reserved
areas, and the need for production of sugar, the area as specified in
f:ach of the schedules is hereby reserved for the factory mentioned
E
in that schedule, with a view to enabling it to purchase the quantity
of sugarcane required by it.

(2) Subject to the provisions of clauses 4 and 5 of this order, no
sugar factory shall purchase cane or accept supplies of cane from
F cane growers, except from the area reserved for that factory.

5. Regulation of Supply of Sugarcane - (I) A permit Officer may
allow a sugar factory to purchase cane or to accept supplies of cane
from cane growers from areas other than the area reserved for it under
clause 3 ifhe is satisfied that any of the following circumstances exist
G namely:-

(a) In the event of production of cane in the area reserved for the
factory being not adequate for enabling it to reach optimum level of
crushing;

H (b) In the event of surplus production of cane in the areas reserved
SAKHAR KARKHANA SANGH, MAHARASHTRA v. STATE [SRINIVASAN,l] J189

for other factories which those factories are not able to crush during A
the crushing season.

(c) In the event of stoppage of nearby sugar factory due to
mechanical break down, labour unrest, lock-out or any other reason.

(d) In the event of cane grower or cane growers from the area B
reserved for a particular factory declining to supply came to the said
factory on account of any of the following reasons, if found justified
by the Permit Officer:-

(i) Non-payment or late payment or cane price by the sugar
factory; or c
(ii) Non-fulfilment of any of the obligations by the sugar factory
arising out of agreement between the cane grower or cane growers
and the sugar factory; or

(iii) Discrimination by the sugar factory in harvesting of cane and D
thereby causing loss to the cane grow<:r or the cane growers:

Provided that before passing any order under this sub-clause, for
any of the reasons, the Permit Officer shall give the parties concerned
a reasonable opportunity of being heard in person of through the
authorised representative." E
5. The validity of the said order of 1984 was challenge in the High Court
of Bombay. A Full Bench of the Bombay High Court disposed of the proceedings
with certain directions to the State Government in its judgment dated 23.9.1988.
That judgment was the subject-matter of appeals in this Court in Civil Appeals
No. 522 of 1989 etc. etc.-Maharashtra Rajya Sahkari Sakkar Karkhana F
Sangh Ltd & Ors. v. State of Maharashtra & Ors. This Court by its judgment
dated April 18, 1995 set aside the directions given by the Full Bench Of the
High Court and upheld the validity of the order of the State Government. The
judgment is reported in [1995] Supp. 3 S.C.C. 475. In Paragraph 2 of the
judgment the directions issued by the Full Bench of the High Court and the G
reasons therefor were set out as follows:

"2. The directions issued by the Full Bench are as under: "We are
therefore of the view, that unless provisions for the following are
made in it, the State Order will not be valid -

(i) The sugarcane-growers who are not members of the factory or H
1190 SUPREME COURT REPORTS [1998] 2 S.C.R.

A factories to which they are required to supply to which they are
required to supply their sugarcane shall be paid for the sugarcane
supplied by them the price sugarcane supplied by them the price
calculated at the market rate prevailing in the locality at the date of
the sale;

B (ii) The market rate may be as agreed between the parties, namely,
the sugarcane-grower and the factory or factories concerned. If there
is any dispute over it, the same should be resolved by an independent
authority which may be created under the Order such as the one
under clause 12 of the present Order. The authority concerned should
decide the dispute expeditiously after hearing the parties and by a
c speaking order;

(iii) No unauthorised deductions on any account should be made
by the factory from the price to be paid to the sugarcane-grower
without his consent. The State Order should provide for a machinery
similar to the above to hear and grant to the sugarcane-grower,
D 1!xpeditious relief if he has any complaint in that behalf."

The reasons for these directions were twofold, one, the non-
members were not bound by the price fixed under bye-laws framed
under the Cooperative Sugar Act and other that there was no
machinery in the zoning Order issued by the State Government to hear
E the non-members before the price was fixed. Before examining whether
these reasons are well founded in law leading to the impugned directions
it: is necessary to narrate in brief the necessity which impelled the
central Government to grant protection to sugar industry and
consequently to control the supply and distribution of the sugarcane
F without sacrificing the interest of the cane-grower."

