Civil Appeal No 1487 of 1984
Appeal by Special leave from the Judgment and Order dated the 21st August 1981 of the Allahabad High Court in Civil Misc Writ Petition No 9820 of 1981 Harbans Singh for the appellant
Abdul Kader and GS Narayanan for the Respondent
The Judgment of the Court was delivered by BHAGWATI J
This is an appeal by Special Leave directed against an order of the High Court of Allahabad dismissing a writ petition filed by the appellants claiming refund of a sum of Rs 2268188 from the Levy Sugar Price Equalisation Fund under Section 6 sub section 1 of the hereinafter referred to as the Equalisation Fund Act
The facts of the case are few and may be briefly stated as follows The appellants carry on business of manufacture of syrups squashes jams and jellies preservation of vegetables and other food products
One of the essential raw materials for these products manufactured by the appellants is sugar
There was at the material time Sugar Control Order 1966 issued under section 3 of the  clause 4 of which provided that no purchaser shall sell or agree to sell or otherwise dispose of sugar or deliver or agree to deliver sugar or remove any sugar from the bonded godown of the factory in which it is stored except under and in 209 accordance with the directions issued in writing by the Central Government or the Chief Director
Pursuant to this Order the Central Government introduced the policy of partial decontrol of sugar in August 1967 and under this policy the Central Government adopted a scheme of acquiring levy sugar from the factory
The price of levy sugar acquired by the Central Govt
was fixed every year in accordance with the principles set out in Section 3 3c of the and during the period in question the price of levy sugar was determined under the sugar Price Determination Order 1972
This order was however challenged by factories manufacturing sugar and an interim order was passed by the High Court of Allahabad permitting them to charge a price higher than that fixed under the order on condition that they furnished bank guarantee for the difference in price in favour of the Registrar of the High Court
Now different prices were fixed under the sugar Price Determination order 1972 for different zones and so far as the East UP Zone was concerned the price fixed was Rs 175 per quintal exclusive of excise duty sales tax etc
with the result that the price inclusive of these taxes and duties amounted to Rs 190 per quintal
The appellants purchased from KM Sugar Mills Limited Motinagar Faizabad a certain quantity of sugar under a release order issued by the Central Government under the Levy Sugar Supply Control order 1972 and they lifted an aggregate quantity of 400 quintals of sugar on 12 8 1972 and 16 8 1972
Now under the sugar Price Determination order 1972 KM Sugar Mills Limited were not entitled to recover from the appellants price at a rate exceeding Rs 190 per quintal but by virtue of the stay order granted by the High Court of Allahabad they recovered from the appellants price at the rate of Rs 23489 per quintal and the total excess amount charged by KM Sugar Mills Limited from the appellants thus came to Rs 2268188 for which bank guarantee was given by KM Sugar Mills Limited in favour of the Registrar of the High Court
The writ petition filed by KM Sugar Mills Limited against the Sugar Price Determination Order 1972 along with other similar writ petitions filed by other manufacturers of sugar was however ultimately dismissed by the Allahbad High Court in November 1974 with the result that the Registrar of the High Court became entitled to encash the bank guarantee given by KM Sugar Mills Limited and a sun of Rs 2268188 was accordingly recovered by the Registrar under the bank guarantee
Since the excess amount recovered by the various manufactu 210 rers of sugar including KM Sugar Mills Limited really belonged to the consumers to whom sugar had been sold by these manufacturers Parliament enacted with effect from 1 4 1976 for the purpose of ensuring that the excess amount so recovered should not remain in the hands of manufacturers of sugar so as to unjustly enrich them but should be paid to the consumers of sugar from whom it had been unlawfully recovered by the manufacturers
Section 31 of the Equalisation Fund Act established a Fund known as the Levy Sugar Price Equlisation Fund
Sub Section 2 of Section 3 provided that there shall be credited to the Fund amounts representing all excess realisations made by the manufacturers irrespective of whether such realisations were made before or after the commencement of the Equalisation Fund Act
Pursuant to this provision the Registrar of the High Court deposited a sum of Rs 2268188 to the Credit of the Fund
Section 6 of the Equalisation Fund Act then proceeded to enact that where any amount of excess realisation is credited to the Fund the buyer of Levy sugar from whom such excess realisation was made by the manufacturer shall be entitled to the refund of such excess realisation from the Fund
This Section is material for the purpose of determination of the controversy arising in the present appeal and we would therefore reproduce it as follows 1 Where any amount is credited to the Fund a refund shall be made from the Fund to the buyer of Levy Sugar from whom any excess realisation was made by the producer or dealer Provided that no buyer shall be entitled to claim as refund under this sub section if he a being the wholesale dealer had passed on the incidence of such excess over the controlled or fair price of levy sugar to the retail dealer by whom the price of such sugar was paid or b being a retail dealer had passed on the incidence of such excess over the controlled or fair price of levy sugar to the consumer by whom the price of such sugar was paid
 Since a sum of Rs 2268188 represented excess realisation 211 made by KM Sugar Mills Limited from the appellants and this amount was credited to the Fund by the Registrar of the High Court the appellants filed an application in form IV making a claim for refund of this amount from the Fund
This application was filed by the appellants on 30th April 1979 admittedly within the prescribed period of six months
The Central Government however rejected the claim made by the appellants on the ground that they had not been able to establish fully and clearly that the incidence of higher sugar price was not passed on by them to the consumers of the end products
The appellants thereupon preferred a Writ Petition in the High Court but the High Court also rejected the Writ Petition on the same ground namely that according to the finding recorded by the Central Government the appellants had not been able to establish fully and clearly that the incidence of higher sugar price was not passed on to the consumers of the end products and since this was a finding of fact base on evaluation of the material and evidence produced by the appellants before the competent authority the High Court would not be justified in interfering with the order of the Central Government
