HIGH COURT OF UTTARAKHAND, AT NAINITAL Writ Petition No.204 of 2008 (M/B) 1. M/s Uttam Sugar Mills Ltd. Registered office at 7-C, Ist Floor, J-Block Shopping Centre Saket, New Delhi Unit: Libberheri, District Haridwar Through Shri H.N. Tyagi DGM - Commercial 2. M/s Kashipur Sugar Mills Ltd. Kashipur, District U.S. Nagar Through its Occupier Shri S. K. Bhatnagar 3. M/s Lakshmi Sugar Mills Co. Ltd. Registered office at P.O. Iqbalpur District Haridwar Through Shri Bhopal Singh General Manager (F&A) 4. Ms. R. B. N. S. Sugar Mills Ltd. Registered office at Lakshar District Haridwar Through Shri S. K. Mittal General Manager 5. S. K. Jain s/o Shri S. N. Jain R/o K1/147 Kavinagar, Ghaziabad Share-holder of petitioner no.1. … Petitioners Versus 1. State of Uttarakhand Through its Secretary Sugar Industry & Cane Development Dept. Civil Secretariat, Dehradun 2. Cane & Sugarcane Commissioner State of Uttarakhand, Dehradun 3. Union of India through its Secretary, Ministry of Consumer Affairs, Food and Public Distribution, Krishi Bhawan, New Delhi. … Respondents AND Writ Petition No.205 of 2008 (M/B) 1. M/s Uttam Sugar Mills Ltd. Registered office at 7-C, Ist Floor, J-Block Shopping Centre Saket, New Delhi Unit: Libberheri, District Haridwar Through Shri H.N. Tyagi DGM - Commercial 2. M/s Kashipur Sugar Mills Ltd. Kashipur, District U.S. Nagar Through its Occupier Shri S. K. Bhatnagar 3. M/s Lakshmi Sugar Mills Co. Ltd. Registered office at P.O. Iqbalpur District Haridwar Through Shri Bhopal Singh General Manager (F & A) 4. Ms. R. B. N. S. Sugar Mills Ltd. Registered office at Lakshar District Haridwar Through Shri S. K. Mittal General Manager 5. S. K. Jain S/o Shri S. N. Jain R/o K1/147 Kavinagar, Ghaziabad Share-holder of petitioner no.1. … Petitioners Versus 1. State of Uttarakhand Through its Secretary Sugar Industry & Cane Development Dept. Civil Secretariat, Dehradun 2. Cane & Sugarcane Commissioner State of Uttarakhand Dehradun 3. Union of India through its Secretary, Ministry of Consumer Affairs, Food and Public Distribution, Krishi Bhawan, New Delhi. … Respondents Mr. Pinaki Misra, Advocate with Mr. Akhilesh Kalra, Mr. Arjun Pant, and Mr. Paresh Tripathi, Advocates for the petitioners. Mr. L. P. Naithani, Advocate General for respondent nos.1 & 2. Mr. U. K. Uniyal, Senior Advocate for applicants in Impleadment Application. Mr. Anurag Bisaria, Advocate for the Caveator/Intervenor. Date of Delivery of Judgment : 31st March, 2008 JUDGMENT Coram: Hon. V. K. Gupta, C.J. Hon. J. C. S. Rawat, J. Per:- Hon. J. C. S. Rawat, J. Since there is a common question of law and fact involved in both petitions, therefore, both petitions have been heard together and are being disposed of by this common judgment. 2. By means of Writ Petition No.204 of 2008 (M/B), the petitioners have sought the following reliefs :- “(i) issue a writ, order or direction or writ in the nature of certiorari quashing the notififation/order dated 23rd January, 2008, fixing the SAP of Rs.132/- per quintal for early maturing cane varieties and Rs.127/- per quintal for general cane varieties, issued by respondent no.1, as contained in Annexure No.1 to the writ petition. (ii) issue a writ, order or direction or writ in the nature of mandamus declaring section 16 of the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 (adopted by Uttarakhand) as unconstitutional. (iii) issue an appropriate writ, order or direction or writ in the nature of mandamus declaring that the State Government would have no authority to fix a price for sugarcane till adequate and appropriate guidelines are framed and incorporated in the provisions of the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 (as adopted by Uttarakhand). (iv) issue a writ, order or direction or writ in the nature of mandamus directing the respondents to appoint a Committee consisting of experts in the field, including industry representative, to fix the price of sugarcane after considering the guidelines, which may be framed by the respondent State. (v) issue a writ, order or direction or an appropriate writ calling for the records of the State Government and quashing its decision fixing State Advised Price for 2007-08. (vi) issue a writ, order or direction or writ in the nature of mandamus commanding the respondent State to refix a fair and reasonable price for sugarcane for the crushing season 2007-08 after taking into consideration relevant factors, as enumerated in the writ petition. (vii) Issue a writ, order or direction permitting the petitioners to pay cane price for the crushing season 2007-08 equal to the Statutory Minimum Price fixed by the Central Government till such time as guidelines are framed under the Act. (viii) Issue a writ order or direction in the nature of certiorari