Petition Nos
464  617 of 1977
Under Article 32 of the Constitution of India  K Parasaran Attorney General Shanti Bhushan Ashwani Kumar KG Bhagat LN Sinha Raja Ram Aggarwal SP Gupta HK Puri V Parthasarthy TC Sharma PP Singh Ms A Subhashini Mrs Sushma Suri G Gopalakrishnan OP Rana AV Rangam and Shartha Raju for the appearing par ties
FS Nariman KK Venugopal AK Verma DN Mishra and section Kachawa for the intervener in WP No 46477
The Judgment of the Court was delivered by THOMMEN J
The petitioners are owners of sugar mills operating in the State of Uttar Pradesh in areas classified for the purpose of determining the price of levy sugar as West and East Zones
They challenge the validity of notifi cations dated 28th November 1974 and 11th July 1975 Annexures 8  9 issued by the Central Government in exer cise of its power under sub section 3 C of section 3 of the Act No 10 of 1955 as amended to date hereinafter referred to as the Act 
The petitioners do not and cannot challenge the validity of the subsection by reason of Article 3 lB of the Constitution of India
By the impugned orders the Central Government fixed the prices of levy sugar for 1974 75 production
For the purpose of determining the prices the country is divid ed into 16 zones and the prices fixed for various grades of sugar in terms of section 3 3 C of the Act vary from  zone to zone
Prices are determined with reference to the geographical cum agro economic considerations and the aver age cost profiles of factories located in their respective zones
Each State for this purpose constitutes a separate zone while UP is divided into 3 zones and Bihar into 2 zones
The petitioners contend that these orders are ultra vires the Act and violative of their fundamental fights as the prices of levy sugar have been determined arbitrarily with reference to the average cost profiles of factories grouped together in zones without regard to their individual capacity and cost characteristics
Such prices do not re flect the actual manufacturing cost of sugar incurred by producers like the petitioners or secure to them reasonable returns on the capital employed by them
Geographical zon ing for the purpose of price fixation they point out is an irrational  and discriminatory system of 1 Published in the Gazette of India Extraordinary dated 28111974 and 1171975
919 averaging wide cost disparities amongst producers of widely varying capacity
Cost of manufacture of sugar depends on a number of factors such as recoveries from the sugarcanes duration of the crushing season crushing capacity of the plant the sugarcane price paid and the capital employed in the manufacture of sugar
These factors vary from factory to factory
Fixation of the levy sugar prices on zonal basis without regard to these divergent factors and the compara tive cost profiles gives the owners of bigger factories an undue advantage over producers like the petitioners whose factories are comparatively of lower crushing capacity and whose manufacturing cost is consequently higher
Clubbing of the petitioners  factories with dissimilar factories in the same zones for the purpose of price fixation is discrimina tory arbitrary and unreasonable
The petitioners point out that the system of geographical zoning for the purpose of price determination has been severely criticised by the Bureau of Industrial Costs  Prices The BICP who have strongly recommended the division of the sugar industry into groups of units having similar cost characteristics with particular reference to recovery duration size and age of the unit and capital cost per tonne of output and irrespec tive of their location
The respondents on the other hand contend that the classification of sugar industry into 15 zones now 16 was upheld by a Constitution Bench of this Court in Anakapalle Co operative Agricultural  Industrial Society Ltd etc
vs Union of India  Ors
  The conten tion that the zonal system was discriminatory and violative of constitutional principles was pointedly urged but cate gorically rejected by this Court
The method adopted by the Government in fixing the price of levy sugar is fully sup ported by the recommendations of various expert bodies
The Tariff Commission in its 1973 Report recommended division of the country into 16 zones for this purpose
The price of sugar is fixed with reference to the Cost Schedule recom mended by that body
These recommendations are based on various factors such as cost and output of individual la bour cane price accounting for about 70 per cent of the cost of sugar production quality of sugarcane taxes on sugarcane cost of other material transport charges cost of storing the sugar produced cane development charges and other overhead expenses selling expenses etc
These factors are almost identical for the entire zone
The cost of manufacturing sugar the respondents con tend depends not only on recovery from the sugarcane duration of crushing season crushing capacity of the plant the sugarcane price paid and the capital employed as stated by the petitioners but also to a consider 920 able extent on the condition of the plant and machinery quality of management investment policy relations with cane growers and labour financial reputation etc
They say It is evident from the Tariff Commission Report of 1959 as also the Official Directory of the Bombay Stock Exchange that the petitioner Company has been consistently diverting huge amounts for investments running into several lakhs elsewhere instead of ploughing back the same into the peti tioner s sugar industry in question
Thus the petitioner Company has been neglecting the sugar factory and for such neglect of their own they cannot blame the Zonal System Mr Shanti Bhushan appearing for the petitioners does not object to the factories being grouped together on the basis of factors common to them with a view to fixing the prices applicable to them as a class of producers
He does not advocate fixation of price separately for each unit
He says that the sugar factories must be grouped together not on the basis of their geographical location but similarity in cost characteristics
He relies upon the 1976 Report of the BICP
The present system of fixing prices according to the regions where the factories are located he says is based on averaging wide cost disparities as a result of which manufacturers like the petitioners incurring a high cost of production and others incurring a low cost of pro duction are treated alike
Such a system works to the disad vantage of the former and to the advantage of the latter
This Mr Shanti Bhushan contends is an unreasonable and invalid classification and violative of constitutional principles
While this line of argument is supported by Mr Raja Ram Agarwal Mr SP Gupta appearing for the interven er in Civil Writ Petition No 464 of 1977 advocates aboli tion of zonal classification or grouping of any kind and supports fixation of price for each individual factory with reference to its cost and regardless of any other considera tion
Such unit wise determination alone according to him satisfies the requirements of Section 33 C
Any system of zoning or grouping for determination of price he contends will fail to meet the norms of that sub section
Mr M M Abdul Khader on the other hand submits that while averag ing and costing with reference to a representative cross section may ordinarily be an appropriate method for deter mining the fair price such a method is inappropriate for a small zone like Kerala where there are only three manufac turing units
In respect of such a zone he says unit wise fixation of price is the only just and proper method
921 Mr KK Venugopal counsel for Indian Sugar Mills  Association ISMA on the other hand supports the zoning system
He says that except for a few producers like the petitioners all the rest of them in the country have ac cepted the principle of zoning
In his written submissions Mr Venugopal states as follows As was seen during the course of hearing only 2 or 3 per sons have come forward challenging zoning
There are 389 sugar factories in the country and the present intervener has 166 members
Besides there are 220 members with the cooperative sector
Their Association being National Federa tion of Cooperative Sugar Factories Ltd has also inter vened in these petitions and have adopted the arguments of ISMA
Hence almost the entire industry has supported zoning and only a handful of people who also factually are not high cost units have opposed zoning Mr Venugopal submits that the present case is squarely covered by the decisions of this Court in Anakapalle Cooper ative Agricultural  Industrial Society Ltd etc
vs Union of India  Ors
  and The Panipat Cooperative Sugar Mills vs The Union of India 1973 2 SCR 860
He says that the petitioners have not made out a case for reconsideration of these two decisions
He refers to T Govindaraja Mudaliar etc
vs The State of Tamil Nadu  Ors  at 228 to 230 and submits that this Court would not reexamine an earlier decision merely because certain aspects of the question had not been noticed in that decision
Mr Venugopal however advocates neutralisation of the high cost incurred by the old units having lower crushing capacity by giving them an incremental levy price as recommended by the High Level Committee in 1980
Before we examine the provisions of section 33 C in the context of the general scheme of the Act we shall briefly refer to the observations of this Court in Anaka palle  and Panipat 1973 2 SCR 860
Grover J speaking for the Bench in Anakapalle supra states  The system of fixing the prices according to certain regions or zones is not a new one
The Tariff Commission in 1959 favoured the formation of four zones
In the report of the Sugar Enquiry Commission 1965 it was pointed out that the Government had actually fixed the prices for 22 922 zones which meant that from four zones the number had been increased to twenty two or more