The appellants thereupon preferred the present appeal with special leave obtained from this Court
The main point of controversy between the parties centres round the true interpretation of section 6 Sub section 1 of the Equalisation Fund Act
This provision lays down as a condition precedent to its applicability that the excess realisation made by the manufacturer of sugar should have been credited to the Fund
Now the application made by the appellants in from IV stated in so many terms that the amount in question had been deposited by the Registrar of the High Court in terms of the Levy Sugar Price Equalisation Fund Rules 1972 through the Chief Pay  Accounts Officer Govt
Of India Ministry of Agriculture  Irrigation Department of Food New Delhi
This statement was not at any time disputed on behalf of the Central Government either in the order made by the Central Government rejecting the claim of the appellants or in the proceedings before the High Court
It is indisputable that a sum of Rs 2268188 representing the excess realisation made from the appellants by KM Sugar Mills Limited was credited to the Fund by the Registrar of the High Court
And in any event this must be 212 presumed to have been done because the Equalisation Fund Act having been enacted for this purpose the Registrar of the High Court would naturally be expected to carry out his obligation under the statute by depositing the amount of excess realisation recovered by him under the bank guarantee given by KM Sugar Mills Limited
There can therefore be no doubt that in terms of Section 6 Sub section 1 the appellants were entitled to claim refund of the sum of Rs 2268188 from the Fund
The only question is whether the proviso to section 6 Sub section 1 precluded the appellants from claiming refund of that amount
The proviso on its plain terms applied only where the party claiming refund of the amount of excess realisation is a wholesale or a retail dealer who has passed on the incidence of the excess over the controlled price of levy sugar to the retail dealer or to the consumer as the case may be
The proviso obviously cannot apply to a case where a claim for refund has been made by a consumer of sugar from whom excess realisation has been made by the manufacturer of sugar
The appellants were admittedly consumers of sugar and not dealers in sugar and since they were not dealers in sugar there could be no question of any incidence of excess being passed by them to the retail dealer or to the consumer
The learned counsel appearing on behalf of the respondent contended that the excess over the controlled or fair price of levy sugar must have been passed on by the appellants to the consumer when they sold the manufactured products to them because the higher price paid by them for the sugar purchased from KM Sugar Mills Limited must have been taken into account by them in fixing the price of the manufactured products
This may be so or may not be so
It is not necessary for us to examine this question because it is irrelevant on the terms of the proviso to Section 6 Sub section 1
That proviso deals with a situation where a wholesale or retail dealer passes on the incidence of excess over the controlled or fair price of levy sugar to a retail dealer or consumer who purchases such sugar
It contemplates a case where a dealer whether whole sale or retail sells sugar to a retail dealer or consumer as the case may be and not where a person sells a manufactured product containing sugar as one of its ingredients we have therefore no doubt that the proviso to Section 6 Sub section 1 was not attracted in the case of the appellants and consequently the appellants were entitled to claim refund of the sum of the Rs 2268188 from the sum of Fund
213 We accordingly allow the appeal set aside the judgment of the High Court and issue a Writ directing the respondent to pay to the appellants a sum of Rs 2268188 together with interest thereon at the rate of 6 per cent per annum from today until payment
The respondent will pay the costs of the appeal to the appellants
HSK Appeal allowed


Summary:
Section 3 1 of the established a fund known as the Levy Sugar Price Equalisation Fund
Sub sec
2 of section 3 provided that there shall be credited to the Fund amounts representing all excess realisations made by the manufacturers
Section 6 1 provided that where any amount of excess realisation was credited to the fund the buyer of levy sugar from whom such excess realisation as made by the manufacturers shall be entitled to the refund of such excess realisation from the Fund
There was a proviso to section 6 1 which inter alia precluded buyers of levy sugar to claim refund of excess realisation in certain cases
The appellants who carried on the business of manufacture of syrups squashes jams and jellies preservation of vegetables and other food products and from whom excess realisation was made and credited to the Fund applied for refund of such realisation
The Central Government rejected the appellants  application for refund on the ground that they had not been able to establish fully and clearly that the incidence of higher sugar price was not passed on by them to the consumers of the end products
The appellants preferred a writ petition which was dismissed by the High Court on the same ground
Hence this appeal by special leave
Allowing the appeal  HELD The proviso on its plain terms applies only where the party claiming refund of the amount of excess realisation is a wholesale or a retail dealer who has passed on the incidence of the excess over the controlled price of levy sugar to the retail dealer or to the consumer as the case may be
The proviso obviously cannot apply to a case where a claim for refund has been made by a consumer of sugar from whom excess realisation has been made by the manufacturer of sugar
106C D In the instant case the appellants were admittedly consumers of sugar 208 and not dealers in sugar and since they were not dealers in sugar there could be no question of any incidence of excess being passed on by them to the retail dealer or to the consumer
106D The proviso to section 6 1 contemplates a case where a dealer whether wholesale or retail sells sugar to a retail dealer or consumer as the case may be and not where a person sells a manufactured product containing sugar as one of its ingredients
106G In the instant case the appellants sold manufactured product containing sugar as one of its ingredient
Therefore the proviso to section 6 1 was not attracted and the appellants were entitled to claim refund of the excess realisation from the Fund
106H