quashing Form C aforesaid. (ix) issue an appropriate writ, order or direction declaring the fixation of State Advised Price under the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 as void in view of Article 254 of the Constitution of India. (x) Issue a writ order or direction in the nature of mandamus directing the respondents not to insist upon the execution of any agreement to be executed in Form-C till appropriate guidelines are framed for fixation of State Advised Price and further not to enforce any agreement executed by the petitioners in Form-C. (xi) issue a writ, order or direction in the nature of mandamus, including diversion of cane centre be taken against the petitioners on the basis of the arrears arising out of the State Advised Price. (xii) issue an ad-interim mandamus to the above effect. (xiii) issue such other writ, order or direction which this Hon’ble Court may deem fit and proper in the facts and circumstances of the case; and (xiv) award the cost of the petition to the petitioners.” 3. By means of Writ Petition No.205 of 2008 (M/B) moved under Article 226 of the Constitution of India, the petitioners have sought the following reliefs:- “(i) Issue a writ, order or direction or writ in the nature of mandamus summoning the record from the respondent State determining the State Advised Price (SAP) of sugarcane for the crushing season 2006-07 and declare the same to be arbitrary, illegal and void abinitio and further the consequential right accrued in favour of the petitioners may be declared to flow in their favuor. (ii) Issue a writ, order or direction or writ in the nature of certiorari quashing the order dated 28th December, 2006 issued by the State Government fixing the State Advised Price of sugarcane for the crushing season 2006-07, after the aforesaid declaration, as contained in Annexure No.1 to the writ petition. (iii) issue a writ, order or direction or writ in the nature of mandamus commanding the respondents not to enforce the State Advised Price, as laid down in the impugned order dated 28th December 2006 issued by the State Government, as contained in Annexure No.1 to the writ petition, against the petitioners. (iv) issue a writ, order or direction or writ in the nature of mandamus commanding the respondents not to take any coercive steps against the petitioners for recovery and enforcement of the impugned State Advised Price for the cane crushing season 2006-07. (v) issue an ad-interim mandamus to the above effect. (vi) issue any other appropriate writ, order or direction in favour of the petitioners as the Hon’ble Court may deem fit in the circumstances of the case. (vii) award the costs of the petition to the petitioners.” 4. In substance, the writ petitioners in W.P. No.204/2008 (M/B) have challenged the Government Notification/Order dated 23.01.2008 fixing the State Advised Price (SAP) of Rs.132/- per quintal for early maturing cane varieties and Rs.127/- per quintal for general cane varieties for the crushing season 2007-2008. In the latter petition, the petitioners have challenged the Government Notification dated 28th December, 2006 fixing the State Advised Price (SAP) of sugarcane for the crushing season 2006-2007. The grounds of challenge in both petitions are common. It has been alleged in the petitions that the sugarcane is an essential commodity under the Essential Commodities Act, 1955 (hereinafter referred as the E.C. Act) which empowers the Central Government to make orders for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. In exercise of the said Act, the Central Government has made the Sugarcane (Control) Order 1966 {hereinafter referred as ‘the 1966 Order (Central)}. The object of this Order was to promote the sugar industry and to eliminate unnecessary impediments in the production of sugar. The Central Government after a thorough consideration had fixed a Statutory Minimum Price (for short ‘SMP’). It was further alleged in the petitions that while fixing the ‘SMP’, the Central Government has consulted the appropriate bodies and associations and also made necessary enquiries, including the collection of relevant data and its evaluation. The State of U.P. has enacted the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 (hereinafter referred as ‘U.P. Act, 1953) and this Act was adopted by the State of Uttarakhand vide Uttarakhand Sugarcane (Regulation of Supply & Purchase) Act 2000. Section 16 of U.P. Act 1953 empowers the State Government to regulate the distribution, sale and purchase of cane in any reserved or assigned areas. The Constitution Bench of Hon’ble Apex Court in the case of U.P. Cooperative Cane Unions Federations Vs. West U.P. Sugar Mills Association & others reported in 2004 (5) SCC 430 has held in its majority judgment