U.P. COOPERATIVE CANE UNION FEDERATIONversusWEST U.P. SUGAR MILL ASSOCIATION AND ORS.

A            U.P. COOPERATIVE CANE UNION FEDERATION
                                        V.

           WEST U.P. SUGAR MILL ASSOCIATION AND ORS.

                                 MAY 5, 2004

B             [RAJENDRA BABU CJ., K.G. BALAKRISHNAN,
                VENKATARAMA REDD!, B.N. SRIKRISHNA
                       ANO G.P. MATHUR, JJ.]

          Sugarcane Act, 1934; Sections 5 and 7/UP. Factories Act, 1938;
C Sections 21 and 22-AIU.P. Sugarcane (Regulation of supply and Purchase)
    Act, 1953; Sections 16 & 17/U.P. Sugarcane (Supply and Purchase) Order,
    1954/Sugarcane (Control) Order, 1955/Sugarcane (Control) Order, 1966;
    Clause 2(g). 3, and 5-A!Essential Commodities Act, 1956; Section 3 :

          Fixation of price of sugurcane-Central Government/State
D   Government-Jurisdiction of-State Government fixing the price!Stute
    Advised price over and above the statutory minimum price fixed by the
    Central Government Challenge to---Order of the State Government
    quashed by High Court-However, in another matter, on the similar issue
    the High Court al/ou•ed the writ petition in favour of the State-On appeal,
E Held:
           Per majority ·

         The provincial Governments could fix price ofsugarcane taking into
  account local conditions and empowered to make rules thereof-Sugar
f Control Order stipulates price could either be the minimum price as fixed
  by the Central Government or as agreed between the growers and the
  producers and includes additional price as well-Thus, there could be a
  price other than the minimum price fixed by the Central Government and
  it could be higher than the minimum price so fixed-Repugnancy would
G arise if the State Government fixes a price lower than the minimum price-
  By fixing higher price the provisions of 1966 Order stood complied with
  by the State Government.

           Regulator; of the State Government-State Government imposing
    statutory conditions on sugarcane growers for continuous supply offresh(v
H   hurvested sugarcane of mi//s--lmplications-State Government in exercise
                                        238
U.P. CO-OP. CANE UNION FEDERAT!ON v. WEST U.P. SUGAR MILL ASSON.         239

 of its regulato1y power could also fix higher price of the sugarcane for the A
 benefit ofthe cane growers-Fixation ofhigher price by the Sate Government
 by itself could not have any major or substantial impact on the fixation
of price of the levy sugar by the Central Government-State Government
frxed the prices uniformly and not factorywise as was the impact offixation
of the statutory price of the sugarcane by the Central Government-Hence, B
State Advised Price more just and equitable-Essential Commodities Act-
Section 3; Constitution of India, 1950-Article 254.

        Agreement between the sugarcane growers and sugar producers-
Terms-Enforcing of-Agreement is the single composite transaction-It
is not open to the producers to enforce the terms thereof to their advantage C
and refuse the State Advised Price on the ground that their consent was
not obtained voluntarily.

       Words and Phrases
                                                                               D
      'Price', 'minimum price', 'agreed price '-Meening of in the context
of Sugarcane Supply and (Control) Order, 1966.

       'goods '-Meaning of in the context of Sales of Goods Act.

      'Regulate '-Meaning of in the context of UP. Sugarcane (Regulation       E
of Supply and Purchase) Act, 1953.

       Per minority :

       Central Government is empowered under the Essential Commodities F
Act to regulate the production, supply and distribution of the essential
commodities and provide for controlling the price thereof-Power to
control includes power to fix the minimum price-Power of the Central
Government under the Central Act and that of the State Government under
1953 Act are mutually exclusive-Since the State Legislation does not
contain provisions even for fixation of minimum price of sugarcane, the G
State Government cannot possess power to fix a price higher than the
minimum-Fixation of price higher than the minimum price by the State
executive. hit by Article 14 ofthe Constitution and renders its constitutionality
open to challenge-Such fixation of price of sugarcane by the State
amounts to violation of the fundamental right guaranteed under Article H
    240               SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A 19(1){3) of the Constiturion--Stute Advised Price unnounced by the State
    Government despite protest by the sugar producers--Hence. it cunnot be
    termed as consensual price between the purties-Constitution of India,
    1950-Articles 1./ & 19.

          Words and Phrases :
B
            'minimum price·. 'fair price', 'remunerative price' and 'maximum
    price '-Meaning of in the context of Essential Commodities Act, 1955.

           'Advised Price '-Meaning of in the context of U.P. Sugarcane
C (Regulation of Supply and Purchase) Act, 1953.
         The questions which arose in these appeals and transfer petitions
    relate to the competence of the State Government to fix the State
    Advised Price for purchase of sugarcane by the manufacturer/occupier
D   of sugar factory over and above the minimum price fixed by the
    Central Government and validity of the procedure adopted for ensuring
    payment of the price to sugarcane growers.

       It was contended by the appellant-U.P. Cooperative Cane Unions
E Federation that since the Central Government fixed only the minimum
  price, it was op.en for the State Government to fix a higher price for
  sugarcane; that the State Government could not only fix a higher price
  but could also advise sugarcane growers/factories to agree and pay a
  higher price for sugar cane to the sugarcane growers; that the Central
F Government while fixing the minimum statutory price of the sugarcane
  did not take into consideration various bye-products produced during
  the course of production of sugar; that the sugar mills make considerable
  amount of money/profit by selling them; that the State Government
  having regard to local conditions and profit earned by the sugar
  factories from the sale of the bye products could fix a fair/reasonable
G and realistic price of the sugarcane; and that there is no repugnancy
  between the price fixed by the Central Government and State Advised
  price as fixed by the State Government.

          It was submitted by the State Government that the Central
H Government in pursuance of the provisions under the Essential
 U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON.   241

  commodities Act has made sugar cane (Control) Order; and since the A
  purpose of the Sugarcane (Control) order was to ensure uninterrupted
  supplies of sugarcahe, it must be construed in the context of policy of
  the Central Government to appropriate a portion of the production of
  sugar and sell it as levy sugar at controlled price; that the statutory
  minimum price as fixed by the Central Government was basically B
  linked to fixation of the price of levy sugar and not linked to fixation
  of the price of sugarcane; that the additional price could only be paid
  to the sugarcane growers when the sugar mills earn profit which is only
  a matter of chance; that the production of sugar from sugarcane needs
  large investment and price is the main incentive for the farmers,
  however, the price fixed by the Central Government was bare minimum C
  and not a remunerative price; that the power to determine remunerative
  price vested with the State Government under the regulatory provisions
  of 1953 Act; that the State Government in exercise of its power under
  the 1953 Act could bring about an agreement between the sugarcane
• growers, Sugarcane Growers Co-operative Society and occupiers of D
  sugar factories whereby the sugarcane grower would be bound to
  supply certain quantity of freshly harvested sugarcane and in case of
  non-supply he would be liable to pay penalty; that since the sugarcane
  grower is liable to pay penalty by the same analogy the State Government
  is obliged to determine and pay the remunerative price to the sugarcane E
  growers; and that the price so determined by the State Government
  represents the true price.

       Respondent-Association submitted that there are no specific
 provisions under the 1966 Order which could empower the State F
 Government to fix the price of sugarcane over and above the price
 fixed by the Central Government; that there exists a clear repugnancy
 between the price· fixed by the Central Government and the price fixed
 by the State Government, thus, the price fixed by the Central
 Government would prevail; that the fixation of higher price by the
 State Government would completely dislocate the mechanism for G
 determination of the price of the levy sugar by the Central Government
 as provided under the Essential Commodities Act, that there was no
 agreement between the sugarcane growers/Sugarcane Growers Co-
 operative Society and the occupiers of the sugar factories for payment
 of the State Advised Price; and that levy could not be compelled to pay H
    242               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A   the State Advised Price since they had never given their consent thereto
    in the agreement.

          Disposing of the appeals and transfer petitions, the Court

B       HELD : Per G.P. MA THUR, J. (for himself, Rajendra Babu, CJ.
    and K.G. Balakrishnan, J.) :

         1.1. The Central Legislature enacted the Sugarcane Act, 1934
    with the objective that the initiative in the matter of fixation of prices
C   for sugarcane must be left to Provincial Governments so as to suit local
    conditions. The purchase of sugarcane intended for use in factory in
    any controlled area at a price less than the minimum price notified was
    made an offence under the provisions of the Act, which conferred wide
    powers on the Provincial Government to make rules for the purpose
    of carrying into effect the objects of the Act. [265-H; 266-C]
D
        1.2. The Central Government exercising powers under Section 3 of
  the Essential Commodities Act made the Sugarcane Control Order, 1955.
  This order was repealed by the Sugarcane (Control) Order 1966. The
  definition of 'price' given in Clause 2(g) of the Sugarcane (Control)
E Order, 1966 shows that it can either be the price or the minimum price
  fixed by the Central Government. So far as the power of the Central
  Government is concerned, under Clause 3(1) of the order it can fix only
  the "minimum price" of sugarcane to be paid by the producers of sugar
  for the sugarcane purchased by them. This is the lowest permissible rate.
F The effect of Clause 3(2) of the order is that a producer of sugar can
  under no circumstances purchase sugarcane at a price lower than the
  minimum price fixed under Clause 3(1) and there is a similar prohibition
  on the cane grower and he cannot sell or agree to sell sugarcane to a
  producer of sugar below the said price. But the 1966 Order, in view of
  definition of "price" given in Clause 2(g) and also the language used in
G Clauses 3 and 3-A, clearly contemplates that there can be a price other
  than the minimum price" ofsugarcane as agreed to between the producer
  and the sugarcane grower or the Sugarcane Growers' Co-operative
  Society'. The provision as laid down under sub-clause (5) of Clause S-
  A again contemplates payment of price higher than the minimum price
H fixed under Clause 3(1 ). A whole reading of the 1966 Order, thus, would
U.P. CO-OP. CANE UNlON FEDERATION v. WEST U.P. SUGAR MlLL ASSON.    243

show that the Central Government shall fix the minimum price of A
sugarcane but there can be a price higher than the minimum price which
may be in the nature of agreed price between the producer of sugar and
the sugarcane grower or the sugarcane growers co-operative society. So
the field for a price higher than the minimum price is clearly left open
in the 1966 Order by the Central Government.                             B
                                   [266-D, E; 268-C-D-E-F-G; 269-B-C]

        1.3. The provisions in the U.P. Sugarcane (Regulation of Supply
and Purchase) Act, 1953, U.P. Sugarcane (Regulation of Supply and
Purchase) Rules, 1954 and the U.P. Sugarcane Supply and Purchase
Order, 1954, have been made for the benefit of the sugar factory so that C
it is assured ofand gets a continuous supply of freshly harvested sugarcane
in quantity according to its crushing capacity and for the whole duration
of the crushing season. No doubt the cane grower also gets some advantage
in the sense that purchase of his yield is assured but at the same time
many limitations and restrictions are imposed upon him. In view of the D
statutory provisions, the position of a cane grower becomes entirely
different from that of a farmer producing any other kind of:;tgricultural
crop where there arc absolutely no restrictions upon him. It is in this
scenario, which is not the creation of the cane grower but of the statutory
provisions operating in the field, that the question whether the State has E
any authority or power to fix the price of the sugarcane supplied to a
producer of sugar (sugar factory) arose. [275-G-H; 276-A-BI

      1.4. The various provisions of U.P. Sugarcane (Regulation of
Supply and Purchase) Act, 1953 Act show in unmistakable terms that F
it regulates the supply and purchase of sugarcane required for use in
sugar factories. 'Regulate' means to control or to adjust by rule or to
subject to governing principles. It is a word of broad impact having
wide meaning comprehending all facets not only specifically enumerated
in the Act, but also embraces within its fold the powers incidental to
the regulation envisaged in good faith and its meaning has to be G
ascertained in the context in which it has been used and the purpose
of the statute. [276-C-D-El

     VSR & Oil Mills v. State of A.P., AIR (1964) SC 1781; State of
Tamilnadu v. Mis. Hindu Stone & Ors., [198112 SCC 205; K. Ramanathan H
   244                SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.
A v. State of Tamil Nadu & Anr., 11985] 2 sec 116 and Jiyajeerao Cotton
   Mills Ltd. & Anr. v. Madhya Pradesh Electricity Board & Anr, (1989]
   Suppl. 2 SCC 52, relied on.

       1.5. The provisions of U.P. Sugarcane (Regulation of Supply and
B Purchase) Act, 1953 show that the legislature has made very elaborate
  provisions regarding supply of sugarcane by canegrowers, its purchase
  by the sugar factories and payment of price thereof. In fact, very
  detailed and exhaustive provisions have been made in the Rules and
  the U.P. Sugarcane Supply Order, 1954 to ensure that at the time of
C delivery of sugarcane by the canegrowers, its weight and price are
  correctly recorded and the price is paid to them within 14 days, failing
  which sugar factory is liable to pay interest. In such circumstances, the
  irresistible conclusion which can be drawn is that the regulatory power
  possessed by the State Government shall also include the power to fix
  the price of the sugarcane. If it is held that the State under its power
D of regulation cannot fix the price, then the statutory provision contained
  in the 1953 Act, the Rules and 1954 Order will become completely one
  sided, operating entirely for the benefit of sugar factories giving them
  many advantages with no corresponding obligations and leaving the
  canegrower in a lurch with host of restrictions upon him. This can
E never be the intention of the Legislature. It will not be fair to read the
   Act and the Rul~s in such a restrictive manner. 1281-C-D-E-F-GI

       1.6. There is no indication in the proforma of the agreement as
  contained in the appendix to U.P. Sugarcane (Supply and Purchase)
F Order, 1954 or in the Order that the word "Government" would refer
  to Central Government. If the State Government is prescribing a
  proforma of an agreement which is to be executed by a canegrower
  or a canegrowers' cooperative society and the occupier of the factory
  regarding sale and purchase of sugarcane wherein the word
  "Government" is used, it can only mean the State Government and not
G the Central Government unless there is clear indication to the contrary.
  The only logical inference which can be drawn is that the word
  "Government" refers to State Government. 1282-D-EI

         2.1. Sugarcane supplied to sugar factory are "goods" within the
H meaning of Section 2(7) of Sale of Goods Act. Th provisions under sub-
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON.     245

sections (1) and (3) of Section 4 and Section 5 of the Act show that price A
is an essential element of sale of goods. 1280-E-F]

    Popatlal Shah v. State of Madras, 11953) SCR 677 and State of
Madras v. Gannon Dunkerley, [1958) SCR 379, referred to.
                                                                           B
     2.2. There is a difference between "the price" which is a fixed
amount and "the minimum price" which only indicates the lowest
permissible rate. The 1966 Order, which itself was made by the Central
Government more than a decade ago and was amended in 1978 and
Clauses 3(3) and 3-A thereof contemplate an "agreed price" which in C
view of the mand~te of Clause 3(2) is bound to be higher than the
"minimum price" fixed under Clause 3(1). Naturally it is this "agreed
price" which' is to be mentioned in the agreements for sale and
purchase of sugarcane in Forum B and C otherwise the very purpose
of entering into agreements would be defeated. 1282-G-H; 283-A-B]
                                                                           D
     Ch. Tika Ram.Ji & Ors. v. State of Uttar Pradesh & Ors., [1956] SCR
393, distinguished.

      2.3. The State Government in exercise of its regulatory power can
fix the price of sugarcane. The mere fact that this price is not to the    E
liking of the sugar factory does not mean that it cannot form the basis
for supply of sugarcane by the canegrowers or canegrowers cooperative
society to the sugar factory. It is well settled that even a compulsory
sale does not lose the character of a sale. [284-E]

     Salar Jung Sugar Mills Ltd. v. State ofMysore & Ors., 11971] 1 SCC
                                                                           F
23, followed.

     Indian Steel & Wire Products Ltd. v. State of Madras, [1968) 1 SCR
479; Andhra Sugar Mills Ltd. v. State of Andhra Pradesh, 11968] 1 SCR
705 and Sukhnandan Saran Dinesh Kumar v. Union of India & Ors., G
11982] 2 sec 150, relied on.

     3. The reservation or assignment of area for growing of the
sugarcane is made for the benefit of a sugar factory. The agreements
executed by the canegrowers or canegrowers cooperative society in H
    246                SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.

A favour of occupier of a factory are also for the benefit of the sugar
  factory as by such agreements it gets an assurance of a continuous
  supply of freshly harvested sugarcane on the days indicated in the
  requisition slips issued by it so that there may not be any problem in
  getting optimum quantity of raw material throughout the crushing
B season. In absence of the agreements the sugar factory factory will also
  be a loser as it may face great problem in getting the supply of sugarcane
  according to its requirement. The occupiers of the factory are themselves
  keen for execution of the agreements but their only objection is to the
  mention of State Advised Price. The agreement is one composite
C transaction and it is not open to them to contend that the terms thereof
  which are to their advantage should be enforced but the term relating
   to price notified by the State Government should not be enforced as their
  consent in that regard was not a voluntary act. However, having regard
   to the advantages derived by the sugar factories, they are fully bound
   by the agreement wherein the State Advised Price may be mentioned
D and it is not open to them to assail the clause relating to price of sugarcane
   on the ground that their consent was not voluntary or was obtained
   under some kind of duress. 1289-B-C-D-EI

          4. Under Sub-section (1) of Clause of the 1966 Order, the Central
E Government can only fix a minimum price of sugarcane. This clause
  should be read along with sub-clause (2) which creates an embargo or
  prohibition that no person shall sell or agree to sell sugarcane to a
  producer of sugar and no such producer shall purchase or agree to
  purchase sugarcane at a price lower than that fixed under Sub-clause
F (1). The inconsistency or repugnancy will arise ifthe 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, ther<! will be no occasion for any
  inconsistency or repugnancy as it is possible for both the orders to operate
  simultaneously and to comply with both of them. A higher price fixed by
G th~ State Government would automatically comply with the provisions
  of sub-clause (2) of Clause 3 oft 966 Order. Therefore, the price fixed by
  the State Government which is higher than that fixed by the Central
  Government cannot lead to any kind of repugnancy. 1292-C-D-EJ

H         M. Karunanidhi v. Union of India, AIR (1979) SC 898; Mis. Hoechst
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILLASSON.    247

Pharmaceuticals Ltd. v. State of Bihar, AIR (1983) SC 1019; National A
Engineering Industries Ltd. v. Sri Kishan Bhageria & Ors., AIR (1988)
SC 329; S. Satyapal Reddy & Ors. v. Govt. ofA.P. & Ors., [1994f 4 SCC
391 and Dr. Preeti Srivastava v. State of MP. & Ors., [1999] 7 SCC 120,
relied on.
                                                                          B
    State of Tamil Nadu v. Kothari Sugars and Chemicals Ltd., [1996]
7 sec 751, distinguished.

      5.1. One of the main reasons given by the High Court quashing
the Order of fixation of State Advised Price was that the power to fix C
sugarcane price had been given to the State Government under the
Sugarcane Act, 1934 and hence it would be redundancy to say that the
same power also flows from Section 16 of the 1953 Act. It appears that
the correct legal position was not brought to the notice of the High
Court. The Sugarcane Act, 1934 was repealed by U.P. Sugar Factories
Control ,o\ct, 1938 (UP Act to No. l of 1938). Section 26 of D
U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 repealed
the U.P. Sugar Factory Control Act, 1938. With the enforcement of
the Government of India Act, 1935, there was distribution of
legislative powers between the Dominion Legislature and the Provincial
Legislature and the entire subject matter of Sugarcane Act, 1934 fell E
within the Provincial Legislative list. It was in these circumstances that
the U.P. Legislature enacted the U.P. Sugar Factories Control Act,
1938 which repealed the Sugarcane Act, 1934 in its application in the
State of U.P. Thus, the reasoning given by the High Court has no legal
basis. [298-D-E, H; 299-A-B-C]
                                                                          F
     Ch. Tika Ramji & Ors. v. State of Uttar Pradesh & Ors., [19561 SCR
393, referred to.

     5.2. The second reasoning given by the High Court is that even
ifthe State Government had the power to fix the minimum cane price G
under Section 16 of the 1953 Act, this power came to an end in view
of Article 254(1) of the Constitution on the enactment of the Essential
Commodities Act and the promulgation of the sugarcane Control
Order, 1955 (later replaced by the 1966 Order), which gives exclusive
power to the Central Government to fix the minimum price. Under H
    248               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A Section 3(3C) of the E.C. Act, the Central Government has to determine
    the price of the levy sugar having regard to several factors enumerated
    in the sub-section and the minimum price fixed under 1966 Order is
    only one of the factors. The manufacturing cost of sugar and securing
    of reasonable return on the capital employed in the business of
B   manufacturing sugar are also relevant factors under Clauses (b) and
    (d) of Section 3(3C) of the E.C. Act and the fixation of higher price
    for sugarcane by the State Government by itself can not have any
    major or substantial impact on the fixation of the price of the levy
    sugar by the Central Government. [299-C-D, F-GI

c         6. The order passed by the Central Government fixing the minimum
    price of sugarcane for the sugar year 2002-2003, shows that prices have
    been fixed for different factories keeping in view the minimum price of
    sugarcane linked to a basis recovery of 8.5. per cent sugar subject to a
    premium at certain rates with the increase in the recovery above that
D   level. In the State of U.P. generally the price fixed for sugarcane for most
    of the sugar mills being run by the U.P. State Sugar Corporation or in
    cooperative sector (Sahkari) is much lower than the price fixed for the
    sugar mills being run by private sector. The prices fixed by the Central
    Government clearly indic:;te that a sugarcane grower who falls within
E   the reserved area ofa sugar mill run by U.P. State Sugar Corporation or
    by cooperative sector gets much less while as one who falls within the
    reserved area of sugar mill run by private sector gets much higher.
    There is no justifiable reason why a sugarcane grower should suffer only
    on account of the fact that he happens to fall within the reserved area of
F   a mill run by the U.P. State Sugar Corporation or in the cooperative
    sector. The State Government fixes uniform prices and '1~t factory wise.
    Such a fixation of price is more just and equitable from the point of view
    ofa sugarcane grower. [301-G-H; 302-A; 303-A-B-CI

          Report of the Sugar Industry Inquiry Commission, 1974, referred to.
G
          Per SRIKRISHNA, J. (dissenting) :

         I .I. The observations in Ch. Tika Ranl)i 's case though made in the
    context of Sugarcane (Control) Order, 1955, are equally applicable in
H   the context of the sugarcane (Control) Order, 1966. Two points of
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON.   249

distinction were sought to be down as to why the ratio of Ch Tika A
Ramji 's case would not apply to the present case; that it did not have
the benefit of examining the Sugarcane (Control) Order, 1966; and
that it was only concerned with comparing the power to fix the
minimum price and did not concern itself with the power of the State
Government to fix higher price. However, these distinctions are purely B
chimerical. A comparison between the Sugarcane (Control) Order,
1955 and Sugarcane (Control) Order, 1966 brings out the hollowness
of the first distinction. Under the 1955 Order, 'price' meant the price
fixed by the Central Government from time to time, for sugarcane
delivered at the factory gate. It empowered the Central Government C
to fix in respect of any area 'the price' or 'the minimum price' to be
paid for the sale/purchase of sugar. The only change made in the
Sugarcane (Control) Order, 1966 is that the expression 'price' has been
defined in clause (2)(g) to mean "the price or the minimum price fixed
by the Central Government from time to time'', for sugarcane delivered,
inter alia, to a sugar factor. If the pa_rties have agreed upon a higher D
price, the Sugarcane (Control) Order, 1966 recognises that and obligates
such amount to be paid. This is also recognised by clause (3-A) dealing
with the rebate that can be deducted. Under this clause, the producer
of sugar is required to pay "either the minimum price of sugarcane
fixed under clause (3) or the price agreed to between the producer or E
his agent or. the sugarca'ne grower or the Sugarcane-growers' Co-
operative Society,_ as the case may be. The distinction that is sought to
be drawn· has no basis. [327-H; 328-A-B-C-D-E-F-G]

    Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & 01·s., [1956[   F
SCR 393, relied on.

     2.2. With regard to the second distinction, this Court examined the
conflict becyveen the provisions of the Central Legislation, the Essential
Commodities Act, 1955 and the U.P. Sugarcane Act, 1953 in Ch.• Tika
Ranyi's case. Under Section 3 of the Essential Commodities Act, 1955, G
the Central Government is specifically empowered, interalia, to 'regulate'
the production supply and distribution of the essential commodity or
trade and commerce therein and also may provide for controlling the
'price' at which the essential commodity may be bought or sold; the
power to 'control the price' is of the wid,,st amplitude and takes into H
    250                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A its fold the power to fix the minimum price, the fair price, the
    remunerative price or even the maximum price. It was this power which
    was contrasted with the power of the State Government under the U.P.
    Sugarcane Act, 1953. After making such a contrast, the Court came to
    the specific conclusion that the State Act did not, in any way, impinge
B   upon the area covered by the Central Act as the provisions of the two
    Acts are "mutually exclusive and did not impinge on each other" there
    being r.u trenching upon the field of one legislature by the other. While
    contrasting this power of the Central Government and its exercise
    under the Sugarcane (Control) Order, 1955, as against the powers of
C   the State Government under the provisions of the U.P. Sugarcane Act,
    1953, the case discerned no power for price fixation in the State
    Government under the provisions of 1953 Act and that is why its
    constitutional validity was upheld. In fact, when Ch. Tika Ram.Ji case
    fails to discover any provision in the State Legislation for minimum
    price fixation with regard to sale/purchase of sugarcane, and upholds
D   its constitutional validity on that very ground, it would be futile to
    attempt to discover in the State Act a power to fix a price higher than.
    the minimum price. 1329-C-D-E-F-G-Hl

          Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors., 119561
E SCR 393, relied on.

          2.3. With regard to the distinction between 'minimum price' fixed,
    which is exclusively within the province of the Central Government
    under the provisions of the Essential Commodities Act, 1955, and what
F   the State seeks to fix is 'fair price' or 'remunerative price', the question
    is not one of repugnancy. The question is one of tracing the source of
    the power, if, at all, it exists. By merely calling it 'fair price' or
    'remunerative price', one cannot wish away the consequences of non-
    payment thereof. The consequence of not paying the minimum price is
    penal liability incurred under the provisions of the Essential Commodities
G   Act, 1955 read with the Sugarcane (Control) Order, 1966. There exists
    no corresponding legislative provision for non-payment of the so-called
    'fair price' or 'remunerative price' under the U.P. Act of 1953. Even
    assuming that such a power of higher price fixation exists, the power
    can only be adjudicatory in nature. The minimum price is the price
H   which when fixed has to be paid by all purchasers of cane. Anything
UP. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON.     251

higher than that would require adjudication of rival claims for which A
there exists no machinery under the I 953 Act or under the delegated
legislation made thereunder. There are also no guidelines indicated in
the 1953 Act as to the basis on which the so-called fair price, remunerative
price or State Advised Price is to be arrived at. To fix the State Advised
Price much above the centrally fixed minimum price, and that too by B
an executive fiat, may render the constitutionality of such power open
to challenge as arbitrary and hit by Article 14 of the Constitution.
Looked at from the practical point of view, ifthe contention of the cane-
growers is accepted, what is payable in the Sate would, in reality, be
the minimum price payable for sugarcane. Calling it as the 'fair price' C
or 'remunerative price' would merely be a matter of semantics and not
of substance. Except the bald reference to 'regulation of sale and
purchase of cane', there is nothing else in the 1953 Act to indicate the
mode, conditions under which, or the guidelines subject to which such
an exercise of fixing the fair price can be exercised, and that too by a
mere executive fiat. It cannot be inferred that such a power of fixation D
of price higher than the minimum price in a Statute which is utterly
bereft of any adjudicatory mechanism or guidelines, particularly when
the subordinate legislation is replete with references to the 'minimum
price fixed by the Government', which too was interpreted in Ch. Tika
Ramji case as the 'minimum price fixed by the Central Government'. E
The U.P. Sugarcane Order, 1954 did not contemplate anything more
than the minimum price fixed by the Government to be stipulated in
the form of a statutory contract.
                                  1330-B-C-D-E-F-H; 331-C-D; 332-A-Bl

     Mis. Crown Aluminium Works v. Their Workmen, relied on.
                                                                          F

      3. That there is sufficient leeway for consensual payment of a rate
higher than the minimum rate is beyond doubt. If such a rate has been
agreed upon, orally or in writing, then that higher rate substitutes itself
in the place of the minimum rate fixed by the Central Government. The G
question before this Court was not as to what could be consensually
done. The question was that in the absence of consensus, does the State
have the power under the 1953 Statute concerned to determine a higher
rate than the minimum rate as the rate payable for the cane supplied;
that fixing of a higher price of sugarcane, compulsorily payable, is a H
    252                SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A restriction on the fundamental right guaranteed under Article 19(l)(g)
    and cannot be legally done except under a law. 1333-D-E; 334-GI

       State uf Madhya Pradesh & Anr. v. Thakur Bharat Singh, 11967) 2
    SCR 454, relied on.

B       Rai Sahib Ram Jawaya Kapur & Ors. v. The State of Puniab, [1955)
    2 SCR 225, distinguished.

        4.1. The construction of the 1953 Act has to be made against the
  legislative background. Under Section 3(2) of Sugarcane Act, 1934, the
C State Governments were empowered to fix a minimum price or
  minimum prices for the purchase of sugarcane in a controlled area
  intended for use in any factory. In Section 21 of the U.P. Act l of 1938,
  there was a specific power vested with the Provincial Government to
  fix the minimum price. In respect of any area, the minimum price to
D be paid by the occupier of the factories or purchasing agents for cane
  purchased in that area could be determined by a notification issued by
  the Government, after consultation with the Board. In contrast, the
  provisions of the U.P. Sugarcane Act, 1953 indicate total absence of
  such a power to fix a price. It the I 953 Act intended to grant to the
  State the power to fix any price - State Advised Price, remunerative
E price or fair price as is called - the Statute would have in terms
  indicated it and not left it to guesswork or inference from the general
  words used in Section 16 and 17 of the Act. 1335-D-E-F)

         4.2. The Statute lays down no guidelines for exercise of power, if
F   any, by the State. Against the background of legislative history, and
    the observations made in Ch. Tika Ramji 's case, it is difficult to discern
    any such power in the State to fix the State Advised Price, ealled by
    whatever name, at a rate higher than the minimum rate fixed by the
    Central Government, which could be made binding on the parties.
    Since U.P. Sugar Mills Associations/factories strongly protested
G   against the State Advised Price and filed writ petitions before the High
    Court challenged the State Advised Price, there ·.vas no occasion for
    the State Governme~t to exercise its diplomacy and bring out a
    consensual price between the. parties nor was there any occasion for

H   basis of consensus. 1336-A-B, F-G-HI
                                                .
    the State Government of U.P. to declare a State Advised Price on the
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON.      253

   Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors., (1956) A
SCR 393, relied on.

      Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd.& Ors. v.
State ofMaharashtra & Ors., (1995) Supp. 3 SCC 475; S.K.G. Sugar Ltd.
v. State of Bihar & Ors., (1997) 9 SCC 362; State of MP. v. Jaora Sugar B
Mills Ltd., (19971 9 SCC 207 and State of Tamil Nadu and Ors. v. Kothari
Sugar & Chemicals Ltd. & Ors., (1996) 7 SCC 751, distinguished-

     Per P. Venkatarama Reddi, J_ (dissenting) :

     I.I. There exists no statutory basis for the 'State advised cane       C
price'. The very expression 'advised' connotes that the State advised
price has no statutory flavour. If the fixation has been done in exercise
of statutory power traceable to any provision in the U.P. Act, it would
be most inapt to describe it as 'advised price'- The statutorily fixed price
can never take the form of advice. It binds, enforces obedience by D
providing for punishment or penal consequences and does not look for
volition of the persons concerned for its compliance. But, that is not the
case here. From year to year, the State Government has been announcing
the 'advised price' in the hope and expectation that the sugar factories
in the private sector will also agree to pay that price- [344-B-C)           E

      1.2. The 'State advised price' cannot be said to have been fixed in
purported exercise of any statutory power and it cannot be elevated to
the level ofa statutory price fixation order. The decisions of this Court
referred to did not hold that the State advised price is statutorily fixed F
and is legally binding on the sugar factories on its own force. (348-D-E)

      State of MP. v. Jaora Sugar Mills Ltd., [1997) 9 SCC 207,
distinguished.

     1.3. The State advised price, though lacking the sanction of law G
and its compliance cannot be ensured against the will of the factory
owner, it can still serve as a framework with which an agreed price
over and above the minimum price fixed under the Central Order can
be brought about. The law does not prohibit the concerned authorities
of the State Government from advising or recommending a price for H
    254               SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A adoption by the sugar factories. The authorities entrusted with the
  various functions under the Act conceived in the interests of both
  growers and producers can certainly play a role. The very fixation of
  State advised price cannot be legally faulted so long as its compliance
  is ensured by a voluntary process by which the State advised price can
B very well become an agreed price. [349-A-B-CJ
         2.1. Section 16 of U.P. Act carries the heading 'Regulation of
    purchase and supply of cane in the reserved and assigned areas'. Sub-
    section (I) lays down the broad parameters of regulatory power
C   followed by sub-section (2) which spells out the specific areas to which
    such power can extend. The lhation of price of cane is not one of them.
    However, sub-section (2) does not exhaust the field of operation of the
    regulatory power. The price fixation could still come under the
    generality of the power reserved under sub-section (I) of Section 16
    of the U.P. Act. The wide meaning given to the expression 'regulate'
D   in various cases coupled with the fact that price is an essential
    component of sale is harped upon to preserve the power of the State
    Government to fix the price. [349-F-G-h, 350-A-BI

          2.2. The expression 'regulate' has no precise or fixed connotation
E and it has different shades of meaning. There is no doubt that it is a
    word of broad imp.ort. Its width and content may vary according to
    the contextual setting in which the expression occurs. The scheme and
    thrust of the provisions of the relevant statute, the objective of
    legislation, the legislative intent gathered from the legislative history
F   and the run of the provisions contained in the enactment can all be
    taken into account while appreciating the correct meaning of the
    expression 'regulate' in a particular statute. [350-E-F-Gl

          2.3. The decision in Tiku Rumji "s case is the main hurdle for giving
    an amplified meaning to the expression 'regulate' so as to cover price
G   fixation. Though the Constitution Bench did not directly deal with the
    question of interpretation of Section 16 vis-a-vis the power of price
    fixation, going by the observations made therein and the basis of
    reasoning adopted to arrive at the conclusion that there was no
    repugnancy, it is fairly clear that the Constitution Bench negatived the
H   existence of any provision empowering the State Government to fix the
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON.   255

price; and that there was no fixation of minimum price by the State A
Government. On a comparative analysis of the provisions, this Court
found no repugnancy between the impugned Act (U.P. Act of 1953) and
the Sugarcane Control Order of 1955. The provisions were held to be
mutually exclusive and did not impinge upon each other. No doubt, the
content of regulatory power under Section 16 was not discussed by the B
Constitution Bench in Ramji 's case. But, the observations made by the
Court necessarily suggest that the State Government was not invested
with the power to fix the 'price of sugarcane. (350-G-H; 351-A-B-C-Dj

    Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors., [1956)   C
SCR 393, relied on.

   Jiyajirao Cotton Mills v. MP. Electricity Board, 11989) Suppl. 2
sec 52, referred to.
      2.4. No particular significance could be attached to the use of the D
expression 'minimum price' in the judgment of Constitution Bench
because in one sense, the price ordained to be paid by the State
Government, would become minimum price. In another sense, it may
be a more remunerative or higher price than what is fixed by the Central
Government. Thus, the Constitution Bench did not discern any power E
to fix the price under the Act. If under Section 16, the power to fix price
was to be inferred, no doubt the Constitution Bench would have paused
and considered the effect of it on repugnancy. It is only on the premise
that there was no such provision, the Court recorded its conclusion on
the issue o.f repugnancy. Even if the Constitution Bench recorded its F
conclusion on the question ofrepugnancy without specifically considering
Section 16 and the power to regulate the price that could possibly flow
therefrom, this coordinate Constitution Bench cannot express a contrary
view at this distance of time. (353-C-D; 353-E-F-l

     In any case, apart from what was held in Tika Ramji's case, there G
are certain features and indicators discernible from the scheme of the
U.P. Act and the legislative history which lead to the irresistible
conclusion that price regulation was not within the contemplation of
the Act. In contrast to the preamble of the U.P. Sugar Factories
Control Act, 1938 (as amended by Act 16 of 1952) the expression 'to H
    256                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A   regulate the price of the sugarcane' has been omitted. Then, the
    specific provision contained in the earlier Act (Section 21 of U.P. Act
    I of 1938) conferring power on the State Government to fix minimum
    price and Section 22A empowering the State Government to direct
    payment of additional price was omitted, the reason for such omission
B   being the promulgation of the Sugar and Gur Control Order, 1950 by
    the Central Government, as noticed by this Court in Tika Ramji 's case.
    Having omitted to reenact those provisions, if the U.P. legislature
    wanted to retain the power to fix higher price over and above the
    minimum fixed by the Central Government, it is reasonable to expect
    the legislature to make a specific provision to that effect rather than
c   leaving it to the general regulatory power under Section 16 to take care
    of it. (353-H; 354-A-B-C]

        Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors., 11956)
    SCR 393, relied on.
D         2.5. When a parallel legislatioh in the Central field was in operation
    in regard to price fixation, the State legislature would not have omitted
    to enact the specific provision empowering the Government to fix the
    price higher than the minimum level prescribed by that legislation if
    that was th_e. intention of the legislature. Such provision would have
E   contained norms, criteria or guidelines governing the higher price fixation
    or at least left them to be prescribed by Rules. Hence, the price fixation
    in the guise of regulatory power under Section 16 was not within the
    contemplation of the ·u.P. State Legislature. The conspicuous absence
    of a specific provisions relating to price fixation must be viewed in the
f   back drop of legislative history and the parallel central legislation
    operating in the field. Both the external and internal aids to construction
    reasonably point to the conclusion that price regulation was not within
    the contemplation of State legislature. [354-D-E-F-G]

        3. lfthere is no authority to fix the price, the fact that the Agreement
G is entered into adopting the 'State advised price' does not impart statutory
   basis to such price. On the other hand, ifthere is power under the Statute
  and such power has been demonstrably exercised by the State, there is
   no need to have recourse to the Agreement to sustain the power. A
  fortiori, the Agreement giving effect to the State advised price is perfectly
H valid and enforceable unless any vitiating factors under the law ofcontract
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON.      257

are established. However, the State Government or its agents cannot A
compel or coerce the sugar factories to enter into agreements to pay to
the growers the 'State Advised Price', even though it has no statutory
power to fix the price. In the absence of such statutory authority, the
only course left open to it to ensure higher price to the farmers is to strive
to evolve an agreement on price by way of consensus. In such a case, the B
State•advised price can enter into the terms of agreement. Such mutual
agreement should be the resultofnegotiations and voluntary acceptance.
                                                       (355-C, H; 356-A-B]

      Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd. & Ors. v.
State ofMaharashtra & Ors., (1995] Supp. 3 SCC 475; S.K.G. Sugar Ltd.       C
v. State of Bihar & Ors., (1997] 9 SCC 362 and State of MP. v. Jaora
Sugar Mills Ltd., [1997] 9 SCC 207, distinguished.

     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 460 of
1997.
                                                                            D
     From the Judgment and Ord~r dated 11.12.96 of the Allahabad High
Court in C.M.W.P. No. 36889 of 1996.

                                  WITH

     C.A. Nos. 461, 4685/97, 1727, 4602/99, 6965/2001, 3023 and 3022/ E
2004, SLP(C) No. 948/2003, C.A. Nos. 8117-8122/2001, T.C.(C) Nos. 21-
22/2003, I.A. No. 3 in C.A. No: 460 of 1997.

     Rakesh Dwivedi, Y.V. Giri, Shanti Bhushan, Jayant Bhushan, K.K.
Venugopal, P. Chidambaram, A.T.M. Ranga Ramanujam, Mrs. K. F
Amareswari, Prashant Kumar, Joseph Pookkatt, Manu Beri, Abhishek
Choudhary, Ms. Pooja Dham, Praveen Kumar, Prateek Kumar, Achintya
Dwevedi, Sudhir Kumar Gupta, Rohit Alex, P.H. Parekh, Ms. Seema
Bengani, Vikas Pahwa, E.R. Kumar, S. Guru, Krishna Kumar, Mrs. Srikala,
C.K.M. Singh, S.R. Setia, Ajay Bhalla, Ms. Abha, R. Sharma, Pramod
Swarup, Ms. Pareena Swarup, Praveen Swarup, Saket Singh, Ms. Niranjana G
Singh, Ms. Vimla Sinha, B.B. Singh, Ms. Pinky Anand, Ms. geeta Luthra,
D.N. Goburdhun, B.S. Chahar, Mrs. Jyoti Chahar, Vinay Garg, Ms. Rani
Jethmalani, Mrs. Gouri Kamna Das, Ms. Anu Gupta, Ms. Debjani Das Par
Kayastha, Rakesh Uttamchandra Upadhyay, Jatinder K. Sethi, Achintya
Dwivedi, Punit Dutt Tyagi, Pradeep Misra, S.S. Shinde, Mukesh K. Giri, H
    258                SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A   Manoj Swamp, Ms. Lalita Kohli, Anubhav Kumar, K. Subbarao. T.V.
    Ratnam, K. Ram Kumar, B. Sridhar, P.S. Narasimha, P. Sridhar, Ananga
    Bhattacharya, G. Seshagiri. Nikhil Nayyar, Satinder S. Gulati, Ms. Kavita
    Wadia, K.K. Mohan, Ms. Geetanjali Mohan, Ms. Anusuya, Ms. Madhu
    Moolchandani. V.M. Singh-in-person, Mrs. Niranjana Singh, Ms. Naresh
B   Bakshi, R.S. Suri and Pravir Chaudhary, for the appearing parties.

          The Judgments of the Com1 were delivered by

       G.P. MATHUR, J. : I. The controversy raised in these appeals by
  special leave and Transfer Petitions basically relates to the competence of
C the State Government to fix the State Advised Price for purchase of
  sugarcane by an occupier of a sugar factory over and above the minimum
  price fixed by the Central Government. The validity of the procedure
  adopted for ensuring the payment of the aforesaid price to a sugarcane
  grower is also under challenge.

D         2. The power of the State Government to fix higher sugarcane price
    was recognised in Maharashtra Rajya Sahkari Sakkar Karkhana Sangh
    Ltd. v. State of Maharash1ra & Ors., [ 1995] Supp 3 SCC 475 and in State
    of MP. v. Jaora Sugar Afills Ltd. & Ors., (1997] 9 SCC 207 it was held
    that the State Government has an obligation to ensure payment of proper
E   price to the sugarcane growers by occupiers of the factory. However, some
    observations made in State of Tamilnadu & Ors. v. Kothari Sugar &
    Chemicals Ltd. & Ors., (1996] 7 SCC 751 apparently indicate that State
    Government has no power to fix the price. In view of this seeming conflict,
    the cases were initially referred for decision by a larger Bench of three
F   Judges and then to a Bench of five Judges.

          3. We will first deal with Civil Appeal Nos. 460 of 1997, 461 of 1997,
    1727 of 1999 and 4602 of 1999 which arise from State of U.P. and are
    directed against the judgment and orders of two benches of Allahabad High
    Cou11 wherein conflicting views have been taken. The Central Government
G   by the order dated 11.3.1996 fixed the statutory premium price of
    sugarcane payable by the sugar factories for 1996-97 sugar season at
    Rs.45 .90 per quintal linked to a basic recovery of 8.5 per cent sugar subject
    to a premium of Rs. 0.57 for every 0.1 percentage point increase in the
    recovery above that level. According to Sugar Mills Association the
H   average minimum statutory price for the whole of U.P. came to about
U.P. CO-OP. CANE UNION FEDERATION F. WESTU.P. SUGAR MILL ASSON. [G.P. MATHUR,!.] 259

Rs.50.33 per quintal and the additional price under Clause 5-A of A
Sugarcane (Control) Order 1966 came to about Rs.7 per quintal and thus
they were liable to pay Rs.57.33 per quintal. The State Government by the
order dated 15.11.1996 fixed the State Advised Price at Rs.72 per quintal
for ordinary quality and Rs.75 per quintal for fast ripening quality of
sugarcane to be delivered at the gate of the factory. ln case the sugarcane B
was delivered at the purchase centre the sugar mills were entitled to deduct
about Rs.3 per quintal towards transpoI1ation cost. Writ Petition No.36889
of 1996 was filed by West U.P. Sugar Mills Association, Central U.P. Sugar
Mills Association, East U.P. Sugar Mills Association and 32 sugar mills
for quashing the order dated 15.11.1996 of U.P. Government whereby C
State Advised Cane Price was fixed and for restraining the respondent
authorities (State of U.P. and Cane Commissioner U.P.) from taking any
coercive steps to enforce the payment of the said State Advised Price. A
declaration was also sought that the writ petitioners are liable to pay only
the minimum price fixed by the Central Government under Clause 3 of
 Sugarcane (Control) Order 1966 plus the additional cane price determined D
 under Clause 5-A of the said Order. A Division Bench of the High Court
 allowed the writ petition by the judgment and order dated 11.12.1996. The
 order of the State Government dated 15.11.1996 was quashed and the
 respondent authorities were restrained from enforcing the State Advised
 Price. It was, however, directed that where an agreement in Form B or E
 Form C of the Appendix to the U.P. Sugarcane Supply and Purchase Order,
 1954 had been reached between occupiers of the factory and the cane
 growers or cane growers' cooperative society then the occupiers of the
 factory will have to pay the price in accordance with such agreement.

      4. The Cane Commissioner U.P. issued a recovery certificate on
                                                                                       F
13.2.1997 for recovery of State Advised Sugarcane price from Agota Sugar
and Chemicals Ltd. and on the basis of the aforesaid recovery certificate
Tehsildar Bulandshahr sent a citation dated 21.2.1997 for recovery of the
amount. Agota Sugar and Chemicals Ltd. then filed Writ Petition No. 775
(M/B) of 1997 before the Lucknow Bench of Allahabad High Court for G
quashing of the aforesaid recovery certificate and the citation. It was also
prayed that a writ of mandamus be issued commanding the Cane
Commissioner and authorities of the State Government not to adopt any
coercive method to recover any amount from it on the basis of the recovery
certificate dated 13.2.1997 and the citation dated 21.2.1907. Writ Petition H
    260                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A No. 2086 (M/B) 1997 was filed by Shri V.M. Singh, a sugarcane grower,
    claiming to represent the interest of all the sugarcane growers in the State,
    praying that the authorities be directed to enforce the payment of State
    Advised Price for the sugarcane purchased by the sugar mills. The writ
    petitions were disposed of by a common judgment and order dated
B   1.2.1999. Writ Petition No. 775 (M/B) of 1997 filed by Agota Sugar and
    Chemicals Limited was dismissed but Writ Petition 2086 (M/B) of 1997
    was allowed and a writ of mandamus was issued commanding the Cane
    Commissioner and State of U.P. to enforce the payment of State Advised
    Price for the sugarcane purchased by the sugar mills in the State. The State
C   Government was further directed to initiate recovery proceedings against
    the defaulting sugar mills for non-payment of the dues and in case sugar
    mills failed to pay the State Advised Price and the interest to the cane
    growers within six weeks, the Government was directed to recover the
    amount in accordance with law and thereafter pay the same to the, cane
    growers or cane growers' co-operative societies.
D
         5. Civil Appeal No. 460 of 1997 has been preferred by U.P. Co-
    operative Cane Unions Federation and Civil Appeal No.461 of 1997 has
    been filed by State of U.P. and another against the judgment and order
    dated 11.12.1996 of Allahabad High Court by which Writ Petition No.
E   36889 of 1996 was allowed .. Civil Appeal No.1727 of 1999 and Civil
    Appeal No.4602 of 1999 have been preferred against common judgment
    and order dated 1.2.1999 of Lucknow Bench of Allahabad High Court,
    whereby Writ Petition No.775 (M/B) of 1997 preferred by Agota Sugar
    and Chemicals was dismissed and Writ Petition No.2086 (M/B) of 1997
    preferred by V.M. Singh was allowed. Civil Appeal No.460 of 1997 is
F   being treated as the leading case.

          6. Shri Rakesh Dwivedi, learned senior counsel for the appellant U.P.
    Co-operative Cane Unions Federation has submitted that the Central
    Government fixes only the minimum price under Clause 3(1) of Sugarcane
    (Control) Order, 1966 (hereinafter referred to as 1966 Order) and such
G   fixation of minimum price does not exhaust the field of determination of
    price of sugarcane. In the matter of fixation of price the concept of
    minimum price, fair price and maximum price are well known and,
    therefore, even after fixation of minimum price by the Central Government
    it is always open for the State Government to fix a higher price for the
H   sugarcane. Learned counsel has submitted that the State Government can
 U.P. CO-OP. CANE UNION FEDERATION v. WESTU.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 26 J

  not only fix a higher price but can also advise sugarcane growers and sugar A
  factories to agree at a higher price. The State Government can fix the higher
  price in exercise of its regulatory power under UP Sugarcane (Regulation
  of Supply and Purchase) Act, 1953 (hereinafter referred to as 1953 Act).
  The Sugarcane grower or the sugarcane growers' co-operative society and
  the occupiers of sugar factories have to compulsorily enter into an B
  agreement in accordance with UP Sugarcane (Supply and Purchase) Order,
  1954 (hereinafter referred ta as 1954 Order) and the State Government can
  issue directions for recording of State Advised Price in the agreements
  which have to be executed for supply of sugarcane. Shri Dwivedi has also
  urged that parchas are issued to the sugarcane growers and in exercise of C
  the power conferred by 1953 Act, the State Government can direct that the
  State Advised Price be recorded in the parchas which are issued to
  sugarcane growers. Learned counsel has also submitted that the Central
  Government does not take into consideration the various bye-products like
  molasses, bagasse and press mud which are produced during the course of
  pt!oduction of sugar and the sugar mills rriake considerable amount of D
  money from the sale of aforesaid bye-products especially since molasses
  has been decontrolled after 1991- The State Government, having regard to
  the local conditions and also the amount earned by the sugar factories from
  the aforesaid bye-prod,ucts, fixes the price oft.he sugarcane which is more
  realistic. Learned counsel has further submitted that there is no repugnancy E
' between the minimum· price fixed by the Central Governr~ent and the State
  Advised Price fixed by the State Government and the view to the contrary
  taken by the High Court is clearly erroneous in law.

      7. Shri P. Chidambaram, learned senior co~nsel appearing for t~e F
 State of U.P. has. submitted that there .are ·many facets of price like
 minimum price, minimum support price, fair price and maximum price.
 Section 3 of Essential Commodities Act, (hereinafter referred to as EC Act)
 empowers the Central Government to make orders for. maintaining or
 increasing supplies of any essential commodity or for securing their
 equitable distribution and availability at fair prices or for regulating or G
 prohibiting the production, supply and distribution thereof and trade and
 commerce therei.n. The Central Government has made Sugarcane (Control)
 Order, 1966 (hereinafter referred to '1966 Order') in exercise of the said
 power and Clause 3 of the Order provides for fixation of minimum price
 of sugarcane payable by the producer of sugar to the grower of sugarcane. H
    262                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A The price is fixed having regard to, inter alia, (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; and (c) availability of
  sugar to the consumer at a fair price. Learned counsel has submitted that
  the main purpose of the 1966 Order, was to ensure that sugarcane supplies
B are maintained and sugar is available at fair price and, therefore. the order
  must be construed in the context of the policy of the Central Government
  to appropriate a part of the production of sugar mills as "levy sugar"' and
  sell levy sugar at controlled price through the public distribution system
  (ration shops). The statutory minimum price as fixed by the Central
  Government is basically linked to fixation of the price of levy sugar and
C is not linked with the actual price of the sugarcane. Hence deliberately the
  Central Government kept the minimum price of sugarcane at a low level.
  The additional price payable under clause 5-A of the 1966 Order is factory
  specific and has co-relation only with the profits of the sugar factory and,
  therefore it is only a matter of chance for a sugarcane grower to get some
D additional amount. If at all the factory makes profit. the amount paid to
  a sugarcane grower wilt be pitiably low or illusory. Learned counsel has
  also submitted that sugarcane occupies land for a longer period than any
  other crop and it needs larger investment in the inputs. The farmers can
  raise only one crop of sugarcane in a year. Price is the main incentive in
E any economy and the best incentive to the sugarcane grower is remunerative
   price for his produce. The minimum price fixed by the Central Government
   under Clause 3 of 1966 Order is not a remunerative price. as the definition
  shows that it is only a minimum price. It does not take into account higher
   costs and higher risks involved in raising sugarcane. If there is a higher
F investment and higher risk, the sugarcane grower is entitled to higher return
   but the said fact is not taken into consideration while fixing the minimum
   price by the Central Government. Learned counsel has submitted that
   power to fix remunerative price must reside in some authority and therefore
   such a power must vest with the State Government as the field for the same
   remains open and unoccupied. Shri Chidambaram has further submitted
G that 1953 Act hi!s been ern;,cted to regulate the distribution, sale and
   purchase of cane. Section 16 of this Act empowers the State Government
   to regulate the distribution, sale or purchase of cane in any reserved or
   assigned area. The power conferred under the Act on the State Government
   is of wide amplitude and takes within its fold the power to determine a
H remunerative price to the cane grower. The Act not only confers power but
U.P. CO-OP. CANE UNION FEDERATION"· WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR. J.] 263

also casts a duty upon the State Government to ensure that the sugarcane A
grower gets a remunerative price and he is incentivised to grow sugarcane
because the economy of the State to a significant extent is dependent upon
growing sugarcane and supplying the same to the sugar factories. Learned
counsel has also urged that the State Government in exercise of its power
under the 1953 Act can bring about an agreement between the sugarcane B
grower or sugarcane growers' co-operative society and occupiers of a
factory satisfying certain terms and conditions and the price of the
sugarcane will b~ one of the terms thereof. Under the agreements the
sugarcane grower is reserved or assigned to a specified sugar mill and is
bound to supply not less than 85 per cent of the agreed quantity of
sugarcane. He is bound to cut the sugarcane on receipt of a cutting order C
and in case of non-supply he is liable to pay penalty. If these terms imposed
by the Government are valid, then by the same logic the term regarding
price is also valid and binding and sugar mills cannot approbate and
 reprobate the agreement. Learned counsel has made an alternative submission
that even if it is assumed that 1953 Act does not confer such a power then D
 Article 162 read with Entry 33 List III of Seventh Schedule of the
Constitution confers power upon the State Government to fix price by an
executive order. In support of this submission reliance has been placed
 upon ce11ain decisions of this Court rendered in Rai Saheb, Ram Jawaya
 Kapoor v. State of Punjab, [1955) 2 SCR 225 Bishambhar Dayal Chandra E
Mohan & Ors. v. State of UP., [1982] I SCC 39 and State of Andhra
 Pradesh v. Lavu Narendranath, [ 1971) 1 SCC 607. Lastly learned counsel
 has submitted that certain items like molasses, begasse and press mud
 which are bye-products of sugar industries and which contribute to the
 earning of the sugar mills have not been taken into consideration by the F
 Central Government and, therefore, the price fixed by the State Government
 which takes into consideration all the relevant factors and the local
 conditions represents the true price which should be upheld.

     8. Shri Shanti Bhushan, learned senior counsel appearing for the
respondents (sugar factories), .has submitted that the main question to be G
examined is whether the State Government has any statutory power to fix
the State Advised Price for sugarcane and to compel the sugar factories
to pay the said price. Learned counsel has .submitted that in exercise of
power conferred by Section 3 of E.C. Act the Central Government has
made the 1966 Order. and the Central Government fixes the price of the H
    264                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A sugarcane under Clause 3 (I) of the said Order. There is no specific
  provision under the 1966 Order, which may empower the State Governmellt
  to fix the price of sugarcane over and above what has been fixed by the
  Central Government. Similarly there is no specific provision in 1953 Act
  and the Rules made thereunder which may empower the State Government
B to fix the price of the sugarcane. Learned counsel has further submitted
  that there is clear repugnancy between the price fixed by the Central
  Government and the price fixed by the State Government and, therefore,
                                                                        0


  it is the price which has been fixed by the Central Government whic h has
  to prevail. It has also been contended that under Section 3 (3-C) of E.C.
C Ac~, the Central Government has to determine the price oflevy sugar which
  a sugar facto1y is compelled to sell to the Central Government or the State
  Government under an order made with reference to Section 3(2)(f) E.C.
  Act and while determining price of such levy sugar it is only the minimum
  price of sugarcane fixed by the Central Government which can be taken
  into consideration. The fixation of higher price of sugarcane by the State
D Goverrtment ·Would completely dislocate the mechanism provided under
  the E.C. Act for determination of the price of the levy sugar. Learned
  counsel has further submitted that the respondents (Sugar Mills Association)
  had sent several letters requesting the State Government not to announce
  any State Advised P.rice and within three days of the announcement of the
E State Advised Price the writ petition was filed. It has thus been urged that
  in fact there was no. agreement between the svgarcane growers or the
  sugarcane growers' co-operative society and the occupiers of the sugar
  factories for payment of State Advised Price·. It has also been contended
  that even if the price fixed by the State Governments is mentioned in the
F agreements or in the parchas, the respondents (sugar factories) cannot be
  compelled to pay the said price as they had never given their consent for
  recording the State Advised Price in the agreements or in the parchas. In
  order to constitute a valici agreement, it is ,submitted, the consent of the
  parties must be voluntarily and must not have been obtained under any
  duress or compulsion and since the sugar mills had never voluntarily
G agreed to pay the State Advised Price, the agreements wherein such a price
  is recorded is not binding upon them.

         9. Shri Sudhir Chandra, learned senior counsel, appearing for the
    appellant Agota Sugar and Chemicals Ltd. in CA No. 4602 of 1999 has
H   adopted the argument ofShri Shanti Bhushan. In addition he has submitted
U.P. CO-OP. CANE UNION FEDERATION r. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, I.] 265

that there cannot be any oral agreement regarding the price of the sugarcane A
between a sugarcane grower or a sugarcane growers' co-operative society
and the occupier of the sugar factory as Forms B and C given in Appendix
to U.P. Sugarcane Supply and Purchase Order, 1954 clearly contemplate
an agreement in writing. He has further submitted that in the agreements
which had been executed between the sugar factory and the sugarcane B
growers co-operative society the State Advised Price had not been recorded
and the High Court had misread the same.

       I 0. Before adverting to the contentions raised at the Bar it is necessary
to keep in mind that sugarcane is the main raw material for manufacture
of sugar as it is the sugarcane juice which is ultimately converted into C
crystals which becomes a marketable commodity. Sugarcane, unlike coal
or ore of minerals is not available under the surface of the earth which may
be extracted and stored and may be used as and when required. It is a
product of agriculture which has to be grown in fields like any other
agricultural crop and requires inputs and hard labour for its production and D
it dries within a sh01i time of its harvesting and becomes virtually useless.
The sugar factories do not have an unlimited capacity to crush sugarcane
 but have a fixed capacity and, therefore, they require fresh sugarcane in
a limited quantity everyday during the entire crushing season. Sugar
factories in the State of U.P. generally commence crushing in the month E
of November and continue upto the end of April or sometimes middle of
May i.e. for about six months. In order to ensure proper and continuous
 supply of sugarcane to sugar factory throughout the crushing season, the
 harvesting of crop has to be done in limited quantity (according to crushing
capacity and requirement of the sugar factory) everyday and not in one F
stretch. In view of this peculiar requirement of sugar factory the position
of sugarcane growers becomes entirely different from those who grow
other crops like wheat or paddy which can be harvested in one go and can
 be sold later on at the convenience of the farmer at the oppo1tune time.
 In order to achieve the proper balance viz. to ensure a cor;tinuous supply
of adequate quantity of sugarcane to the sugar factory and proper G
 remuneration to the cane grower for the cane supplied by him, various
 enactments have been made which we will presently refer to.

     11. The Central Legislature initially enacted Sugarcane Act, 1934 and
the Statement of Objects and Reasons, amongst others, said that the H
    266                 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A initiative in the matter of fixing prices for cane must be left to Provincial
  Governments so as to suit local conditions. Section 3 of this Act empowered
  the Provincial Government, by notification in the official gazette, to declare
  any area as controlled area, to fix a minimum price or minimum prices for
  the purchase in any controlled area of sugarcane intended for use in any
B factory and to prohibit in any controlled area the purchase of sugarcane
  intended for use in any factory otherwise than from the grower of the
  sugarcane or from a person licensed to act as a purchasing agent. The
  purchase of sugarcane intended for use in factory in any controlled area
  at a price less than the minimum price notified was made an offence under
C Section 5. Section 7 of the Act conferred wide powers on the Provincial
  Government to make rules for the purpose of carrying into effect the
  objects of the Act. The U.P. Legislature thereafter enacted the U.P. Sugar
  Factories Control Act, 1938 (U.P. Act No. I of 1938) which repealed the
  Sugarcane Act, 1934 in its application in the province of U.P. Section 2
  (a) ofE.C. Act defines essential commodities and in view of Section 2(b)
D of the said Act ·'food crops" includes crops of sugarcane. The Central
  Government exercising powers under Section 3 of the E.C. Act made the
  Sugarcane Control Order, 1955. Clause 3(a) of !his Order laid down that
  the Central Government may, after consultation with such authorities,
  bodies or associations as it may deem fit, by notification in the Official
E Gazette, fix in respect of an area the price or the minimum price to be paid
  by producers of sugar for sugarcane purchased by him. This order was
  repealed by the Sugarcane (Control) Order, 1966 (for short' 1966 Order')
  and Clause 2(g) and (i) and sub-clauses (J),(2),(3) of Clause 3 thereof are
  being reproduced below:

F            2(g) "price" means the price or the minimum price fixed by the
             Central Government, from time to time, for sugarcane delivered

             ( i) to a sugar factory at the gate of the factory or at a sugarcane
                    purchasing center; or
G
             (ii)   to a khansari unit;

             (i)    ·'producer of sugar" means a person carrying on the business
                    of manufacturing sugar by vacuum pan process

H            3. Minimum price of sugarcane payable by producer of sugar-
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 267

          (I) The Central Government may, after consultation with the A
          authorities, bodies or associations 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 -

                                                                                         B
          (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 consumers at a fair price;
                                                                                         c
          (d)   the price at which sugar produced from sugarcane is sold by
                producers of sugar; and

                                                                                         D
          (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                   E
          Clause 3-A, allow a suitable rebate in the price so fixed,

          Explanation - (I) Different prices may be fixed for different
          areas or different qualities or varieties of sugarcane.