The Commission was of the view that there should be five zones only in addition to Assam
The Tariff Commission 1969 however recommended the constitution of fifteen zones largely on State wise basis with an exception only in case of Uttar Pradesh and Bihar
Uttar Pradesh was divided into three zones and Bihar into two
The Tariff Commission had been specifically requested to inquire into the working of the zonal system the main point for inquiry being the zones into which the sugar producers should be grouped having regard to the basis of classification to be recommended by the Commission
The view of the Commission was that on the whole the number of price zones should be fifteen which would reduce though not eliminate the inter se anomalies in the cost structure without resorting to the extreme of the fixation of price for each unit or a single or at the most two one for the sub tropical and other for the tropical one
The Tariff Commission hoped that in the course of time conditions would be created making the operation of the second alternative feasible Rejecting the contention that it was the zonal system that caused the losses allegedly incurred by some of the sugar producers Grover J says that ordinarily these units ought to have made profits
The reasons for incurring losses can be many such as inefficiency failure to pursue the right policy poor management and planning etc but these reasons have no relation to the zonal system
That system by and large has led to efficiency and provides an incentive to cut down the cost
Healthy competition among the units in the same zone should in the normal
course result in reduc tion of cost and greater efficiency in the operation of the units
It is proper management and planning that would lead to the success of any commercial venture
The contention of the producers that they have been incurring losses on ac count of the zonal system is opposed to the evidence pro duced by them
The Court has rejected the extreme contention that prices should be fixed unitwise ie on the basis of actual cost incurred by each unit
Referring to this conten tion this Court observes Apart from the impracticability of fixing the prices for each unit in the whole country the entire object and pur pose of controlling prices would be defeated by the adoption of such a system
 923 Grover J states that during the earlier period of price control it was on an all India basis that the price was fixed
That is still the objective
If such an objective is achieved it would undoubtedly be conducive to conferring proper benefit on the consumers
The objective of the Tariff Commission is to have only two regions for the whole coun try viz sub tropical and tropical
The Court has rejected as baseless the criticism against the principle of weighted average adopted in the fixation of price in each zone
Such a principle is well recognised and acted upon by various Sugar Enquiry Commissions
A proper cost study is intended to do justice to the weak and strong alike
There is abundant justification for continuing and sustaining the zonal system
The varying climatic conditions of each State have been taken into account
For the same reason Bihar is divided into 2 zones and UP into 3 zones while in the case of many other States each State is treated as a single zone
This system of zoning is thus adopted with special reference to climatic and agro economic conditions
Rejecting the contention that the zonal system has resulted in discriminatory treatment this Court states We are unable to hold that while classifying zones on geographical cum agro economic consideration any discrimi nation was made or that the price fixation according to each zone taking into account all the relevant factors would give rise to such discrimination as would attract Article 14 of the Constitution
 Even if there is no price control the uneconomic units would be at a great disadvantage
The Court states Even if there is no price control each unit will have to compete in the market and those units which are uneconomic and whose cost is unduly high will have to compete with others which are more efficient and the cost of which is much lower
It may be that uneconomic units may suffer losses but what they cannot achieve in the open market they cannot insist on where price has to be fixed by the govern ment
The Sugar Enquiry Commission in its 1965 report ex pressed the view that cost plus basis of price fixation perpetuates inefficiency in the industry and is therefore against the long term interest of the country
 Considering the general principle involved in price fixa tion the Court states 924 It is not therefore possible to say that the principles which the Tariff Commission followed in fixing the prices for different zones are either not recognised as valid principles for fixing prices or that simply because in case of some factories the actual cost was higher than the one fixed for the zone in which that factory was situate the fixation of price became illegal and was not in accordance with the provisions of sub section 3 C
It has not been denied that the majority of sugar producers have made prof its on the whole and have not suffered losses
It is only some of them which assert that their actual cost is far in excess of the price fixed
That can hardly be a ground for striking down the price fixed for the entire zone provided it has been done in accordance with the accepted principles   
The Court concludes When prices have to be fixed not for each unit but for a particular region or zone the method employed by the Commis sion was the only practical one and even if some units because of circumstances peculiar to them suffered a loss the price could not be so fixed as to cover their loss
That cannot possibly be the intention of the Parliament while enacting sub section 3 C of section 3 of the Act
If that were so the price fixation on zonal or regional basis would have to be completely eliminated
In other words the entire system of price control which is contemplated wilt break down because fixation of price for each unit apart from being impractical would have no meaning whatsoever and would not be conducive to the interest of the consumer   This Court has thus in Anakapalle supra rejected the argument that the alleged loss incurred by certain sugar producers is attributable to fixation of price on a zonal basis or the zonal system has led to inefficiency or lack of incentive or it has resulted in unequal or unfair treat ment
On the other hand the zonal system has encouraged a healthy competition amongst the units in the same zone
Unit wise fixation is impracticable
The Tariff Commission is the best judge in selecting units for cost study to determine the average cost
The fair price has to be deter mined with reference to the conditions of a representative cross section of the industry
For all these reasons there is ample justification in continuing and sustaining the zonal system for 925 the purpose of price fixation
Price has to be fixed for each zone and necessarily it varies from zone to zone
There is no discrimination in the classification of zones on a geographical cum agro economic consideration and any such classification is perfectly consistent with the principle of equality
In Panipat 1973 2 SCR 860 Shelat J speaking for the same Constitution Bench that has decided Anakapalle   referes to the norms adopted in sub sec tion 3 C viz a determination by the Government of the price of sugar and b payment of an amount to the manufacturer and states that the concept of fair price which is what is referred to in sub section 3 C as price of sugar does not by any account mean the actual cost of production of every individual manufacturer
Such price has to be arrived at by a process of costing with reference to a representative cross section of the manufacturing units
He states The basis of a fair price would have to be built on a reasonably efficient and economic representative crosssec tion on whose workings cost schedules would have been worked out and the price to be determined by Government under sub section 3 C would have to be built So stating Shelat J rejects the contention that such price has to be determined unit wise
Any such fixation of price he points out would be contrary to the concept of partial control postulated by the subsection and would perpetuate inefficiency and mismanagement
But of course any such price he hastens to add has to be fixed reasona bly and on relevant considerations
Referring to the policy of partial control Shelat J states    the Central Government was confronted with two main problems a deterioration in the sugar industry and b the conflicting interests of the manufacturer the consumer and the cane grower
The floor price of cane fixed by Government was intended to protect the farmer from ex ploitation but that was found not to be an incentive enough to induce him to increase his acreage
A device had to be found under which a price higher than the minimum could be paid by the manufacturer of sugar
The consumer on the other hand had also to be protected against the spiralling of sugar price and his needs growing as they were had to be satisfied at some reasonable price
 926 Shelat J emphasises the need to modernise the factories which alone would yield a reasonable return
This is what he states Both these and a larger production of sugar would not be possible unless there was a reasonable return which would ensure expansion which again would not be possible unless new machinery for such expansion was brought in and facto ries particularly in UP and Bihar were modernised and renovated
A fair price for sugar therefore had to be such as would harmonise and satisfy at least to a reasonable extent these conflicting interests
