Holding

The term "foodstuffs" under the Essential Commodities Act, 1955 includes cooked food, and the price‑fixation orders are valid and not violative of Article 14.

Summary

The State of Andhra Pradesh issued orders fixing maximum prices for certain cooked food items served by catering establishments under the Essential Commodities Act, 1955. Several hoteliers challenged the orders, arguing that the term "foodstuffs" in the Act does not cover cooked food and that the price fixation was arbitrary and violative of Article 14 of the Constitution. The Supreme Court held that "foodstuffs" includes cooked food, as the expression was intended to have the same wide meaning as in the 1946 Act, and that the power to fix prices under Section 3 extends to articles made from raw foodstuffs. The Court also declined to scrutinise the mechanics of price fixation, finding no evidence of hostile discrimination or unprofitability. Consequently, the petitions were dismissed with costs, and the stay orders were vacated, allowing the price control orders to operate.

Issues considered

Whether the expression "foodstuffs" in the Essential Commodities Act, 1955 includes cooked food.
Whether the State Government has authority under Section 3 of the Essential Commodities Act to fix prices of cooked food items.
Whether the price fixation orders are arbitrary and violative of Article 14 of the Constitution.
Whether the court may interfere with the executive's mechanics of price fixation.

Legislation cited

Constitution of Indias. 14, s. 19, s. 32
Essential Commodities Act, 1955s. 2, s. 3

Subjects

Essential Commodities Actfoodstuffscooked foodprice controlarbitrarinessArticle 14constitutional lawprice fixationcatering establishments

Judgment

WELCOME HOTEL AND OTHERS '
v.

STATE OF ANDHRA PRADESH AND OTHERS

B August 22, 1983

[0. A. DllSAI AND 0, CHINNAPPA REDDY, JJ.J ·

Andhra PrfJlksh Catering Establishments (Fbiation <111d Display of Prices
of Foo/!stuffs) Order, 1978-Validity of.
c Essential Commodities Act, 1955-S. 2(•) (•)-"Foodstuffs", meaning of-
Whether it includes cookedfood?-Mechanics of price fixation under the Act-
Extent of scope for interference by Court.

The Government of Andhra Pradesh, in exercise of powers conferred
under .the Essential Commodities Act, 1955 promulgated the Andhra Pradesh
D Catering-Establishments (Fixation and Display of Prices of Foodstuffs) Order,
19i8 fixing the maximum· prices of seven items of cooked food listed in the
Schedule thereto. As the hoteliers in the State raised a hue and cry, the State
Government effected an upward revision of the prices fixed by an Amendina
Order dated December 11, 1980. The hoteliers were not satisfied with that and
' negotiations were held between them and the Minister of Civil Supplies and
as a .consequence another order dated January s, 1981 w3.s issQed effecting Yet
another upward revision in the maximum prices fixed and also reducing the
number of scheduled items from seven to six. Ignoring this order which
replaced the earlier orders, the. petitioners approached this Court questioning
the validity of the earlier orders_ and obtained an ex parte stay.
' "

The contentions raised were: (i) that the State Government was not
competent to issue any price control measure in respect of 'cooked food' as the
~xpression 1 foodstuffs' under the Act ineans raw foodstuffs only; and (ii) that
the fixation of maximum prices of scheduled items under the impugned orders
was arbitrary and violative of Art. 14 inasmuch as the prices were economically
unprofitable as the same had been arrived at without scientifically examining
tho pricea of inputs, over·head chargea, otc.
Cl
Di1mi1sins the petition&,

HELD : I. The expresssion 'foodstuffs' in s. 2(a) (v) of the Essential
Commodities Act 1955 includes cooked food. If power to control prices of
raw foodstuffs su~h as rice or wheat in conferred by s. 3, there is no justification
for that power not comprehending within its fold the power to regulate prices
B of articles made out of such raw foodstuffs. L678 A·CJ