After reforring to Clause 5 of the State Government's order, this Court said
in paragraphs 36, 37 & 38 as follows:

"36. Clause (5) prescribes the situations in which one sugar factory
will be permitted by the prescribed authority to purchase sugarcane
G
from the zone of another sugar factory. It does not provide for the
cane-grower seeking a permit for sale of his cane to another sugar
factory (than the factory within whose zone he may be situated) even
if any or all the conditions prescribed in the clause are satisfied. Take
a case where a sugar factory indulges in all the three irrularities
H mentioned in sub-clause (d) of clause (5), viz., it does not pay the
SAKHAR KARKHANA SANGH, MAHARASHTRA v. STATE [SRINIVASAN, l.] 1191

price of cane at the proper time, it does not adhere to the agreement A
it has thereby causing loss to the cane-growers - even then the cane-
grower cannot apply for permit to sell his cane to whomsoever he
likes. All that probably he can do is to complain. But he will get some
relief only when there is another factory (which, of course, has its
own zone) which is prepared to purchase cane from this zone and
applies for permit to the Permit Officer to purchase cane from this B
zone. If it does not so apply, the grower within the first zone is
helpless. That is not being fair and just to the growers. It is, therefore,
necessary that the State Government may suitably amend the Zoning
Order so as to provide that in a case where any of the three
circumstances mentioned in clause 5( d) are present it would be open C
to the cane-growers to apply to the specified officer for permission to
supply his cane outside the zone. In such an event, it may be open
to the officer to designate the factory to which the grower should sell
his cane ensuring that the grower gets a price which is not less than
the price obtained in his zone.
b
37. The State Government would be further well advised to get
the matter thrashed out, before the next crushing season commences,
by an Expert Committee comprising of economists and financial experts
well versed in price fixation, particularly in agricultural sector. This
exercise has become imperative after the enforcement of Zoning Order. E
In fact when Zoning Order was introduced the State at that time
should have got these aspects examined. However, the price equation
since 1984 has undergone tremendous upsurge. the escalation is
manifold. Benefit of higher price of sugar must percolate to growers
as well. Therefore. the Committee may examine -
F
(a) If the fixation of State Advised Price uniformly for the entire
State as it is being done in other States, or at least separately for
different zones, as the normal recovery in the zones varies, wou Id be
more feasible;

(b) If the additional price worked out in the manner indicated in G
Schedule II of Control Order of 1966 is more advantageous and
beneficial to the growers. If it be so it may opt for the same as it would
avoid tedious exercise by the Ministerial Committee and have the
benefit of uniformity;

(c) The Committee may further examine whether Rs.600 which has H
1192 SUPREME COURT REPORTS · [1998] 2 S.C.R.

A been paid by the factories to the non-growers under interim order
passed by this Court would not be a reasonabl.e minimum price for
1995-96 and may furnish the basis for fixation of price for future years;

(d) It may also suggest ways and means for improving yield by
the sugar factories and reducing overhead expenses and eliminating,
B possible paper loss;

(e) It would further be in the interest of the Government to ask
the Committee to examine if the shortcomings pointed out by the Full
Bench in other regard can be rectified and rationalised; and

C (f) The Committee may examine whether Bye-law 65 should be
applied to non-members or not.

38. Although the price fixation has not been found to suffer from
any infirmity yet due to passage of time, nearly eight or nine years,
since this price fixation was challenged and with rise of price all
D around it appears expedient to dispose of these appeals with following
directions to ensure smooth functioning both for the past and future:

(i) The directions of the Full Bench in para 25 of the judgment
shall stand set aside.

(ii) The State Government may take appropriate steps to amend
E clause (5) of the Zoning Order so as to protect the cane-growers.

(iii) The Government may appoint a Commi.ttee of Experts to study
and examine the price structure in the light of what has been stated
earlier.

F (iv) Even though the order issued by the State Government
determining price for each factory is upheld but since in consequence
of the order passed by the High Court an interim order was granted
by this Court and the factories were directed to pay Rs.600 to the
Cane-growers and they were directed to furnish bank guarantee for
Rs.145 1.t is directed that the amount paid by the factories shall not
G be liable to recovery from the cane-growers. But the bank guarantee
furnished by the appellants or sugar factories shall stand discharged.