 Significantly the BICP s recommendation to group indi vidual units having homogenity in cost irrespective of their location was not accepted by the Central Government particularly because the Tariff Commission itself had con sidered the question and reached the conclusion that geo graphical cum agro economic considerations demanded the grouping of factories with reference to State zones or subzones as in the case of UP and Bihar
To group them on the basis of their location in various regions of the coun try for the purpose of price fixation is a rational method reflecting economic realities
This is particularly so as conditions generally vary from State to State as regards the availability and quality of sugarcane labour conditions and other factors whereas within the same region like facili ties are generally available to all factories
If the cost structure varies from factory to factory such variation is not necessarily caused by the non availability or the poor quality of raw material or the labour conditions but probably for reasons unconnected with them such as the age of the plant availability of finance management ability etc
There is great force in the submission of the respond ents that to group together factories having a high cost profile and to determine a price specially applicable to them is as recognised by this Court in Panipat supra and Anakapalle supra to put a premium on incompetence if not mismanagement
The history of control over sugar has been set out at length in Panipat supra and we do not wish to burden this judgment with a narration of the circumstances which have led to the introduction of partial control under which 60 of the output of sugar is acquired and the balance left for free sale
It is in implementation of this policy that sub section 3 C of section 3 was inserted2 Before we examine the 2
For an illuminating discussion of this aspect See AM Khusro Price Policy Lancer International 1987 p 62 63 927 provisions of that sub section under which the impugned notification have been issued we shall refer to the statu tory scheme
The Act was as stated in the preamble enacted by Parliament to provide in the interest of the general public for the control of the production supply and dis tribution of and trade and commerce in certain commodi ties
The entire Act is devoted to the cause of the general public with a view to achieving equitable distribution of essential commodities at fair prices
Section 3 of the Act confers wide power upon the Central Government to control production supply distribution etc of essential commodities
It reads 3
Powers to control production supply distribution etc of essential commodities 1 If the Central Govern ment is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for securing any essential commodity for the defence of India or the efficient conduct of military operations it may by order provide for regu lating or prohibiting the production supply and distribu tion thereof and trade and commerce therein
 Sub section 2 of section 3 says that without preju dice to the generality of the powers conferred by sub sec tion 1 an order made After many years of adverse experience a new strategy of dual pricing was introduced in sugar
The mills were asked to deliver to the public distribution system about 60 per cent of their output say at Rs2 per Kg
and were allowed to sell the balance of 40 per cent in the free market at say Rs6 per kg
The mills were delighted to do so as they got very much enhanced receipts from their flee market sales
With larger receipts they offered in the following season a higher price to the farmer the sugarcane grower who in turn grew and offered more cane
In other words the law of supply which had been held captive as it were was freed from bondage
With a higher price offer from the mills the cane growers brought more land under sugar cane diverted land from other crops to cane used more inputs produced and delivered to the mills more cane and in fact diverted cane deliveries from the open pan system to the mill system
Having thus obtained much more cane the mills produced much more sugar and sold 30 40 per cent of it in the free market
Within a year or two the free market price of sugar fell from Rs6 to Rs3 or even Rs250
At this rate consumers began to buy more in the free market millions of ration cards remained unused and the demands on the public distribution declined substantially
Prolonged shortages of sugar got converted into a relative abundance
 928 under that sub section may provide for the matters specified in subsection 2
One of them is what is contained in clause f of sub  section 2 which empowers the Central Government to require any person dealing in any essential commodity to sell the whole or a specified part of such commodity to the Central Government or the State Government or to a nominee of such Government
It reads 2 Without prejudice to the generality of the powers conferred by sub section 1 an order made thereunder may provide a                  f for requiring any person holding in stock or engaged in the production or in the business of buying or selling of any essential commodity  a to sell the whole or a specified part of the quantity held in stock or produced or received by him or b in the case of any such commodity which is likely to be produced or received by him to sell the whole or a speci fied part of such commodity when produced or received by him to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order
 The power contained in sub section 1 or sub section 2 is exercisable by an order
An order  is defined under section 2 to include a direction issued thereunder
Any order made under section 3 by the Central Government or by an officer or authority of the Central Government is re quired by sub section 6 of section 3 to be laid before both Houses of Parliament as soon as may be after it is made
Any order made under section 3 which is of a general nature or affecting a class of persons has to be notified in the official gazette
Subsection 5 of section 3
929 Sub section 3 of section 3 provides that where any person has sold any essential commodity sugar being such a commodity in compliance with an order made with reference to clause f of sub section 2 he shall be paid the price of the goods purchased from him as provided under clauses a b and c of sub section 3
This subsection oper ates only where an order has been made under sub section 1 with reference to clause f of sub section 2
While clause a of the sub section postulates an agreed price consistently with the controlled price if any clause b speaks of a price calculated with reference to the con trolled price if any when no agreement is reached
Where neither clause a nor clause b applies either because there is no agreement or because there is no controlled price the seller has to be paid as per clause c a price calculated at the market rate prevailing in the locality at the date of the sale
Sub section 3 A empowers the Central Government to regulate in accordance with the provisions of the sub sec tion the price of any foodstuff sold in a locality in com pliance with an order made with reference to clause f of sub section 2
This power is exercisable by a direction which has to be duly notified in the official Gazette
The power to issue the direction is notwithstanding anything contained in sub section 3
Before issuing the notifica tion the Central Government has to form an opinion that the price of any foodstuff including sugar has to be regulated for the purpose of cotrolling the rise in its prices or preventing its hoarding in any locality
Any such notifica tion will remain in force for any specified period not exceeding 3 months
The price payable in such cases is either the agreed price consistently with the controlled price if any or where no such agreement is possible the price calculated with reference to the controlled price if any or where neither of these two methods is applicable the price calculated with reference to the average market rate prevailing in the locality during the period of 3 months immediately prior to the date of the notification
The average market rate will be determined by an officer authorised by the Central Government and the rate so deter mined by him is not liable to be questioned in any court
Sub section 3 C which is the crucial provision was inserted in 1967
It reads 3 C
Where any producer is required by an order made with reference to clause f of sub section 2 to sell any kind of sugar whether to the Central Government or a State Government or to an officer or agent of such Govern 930 ment or to any other person or class of persons and either no notification in respect of such sugar has been issued under sub section 3 A or any such notification having been issued has ceased to remain in force by efflux ot time then notwithstanding anything contained in sub section 3 there shall be paid to that producer an amount therefore which shall be calculated with reference to such price of sugar as the Central Government may by order determine having regard to a the minimum price if any fixed for sugarcane by the Central Government under this section b the manufacturing cost of sugar c the duty or tax if any paid or payable thereon and d the securing of a reasonable return on the capital employed in the business of manufacturing sugar and different prices may be determined from time to time for different areas or for different factories or for different kinds of sugar
Explanation For the purposes of this sub section produc er means a person carrying on the business of manufacturing sugar emphasis supplied Sub Section 3 C is attracted whenever any producer is required to sell sugar by an order made with reference to sub section 2f and no notification has been issued under sub section 3 A or any such notification having been issued has ceased to be in force