. (I) The Essential Commodities Act, 1955 has· the same object as \he
1'"6 fl.ct "1d ther~fore the expression 'foodstuffs' in the 1955 Act must receiv~
WELCoMB HO'l'EL v. AND!IRA PIW>ES!l 675

the same construction which it received under the 1946 Act. Expressions such
as •food crops', 'spices' and 'condiments! indicate differ~nt spices of artieles of A
food but the general expression 'foodstuffs' was interpreted in the context of
the 1946 Act to include spices and condiments also. It was pointed out that •
althollgh expressions 'food' and 'foodstuffs' could be used in both a wide and a.
narrow sense, the ex.pr~:ssion 'foodstuffs' .had been used in a wider sense in .
the 1946 Act. [579 D-Gj
8
4
State of Bom~ay v. Virkumlr Gulabchaad Shah, [1952] S.C.R. 877
referred to.

(ii) The expression •food' has generally been understood to mean
nutritive material absorbed or taken into the body of an organism which serves
for purposes of growth, work or repair and for the maintenance of the vital C
.process. What human beings ·consume is styled as food and what itnimals .
consume is described as animal feed. This distinction has to be borne in mind ..
The expression •foodstuffs' is made of two expressions, •food' and 'stuff'. In
other words, the stuff which is used as food would be foodstuff .. Therefore,
foodstuff is that which is taken into the system to maintain life and growth
and to supply for waste of tissue. If raw foodstuff with a View to making it
consumable by human beings undergoes a change in its condition by the D
process of cooking, the derivative is· none the less foodstuff. (679 H, 680 A-BJ

(iii) That the expression •foodstuff' as used in the 1955 Act comprehends
cooked food is also clear from the fact that •food crop' has been separately
defined in the Act. [680 DJ
E
2. (a) The mechanics of price fixation has necessarily to be left to the
·judgment of ihe executive and unless it is patent that there is hostile discrimi-
nation against a class of operators, the processual basis ·of price fixation has to
be accepted in the generality of ca~es as valid: [681 G-H]

Prag lee & Oil Mills & Anr. v. Union of India, [1978] 3 s.c.R. 293 F
relied on.

(b) The petitioners ordinarily do not serve only the sc:1eduled itents,
but they have large establishments catering to various tastes and delicacies.
No price fixation order need guarantee profit to an establishment in respect of
each unit of article served or sold. It is the overall picture iJ;l the trade ot
. con1I11erce that needs to be examined. - The petitioners have not shown that in
. their overall turnover they have s~nce the promulgation of Impugned orders G
suffered losses. And this situation never fructified because the 1978 Order was
kePt in suspend~d animation for a period of two years and. when the latest
order dated January 5, 1981 was promulgated it was still-born at the hands
of the Court because of the ex Parle stay orde; obtained by the petitioners.
(681.D-FJ
H
~- ORIGINAL JuRISDICTJON: Writ Petition Nos. 43 of 1981, 51-53,
415-18/81, 5465-5562/83, 1751-52/81 and 7763-7890 of 198~'.
SUPJuiMll COURT REPORTS (! 98313 s.c.i\.

Dr. L. M. Singhvi, B. Kmita Rao, Lakshmi Kant Pandy and
A J. Eswara Prasad for the Petitioners.

M. S. Ganesh, Ms. Lala Krishnamaorty and T. V. S. N. Ghari
for the Respondent.

B The Judgment of.the Court was delivered by

DESAi, J. Should Art. 32 of the. Constitution lend its assistance
to petitioners in this group of petitions so that the poor in Andhra
Pradesh can be successfully deprived of theintaple simple breakfast ?
Even ·an imaginary marginal dent in the profits of the hoteliers stirs
c ·it into action by an easy resort to a writ petition under Art. · 32 and
an ex·parte stay which itself is success even if the petition ultimately
. fails because in the meantime the measure which may possibly affect
their profits is kept under suspended animation and the profit being
continuously derived frorri scattered consumers is not refundable and
D the unjust enrichment is enjoyed with impunity. This case amply
illustrates ihe point.

