SUGAR MILLS ASSOCIATION & ORS .versusSTATE OF UTTAR PRADESH & ORS.

                        (2012) 1 S.C.R. 352

.A       WEST U.P. SUGAR MILLS ASSOCIATION & ORS .
                                 v.
              STATE OF UTTAR PRADESH & ORS.
                 (Civil Appeal No. 7508 of 2005)
                        JANUARY 17, 2012
B
        [DALVEER BHANDARI, T.S. THAKUR AND DIPAK
                      MISRA, JJ.]

        U.P. Sugarcane (Regulation of Supply and Purchase)
C Act, 1953 - s. 16 - Fixation of State Advised Price (SAP) for
   sugarcane, over and above the minimum price fixed by the
   Central Government - Power of the State Government -
   Conflicting judgments by the Constitution Bench of five
  judges of the Court - Instant matter before a Bench of three
o judges - Since conflicting judgments have been delivered by
   the Bench of five judges, matter referred to a larger Bench of
   at least seven judges - However, certain directions issued to
  the sugar factories to pay the balance outstanding principal
  amount to cane growers or to the co-operative societies
E according to the SAP of the relevant crushing seasons.
         The question which arose for consideration in these
     matters was whether the State of Uttar Pradesh has the
     authority to fix the State Advised Price (SAP) which is
     required to be paid over and above the minimum price
F    fixed by the Central Government

       The appellant contended that in the Constitution
  Bench judgment in *Tika Ramji's case it was held that
  ~here was no power to fix a price for sugarcane under the
G U.P. Sugar Cane (Regulation of Supply and Purchase)
  Act, 1953 or Rules and orders made thereunder and the
  same was contrary to the majority judgment in the later
  Constitution bench judgment of 2004 in **U.P. Co-
  operative Cane Unions Federation's case; and as such
H                            352
 WEST U.P. SUGAR MILLS ASSOCIATION v. STATE 353
             OF UTTAR PRADESH
the cases may be referred to a larger bench.as regards . A
the power to fix a price for sugarcane.

     Referring the matter to the larger Bench, the Court

     HELD: 1.1. Ordinarily a Bench of three Judges should B
refer the matter to a Bench of five Judges, but, in the
instant case since both the conflicting judgments *Ch.
Tika Ramji and others etc. v. State of Uttar Pradesh and
Others and **U.P. Cooperative Cane Unions Federations
v. West U.P. Sugar Mills Association and Others have
been delivered by the Constitution Benches of five C
Judges of this Court and thus, this controversy can be
finally resolved only by a larger Bench of at least seven
Judges of this Court, the matters are referred to the larger
Bench. [Para 10] [360-F-G]
                                                                D
      •ch: Tika Ramji and others etc. v. State of Uttar Pradesh
and others (1956) SCR 393; **U.P. Cooperative Cane Unions
Federations v. West U.P. Sugar Mills Association and others
(2004) 5 SCC 430: 2004 (2) Suppl. SCR 238 and Mineral
Area Development Authority and others v. Steel Authority of E
India and others (2011) 4 SCC 450: 2011 (4) SCR 19 -
 referred to.

      1.2. In the peculiar facts and circumstances of the
 instant cases, the sugar factories are directed to pay the
 balance outstanding principal amount to the cane F
 growers or to the co-operative 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 co-operative G
 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 H
     354    SUPREME COURT REPORTS                 [2012] 1 S.C.R.

A or by the High Court are modified/vacated in the aforesaid
  terms. The balance outstanding principal amount are to
  be paid by the sugar factories within the stipulated
  period otherwise, buyers would be liable to pay interest
  at the rate of 18% per annum on the delayed payment to
B the cane growers or to the co-operative societies, as the
  case may be. [Para 13 and 14] [361-F-H; 362-A-B]

      1.3. 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
C advanced by them (sugar factories) that the State
  Government lack legislative competence to impose the
  SAP. [Para 15] [362-C-D]

          1.4. The SAP has been continuously increasing every
o    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. [Para 17] [362-E-F]
E                        Case Law Reference:
     (1956) SCR 393               Referred to           Para 6, 7
     2004 (2) Suppl. SCR 238      Referred to           Para 6, 7
F    2011 (4) SCR 19              Referred to           Para 11