Whenever sub section 3 C is attracted it operates notwithstanding anything con tained in sub section 3
This means the compensation payable to the seller in the circumstances attracting sub section 3 C is not the price postulated in sub section 3
Nor is it the price mentioned under sub section 3A for that sub section cannot be in operation when sub section 3 C is attracted
What is payable under sub sectin 3 C is an amount calculated with reference to the price of sugar determined in the manner indicated in that sub sec tion
931 Construing sub section 3 C this Court in Panipat 1973 2 SCR 860870 says Sub section 3C with which we are presently concerned was inserted in sec
3 by sec
3 of Act 36 of 1967
The sub section lays down two conditions which must exist before it applies
The first is that there must be an order made with reference to sub section 2 cl
f and the second is that there is no notification under sub section 3A or if any such notification has been issued it is no longer in force owing to efflux of time
Next the words notwithstanding anything contained in sub section suggest that the amount payable to the person required to sell his stock of sugar would be with reference to the price fixed under the subsection and not the agreed price or the market price in the absence of any controlled price under sub sec
The sub section then lays down two things firstly that where a producer is required by an order with reference to sub sec
2f to sell any kind of sugar there shall be paid to that producer  an amount therefore that is for such stock of sugar as is required to be sold and secondly that such amount shall be calculated with reference to such price of sugar as the Central Government may by order determine having regard to the four factors set out in cls
a b c and d
Unlike the preceding three sub sections under which the amount payable is either the agreed price or the controlled price or where neither of these prices is applicable at the market or average market price the amount in respect of sugar required to be sold is to be calculated at the price determined by th Central Government   What is specially significant is that sub section 3 C postulates payment of an amount to the producer who has been required to sell sugar in the circumstances mentioned there in
What is required to be paid to him is not the price of sugar but only an amount
That amount has to be calculated with reference to the price of sugar
The price is deter mined by the Central Government by means of an order which as required by sub sections 5 and 6 has to be notified in the official gazette and laid before both Houses of Parliament
The order notifying the price of sugar is of general application and it is the rate at which the actual amount payable to each seller is calculated
The price of sugar must be determined by the Central Govern 932 ment having regard to the factors mentioned in clauses a to d of sub section 3C
This is done with reference to the industry as a whole and not with reference to any indi vidual seller
In contradistinction to the price of sugar the amount is calculated with reference to the particular seller
The Central Government is authorised to determine different prices for different areas or for different facto ries or for different kinds of sugar
Whether factories are required to be grouped together for a rational determination of the prices according to their location or their size age and capacity or by any other standard is a matter for deci sion by the Central Government on the basis of relevant material
What is contemplated by the legislature in dele gating such wide discretion to the Central Government is that it must apply its mind to the manifold questions rele vant to the determination of prices and with due regard to the norms laid down in the sub section
What is required by sub section 3 C is the adoption of a valid classification of factories having a rational nexus to the object sought to be achieved viz determination of a fair price of sugar with reference to which the actual amounts payable to the producers in the circumstances attracting the sub section are calculated
Referring to the legislative background of sub section 3 C this Court in Panipat supra observes In order to appreciate the meaning of cls
a b c and d it must be remembered that ever since control on sugar was imposed Government had set up expert committees to work out cost schedules and fairprices
Starting in the beginning with an All India cost schedule worked out on the basis of the total production of sugar the factories were later grouped together into zones or regions and different cost schedules for different zones or regions were con structed on the basis of which fair prices were worked out at which sugar was distributed and sold
The Tariff Commis sion in 1958 and the Sugar Enquiry Commission in 1965 had worked out the zonal cost schedules on the basis of averaged recovery and duration the minimum and not the actual price of cane the averaged conversion costs and recommended a reasonable return on the capital employed by the industry in the business of manufacturing sugar
This experience was before the legislature at the time when subsec
3C was inserted in the Act
The legislature therefore incorporated the same formula in the new sub section as the basis for working out the price
The purpose behind 933 enacting the new sub section was three fold to provide an incentive to increase production of sugar encourage expan sion of the industry to devise a means by which the cane producer could get a share in the profits of the industry through prices for his cane higher than the minimum price fixed and secure to the consumer distribution of at least a reasonable quantity of sugar at a fair price   Clauses a to d of sub section 3 C postulate that the price of sugar must be determined having regard to the minimum price if any fixed for sugarcane by the Central Government the manufacturing cost of sugar the duty or tax applicable in the zone and the securing of a reasonable return on the capital employed in the business of manufac turing sugar
Referring to clause d of sub section 3 C this Court observes in Panipat supra It is clear from the reports of the Tariff Commission that a reasonable return recommended by that body at a fixed amount of Rs 1050 per quintal which worked out in 196667 at 125 per annum was not in respect of levy sugar only but on the whole so that even if such a return was not obtain able on levy sugar but was obtainable on the whole it would meet the requirement of cl
In this conclusion we derive a two fold support firstly from the language used in cl
d itself viz a reasonable return on the capital employed in the business of manufacturing sugar which must mean the business as a whole and not the business of manu facturing levy sugar only and secondly from the fact of the Commission having all along used the same phraseology while recommending Rs 1050 per quintal as an addition by way of a reasonable return on the capital employed in the industry
The cost schedules prepared by these bodies were for determining a fair price in relation to the entire sugar produced by the industry and the return which should be granted to it on the capital employed in the industry and not with respect to that stock only required to be sold under sub sec
This is clear from the heading of Ch
9 of the Tariff Commission s report 1969 Cost Structure and Price Fixation
 The petitioners contend that although the Government has the discretion to fix different prices for different areas or for different 934 factories or for different kinds of sugar such wide dis cretion has to be reasonably exercised
It is of course a well accepted principle that any discretion conferred on the executive has to be reasonably exercised
Nevertheless it is a discretion which the Court will not curtail unless the exercise of it is impeachable on well accepted grounds such as ultra vires  or unreasonableness 
The petitioners further contend that the Act requires the Government to have regard to clauses a to d and therefore it is mandatory on the part of the Government to act strictly in compliance with the provisions of those clauses in determining the prices
According to them having regard to is a mandatory requirement demanding strict compliance with the provisions to which reference is made by the legislature
They say that the ingredients of clauses a to d must be examined with reference to each producer as a condition precedent to the determination of the price of sugar
We may in this connection point out that the petitioners have not furnished any data to show that the prices deter mined by the Government would have been different had the ingredients of clauses a to d of the sub section been examined with reference to each individual producer instead of a representative cross section of manufacturing units
Be that as it may the expression having regard to must be understood in the context in which it is used in the stat ute
See Union of India vs Kamlabhai Harjiwandas Parekh  Ors  at 471
These words do not mean that the Government cannot after taking into account the matters mentioned in clauses a to d consider any other matter which may be relevant
The expression is not having regard only to but having regard to
These words are not a fetter they are not words of limitation but of general guidance to make an estimate
The Government must of course address itself to the questions to which it must have regard and having done so it is for the Government to determine what it is empowered to determine with refer ence to what it reasonably consider to be relevant for the purpose