· Hoteliers of Andhra Pradesh raised a hue and cry when the
Government of Andhra Pradesh-the first respondent enacted and
proclaimed in exercise of the powers conferred by Sec. 3 of the
E Essential Commodities Act, 1955 (1955 Act for short) read with the
notification of the Ministry of Agriculture and Irrigation dated June 9,
1978, the Andhra Pradesh Catering Establishments (Fixation and
Display of Prices of Foodstuffs) Order. 1978 (1978 Order for short)
dated September 8, 1978 whereby it was made obligatory for the
11 catering establishments to display the prices of all foodstuffs served
by the establishment and simnltaneous.ly fixed the maximum price of
seven items of food comprising the poorman's menu in the State of
Artdhra Pradesh. The seven items enumerated in the Schedule
appended to the 1978 Order include idli, vada, upma, sada dosa,
puree, coffee, tea and \I rice plate (scheduled items for short). Cl. 3
'G
of the Order prescribed maximum prices of the scheduled items of
food and cl. 4 makes it obligatory to display in English and principal
language ·of the area the weight or measure and price of every item
of foodstuff offered for safo in the establishment. There were conse•
quential
. provisions such as power to,issue directions, power to call
H for information, power of entry, search & seizure and power to
grant exemption. as aiso power to amend .the Schedule. A clarificatory
notification was issued on Oetober 3,·1978 giving certain directions.
WELCOME HOTEL v. ANbllRA PRADESH (Desai, J.) 6'1
The Schedule and the rates set out therein were modified by the
A
"· Amending Order dated December II, 1980. The amendment catered
to an upward revision of the prices. It seems some further negotia-
tions took place between the Minister of Civil Supplies and Labour
on the .one hand and hoteliers on the other which led to a notification
dated January 5, 1981 (1981 Order for short) giving further upward
revision in maximum price of scheduled items and the scheduled items B
were reduced from 7 to 6 deleting rice place. Ignoring this latest
order which replaced the earlier orders, the petitioners approached
this Court and obtained an ex-parte stay of the implementation of
Orders dated September 5, 1978 and December 11, 1980. In fact,
but for the interventio'n by the Court staying the operation of earlier
orders, the order dated January 5, 1981 was not stayed· yet effectively c
the petitioners succeeded in putting into cold storage the price
fixation order leaving them free to charge any price unhampered and
uninhibited by any governmental action.

Dr. L. M. Singhvi, who led on behalf of the petitioners made
D
two submisions which have nothing to do with the validity or legality
of the impugned Orders. He submitted that the Court should give a
direction to the State Goverment to re-examine the prices of inputs
and overhead charges so as. to arrive at such maximum price of tho
scheduled commodities as to ensure a reasonable rerurn on the invest-
ment which would rel)der the restriction on the fundamental right E
to carry on trade; reasonable and satisfy Art. 19 (1) (g) of the
Constitution . He next submitted that there are certain directions
in the 1978 and 1981 orders which are impossible of compliance and;
therefore, the petitioners should be heard before they are compelled
to implement the conditions. Neither of the submissions has any·
F
impact on the validity of the impugned Orders. It may, however,
be pointed' out how the petitiouers suppressing material facts
succeeded in obtaining an ex-parte stay order. In the counter-affida-
'vit filed by one Mr. D. Muralikrishna, Di~,cctor of Civil Supplies,
it was stated that after the Order dated December 11, 1980 was issued
the hoteliers resorted to some agitation which led to the Minister of G
.Civil Supplies calling a meeting of the hoteliers. What transpired at
this meeting may be extracted from the counter-affidavit :