          (2) No person shall sell or agree to sell sugarcane to a producer F
          of sugar or his agent, and no such producer or agent shall purchase
          or agree to purchase sugarcane, at a price lower than that fixed
          under sub-clause (1 ).

          (3) Where a producer of sugar purchases any sugarcane from a G
          grower of sugarcane or from a sugarcane grower's co-operative
          society, the producer shall, unless there is an agreement in writing
          to the contrary between the parties, pay within fourteen days from
          the date of delivery of sugarcane to the seller or tender to him the
          price of the cane sold at the rate agreed to between the producer H
    268                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A           and the sugarcane grower or sugarcane growers' co-operative
            society or that fixed under sub-clause (I), as the case may be,
            either at the gate of factory or at the cane collection center or
            transfer or deposit the necessary amount in the
            Bank account of the seller or the co-operative society, as the case
            may be.
B
        12. The 1966 Order has been amended several times by the Central
  Government. Sub-clause 3 of Clause 3 was substituted on 18.5.1968,
  Clause 3-A rdating to rebate that can be deducted from the price paid for
  the sugarcane was inserted on 24.9.1976 and Clause 5-A was inserted on
C 25.9.1974. The definition of 'price' given in Clause 2(g) shows that it can
  either be the price or the minimum price fixed by the Central Government.
  Clause 3(3) deals with payment of the price of the cane sold at· the rate
  agreed to between the producer and the sugarcane grower or sugarcane
  growers' co-operative society or that fixed under sub-clause (I) as the case
D may be. Clause 3-A which deals with rebate that can be deducted from the
  price paid for sugarcane also refers to either the minimum price of
  sugarcane fixed under Clause 3 or the price agreed to between the producer
  and the sugarcane grower or the sugarcane growers' co-operative society.
  So far as the power of the Central Government is concerned, under Clause
E 3(1) it can fix only the "minimum price" of sugarcane to be paid by
  producers of sugar for the sugarcarie purchased by them. This is the lowest
  permissible rate. The effect of Clause 3(2) is that a producer of sugar can
  under no circumstances purchase sugarcane at a price lower than the
  minimum price fixed under Clause 3( I) and there is a similar proh;bition
F on the cane grower and he cannot sell or agree to sell sugarcane to a
  producer of a sugar below the said price. But the 1966 Order, in view of
  definition of "price" given in Clause 2(g) and also the language used in
  Clauses 3 and 3-A, clearly contemplates that there can be a price other than
  the ''minimum price" of sugarcane fixed under Clause 3( I), namely, the
  "price agreed to between the producer and the sugarcane grower or the
G sugarcane growers' co-operative society". Clause 5-A lays down that
  where a producer of sugar purchases sugarcane from a grower of sugarcane
  during each sugar year, he shall in addition to the minimum sugarcane price
  fixed under Clause 3 pay to the sugarcane grower an additional price, if
   found due in accordance with the provisions of the Second Schedule. This
H additional price is to be calculated in accordance with the formula given
    U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J] 269

    in Second Schedule and is dependent upon the value of the sugar produced A
    and the profits made and in effect it is a sharing of profits. Sub-clause (5)
    of Clause 5-A lays down that no additional price determined under sub-
    clause (2) shall become payable by a producer of sugar who pays a price
    higher than the "minimum sugarcane price" fixed under Clause 3 to the
    sugarcane grower, if the same is not less than the total of the price fixed B
    under Clause 3(1) and additional price determined under Clause 5-A (2).
    This provision again contemplates payment of price higher than the
    minimum price fixed under Clause 3 (I). A whole reading of the 1966.
    Order would, therefore, show that the Central Government shall fix the
    minimum price of sugarcane but there can be a price higher than the C
    minimum price which may be in the nature of agreed price between the
    producer of sugar and the sugarcane grower or the sugarcane growers'
    co-operative society. So the field for a price higher than the minimum
    price is clearly left open in the 1966 Order made by the Central
    Government.
                                                                                            D
          13. The U.P. legislature enacted the U.P .. Sugarcane (Regulation of
    Supply and Purchase) Act, 1953 (for short 'the 1953 Act') which was
    published in Gazette on 9.10.1953. Sections 2(a), 2(n), 15 and 16 of this
    Act read as under:-

              Section 2(a) "assigned area" means an area assigned to a factory E
              under Section 15;

              Section 2(n) "Reserved area" shall mean the area reserved for a
              factory under an Order for reservation of Sugarcane areas made
              under Rule 125-B of the Defence oflndia Rules, 1962, and when F
              no such order is in force, the area specified in an order made under
              Section 15.

              "15. Declaration of reserved area and assigned area - (I)
              Without prejudice to any order made under Clause (d) of sub- G
              section (2) of Section 16, the Cane Commissioner may, after
•
              consulting the Factory and Cane-growers Co-operative Society in
              the manner to be prescribed -

              (a)   reserve any area (hereinafter called the reserved area),
                    and                                                      H
    270              SUPREME COURT REPORTS (2004) SUPP. 2 S.C.R.

A         (b)   assign ·any area (hereinafter called an assigned area),

          for the purposes of the supply of cane to a factory in accordance
          with the provisions of Section 16 during one or more crushing
          seasons as may be specified and may likewise at any time cancel
          such order or alter the boundaries of an area so reserved or
B         assigned.

          (2) Where any area has been declared as reserved area for a
          factory, the occupier of such factory shall, if so directed by the
          Cane Commissioner, purchase all the cane grown in that area,
c         which is offered for sale to the factory.

          (3) Where any area has been declared as assigned area for a
          factory, the occupier of such factory shall purchase such quantity
          of cane grown in that area and offered for sale to the factory, as
          may be determined by the Cane Commissioner.
D
          (4) An appeal shall lie to the State Government against the order
          of the Cane Commissioner passed under sub-section (1).

          16. Regulation of purchase and supply of cane in the reserved
E         and assigned areas- (I) The State Government may, for
          maintaining supplies, by order, regulate -

          (a)   the distribution, sale or purchase of any cane in any reserved
                or assigned area; and

F         (b)   purchase of cane in any area other than a reserved or
                assigned area.

          (2) Without prejudice to the generality of the foregoing powers
          sue h order may provide for -

G         (a)   the quantity of cane to be supplied by each Cane-grower or
                Cane-growers' Cooperative Society in such area to the
                factory for which the area has so been reserved or assigned;

          (b)   the manner in which cane grown in the reserved area or the
H               assigned area, shall be purchased by the factory for which
U.P. CO.OP. CANE UNION FEDERATION, .. WESTU.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 271

                 the area has been so reserved or assigned and the circumstance A
                 in which the cane grown by a cane-grower shall not be
                 purchased except through a Cane-growers' Co-operative
                 Society;

          (c)    the form and the terms and conditions of the agreement to B
                 be executed by the occupier or manager of the factory for
                 which an area is reserved or assigned for the purchase of
                 cane offered for sale;

          (d)    the circumstances under which permission may be granted-
                                                                                         c
          (i)    for the purchase of cane grown in reserved or assigned area
                 by a Gur, Rab or Khandsari Manufacturing Units or any
                 person or factory other than the factory for which area has
                 been reserved or assigned; and
                                                                                         D
          (ii)   for the sale of cane grown in a reserved or assigned area to
                 a Gur, Rab or Khandsari Manufacturing Unit or any person
                 or factory other than the factory for which the area is
                 reserved or assigned;
                                                                                         E
          (e)    such incidental and consequential matters as may appear to
                 be necessary or desirable for this purposes."

       14. In exercise of the power conferred by Section 28 of the 1953 Act,
the State Government has made U.P. (Regulation of Supply and Purchase) F
Rules, 1954 (for short 'the Rules'). Rule 21 lays down that the occupier
of a factory shall by August 31, each year, apply to the Cane Commissioner
in Form I, Appendix III, for the reservation or assignment of an area for
supply of cane to the factory during the ensuing crushing season. There
is a specific column viz. Item No.6 in Fonn I Appendix III wherein details
of purchases, if any, made at more than the minimum cane price during G
the last crushing season have to be given. Here the occupier has to fill in
the quantity of sugarcane which was purchased at a price more than the
minimum price and also the amount of increase over and above the
minimum price. Thus payment of higher price and quantum of sugarcane
so purchased is a factor which is taken into consideration while reserving H
    272                SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A or assigning an area in favour of a sugar factory. Rule 38-A enjoins that
    at every purchasing centre at least one weighment clerk shall be appointed
    and deputed by the occupier of a factory who is required to weigh the
    sugarcane and calculate the cane price correctly. Similarly under sub-rule
    (4) of this Rule the cane growers co-operative society is required to appoint
B   one society clerk at every purchasing centre who has to carefully watch
    and check the wieghment of cane and also examine the parcha in which
    weight and price of cane are recorded. Rule 94(b) requires occupier of a
    factory to put up at each purchasing centre a notice in Devnagri script,
    showing the minimum price of cane fixed by Government and also the rates
C   at which cane is being purchased at the centre. Rule 96 (I )(i) (j) lays down
    that no occupier of a factory shall purchase cane without preparing or
    causing to be prepared at the purchasing centre a parcha in quadruplicate
    showing correctly the rate at which the sugarcane is purchased and the price
    that has to be paid for the sugarcane at that rate. Rule I 00 requires an
    occupier of a factory to maintain in respect of each sugarcane grower
D   (except in respect of cane purchased through a cane growers' co-operative
    society) a detailed account containing several items including the net
    weight of cane purchased and the rate per quintal paid for sugarcane.

          15. In exercise of power conferred by Section 16 of the Act, the State
E Government has made UP Sugarcane (Regulation of Supply and Purchase)
    Order, 1954 (hereinafter referred to as 1954 Order). Clause 3-A of this
    Order provides for purchase of cane in reserved area and Clause 4 provides
    for purchase of cane in an assigned area. Clause 3(2) lays down that a cane
    grower or a cane growers' co-operative society may within 14 days of the
F   issue of an order reserving an area for a factory, offer to supply cane grown
    in the reserved area to the occupier of the factory in Form A of the
    Appendix. Clause 3(3) and Clause 4 (I) lay down that the occupier of the
    factory for which an area has been reserved or assigned shall within
    fourteen days of the receipt of the order enter into an agreement in Form
    B or Form C of the Appendix, with the cane grower or the cane growers'
G   co-operative society, as the case may be, in respect of the cane offered.
    Clause 5 (l) lays down that cane grown in the reserved or assigned area
    shall not, except with the permission of the Cane Commissioner, be
    purchased by any person without the previous issue of requisition slips and
    identification cards to the growers by the occupier of the factory. Sub-
H   clauses (2) and (3) of Clause 5 mandate that the requisition slips and
U.P. CO-OP. CANE UNION FEDERATION,.. WEST U.P. SUGAR MILL ASS01'{. [G.P. MATHUR, J.] 273

identification cards to the members of cane growers' co-operative society A
shall not be issued except by such society and records of the _same have
to be maintained by the occupier of the factory and also by the cane
growers' co-operative society. Clause 5(4) lays down that purchase of cane
shall be spread over the entire crushing season in an equitable manner and
Clause 5(7) lays down that no person shall transfer or abet the transfer of B
requisition slips for the cane of a grower to another person.

      16. The proforma of the agreement regarding sale and purchase of
cane which is to be executed between a cane grower and the occupier of
a factory is given in Form B and that between cane growers' co-operative
society and the occupier of a factory is given in Form C and they mention C
the terms thereof. Para 1 of Form B contains the agreement of the sugarcane
grower to sell his sugarcane crop (giving details of area and approximate
yield) to the occupier of the factory at the minimum price notified by the
Government and on such dates as may be specified in requisition slips
issued by the said occupier. Para 2 provides that the cane shall be taken D
by the factory in installments equitably spread over the whole working
period of factory. Para 3 provides that in the event of willful failure to
supply at least 85 per cent of the agreed quantity of sugarcane, the cane
grower shall be liable to pay the factory compensation at the rate not
exceeding thirty-three naya paise per quintal on such deficit. Para 4 E
provides that in case the cane grower willfully fails to supply sugarcane
to the factory on three consecutive occasions according to the requisition
made by the factory, he shall cease to have a claim to sell cane to the
factory. Para 6 is important and it provides that in the event of a break down
at the factory or of other circumstances due to natural causes, calamities, F
accident beyond human control arising to show that the factory will not
be able to purchase the cane it has agreed to purchase, the cane grower,
after giving a week's notice to the occupier of the factory and with the
previous permission of the Cane Commissioner shall have the option of
making other arrangements for the disposal of the cane and in such case
no compensation shall be payable by either party to the other.                 G

      17. Form C is the proforma of the agreement which has to be executed
between the cane growers' co-operative society and the occupier of a
factory regarding sale and purchase of sugarcane. Para I of this proforma
contains the agreement of the society to sell sugarcane (giving details of H
   274                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A the area and the quality) to the factory at the minimum price notified by
  the Government and the supply has to be made in such quantities and on
  such dates as may be specified in the requisition slips issued by the
  occupier. It also contains a proviso that the price payable by the factory
  to the society shall not in any case be lower than that paid generally by
B the factory to other growers of the villages in which co-operative society
  operates. The remaining paragraphs of the agreement are almost similar to
  that of proforma in Form B regarding supply of cane being taken by the
  factory in installments equitable spread over the whole working period of
  the factory, compensation to be paid by society to the factory in the event
C of deficit and the right of the society to make other arrangements for the
  disposal of the cane with the previous permission of the Cane Commissioner
   in the event of break down or happening of other circumstances where
   under factory is unable to purchase the sugarcane.

         18. A sugar factory normally runs in shifts for the whole day during
D the crushing season and it needs a continuous supply of freshly harvested
  sugarcane according to its daily crushing capacity which should be spread
  over the entire crushing season of about ~ix months. The U.P. Sugarcane
  (Regulation of Supply and Purchase) Act, 1953, U.P. Sugarcane (Regulation
  of Supply and Purchase) Rules, 1954 and the U.P. Sugarcane Supply and
E Purchase Order, 1954, have been made to achieve that object. Any shortfall
  in supply of sugarcane to sugar factory will seriously affect its production
  resulting in huge losses. Therefore, the first and foremost requirement for
  the profitable ninning of the sugar factory is that it should get adequate
  quantity of sugarcane everyday throughout the crushing season and for
F ensuring this, a system of reserving or assigning an area in favour of sugar
   factory has been evolved under Section 15 of the Act. The reservation of
   an area ensures the supply of the entire sugarcane grown therein to the
   factory in whose favour it has been reserved. Similarly the assignment of
   an area ensures the supply of such quantity of sugarcane to the factory in
   whose favour it has been assigned as may be determined by the Cane
G Commissioner. Another advantage to the sugar factory is that sugarcane
   from its reserved or assigned area cannot be sold to any other factory in
   the vicinity even if it offers a higher price to a grower. This arrangement
   does not allow the market forces to operate and thereby completely avoids
   competition amongst the sugar factories which could lead to escalation in
H prices. It is common knowledge that every sugar factory is keen to have
 U.P. CO-OP. CANE UNION FEOERATION •·.WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 275

  the maximum area reserved or assigned for it so that it may get adequate A
  raw material. Sugarcane requires a particular type of soil and climatic
  condition and cannot be grown everywhere. The sugar factories are
  established in the sugar producing belt in close proximity with each other
. and very often there are competing claims for reservation or assignment
  of an area in their favour. It is for this reason that an appeal is provided B
  under Section 15(4) of the Act against an order made under Section 15(1)
  of the Act by the Cane Commissioner reserving or assigning an area in
  favour of sugar factory. Once an area is reserved in favour of a factory
  the cane grower in the said area or the cane growers' co-operative society
  operating therein gets tied to that factory and has to compulsorily enter into C
  an agreement in prescribed proforma (Form B or Form C) given in the
  Appendix to 1954 Order. In view of Clause 5 of the said Order cane grown
  in the reserved or assigned area cannot be purchased by anyone without
  the previous issue of requisition slips and identification cards to the
  growers by the occupier of the factory and in the case of members of the
  cane growers co-operative society by such society. Since the requisition D
  slips are non-transferable and they are issued by the sugar factory
  according to its requirement of sugarcane, it thereby completely controls
  the purchase of sugarcane from a reserved or assigned area. The terms of
  the agreement in Form B and Form C are also quite stringent as in the event
  of failure to supply at least eighty-five per cent of the agreed quantity of E
  sugarcane the cane grower or the cane growers' co-operatLve society has
  to pay compensation. Even in the event of a break down in the factory or
  its inability to purchase due to calamities or circumstances beyond human
  control, the cane grower or the cane growers' co-operative society is not
  at liberty to make any other arrangement for disposal of cane except after F
  giving a week's notice to the factory and obtaining prior permission of the
  Cane Commissioner. Here too no compensation is payable by the factory
  to the cane grower or the cane growers' co-operative society for the loss
  which may be suffered on this account.

      19. The provisions referred to above have been made for the benefit G
of the sugar factory so that it is assured of and gets a continuous supply
of freshly harvested sugarcane in quantity according to its crushing
capacity and for the whole duration of the crushing season. No doubt the
cane grower also gets some advantage in the sense that purchase of his
yield is assured but at the same time many limitations and restrictions are H
    276                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A imposed upon him. In view of the aforesaid statutory provisions, the
    position of a cane grower becomes entirely different from that of a farmer
    producing any other kind of agricultural crop where there are absolutely
    no restrictions upon him. He is at absolute liberty to harvest his crop at
    his convenience without being dictated by a third party, to sell it to anyone
B   whomsoever he likes and whenever he wants. It is in this scenario, which
    is not the creation of the cane grower but of the statutory provisions
    operating in the field, that we have to examine the question whether the
    State has any authority or power to fix the price of the sugarcane supplied
    to a producer of sugar (sugar factory).

c        20. The preamble of U.P. Sugarcane (Regulation of Supply and
    Purchase) Act, 1953 is-an Act to regulate the supply and purchase of
    sugarcane for use in sugar factories, gur, rab or khandsari sugar
    manufacturing units. The various provisions of the Act show in unmistakable
    terms that it regulates the supply and purchase of sugarcane required for
D   use in sugar factories. 'Regulate' means to control or to adjust by rule or
    to subject to governing principles. It is a word of broad impact having wide
    meaning comprehending all facets not only specifically enumerated in the
    Act, but also embraces within its fold the powers incidental to the
    regulation envisaged in good faith and its meaning has to be ascertained
E   in the context in which it has been used and the purpose of the statute.

          21. In State of Tami/nadu v. Mis. Hindu Stone & Ors., [1981] 2 SCC
    205 it was held that regulation must receive so wide an amp! itude so as
    to impute prohibition within its fold. It will be useful to reproduce the
F   relevant part of para IO of the Report wherein this principle was succinctly
    stated by Chinappa Reddy, J. in following words:-

             " ... We do not think that 'regulation' has that rigidity of meaning
             as never to take in 'prohibition'. Much depends on the context in
             which the expression is used in the statute and the object sought
G            to be achieved by the contemplated regulation. It was observed
             by Mathew, J. in G.K. Krishnan v. State of Tamil Nadu, [1975]
             I SCC 375 : "The word 'regulation' has no fixed connotation. Its
             meaning differs according to the nature of the thing to which it
             is applied''. In modern statutes concerned as they are with
H            economic and social activities, 'regulation' must, of necessity,
U.P. CO·OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR,!.] 277

         receive so wide an interpretation that in certain situations, it must A
         exclude competition to the public sector from the private sector.
         More so in a welfare State. It was pointed out by the Privy Council
         in Commonwealth of Australia v. Bank of New South Wales,
         (1949] 2 All ER 755 (PC)-and we agree with what was sated
         therein-that the problem whether an enactment was regulatory B
         or something more or whether a restriction was direct or only
         remote or only incidental involved, not so much legal as political,
         social or economic consideration and that it could not be laid
         down that in no circumstances could the exclusion of competition
         so as to create a monopoly, either in a State or Commonwealth
         agency, be justified. Each case, it was said, must be judged on its C
         own facts and in its own setting of time and circumstances and
         it might be that in regard to some economic activities and at some
         stage of social development, prohibition with a view to State
         monopoly was the only practical and reasonable manner of
         regulation. The statute with which we are concerned, the Mines D
         and Minerals (Development and Regulation) Act, is aimed, as we
         have already said more than once, at the conservation and the
         prudent and discriminating exploitation of minerals. Surely, in the
         case of a scarce mineral, to permit exploitation by the State or its
         agency and to prohibit exploitation by private agencies is the most E
         effective method of conservation and prudent exploitation. If you
         want to conserve for the future, you must prohibit in the present.
         We have no doubt that the prohibiting of leases in certain cases
         is part of the regulation contemplated by Section 15 of the Act."

      Again in K. Ramanathan V, State of Tamilnadu & Anr., (1985] 2 sec
                                                                                        F
116 it was held that the word 'regulation' cannot have any rigid or
inflexible meaning so as to exclude prohibition. It is a word of broad
import, having a broad meaning and is very comprehensive in scope. It was
further held that the power to regulate carries with it full power over the
thing subject to regulation and in absence of restrictive words, the power G
must be regarded as plenary over the entire subject. It implies the power
to rule, direct and control, and involves the adoption of a rule or guiding
principle to be followed or the making of a rule with respect to the subject
to be regulated. It has different shades of meaning and must take its colour
from the context in which it is used having regard to the purpose and object H
    278                 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A of the legislation.

          22. In VSR & Oil Mills v. State of A.P., AIR (1964) SC 1781
    agreements for a period of ten years had been executed for supply of
    electricity and the same did not contain any provision authorising the
B   Government to increase the rates during their operation. However, the State
    Government issued orders enhancing the agreed rates exercising power
    under Section 3( 1) of Madras Essential Articies Control & Requisitioning
    (Temporary Powers) Act, 1949 which reads as under:

             " ......... The State Government so far as it appears to them to be
c            necessary or expedient for maintaining, increasing or securing
             supplies of essential articles or for arranging for their equitable
             distribution and availability at fair prices may, by notified order,
             provide for regulating or prohibiting the supply, distribution and
             transport of essential articles and trade and commerce therein."
D
          The enhancement in rates was challenged on the ground that any
    increase in agreed tariff was out of the purview of Section 3(1 ). Chief
    Justice Gajendragadkar, speaking for the Constitution Bench, held as
    under:
E
             "The word regulate is wide enough to confer power on the State
             to regulate either by increasing the rate or decreasing the rate, the
             test being what is it that is necessary or expedient to be done to
             maintain, increase, or secure supply of the essential articles in
             question and to arrange for its equitable distribution and its
F            availability at fair prices. The concept of fair prices to which
             Section 3 (I) expressly refers does not mean that the price once
             fixed must either remain stationary, or must be reduced in order
             to attract the power to regulate. The power to regulate can be
             exercised for ensuring the payment of a fair price, and the fixation
G            of a fair price would inevitably depend upon a consideration of
             all relevant and economic factors which contribute to the
             determination of such a fair price. If the fair price indicated on
             a dispassionate consideration of all relevant factors turns out to
             be higher than the price fixed and prevailing, then the power to
H            regulate the price must necessarily include the power to increase
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 279

         so as to make it fair. Hence the challenge to the validity of orders A
         increasing the agreed tariff rate on the ground that they are outside
         the purview of Section 3(1) cannot be sustained."

      In Jiyajeerao Cotton Mills Ltd. & Anr. v. Madhya Pradesh Electricity
Board & Anr., (1989] Suppl 2 sec 52 the validity of the orders providing B
for higher charges/tariff for electricity consumed beyond legally fixed limit
was upheld in view of Section 22(b) of the Electricity Act which permits
the State Government to issue an appropriate order for regulating the
supply, distribution and consumption of electricity. It was held that the
Court while interpreting the expression "regulate" must necessarily keep C
in view the object to be achieved and the mischief sought to be remedied.
The necessity for issuing the orders arose out of the scarcity of electricity
available to the Board for supplying to its customers and, therefore, in this
background the demand for higher charges/tariff was held to be a part of
a regulatory measure. In Quarry Owners' Association v. State of Bihar,
(20001 s sec 655 the question which required consideration was whether D
the State Government had the power to fix the rate of royalties in Mines
and Minerals (Regulation and Development) Act, 1957. The Court after
taking note of the fact that the words "regulation of mines and mineral
development" are incorporated both in the Preamble and the Statement of
Objects and Reasons of the Act held that the word "regulation" may have E
different meaning in different context but considering it in relation to the
economic and social activities including the development and excavation
of mine, the fixation of the rate of royalties would also be included within
its meaning. In Deepak Theatre, Dhuri v. State of Punjab & Ors., (1992]
Supp. I sec 684 while interpreting the Cinemas Regulations Act, 1952 F
and having regard to the preamble thereto - an Act to make provision for
regulating exhibition of cinematographs - it was held that classification of
seats and fixation of rates of admission according to paying capacity of a
cinegoer is also an integral power of regulation and, therefore, fixation of
rates of admission became a legitimate ancillary or incidental power in
furtherance of the regulation under the Act.                                  G

     23. The 1953 Act, the Rules and 1954 Order substantially deal with
sale and purchase of sugarcane. Section 16 (I) provides that the State
Government may, for maintaining supplies, by order, regulate sale or
purchase of cane in any reserved or assigned area .or purchase of cane in H
    280                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A area other than a reserved or assigned area. Section 16(2)(b) of the Act lays
    down that the order may provide for the manner in which cane grown in
    a reserved or assigned area shall be purchased by the factory and the
    circumstances in which cane grown by canegrowers shall not be purchased
    eiccept through a canegrowers' cooperative society. Section 17 enjoins
B   speedy payment of the price of cane purchased by occupier of a factory,
    payment of interest where default occurs for a period exceeding 15 days
    from the date of delivery and recovery of amount by the Collector as arrears
    of land revenue on a certificate issued by the Cane Commissioner. Rule
    38"A requires weighment clerk to calculate the cane price correctly after
    weighment of cane and the clerk appointed by the society to examine that
C   the weight and price are correctly recorded in the parchas. Rule 96
    ml)ndates that cane shall not be purchased at the purchasing centre without
    preparing a parcha in quadruplicate mentioning amongst others the rate at
    which the cane is purchased and the price that has to be paid for the same
    and Rule I 00 casts a duty upon the occupier of the factory to maintain
D   separately for each canegrower a complete account c.f several items
    including the rate per quintal paid for cane.

          24. Sugarcane supplied to sugar factory are "goods" within the
    meaning of Section 2(7) of Sale of Goods Act. Sub-section (I) of Section
E   4 of Sale of Goods Act provides that a contract of sale of goods is a contract
    whereby the seller transfers or agrees to transfer the property in goods to
    the buyer fot a price. Sub-section (3) of the same Section provides that
    where under a contract of sale the property in the goods is transferred from
    the seller to the buyer, the contract is called a sale, but where the transfer
F   of property in the goods is to take place at a future time or subject to some
    conditions thereafter to be specified, the contract is called an agreement
    to sell. Section 5 provides that a contract of sale is made by an offer to
    buy or sell goods for a price Md the acceptance of such offer. These
    provisions show that price is an essential element of sale of goods.

G      25. In Popat/al Shah v. State of Madras, (1953] SCR 677 it was held
  by a Constitution Bench that the expression "sale of goods" is a composite
  expression consisting of various ingredients or elements. There are the
  elements of a bargain or contract of sale, the payment or promise of
  payment of price, the delivery of goods and the actual passing of title and
H each one of them is essential to a transaction of sale though the sale is not
U.P. CO·OP. CANE UNION FEDERATION,.. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, l.] 281

completed or concluded unless the purchaser becomes the owner of A
property. In State of Madras v. Gannon Dunkerley, (1958] SCR 379 (at
page 397) it was observed that according to the law both of England and
of India, in order to constitute a sale it is necessary that there should be
an agreement between the parties for the purpose of transferring title to the
goods which, of course, presupposes capacity to· contract, that it must be B
supported by money consideration and that as a result of the transaction
property must actually pass in the goods. Unless all these elements are
present, there can be no sale. The law is, therefore, well settled that in a
matter relating to sale of movable property or goods, price is an essential
element of the transaction.
                                                                                         c
        26. The Preamble of the 1953 Act says "An Act to regulate the supply
 and purchase of sugarcane required for use in sugar factories ..." The
 provisions of the Act referred to above also show that the legislature has
 made very elaborate provisions regarding supply of sugarcane by
 canegrowers, its purchase by the sugar factories and payment of price D
thereof.. In fact, very detailed and exhaustive provisions have been made
 in the Rules and the 1954 Order to ensure that at the time of delivery of
sugarcane by the canegrowers, its weight and price is correctly recorded
and the price is paid to them within 14 days, failing which sugar factory
 is liable to pay interest. In such circumstances, the irresistible conclusion E
 which can be drawn is that the regulatory power possessed by the State
 Government shall also include the power to fix the price of the sugarcane.
If it is held that the State under its power of regulation cannot fix the price,
then the statutory provision contained in the 1953 Act, the Rules and 1954
Order will become completely one sided, operating entirely for the benefit F
of sugar factories giving them many advantages with no corresponding
obligations and leaving the canegrower in a lurch with host of restrictions
upon him. This can never be the intention of the Legislature. It will not
be fair to read the Act and the Rules in such a restrictive manner, whereby
the provisions made for the benefit of the canegrowers become wholly
illusory.                                                                        G

     27. It has been urged by learned counsel for respondents that the
expression "at the minimum price notified by Government" ·used in the
proforma of the agreement which is to be executed between a canegrower
and the occupier of the factory as given in Form B and that which is to H
    282                SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A be executed between a canegrowers' cooperative society and the occupier
  of the factory as given in Form C in the appendix to 1954 Order indicates
  that it is only the minimum price fixed by the Central Government which
  can be the consideration or price for the sale of sugarcane to the sugar
  factory. Strong reliance in support of this submission has been placed upon
B certain observations made by this Court in Ch. Tika Ramji & Ors. v. State
  of Uttar Pradesh & Ors., [ 1956] SCR 393. The proforma of agreement viz.
  Forms B and C are contained in the appendix to U.P. Sugarcane Supply
  and Purchase Order, 1954. This Order has been made by U.P. Government
  in exercise of the power conferred by Section 16 of the 1953 Act, which
C provides that the State Government may for maintaining supplies by Order
  regulate the distribution, sale or purchase of cane in any reserved or
  assigned area, etc. The Order having been made by the State Government
  in exercise of a power conferred by an Act made by U.P. legislature, the
  only logical inference which can be drawn is that the word "Government"
   refers to State Government. There is no indication in the proforma of the
D agreement or in the 1954 Order that the word "'Government" would refer
   to Central Government. If the State Government is prescribing a proforma
   of an agreement which is to be executed by a canegrower or a canegrowers'
   cooperative society and the occupier of the factory regarding sale and
   purchase of sugarcane wherein the word "Government" is used, it can only
E mean the State Government and not the Central Government unless there
    is clear indication to the contrary.