(v) It is made clear that the direction not to recover Rs.600 from
non-growers would not entitle any member of the cooperative society
or the cooperative society itself to claim that it was liable to be paid
H Rs. 600 for its cane during the years in dispute."
SAKHAR KARKHANA SANGH, MAHARASHTRA v. STATE [SRINIVASAN, J ] J 193

6.The State Government appointed an Expert Committee as directed by A
this Court but the said Committee did not go into the aspect of zoning and
confined itself to the price of sugarcane. There was an agitation by the
farmers in the State according to whom the Government order of 1984 had led
to an unsatisfactory situation warranting an amendment thereof. The State
Government appointed a Committee on 6.1.1996 to take a decision on zoning. B
The Committee was headed by the Deputy Chief Minister of the State. Based
on the recommendations made by that Committee, the State Government
passed the impugned order amending the order of 1984 by introducing certain
provisos to Clause 3(2) of the order of 1984. The same reads as follows :

"In Maharashtra Sugar Factories (Reservation of Areas and C
Regulation of Crushing and Sugarcane Supply) Order, 1984, -

(i) in clause 3, to the condition No. (2), the following provisos shall
be added:

Provided that in case of a Cooperative Sugar Factory, the cane-
growers who are not member of the Cooperative Society, shall be free D
to supply their cane to any factory of their choice;

Provided further that a member of a Cooperative sugar factory
shall be bound to supply sugarcane to that Cooperative sugar factory
in the ratio of shares held by him and area under sugarcane as per
the bye-laws of the Co-operative sugar factory and he will be free to E
supply excess cane, if any, to any factory of his choice be entering
into agreement or contract to that effect:
Provided also that the Non-members cane growers in case of a
Cooperative sugar factory and cane-growers in case of other sugar
factories shall be free to their sugarcane to any factory of their choice F
by entering into agreement or contract to that effect. Same provision
will apply to excess sugarcane or the member of Cooperative Sugar
factories:

Provided also that if any cane-grower fails to enter into such
agreement for supply of his sugarcane, responsibility of disposal of G
such cane shall be entirely his own. There shall be no responsibility
on any sugar factory, Cooperative or otherwise or on the State
Government, for crushing of any such cane."

7. It is the aforesaid amendment which is attacked by the appellants.
The High Court dismissed the writ petition of the appellants observing that H
1194 SUPREME COURT REPORTS [1998] 2 S.C.R.

A they did not find that the impugned order was in any way illegal or unreasonable
and that the order would appear to ensure better sugarcane price to the
farmers ""ho are not members of any Cooperative sugar factory.

8. Before us, Mr. F.S. Nariman, learned senior counsel for the appellants
has advanced three contentions:
B
The first contention is that the State Government being a delegatce from
the Central Government under the Notification dated 16th July 1966 is not
empowered to pass an order inconsistent with the Sugar (Control) Order of
1966 passed by the Central Government. Our attention is drawn to Section 6
C of the Essential Commodities Act and it is contended that the Sugar (Control)
Order of 1966 being one under Section 3 of the said Act shall have effect
notwithstanding anything inconsistent therewith contained in any enactment
other than that Act or any instrument having effect by virtue of any enactment
other than that Act. It is argued that the impugned order is in exercise of the
power conferred under clause 6 (I) of the Sugar (Control) Order, 1966 read
D with the Notification dated 16th July 1966 and it cannot therefore run counter
to sub-clause 2 of Clause 6 of the Sugar (Control) Order of 1966. The said
Clause is in the following terms:

"Every sugarcane grower, sugarcane growers cooperative society
and factory, to whom or to which an order made under paragraph (c)
E of sub-clause (!) applies, shall be bound to supply or purchase, as
the case may be, that quantity of suga~cane covered by the agreement
entered into under the paragraph and any wilful failure on the part of
the s•·Jgarcane grower, sugarcane grower's cooperative society of the
factory to do so, shall constitute a breach of the provisions of this
order:
F
Provided that where a default committed by any sugarcane
growers' cooperative society is due to any failure on the part of any
sugarcane grower, being a member of such society, such society shall
not be bound to make supplies of sugarcane to the factory to the
extent of such default."
G
According to him the impugned amendment is contrary to the above
clause.