"The Minister for Civil Supplies therefore c~nvened a
meeting at Hyderabad on 31.12.80 with the representatives H
of hoteliers all over the State and the Joint Collectors. At
the said meeting all the issues involved were throughly
6?8 SUPREME COURT REPORTS [1983]. 3 s.c.R..
discussed. After prolonged ·discussions; the hoteliers of
A the districts have agreed unanimously for reducing the
prices in respect of 6 items of foodstuffs excluding meals
and an undertaking to that effect was signed by the hote-
liers at 1.30 a. m. on 1.1.1981." T

B A copy of the undertaking is produced at Annexure 'B' to the counter-
aflidavit which inter a/ia also provided that the rates of the scheduled
items determined_ with the consent of the hoteliers will be reviewed
after three months. What is now demanded is that the State
Government should examine the prices of inputs and overhead
charges and determine afresh the maximum prices _of the scheduled
c items, which was very much an integral part of an over all agreement
between the State Government and the hoteliers. After suppressing
this material fact from the Court in the petition, the petitioners
obtained an ex-parte stay order on January 12, 1981 and this was
suppression of such a material fact as would di§,entitle the petitioners
D to any relief at the hands of this Court. That apart_ review at
reasonable interval is implicit in any price fixation measure.

The second submission that the petitioners be heard to point
out the impossibility of complying with some of the conditions of the
Orders is merely to be stated to be rejected. If the real bone of
.E contention was' the maximum price of scheduled items which was to
be thrashed out by discussion, it is not possible to accept the sub-
mission that the petitioners would not have put forth their grievances
about the impossibility of complying with some of the conditions of

,. the impugned orders. There is not a whisper about it in the
·agreement Annexure 'B' and we do not find anything very unusual
or impracticable in the conditions prescribed in the impugned ordei:s ..

Mr. B. Kanta Rao who appeared for some of the petitioners.
urged that the State Government is not competent to issue any price
controf measure ·in respect of cooked food ?ecause the Essential
G Commodities Act, 1955 which confers power to issue orders in respect
of essential commodities does not confer any power to issue any
order in respect of cooked food. Sec. 3 of Essential Commodities
Act, 1955 confers power on the Central Government by -an order to
provide for regulating or prohibiting the production, distribution and
H supply and trade in essential commodity or for securing their equit-
able distribution and availability at 'fair prices. The power to fix
price of essential commodity is implicit in the power conferred by
•
WELCOME HOTEL v. ANDHRA PRADESH (Desai, i.) 679