          28. The observations made in Tika Ramji (supra), strong reliance on
    which is placed by learned counsel for the respondents, have to be
F   understood in the context in which they were made. It may be noted that
    the writ petitions in the said case were filed in this Court in the year 1954
    and the judgment was delivered on 24.4.1956. At the relevant time, it was
    the Sugarcane (Control) Order, 1955 which was in operation. Clause 3 of
    this Order empowered the Central Government to fix the price or the
    minimum price to be paid by a producer of sugar for sugarcane purchased
G   by him. The 1955 Order has been repealed by Sugarcane (Control) Order,
     1966 and Clause 3 of this Order provides that the Central Government may
    fix thf! minimum price of sugarcane to be paid by producers of sugar. There
    is a difference between "the price'' which is a fixed amount and "the
    minimum price'' which only indicates the lowest permissible rate. The 1966
H   Order which itself was made by the Cel'!tral Gov'!rnment more than a
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 283

decade after the judgment was rendered in Tika Ramji was amended in A
 1978 and Clauses 3(3) and 3-A thereof contemplate an "agreed price"
which in view of the mandate of Clause 3(2) is bound to be higher than
the "minimum price" fixed under Clause 3(1 ). Naturally it is this "agreed
price" which is to be mentioned in the agreements for sale and purchase
of sugarcane in Forms B and C otherwise the very purpose of entering into B
agreements would be defeated. The State Government had not fixed any
price for the sugarcane under its regulatory power by the time Tika Ramji
(supra) was decided by this Court in April, 1956 and only the Central
Government had taken a step for fixing the price. It was in these
circumstances that it was observ~d that the "price fixed by the Government" C
would mean "the Central Government". The observations relied upon by
the learned counsel for the respondents were made while considering the
question whether there was any repugnancy between the provisions of the
Sugarcane Control Order, 1955 and the 1953 Act, the Rules and 1954
Order and they should be understood in that context. The relevant portion D
of the judgment on page 434 is being reproduced below :

         "The price of cane fixed by Government here only meant the price
         fixed by the appropriate Government which would be the Central
         Government, under clause 3 of the Sugarcane Control Order, E
          1955, because in fact the UP. State Government never fixed the
         price of sugarcane to be purchased by the factories. Even the
         provisions in behalf of the agreements contained in clauses 3 and
         4 of the U.P. Sugarcane Regulation of Supply and Purchase Order,
         1954, provided that the price was to be the minimum price to be
         notified by the Government subject to such deductions, if any, as F
         may be notified by the Government from time to time meaning
         thereby the Central Government, the State Government not having
         made any provision in that behalf at any time whatever. The
         provisions thus made by the Sugarcane Control Order, 1955, did
         not find their place either in the impugned Act or the Rules made G
                                                                                         ;
         thereunder or the U.P. Sugarcane Regulation of Supply and
         Purchase Order, 1954; and the provision contained in Section I 7
         of the impugned Act in regard to the payment of sugarcane price
         and recovery thereof as if it was an arrear ofland revenue did not
         find its place in the Sugarcane Control Order, 1955."              H
    284                SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A      Having regard to the factual situation then existing that U.P.
  Government had not fixed the price of the sugarcane, it was held that the
  price of the cane fixed by the Government could only mean "Central
  Government". It has not been laid down as a principle oflaw that the words
  "minimum price notified by Government" must necessarily mean the
B minimum price fixed by the Central Government or that under no
  circumstances it can mean the price fixed by the State Government.

        29. Learned counsel for the respondent has also submitted that in
  order to constitute a valid agreement, the consent of the parties thereto
C should be a voluntary consent and not a consent obtained under any kind
  of compulsion or duress. It has been submitted that after the State
  Government makes an announcement of a State Advised Price, the
  occupiers of the sugar factories are compelled to enter into agreements with
  the canegrowers and canegrowers' cooperative societies in Forms B and
  C, whei:ein the State Advised Price is mentioned. The same price is also
D mentioned in the parchas issued to the canegrowers. It has been urged that
  the sugar factories cannot be compelled to pay such State Advised Price
  even though it may have been mentioned in the Forms or in the parchas.
  It is not possible to ac,ept the contention raised. As discussed earlier, the
  State Government in ~.,ercise of its regulatory power can fix the price of
E the sugarcane. The mere fact that this price is not to the liking of the sugar
  factory does not mean that it cannot form the basis for supply of sugarcane
  by the canegrowers or canegrowers' cooperative society to the sugar
  factory. It is well settled that even a compulsory sale does not lose the
  character of a sale. This question has been examined in considerable detail
F by a Constitution Bench in Indian Steel & Wire Products Ltd. v. State of
  Madras, [I 968] I SCR 479. The appellant in this case supplied certain steel
  products to various persons at the instance of the Steel Controller, who
  exercised powers under the Iron and Steel (Control of Production &
   Distribution) Order, 1941, which was issued under the Defence of India
  Act, 1939. The appellant challenged the assessment of sales tax made on
0 its turnover under Madras General Sales Tax Act. The contention of the
   appellant was that it was the Controller who determined the persons to
   whom the goods were to be supplied, the price at which they were to be
   supplied, the manner in which they were to be transported and the mode
   in which payment of price was to be made. In short it was said that every
H facet of the transaction was prescribed by the Controller and, therefore,
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATIIUR, J.) 285

 they could not be considered as sales. Sub-clause (I) of Clause 11-8 of A
the Control Order provided that the Controller may, by notification in the
 Gazette, fix the maximum price at which any iron or steel may be sold and
 Sub-clause (3) of the same clause provided that no producer or stockholder
 shall sell or offer for sale (and no person shall acquire) any iron or steel
 at a price exceeding the maximum price fixed under Sub-clause (I) or (2). B
.After review of number of authorities, the Court held as under :

          "For the reasons already stated, we are unable to accept the
          contention that the transactions with which we are concerned in
          these cases are not sales. Out of the four elements mentioned
          earlier, .three were admittedly established, namely, the parties C
          were competent to contract, the property in the goods was
          transferred from the seller to the buyer, and price in money was
          paid. The only controversy was whether there was mutual assent
          Our finding is that there was mutual assent in several respects.
          Hence, we agree with the High Court that the transactions before D
          us are sales."

       30. In Andhra Sugar Mills Ltd. v. State of Andhra Pradesh, [1968]
 1 SCR 705, the question of compulsion by law to enter into an agreement
 was considered by a Constitution Bench. Under the Andhra Pradesh
 (Regulation of Supply and Purchase) Act, 1961, the occupier of a sugar E
 factory had to buy sugarcane from canegrowers in conformity with the
 directions from the Cane Commissioner. Under Section 21 of the aforesaid
 Act, the State Government had power by notification to tax purchasers of
 sugarcane for use, consumption or sale in a sugar factory and the tax was
 leviable subject to a maximum rate per metric ton. The petitioner sugar F
·factories filed writ petitions under Article 32 of the Constitution challenging
 the validity of Section 21 mainly on the ground that as the petitioners were
 compelled by law to buy cane from canegrowers, their purchases were not
 made under agreements and were not taxable under Entry 54 List II having
 regard to Gannon Dunkerley's case. The contention was repelled after a G
 thorough analysis of the legal position and the following observations on
 page 711 of the Report show that the challenge raised by the respondents
 here has no substance :

              "Under Section 4(1) of the Indian Sale of Goods Act, 1930,
          a contract of sale of goods is a contract whereby the seller H
    286             SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A         transfers or agrees to transfer the property in goods to the buyer
          for a price . By Section 3 of this Act, the provisions of the Indian
          Contract Act, 1872 apply to contracts of sale of goods save in so
          far as they are inconsistent with the express provisions of the later
          Act. Section 2 of the Indian Contract Act provides that when one
B         person signifies to another his willingness to do or to abstain from
          doing anything with a view to obtaining the assent of the other
          to such act or abstinence, he is said to make a proposal. When the
          person to whom the proposal is made signifies his assent thereto,
          the proposal is said to be accepted. A proposal when accepted
          becomes a promise. Every promise and every set of promises
c         forming the consideration for each other is an agreement. There
           is mutual assent to the proposal when the proposal is accepted and
          in the result an agreement is formed. Under Section I 0, all
          agreements are contracts if they are made by the free consent of
          parties competent to contract for a lawful consideration and with
D         a lawful object and are not by the Act expressly declared to be
          void. Section 13 defines consent. Two or more persons are said
          to consent when they agree upon the same thing in the same sense.
          Section 14 defines free consent. Consent is said to be free when
           it is not caused by coercion, undue influence, fraud,
E          misrepresentation or mistake as defined in Sections 15 to 22. Now,
           under Act No.45 of 1961 and the Rules framed under it, the cane
           grower in the factory zone is free to make or not to make an offer
           of sale of cane to the occupier of the factory. But if he makes an
           offer, the occupier of the factory is bound to accept it. The
           resulting agreement is recorded in writing and is signed by the
F          parties. The consent of the occupier of the factory to the agreement
           is not caused by coercion, undue influence, fraud, misrepresentation
           or mistake. His consent is free as defined in Section 14 of the
           Indian Contract Act though he is obliged by law to enter into the
           agreement. The compulsion of law is not coercion as defined in
G          Section 15 of the A.ct. In spite of the compulsion the agreement
           is neither void nor voidable. In the eye of the law, the agreement
           is freely made. The parties are competent to contract. The
           agreement is made for a lawful consideration and with a lawful
           object and is not void under any provisions oflaw. The agreements
H          are enforceable by law and are contracts of sale of sugarcane as
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 287

          defined in Section 4 of the Indian Sale of Goods Act. The A
          purchases of sugarcane under the agreement can be taxed by the
          State legislature under Entry 54 List II."

     Again at page 712, the Court made the following observation :

                                                                                         B
               " ... It is now realised that in the public interest, persons
          exercising certain callings or having monopoly or near monopoly
          powers should sometimes be charged with the duty to serve the
          public and, if necessary, to enter into contracts. Thus, Section 66
          of the Indian Railways Act, 1890 compels the railway
          administration to supply the public with tickets for travelling on C
          the railway upon payment of the usual fare. Section 22 of the
          Indian Electricity Act, 1910 compels a licensee to supply electrical
          energy to every person in the area of supply on the usual terms
          and conditions. Cheshire and Fifoot in their Law of Contract, 6th
          Edn. p. 23 observe that for reasons of social security the State may D
          compel persons to make contracts. One of the objects of Act
          No.45 of 1961 is to regulate the purchase of sugarcane by the
          factory owners from the canegrowers. The canegrowers scattered
          in the villages had no real bargaining power. The factory owners
          or their combines enjoyed a near monopoly of buying and could E
          dictate their own terms. In this unequal contest between the
          canegrowers and the factory owners, the law stepped in and
          compelled the factory to enter into contracts of purchase of cane
          offered by the canegrowers on prescribed terms and conditions."

     31. A similar question was examined by a Bench of Seven Judges in
                                                                                         F
Safar Jung Sugar Mills Ltd. v. State of Mysore & Ors., [1971] 1 SCC 23.
The contention was that there was no mutual assent by and between the
sugar mills and the growers of the sugarcane and, therefore, there was no
purchase or sale of sugarcane and consequently no tax under Mysore Sales
Tax Act could be levied. It was held that Statutory Orders regulating the G
supply and distribution of goods by and between the parties under Control
Orders in a State do not absolutely impinge on the freedom to enter into
contract. Legislative measures or statutory provisions fixing the price,
delivery, supply, restricting areas for transactions are all within the realm
of planning economic needs, ensuring production and distribution of H
    288                SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A essential commodities and basic necessities of community. The individual
    freedom is to be reconciled with adequate performance by the Government
    of its functions in a highly organized society. In para 44 of the Reports
    it was held as under :

                   "The parties choose the term of delivery. They have choice
B
             of obtaining a supply exceeding 95% of the yield. They can
             stipulate for a price higher than the minimum. They can have
             terms for payment in advance as well as in cash. A grower may
             not cultivate and may not have any yield. A factory may be closed
             or wound up, and may not buy any sugarcane. A factory can reject
c            goods on inspection. A combination of all these features indicate
             that the parties entered into agreements with mutual assent and
             with volition for transfer of goods in consideration of price. The
             transactions amount to sales within the meaning of the Mysore
             Sales Tax Act."
D
          32. In Sukhnandan Saran Dinesh Kumar v. Union of India & Ors.,
    [I 982] 2 SCC 150, after considering the provisions of 1966 Order and 1953
    Act made by U.P. Legislature the Court clearly ruled that in order to protect
    the sugarcane growers who are not in a position to negotiate, the
E   Government can prescribe terms in a contract which they have to enter into
    with the occupiers of sugar factories. After elaborate discussion of the
    relevant provisions, the Court expressed its view in following words in para
    22 of the Reports:

             " ........ The proposition is now beyond the pale of controversy that
F            the State can impose a restriction in the interest of general public
             on the right of a party to contract where in the opinion of the
             Government the contracting parties are unable to negotiate on the
             footing of equality. Constitutional validity of statutes prescribing
             minimum wages has been founded on this proposition. The
G            principle can be effectively extended to the powerful sugar
             industry and the cane growers because the cane growers admittedly
             are at a comparative disadvantage to the producers of sugar and
             khandsari sugar who were described in the course of arguments
             as sugar barons. It does not require an elaborate discussion to
H            reach an affirmative con cl us ion that sugarcane growers who are
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 289

          farmers cannot negotiate on the footing of the equality with the A
          producers pf sugar and khandsari sugar. The State action for the
          protection of the weaker sections is not only justified but absolutely
          necessary unless the restriction imposed is excessive ........ "

      33. As discussed earlier, the reservation or assignment ofarea is made B
for the benefit of a sugar factory. The agreements executed by the
canegrowers or canegrowers' cooperative society in favour of occupier of
a factory are also for the benefit of the sugar factory as by such agreements
it gets an assurance of a continuous supply of freshly harvested sugarcane
on the days indicated in the requisition slips issued by it so that there may
not be any problem in getting optimum quantity of raw material throughout C
the crushing season. In absence of the agreements the sugar factory will
also be a loser as it may face great problem in getting the supply of
sugarcane according to its requirement. The occupiers of the factory are
themselves keen for execution of the agreements but their only objection
is to the mention of State Advised Price. The agreement is one composite D
transaction and it is not open to them to contend that the terms thereof
which are to their advantage should be enforced but the term relating to
price notified by the State Government should not be enforced as their
consent in that regard was not a voluntary act. In our opinion, having regard
to the advantages derived by the sugar factories, they are fully bound by E
the agreement wherein the State Advised Price may be mentioned and it
is not open to them to assail the clause relating to price of the sugarcane
on the ground that their consent was not voluntary or was obtained under
some kind of duress.

       34. Learned senior counsel for the respondents has strenuously urged F
that the Central Government having made the 1966 Order which contains
a specific provision for fixation of price of sugarcane, under Clause 3(1)
thereof, the regulatory power under the 1953 Act cannot embrace within
its fold the same power of fixation of price as this will be clearly repugnant
to a law made by the Parliament and would be void in view of Article G
254(1) of the Constitution. In Ch. Tika Ramji (supra) it has been held that
the E.C. Act under which the Central Government made the 1966 Order
and the 1953 Act made by U.P. Legislature have been enacted with
reference to Entry 33 of List III of the Seventh Schedule. The constitutional
validity of the 1953 Act was upheld by the Constitution Bench in the said H
    290                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A decision. On page 437 of the Reports the Court quoted with approval the
    following passage from the judgment of Sulaiman J. in Shyamakant Lal
    v. Rambhajan Singh, (1939) FCR 188 (at 212) for the principle of
    construction in regard to repugnancy :

            "When the question is whether a Provincial legislation is repugnant
B
            to an existing Indian law, the onus of showing its repugnancy and
            the extent to which it is repugnant should be on the party attacking
            its validity. There ought to be a presumption in favour of its
            validity, and every effort should be made to reconcile them and
            construe both so as to avoid their being repugnant to each other;
c           and care should be taken to see whether the two do not really
            operate in different fields without encroachment. Further,
            repugnancy must exist in fact, and not depend merely on a
            possibility....... "

D And then went to hold :

             "In the instant case, there is no question of any inconsistency in
             the actual terms of the Acts enacted by Parliament and the
             impugned Act. The only questions that arise are whether Parliament
             and the State Legislature sought to exercise their powers over the
E
             same subject-matter or whether the laws enacted by Parliament
             were intended to be a complete exhaustive code or, in other words,
             expressly or impliedly evinced an intention to cover the whole
             field."

F          35 . .In M Karunanidhi v. Union of India, AIR (1979) SC 898, the
    principles to be applied for determining repugnancy between a law made
    by Parliament and law made by State legislature were considered by a
    Constitution Bench. In pursuance of an FIR lodged against Shri M.
    Karunanidhi the CBI after investigation had submitted chargesheet against
G   him under Section 161, 468 and 471 !PC and Section 5(2) read with Section
    5( I)( d) of the Prevention of Corruption Act. The Madras Legislature had
    passed an Act known as Tamil Nadu Public Men (Criminal Misconduct)
    Act, 1973 which had received the assent of the President. It was contended
    that by virtue of Article 254(2) of the Constitution, the provisions oflndian
H   Penal Code, Prevention of Corruption Act and Criminal Law Amendment
U.P. CO.OP. CANE UNION FEDERATION.-. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.) 291

Act stood repealed. After review of all the earlier authorities Court laid A
down the following tests :

          "I. That in order to decide the question of repugnancy it must
          be shown that the two enactments contain inconsistent and
          irreconcilable provisions, so that they cannot stand together or B
          operate in the same field.

          2. That there can be no repeal by implication unless the
          inconsistency appears on the face of the two statutes.

          3. That where the two statutes occupy a particular field, but C
          there is room or possibility of both the statutes operating in the
          same field without coming into collision with each other, no
          repugnancy results.

          4. That where there is no inconsistency but a statute occupying D
          the same field seeks to create distinct and separate offences, no
          question of repugnancy arises and both the statutes continue to
          operate in the same field."

     The same question was examined in considerable detail in Ml~
Hoechst Pharmaceuticals Ltd. v. State ofBihar, AIR (1983) SC 1019 and E
it was held that one of the occasion where inconsistency or repugnancy
arose was when on the same subject matter one would be repugnant to the
other and, therefore, in order to raise a question of repugnancy, two
conditions must be fulfilled. The State law and the Union law must operate
on the same field and one must be repugnant or inconsistent with the other F
and these are cumulative conditions. In National Engineering Industries
Ltd. v. Sri Kishan Bhageria & Ors., AIR (1988) SC 329, Sabyasachi
Mukharji, J. opined that the best test of repugnancy is that if one prevails,
the other cannot prevail.

      36. In S. Satyapal Reddy & Ors. v. Govt. of A.P. & Ors., [1994] 4 G
sec 391, the question was examined in the context of prescription of a
higher qualification by the State Government. The service rule made by
the Central Government prescribed a diploma in Mechanical Engineering
as the minimum qualification for appointment on the post of Assistant
Motor Vehicles Inspector while the rule made by the State Government H
    292                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A required a degree in Mechanical Engineering or certain other alternative
    qualifications. The challenge made by the diploma holders was negatived
    and it was held that prescribing a higher qualification did not give rise to
    arty inconsistency or repugnancy as both the rules could operate
    harmoriiously and effect could be given to both of them. Similarly, in Dr.
B   Preeti Srivastava v. State of MP. & Ors, [1999] 7 SCC 120, it was held
    that laying down higher eligibility qualification by the State Government
    for admission to Post Graduate Medical Courses did not lead to any kind
    of repugnancy.

          37. Under Sub-section (1) of Clause 3 of the 1966 Order, the Central
C Government can only fix a minimum price of sugarcane. This clause
    should be read along with Sub-clause (2) which creates an embargo or
    prohibition that no person shall sell or agree to sell sugarcane to a producer
    of sugar and no such producer shall purchase or agree to purchase
    sugarcane at a price lower than that fixed under Sub-clause (1 ). The
D   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 ~xed by the State Government is higher than that fixed by the
    Central Government, there will be no occasion for any inconsistency or
    repugnancy as it is possible for both the orders to operate simultaneoµsly
E   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 1966 Order. Therefore, any price fixed by the
    State Government which is higher than that fixed by the Central Government
    cannot lead to any kind of repugnancy.

F       38. The decisions of this Court touching the controversy in hand may
  now be examined. In Maharashtra Rajya Sahkari Sakkar Karkhana Sangh
  Ltd. & Ors. v. State ofMaharashtra & Ors., [1995] Supp. 3 SCC 475 (paras
  11, 12, 21), R.M. Sahai, J. speaking for a Three Judge Bench held that the
  entire process of price fixation can be divided into three stages. The first
G is the fixation of what is known as the minimum ex-factory price by the
  Certtral Government under 1966 Order for all the sugar factories in the
  country linking it with basic recovery of 8.5 per cent with a proportionate
  increase for every 0.1 per cent extra recovery. The second is the State
  Advised Price and every State has its own method to determine it. The
H power is aswmed under the Acts of the State Legislature or Orders issued
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR. J.] 293

by the Government and in State ofU.P. it is done by Orders issued under A
the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953. The
third is the price paid at the end of the season. The Bhargava Commission
had recommended the payment of additional price at the end of the season
on 50-50 profit sharing basis between growers and factories to be worked
out in accordance with Second Schedule to the 1966 Order. In paragraph B
21, it was observed as under :

          " ........ The price is fixed, may be, by the Board of Directors or by
          the State Government under bye-laws but the prices are for the
          reserved area. The Central Government did not fix any maximum
          price obviously because the conditions in the agricultural C
          sector differed from State to State. Therefore, it having fixed
          a minimum price expects the State to offer remunerative price
          to its cultivators. In a controlled economy the price fixation
          machinery is to be determined by the State Government or under
          the 1966 Order in the manner provided therein. Since in D
          Maharashtra 95% of the sugar factories are in the cooperative
          sector the price is fixed by the Government as it has substantial
          financial stake. But so long the price fixation does not suffer from
          any infirmity or it is held to be prejudicial to the cane-growers
          so as to benefit the State or the financial institution it cannot be
          held to be bad .......... "                                            E
      The next is State of MP. v. Jaora Sugar Mills Ltd. & Ors., [1997]
9 SCC 207, which has been decided by a Bench of two judges. The dispute
arose on account of fixation of price under the M.P. Sugar (Regulation of
Supply and Purchase) Act, 1958. The contention on behalf of the sugar F
factories was that Clauses 3 and 5-A of the 1966 Order determine the
liability to pay the price and additional price and the Central Government
having determined the price of the sugarcane under the aforesaid Order,
there is no power with the State Government de hors the Order to fix any
agreed price. The concept of agreed price came into force on 19.9.1976
by virtue of Clause 3-A of the said Order and until then there was no power G
to fix an agreed price. It was also urged that the State Government has,
therefore, no power under the Act to fix any price as the field was occupied
by the 1966 Order. The contention was, however, not accepted and after
noticing the provisions of Clauses 3(2) and 3(3), it was held as under in
para 8 of the Reports :                                                      H
    294                  SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A              "8. This would clearly indicate that despite the fixation of
               minimum price under clause 3(1), by agreement between the
               sugarcane grower and the purchaser of the sugarcane, they would
               be at liberty to agree to sell or purchase the sugarcane at a higher
               price than that fixed by the Central Government under clause 3(1 ).
               Only for postponement of oayment beyond 14 days, there should
B
               be an agreement in writing between the parties obviously with the
               concurrence of the Central Government or authorised authority in
               that behalf. Thus, there is no statutory prohibition in that behalf
               to pay higher price. That would be further clear by clause 3(2)
               which speaks of the contract between the parties for payment of
c              higher price of sugarcane fixed under sub-clause (I) of clause 3
               pursuant to the agreement or pursuant to the minimum price fixed
               by the Central Government under clause 3(1) of the Order."

          It was observed in paras 9 and I 0 that there was no prohibition for
D the cane growers and occupiers of the sugar factories in entering into oral
    agreement through the service of the Cane Commissioner, a statutory
    authority, who could effect such an agreement. The agreement would not
    be tainted with compulsion but in novation of the minimum price fixed
    under the 1966 Order. After noticing the provisions of the M.P. Act, which
E are some what similar to U.P. Act, it was held as under in para 13 of the
    Reports:

                    "13. It would thus be clear that the Cane Commissioner
               having power to compel the cane-growers to supply cane to the
               factory or khandsari unit, he has incidental power and is duty
F              bound to ensure payment of the price of the sugarcane supplied
               by the sugarcane grower. The price fixed or agreed is a statutory
               price and bears the stamp of statutory first charge on the sugar
               and assets of the factory over any other contracted liabilities to
               recover the price of the sugarcane supplied to the factory or
G              khandsari unit."

          SKG Sugar Ltd. v. State of Bihar, [ 1997] 9 SCC 362 is a decision
    by the Bench of three judges and deals with the effect of 1966 Control
    Order and the Bihar Sugarcane (Regulation of Supply and Purchase) Act,
H   198,J. It was clearly ruled that the provisions of 1966 Order do not show
     U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 295

     that there is any prohibition on the factory or the association of factories A
     entering into an agreement to pay higher price than the minimum price
     prescribed under the Order and the object of the Order is to ensure that
     the canegrowers should not be compelled to sell their sugarcane at a price
     lower than the minimum price fixed by the Central Government under
     Clause 3. In this case an agreement had been arrived at between Sugar B
     Factories Owners Association and sugarcane growers, wherein a higher
     price was agreed to be paid but this was sought to be resiled by the
     appellant on the ground that it was a Company, which was an independent
     entity in the eye of law and was, therefore, not bound by any such
     agreement. After noticing the provisions of the Act and the earlier decision C
     rendered in State of MP. v. Jaora Sugar Mills Ltd. (supra) it was held as
     under in para 6 of the reports :

                     "It is not in dispute that under Section 31 of the Supply Act,
               the State Government has power to fix the reserved area, in other
               words, zone was carved out for the appellant for the supply of D
               sugarcane to the factory. All the farmers who are cultivating
               sugarcane within that zone are bound by the State action to supply
               sugarcane to the factories within that reserved area. Consequently,
               the factory also is bound by the actions of the State Government.
               Obviously, pursuant to the obligation had by the State under the E
               Supply Act, the meeting was convened by the State Government
               where at the Factory Owners' Association and farmers participated
               and agreed to fix the price at Rs. 20.50 per quintal of sugarcane.
               As a consequence, both the cane growers as well as the owners
               of the factory are bound by the decision. This having been F
               agreed upon, the price fixed by the State Government in excess
               of the minimum price fixed by the Central Government under
               clause 3 of the Order would be the price fixed for mpply of
               sugarcane and the Government would be entitled to enforce the
               liability ...."
                                                                                              G
          It was also observed in the same paragraph that the State Government
     acted in their statutory capacity to fix the higher price of the sugarcane.

          39. These cases clearly lay down that under the 1966 Order the
     Central Government only fixes the minimum price and It is always open H



.-
    296                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A to the State Government to fix a higher price. Under the enactments made
    by the State Legislatures areas are reserved for the sugar factories and the
    canegrowers therein are compelled to supply sugarcane to them and
    therefore the State Government has incidental power to fix the price of
    sugarcane which will also be statutory ~rice. They further lay down that
B   the Cane Commissioner can direct the canegrowers and the sugar factories
    to enter into agreements for purchase of sugarcane at a price fixed by the
    State Government and such agreements cannot be branded as having been
    obtained by force or compulsion.

          40. Learned senior counsel for the respondents has placed strong
C   reliance on certain observations made in State of Tamil Nadu v. Kothari
    Sugars and Chemicals Ltd., [1996] 7 SCC 751, which is a decision by a
    Bench of two judges. In our opinion, this decision can be of no assistance
    to the respondents as the point for consideration here was entirely different,
    which will be evident from paras I and 3 of the judgment which read as
D   under:

             "Para I. The question for decision is :Whether for the purchase
             of sugarcane from the canegrowers, a purchaser is liable to pay
             purchase tax under the State Sales Tax Act on the amount
E            paid by the purchaser to the canegrower over and above the price
             fixed under clauses 3 and 5-A of the Sugarcane (Control) Order,
             1966?

             Para 3. The occasion for payment by the purchaser of the amount
             in excess of the aggregate of the minimum cane price and the
F            additional cane price so fixed, arises on account of an order of
             the State Government dated 15.11.1980 purporting to fix a higher
             revised minimum cane price and directing the sugar factories in
             Tamil Nadu to pay that price to the canegrowers. Pursuant to the
             direction, each sugar factory was directed to make that payment
G            and in compliance thereof this sugar factory paid the excess
             amount as an 'advance' described as under :

                   " ..... being advance payment towards cane supply during
                   1980-8 l season, against probable additional cane price
H                  under Section 5-A of the Sugarcane (Control) Order, 1966."
....
       U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 297

             41. It is important to note that in Tamil Nadu there is no statutory A
       provision for regulating the supply and purchase of sugarcane for use in
       sugar factories or khandsari sugar manufacturing units. Therefore, the
       order of the State Government dated 15.11.1980 fixing higher revised
       minimum cane price had not been issued in exercise of any statutory power.
       In para 6 of the Reports, the Court observed that unless there be an B
       agreement between the grower and the purchaser for purchase of the
       sugarcane at higher price, the obi igation of the purchaser is to pay the
       grower only the aggregate of the amounts fixed under clauses 3 and 5-A.
       It was further observed that without any contractual or statutory basis
       fixing the sale price of sugarcane at an amount higher than the minimum C
       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 sugarcane. It was pointed out in para 7 that the State advice
       to the purchasers to pay certain amount in addition to the minimum price D
       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 of
       advance was paid in anticipation of fixation of additional cane price under
       Clause 5-A, which means that in case the fixation under Clause 5-A was
       at a higher amount than the amount paid as advance, then the purchaser E
       would have to pay the deficit amount. Similarly, when the amount of
       advance was in excess, the purchaser would be entitled to refund of the
       excess amount, irrespective of the fact that whether the refund was actually
       made or not. Any amount paid by way of advance towards a probable
       additional price to be worked out in accordance with the formula given in
       the 1966 Order could not be treated as price of sugarcane for the purpose F
       of levy of sales tax. In fact in para 9 of the reports it was observed that
       for treating the entire amount paid by the purchaser as the price of the
       sugarcane supplied, it must be found proved as a fact that the higher price
       including the excess amount was paid as the price of sugarcane under an
       agreement between the grower and the purchaser irrespective of a lower G
       amount being fixed as an aggregate of the price fixed under Clauses 3 and
       5-A of the 1966 Order. It was further held that unless a clear finding to
       that effect is recorded, the amount paid by the purchaser in excess of the
       aggregate of the minimum price fixed under Clause 3 and the additional
       price fixed under Clause 5-A, as paii of the amount paid in advance prior H
    298               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A to the fixation of the additional price under Clause 5-A, cannot be treated
    automatically as a part of the total price of the sugarcane.