that the power conferred upon the State Government under section 16 of the U.P. Act, 1953 includes the power of State Government to determine State Advisory Price (hereinafter referred as ‘S.A.P.’) to be paid by the occupier of the factory for purchasing sugarcane intended to be used by the factory. In exercise of the power conferred under section 16 of the U.P. Act 1953, the State Government fixed the S.A.P. at the rate of Rs.132/- per quintal for early maturing cane varieties and Rs.127 per quintal for general cane varieties. The State has disregarded the various factors which are required to be taken into consideration for fixing of the S.A.P. of sugarcane. It was further alleged that there is a provision under Sections 3 and 4 of the U.P. Act, 1953 to constitute a Sugarcane (Control) Board. The Uttarakhand State Government has not constituted the Board as provided under section 3 & 4 of the Act. Under the legislative intent, it is obligatory on the part of the State Government to seek the advice of sugarcane board while fixing the S.A.P. The State Government while fixing the S.A.P. for the crushing season 2007-08 has neither considered any guidelines nor relevant factors, nor prevailing sugar prices, nor the cane price prevailing in other sugarcane producing States which are much lower than the cane price of Uttarakhand. The petitioners had executed Form-B & C agreement which is a dotted line agreement. Petitioners’ sugar factories had no option, but to purchase sugarcane at the SAP fixed by the State Government and they had to sign in the agreement in Form B & C prescribed in the 1954 Rules. The said Forms leave no choice for sugar factories, thus, the agreement in Form B & C indicated above renders nugatory the ability of the petitioners’ company have entered into an independent agreement with the farmers for purchase of sugarcane at a price lower than the S.A.P. A number of representations were made to the authorities concerned. When no heed was paid by the State Government, the petitioners filed the writ petitions before this Court. 5. The State Government has filed the counter affidavit on behalf of respondent no.1 & 2 alleging therein that the sugarcane growers and the petitioners have already acted upon the agreement executed in Form B & C for the year 2006-07 wherein the petitioners have agreed to purchase the sugarcane at the rate fixed by the State Government for the crushing season 2006-2007 as is apparent from perusal of Clause 1 of said agreements. Copies of these agreements have been filed with C.A. – 1 to 3. The respondent no.2 have also alleged that all the petitioners entered into an agreement to purchase the sugarcane at the rate fixed price by the State Government for the crushing season 2007-08 and the copies of these agreements have been filed as C.A.-4 to 7. It was further alleged that the Government fixed S.A.P. at the rate of Rs.132/- per quintal for early maturing cane varieties and Rs.127/- per quintal for general varieties for the purchase of sugarcane in the year 2006-07 and these rates of SAP were not changed for the crushing season of 2007-08. It was further alleged in the counter affidavit that after executing the agreement the occupier of the factory cannot turn around from the agreement executed in Form ‘C’ by saying that it is a standard format and doted line contract. The Central Government is empowered to fix the minimum price of sugarcane and it can be higher than the minimum price which may in the nature of agreed purchase price between the occupier of the factories and the sugarcane growers and sugarcane cooperative societies. The Constitution Bench of the Hon’ble Apex Court in U.P. Cooperative Cane Unions Federations (supra) has held that the regulatory power is possessed with the State Government under section 16 of U.P. Act, 1953 and the regulatory power also include the power to fix the price of sugarcane. If it is held that the State under the power of regulation cannot fix the price then the statutory provisions contained in the U.P. Act, 1953 and the Order thereunder i.e. 1954 would be completely one sided agreement operating for the benefit of sugarcane factories giving them many advantages and no corresponding obligation would have to be given to the cane growers and leaving the cane growers in the lurch. At last, the respondents prayed for dismissal of the writ petitions. 