Sec. 3 of the Act and what is implicit in Sec. 3 (I) is made
explicit by cl. (c) of sub-section (2) of Sec. 3 which proviiles that an A
order made under Sec. 3 (I) may provide-(c) for controlling the
price at which essentiar commodity may be bought or sold. Clause
(a) of Sec. 2 defines 'essential commodity' to mean any of the items
which include .. (v) foodstuffs, including edible oilseeds and oils. The
submission is that the ·expression 'foodstuffs' in its etymological and
grammatical sense would mean raw foodstuffs or appropriately called
B
food ·grains such as wheat, rice, jawar, bazra, maize etc. but not
. cooked food which is a perishable commodity. We see no justification
for giving a restricted meaning to the expression 'foodstuffs', If
power to control prices of raw foodstuffs such as rice or "'.heat is
conferred by Sec. 3, we see no justification for that power not com· c
prehending within its fold the power to regulate prices of articles
made out of such raw foodstuffs; Expression such as 'foodcrops' ·
'spices' and 'condiments' indicate different species of articles of food
but the general expsession 'foodstuffs' was interpreted to include
spices·and condiments also. In the State of Bombay v. Virkrimar
G1,1/abchpnd Shah(') this Court construed the expression 'foodstuffs' D
in cl. (3) of the Spices (Forward Contract Prohibition) Order of 1944
read with Sec. 2 (a) of the Essential Supplies (Temporary Powers)
Act, 1946 to include turmeric. After examining the definition of
expression 'foodstuffs' in Oxford English Dictionary and Webster,'s
International Dictionary and some decisions bearing on the subject, E
this Court held that the expressions 'food' and 'foodstuffs' can ·be
used in both a wide and a narrow sense and that the circumstances
and background can alone determine which is proper in any given case.
After examining the object and the intendment underlying enactment
of Essential Supplies (Temporary Powers) Aci, 1946, this Court held
that if turmeric is a commodity essential to the life of the community F
it must he covered by the expression 'foodstuffs'. Accordingly, it was
held that the expression 'foodstuffs' has been used in a wider sense
in 1946 Act. It may be recalled that the Essential Commodities Act,
1955 was enacted for the control of the production, supply and
distribution of and trade and commerce in essential commodities. It
has the same object as the 1946 Act and therefore, the expression
·G
'foodstuffs' in 1955 Act must receive the same construction. If that
be so, the expression 'foodstuffs' must obviously include cooked food
also.
Further the expression 'food' has generally been understood ·to H
mean nutritive material absorbed or taken into the body of an
(I) [19521 S._C.R. 877,
680 SUPREME CoURT REPORTS [19s3l 3s.c.R.
'
organism which serves for purposes of growth, work or repair and
A for the maintenance of the vital process. What human beings
consume is styled as food and what animals consume is described as
animal feed. This distinction has to ~e borne in mind. Expression
'foodstuffs' is made of two expressions, 'food' plus 'stuff'. In other
words, the stuff which is used as food would be foodstuff. Therefore,
B foodstuff is that which is taken into the system to -maintai_n life and
growth and to supply waste.of tissue. If the rawifoodstuff with~ view
to making it consumable by human beings undergoes a change of its
condition by the process of cooking, the derivative is none the less
foodstuff. If raw rice is foodstuff, does rice when boiled in water
cease to be foodstuff. As the Chinese by an accidental fire in a hut
c where there were pigs learnt the advantage of consuming cooked
food in place of raw food, the submission of Mr. Kanta Rao would
·make us march backward by centuries and be a disgrace to modern
culinary ari. And 'food crop' is another expression defined in the >
195S Act.- Therefore, the expression 'foodstuff' as used in the 1955
Act comprehends cooked food. The contention of Mr. Kanta Rao,
D
therefore, must be negatived.

It' was next contended that the maximum price of scheduled
items fixed under the impugned orders. is economically un'
profitable and the same have been arrived at without scientifically
E examining the price of inputs anj overhead charges and the
reasonable return on investment and therefore, the exercise of
fixing maximuni price suffers from the vice of arbitrariness and·
must be declared unconstituiional as being violative of Art. 14.
While canvassing the ,submission, some attempt was made both
on the side of tlie petitioners as well as on the side of the State
F • to take us through the labyrinthe of the tables daawn up by
both side showing prices of inputs and overhead charges. We declined
to be involved in the vortex of this cost accountant's exercise as we
are neither experts of the subject nor we consider it necessary to
undertake this exercise. The argument proceeded that the prices of
inputs have escalated so high that the _maximum prices determined
by the impugned orders have become uneconomical. For this malaise,
petitioners have to thank themselves because it was an integral part
of their agreement with the Minister of Civil Supplies on December
31, 1980 that the maximum prices fixed by the impunged orders
H would be re-examined on the expiration of the three months from the
date pf the agreement. Instead of honouring this agreement, the
petitioners within a span of 12 days rushed to this Court and obtained
ex-parte stay order wholly suppressing the· fact that the orders
WBLcOMB HOTEL v. ANDHRA PRADESH (Desai, J.) 6Sl

impugned in these petitions have already been replaced by the latest
order dated January 5, 1981. Petitioners who have behaved in this A
manner are not eniitled to any consideration at the hands of the
Court.