9. We are unable to accept this argument of learned senior counsel.
Clause 6( I) only prescribes the matters with reference to which the Central
H Government may pass orders by notifying.in the official gazette. By virtue of
SAKHAR KARKHANA SANGH, MAHARASHTRA v. STA TE[SRINIVASAN, l] 1195

the Notification dated 16.7.66, the State Government is also empowered to do A
so. Sub-cl.(2) of Clause 6 of the Sugar (Control) Order 1966 is dependent upon
an order made under paragraph, (c) of sub-cl.( I) of Clause 6. Admittedly there
is no order passed by the Central Government under Clause 6(1) (c). Such an
order was made by the State Government in 1984 as referred to by us earlier.
The said order of 1984 is amended by the present impupned order of the State. , B
Government. It is not contended before us that the State Government has no
power to amend the order of 1984 or that the power delegated by the Central
Government by the notification dated 16.7.1966 got exhausted with the passing
of the order of 1984 and thereafter the State Government had no power to
issue another order. Hence, there is no merit in the contention that the State
Government has no power to pass the impugned order. C
10. There is also no merit in the contention that the impugned order is
in conflict with the sugar (Control) Order; 1966 issued under Section 3 of the
Essential Commodities Act. As pointed out already the said order does not
by itself make any provision for the matters set out in Clause 6(1 ). Hence the
first contention is rejected. D
11. The second contention is that the State Government has exercised
its power arbitrarily and discriminated against the factory owners. According
to learned counsel the various observations made by this Court in its iudgment
dated April 18, 1995 while upholding the Government Order, 1984 have been
completely ignored by the State Government and that the Expert Committee E
appointed pursuant to the direction given by this Court has not made any
recommendation for the present amendment. It is also contended that another
Committee appointed by the State Government had time till 30.8.1997 but the
impugned order was passed even in April without waiting for the report of
the second Committee. We are unable to see any merit in this contention. We p
have already referred to the circumstance that the Expert Committee appointed
pursuant to the directions given by this Court in the judgment dated April
18, 1995 had not considered the aspect of zoning and had confined itself to
the price of sugarcane. The present amendment was made pursuant to the
suggestions made by the Committee appointed by the State Government on
6.1.1996. The reasons for the present amendment as suggested by the G
Committee are set out in the counter-affidavit filed by the State Government
)- as follows:

"REASONS FOR AMENDMENT OF ZONING ORDER 1984

In the background of the aforesaid facts it was necessary for the State H
1196 SUPREME COURT REPORTS [1998] 2 S.C.R.

A Government to protect the interest of the members and non-members
cane growers by permitting them to sell their sugarcane outside the
zone of the factory so that they could get the most remunerative
prices for his sugarcane. It was necessary to do so as it was found
that :

B I. The factoiies neglect non-members totally in the season when the
cane is in excess than their capacity.

2. Jn thi!; situation even the members are restricted io the extent of
their shares.

C 3. The large difference in the cane price within the same village in two
different factories goes up to Rs. 300 per metric ton (R-7).

4. the amendment is only an extension to the earlier zoning order 1984,
clause 5(1) (d) (para 50).

5. The failure of the factories to enroll non-members for political
D reasons and also on account of the membership granted in favour of
non-cane growers.

6. Non-members is deprived of the facilities granted to the members
i.e. supply of seeds, fertilizers, implements, incentives to drip and
sprinkler irrigation, credit facilities and supply of sugar at concessional
E rate.

7. The alarming drop of sugarcane cultivation from 1995-96 to 1997-
98 crushing season from 560 lakh M. T. to 312 lakh M.T.

8. The expected sugarcane production in India in the year 2000 will
F be 2000 lakh M.T. and Maharashtra is expected to grow about 800 lakh
M.T.