       42. The question in issue here did not come up for consideration
  before the Bench and some general observations made in the course of the
B reasoning given in a matter dealing with liability to pay tax on some
  amount which was paid by sugar factory as "advance" towards the probable
  additional cane price under Clause 5-A cannot be construed as an
  expression of opinion on the merits of the matter. It is well settled that a
  decision is an authority for what it actually decides and not what logically
  flows from it. Every observation of Court are not to be interpreted or used
C like provisions of Statute as if they were part of an Act. It is, therefore,
  not possible to hold that the Court laid down any principle of law that it
  is not open to the State to fix higher price or that there could be no
  agreement between the canegrowers and the occupier of the factory for
  payment of higher price.
D
        43. One of the main reasons given by the High Court for allowing
  the writ petition and quashing the order of fixation of State Advised Price
  is that power to fix sugarcane price had been given to the State Government
  under the Sug<l!cane Act, 1934 and hence it would be redundancy to say
E that the same power to fix cane price also flows from Section 16 of the
   1953 Act. The High Court has also held that 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 and hence,
  it could not have been the intention of the U.P. Legislature while enacting
F 1953 Act that Section 16 thereof would include the power to fix the
  minimum cane price as such a power was already there with the State
  Government under Section 3(2) of the Sugarcane Act, 1934. The High
  Court, therefore, concluded that Section 16 of the 1953 Act only gave
  power to the State Government to regulate the supply and purchase of
  sugarcane in the narrower sense and not in the wider sense so as to include
G the power to fix the minimum price. This reasoning of the High Court
  proceeds on the footing that the Sugarcane Act, 1934 was in existence and
  was in operation when the 1953 Act was enacted by U.P. Legislature. It
  appears that the correct legal position was not brought to the notice of the
   learned judges. The Sugarcane Act, 1934 was repealed by U.P. Sugar
H Factories Control Act, 1938 (UP Act No. I of 1938). Section 26 of U.P.
 U.P. CO-OP. CANE UNION FEDERATION•·. WEST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 299

Sugarcane (Regulation of Supply & Purchase) Act, 1953 repealed the U.P. A
Sugar Factories Control Act, 1938. With the enforcement of the Government
of India Act, 1935, there was distribution of legislative powers between
the Dominion Legislature and the Provincial Legislature and the entire
~ubject matter of Sugarcane Act, 1934 fell within the Provincial Legislative
list. It was in these circumstances that the U.P. Legislature enacted the U.P. B
Sugar Factories Control Act, 1938 which repealed the Sugarcane Act, 1934
in its application in the State of U.P. This position has been noticed in Ch.
Tika Ramji & Ors. v. State of Uttar Pradesh & Ors., [1956] SCR 393 at
page 400, 401 and 417. Therefore, the aforesaid reasoning given by the
High Court has no legal basis.
                                                                                          c
        44. The second reasoning given by the High Court is that even if the
 State Government had the power to fix the minimum cane price under
 Section 16 of the 1953 Act, this power came to an end in view of Article
 254(1) of the Constitution on the enactment of the E.C. Act and the
 promulgation of the Sugarcane Control Order, 1955 (later replaced by the D
  1966 Order), which now gives exclusive power to the Central Government
 to fix the minimum price. As discussed earlier we are not in agreement with
 the aforesaid reasoning as the question of repugnancy does not arise. The
 High Court has also held that the Central Government, while fixing the
 price of the sugar under Section 3(3C) of the E.C. Act, takes into E
 consideration the minimum price of sugarcane fixed under 1966 Order and
 if the sugar mills are compelled to pay a higher price than that fixed by
 the Central Government, it will disturb the price of the levy sugar and such
 an eventuality could not have been contemplated by the legislature. Over
a period of time, the quota of levy sugar has gone down from 40 per cent F
to I 0 per cent of the total production of sugar and the sugar mills are now
free to sell 90 per cent of their production in open market. Under Section
3(3C) of the E.C. Act, the Central Government has to determine the price
of the levy sugar having regard to several factors enumerated in the sub-
section and the minimum price fixed under 1966 Order is only one of the
factors. The manufacturing cost of sugar and securing of reasonable return G
on the capital employed in the business of manufacturing sugar are also
relevant factors under Clauses (b) and (d) of Section 3(3C) E.C. Act and,
therefore, the fixation of higher price for sugarcane by the State Government
by itself cannot have any major or substantial impact on the fixation of the
price of the levy sugar by the Central Government.                            H
     300               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A       45. Shri Shanti Bhushan, learned senior counsel, has strenuously
  urged that the fixation of higher price by the State Government will
  seriously affect the economy of the sugar factories inasmuch as the price
  of the sugarcane is a very major factor and contributes to the extent of 70
  per cent of the price of sugar. Learned counsel has submitted that any
B increase in the price of sugarcane by the State Government is bound to
  result in a serious financial crisis for the sugar factories which are already
  passing through a bad phase and are suffering huge losses. He has also
  placed before the Court some facts and data to show that the sugar mills
  being run by U.P. State Sugar Corporation and those under the cooperative
C sector, which pay the State Advised Price for sugarcane, are running on
  huge losses. Reports have also been placed to show that the State
  Government has given heavy amounts by way of subsidy to these sugar
   factories in order to sustain the loss. The contention is that the payment
   of State Advised Price by the sugar factories will result in a virtual closure
   of the sugar industry. Shri Rakcsh Dwivedi, learned senior counsel for
D appellant, has seriously disputed the aforesaid submission and has urged
   that the respondent sugar factories have not produced their balance sheets
   to show that they aie in fact running on losses. He has submitted that
   virtually all the factories being run by the U.P. State Sugar Corporation
   were established in Nineteen Thirties, have very old machinery and
E technology and are over-staffed and the main reason for the losses suffered
    by them is their poor performance on account of the frequent breakdowns,
    the machinery being old and employment of excessive 'llanpower and not
    the price of sugarcane. The U.P. State Sugar Corporation, it is urged, could
    not invest money in order to improve the technology or install new
F machinery due to financial crunch. Shri Dwivedi has also placed before
    the Court data relating to some of the factories being run under cooperative
    sector which have made profits.

           46. Learned counsel for both the sides have also placed reliance on
      the Report of the Sugar Industry Inquiry Commission, 1974, also known
 G    as 'Bhargava Commission', which was given on 27.2.1974. Shri
      Chidambaram has referred to paragraphs 1.20, 1.23 and 1.24 of the Report,
      wherein it is said that there is need not only to intensify cane development
      work to increase the sugarcane yield, but also to bring more area under
      sugarcane. Sugarcane occupies land for a longer period than any other
 H    crop, its period of growth extending from I0 months to 18 months and
     U.P. CO-OP. CANE UNION FEDERATION'· WESTU.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 301

     during this period, two.or more other crops can be grown, which give the A
     farmer a quicker return for his investment. Sugarcane also needs larger
     investment in the inputs. It, therefore, recommended that the statutory
     minimum cane price be so fixed that the return from the sugarcane has an
     edge over the return from other alternative crops, in which technological
     breakthrough had already been achieved, and should be varied from year B
     to year in future in proportion to the changes in return from other
     competitive crops and that it wholly covered the cost of cultivation in all
     major cane growing regions. Shri Chidamabaram has also urged that para
     2.22 of Chapter II of the Report shows that the Central Government, while
     fixing the minimum price of sugarcane, does not take into consideration C
     extra realization from molasses. Molasses, which is a bye product of sugar
     industry, is the main raw material for production of rectified spirit, potable
     and industrial alcohol and ethnol. Learned counsel has submitted that on
     accqunt of decontrol of molasses and its heavy demand, the sugar mills
·'   earn considerable amount of money from the sale of this bye product.
     Besides molasses, bagasse and press mud are also produced in the D
     manufacture of sugar which are again not taken into consideration .
     Bagasse is used in co-generation and also for manufacture of paper and
     press mud is used in manufacture of manure. According to learned counsel,
     since these three items from which sugar factories earn considerable
     amount of money are not taken into consideration by the Central Government, E
     the minimum price fixed under the 1966 Order is not realistic. The State
     Government is aware of the local conditions like cost of the inputs and
      labour etc. and as it also takes into consideration "the aforesaid factors
     (molasses, bagasse and press mud) the price of the sugarcane fixed by it
     reflects the correct price.
                                                                                            F
           47. Shri Shanti Bhushan has also placed before the Court a copy of
     the order passed by the Central Government under Clause 3 of the 1966
     Order on 9.1.2003 fixing the minimum price of sugarcane for the sugar
     year 2002-2003, which shows that prices have been fixed for different
     factories keeping in view the minimum price of sugarcane at Rs.69 .50 per G
     quintal linked to a basic recovery of8.5 per cent sugar subject to a premium
     of Rs.0.82 for every 0.1 per cent point increase in the recovery above that
     level. The chart shows that in the State of U.P. generally the price fixed
     for sugarcane for most of the sugar mills being run by the U.P. State Sugar
     Corporation or in cooperative sector (Sahkari) is much lower than the price H
    302                 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A fixed for the sugar mills being run by private sector. The price of sugarcane
    fixed for some of the sugar mills, which will illustrate the situation, is given
    below:

          S.No.   Name of Sugar Factory               Minimum Sugarcane Price
                                                        (Rupees per quintal)
B
          1.       U.P. State Sugar Corporation Ltd.               71.96
                   Panninagar, Distt. Bulandshahr.

          2.       U.P. State Sugar Corporation Ltd.               73.60
                   Rohana Kalan, Distt. Muzaffarnagar.
c
          3.       Daurala Sugar Works,                            89.18
                   Daurala, Distt. Meerut.

          4.       The Upper India Sugar Mills                     84.26
                   Khatauli, Distt. Muzaffarnagar.
D
          5.       The Upper Doab Sugar Mills Ltd.                 86.72
                   Shamli, Distt. Muzaffarnagar.

          6.       Siel Ltd.                                       87.54
E                  Titawi, Distt. Muzaffarnagar.

          7.       Bisalpur Kisan Sahakari Chini                   71.14
                   Mills Ltd.
                   Bisalpur, Distt. Pilibhit.

F         8.       L.H. Sugar Factories Ltd.                       78.52
                   Pilibhit, Distt. Pilibhit.

          9.       Ghaghara Sugar Ltd.                             86.72
                   Ajbapur, Distt. Lakhimpur Kheri.

G        48. Bulandshahr, Meerut and Muzaffarnagar are adjoining districts in
    Western U.P. but the prices of sugarcane range from Rs.71.96 to Rs.89.18.
    The Sugar mills at serial nos. 2 and 6 are situate within the same district
    ofMuzaffarnagar, but the difference in prices is almost Rs.14.00. Similarly,
    sugar mills at serial nos. 7 and 8 are situate within the same district of
H   Pilibhit and serial no.9 is in adjoining district of Lakhimpur but the
U.P. CO·OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL AS SON. [G.P. MATHUR, J.] 303

difference in prices is quite substantiah It is not likely that there would be A
any substantial difference in the quality of cane grown within the same
district or in the same area. The prices fixed by the Central Government
clearly indicate that a sugarcane grower who falls within the reserved area
of a sugar mill run by U.P. State Sugar Corporation or by cooperative sector
gets much less while as one who falls within the reserved area of sugar B
mill run by private sector gets much higher. This is possibly due to the
reason that the sugar mills. of U.P. State Sugar Corporation are very old
having obsolete technology due to which recovery is poor. There is no
justifiable reason why a sugarcane grower should suffer only on account
of the fact that he happens to fall within the reserved area of a mill run
by the U.P. State Sugar Corporation or in the cooperative sector. The State C
Government fixes uniform prices and not factory wise. Such a fixation of
price is, therefore, more just and equitable from the point of view of a
sugarcane grower.

     49. It is, however, difficult to form any definite opinion on the factual D
aspect of the matter only on the basis of the statistical data placed before
us by the learned counsel for the parties as a correct or true assessment
of the situation cannot be had from the same. Moreover, we are more
concerned with the legal aspect of the matter.
                                                                                          E
     50. Jn view of the discussions made above, Civil Appeals No.460 of
1997 and 461 of 1997 are allowed and the judgment and order dated
11.12. 1996 of the High Court is set aside. Civil Appeals No.1727 of 1999
and 4602 of 1999 are dismissed and the judgment and order dated 1.2.1999
of the High Court is affirmed.
                                                                                          F
Civil Appeal No. 4685 of 1997: The State of Bihar v. Bihar Sugar Mills
Association

       State of Bihar has pr~ferred this appeal by special leave against the
judgment and order dated 4.2.1997 of the Patna High Court by which the G
writ petition preferred by Bihar Sugar Mills Association was allowed and
the order dated 29.11.1996 passed by the Sugarcane Commissioner, Bihar,
 fixing the price of sugarcane for crushing season 1996-97 was quashed.
For doing so, the High Court basically relied upon the provisions of
 Sugarcane (Control) Order, 1966 issued by the Central Government and H
    304                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A also the judgment and order dated 11.12.1996 of Allahabad High Court in
    CMWP no. 36889of1996 (West UP. Sugar Mills Association v. State of
    U.P.). The High Court did not examine the provisions ofBihar Sugarcane
    (Regulation of Supply anid Purchase) Act, 1981 in order to ascertain
    whether under the said Act the State Government has any power to fix the
B   price of sugarcane. We have set aside the judgment of the Allahabad High
    Court dated 11.12.1996. We are, therefore, of the opinion that the matter
    requires fresh consideration in the light of our decision in CA No. 460 of
    1997 (UP. Co-operative Cane Unions Federation v. West UP. Sugar Mills
    Association). The appeal is accordingly allowed and the judgment and
    order dated 4.2.1997 of the High Court is set aside and the writ petition
C   is remitted back to the High Court for fresh consideration in accordance
    with law.

    Civil Appeal No.6065of2001: State ofPunjab & Ors. v. Saraya Industries
    Ltd. & Ors. and SLP (CJ No. 1363 of 2002 : State of Haryana & Ors. v.
D   The Saraswati Industrial Syndicate Ltd. & Anr.

        State of Punjab and State of Haryana have preferred these appeal and
  special leave petition against the common judgment and order dated
  23.12.1998 of Punjab & Haryana High Court by which a bunch of writ
E petitions preferred by the respondent Sugar Mills were allowed and the
  direction given by the State Government to the writ petitioners to pay the
  State Advised Price for the sugarcane purchased by them during the year
   1996-97 was declared illegal and it was held that the writ petitioners cannot
  be compelled to pay any price over and above the statutory minimum price
F fixed by the Central Government for the sugarcane purchased by them. For
  doing so, the High Court basically relied upon the provisions of Sugarcane
  (Control) Order, 1966 issued by the Central Government and also the
  judgment and order dated 11.12.1996 of Allahabad High Court in CMWP
  no. 36889 of 1996 (West UP. Sugar Mills Association v. State of UP.).
  The High Court did not examine the provisions of Punjab Sugarcane
G (Regulation of Supply and Purchase) Act, 1953 in order to ascertain
  whether under the said Act the State Government has any power to fix the
  price of sugarcane. We have also set aside the judgment of the Allahabad
  High Court dated 11.12.1996. We are, therefore, of the opinion that the
  matter requires fresh consideration in the light of our decision in CA No.
H 460 of 1997 (UP. Co-operative Cane Unions Federation v. West U.P.
U.P. CO-OP. CANE UNION FEDERATION v. W~ST U.P. SUGAR MILL ASSON. [G.P. MATHUR, J.] 305

Sugar Mills Association). The appeal and the special leave petition are A
accordingly allo'Yed and the judgment and order of High.Court is set aside
and the writ petitions are remitted back to the High Court for fresh
consideration in accordance with law.

CA Nos. 8117-22 of 2001 and SLP(C) No. 16851 of 2001 : Government B
ofAndhra Pradesh & Anr. v. KCP Sugar & Industries Corpn. Ltd. & Ors.

      Leave granted in SLP(C) No.16851 of2001. These appeals by special
leave have been preferred by Government of Andhra Pradesh against the
judgment and order dated 8.5.2001 of the High Court of Andhra Pradesh C
by which the writ petition preferred by respondent KCP Sugar Mills was
allowed and order passed by the State Government on 4.12.1998 fixing the
price of sugarcane was set aside. For doing so, the High Court basically
relied upon the provisions of Sugarcane (Control) Order, 1966. The High
Court did not examine the provisions of the Andhra Pradesh Sugarcane D
(Regulation of Supply and Purchase) Act, 1961 in order to ascertain
whether under the said Act the State Government has any power to fix the
price of sugarcane. We are, therefore, of the opinion that the matter requires
fresh consideration in the light of our decision in CA No. 460of1997 (U.P.
Co-operative Cane Unions Federation v. West U.P. Sugar Mills Association). E
 The appeals are accordingly allowed and the judgment and order dated
8.5.2001 of the High Court is set aside and the writ petition is remitted back
to the High Court for fresh consideration in accordance with law.

Transfer Case Nos. 21 and 22 of 2003 : The South Indian Sugar Mills
Association, Tamil Nadu v. Government of Tamil Nadu & Ors.                               F

      The South Indian Sugar Mills Association, Tamil Nadu filed writ
petition praying that a writ of mandamus or any other appropriate writ,
order or direction may be issued forbearing the Government of Tamil Nadu
and the Commissioner of Sugar and Cane Commissioner, Chennai, from G ·
fixing and announcing or notifying any price for sugarcane except the
additional price under Clause SA of the Sugar (Control) Order, 1966, to
be paid by the sugar mills in Tamil Nadu to the sugarcane growers for the
sugar season 1999-2000. The writ petitions were transferred to this Court
and were heard along with CA No. 460 of 1997.                             H
    306                SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A         The State of Tamil Nadu has not made any statutory enactment for
    regulation of supply and purchase of sugarcane. In the counter-affidavit
    filed on behalf of the respondents it is admitted that the State Government
    is not fixing State Advised Price for sugarcane in exercise of any statutory
    power. In fact in para 9 of the counter-affidavit it is stated that the State
B   Government will not make any unilateral announcement of State Advised
    Price as apprehended by the petitioner. It is further stated that the
    Government will follow the past practice of consultation with the sugar mill
    owners and cane growers and only after ascertaining their respective views
    and making them to come to an agreement on fixation of price, the State
C   Advised Price, as an agreed price, will be recommended by the State
    Government. In view of the fact that there is no statutory enactment
    regarding regulation of supply and purchase of sugarcane, it is obvious that
    the State Government has no power to fix the price of the sugarcane.
    However, it is always open for the sugar mills to enter into agreements with
    the sugarcane growers to purchase sugarcane at a price higher than the
D   statutory minimum price fixed by the Central Government. The Transfer
    Petitions are accordingly disposed of in the aforesaid terms.

    SLP (C) No. 948 of 2003: Mis. Naraingarh Sugar Mills Ltd. v. State of
    Haryana & Ors.
E
          This Special Leave Petition has been preferred against the judgment
    and order dated 20.12.2002 ofa Division Bench of the Punjab & Haryana
    High Court by which interim orders passed in favour of petitioner were
    vacated. The main ground which weighed with the High Court for vacating
F   the stay order was that the writ petitioner had not even paid the statutory
    minimum price of sugarcane to the farmers and a sum of Rs.5 crores was
    due from it. In the facts and circumstances of the case, we do not find any
    ground to interfere with the order passed by the High Court. The Special
    Leave Petition is accordingly dismissed.

G IA No.3 of 2002 in CA No. 460of1997: New Horizon Sugar Mills Ltd.
    Ariyur. Kandamangalam P.O., Pondicherry

          This application has been moved in CA No.460 of 1997 ( U.P. Co-
    operative Cane Union Federation v. West U.P. Sugar Mills Association &
H   Ors.). Since the main relief claimed in the application is against Government
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   307

of Pondicherry which is not party to the civil appeal, it is not possible to A
grant the prayers made in the application. The application is accordingly
dismissed.

      SRIKRISHNA, J. : I have had the benefit of going through the
erudite and well considered opinion of Brother G.P. Mathur, J. I regret, B
I am unable to share the views expounded by him, which constrains me
to write this dissenting opinion.

      The facts have been succinctly reproduced in the opinion of Brother
G.P. Mathur, J. and hence need no repetition, except for certain highlighting. C
I have also treated C.A. No. 460 of 1997 as the leading case, since most
of the arguments were addressed by counsel appearing for the contending
parties in this appeal.

      By an Order made on 22.1.1997, a Bench of two learned Judges of
this Court [Hon'ble S.P. Bharucha and Hon'ble Faizan Uddin, JJ.] took the D
primafacie view that under the provisions of the U.P. Sugarcane (Regulation
of Supply and Purchase) Act, 1953 and the Rules made thereunder, it
appeared that the State Government is not empowered to fix the 'State
Advised Cane Price' which it had purported to do. In view thereof, special
leave was granted.                                                          E

      When this group of matters came up before another Bench of two
learned Judges of this Court [Hon'ble V.N. Khare (as His Lordship then
was) and Hon'ble K.G. Balakrishnan, JJ.], the Bench noticed a conflict in
the opinions of two judgments of this Court in State ofMP. v. Jaora Sugar                 F
Mills Ltd., [1997] 9 SCC 207 and State of Tamil Nadu & Ors. v. Kothari
Sugar & Chemicals Ltd. & Ors., [1996] 7 SCC 751 and thereafter referred
the instant group of matters to a larger Bench of Three Judges.

     By an order dated 15.1.2003, a Bench of three learned Judges of this
Court took the view that one of the conflicting judgments had been G
approved by the decision in S.K.G. Sugar Ltd. v. State of Bihar & Ors,
[1997] 9 SCC 362 by a Bench composed of three Judges and, therefore,
thought it would be appropriate to refer this matter to a larger Bench of
Five Judges. Hence, these matters have been placed before.this Bench of
Five Judges.                                                              H
    308               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A       The crucial issue involved in this group of matters is: whether under
  the provisions of the U.P. Sugarcane (Regulation of Supply and Purchase)
  Act, 1953 read with the U.P. Sugarcane (Regulation of Supply & Purchase)
  Rules, 1954 and the U.P. Sugarcane Supply & Purchase Order, 1954
  [hereinafter referred to as 'the U.P. Sugarcane Act of 1953 ', 'the U.P.
B Sugarcane Rules, 1954' and 'the U.P. Sugarcane Order, 1954' respectively],
  the State Government has the authority to stipulate a purchase price known
  as 'State Advised Price' (SAP) for supply of sugarcane to sugar producers
  which is required to be paid over and above the minimum ptice and
  additional price for purchase of sugarcane payable under the provisions of
C the Sugarcane (Control) Order, 1966.

    Legislative Background :-

         The legislative background against which this question has arisen has
    been succinctly traced in the judgment of the Constitution Bench of this
D   Court in Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors.,
    [1956] SCR 393. Some excerpts, however, may be necessary.

        On 8th April, 1932, the Central Legislature, in then British India,
  passed the Sugar Industry (Protection) Act, 1932 [Act XIII of 1932] to
E provide for the fostering and development of Sugar Industry in India. This
  led to a large number of farmers taking up sugarcane cultivation and the
  establishment of a number of sugar factories coming up, particularly in the
  then Province of U.P. To protect the interest of the sugarcane-growers',
  and for the purpose of assuring them a fair price, the Central Legislature
F enacted on 1st May, 1934 the Sugarcane Act, 1934 [Act XV of 1934] to
  regulate the price at which sugarcane intended for manufacture of sugar
  could be purchased by or for the factories. Since, sugarcane was grown
  in various Provinces and the Sugarcane Act, 1934 left the declaration of
  controlled areas and the fixing of minimum price for the purchase of
  sugarcane in any controlled area to the discretion of the Provincial
G Governments, the Provincial Governments were also empowered to make
   rules for the purpose of carrying into effect the objects of the Act.

          As a result of the Government of India Act, 1935, there was a
    distribution of legislative powers between the Dominion Legislature and
H   the Provincial Legislatures. Consequently, the entire subject matter of Act
U.P. CO-OP. CANE UNION FEDERATION,._ WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, !.]   309

XV of 1934 fell within the Provincial Legislative List. It was felt that Act A
XV of 1934 was not sufficiently comprehensive for dealing with the
problems of the sugar industry. The Governments of U.P. and Bihar
decided to introduce legislation on similar lines in both the provinces since,
between them, they accounted for nearly 85% of production of sugar in
India.
                                                                                          B
       The U.P. Legislature enacted on 10th February, 1938 the U.P. Sugar
Factories Control Act, 1938 [U.P. Act I of 1938]. This Act provided for
(i) licensing of sugar factories, (ii) regulation of the supply of sugarcane
intended for use in such factories, (iii) the minimum price for sugarcane, C
(iv) the establishment of Sugar Control Board and Advisory Committee,
and (v) a tax on the sale of sugarcane intended for use in factories. Though
this Act was to remain in force initially until 30th June, 1947, its life was
extended from time to time and finally up to 30th June 1952. Parallel
developments during this period were the outbreak of the Second World
War and the legislative measures taken to meet the situation by the then D
Government oflndia for controlling the production, regulation of distribution
and supply of essential commodities. The Dominion Legislature acquired
the power to make laws for the Provinces with respect to any of the matters
enumerated in the Provincial Legislative List. Under the Defence of
India Act, sugar was made a controlled commodity in the year 1942 E
and its production and distribution as well as the fixation of sugar
prices were. regulated by the Sugar Controller. The proclamation of
emergency was revoked by the Governor General on !st April 1946.
Simultaneously, the laws made by the Dominion Legislature in the field
of the Provincial Legislative List were to cease to be effective after 30th F
September 1946.

       On 26th March 1946, the British ParliamePt enacted the India
(Central Government and Legislature) Act, 1946 [9 & 10 Geo.6, Chapter
39] which provided that, notwithstanding anything in the Government of
India Act, 1935, the Indian Legislature shall during the periods specified G
in Section 4 of the Act have the power to make laws with respect, inter
alia, to 'foodstuffs'. Though the period provided in Section 4 was one year
from the expiration of the declaration of the emergency by the Governor
General, this period was extended from time to time and would have ended
on 31st March 1948.                                                         H
    310                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A        On 18th July 1947, the Indian Independence Act came to be passed
  leading to the Indian (Central Government and Legislature) Act, 1946
  which by way of adaptation provided that the powers of the Dominion
  Legislature shall be exercised by the Constituent Assembly. With the
  Constitution coming into force on 26th January 1950, Article 369 invested
B Parliament with the power for a period of 5 years from the commencement
  of the Constitution to make laws with respect to some of the matters as
  if they were enumerated in the Concurrent List. One such matter was "trade
  and commerce within a State in, and the production, supply and distribution
  of, ..... foodstuffs (including edible oil seeds and oil), ......"

c      On 7th October 1950, the Central Government, in exercise of the
  powers conferred upon it by Section 3 of the Act, promulgated the Sugar
  and Gur Control Order, 1950 which, inter alia, empowered it to prohibit
  movement of sugarcane from any area and also to direct that no gur or
  sugar should be manufactured from sugarcane except under and in
D accordance with a licence issued by it. Power was also given to the Central
  Government to fix the minimum price of sugarcane and no person was to
  sell or agree to sell sugarcane to a producer and no producer was to
  purchase or agree to purchase sugarcane at a price lower than that notified.
  This power of fixing the price of sugarcane was exercised by the Central
E Government from time to time by issuing notifications which fixed the
  minimum price to be paid by the prodt•cer of sugar by vacuum pan process.
  An Act for similar purposes, by name, Bihar Sugar Factories Control Act
  VII of 1937 came to be enacted in the State of Bihar. As a result of the
  recommendations of the Khaitan Committee, the report of the Indian Tariff
F Board in the year 1938 and the U.P. Sugar Industry Enquiry Committee,
  1951 [Swaminathan Committee], it was desired that the U.P. Act I of 1938
  should be amended in order to make regulation of the supply of sugarcane
  possible.

          Industries (Development and Regulation) Act, 1951 [Act LXV of
G   I 951] was brought into effect from 8th May 1952. In view of this Act
    coming into force, certain provisions of the U.P. Act I of 1938 became
    inoperative. The U.P. Legislature passed on 29th June, 1952, the U.P.
    Sugar Factories Control (Amendment) Act, 1952, deleting those provisions
    and putting the amended Act permanently on the Statute Book. The U.P.
H   Act I of 1938, thus amended, continued in force till it was repealed by the
U.P. CO-OP. CANE UNION FEDERATION>'. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   311

U.P. Sugarcane Act, 1953. The object of the enactment of the 1953 Act A
is stated thus : "With the promulgation of the Industries (Development and
Regulation) Act, 1951 with effect from 8th May 1952, the regulation of
the sugar industry has become exclusively a Central subject. The State
Governments are now only concerned with the supply of sugarcane to the
sugar factories. The Bill is being introduced in order to provide for a B
rational distribution of sugarcane to factories, for its development on
organised scientific lines, to protect the interests of the cane-growers and
of the industry and to put the new Act permanently on the Statute Book"
(See - Statement of Objects and Reasons published in the U.P. Gazette
Extraordinary dated 15th July, 1953]. In exercise of the rule making power C
conferred by Section 28 of the Act, the U.P. Government made the U.P.
Sugarcane Rules, 1954 and also in exercise of the powers conferred by
Section 16 of the Act, promulgated the U.P. Sugarcane Order, 1954.

      On I st April 1955, Parliament enacted the Essential Commodities
Act, 1955 [Act X of 1955] to provide in the interests of the general public D
"for the control of production, supply and distribution of, and trade and
commerce in, certain commodities". This Act defines 'essential commodity'
in Section 2(a)(v) to be any "foodstuffs, including edible oilseeds and oils".
By clause (b ), "food-crops" is defined to include crops of sugarcane. By
clause (xi), the definition of 'essential commodity' extends to any other E
class of commodity which the Central Government may declare to be an
essential commodity for the purpose of the Act, being a commodity with
respect to which Parliament has power to make laws by virtue of Entry
33 in List III in the Seventh Schedule to the Constitution.

     Section 3(1) empowers the Central Government, if necessary or
                                                                                          F
expedient to do so "for maintaining or increasing the supplies of any
essential commodity or for securing their equitable distribution and
availability at fair prices", by an order to provide "for regulating or
prohibiting the production, supply and distribution thereof and trade and
commerce therein." Under clause (c) of sub-section (2) of Section 3, such G
an order may provide for controlling the price at which essential commodity
may be bought or sold.