The Judicial Committee in Commissioner of Income Tax vs Williamson Diamonds Ltd  49 observed with reference to the expression having regard to The form of words used no doubt lends itself to the sugges tion that regard should be paid only to the two matters mentioned but it appears to their Lordships that it is impossible to arrive at a conclusion as to reasonableness by considering the two matters mentioned isolated from other 935 relevant factors
Moreover the statute does not say having regard only to losses previously incurred by the company and to the smallness of the profits made
No answer which can be said to be in any measure adequate can be given to the question of unreasonableness by considering these two matters alone   See Commissioner of Income tax West Bengal Calcutta vs Gungadhar Banerjee and Co P Ltd  at 444 45
See also Saraswati Industrial Syndicate Ltd etc
vs Union of India  at 959
In State of Karna taka and Anr etc
vs Shri Ranganatha Reddy  Anr
  at 657 58 this Court stated The content and purport of the expressions having regard to and shall have regard to have been the subject matter of consideration in various decisions of the Courts in England as also in this country
We may refer only to a few
In Illingworth vs Welmsley it was held by the Court of Appeal to quote a few words from the judgment of Romer CJ at page 144 All that clause 2 means is that the tribunal assessing the compensation is to bear in mind and have regard to the average weekly wages earned before and after the accident respectively
Beating that in mind a limit is placed on the amount of compensation that may be awarded   In another decision of the Court of Appeal in Perry vs Wright etc etc Cozens Hardy MR observed at page 451 No mandatory words are there used the phrase is simply regard may be had
The sentence is not grammatical but I think the meaning is this Where you cannot compute you must estimate as best as you can the rate per week at which the workman was being remunerated and to assist you in making an estimate you may have regard to analogous cases
 It is worthwhile to quote a few words from the judgment of Fletcher Moulton LJ at page 458
Under the phrase Regard may be had to the facts which the Court may thus take cognizance of are to be a guide and not a fetter
This Court speaking through one of us Beg J as he then was has expressed the same opinion in the case of Saraswati Industrial Syndicate Ltd etc
vs Union of India  Says the learned Judge at page 959 The expression having regard to only obliges the Government to consider as relevant data material to which it must have regard
 936 In State of UP  Ors
vs Renusagar Power Co   one of us Mukharji J as he then was observed The expression having regard to only obliges the govern ment to consider as relevant data material to which it must have regard   
In O May and Ors
vs City of London Real Property Co Ltd at 665 HL Lord Hailsham stated A certain amount of discussion took place in argument as to the meaning of having regard to  in section 35
Despite the fact that the phrase has only just been used by the draftsman of section 34 in an almost mandatory sense I do not in any way suggest that the court is intended or should in any way attempt to bind the parties to the terms of the current tenancy in any permanent form   
The words having regard to in the sub section are the legislative instruction for the general guidance of the Government in determining the price of sugar
They are not strictly mandatory but in essence directory
The reasona bleness of the order made by the Government in exercise of its power under sub section 3 C will of course be tested by asking the question whether or not the matters mentioned in clauses a to d have been generally considered by the Government in making its estimate of the price but the Court will not strictly scrutinise the extent to which those matters or any other matters have been taken into account
There is sufficient compliance with the sub section if the Government has addressed its mind to the factors mentioned in clauses a to d amongst other factors which the Government may reasonably consider to be relevant and has come to a conclusion which any reasonable person placed in the position of the Government would have come to
On such determination of the price of sugar which as stated in Panipat supra is the fair price the sub section postu lates the calculation of an amount with reference to such price for payment to each producer who has complied with an order made with reference to sub section 2f
The price of sugar unlike the amount is arrived at by a process of costing in respect of a representative cross section of manufacturing units beating of course in mind the legis lative instruction contained in clauses a to d
The Attorney General submits that orders determining the 937 prices of sugar in terms of the sub section are of general application and therefore legislative in character
Omis sion if any to consider the peculiar problems of individu al producers is not a ground for judicial review
The peti tioners  counsel as well as Mr Venugopal appearing for the intervener ISMA do not agree
They submit that the sub section contemplates only administrative or quasi judicial orders of particular application and the impugned orders are not legislative
They rely upon a certain observation of this Court in Union of India  Anr
vs Cynamide India Ltd  Anr 1987 2 SCC 720
Mr Venugopal however hastens to add that his client does not seek personal heating before prices are determined
Mr BRL Iyengar supporting the contentions of the petitioners points out that the expres sion determine  used in sub section 3 C indicates that the order to which that expression refers is quasi judicial
Judicial decisions are made according to law while administrative decisions emanate from administrative policy
Quasi judicial decisions are also administrative decisions but they are subject to some measure of judicial procedure such as rules of natural justice
To distinguish clearly legislative and administrative functions is difficult in theory and impossible in practice3 Referring to these two functions Wade says They are easy enough to distinguish at the extremities of the spectrum an Act of Parliament is legislative and a deportation order is administrative
But in between is a wide area where either label could be used according to taste for example where ministers make orders or regula tions affecting large numbers of people    4
Wade points out that legislative power is the power to prescribe the law for people in general while administra tive power is the power to prescribe the law for them or apply the law to them in particular situations
A scheme for centralising the electricity supply undertakings may be called administrative but it might be just as well legisla tive
Same is the case with ministerial orders establishing new towns or airports etc
He asks And what of directions of a general character  given by a minister to a nationa lised industry Are these various orders legislative or administrative Wade says that the correct 3 Comd 4060 1932 p 73 see HWR Wade Adminis trative Law 6th ed p 47 4 Ibid p 848
938 answer would be that they are both
He says   there is an infinite series of gradations with a large area of overlap between what is plainly legislation and what is plainly administration5 Courts nevertheless for practi cal reasons have distinguished legislative orders from the rest of the orders by reference to the principle that the former is of general application
They are made formally by publication and for general guidance with reference to which individual decisions are taken in particular situations
According to Griffith and Street an instruction may be treated as legislative even when they are not issued formal ly but by a circular or a letter or the like
What mat ters is the substance and not the form or the name
The learned authors say 
 where a Minister or other authority is given power in a statute or an instrument to exercise executive as opposed to legislative powers as for example to requisition property or to issue a licence and delegates those powers generally then any instructions which he gives to his delegates may be legisla tive6 Where an authority to whom power is delegated is entitled to sub delegate his power be it legislative executive or judicial then such authority may also give instructions to his delegates and these instructions may be regarded as legislative
However as pointed out by Denning LJ as he then was a judicial tribunal cannot delegate its functions except when it is authorised to do so express ly or by necessary implication  see Bernard and Ors
vs National Dock Labour Board and Ors  at 40
Kenneth Culp Davis says What distinguishes legislation from adjudication is that the former affects the rights of individuals in the abstract and must be applied in a further proceeding before the legal position of any particular individual will be definitely touched by it while adjudica tion operates concretely upon individuals in their individu al capacity7 Justice Holmes  definition which is what is called the time test and which Davis describes as one which has produced many unsatisfactory practical results reads A judicial inquiry investigates declares and enforces liabilities as they stand on present or past facts and under laws supposed already to exist
That is its purpose and end
Legislation on the other hand looks to the future and 5 Ibid
6 Principles of Administrative Law 5th ed
 p 65 7 Administrative Law Text 3rd ed p 123 24
939 changes existing conditions by making a new rule to be applied thereafter to all or some part of those subject to its power
The establishment of a rate is the making of a rule for the future and therefore is an act legislative not judicial 
Prentis vs Atlantic Cost Line Co  226
The element of general application is often cited as a distinct feature of legislative activity