6. The Sehkari Ganna Vikas Samiti of Iqbalpur Roorkee (District Haridwar), Jwalapur (District Haridwar), Laksar (District Haridwar) and Kashipur have also filed impleadment applications alongwith their affidavits. They have alleged in their applications that the applicants are the registered societies under the Co-operative Societies Act and they supply the cane from the cane growers to the sugar factories. The sugar factories cannot directly purchase cane from the cane growers. The applicants’ societies get payment from the sugar factory and disburse it among the cane growers. The petitioners’ sugar factories and the societies have executed an agreement for supplying the cane and now they cannot turn around. These interveners were allowed to intervene in the matter. 7. The pleadings have been exchanged in Writ Petition No.204 of 2008 (M/B). The parties have adopted common pleadings in both petitions because the grounds of challenge in both petitions are common. 8. We have heard the learned counsel for the parties on admission and perused the record. 9. Learned counsel for the petitioners contended that neither they have challenged nor they can challenge the existing power of the State about the fixation of SAP in view of the judgment rendered by the Hon’ble Supreme Court in U.P. Cooperative Cane Unions Fed. (supra). It was further contended that the Central Government in its 1966 Order has categorically laid down the norms for fixing the SMP whereas the State legislation did not provide any machinery, norms or guidelines to exercise the power in this regard; in absence of guidelines norms and criteria prescribing the SAP render the section 16 of U.P. Act, 1953 unconstitutional; the State Government did not consider the relevant factors while fixing the S.A.P.; the State Government considered the irrelevant factors to fix the S.A.P.; and S.AP. was fixed arbitrarily. It was further contended that section 3 of U.P. Act, 1953 provides to constitute a Sugarcane (Control) Board and the function of the Board is to advise the State Government on the matters pertaining to regulation of supply and purchase of sugarcane. The State Government inspite of the mandate of law has not established any Sugarcane (Control) Board in the State. The Government has fixed the sugarcane price on its whims and fancies. It was further contended that the State Government could not demonstrate before the Court that as to what method was adopted or on whose advice the Government fixed the SAP of sugarcane for the year 2006-07 and 2007-08. It was further contended that it is evident from non-production of such reports or documents that the State Government has not adopted any norms or guidelines while fixing the State Advice Price. 10. The Advocate General appearing on behalf of respondent nos.1 & 2 contended that the provisions regarding the constitution of the Board has been deleted by the State of U.P. by the Amendment Act, No.17 of 2006 by which section 3 & 4 of the said Act have been omitted. The State Government of Uttarakhand is proposing not to constitute the sugarcane board and to delete the provisions of section 3 & 4 of U.P. Act, 1953. It was further contended that the reservation or the assignment of area is made for the benefit of a sugar factory under the provisions of the U.P. Act, 1953. The agreements in form B and C executed by the cane growers or cane growers’ cooperative society in favour of occupier of a factory are also for the benefit of sugar factory because these agreements gave an assurance of continuous supply of sugarcane on the days indicated in the requisition slips issued by the sugar factories so that there may be not any problem in getting the raw material throughout the season. If the cane growers and the Co- operative societies does not provide the adequate quantity of sugarcane as required by the sugar factories in the requisition slip, the cane growers or the society, as the case may be, are penalized for the same. It was further contended that in absence of such agreements the sugar factories will also be the loser as they may face great problem in getting the supply of sugarcane according to their requirements. The occupiers of the factories are keen on execution of the agreements. The agreement is not only in favour of the cane growers, but also in favour of the factories. The agreement is one composite transaction and it is not open to them to contend that the terms of relating to price should not be enforced as their consent in that regard was obtained on a doted line form; the owners and occupiers of the factory are fully bound by the agreement and the factory owners cannot assail the only clause relating to price of sugarcane on the ground that their consent was obtained forcibly on a doted line form. 11. Learned Senior Counsel appearing for the interveners adopted the arguments advanced by the learned Advocate General. 12. Before proceeding to discuss on merit and the contentions raised in both petitions, it would be just and appropriate to examine the legal position in this regard. The sugar industry is a controlled industry in the sense that the Government has control on the sugarcane production, distribution and prices. There are Central and State Legislations on the subject. 