   In exercise of the powers conferred by Section 3 of the Essential
Commodities Act, the Central Government ;iromulgated on 27th August H
    312                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 1955, the Sugar Control Order, 1955 and the Sugarcane Control Order,
    1955. Clause 3(a) of the Sugarcane Control Order, 1955 empowers the
    Central Government, after consultation with appropriate authorities, to fix
    in respect of any area 'the price or the minimum price' to be paid by a
    producer of sugar for sugarcane purchased by him in that area. It also
B   empowers fixation of different prices for different areas or different
    qualities of sugarcane or on the basis of recovery of sugar from sugarcane
    having regard to various factors enumerated therein. Clause 3(2) provides
    that no person shall sell or agree to sell sugarcane to a producer of sugar
    or factory and no producer or factory shall purchase or agree to purchase
C   sugarcane at a price lower than that notified under this clause. Clause (4)
    empowers the Central Government to prohibit or restrict or otherwise
    regulate the export of sugarcane from any area for supply to different
    factories and also to direct that no gur or sugar shall be manufactured from
    sugarcane except under and in accordance with the conditions specified in
    a licence issued in this behalf. Clause (5) requires every producer or factory
D   to comply with the directions made under the order. By clause (7) of this
    order, the Sugar and Gur Control Order, 1950 was repealed.

         On 16. 7.1966, the Central Government notified the Sugarcane (Control)
    Order, 1966. Clause 2(g) defines 'price' to mean the price or the minimum
E   price fixed by the Central Government, from time to time, for sugarcane
    delivered, inter alia, to a sugar factory. Clauses 3 and 3-A bear reproduction
    and read thus :-

    Clause 3 : Minimum price of sugarcane payable by producer of sugar- ( l)
F The Central Government may, after consultation with such authorities,
    bodies or associations 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 -

G         (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;

H         (c) the availability of sugar to the consumer at a fair price;
lJ.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKR!SHNA, J.]   313

     (d) the price at which sugar produced from sugarcane is sold by A
producers of sugar; and

      (e) the recovery of sugar from sugarcane :

      [Provided that the Central Government or, with the approval of the B
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 C
different qualities or varieties of sugarcane.

     (2) No person shall sell or agree to sell sugarcane to a producer of
sugar or his agent, and no such producer or· agent shall purchase or agree
to purchase sugarcane, at a price lower than that fixed under sub-clause
(1).                                                                       D
      (3) Where a producer of sugar purchases any sugarcane from a grower
of sugarcane or from a Sugarcane-grower's Co-operative Society, the
producer shall, unless there is an agreement in writing to the contrary
between the parties, pay within fourteen days from the date of delivery of E
the sugarcane to the seller or tender to him the price of the cane sold at
the rate agreed to between the producer and the sugarcane-grower or
Sugarcane-growers' Co-operative Society or that fixed under sub-clause
(I), as the case may be, either at the gate of the factory or at the cane
collection centre or transfer or deposit the necessary amount in the bank F
account oftne seller or the co-operative society, as the case may be. [Subs.
by G.S.R. 945, dated 18.5.1968].

      (3-A) Where a producer of sugar or his agent fails to make payment
for the sugarcane purchased within        14
                                        days .of the date oi delivery, he shall
pay interest on the amount due at the rate of 15 per c~nt per annum for G
the period of such delay beyond 14 days. Where__payment of interest on
delayed payment is made to a cane-growers' society, the sociefy$tym .pass
on the interest to the cane-growers concerned after deducting adivinlstrative
charges, if any, permitted by the rules of the said society. [Ins. by G.S.R.
62(E) dated 2.2. 1978].                                                         H
    314                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A         (4) Where sugarcane is purchased through an agent, the producer or
    the agent shall pay or tender payment uf such price within the period and
    in the manner aforesaid and if neither of them has so paid or tendered
    payment, each of them shall be deemed to have contravened the provisions
    of this clause.
B
         (5) At the time of payment at the gate of the factory or at the cane
    collection centre, receipts, if any, given by the purchaser, shall be
    surrendered by the cane-grower or co-operative society.

C         (6) Where payment has been made by transfer or deposit of the
    amount to the bank account of the seller or the co-operative society as the
    case may be, the receipt given by the purchaser, if any, to the grower or
    the co-operative society if not returned to the purchaser, shall become
    invalid.

D         (7) In case, the price of the sugarcane remains unpaid on the last day
    of the sugar year in which cane supply was made to the factory on P/ ..mnt
    of the suppliers of cane not coming forward with their claims therefore or
    for any other reason, it shall be deposited by the producer of sugar with
    the Collector of the district in which the factory is situated, within three
E   months of the close of the sugar year. The Collector shall pay, out of the
    amount so deposited, all claims, considered payable by him and preferred
    before him within three years of the close of the sugar year in which the
    cane was supplied to the factory. The amount still remaining undisbursed
    with the Collector, after meeting the claims from the suppliers, shall be
F   credited by him to the Consolidated Fund of the State, immediately after
    the expiry of the time limit of 3 years within which claims therefore could
    be preferred by the suppliers. The State Government shall, as far as
    possible, utilise such amounts, for development of sugarcane in the State.

G Clause 3-A : Rebate that can be deducted from the price paid for sugarcane
    - A producer of sugar or his agent shall pay, for the sugarcane purchased
    by him, to the sugarcane-grower or the sugarcane-growers' co-operative
    society, either the minimum price of sugarcane fixed under Clause 3, or
    the price agreed to between the producer or his agent and the sugarcane-
H   grower or the sugarcane-growers' co-operative society, as the case may be
U.P. CO.OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, l.]   3 J5
(hereinafter referred to as the agreed price) .......... [Subs. by G.S.R. 815(E) A
dated 24.9.1976)

      Clause 4 empowers the Central Government 'or·a State Government,
with the concurrence of the Central Government', to fix the minimum price
or the price of sugarcane to be paid by producers of the khandsari sugar B
for the sugarcane purchased by them with the proviso that the minimum
price or the price of sugarcane so fixed shall not exceed the minimum price
of sugarcane fixed by producers of sugar in the region with a further
proviso that no person shall sell or agree to sell sugarcane to a producer
of khandsari sugar or his agent, and no such producer .or his agent shall C
purchase or agree to purchase sugarcane, 'at a price lower than that fixed
under clause (4)'.

      Clause 5-A provides that where a producer of sugar purchases
sugarcane, from a sugarcane-grower during each sugar year, he shall be
liable to pay, in addition to the minimum sugarcane price fixed under D
Clause 3, an additional price, if found due in accordance with the formula
enumerated in Second Schedule to the Order.

     Under sub-clause (2) of Clause 5-A, an appropriate authority may be
authorised to determine the additional price payable under sub-clause (I) E
who shall intimate the same in writing to the producer of sugar and the
sugarcane-grower.

    Under sub-clause (4), the manner of payment of the additional price
may be prescribed as directed by the Central Government or the State                       F
Government, from time to time.

      Under sub-clause (5), no additional price determined under sub-
clause (2) or sub-clause (3) is required to be paid by a producer of sugar
who pays a price higher than the minimum price fixed under Clause 3 to
the sugarcane-grower, provided that, "the price so paid is not less than the G
total price comprising the minimum sugarcane price fixed under Clause 3
and the additional price detennined under sub-clause (2) or sub-clause (3)."

     Under sub-clause (6), it is provided that any extra price paid by the
producer of sugar to the sugarcane-grower over and above the minimum H
    316                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A sugarcane price fixed under Clause 3, shall be adjusted against the
    additional sugarcane price determined under sub-clause (2) or sub-clause
    (3) and the balance, if any, shall be paid to the sugarcane-grower.

          Sub-clause (7) provides that, additional price shall be payable to the
B sugarcane-grower if he, in performance of his agreement with a producer
    of sugar, has supplied not less than 85% of the sugarcane so agreed.

        Clause 6 empowers the Central Government to: (i) reserve areas
  where sugarcane is grown to determine the quantity of sugarcane which
C a factory will require for crushing during any year; (ii) to fix, with respect
  to any specified sugarcane-grower or sugarcane-growers generally in a·
  reserved area, the quantity or percentage of sugarcane which he by himself
  or as a member of a co-operative society of suga,.cane-growers operating
  in such area, shall supply to the factory concerned; (iii) direct a sugarcane-
  grower or a sugarcane-growers' co-operative society, supplying sugarcane
D to a factory, and the factory concerned, to enter into an agreement to supply
  or purchase the quantity of sugarcane fixed; (iv) direct that no gur or
  khandsari sugar shall be manufactured from sugarcane except in accordance
  with the conditions specified in the licence; and (v) "prohibit or restrict or
  otherwise regulate" the export of sugarcane from any area (including a
E reserved area) except under and in accordance with a permit issued in his
  behalf. Sub-clause (2) makes it obligatory on every sugarcane-grower,
  Sugarcane-growers' Co-operative Society and factory, to whom an order
  is issued under sub-clause ( 1), to supply or purchase the quantity of
  sugarcane covered by the agreement entered into. Any wilful failure on the
F part of the sugarcane-grower, sugarcane-growers' co-operative society and
   factory to do so, is constituted a breach of the provisions of the Order.

         Under Clause 11, the powers under the Order shall, subject to
    specified conditions, be exercisable also by an officer or authority of the
    Central Government and the State Government or any officer or authority
G   of the State Government.

         As a matter of practice, it has been found that in the States such as
    U.P., A.P., Bihar, Tamil Nadu and Haryana, the State Governments have
    been pressurising the sugar producers to enter into agreements for payment
H   of purchase price of sugarcane at a rate higher than that decided under the
U.P.CO·OP. CANE UNION FED~RATION ,.. WESTU.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   317

 Sugarcane (Control) Order, 1966. In the case of Tamil Nadu, it has been A
"frankly conceded that there is no statutory basis and that the State Advised
 Price was merely an executive act intended to resolve a dispute between
 the contending parties. As far as the States ofU.P., Haryana and Bihar are
 concerned, counsel for the respective States and the sugarcane suppliers
 contend that the State is fully empowered under the State Legislation to B
 fix a price. for sale/purchase of sugarcane to sugar producers as a
 'remunerative price' which would take into account several local factors.
 This price is popularly described as 'State Advised Price' (SAP) and
 arrived at by calling for a meeting at the highest level, and after hearing
 the representatives of the contending parties.                               C
     In order to appreciate the contentions urged at the bar, I would take
up the cases arising under the U.P. Sugarcane Act, 1953.

     Mr. Shanti Bhushan, learned Senior Counsel appearing on behalf D
of the West U.P. Sugar Mills Association (the association of sugar
producers), questioned the power of the State Government under the U.P.
Sugarcane Act, 1953 and the subordinate legislation made thereunder to
fix any price for sale of sugarcane by the sugarcane-growers to the
sugarcane factories.
                                                                                         E
      Before we attempt a detailed analysis of the provisions of the Acts,
Rules and Or.ders, we strrightaway notice that in none of them is there any
reference to the so-called 'State Advised Price', which appears to be a term
coined for convenience, either. by the State Government, or by the parties,
and popularised by usage. Even if such an expression is to be found absent F
in the concerned legislations, the question is whether there is a statutory
basis for the 'State Advised Price'.

      The U.P. Sugarcane Act, 1953, as its preamble indicates, is "an Act
to regulate the supply and purchase of sugarcane required for us~ in sugar G
factories and Gur, Rab or Khandsari Sugar Manufacturing Units and other
connected matters'. Chapter II of this Act establishes certain administrative
machinery called 'the Sugarcane Board and the Development Council'.
The functions of the Sugarcane Board are indicated in Section 4 and pertain
to advising the State Government on the following matters :-                  H
    318                SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.

A        (a) matters pertaining to the regulation of supply and purchase of cane
    for sugar factories;

         (b) the varieties of cane which are suitable or unsuitable for use in
    sugar factories;
B
          (c) the maintenance of healthy relations between occupiers or managers
    of factories, cane-growers, Cane-growers' Constitution-operative Societies,
    Cane Development Council; and

C         (d) such other matters as may be prescribed.

         The functions of the Development Council are indicated in Section
    6(1) as unde~ :-

          (a) to consider and approve the programme of development for the
D zone;

         (b) to devise ways and means for the execution of the development
    plan in all its essentials such as. cane varieties, cane seed, sowing
    programme, fertilizers and manures;
E
          (c) to undertake the development of irrigation and other agricultural
    facilities in the zone;

         (d) to take necessary steps for the prevention and control of diseases
F   and pests and to render all possible help in the soil extension work;

         (e) to impart technical training to cultivators in matters relating to the
    production of cane;

G        (t) to administer the funds at its disposal for the execution of the
    development scheme subject to the general or special directions of the Cane
    Commissioner; and

          (g) to perform other prescribed functions pertaining and conducive
H   to the general development of the zone.
U.P. CO·OP. CANE UNION FEDERATION v. WESTU.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   319

      Chapter !II which deals with "Supply and Purchase of Cane" contains A
the fasciculus of Sections 12 to 19. Under Section 12, an officer known
as Cane Commissioner makes estimates of requirements of the quantity of
cane, which will be required by any factory after getting appropriate
infonnation from the factory. Sections 13 and 14 deal with the manner of
keeping information as to the cane-growers and Cane-growers' Co- B'
operative Society by registers and by surveys carried out by the State
Government. Section 15 empowers the Cane Commissioner to reserve and
assign any area for the purposes of supply of cane to a factory in
accordance with the provisions of Section 16 during one or more crushing
seasons as may be specified. It also empowers him to cancel such order
or alter the boundaries of the area so reserved or assigned. Under sub- C
section (2) of Section 15, where any area has been declared as .reserved
area for a factory, the occupier of such factory shall, if so directed by the
Cane Commissioner, purchase all the cane grown in that area, 'which is
offered for sale to the factory'. According to sub-section (3), where any
area has been declared as assigned area for a factory, the occupier of such D
factory 'shall purchase such quantity of cane grown in that area and offered
for sale to the factory' as may be determined by the Cane Commissioner.
There is an appeal provided to the State Government against the order of
the Cane Commissioner passed under sub-section (I).
                                                                                         E
      Then comes Section 16 on which most of the addressed arguments
turn. It reads thus :-

          "16. Regulation of purchase and supply of cane in the reserved
          and assigned areas -
                                                                                         F
          (I)   The State Government may, for maintaining supplies, by
                order, regulate -

                (a)    the distribution, sale or purchase of any cane in any
                       reserved or assigned area; and
                                                                                         G
                (b)    purchase of cane in any area other than a reserved or
                       assigned area.

          (2)   Without prejudice to the generality of the foregoing powers
                such order may provide for -                                H
    320                  SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A                (a)     the quantity of cane to be supplied by each cane-grower
                         or Cane-growers' Co-operative Society in s_uch area to
                         the factory for which the area has so been reserved or
                         assigned;

                  (b) the manner in which cane grown in the reserved area
B
                      of the assigned area, shall be purchased by the factory
                      for which the area has been so reserved or assigned and
                      the circumstance in which the cane grown by a cane-
                      grower shall not be purchased except through Cane-
                      growers' Co-operative Society;
c
                  ( c)   the form and the terms and conditions of the agreement
                         to be executed by the occupier or manager of the
                         factory for which an area is reserved or assigned for the
                         purchase of cane offered for sale;
D
                  ( d) the circumstances under which permission may be
                       granted -

                         (i)    for the purchase of cane grown in reserved or
E                               assigned area by a Gur, Rab or Khandsari
                                Manufacturing Unit or any person or factory
                                other than the factory for which area has been
                                reserved or assigned, and

                         (ii)    for the sale of cane grown in a reserved or
F                               assigned area to a Gur, Rab or Khandsari
                                Manufacturing Unit or any person or factory
                                other than the factory for which the area is
                                reserved or assigned;

G                 (e)    such incidental and consequential matters as may appear
                         to be necessary or desirable for this purpose."

         The contention assiduously canvassed by the State Governments and
    the counsel for the cane-growers is that the power of the State Government
H   under Section 16 is a wide power intended for maintenance of supplies
U.P. CO-OP. CANE UNION FEOERATION v WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.J   321
empowering the State Government by order to 'regulate, inter alia, A
the distribution, sale or purchase of any cane in any reserved or
assigned area'. The contention is that the power to regulate a sale or a
purchase of cane in a reserved or assigned area would necessarily take
within its scope the power to fix the price at which such sale or purchase
can be effected.                                                                         B

      The contention is sought to be buttressed by highlighting that the
object of reservation of sugarcane area is to ensure that there is no
interruption to the supply of sugarcane leading to disruption of the
production of sugar, which has been declared to be an essential commodity. C
Unlike other raw-materials, sugarcane needs to be grown for a specific
period and harvested at a specific time to maintain its sugar content so that
it will yield the maximum sugar when crushed. This determines the
imperative necessity for continuous supply of sugarcane to the sugar
factories depending on their crushing capacity and crushing program. It is D
contended that the economy of the U .P. State and its revenues depend, to
a very great extent, on the crushing of sugarcane and production of sugar.
Molasses, which is the bye-product, is utilised by distilleries for
manufacturing rectified spirit, which in tum is used for the manufacture
of potable liquor and other chemical products. It is also urged that crushing E
of sugarcane results in the bye-product of bagasse, which is used as fuel
or by paper mills. Hence, the counsel contended that, in view of the crucial
importance of timely supply and crushing of sugarcane, the 1953 Act has
conferred upon the State Government the power of regulation of sale and
purchase of sugarcane under Section 16 and the power under Section 17
to ensure speedy payment of cane price. This power the Government F
exercises by calling for a tripartite meeting wherein conflicting points of
view are put forward and ultimately a decision is arrived at as to what
should be the higher price payable which is termed as the 'State Advised
Cane Price'. It is contended, that this power of the State Government to
fix a price higher than the minimum price fixed by the Central Government G
is discernible in the State's power to 'regulate the sale and purchase of
sugarcane' with a view to maintaining supplies. It is also contended that
the word 'regulate' has been held to be a very wide power even
empowering fixation of royalty, higher tariff for electricity, fixing rates for
cinema and so on as evidenced in the following judgments :-                     H
    322                 SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A            I.    Adoni Cotton Mills Ltd. & Ors. v. A.P. State Electricity
                   Board & Ors., (1976] 4 SCC 68                 [para 7]

             2.    State of Tamil Nadu v. Mis. Hind Stone & Ors., (1981] 2
                   sec 205                                       [para 1OJ

B
             3.    K. Ramanathan v. State of Tamil Nadu & Anr., (1985J 2
                   SCC 116                     (paras 11, 15, 18-20 & 23J

             4.    D.K. Trivedi & Sons and Ors. v. State of Gujarat & Ors.,
                   [I 986] (Supp) SCC 20                   (paras 30 & 31 J
c
             5.    Jiyajeerao Cotton Mills Ltd. & Anr. v. MP. Electricity
                   Board & Anr., (1989J Supp (2) SCC 52       [para 32]

             6.    Deepak Theatre, Dhuri v. State of Punjab & Ors., (1992]
D                  Supp I sec 684                             [paras 3-1 OJ

             7.    Quarry Owners' Association v. State of Bihar & Ors.,
                   (2000J 8 sec 655           (paras 25, 26, 31 & 61(c)J

E         Counsel for the sugarcane-growers' and the State also contended that
    the expression 'regulate' is used in Section 16 in the context of maintaining
    supplies and "sale or purchase" . The expression 'sale or purchase' would
    necessarily include all aspects or ingredients of sale as it cannot be gainsaid
    that price is certainly an important ingredient of sale. The provisions of
F   the Sale of Goods Act, Contract Act, Transfer of Property Act, Article
    366(29) of the Constitution of India and a number of authorities were relied
    upon to contend that price is an essential ingredient of sale and that the
    State could regulate it

          That the power to regulate production, supply and distribution of a
G commodity may, in an appropriate context, be wide enough to include the
    power to fix the price, is incontestable. However, the background against
    and the context in which the power of regulation has been given and the
    scheme of the Statute determine the content of such power. The counsel
    for the sugar factories urge that the background, context and evolution of
H   the Statute belie such a construction. From the Sugarcane Act of 1934
U.P. CO·OP. CANE UNI.ON FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   323

down to the U.P. Sugarcane Act, 1953, it would appear that after 1938 there A
has been a distinct shift and the power of price fixation of sugarcane was
taken over by the Central Government for larger reasons of policy. They
point out that in Ch. Tika Ramji & Ors. Etc. v. The State of Uttar Pradesh
& Ors., (1956] SCR 393, the very Act, namely, the U.P. Sugarcane Act,
1953, was challenged as unconstitutional on several grounds including the B
ground that it was inconsistent with the provisions of the Essential
Commodities Act, 1955. After elaborate consideration of the legislative
history of the Act and an analytical contrast of the provisions of the
Essential Commodities Act with the U.P. Sugarcane Act, 1953, the
Constitution Bench of this Court came to the specific finding that the power
to fix minimum price of sugarcane, which existed under the U.P. Act I of C
 1938 had been deleted from the U.P. Sugarcane Act, 1953 since it was
being exercised by the Centre under Clause 3 of the Sugar and Gur
(Control) Order, 1950. In fact, the Constitution Bench of this Court in Ch.
Tika Ramji's case (supra) came to the conclusion that there was no
repugnancy between the Essential Commodities Act, 1955 and the U.P. D
Sugarcane Act, 1953 as they operated in different spheres, there being no
conflict or overlapping in the matter of price fixation. Counsel rely heavily
on the following observations from Ch. Tika Ramji 's case (supra) :-

          (a)    "Even the power reserved to the State Government to fix
                 minimum prices of sugarcane under Chapter V of the U.P. E
                 Act of 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, I 950, issued by it in exercise of the
                 powers conferred under Section 3 of Act.XXIV of 1946.
                                                                                           F
                 The prices fixed by the Centre were adopted by the State
                 Government and the only thing which the State Government
                 required under rule 94 was that the occupier of a factory or
                 the purchasing agent should cause to be put up at each
                 purchasing centre a notice showing the minimum price of
                 cane fixed by the Government meaning thereby the Centre. G
                 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' co-operative societies, the
                 factories and their purchasing agents for the supply and H
    324             SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A               purchase of sugarcane as provided in the U.P. Sugarcane
                Supply and Purc~ase Order, 1954.

                The only provision which was retained by the State
                Government in the impugned Act for the protection of the
                sugarcane growers was that contained in Section 17 whlch
B               provided for the payment of price of sugarcane by the
                occupier of a factory to the sugarcane grower~. It could be
                recovered from such occupier as if it ~e an arrear of land
                revenue. This comparison goes to show that the impugned
                Act merely confined itself to the regulatinn of the supply and
c               purchase of sugarcane required for use in sugar factories and
                did not concern itself at all with the controlling or licensing
                of the sugar factories, with the production or manufacture of
                sugar or with the trade and commerce in, and the production,
                supply and distribution of, sugar.

D               If that was so, there was no question whatever of its
                trenching upon the jurisdiction of the Centre in regard to
                sugar industry which was a controlled industry within Entry
                52 of List I and the U.P. Legislature had jurisdiction to enact
                the law with regard to sugarcane and had legislative
E               competence to enact the impugned Act." (pp. 422-423)

          (b)   " ....... the only question which remained to be considered was
                whether there was any repugnancy between the provisions
                of the Central legislation and the U.P. State legislation in this
                behalf. As we have noted above, the U.P. State Government
F               did not at all provide for the fixation of minimum prices for
                sugarcane nor did it provide for the regulation of movement
                of sugarcane as was done by the Central Government in
                clauses (3) and (4) of the Sugarcane Control Order, 1955.

                The impugned Act did not make any provision for the same
G               and the only provision in regard to the price of sugarcane
                which was to be found in the U.P. Sugarcane Rules, 1954,
                was contained in Rule 94 which provided that a notice of
                suitable size in clear bold lines showing the minimum price
                of cane fixed by the Government and the rates at which the
H               cane is being purchased by the centre was to be put up by
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   325

                an occupier of a factory or the purchasing agent as the c~l]\
                may be at each purchasing centre. The price of cane fi~~d
                by Government here only meant the price fixed by the
                appropriate Government which wo!:lld be the Central
                Government, under clause 3 of the Sugarcane Control Order,
                1955, because in fact the U.P. State Government never fixed B
                the price of sugarcane to be purchased by the factories. Even
                the provisions in behalf of the agreements contained in
                clauses 3 and 4 of the U.P. Sugarcane Regulation of Supply
                and Purchase Order, 1954, provided that the price was to be
                the minimum price to be notified by the Government subject
                to such deductions, if any, as may be notified by the C
                Government from time to time meaning thereby the Central
                Government, the State Government not having made any
                provision in that behalf at any time whatever. The provisions
                thus made by the Sugarcane Control Order, 1955, did not
                find their place either in the impugned Act or the Rules made D
                thereunder or the U.P. Sugarcane Regulation of Supply and
                Purchase Order, 1954, and the provision contained in Section
                 17 of the impugned Act in regard to the payment of
                sugarcane price and recovery thereof as if it was an arrear
                of land revenue did not find its place in the Sugarcane
                Control Order, 1955. These provisions, therefore, were E
                mutually exclusive and did not impinge upon each other
                there being thus no trenching upon the field of one Legislature
                by the other."
                                                               (vide 433-434)
                                                                                          F
          (c)   "Suffice it to say that none of these provisions do overlap,
                the Centre being silent with regard to some of the provisions
                which have been enacted by the State and the State being
                silent with regard to some of the provisions which have been
                enacted by the Centre. There is no repugnancy whatever G
                between these provisions and the impugned Act and the
                Rules framed thereunder as also the U.P. Sugarcane
                Regulation of Supply and Purchase Order, 1954 do not
                trench upon the field covered by Act X of 1955. There being
                no repugnancy at all, therefore, no question arises of the
                operation of Article 254(2) of the Constitution and no H
    326                 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A                  provision of the impugned Act and the Rules made thereunder
                   is invalidated by any provision contained in Act LXV
                   of 1951 as amended by Act XXVI of 1953 or Act X of
                   1955 and the Sugarcane Control Order, 1955 issued
                   thereunder."
                                                                      (p. 435)
B
          These observations of the Constitution Bench in Ch. Tika Ramji's
    case (supra) do support the arguments of the respondents-sugar producers.
    A distinction is sought to be made that Ch. Tika Ramji 's case (supra) does
    not decide the issue as to the content of the regulatory power under the
C   U.P. Sugarcane Act, 1953 and, therefore, these observations are not of any
    avail. This argument cannot be accepted. The question posed before the
    Constitution Bench was one of inconsistency between Central Legislation
    and State Legislation, the State Legislation being the U.P. Sugarcane Act,
    1953. The basis for the decision in Tika Ramji (supra) is that the two
D   operated on separate planes and that the provisions "were mutually
    exclusive and did not impinge on each other" there being no trenching upon
    the field of one legislature by the other. I cannot impute to the Constit:ition
    Bench an incomplete analysis of the provisions of the U.P. Sugarcane Act,
    1953 when it made these observations. The observations necessarily
    suggest to me that the full extent of the State's power under the 1953 Act
E   was reckoned with and compared against the power of the Central
    Government under the Central Legislation after which only the Constitution
    Bench arrived at its finding that there was no conflict and upheld the
    constitutional validity of the U.P. Sugarcane Act, 1953. There was no
    tentativeness or ad hoc1sm in the observations; nor were they made only
F   pro tern.

          The very Statute (U.P. Sugarcane Act, 1953) having the subject
    matter of construction and interpretation by the Constitution Bench, it is
    not open, for this Bench at least, to take a different view with regard to
G   its construction.

          The respondents seek to counter these arguments by seeking to read
    Ch. Tika Ramji's case (supra) in a different manner. According to them,
    the contrast made by Ch. Tika Ramji 's case (supra) between the Central
    Legislation and the U.P. State Legislation was not on the general issue of
H   price, but only with regard to 'minimum price' on which, there being no
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   327
provision in the State Act, no conflict was discovered. The counsel for A
growers contend that Ch. Tika Ramji 's case (supra) had no occasion to
examine repugnance from the stand point of higher price, nor was there
an examination of the scope of Section 16 of the 1953 Act and the ambit
of State's regulatory power in Ch. Tika Ramji 's case (supra).

      A number of arguments were addressed to impress upon us that there B
is no repugnance between the Essential Commodities Act, 1953 read with
Sugarcane (Control) Order, 1966 and the U.P. Sugarcane Act, 1953. It was .
argued that the Central Act does not occupy the whole gamut of price fixing
and as the field of 'price' was not fully occupied, leaving plenty of room
available for exercise of legislative power by the State. In my view, it is C
unnecessary to go into this question. Even assuming that the field of price
is not fully covered by the Essential Commodities Act, 1955, the question
is whether the Statute before us empowers the State government to fix a
price of sale/purchase of sugarcane at a price higher than the price fixed
under the Sugarcane (Control) Order, 1966? The only legislation upon D
which the sugarcane-growers' rely is the U.P. Sugarcane Act, 1953. This
very Act was the subject matter of consideration and interpretation by the
Constitution Bench of this Court in Ch. Tika Ramji 's case (supra). After
comparing this with the provisions of the Essential Commodities Act of
1955 and the Sugarcane (Control) Order, 1966 made thereunder, the
Constitution Bench found that the two did not operate on a collision course E
because the provisions dealt with subjects which are "mutually exclusive
and did not impinge on each other" there being no trenching upon the field
of one legislature by the other. Whether the State Legislature has the power
at all of fixing a purchase price for sugarcane at a price higher than the
minimum price fixed under the Sugarcane (Control) Order, 1966, is a F
question that need not detain me. As and when such an issue arises before
some court, it will be considered by the court. For the nonce, I am
concerned with the interpretation of Section 16 and 17 of the U.P.
Sugarcane Act, 1953 which must necessarily proceed on the hasis of what
has been found in Ch. Tika Ramji 's case (supra) after an examination of
its provisions and the Statement of Objects and Reasons appended to the G
Bill which preceded the said Act of 1953.

      Two further points of distinction were sought to be drawn as to why
the ratio of Ch. Tika Ramji 's case (supra) would not apply to the present
case. First, that Ch. Tika Ramji 's case (supra) did not have the benefit of H
    328                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A .examining the Sugarcane (Control) Order, 1966. Second, that Ch. Tika
    kamji's case (supra) was only concerned with comparing the power to fix
    the minimum price and did not concern itself with the power of the State
    Government to fix any higher price. In my view, these distinctions are
    purely chimerical.

B
        A comparison between the Sugarcane (Control) Order, 1955 and
  Sugarcane (Control) Order, 1966 brings out the hollowness of the first
  distinction. Under the Sugarcane (Control) Order, 1955, clause (1)(2)(c)
  defined 'price' to mean the price fixed by the Central Government from
C time to time, for sugarcane delivered at the factory gate. It then empowered
  the Central Government vide clause (3) to fix in respect of any area 'the
  price' or 'the minimum price' to be paid for the sale/purchase of sugar.
  The only change made in the Sugarcane (Control) Order, 1966 is that the
  expression 'price' has been defined in clause (2)(g) to mean "the price or
  the minimu.m price fixed by the Central Government from time to time",
D for sugarcane delivered, inter alia, to a sugar factory. Clause (3) empowers
  the fixation of minimum price of sugarcane. Sub-clause (2) of clause (3)
  prohibits the sale/purchase or agreement to sell/purchase sugarcane at a
  price lower than fixed under sub-clause (I). Sub-clause (3), however,
  requires the producer of sugar who purchases sugarcane from a grower,
E unless there is an agreement in writing to the contrary, to pay within 14
  days from the date of delivery of the wgarcane or tender within the same
  period the price of the cane sold "at the rate agreed to between the producer
  and the sugarcane-grower or Sugarcane-growers' Co-operative Society or
  that fixed under sub-clause (1 ), as the case may be". Consequently, if the
F parties have agreed upon a higher price, the Sugarcane (Control) Order,
   1966 recognises that and obligates such amount to be paid. This is also
  recognised by clause (3-A) dealing with the rebate that can be deducted.
  Under this clause, the producer of sugar is required to pay "either the
  minimum price of sugarcane fixed under clause (3) or the price agreed to
  between the producer or his agent or the sugarcane grower or the
G Sugarcane-growers' Co-operative Society, as the case may be (hereinafter
  referred to as 'the agreed price')".