In the words of Chief Justice Burger rule making is normally directed toward the formulation of requirements having a general application to all members of a broadly identifiable class Bernard Schwarts says an adjudication on the other hand applies to specific individuals or situations
Rule making affects the fights of individuals in the abstract and must be applied in a further proceeding before the legal position of any particular individual will be definitely affected adjudication operates concretely upon individuals in their individual capacity  9 According to Schwartz the time test and the applicability test are workable in most cases although in certain situations distinctions are indeed difficult to draw
A statutory instrument such as a rule order or regula tion emanates from the exercise of delegated legislative power which is the part of the administrative process resem bling enactment of law by the legislature
A quasi judicial order emanates from adjudication which is the part of the administrative process resembling a judicial decision by a court of law
This analogy is imperfect and perhaps unhelp ful in classifying borderline or mixed cases which are better left unclassified 10
If a particular function is termed legislative rather than judicial practical results may follow as far as the parties are concerned
When the function is treated as legislative a party affected by the order has no fight to notice and heating unless of course the statute so re quires
It being of general application engulfing a wide sweep of powers applicable to all persons and situations of a broadly identifiable class the legislative order may not be vulnerable to challenge merely by reason of its omission to take into account individual peculiarities and differ ences amongst those falling within the class
8 Quoted by Bernard Schwartz in Administrative Law  1976 p 144
9 Ibid 10 See Davis Administrative Law Text p 123 940 In Union of India  Anr
vs Cynamide India Ltd  Anr 1987 2 SCC 720 at 734 35 Chinnappa Reddy J referring to the earlier decisions of this Court states    legislative action plenary or subordinate is not subject to rules of natural justice
In the case of Parlia mentary legislation the proposition is self evident
In the case of subordinate legislation it may happen that Parlia ment may itself provide for a notice and for a hearing  
But where the legislature has not chosen to provide for any notice or hearing no one can insist upon it and it will not be permissible to read natural justice into such legislative activity  
It is true that with the proliferation of delegated legislation there is a tendency for the line between legislation and administration to vanish into an illusion
Administrative quasi judicial decisions tend to merge in legislative activity and con versely legislative activity tends to fade into and present an appearance of an administrative or quasi judicial activi ty
Stating that rule making is of general application to all members of a broadly identifiable class while adjudication is applicable to specific individuals or situations the learned Judge observes A price fixation measure does not concern itself with the interests of an individual manufacturer or producer
It is generally in relation to a particular commodity or class of commodities or transactions
It is a direction of a general character not directed against a particular situation
It is intended to operate in the future
It is conceived in the interests of the general consumer public
The right of the citizen to obtain essential articles at fair prices and the duty of the State to so provide them are transformed into the power of the State to fix prices and the obligations of the producer to charge no more than the price fixed
Viewed from whatever angle the angle of general application the prospectiveness of its effect the public interest served and the rights and obligations flowing therefrom there can be no question that price fixation is ordinarily a legisla tive activity
The learned Judge emphasises 941 Price fixation may occasionally assume an administrative or quasi judicial character when it relates to acquisition or requisition of goods or property from individuals and it becomes necessary to fix the price separately in relation to such individuals
Such situations may arise when the owner of property or goods is compelled to sell his property or goods to the government or its nominee and the price to be paid is directed by the legislature to be determined accord ing to the statutory guidelines laid down by it
In such situations the determination of price may acquire a quasiju dicial character
These observations have been cited with approval by one of uS Sabyasachi Mukharji J as he then was in Renusagar supra
In Saraswati Industrial Syndicate Ltd etc
vs Union of India  at 961 this Court states Price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material
It could not there fore give rise to a complaint that a rule of natural jus tice has not been followed in fixing the price
In Prag Ice  Oil Mills  Anr etc
vs Union of India  at 317 Chandrachud J as he then was speaks for the majority We think that unless by the terms of a particular statute or order
price fixation is made a quasi judicial function for specified purposes or cases it is really legislative in character in the type of control order which is now before us because it satisfies the tests of legislation
A legisla tive measure does not concern itself with the facts of an individual case
It is meant to lay down a general rule applicable to all persons or objects or transactions of a particular kind or class
See also the observation of Megarry J as he then was in Bates vs Lord Hailsham of St Marylebone  Ors at 1024
The impugned orders duly published in the official gazettes notifying the prices determined for sugar of var ious grades and pro 942 duced in various zones and applicable to all producers of such sugar can in our view be legitimately characterised as legislative
These orders are required by Sub section 6 to be laid before both Houses of Parliament
The notified prices are applicable without exception to all persons falling within well defined groups
The prices are deter mined in accordance with the norms postulated in the sub section
It is with reference to such predetermined prices of sugar that the amount payable to each producer who has sold sugar in compliance with an order made with reference to clause f of sub section 2 is calculated
The calcu lation of such amount is in contradistinction to the deter mination of price of sugar a non legislative act
Thus while individual consideration is relevant to the calculation of the amount it is not so for the determina tion of the price of sugar which is the rate at which the amount is calculated
That price as stated in Panipat supra is to be arrived at by a process of costing with reference to a reasonably efficient and economic representa tive cross section of manufacturing units
In this connection we must point out that at first blush a certain observation of Chinnappa Reddy J in Cyna mide 1987 2 SCC 720 at 741 on which much reliance is placed by the petitioners  counsel appears to be inconsist ent with what we have now stated
The learned Judge says The Order made under Section 32c which is not in respect of a single transaction nor directed to a particu lar individual is clearly a legislative act while an Order made under Section 33 C which is in respect of a particu lar transaction of compulsory sale from a specific individu al is a non legislative act
It would appear that what the learned Judge had in mind was an order by which the amount was calculated in terms of sub section 3 C in respect of each individual producer and not an order determining the price of sugar
While the former is non legislative the latter by the very test adopted by the learned Judge is legislative in character
We therefore understand the observation of the learned Judge on this point as applicable only to the individual order fixing the amount in terms of the sub section and not to orders determining the price of sugar which are what the impugned orders are
Any other construction of the sub section would conflict with what was adopted by the Constitution Bench in Panipat supra and would therefore be unsustainable
943 The individual orders calculating the amounts payable to the individual producers being administrative orders rounded on the machanics of price fixation they must be left to the better instructed judgment of the executive and in regard to them the principle of audi alteram partem is not applicable
All that is required is reasonableness and fair play which are in essence emanations from the doctrine of natural justice as explained by this Court in AK Krai pak  Ors etc
vs Union of India  Ors See also the observation of Mukharji J as he then was in Renusagar  105
Price fixation is in the nature of a legislative action even when it is based on objective criteria rounded on relevant material
No rule at natural justice is applicable to any such order
It is nevertheless imperative that the action of the authority should be inspired by reason
Saras wati Industrial Syndicate Ltd   961 962
The Government cannot fix any arbitrary price
It cannot fix prices on extraneous considerations Renusagar supra
Any arbitrary action whether in the nature of a legis lative or administrative or quasi judicial exercise of power is liable to attract the prohibition of Article 14 of the Constitution
As stated in EP Royappa vs State of Tamil Nadu  Anr   equality and arbi trariness are sworn enemies one belongs to the rule of law in a republic while the other to the whim and caprice of an absolute monarch
 Unguided and unrestricted power is af fected by the vice of discrimination Mrs Maneka Gandhi vs Union of India  Anr 1978 1 SCC 248 at 293 294
The principle of equality enshrined in Article 14 must guide every state action whether it be legislative executive or quasi judicial Ramana Dayaram Shetty vs The International Airport Authority of India  Ors  at 1042 Ajay Hasia  Ors