In order to illustrate how the Court is not the forum for
scientifically structuring prices of commodities, it may be pointed B
. out that the petitioners in their price structure tables have added· in
respect of each scheduled ·item 24% of· wages. Totalling the wages
for seven items the wage bill accumulates at. 175%. And that is
equally true of other overhead charges. Add to this numerous other
items of food sold by petitioners in their establishments and the utter
unsustainability of their claim becomes manifest.
c
We would however, reject the contention· about the mechanics
of price fixation on the short ground that petitioners, ordinarily do
not serve only the scheduled items, but they have large establishments
catering to various tastes and ·delicacies. No price fixation order
need guarantee profit to an establishment in respect of each unit of
article served or sold. It is the over all picture in the trade or
commerce that needs to be examined. Petitioners have not shown
that in their over all turnover they .have since the promulgation of
impugned orders suffered losses. And this situation never fructified E
because the 1978 Order was kept in suspended animation for a period
of two years and when the latest order dated .January 5, 1981 was
promulgated, it was still·born at the hands of the Court because of
the ex·parte stay order obtained by the petitioners. And we reject
this contention for the additional reason as laid down by a Constitu·
tion Bench of seven learned Judges of this Conrt in Prag Ice & Oil F
Mills & Anr. etc. v. Union of India(') where Chandrachud, CJ.
observed as under;

"In the ultimate analysis, the mechanics of price
fixation has necessarily to be left to the .judgment of the
executive . and unless it is patent that there is hostile
discrimination against a class of operators, the processual
basis of price fixation has to be accepted in the generaliiy
of cases as valid." ·
H

(2) [1978] 3 s:c.. R 293 at 3.25.
682 SUPRBMll COURT RBPORTS h983) 3S.C.R.
Not the slightest case is made out for departure from the proposition
A laid down by this Court as extracted hereinabove.

Before we conclude, we would like to pin-point the unfair
advantage which the petitioners have obtained by ex-parte stay
suppressing the material fact that the later order had already replaced
B the earlier cirders and the latest order was issued with their consent.
In the Writ Petition No. 43/81 the prayer clause reads as under :

"Issue a writ of mandamus or any other appropriate
c writ or order holding that G.O. Ms. No. 548 dated
8.9.1978 and G.O. Ms. No. 626 dated 11.12.1980 of the
Government of Andhra Pradesh and the notification
issued by the Collector, the second respondent ·herein
dated 16.12.!980 in pursuance of the said impugned
Orders as ultra vires, unconstitutional al\d void and quash
D the same." ,

The bone of contention was not the power exercised by the State
Qovernment but the maximum prices fixed in exercise of the· power
conferred on the State Government. The maximum prices were to
E be regulated as per the order dated January 5, 1981, and even though
this Court was moved for ex-parte stay on January 12, 1981, the
fact that the !ates! order dated January 5, 1981 has replaced the
earlier orders was-suppressed from the Court; And peculiarly the State
Government did not pursue vigorously its latest notification dated
F January 5, 1981 because its operation was not stayed .by the Court.
However, the entire notification fixing the price of the menu of the
poormen was put under suspended animation leaving the hoteliers
to extort any price to suit their greed. Now that we are dismissing
these petitions and vacate the stay orders, the notification fixing the
maximum prices will revive and can be enforced. But in the
G meantime "the poor of Andhra Pradesh· were made to pay by their
nose for their simplest menu and the difference between maximum •
,Price fixed· by the impugned notification and the prices charged by
the hoteliers would be unjust enrichment of the hoteliers undeser-
vedly enjoyed with the assistance of the court .by the exercise of
H the constitutional power under Art. 32 of the Constitution, and
there is no way of depriving this unjust enrichment The Court .
WBLCOMB HOTEL V• ANDHRA PRADBSH (Desai, i.) 683

set up for justice, including socio-economic justice, unfortunately
lent its assistance to such unjust enrichment and. yet we are helpless. A

For the reasons herein discussed, we find no 'merits in any of
the contentions canvassed on behalf of the petitioners and therefore,
these petitions fail and they are dismissed with costs in each.
B
H.L.C. / Petition dismissed.

..