          In addition, Section 5 and 5-A deal with the additional amount to be
    paid by the producer of the sugar 'in addition to the minimum sugarcane
H   price fixed under clause (3 )'. The distinction that is sought to be drawn,
      U.P. CO-OP. CANE UNION FEDERATION'· WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   329

      therefore, has no basis in my view. The Sugarcane (Control) Order of 1955 A
      talked only in terms of minimum price and did not deal with additional
      price. The Sugarcane (Control) Order, 1966, after enumerating the
      mechanism for fixation of minimum price, goes on to indicate that, if the
  1   parties agree upon it, a rate higher than that minimum rate would become
      payable and deals with the matter of enforcement of such payment, B
      calculation of the rebate, under clause (3-A), set-off available of the
      additional amounts against advances and such other issues.

            I am, therefore; unable to accept the first distinction made for and I
      think that the observations in Ch. Tika Ramji 's case (supra), though made
      in the context of Sugarcane (Control) Order, 1955, are equally applicable C
      in the context of the Sugarcane (Control) Order, 1966. Now to the second
      distinction. Ch. Tika Ramji 's case (supra) was considering the conflict
      between the provisions of the Central Legislation, namely, the Essential
      Commodities Act, 1955 and the U.P. Sugarcane Act, 1953. Under Section
      3 of the Essential Commodities Act, 1955, the Central Government is D
      specifically empowered, inter alia, to 'regulate' the production supply and
      distribution of the essential commodity or trade and commerce therein and
      also may provide for controlling the 'price' at which the essential
      commodity may be bought or sold. The power to 'control the price' is of
      the widest amplitude and takes into its fold the power to fix the minimum E
      price, the fair price, the remunerative price or even the maximum price.
      It was this power which was contrasted with the power of the State
      Government under the U.P. Sugarcane Act, 1953. After making such a
      contrast, Ch. Tika Ramji 's case (supra) came to the specific conclusion that
      the State Act did not, in any way, impinge upon the area covered by the F
      Central Act as the provisions of the two Acts are "mutually exclusive and
      did not impinge on each other" there being no trenching upon the field of
      one legislature by the other. While contrasting this power of the Central
      Government and its exercise under the Sugarcane (Control) Order, 1955,
'.,   as against the powers of the State Government under the provisions of the
      U.P. Sugarcane Act, 1953, Ch. Tika Ramji's case (supra) discerned no G
      power for price fixation in the State Government under the provisions of
      1953 Act and that is why its constitutional validity was upheld. In fact,
      when Ch. Tika Ramji's case (supra) fails to discover any provision in the
      State Legislation for minimum price fixation with regard to sale/purchase
      of sugarcane, and upholds its constitutional validity on that very ground, H
    330                SUPRCME COURT REPORTS [2004] SUPP. 2 S.C.R.

A it would be futile to attempt to discover in the State Act a power to fix
    a price higher than the minimum price.

          Another interesting contention advanced on behalf of the sugarcane-
    growers' is that there is a distinction between 'minimum price' fixed,
B   which is exclusively within the province of the Central Government under
    the provisions of the Essential Commodities Act, 1955 and what the State
    seeks to fix is 'fair price' or 'remunerative price'. It is contended that the
    two are not repugnant, there being no conflict between the Centre's power
    to fix 'minimum price' and the State's power to fix the 'remunerative price'
    or the 'fair price'. In my view, the question is not one of repugnancy. The
C   question is one of tracing the source of the power, if, at all, it exists. By
    merely calling it 'fair price' or 'remunerative price', one cannot wish away
    the consequences of non-payment thereof. The coasequence of not paying
    the minimum price is penal liability incurred under the provisions of the
    Essential Commodities Act, 1955 read with the Sugarcane (Control) Order,
D   1966. I see no corresponding legislative provision for non-payment of the
    so-called 'fair price' or 'remunerative price' under the U.P. Act of 1953.

          Even assuming that such a power of higher price fixation exists, the
    power can only be adjudicatory in nature. The minimum price is the price
E   which when fixed has to be paid by all purchasers of cane. Anything higher
    than that would require adjudication of rival claims for which I see no
    machinery under the U.P. Sugarcane Act of 1953 or under the delegated
    legislation made thereunder. There are also no guidelines indicated in the
    1953 Act as to the basis on which the so-called fair price, rem11nerative
F   price or State Advised Price is to be arrived at. To fix the State Advised
    Price much above the centrally fixed minimum price, and that too by an
    executive fiat, may render the constitutionality of such power open to
    challenge as arbitrary and hit by Article 14 of the Constitution.

          Looked at from the practical point of view, if the contention of the
G cane-growers is accepted, what is payable in the State would, in reality,
    be the minimum price payable for sugarcane. Calling it as the 'fair price'
    or 'remunerative price' would merely be a matter of semantics and not
    substance. An illustration from the field of industrial adjudication may be
    considered. A minimum wage is payable under the Minimum Wages Act,
H   1948. All industries are required to pay this; or else, they have no right
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SR!KR!SHNA, !.]   331

to exist and must necessarily close down [See in this connection Messrs. A
Crown Aluminium Works v. Their Workmen]. Employers are not precluded
from voluntarily paying wages higher than minimum wages to the
workmen. However, if the workmen want to enforce a fair wage, a rate
of wage higher than the minimum wage, it can only be done by an elaborate
process ofadjudication envisaged under the Industrial Disputes Act, I 94 7. B
It is only by such an award adjudicated by that process which can fix a
rate higher than the minimum rate of wages. In my view, this principle
would equally apply to a situation of fixing of the fair price for purchase
of cane. I see no adjudicatory machinery, nor guidelines, under the U.P.
Sugarcane Act of 1953 for doing it. Except the bald reference to 'regulation C
of sale and purchase of cane', there is nothing else therein to indicate the
mode, conditions under which, or the guidelines subject to which such an
exercise of fixing the fair price can be exercised, and that too by a mere
executive fiat. I find it extremely difficult to infer such a power of fixation
of price higher than the minimum price in a Statute which is utterly bereft
of any adjudicatory mechanism or guidelines, particularly when the D
subordinate legislation is replete with references to the 'minimum price
fixed by the Government', which too was interpreted by Ch. Tika Ramji 's
case (supra) as the 'minimum price fixed by the Central Government'. I
am, therefore, unable to accept this argument.
                                                                                          E
     Based on the doctrine of contemporanea expositio, counsel for the
sugarcane-growers' attempted to read the State's power by reference to
some provisions of the subordinate legislation made under the U.P.
Sugarcane Act, 1953.

      Clause 3 of the U.P. Sugarcane Order, 1956 was referred to. Under
                                                                                          F
this clause, the occupier of a factory is required to estimate by 3 lst of
October every year the quantity of cane which each grower enrolled is
required to offer in Form A to supply cane grown in the reserved area to
the occupier of the factory. Correspondingly, the occupier of the factory,
for which the area has been reserved, is required within 14 days of the G
receipt of the offer to enter into an agreement in Form B or Form C of
the Appendix, with tlie cane-grower or the Cane-growers' Co-operative
Society. A reference to Form B and Form C indicate that what is
contemplated therein is only an agreement by the first party cane-grower
to sell cane to the second party 'at the minimum price notified by H
    332                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A Government subject to deductions, if any, .as may be notified by the
    Government from time to time'. There is hardly anything in this which
    supports the contention advanced. Thus, it would appear that the U.P.
    Sugarcane Order, 1954 did not contemplate anything more than the
    minimum price fixed by the Government to be stipulated in the form of
B   a statutory contract.

        In the U.P. Sugarcane Rules, 1954, Chapter IX deals with payments.
  The only reference made in the Rules to the price, as indicated in Ch. Tika
  Ramji 's case (supra), is in Rule 94. Rule 94(b) requires a notice to be put
C up by the occupier of a factory in suitable size in clear bold letters showing
  the 'minimum price' of cane fixed by the Government and the rates at
  which cane is being purchased at the centre. It is not the 'cane-growers'
  case before us that the State Government ever fixes the 'minimum price'.
  As observed in Ch. Tika Ramji 's case (supra), the reference here is
  obviously is to the minimum price of cane fixed by the Central Government.
D The reference to the rates at which the cane is purchased in a particular
  factory could be conceivably to the agreed price between the cane-grower
  and the producer of sugar.

          There is no doubt that the provisions of the Sugarcane (Control)
E Order, 1966, the U.P. Sugarcane Act, 1953 and the subordinate legislation
    thereto permit the sugarcane-grower and the sugar producer to agree upon
    a price at a rate higher than the rate fixed by the Central Government
    statutorily. What may be permissible consensually between the parties does
    not empower the State to fix a price higher than the statutory minimum
F   price on pain of sanction for disobedience.

        It is contended for the cane-growers that the Sugarcane (Control)
  Order, 1966 itself recognises that the parties may, by an agreement, pay
  a rate higher than that fixed by the Central Government and, if there is such
  an agreement, the agreed rate would be substituted for the minimum rate
G fixed by the Central Government; such an agreement need not be evidenced
  by any writing as it car. be an ora! agreement also, since oral agreements
  are permitted under Section I 0 of the Indian Contract Act, 1872 in the
  absence of a law to the contrary. Such oral agreements are also capable
  of enforcement as much as an agreement in writing. Section 16(2)(c) of
H the U.P. Sugarcane Act, 1953 confers powers to prescribe forms and terms
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   333

of the agreement to be executed by the occupier or manager of the factory A
for purchase of sugarcane. Chapter IX of the Rules prescribed thereunder
deals with payment of cane price and issuance of parchas. By reason of
the Rules and the U.P. Sugarcane Order, 1954, vide clause 3(3) requiring
agreements to be entered into by prescribed forms, requisition, slips/
parchas are issued which would indicate the cane price, total quantity of B
cane supplied and the total amount payable. Once such a parcha has been
issued indicating the quantity of cane supplied, the rate at which the cane
is supplied and the total amount payable, the agreed rate indicated becomes
payable in lieu of the minimum rate fixed by the Central Government and
would have the same legal efficacy as the minimum rate fixed by the C
Central Government.

      That there is sufficient leeway for consensual payment of a rate higher
than the minimum rate is beyond doubt. If such a rate has been agreed
upon, orally or in writing, then that higher rate substitutes itself in the place
of the minimum rate fixed by the Central Government. The question before D
us is not as to what can be consensually done. The question is, in the
absence of consensus, does the State have the power under the 1953 Statute
concerned to determine a higher rate than the minimum rate as the rate
payable for the cane supplied? I am afraid, the argument begs the question
and does not indicate the manner in which such a power, if it exists, can E
be discovered,

      It is not necessary for me to notice or discuss in detail the authorities
relied upon by the parties to show that there is no conflict between the
provisions of the U.P. Sugarcane Act, 1953, the provisions of the Essential F
Commodities Act, 1955 and the subordinate legislation thereunder. This
exercise has already been done by the Constitution Bench of this Court in
Ch. Tika Ramji 's case (supra) and it is only after this exercise was done
that the constitutional validity of the Act was upheld. I, therefore, decline
to go into the question of 'occupied field', on which much stress has been
~-                                                                                        G
      Another contention urged on behalf of the cane-growers' is that,
under Article 162 of the Constitution, as expounded by the decision of this
Court in Rai Sahib Ram Jawaya Kapur & Ors. v. The State of Punjab,
[ 1955] 2 SCR 225, it is open to the State to issue executive orders even H
    334                 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A ifthere is no legislation in support thereof, provided the State had the power
    to legislate on the subject in respect of which action is taken. It is contended
    that the instant legislation falls within Entries 33 and 34 of List III -
    Concurrent List and, therefore, the State Legislature is fully competent to
    legislate with reference to these entries. Consequently, the executive is
B   equally empowered to issue an order to the same extent by reason of Article
    162 of the Constitution. Hence, even if there is no statutory basis for the
    State Advised Price, it is legal and valid by reason of the exercise of
    executive powers within the meaning of Article 162.

C         The contention is unsound and cannot be accepted. A Constitution
    Bench of this Couit in State of Madhya Pradesh & Anr. v. Thakur Bharat
    Singh, [1967] 2 SCR 454, was presented with the same argument and
    rejected it in the following words :-

             "In our judgment, this argument involves a grave fallacy. All
D            executive action which operates to the prejudice of any person
             must have the authority of law to support it, and the terms of
             Article 358 do not detract from that rule. Article 358 expressly
             authorises the State to take legislative or executive action provided
             such action was competent for the State to make or take, but for
E            the provisions contained in Part III of the ::onstitution. Article 358
             does not purport to invest the State with arbitrary authority to take
             action to the prejudice of citizens and others".

          The observations in Rai Sahib Ram's case (supra) were also explained
F   away in Thakur Bharat Singh 's case (supra) by pointing out that the action
    taken there did not amount to infraction of the guarantee under Article
    19(1)(g) of the Constitution, since no fundamental rights of the petitioners
    were violated by the executive act of the Government done in furtherance
    of their policy of nationalisation of text-books for students. This judgment
    in effect rejects this contention. It is obvious that fixing of a higher price
G   of sugar, compulsorily payable, is a restriction on the fundamental right
    guaranteed under Article 19(1 )(g) and cannot be legally done except under
    a law.

          Much debate was carried out with regard to realisations made by the
H States by sale of molasses and bagasse and as to how the fixing of State
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   335

Advised Price by the States at rates higher than the minimum prescribed A
by the Central Government had resulted in financial loses to the sugar
producers. Certain amount o~ data was also placed on record with a view
to persuading us to take the particular view which was canvassed. After
scrutiny of the data on record, I am of the view that the. data on record
is insufficient to draw any conclusions as urged by both sides. In any event, B
according to me, the discovery of the State's power is a question of law,
which turns upon the construction of statute in question, and not upon the
consequences that may have flowed from the exercise of such power. If
there is such power, then the consequences are justified; conversely, if
there is none, the consequences are not justified. It is needless, therefore,
to be drawn into this controversy with regard to the economic consequences C
of the State Advised Price.

      The construction of the U.P. Sugarcane Act, 1.953 has to be made
against the legislative background. Under Section 3(2) of the Sugarcane
Act, 1934, the State Governments were empowered to fix a minimum price D
or minimum prices for the purchase of sugarcane in a controlled area
intended for use in any factory. In Section 21 of the U.P. Act I of 1938,
there was a specific power vested with the Provincial Government to fix
the minimum price. In respect of any area, the minimum price to be paid
by the occupier of the factories or purchasing agents for cane purchased
in that area could be determined by a notification issued by the Governor, E
after consultation with the Board. A contrast with the provisions of the U.P.
Sugarcane Act, 1953 indicates total absence of such a power to fix a price.
If the 1953 Act intended to grant to the State the power to fix any price
- State Advised Price, remunerative price or fair price as is called - the
Statute would have in terms indicated it and not left it to guesswork or p
inference from the general words used in Sections 16 & 17 of the Act. A
reference to the Statement of Objects and Reasons attached to the Bill
which was moved supports this construction of the U.P. Sugarcane Act,
 1953.

      Much was urged before us as to whether the fixation of State Advised G
Price was merely a populist measure intended to pacify the clamour of one
section of the society, namely, the cane-growers'. Despite the vehemence
with which each side presented its view, it appears to me that this debate
is wholly unnecessary, and misplaced, in a court of law where the
provisions of the Statute have to be construed to ascertain the State's H
    336                 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A power. It was contended that the State exercises its powers by taking into
    account various factors as to what they are and what they ought to be. There
    is no indication whatsoever of these in the Statute. As far as the Statute
    is concerned, it lays down no guidelines for exercise of such power, if any.
    Against the background of legislative history, and the observations made
B   in Ch. Tika Ram.Ji 's case (supra), I am of the view that it is difficult to
    discern any such power in the State to fix the State Advised Price, called
    by whatever name, at a rate higher than the minimum rate fixed by the
    Central Government, which could be made binding on the parties.

          Learned counsel for the sugar producers urged that given the Central
C   Legislation on the subject, namely, the Essential Commodities Act, 1955
    and the statutory orders made thereunder, the State Government had no
    legislative power at all to fix the price of sugarcane. In my view, it is not
    necessary to consider this larger question or to answer it presently. We are,
    for the present, concerned with the U.P. Sugarcane Act, 1953. I see no basis
D   for exercise of such power by the State Government in that Statute. As to
    whether any other suitably worded Statute investing such a power in the
    State Government would conflict with the Essential Commodities Act,
    1953 or not, is not the question that needs to be answered presently. Hence,
    I refrain from expressing any opinion thereupon.

E         In the judgments in S.K.G. Sugar Ltd. 's case (supra) and Jaora Sugar
    Mill's case (supra), it was found, as a matter of fact, that there existed valid
    consensual agreements between the factories and the sugarcane-growers.
    Hence, it was held that higher price which had been agreed had to be paid
    by the sugar factories. In the present case before us, it is pointed out that
F   U.P. Sugar Mills Association had written detailed letters to the Government
    of U.P. in September 1996 to refrain from fixing any State Advised price
    which, the Association declared, would not be binding on the sugar mills
    [see pages 109-116, Vol. II ofC.A. No. 460of1997]. Despite such strong
    protest, the State Advised Price was announced by the U.P. Government
    on 15th November 1996. Immediately thereafter, the associations and the
G   factories have filed their writ petitions before the High Court challenging
    the State Advised Price on 18th November 1996. Consequently, there was
    no occasion for the State Government to exercise its diplomacy and bring
    out a consensual price between the parties; nor was there any occasion for
    the State Government in U.P. to declare a State Advised Price on the basis
H   of consensus. The Division Bench of the Allahabad High Court in the
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA. !.]   337

judgment impugned in C.A. No. 460 of 1997, while allowing the writ A
petition, has held that there was no agreement for paying the State Advised
Price.

       The judgment of this Court in Maharashtra Rajya Sahkari Sakkar
Karkhana Sangh Ltd. & Ors. v. State ofMaharashtra & Ors., [1995] Supp. B
3 sec 475, is distinguishable, since it was decided on its peculiar facts.
The distinguishing feature in that case was that the bye-Jaws under which
the co-operative society was formed, empowered the State Government to
determine the price for supply of sugarcane to be paid to the members as
long as the loans advanced to the co-operative society were not fully paid.
It is in exercise of the power under this bye-law that the State Government C
fixed what it called the 'State Advised Price'. The power of the State was
thus upheld because of the peculiar provision in the bye-laws under which
the sugar producer co-operative society was formed. The Bench further
took the view that if the price fixed by the Government is good for
members of co-operative society, who are as much cane-growers as non- D
members, then there is no reason to hold that such price was bad or it
operated unreasonably for non-members. In view of the fact that zoning
or reservation or fixation of price for each zone were interlinked, the Bench
expressed its view as under :-
                                                                                          E
           "It is difficult to visualise that they would opt or fix a price for
           the sugarcane which would be unremunerative. As explained
           earlier, the price fixed by the Cabinet Committee in exercise of
           power under the bye-law is the State Advised Price. It applies
           uniformly to all cane-growers irrespective of whether they are F
           members of non-members and whether they are in reserved area
           of outside it. To confine it to the members as they having entered
          .into agreement and being members of the cooperative societies are
           bound by it is ignoring the entire price mechanism. Nowhere in
           the country the State Advised ·Price is fixed for one class of
           growers only. 1n absence of any material to show that the fixation G
           by the Government was one-sided or with a view to exploit the
           cane-growers the submission that it did not apply to non-members
           cannot be accepted. The order does not make any distinction
           between members and non-members. Nor does it visualise separate
           mechanism for price fixation for the two. The price is fixed, may H
    338                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A            be, by the Board of Directors or by the State Government under
             bye-laws but the prices are for the reserved area."

        The decision of the Division Bench of this Court in Jaora Sugar
  Mill's case (supra), does not address the question with which we are
B concerned. The finding was that there was consensus ad idem to pay higher
    price of the sugarcane than the minimum price fixed by the Central
    Government and the parties acted thereupon. It was not in dispute that the
    sugarcane-growers had supplied the sugarcane to the sugar factories
    who had utilised the sugarcane for the production of sugar. In the
    circumstances, it was held that the said higher price was the price payable
c   in lieu of the minimum price fixed under the Sugarcane (Control) Order,
    1966.

          In Kothari Sugar & Chemicals Co. Ltd. 's case (supra), the issue arose
    in the context of imposition of the cane purchased tax on the additional
D   price paid over and above what was payable under clause 3 and 5-A of
    the Sugarcane (Control) Order, 1966. In this context, it was observed as
    under :-

             "Thus, unless there be an agreement between the grower and the
E            producer for purchase of the sugarcane at a higher rate, the
             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 statutory basis fixing the sale
F            price of sugarcane 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"[See vide
G            para 5].

             Further, it was held that :-

             "However, as indicated earlier, for treating the entire amount paid
H            by the purchaser as the price of sugarcane supplied, it must be
U.P. CO-OP. CANE UNION FEDERATION••. WESTU.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   339

          found proved as a fact that the higher price including the excess A
          amount was paid as the price of sugarcane under an agreement
          between the grower and the purchaser irrespective of a lower
          amount being fixed as the aggregate of the price fixation under
          clauses 3 and 5-A of the Control Order. Unless a clear finding to
          that eflect is recorded, the amount paid by the purchaser in excess B
          of the aggregate of the minimum price fixed under clause 3 and
          the additional price fixed under clause 5-A , as a part of the
          amount paid as advance prior to fixation of the additional price
          under clause 5-A, cannot be treated automatically as a part of the
          total price of sugarcane."
                                                                                         c
      In S.K.G. Sugar Ltd. 's case (supra), it was merely observed that there
was no prohibition under clause 3 of the Sugarcane (Control) Order, 1966
read with clauses 3 and 5-A for "factories entering in.to an agreement
to pay higher price than the minimum price prescribed under the order,
the object of the order is to ensure that the cane-growers should not D
be compelled to sell their sugarcane at a price lower than the minimum
price prescribed by the Central Government under clause 3 of the Order".
As a matter of fact, it was found that there was an agreement by the
Sugar Factory Owners' Association with sugarcane-growers regarding
fixing of the price of sugarcane at a rate higher than the centrally E
fixed minimum price. In view thereof, it was held that the State Government
was justified in fixing the price of cane at 20.50 per quintal, since this
was agreed to in the tripartite meeting convened by the State Government
in which representatives of both growers and the sugar producers
participated. Hence, the Bench held that this price would be the F
price payable in lieu of the minimum price fixed by the Central
Government.

     None of these decisions is of help in deciding the question before us
today.
                                                                                         G
      In the result, I would summarise my conclusions as under :-

      (I) It is not necessary to opine on the question as to whether the entire
field of price is occupied by the Central Legislation, namely, the Essential
Commodities Act, 1955.                                                          H
    340                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A         (2) The source of the State's power claimed in C.A. No. 460of1997
    is the U.P. Sugarcane Act, 1953 which has been the subject matter of
    careful analysis by the Constitution Bench of this Court in Ch. Tika Ramji 's
    case (supra). Its constitutional validity was upheld on the footing that the
    said Act did not trench upon the field of pricing.

B        (3) There is no power discernible in the provisions of the U.P.
    Sugarcane Act, 1953 with the State Government to fix a price for sale/
    purchase of sugarcane so as to make it binding on the parties or legally
    enforce its payment.

c consensually
       (4) The Sugarcane (Control) Order, 1966 itself enables parties to
               agree to a rate higher than the rate prescribed therein. If such
    higher rate is agreed, then that would become the rate which the sugar
    producers would be obliged to pay and would also become substituted for
    the minimum rate so as to enable the State Government under the
D   provisions of the U.P. Sugarcane Act, 1953 to enforce it in case of default
    by treating it as arrears of land revenue.

          Hence, the following Order:-

                                    ORDER

E STATE OF UTTAR PRADESH
          In C.A. No. 460of1997, the Division Bench of the Allahabad High
    Court allowed the writ petition No. 36889/96 by its judgment dated
    11.12.1996 and quashed the Government's Order fixing the State Advised
F   Price.

         I would dismiss C.A. 460 of 1997. Consequently, C.A. No. 461 ~(.
    1997 filed by the State of Uttar Pradesh and I.A. No. 3 in C.A. No. 460
    of 1997 shall also stand dismissed.

G         C.A. No. 932 of 2001 stands dismissed.

        C.A. No. 1727 of 1999 is allowed and the judgment of the Division
    Bench appealed against in W.P. No. 2086 (M/B) of 1997 is set aside.

         C.A. No. 4602 of 1999 rendered in writ petition No. 775 of 1997
H   dated 1.2.1999 by Lucknow Bench of the High Court of Allahabad is
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [SRIKRISHNA, J.]   34]

allowed and the judgment of the Division Bench appealed against is set A
aside.

     C.A. Nos. 3512-3513 of 1997 are directed against an interim orders
dated 27.2.1997 and 21.3.1997 made by the Division Bench of the
Allahabad High Court (Lucknow Bench) in C.W.P No. 775 (M/B) of 199~ B
pending before it. In view of the fact that the law has been declared by
this Court, the High Court shall decide the pending writ petition in
accordance therewith. There is no reason to interfere with the interlocutory
orders. Hence, C.A. Nos. 3512 and 3513 of 1997 are dismissed.

      C.P. No. 63 of 2003 in C.A. No. 932 of 2001 alleges contempt of C
the interim order dated 31.01.2001 made by this Court in Civil Appeal No.
460 of I 997. It may be placed before an appropriate Bench for hearing on
merits.

STATE OF BIHAR                                                                            D

      The applicable Statute in the State of Bihar is the Bihar Sugarcane
(Regulation of Supply and Purchase) Act, 1981. Sections 42 and 43 deal
with the question of 'minimum price' of cane supplied to ~ unit. Section
42 deals with the payment of price of cane supplied to a unit. Although E
this Section empowers the State Government, after consulting the Board,
to determine by notification the minimum price of cane payable by owners
of units to the cane-growers' or co-operative societies for cane supplied,
the proviso to Section 42 clearly sa¥s that 'the minimum price so
determined shall not exceed the minimum price payable by the occupier F
of a factory under any law for the· time being in force' in respect of the
cane supplied. Thus, it is clear that this Section does not contemplate
payment of any price more than the one paid under the Suga~cane (Control)
Order, 1966. There is no other provision in the Act empowering the State
Government to fix higher price for sugarcane.
                                                                                          G
      The High Court was, therefore, justified in allowing the writ petition
filed by the sugar producers.

     C.A. No. 4685 of 1997 filed by the State of Bihar is hereby
dismissed.                                                       H
    342                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A STATE OF ANDHRA PRADESH

          The State Govemmen(s power was sought to be traced to the
    provisions of the Andhra Pradesh Sugarcane (Regulation of Supply and
    Purchase) Act, 1961 which appears to be pari materia with the legislation
B   in U.P. Following the judgment in Ch. Tika Ramji's case (s~), the
    Division Bench of the Andhra Pradesh High Court in its judgment dated
    8.5.2001 in writ appeal No. 902 of 1999 held that no such power of fixing
    a higher rate for purchase of sugarcane was discerned in the State
    Government under the said Act. I agree with this view.

C C.A. Nos. 8117-8122uf2001 and the Civil Appea/@SLP (C) No. 16851
    of 2001 are dismissed.

    STATE OF PUNJAB

D         In this State, the corresponding legislation is the Punjab Sugarcane
    (Regulation of Purchase and Supply) Act, 1953 together with the Rules
    made thereunder. The power of the State Government to fix the price is
    sought to be derived from Section 3. Upon interpretation of this provision
    of the State Legislation, the Division Bench of the High Court of Punjab
E   & Haryana, by its judgment dated 23.12.1998 in CWP No. 19816of1996,
    held that there was no such power in th'! State Government and struck down
    the orders for payment under the State Advised Price holding that the sugar
    producers cannot be compelled to pay a price for the sugarcane over and
    above the minimum price fixed by the Central Government. The Division
    Bench also took the view that this did not preclude the parties from entering
F   into agreement for payment of higher price. The State Government, being
    aggrieved, is in appeal.

         I would agree with the view expressed by the High Court and dismiss
    Civil Appeal No. 6065 of 2001.
G
    STATE OF HARYANA

         The Civil Appeal arising out of SLP (C) No. 948 of 2003 is directed
    only against an order in Writ Petition No. 11702 of2002 dated 20.12.2002
H   by which the Division Bench of the High Court of Punjab & Haryana
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSONc [SRIKRISHNA, J.]   343

vacated the interim orders which had been passed in favour of the A
petitioner. The said writ petition is presumably pending before the High
Court. The instant appeal is, therefore, dismissed. The High Court shall
decide the pending writ petition in accordance with the law declared by
this Court.
                                                                                          B
     The Civil Appeal arising out ofSLP (C) No. 1363 of2002 is directed
against the judgment of the Division Bench of the High Court of Punjab
& Haryana in writ petition CWP No. 19816 of 1996 dated 23.12.1998.
Here, the High Court has allowed the writ petition of the sugar producers
by holding that the State Government had no power to fix the State Advised
Price at a rate higher than the centrally fixed minimum price for purchase C
of sugarcane and that the purchasers cannot be compelled to pay such
higher price except when there is an agreement between the purchasers and
the cane-growers to pay such higher price.

     I would dismiss the appeal arising out of SLP (C) No. 1363 of D
2002.

      Civil Appeal Nos.1639-45/99 are directed against the common
judgment of the Punjab and Haryana High Court in C.W.P.Nos. 558/97,
3847/97, 3921/97, 16035/97,15316/97, 14761/97 and 6802/97. The High E
Court had in these judgments held that the appellants before us had not
made full payment along with interest towards the purchase price of
sugarcane supplied to the appellant by relying on the provisions of section
 I SA of the Punjab Sugarcane (Regulation of Purchase and Supply) Act,
 1953. The High Court rightly dismissed the writ petitions. I see no reason F
to interfere with the judgment of the High Court. I would, therefore,
dismiss Civil Appeal Nos.1639-45 of 1999.

STATE OF TAMIL NADU

      In T.C. Nos. 21-22 of2002 arising out ofT.P. (C) Nos. 648-649 of G
2000, the sugar producers filed writ petitions before the High Court of
Madras challenging the fixation of the State Advised Price by the State
Government. In the counter-affidavits filed by the State, it is expressly
admitted before the High Court that there is no statutory provision for
fixation of any State Advised Price at a rate higher than the centrally fixed H
    344                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A minimum rate for purchase of sugarcane.