9. There is a trend to divert from sugarcane to other crops like
soyabeen, cotton and horticultural crops which is l 00% subsidy
programme of the State. The area has gone up under horticultural
G development by nearly five times (para t 5)

t 0. The nea:rly 90% contribution is by the State Government to these
·(
factories (para 5).

11. Large scale mismanagement of the sugar factories leading to law
H cane price and drop in cane cultivation (Para 13).
SAKHAR KARKHANA SANGH, MAHARASHTRA v. STATE [SRINIVASAN, J.] 1197

12. Zoning has not yielded desired results during the last 13 years." A
12. In view of the above, it is not possible to accept the contention that
the State Government has acted arbitrarily in amending the order of I 984. Nor
is there any discrimination against the factory owners. In fact, this Court has
in its judgment dated April 18, 1995 taken note of the plight of the growers
of sugarcane and directed the State Government to take appropriate steps to B
amend Clause 5(1) of the Zoning Order. (see paragraphs 37 & 38 of the
judgment already quoted). The State Government has instead of amending
Clause 5 amended Clause 3(2) in order to improve the position of growers and
in particular those who are not members of cooperative societies.

13. The third contention is that the amendment is wholly unreasonable C
and it will put an end to the cooperative movement. In support of this
contention, reliance is placed on the following observation made by this
Court in Paragraph 30 of its judgment dated April 18, 1995:

"30. The dual pricing system, one, for members and other for non- D
members or the option to non-members to sell to the factory of their
choice may be negative of the zoning concept and may affect the
cooperative movement in the State. Dr. Singh vi may be right that even
before zoning Order was issued the cooperative movement was there
and the benefits that a member of the society derives may not result
in affecting the system largely but any policy which has the tendency E
of shaking the system rudely must be avoided."

It is submitted that the present amendment has the effect of practically
annulling the cooperative system.

14. We are unable to accept this contention. We do not find any F
justification in the facts and circumstances of the case for the contention that
the cooperative system would be affected by the present amendment. We find
that it is a balancing act on the part of the State Government to protect the
interests of farmers who are not members of cooperative societies. After the
passing of the 1984 order it has been found by the State Government that the G
provisions thereof could not enable the Government to achieve the objects
with which it was passed. The counter-affidavit filed by the State Government
has set out in detail the various circumstances which necessitated the State
Government to re-consider the zoning order of 1984. Our attention has also
been drawn to the counter-affidavit filed by the Govt. of India in which the
stand taken by the State government has been fully supported. Paragraph 9 H
1198 SUPREME COURT REPORTS (1998] 2 S.C.R.

A of the said counter-affidavit reads as follows:

"9. I: further submit that the intention of zoning or reserving cane
areas for each sugar factory is not to introduce any monopoly to any
sugar factory but only to sub-serve to the interest of the farmers,
sugar-factories and consumers at large both at times of shortage of
B cane production and in years of surplus.

I further submit that the Government of Maharashtra may be
allowed to operate the order dated 19th November, 1997 till the report
of the High Powered Committee set up by the Government of India
under the chairmanship of Sh. B.B. Mahajan to enquire into various
c legislations relating to the Sugar Industry in India including the fixation
of Statutory minimum Price of cane is received and a decision is taken
by the Government in the matter."

15. It is also pointed out to us that the impugned amendment is pursuant
to a policy decision of the State Government to protect the interests of the
D farmers on the one hand and the cooperative societies on the other. Nothing
has been i:-Iaced on record to show that the impugned order is vitiated by
mala tides. In such circumstances. It is not possible for this Court to interfere
with the order issued by the State Government. We do not also find anything
unreasonable in the impugned amendment.
E
16. In the result, we agree with the views expressed by the High Court
and dismiss the appeal.

17. The transfer petitions are for transferring proceedings pending on
the file of the High Court in order to be heard along with the above appeal.
F We do not find any necessity to withdraw those proceedings to this Court.
Now that we have disposed of the appeal in the above manner, the High Court
may dispose of the proceedings pending before it in accordance with this r
judgment.

18. The Civil Appeal and the transfer petitions are dismissed. There will
G be no order as to costs.
R.P. Appeal and Transfer Petitions dismiss.