13. The Sugarcane Act, 1934 was initially enacted by the Central Legislature. It regulated the price of sugarcane intended to be used in the sugar factories. It empowers the State Government to declare the area as assigned or reserved area of sugarcane for the sugar factories and also to fix the minimum price for the purchase of sugarcane in that area. U.P. Legislature by enacting the U.P. Sugar Factories (Control) Act, 1938 repealed the Sugarcane Act, 1934 in its application in the Province of U.P. The Sugarcane Act, 1934 was repealed in its application to the State of U.P. on the promulgation of the United Provinces Sugar Factories (Control) Act, 1938 which again gave the power to the State Government to grant licenses for setting up of factories, reserving area for purchase of sugarcane by factories and the minimum price of sugarcane to be paid by the factories. The U.P. Sugar Factories Control Act, 1938 was repealed by the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953. 14. It is pertinent to mention here that the Parliament enacted the Essential Commodities Act, 1955. Section 2(a) of E.C. Act defines the commodities and section 2(b) defines the ‘food crops’. The ‘food crops’ includes the crops of sugarcane. In exercise of the powers conferred under section 3 of E.C. Act, the Sugarcane (Control) Order, 1955 was issued by which it is provided that the Central Government may after consultation with such authorities, bodies or associations, it may deem fit by notification in the official gazette, fix in respect of an area, the price or the minimum price to be paid by the occupier of factories for sugarcane purchased by them. The Central Government again issued a Sugarcane (Control) Order, 1966 by which the Sugarcane (Control) Order, 1955 was repealed and the said Order also empowers the Central Government to fix the minimum price of sugarcane to be paid by the sugar factories. The Sugarcane (Control) Order, 1966 was amended from time to time. This Order also unequivocally provides that the Central Government can only fix the minimum price to be paid by the occupier of sugar factories for the sugarcane purchased by them. 15. In the Constitution Bench of U.P. Cooperative Cane Unions Fed. (supra), the Hon’ble Supreme Court has held that the effect of clause 3(2) is that a producer of sugar under no circumstances purchase sugarcane at a price lower than the minimum price fixed under clause 3(1) and there is a similar prohibition on the cane-growers that they cannot sell or agree to sell sugarcane to a producer of sugar below the said price. It was further held that a whole reading of the 1966 Order (Central) would, therefore, show that the Central Government shall fix the minimum price of sugarcane but there can be a price higher than the minimum price which may be in the nature of agreed price between the producer of sugar and the sugarcane-grower or the sugarcane-growers’ cooperative society. So the field for a price higher than the minimum price is clearly left open in the 1966 Order (Central) made by the Central Government. The Hon’ble Supreme Court further held that the regulatory power possessed by the State Government shall also include the power to fix the price of sugarcane. If it is held that the State under its power of regulation cannot fix the price, then the statutory provision contained in the U.P. Act 1953, U.P. Rules, 1954 and the 1954 Order will become completely one-sided, operating entirely for the benefit of sugar factories giving them many advantages with no corresponding obligations and leaving the cane-grower in lurch. This can never be the intention of the legislature. It will not be fair to read the Act and the Rules in such a restrictive manner, whereby the provisions made for the benefit of the cane-growers become wholly illusory. 16. At the outset, it need to be mentioned that according to the provisions of the U.P. Rules, 1954 made under section 16 of U.P. Act 1953, Form B & C in the appendix thereto provides that the occupier of the sugar factory and the sugarcane growers / sugarcane growers co-operative societies would execute an agreement in the said forms. Once the occupier of the sugar factory reaches an agreement with the cane growers, may be at the instance of the State authorities, to pay the price equivalent to the SAP either by executing a formal agreement in this behalf or otherwise the occupier of sugar factory has to pay such price and in case of default it can be recovered by the State authorities by coercive methods. The minimum price fixed by the Central Government under clause 3 of the 1966 Order (Central) issued under Section 3