          The two transferred cases are remitted back to the High Court which
    shall dispose of the pending writ petitions in accordance with the law
    declared by this Court.
B
          P. VENKATARAMA REDDI, J. : I. To put it in a nut shell, the
  three questions that broadly arise for consideration are : 1) the legal status
  and binding nature of 'State advised cane price', 2. the power of the State
  Government to fix sugarcane price under the provisions ofU.P. Sugarcane
C (Regulation and Purchase) Act, 1953 (hereinafter referred to as U.P. Act)
  and 3. in case such power exists and is exercised, whether the State law
  fixing the price becomes repugnant to the provisions of the Central Law,
  namely the Sugarcane Control Order of 1966 framed under Essential
  Commodities Act. As pointed out by Srikrishna, J. the third question need
D not be answered in case no power to fix the price is discernible from the
  provisions of the U.P. Act of 1953.

        2.1. Turning to first question, I find no statutory basis for the 'State
  advised cane price'. The very expression 'advised' connotes that the State
  advised price has no statutory flavour. If the fixation has been done in
E exercise of statutory power traceable to any provision in the U.P. Act, it
  would be most inapt to describe it as 'advised price'. The statutorily fixed
  price can never take the form of advice. It binds, enforces obedience by
  providing for punishment or penal consequences and does not look for
  volition of the persons concerned for its compliance. But, that is not the
F case here. From year to year, the State Government has been announcing
  the 'advised price' in the hope and expectation that the sugar factories
  in the private sector will also agree to pay that price. It is worth
  quoting a typical order/communication issued by the Government and
  the Cane Commissioner. The following is the communication dt. 15.11.96
G addressed by Principal Secretary to Govt. to the Cane Commissioner
  of U.P. :-

             "As is evident, that for every crushing season State Advised Cane
             Price is announced by the State Government. Accordingly, I have
H            been directed to inform you on the above subject, that the State
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!;!.]   345
          Advised Cane Price payable by all sugar factories for the season A
          1996-97 has been fixed as under:

          a)    For early maturing varieties at mill gate - 76.00

          b)    For general varieties at mill gate                 - 72.00
                                                                                    B
          2. I have also been directed to inform you that during crushing
          seasons 1996-97 the transport deduction for cane supplied to the
          sugar factories at their out centres will continue to be Rs. 3 per
          quintal.                                                                  C
          3. Above orders will be applicable for crushing season 1996-97.

          4. Please take immediate action in the above matter."

                                                             (Sd.)                  D
                                                      Principal Secretary
                                   *** *** ***
Office order dt.15.11.96 issued by Cane Commissioner, UP.
                                                                                    E
          "The State Advised Cane Price is announced by the State
          Government for every crushing season. Keeping this in view, the
          sugar factories have been paying cane price to the cane growers.
          Accordingly, the State Government has announced the State
          Advised Price payable by factories as under:                              F

          a)     For early maturing varieties at mill gate - 76.00

          b)     For general varieties at mill gate                - 72.00"
                                                                                    G
          The above price is for the mill gate and for supply at outcentres.
          Transport deduction will be separate.

                                                     (Sd.)
                                             Cane Commissioner, U.P.                H
    346                 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A        The order of the Cane Commissioner is marked to several officials,
    organisations and occupiers of sugar factories.

          2.2. Even in the counter-affidavits filed in the writ petitions, no
    categorical stand has been taken by the Government that the 'State advised
B   price' is the statutorily fixed price which is legally binding on all
    concerned. On the other hand, the averments in the counter-affidavit give
    a fair indication that it is nothing but advised price in its literal sense. The
    following excerpts from the counter-affidavit filed in writ petition No.
    36889 of 1996 (the corresponding Civil Appeal No. being 460 of 1997)
    make this position clear.
c
             "So far as the State of U.P. is concerned, there are 118 sugar mills
             out of which 70 sugar mills belong to either the Sugar Corporation
             which is the instrumentally of the State or the cooperative sector
             in which the State Government has major share holding and only
             48 sugar mills belong to private sector. Thus, the State Government
D
             is fully justified in law to provide a price of sugarcane for its own
             mills and since the private sugar factories are also aware that the
             cane growers will not supply sugarcane 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
E            is parity in the price of sugarcane throughout the state and it
             removes the element of disparity in any manner."

                                         *** *** ***
             "It has already been stated above that since 1973 the policy of
F
             State Advised cane price is in existence in the State of U.P. and
             it is in existence in all other sugar producing areas of the country.
             The aforesaid policy has been invoked merely for the purposes
             of ensuring that the sugarcane continues to be a cash crop and that
             the cane growers do not resort to any other alternative crop. It is
G            for this purpose that the State Government intervenes and advise
             a price which is remunerative and is comparable to the prices of
             sugar in the State during the relevant period."

          2.3. I may also refer to the order issued by the Government in the
H State of A.P. where the provisions similar to U.P. Act exist and the
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!, J.]   34 7
averments in the counter-affidavit filed on behalf of the Government in A
Writ Petition 2876/99 (corresponding to SLP (c) 16851/01). The relevant
particulars QfGOMS No. 420 (Industries & Commerce, (Sugar) Department)
dated 4.12.98 are as follows :

          "The Government oflndia has announced the statutory Minimum B
          Price of Rs. 527 .00 per M.T. linked to a basic rec~overy of 8.5%
          to be paid by the sugar factories to the cane suppliers, for the year
          1998-99.

          2. In the context of ensuring payment of fair and reasonable cane C
                price to the farmers, who supply sugarcane to the sugar
                factories, the Government elicited the views of sugar cane
                growers and management of sugar factories'.

          3.    The Government after carefully examining the views and
                various issues connected with it, it accordingly advise all the D
                sugar factories, including khandasari units, whether situated
                within or outside the zone of sugar factories in the State, to
                pay a minimum price of Rs. 652.50 per M.T. linked to a
                basic recovery of 8.5% or 1997-98 year's price, whichever
                is higher by each factory/khandasari Unit fqr the sugar cane E
                purchased by it for the year 1998-99 season as against the
                statutory minimum price ofRs.527.00 per M.T. fixed by the
                Government of India.

          4.    All the sugar factories and khandasari units in the State have F
                to pay the State Advised cane price without any monetary
                assistance from the State Government. The payment of
                sugarcane price shall be adjusted against the ultimate price
                payable under price sharing formula under clause 5(A) of
                Sugarcane (control) Order, 1966."
                                                                                      G
      In the counter-affidavit, it is made clear "that the State Government
only advised the sugar factories to pay certain price to the cane suppliers
which is fair and reasonable after eliciting the views of the representatives
of sugarcane growers and managements of sugar factories. It is not true
to state that the State Governml!nt have compelled the sugar factories to H
    348                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A pay the SAP to cane suppliers but sugar factories have to pay the purchase
    tax at Rs.60 per M.T." Again at paragraph 7, it is stated in emphatic tenns
    that the State Government only advises the payment of cane price for the
    welfare of sugar industry and cane growers. In fact, in the course of
    arguments before the High Court, the learned Advocate General appearing
B   for the State rightly took the stand that the State advice price is not an
    'Imposition'.

        2.4. The stand taken by the State Governments in the cases previously
  decided by this Court, viz., Jaora Sugar Mills and SKG Sugars, which has
  been accepted by the Court was that efforts were made by the official
C machinery of the State to convene the meetings and to arrive at an agreed
  price which was notified as the State advised price. Thus, the real basis
  for compliance with the State advised price is the agreement but not its
  statutory authority or binding force. The apparent reason for not notifying
  the price under the provisions of the statute, namely, U.P. Act of 1953
D seems to be the doubt cast on the State's power to fix such price in the
  light of the observations made in Tika Ramji 's case and, it may also be
  attributable to the difficulty arising on account of lack of criteria or
  guidelines undei the Act and Rules regarding fixation of price. Be that as
  it may, the fact remains that the 'State advised price' cannot be said to have
E been fixed in purported exercise of any statutory power and it cannot be
  elevated to the level of a statutory price fixation order. The decisions of
  this Court referred to supra did not hold that the State advised price is a
  statutorily fixed price and is legally binding on the sugar factories on its
  own force. The observation in Jaora Sugar Mills case at paragraph 14 to
F the effect that "the price fixed or agreed is a statutory price" does not mean
  that State advised price was construed as statutorily determined price.
  Apparently, the learned Judges were referring to the two concepts of price
  envisaged by the Sugar Control Order as discussed in paragraph 8 of the
  said decision. But, it does not appear to have reference to the 'State
  Advised Price' as such. However, 1 would like to clarify that the question
G posed by the Court at paragraph 12 i.e. "whether the State Government had
  entered into such a contract" is not accurate and does not fit in with the
  actual decision in the case.

          2.5. In the light of my conclusion that the State Advised Price has
H no statutory basis and legal force, is it necessary to strike down the orders
U.P. CO·OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!, l.]   349

communicating the State Advised Price? That is the next question. In my A
considered opinion, it is not necessary or appropriate to do so. The State
advised price, though lacking
                          ,- the sanction oflaw and its compliance cannot
be ensured against the will of the factory owner, it can still serve as a
framework within which an agreed price over and above the minimum
price fixed under the Central Control Order can be brought about. The law B
does not prohibit the concerned authorities of the State Government from
advising or recommending a price for adoption by the sugar factories. The
authorities entrusted with the various functions under the Act conceived
in the interests of both growers and producers can certainly play a role,
as has been pointed out in Jaora Sugar Mills in bringing the parties to a C
negotiating table and forging a mutual settlement leading to the payment
of the State advised price. The very fixation of State advised price cannot
be legally faulted so long as its compliance is ensured by a voluntary_
process' by which the State advised price can very well become an agreed
price.
                                                                                     D
      3. I. The next and more important controversy is about the State
Government's power to fix the price. Such power is traced to Section 16
of the U.P. Act by the learned counsel appearing for the State and the
Cooperative Cane Unions. There is almost a similar provision in the
corresponding enactments ~n force in the States of Andhra Pradesh, Punjab E
and Haryana. In Bihar and Tamilnadu, there is no such provision. In fact,
Section 42 of the Bihar Act lays down that the minimum price determined
under the Act shall not exceed the minimum price payable under any law
for the time being in force.
                                                                                     F
      It would suffice to confine the discussion to the provisions of U.P.
Act. Section I6 of U.P. Act carries the heading 'Regulation of purchase
and supply of cane in the reserved and assigned areas'. Sub-Section(!)
empowers the State Government, "for the purpose of maintaining supplies",
to regulate (a) "the distribution, sale or purchase of cane in any reserved G
or assigned area" and (b) "purchase of cane in any area other than a
reserved or assigned area". After thus laying down the broad parameters
of regulatory power, it is followe~ by sub-Section (2) spelling out the
specific areas to which such power can extend. The fixation of price of
cane is not one of them. However, sub-Section(2) does not exhaust the field H
    350                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A of operation of the regulatory power. The price fixation could still come
    under the generality of the power reserved under sub-Section (!). It is
    contended with much force that the power to regulate the sale or purchase
    of sugarcane comprehends within its scope the power to fix the price of
    sugarcane. The wide meaning given to the expression 'regulate' in various
B   cases coupled with the fact that price is an essential component of sale is
    harped upon to preserve the power of the State Government to fix the price.
    Mathur, J. has also highlighted the fact that the fixation of a remunerative
    price for sugarcane supplied to factories would go a long way in
    accomplishing the objective of maintaining supplies. The peculiarities
C   associated with harvesting and marketing of sugarcane have been pointed
    out. The need to protect the interests of sugarcane growers has also been
    stressed. These are no doubt weighty considerations which go to support
    the argument that the regulatory power can extend to fixation of price of
    sugarcane supplied to the factories. But, there are equally weighty factors
D   which persuade me to hold, in concurrence with the view expressed by
    Srikrishna, J, that the regulatory power under Section 16 does not extend
    to price fixation.

          3.2. Number of cases were cited at the bar to buttress the argument
    that the import of the word 'regulatory' is wide and expansive enough to
E   cover price fixation. It was noticed in more than one case (for eg. Jiyajirao
    Cotton Mills v. MP. Electricity Board, (1989] Suppl. 2 SCC 52 that the
    expression 'regulate' has no precise or fixed connotation and that it has
    different shades of meaning. There is no doubt that it is a word of broad
    import. Its width and content may vary according to the contextual setting
F   in which the expression occurs. The scheme and thrust of the provisions
    of the relevant statute, the objective of legislation, the legislative intent
    gathered from the legislative history and the run of the provisions contained
    in the enactment can all be taken into account while appreciating the correct
    meaning of the expression 'regulate' in a particular statute. I agree with
G   Srikrishna, J. that the decision in Tika Ramji 's case is the main hurdle for
    giving an amplified meaning to the expression 'regulate' so as to cover
    price fixation. After giving anxious consideration to the issue, I find it
    difficult to distinguish the judgment in the manner in which it was sought
    to be done by the learned counsel appearing for the State and the Union
H   of cane growers. Though the Constitution Bench did not directly deal with
  U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!, J.]   35 J

    the question of interpretation of Section 16 vis-a-vis the power of price A
    fixation, going by the observations made therein and the basis of reasoning
    adopted to arrive at the condusion that there was. no repugnancy, it is fairly
    clear that the Constitution Bench negatived the existence of any provision
    empowering the State Government to fix the price. The Court in addition
    observed that factually, there was no fixation of minimum price by the B
    State Government. On a comparative analysis of the provisions, this Court
    found no repugnancy between the impugned Act (U.P. Act of 1953) and
    the Sugarcane Control Order of 1955. The provisions were held to be
    mutually exclusive and did not impinge upon each other. It is appropriate
· · to refer to the relevant observations made and the reasons given by the C
    Constitution Bench which are crucial. While dealing with the point No.I,
    i.e., whether the U.P. Act of 1953 had trenched upon the subject of notified
    industries falling within the exclusive domain of Parliament, this Court
    noticed that the provisions in the repealed U.P. Act I of 1938 dealing with
    the minimum price of sugarcane were deleted. The following observations D
    may be noticed:

        "Even the power reserved to the State Government to fix the minimum . ,
  prices of sugarcane under Chapter 5 of UP. Act I of 1938 was deleted
  from the impugned Act, the same being exercised by the Centre under
   Clause (3) of Sugar and Gur Control Order, 1950 issued by it in exercise
                                                                            E
  of the powers conferred under Section 3 of Act 24 of 1946. "

         "The prices fixed by the Centre were adopted by the State and the
  only thing which the State Government required under Rule 94 was that
  the occupier of a factory or the purchasing agent should cause to be put F
  up at each purchasing centre a notice showing the minimum price of cane
  fixed by the Government meaning thereby the Centre. " Again it was
  observed in the next para: "the only provision which was retained by the
  State Government in the impugned Act for the protection of the sugarcane
  growers was that contained in Section 17 which provided for the payment G
  of price of the sugarcane by the occupier of a factory to the sugarcane
  growers. It could be recovered from such occupier as if it were an arrear
   of land revenue. This comparison goes to show that the impugned Act
   mainly confined itself to the regulation of the supply and purchase of
   sugarcane required for use in sugar factories ..... "                    H
    352                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A         3.3. Turning then to the question of repugnancy (point No.2), the
    Court after clarifying that both the Parliament and the U.P. State Legislature
    had the concurrent power of legislation under Entry 33 of the List III in
    regard to sugarcane, found no repugnancy between the Central and State
    legislations. Central to the reasoning of the case are the following
B observations :

             "As we have noted above, the U.P. State Government did not at
             all provide for the fixation of minimum prices for sugarcane nor
             did it provide for the regulation of movement of sugarcane as was
C            done by the Central Government in Clauses (3) and (4) of the
             Sugarcane Control Order, 1955.

             The impugned Act did not make any provision for the same and
             the only provision in regard to the price of sugarcane which was
             to be found in the U.P. Sugarcane Rules, 1954, was contained in
D            R.94 which provided that a notice of suitable size in clear bold
             lines showing the minimum price of cane fixed by the Government
             and the rates at which the cane is being purchased by the centre
             was to be put up by an occupier of a factory or the purchasing
             agent as the case may be at each purchasing centre. (emphasis
E            supplied)

             The price of cane fixed by Government here only meant the price
             fixed by the appropriate Government which would be the Central
             Government, under Clause (3) of the Sugarcane Control Order,
F            1955, because in fact the U.P. State Government never fixed the
             price of sugarcane to be purchased by the factories. * * * * * *
             * * * * ** * * * * * * ** * * * * * * ** * * * * * * * * * *
             The provisions thus made by the Sugarcane Control Order, 1955,
             did not find their place either in the impugned Act or the Rules
G            made thereunder or the U.P. Sugarcane Regulation of Supply and
             Purchase Order, 1954, and the provision contained in Section 17
             of the impugned Act in regard to the payment of sugarcane price
             and recovery thereof as if it was an arrear of land revenue did not
             find its place in the Sugarcane Control Order, 1955. These
H            provisions, therefore, were mutually exclusive and did not impinge
U.P. CO-OP. CANE UNION FEDERATION v. WESTU.P. SUGAR MILL ASSON. [REDDI, l.]   353

          upon each other there being thus no trenching upon the field of A
          one Legislature by the other."

      3.4. No doubt, the content of regulatory power under Section 16 was
not discussed by the Constitution Bench. But, as viewed by Srikrishna, J.,
the observations made by the Court necessarily suggest that the State
Government was not invested with the power to fix the price of sugarcane. B
It was argued that the question of repugnancy was considered from the
stand point of minimum price but not the price in general. I find it difficult
to accept this contention. The tenor of discussion more especially the
observations extracted supra would unmistakably indicate that the
Constitution Bench did not consider the question of repugnancy only from C
such narrow angle but it was considered in the broader perspective of the
provisions relating to price and the exercise of power of price fixation by
the State Govt. No particular significance can be attached to the use of the
expression 'minimum price' in the judgment of Constitution Bench
because in one sense, the price ordained to be paid by the State government, D
will become minimum price. In another sense, it may be a more remunerative
or higher price than what is fixed by the Central Government.

      3.5. On a careful reading and analysis of the judgment, I am inclined
to think that the Constitution Bench did not discern any power to fix the
price under the Act. If under Section 16, the power to fix price was to be E
inferred, I have no doubt that the Constitution Bench would have paused
and considered the effect of it on repugnancy. It is only on the premise
that there was no such provision, the Court recorded its conclusion on the
issue of repugnancy. In other words, the Court proceeded on the basis that
the subject of price fixation minimum or otherwise was not dealt with by F
U.P. Act of 1953. It is also not possible to distinguish the decision on the
ground that what was uppermost in the mind of the Constitution Bench was
the factual non fixation of the price by the State Government but not the
power to fix the price. It was on both aspects. Even if the Constitution
Bench recorded its conclusion on the question of repugnancy without G
specifically considering Section 16 and the power to regulate the price that
could possibly flow therefrom, this coordinate Constitution Bench cannot
express a contrary view at this distance of time.

      3.6. In any case, apart from what was held in Tika Ramji 's case, there
are certain features and indicators discernible from the scheme of the U.P. H
    354                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A Act and the legislative history which lead to the irresistible conclusion that
  price regulation was not within the contemplation of the Act. In contrast
  to the preamble of the predecessor Act, namely, the U.P. Sugar Factories
  Control Act, 1938 (as amended by Act 16 of 1952) the expression 'to
  regulate the price of the sugarcane' has been omitted. Then, the specific
B provision contained in the earlier Act (Section 21 of U.P. Act 1 of 1938)
  conferring power on the State Government to fix minimum price and
  Section 22A empowering the State Government to direct payment of
  additional price was omitted, the reason for such omission being the
  promulgation of the Sugar and Gur control Order, 1950 by the Central
  Government, as noticed by this Court in Tika Ram j i's case. Having omitted
C to reenact those provisions, if the U.P. legislature wanted to retain the
  power to fix higher price over and above the minimum fixed by the Central
  Government, it is reasonable to expect the legislature to make a specific
  provision to that effect rather than leaving it to the general regulatory
  power under Section 16 to take care of it. It cannot be gainsaid that the
D power to fix the price and to regulate dealings between the parties
  accordingly is a matter of great importance. When a parallel legislation in
  the Central field was in operation in regard to price fixation, the State
  legislature would not have omitted to enact the specific provision
  empowering the Government to fix the price higher than the minimum
E level prescribed by that legislation if that was the intention of the
   legislature. Such provision would have contained norms, criteria or
  guidelines governing the higher price fixation or at least left them to be
   prescribed by Rules. This is also one of the factors which persuades me
  to think that the price fixation in the guise of regulatory power under
F Section 16 was not within the contemplation of the U.P. State Legislature.
   Srikrishna, J. has also referred to this aspect in his judgment. The learned
   Judge's observations in this behalf are quite pertinent. The conspicuous
   absence of a specific provision relating to price fixation must be viewed
   in the back drop of legislative history and the parallel central legislation
   operating in the field. Both the external and internal aids to construction
G reasonably point to the conclusion that price regulation was not within the
   contemplation of State legislature. In fact, that aspect was consciously left
   out. Above all, the observations in Tika Ramji 's case cannot be explained
   away by clear cut distinguishing features as discussed earlier. I am,
   therefore, of the view that Section 16 of the U.P. Act 1953 cannot be so
H construed as to confer the power on the State Government to fix the price.
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. [REDD!, J.]   355

Section 17 of the Act and the kules are only provisions to ensure prompt A
payment of price and to provide for recovery in case of default. It is only
to this extent a provision exists in regard to price.

      4. I agree with Srikrishna, J, that there is no need to decide the
constitutional question whether the fixation of price by the State Government
clashes with the provisions of Sugar Control Order 1966 promulgated B
under the Essential Commodities Act. As and· when the legislation is
enacted by the State and the price is fixed by the State Government or other
designated authority in terms of such statutory provision, the need may
arise to test the validity of such provisions in the light of Article 254 of
the Constitution. It is a well settled practice of this Court not to render a C
decision on a constitutional issue on hypothetical basis or in anticipation
of future law, especially when the Union of India is not a party to these
proceedings. I, therefore, express no view on the Constitutional issue
relatable to Article 254.

      5.1. Having considered the main points at issue, certain aspects D
concerning the inter-relation between Agreements and State advised price
and the role of State machinery in this regard need to be dealt with. The
ratio of certain decisions of this Court cited at Bar in a bid to impart binding
force to the State advised price should also be considered.

      5 .2. First, I would like to clarify that the signing of an agreement E
incorporating the State recommended Price should not cloud the issue
whether the State Government has statutory authority to fix such price. I
agree with Srikrishna, J. that the existence or otherwise of an agreement
is not determinative of the crucial controversy relating to the power of the
State Legislature or its delegate. If there is no authority to fix the price, F
the fact that the Agreement is entered into adopting the 'State advised
price' does not impart statutory basis to such price. On the other hand, if
there is power under the Statute and such power has been demonstrably
exercised by the State, there is no need to have recourse to the agreement
to sustain the power. It needs to be clarified here that once the agreement G
is arrived at or executed, the price specified therein, even if it be 'State
advised price', has to be paid irrespective of the question whether such
price has statutory flavour. At the same time, it nurst be made clear, as
pointed out by Mathur, J., that the agreement cannot be said to have been
vitiated on the ground of statutory compulsion for the reason that the
statutorily fixed price is incorporated into the agreement. A fortiori, the H
    356                   SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A agreement giving effect to the State .advised price is perfectly valid and
  enforceable unless any vitiating factors under the law of contract are
  established. I would however like to make it clear that the State Government
  or its agents cannot compel or coerce the sugar factories to enter into
  agreements to pay to the growers the 'State Advised Price', even though
B it has no statutory power to fix the price. In the absence of such statutory
  authority, the only course left open to it to ensure higher price to the
  farmers is to strive to evolve an agreement on price by way of consensus.
  In such a case, the State advised price can enter into the terms of agreement.
  Such mutual agreement should be the result of negotiations and voluntary
  acceptance. In some of the decisions, it has been said that agreed price is
C the 'State Advised Price'. It may or may not be always so. It depends on
  the fact whether voluntary agreement as regards the price has been arrived
  at or not. The super-imposition of State Specified Price into the terms of
  the agreement by means of an unilateral action on the part of the
  Government does not obviously pass the muster of agreed price. In short,
D an agreement cannot be forced on the parties in the absence of statutory
  backing, though the State machinery can play a role to evolve an agreement
  through a voluntary process.

          6.1. The next point which needs to be clarified is that the judgments
    in Jaora Sugar Mills' case and S.K.G. Sugars 2 case relied on by Mathur,
E   J. are of little assistance in answering the crucial issues arising in the
    present case. As rightly pointed out by Srikrishna, J., in those cases it was
    found as a matter of fact that there existed valid consensual agreements
    between the factories and the sugarcane growers. It may be that the official
    machinery was instrumental in bringing about such agreements, but that
F   is an immaterial factor. Once the agreement is entered into the price
    specified therein (whether equivalent to State advised price or otherwise),
    is liable to be paid without raising further questions.

       6.2. No support can be drawn even from the decision in Maharashtra
  Rajya Sahakari Shakkar Kharkhana Sangh 's3 case. The following are the
G observations of R.M. Sahai, J. at para 21 :-
               " .... the Central Government did not fix any maximum price
               obviously because the conditions in the agricultural sector differed
    1.    [19971 9 sec 201
    2.    [19971 9 sec 362
H   3.    [995) Supp. sec 475
U.P. CO-OP. CANE UNION FEDERATION v. WESTU.P. SUGAR MILL ASSON. [REDOI, J.]   357

           from State to State. Therefore, it having fixed a minimum price A
           expects the State to offer remunerative price to its cultivators. In
           a controlled economy, the price fixation machinery is to be
           determined by the Government or under the 1966 Order in the
           manner provided therein ....."

       The observations must be confined to the facts and the issue arising
                                                                                    B
therein. The distinguishing feature in that case, as pointed out by Srikrishna,
J., is that the bye-laws of the co-operative society empowered the State
Government to determine the price of the sugarcane to be paid to the
members so long as the loans advanced to the co-operative society were
not fully paid. It is this bye-law that empowered the State Government to C
fix the price. No question arose in that case regarding interpretation of
Section 16 of U.P. Sugarcane Act or the conflict between the State and
Central law.

      7. Now, a Summary of conclusions :                                            D
      I)    The State Advised Price has no statutory flavour. It is not fixed
            or purportedly fixed in exercise of any statutory power. It is only
            persuasive or recommendatory in nature. The sugar factories
            cannot be compelled or coerced to pay that price by taking any
            steps not sanctioned by Jaw.                                        E

      2)    The U.P. Sugarcane (Regulation of Supply and Purchase) Act,
            1953 does not confer the power on the state government to fix
            the price of sugarcane. Such power cannot be spelt out from
            section 16.                                                   F
     3)     In view of conclusions(!) and (2) it is not necessary to express
            any opinion on the constitutional issue of repugnancy between
            the central and the state law. The finding recorded on this aspect
            by the Allahabad High Court in writ petition No. 36889 of 1996
            is set aside. That question of Jaw is left open.
                                                                               G

     4)     The writ or direction issued in some of the writ petitions to
            'enforce' the State Advised Price irrespective of the consent of
            the occupier of sugar factory is declared illegal and hereby set
            aside.                                                           H
    358                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A         5)   Although the State Advised Price has no sanction of law, the
               action of the State government in notifying the State Advised
               Price and advising the sugar factories to comply with the same
               is not per se illegal. The State Advised Price can serve as the
               framework within which the agreement as to price can be
               reached between the cane growers and the sugar producers.
B              Therefore, the orders issued by the state government I Cane
               Commissioner commur.icating the fixation of State Advised
               Price need not be set aside.

          6)   There is no legal taboo against the State government machinery
c              playing a role in evolving an agreement between the cane
               growers and the sugar producers as to the price, without
               adopting any coercive methods.

          7)   Once the occupier of sugar factory reaches an agreement with
               the cane grower - may be on the persuasion of the state
D              authorities, to pay the price equivalent to State Advised Price
               either by executing a formal agreement in this behalf or
               otherwise, the occupier of the factory is bound to pay such price
               and in case of default it can be recovered by the State authorities
               by coer>:ive process laid down in the statute.
E
          8)   Whether or not there is an agreement to pay particular price is
               a question of fact. In the absence of express agreement, it is not
               impermissible to look into other evidence, if there is a dispute
               on the question of the price agreed to be paid.

F        The writ petitions and transferred cases shall be disposed of by the
    respective High Courts de nova in the light of the declaration of law and
    the observations made above. Accordingly Civil Appeals/S.L.Ps. other
    than those mentioned in the last paragraph stand disposed of.

G        However, I.A.Nos. 13-14 in C.A. Nos.3512-3513of1997, S.L.P.(C)
    Nos. 948 of2003 and 1363 of2002 arising out of interim orders and C.A.
    Nos.1639- I 645 of 1999 relating to recovery of agreed price are dismissed.
    Contempt case to be posted before the appropriate Bench.

          G.P. MATHUR, J.: V.M. Singh has preferred this appeal against the
H judgment and order dated 11.12.1996 of Allahabad High Court in Civil
U.P. CO-OP. CANE UNION FEDERATION v. WEST U.P. SUGAR MILL ASSON. (G.P. MATHUR, J.]   359

Misc. Writ Petition No. 36889of1986. The appellant V.M. Singh was not A
a party to the writ petition. We have set aside the impugned judgm<;nt and
order dated 11.12. I 996 of the High Court in Civil Appeals No. 460 and
461 of 1997. Therefore, no separate order is required to be passed in the
present appeal. The appeal is accordingly disposed of.

                                      ORDER                                                B

      In view of the majority judgment.

     C.A. Nos. 460/97 and 461/1997 are allowed and the judgment and
order dated 11.12.1996 of the I:Iigh Court is set aside;            C
     C.A. Nos. 1727/99 and 4602/ I 999 are dismissed and the judgment
and order dated I .2.1999 of the High Court is affirmed;

      C.A. Nos. 4685/97 is allowed and the judgment and order dated
4.2.1997 of the High Court is set aside and the writ petition is remitted back D
to the High Court for fresh consideration in accordance with Jaw;

     C.A. No. 6065/2001 & SLP (C) 1363/2002: Leave granted in SLP(C)
1363/2002. The appeals are allowed; The writ petitions are remitted back
to the High Court for fresh consideration.
                                                                                           E
     C.A. Nos. 8117-22/2001 and SLP(C) 16851/2001 : Leave granted in
SLP (C) No. 16851/2001. The appeals are allowed; the writ petition is
remitted back to the High Court for fresh consideration.

    TC Nos. 21 & 22/2003 : These transferred cases are disposed of;                        F
SLP(C) No. 948/2003 : The special leave petition is dismissed;

      I. A. No. 3/2002 In CA 460/J 997 is dismissed;

      C.A. No. 932/2001 is disposed of; and
                                                                                           G
     C.A. Nos. 1639-45/99, CP No. 63/2002 in CA No. 932/2001 and IA
Nos. 13-14 in CA Nos. 3512-3513/97: List before an appropriate Bench.

S.K.S.                                               Appeals/Petition disposed of.