vs Khalid Mujib Sehravardi  Ors  and DS Nakara  Ors
vs Union of India  Power delegated by statute is limited by its terms and subordinate to its objects
The delegate must act in good faith reasonably intra vires the power granted and on relevant consideration of material facts
All his decisions whether characterised as legislative or administrative or quasi judicial must be in harmony with the Constitution and other laws of the land
They must be reasonably related to the purposes of the enabling legislation
See Leila Mourn ing vs Family Publications Service   If they are manifestly unjust or oppressive or outra geous or directed to an unauthorised end or do not tend in some degree to the accomplishment of 944 the objects of delegation courts might well say Parlia ment never intended to give authority to make such rules they are unreasonable and ultra vires
per Lord Russel of Killowen CJ in Kruse vs Johnson 1988 2 QB 91 99
The doctrine of judicial review implies that the reposi tory of power acts within the bounds of the power delegated and he does not abuse his power
He must act reasonably and in good faith
It is not only sufficient that an instrument is intra vires the parent Act but it must also be consist ent with the constitutional principles Maneka Gandhi vs Union of India 1978 1 SCC 248 314 315
Where a question of law is at issue the Court may determine the rightness of the impugned decision on its own independent judgment
If the decision of the authority does not agree with that which the Court considers to be the right one the finding of law by the authority is liable to be upset
Where it is a finding of fact the Court examines only the reasonableness of the finding
When that finding is found to be rational and reasonably based on evidence in the sense that all relevant material has been taken into account and no irrelevant material has influenced the deci sion and the decision is one which any reasonably minded person acting on such evidence would have come to then judicial review is exhausted even though the finding may not necessarily be what the Court would have come to as a trier of fact
Whether an order is characterised as legislative or administrative or quasi judicial or whether it is a deter mination or law or fact the judgment of the expert body entrusted with power is generally treated as final and the judicial function is exhausted when it is found to have wanant in the record and a rational basis in law See Rochester Tel
Corp vs United States   See also Associated Provincial Picture Houses Ltd vs Wednesbury Corporation  As stated by Lord Hailsham of St Marylebone LC HL in Chief Constable of the North Wales Police vs Evans  at 1160 61 The function of the court is to see that lawful authority is not abused by unfair treatment and not tO attempt itself the task entrusted to that authority by the law  
The purpose of judicial review is to ensure that the indi vidual receives fair treatment and not to ensure that the authority after according fair treatment reaches on a matter 945 which it is authorised by law to decide for itself a conclu sion which is correct in the eyes of the court
In the same case Lord Brightman says Judicial review as the words imply is not an appeal from a decision but a review of the manner in which the decision was made
A repository of power acts ultra vires either when he acts in excess of his power in the narrow sense or when he abuses his power by acting in bad faith or for an inadmissi ble purpose or on irrelevant grounds or without regard to relevant considerations or with gross unreasonableness
See Associated Provincial Picture Houses Ltd vs Wednesbury Corporation  In the words of Lord Mac naghten in Westminster Corporation vs London and North Western  Railway  430   
It is well settled that a public body invested with statutory powers such as those conferred upon the Corporation must take care not to exceed or abuse its pow ers
It must keep within the limits of the authority commit ted to it
It must act in good faith
And it must act rea sonably
The last proposition is involved in the second if not in the first 
In The Barium Chemicals Ltd  Anr
vs The Company Law Board  Ors 1966 Supp
SCR 311 this Court states   
Even if the statutory order is passed in good faith and with the best of intention to further the purpose of the legislation which confers the powers since the Authority has to act in accordance with and within the limits of that legislation its order can also be challenged if it is beyond those limits or is passed on grounds extra neous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation
In any one of these situations it can well be said that the authority did not honestly form its opinion or that in forming it it did not apply its mind to the relevant facts
In Renusagar   104 Mukharji J as he then was states 946 The exercise of power whether legislative or administrative will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary
Similarly if the power has been exercised on a non consideration or non application of mind to relevant factors the exercise of power will be regarded as manifestly erroneous
If a power whether legislative or administra tive is exercised on the oasis of facts which do not exist and which are patently erroneous such exercise of power will stand vitiated
The true position therefore is that any act of the repository of power whether legislative or administrative or quasi judicial is open to challenge if it is in conflict with the Constitution or the governing Act or the general principles of the law of the land or it is so arbitrary or unreasonable that no fair minded authority could ever have made it The impugned orders are undoubtedly based on an exhaus tive study by experts
They are fully supported by the recommendations of the Tariff Commission in 1969 and 1973
It is true that these recommendations in some respects were the subject matter of criticism by a subsequently appointed expert body viz the BICP
Apart from the fact that the BICP s criticism has not been accepted by the Government that criticism is not relevant in so far as the impugned orders are concerned because the latter are in regard to an earlier period
These orders are fully supported by the relevant material on record
The conclusions reached by the Central Government in exercise of its statutory power are expert conclusions which are not shown to be either discrim inatory or unreasonable or arbitrary or ultra vires
The 11 See the observation of Lord Russel in Kruse vs Johnson and that of Lord Greene MR in Associated Provincial Picture Houses Ltd vs Wednesbury Corporation   See also Mixnam Properties Ltd vs Chertsey UDC  Commissioners of Customs and Excise vs Cure and DeeIcy Ltd 1962 1 QB 340 McEldowney vs Forde 1971 AC 632 HL Carltona Ltd vs Commissioners of Works  564 Point of Ayr
Collieries Ltd vs Lloyd George  Scott vs Glasgow Corporation  492 Robert Baird LDv
City of Glasgow  42 Manhattan General Equipment Co vs Commissioner   134 Yates Arthur  Co Pty Ltd vs Vegetable Seeds Committee   Bailey vs Conole   Boyd Builders Ltd vs City of Ottawa  Re Burns and Township of Haldimand 14 and Lynch vs Tilden Produce Co 15320 322
947 material brought to our notice by the petitioners does not support the arguments at the bar that the Central Government has not applied its mind to the relevant questions to which they are expected to have regard in terms of the statute
That the sugar factories for the purpose of determining the price of sugar in terms of sub section 3 C should be grouped on the basis of their geographical location is a policy decision based on exhaustive expert conclusions
Factories are classified with due regard to geographi cal cumagro economic considerations
Fair prices for differ ent grades of sugar are determined for each zone with refer ence to a reasonably efficient and economic representative cross section of the manufacturing units
Such classifica tion as held in Panipat supra and Anakapalle supra cannot in the absence of evidence to the contrary be characterised as arbitrary or unreasonable or not rounded on an intelligible differentia having a rational nexus with the object sought to be achieved by subsection 3 C
The person assailing such classification carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences Federal Power Commission vs Hope Gas Co   602 1944
If the petitioners nevertheless incur losses such losses need not necessarily have arisen by reason of geographical zoning but for reasons totally unconnected with it such as the condition of the plant and machinery quality of management investment policy labour relations etc
These are matters on which the petitioners have not furnished data and in any event judicial review is hardly appropriate for their consideration
In this connection we would recall the observations of Chinnappa Reddy J in Union of India and Anr
vs Cynamide India Ltd andAnr 1987 2 SCC 720 at p 736 We do not agree with the basic premises that price fixation primarily affects manufacturers and producers
Those who are most vitally affected are the consumer public
It is for their protection that price fixation is resorted to and any increase in price affects them as seriously as any decrease does a manufacturer if not more In Ms Gupta Sugar Works vs State of UP and Ors 1987 Supp
SCC 476 at p 48 1 one of us Jagannatha Shetty J  stated In this view of the matter the primary consideration in the fixation of price would be the interest of consumers 948 rather than that of the producers The Court has neither the means nor the knowledge to reevaluate the factual basis of the impugned orders
The Court in exercise of judicial review is not concerned with the correctness of the findings of fact on the basis of which the orders are made so long as those findings are reasonably supported by evidence