          CIVIL APPELLATE JURISDICTION : Civil Appeal No .
    . 7508 of 2005.
      From the Judgment & Order dated 07.10.2004 of the High
G Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
  26291 of 2004.
                                WITH
  Civil Appeal Nos. 7509-7510 of 2005, 150, 2664 of 2007,
H 4026, 4024, 4025. 4014-4023 of 2009.
 WEST U.P. SUGAR MILLS ASSOCIATION v. STATE 355
             OF UTIAR PRADESH
Contempt Petition (C) No. 169 of 2006 in C.A. No. 7508 of A
2005, Contempt Petition (C) No. 253 of 2007 in C.A. No. 7508
of 2005, Contempt Petition (C) No. 254 of 2007 in C.A. No.
7508 of 2005.
Civil Appeal Nos. 3911-3912, 3925, 3996-3997 of 2009.
                                                                B
Contempt Petition (C) Nos. 263-264 of 2008 in C.A. Nos.
3996-3997of 2009, Contempt Petition {C) Nos. 265-266 of
2008 in C.A. Nos. 3996-3997 of 2009, Contempt Petition (C)
Nos. 267-268 of 2008 in C.A. Nos. 3996-3997 of 2009.
Civil Appeal No. 4764/2009                                      c
SLP (C) Nos. 21576-21581, 21585-21587, 18681, 19183,
20205, 20206. 23202, 26026 of 2008.                                  ..
     P.P. Malhotra, ASG, Mukul Rohtagi, Sudhir Chandra,
Jayant Bhushan, lndu Malhotra, Rajiv Dutta, J.S. Attri, Ashok H. D
Desai, M.L. Verma, Dr. Rajeev Dhawan, Shail Kumar Dwivedi,
AAG, Mahesh Agarwal, Narinder Kumar Verma, Gaurav Goel,
Kush Chaturvedi, J.K. Sethi, Vansh Deep Dalmia, Vikas Mehta,
Syed Shahid Hussain Rizvi, Sanjeev Kumar Singh, Uday
Kumar, Rajesh Tiwari, Parijat Sinha, Sanjeev K. Singh, Uday E
Singh, Ruby Singh Ahuja, Abeer Kumar, lshan Gaur, Bhagwati
Prasad Padhy (for Karanjawala & Co.), V.M. Singh, Prashant
Kumar, Anurag Sharma {for AJ & J Chambers), Manik
Karanjawala, E.C. Agrawala, Vishwajit Singh, Praveen Kumar,
Umesh Kumar Khaitan, Kritika Mehra, Bhumika Manan, Vishnu F
Sharma, P.N. Gupta, Indira Sawhney, Gaurav Sharma, Binu
Tamta, Sushma Suri, Anil Katiyar (for V.K. Verma), Ravi P.
Mehrotra, Vibhu Tiwari, Shantanu Krishna, Ajay Singh, Mukesh
Verma, Var.dana Mishra, S.S. Shamshery, Jatinder Kumar
Bhatia, Abhishek Attrey, V.D. Khanna, Parvesh Sharma, Bimal G
Roy Jad, Rajeev K. Bharti, Nopni Gopal Dev, Manvendra Verma,
K.R. Sasiprabhu, Punit D. Tyagi, Sidharth Chowdhray, Bina .
Gupta, Pradeep Mishra, Gunnam Venkateswara Rao, Ajay
Kumar Talesara, T. Mahipal, Ritesh Agrawal, Ajay Choudhary,
Ambhoj Kumar Sinha for the appearing parties.                    H
     356      .SUPREME COURT REPORTS                [2012] 1 S.C.R.


·A         The Judgment of the Court was delivered by
        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 paid over and above the minimum price
8
  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)
C 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)
D 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
E 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 i::ages
  422, 433 and 434 of the Tika Ramji's case are reproduced as
   under:
 F         • ... ... ... 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,
 G         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
 H
WEST U.P. SUGAR MILLS ASSOCIATION v. STATE 357
 OF UTIAR PRADESH [DALVEER BHANDARI, J.]
  purchasing centre a notice showing the minimum price         A
  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       B
  societies... .. . . .. "



        "       .. .As we have noted above, the U.P. State
  Government did not at all provide for the fixation of C
  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 D
 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 E
 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 F
 would be the Central Government, under clause 3 of the
 Sugarcane Control Order, 1955, because in fact the U.P.
 State Government never fixed the price of sugarcane to
 be purchased by the factories. Even the provisions in
 behalf of the agreements contained in clauses 3 and 4 G
 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
                                                               H
    358      SUPREME COURT REPORTS                  [2012] 1 S.C.R.


A         C&atra/ 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
B 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
C 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
D Government,· however, the majority judgment in the later
  Constitution Bench judgment of 2004 in U.P. Cooperative
  Cane Unions Federations v. West U.P. Sugar Mills
  Association and others (2004) 5 SCC 430 held as under:

E         "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
F         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
G
          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
H is contrary to Tika Ramji's case.
 WEST U.P. SUGAR MILLS ASSOCIATION v. STATE                     359
  OF UTTAR PRADESH [DALVEER BHANDARI, J.]
    6. We have heard learned counsel for the parties at length.         A
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.
                                                                        B
     7. In our considered view, there is a clear conflict in the
aforementioned judgments of the Constitution Benches. It 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         C
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         D
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               E
larger Bench of this Court:

      (1)   Whether by virtue of Article 246 read with Entry 33
            of List Ill to the Seventh Schedule of the Constitution
            the field is occupied by the Central legislation and        F
            hence the Central Government has the exclusive
            power to fix the price of sugarcane?

      (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              G
            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 sa.id provision of the       H
    360         SUPREME COURT REPORTS                 [2012] 1 S C.R


A                 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
B                 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
c                 exercise of powers under Section 16 of the U.P.
                  Sugarcane (Regulation of Supply and Purchase)
                  Act, 1953 is arbitrary, without any application of
                  mind or rational basis and is therefore, invalid and
                  illegal?
D
          (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?

E         (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?
F
       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
G 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.

       11. Recently, a three-Judge Bench of this court in Mineral
  ·Area Development Authority and others v. Steel Authority of
H India and others (2011) 4 sec 450 dealt with somewhat
 WEST U.P. SUGAR MILLS ASSOCIATION v. STATE 361
  OF UTIAR PRADESH [DALVEER BHANDARI; J.]
similar situation and this Court in para 2 of the said judgment     A
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      B
     being placed for hearing before a Bench of larger coram
     than the Bench whose decision has come up for
     consideration (see Central Board of Dawcodi Bohra
     Community v. State of Maharashtra (2005) 2 SCC 673).
     However, in the present case, since prima facie there          C
     appears to be some conflict between the decision of this
     Court in State of WB. v. Kesoram Industries Ltd. (2004)
     10 sec     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        D
     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       E
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
                                                                    F
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          G
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   H
     362     SUPREME COURT REPORTS                  [2012] 1 S.C.R.

A 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
B 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.
c
          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.
0
          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.
E
       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
F 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.
G
          18. All these Civil Appeals and other petitions are
    · accordingly referred to a larger Bench.

     N.J.                         Matter referred to Larger Bench.
H