In the words of Justice Frankfurter of the US Supreme Court in Railroad Commission of Texas vs Rowan  Nichols Oil Company 311 US 570 577 85 L ed
358362 Nothing in the Constitution warrants a rejection of these expert conclusions
Nor on the basis of intrinsic skills and equipment are the federal courts qualified to set their independent judgment on such matters against that of the chosen state authorities  
When we consider the limit ing conditions of litigation the adaptability of the judi cial process only to issues definitely circumscribed and susceptible of being judged by the techniques and criteria within the special competence of lawyers it is clear that the Due Process Clause does not require the feel of the expert to be supplanted by an independent view of judges on the conflicting testimony and prophecies and impressions of expert witnesses
This observation is of even greater significance in the absence of a Due Process Clause
Judicial review is not concerned with matters of econom ic policy
The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either
The Court does not supplant the feel of the expert by its own views
When the legislature acts within the sphere of its authority and delegates power to an agent it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonable ness
In all such cases judicial in quiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land
As rated by Jagannatha Shetty J in Ms Gupta Sugar Works supra the court does not act like a chartered accountant nor acts like an income tax officer
The court is not concerned with any individual case or any particular problem
The court 949 only examines whether the price determined was with due regard to considerations provided by the statute
And wheth er extraneous matters have been excluded from determination Price fixation is not within the province of the courts
Judicial function in respect of such matters is exhausted when there is found to be a rational basis for the conclu sions reached by the concerned authority
As stated by Justice Cardozo in Mississippi Valley Barge Line Company vs United States of America  292 US 282 290  1265 The structure of a rate schedule calls in peculiar measure for the use of that enlightened judgment which the Commis sion by training and experience is qualified to form  
It is not the province of a court to absorb this function to itself  
The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body
It is a matter of policy and planning for the Central Government to decide whether it would be on adoption of a system of partial control in the best economic interest of the sugar industry and the general public that the sugar factories are grouped together with reference to geographi cal cum agro economic factors for the purpose of determining the price of levy sugar
Sufficient power has been delegated to the Central Government to formulate and implement its policy decision by means of statutory instruments and execu tive orders
Whether the policy should be altered to divide the sugar industry into groups of units with similar cost characteristics with particular reference to recovery duration size and age of the units and capital cost per tonne of output without regard to their location as recom mended by the BICP is again a matter for the Central Gov ernment to decide
What is best for the sugar industry and in what manner the policy should be formulated and imple mented bearing in mind the fundamental object of the stat ute viz supply and equitable distribution of essential commodity at fair prices in the best interest of the general public is a matter for decision exclusively within the province of the Central Government
Such matters do not ordinarily attract the power of judicial review
We would in this connection recall the words of Jus tice Frankfurter in Secretary of Agriculture etc
vs Cen tral Roig Refining Com 950 pany etc
  Congress was   confronted with the formula tion of policy peculiarly with its wide swath of discretion
It would be a singular intrusion of the judiciary into the legislative process to extrapolate restrictions upon the formulation of such an economic policy from those deeply rooted notions of justice which the Due Process Clause expresses   
Suffice it to say that since Congress fixed the quotas on a historical basis it is not for this Court to reweigh the relevant factors and perchance substitute its notion of expediency and fairness for that of Congress
This is so even though the quotas thus fixed may demonstrably be disadvantageous to certain areas or persons
This Court is not a tribunal for relief from the crudities and inequities of complicated experimental economic legislation
It is important to remember that the division of the industry on a zonal basis for the purpose of price determi nation has been accepted without question by almost all the producers with the exception of a few like the petitioners
Even if it is true that the petitioners as individuals are at a disadvantage and have suffered losses on account of the present system an assertion which has not been established and which by its very nature is incapable of determination by judicial review that is not sufficient ground for inter ference with the impugned orders
We are not satisfied that the decisions of this Court in Anakapalle  and Panipat 1973 2 SCR 860 require reconsideration in any respect
We see no merit in the challenge against the im pugned orders
The civil writ petitions are in the circum stances dismissed
However we do not make any order as to costs
PSS Petitions dismissed


Summary:
The respondent Delhi Cloth Mills has a complex over an area of 63 acres at Bara Hindu Rao and Kishan Gnaj Delhi which is a nonconforming area and the industry of the kind in which the mill is engaged in was required to be shifted consequent upon the enforcement of Master Plan prepared by Delhi Development Authority under the Delhi Development Act 1966 which plan amongst other things was to assign land use
The Delhi Cloth Mills in September 1982 approached the DDA and put forth a proposal for shifting the mill and for redeveloping the Mill area for group housing and flatted factories
The DDA by Resolution No 26 agreed to the scheme to be implemented in phases but it took care to examine the matter further from Delhi s economics point of view
In September 1983 the DDA turned down the request of the respondent for allotment of an alternate site in a conform ing area for shifting the mill
Thereupon the Mill applied to the Secretary LabourLabour Commissioner Delhi Adminis tration for permission to close down the Mill under Sec
25D of the Industrial Disputes Act on the ground that the Mill could not be kept located in a non coforming area as otherwise penal consequences would follow
On April 15 1985 the request of the Mill was turned down by the Secre tary LabourLabour Commissioner
Thereupon the Delhi Mill filed a writ petition before the High Court for direction that the DDA be directed to implement its resolution No 26 dated Feb 1 1983
It may be mentioned here that during the pendency of the writ petition before the High Court DDA had reviewed the situation and passed a fresh resolution No 3 dated August 1 1986 reviewing the earlier resolution dated Feb 1 1983 recalling the grant of approval with regard to the scheme propounded by the DCM
Thereafter DDA reiterated its Resolution of August 1 1986 by another resolution dated November 3 1986
952 The High Court quashed the two later resolutions and re stored the resolution dated February 1 1983
It took the view that the Mill could not be kept working in a non con forming area as otherwise it would attract penal action under the law after the lapse of three years from Jan 18 1986
Both Union of India and DDA have filed appeals in this Court by special leave against the High Court s order
In the meantime DCM filed a writ petition in the High Court which was allowed by a Full Bench of the High Court on March 1 1989 ordering closure of the Mill
Delhi Adminis tration filed special leave petition in this Court against the said order and the Mill filed another special leave petition against the order of the High Court dated 331989 extending time for grant of permission by the Lt Governor for Closure of the factory till March 30 1989
When these matters reached hearing in this Court DCM and its employees had reached an agreement in the matter of closure of the factory
The Special Leave Petitions were therefore dis missed by this Court and on the file of this Court remained these two appeals
Dismissing the appeals with a direction this Court HELD The factory has been ordered to be closed and the employer and the employees have entered a settlement
The supposed basis for reviewing or recalling resolution dated February 1 1983 on the basis of its affectation to the industry and economy of Delhi as also to the workmen has vanished
On this footing and on the events which have come by the challenge to the judgment and order of the High Court loses rigour
956F G Resolution No 26 dated February 1 1983 approving the scheme is given by the DCM provided that the scheme had taken all necessary safeguards and controls which would help triggering re development and rehabilitation in the congest ed areas of the central core of the capital956G Appeals dismissed conveying a direction that the DDA shall grant the DCM conditional approval subject to removal of the enumerated objections raised or such of them as are valid and tenable in law after DCM is heard by the Municipal Corporation of Delhi
The matter be formalised forthwith by the DDA and other authorities connected therewith within eight weeks so that the settlement between the workers and the DCM and other matters connected do not stagnate and move to the benefit of all concerned
960G H 953