Case: Janki Sugar Mills &amp; Co Vs. Commissioner Of Meerut Division, Meerut

Supply and Purchase) Act, 1953 and set out Cl. 3 of the U.P. Sugarcane Supply and Purchase Order, 1954. Under s.15(1) of the Act power has been conferred upon t he Cane Commissioner after consulting the factory and the cane-grower/Canegrowers Co-operative Society to (a) reserve any area (hereinafter called the reserved area) or, (b) assign any area (hereinafter called an assigned area) for the purpose of the supply of sugarcane to a factory in accordance with the provisions of s.16 during one or more crushing seasons as may be specified. It was under this provision that the Cane Commissioner has passed order dated November 1, 1954 reserving certain sugarcane centres (reserved area) for the appellant firm for the 1954-55 season. 4 Clause 3 of the U.P. Sugarcane Supply and Purchase Order 1954 runs thus:"3. Purchase of cane in reserved areas.- (1) The occupier of a factory shall estimate or cause to be estimated by the 31st day of October or such later date in a crushing season as, on an application being made to the Cane Commissioner by the occupier of a factory, may be fixed by the Cane Commissioner, the quantity of cane with each grower enrolled in the Growers Register and shall on demand submit the estimate to the Cane Commissioner and the Collector. (2) A cane-grower or a Cane-growers Co-operative Society may within 14 days of the issue of an order reserving an area for a factory, offer in Form A of the Appendix, to supply cane grown in the reserved area, to the occupier of the factory. (3) The occupier of the factory for which an area has been reserved, shall, within fourteen days of the receipt of the offer enter into an agreement in Form B or Form C of the Appendix, with the Cane-grower or the Canegrowers Cooperative Society, as the case may be, in respect of the cane offered: Provided that any purchase of cane made before the execution of the prescribed agreement shall be deemed to have been made in accordance with such agreement. (4) The Cane Commissioner may, for reasons to be recorded in writing, extend the date for making offers in respect of any reserved area." 5. On a fair reading of the sub-cls.(2) &(3) of cl. 3 of the Order two or three things become at once clear. In the first place sub-cl.(2) uses the expression may and provides that a cane-grower or Canegrowers Co-operative Society may within 14 days of the issue of an order reserving an area for a factory make an offer to supply the cane grown in the reserved area to the factory. That the period of 14 days mentioned in this sub-clause is not imperative or mandatory is also clear from sub-cl.(4) which confers power upon the Cane Commissioner to extend the date for making offer in respect of any reserved area. Secondly, sub-cl.(3) uses the expression shall indicating that an imperative obligation is cast upon the factory to accept the offer within 14 days from the receipt of the offer. Reading the two sub-clauses together, it becomes clear that if a cane- grower or Canegrowers Cooperative Society makes an offer within 14 days mentioned in sub-cl.(2) it is obligatory upon the occupier of the factory to accept that offer within 14 days of the receipt of the offer, this only means that if the offer is made by the cane-grower or Cane-growers Cooperative Society beyond the period specified in sub-cl.(2) or the extended time under sub-cl.(4) it would not be obligatory but optional for the occupier of the factory to accept the said offer but if such offer made beyond the prescribed or extended period is accepted by the occupier of the factory a binding agreement comes into existence between the parties and sugarcane supplied thereunder would be bonded sugarcane, more so when the agreement is entered into in the prescribed form. Merely because the offer from the cane-grower or Cane-growers Co-operative Society emanates after the expiry of the period mentioned in sub-cl.(2) it does not mean that the parties are prevented from entering into an agreement in the prescribed form and if they do enter into an agreement in the prescribed form, as was the case here, the sugarcane supplied thereunder would be bonded sugarcane. It is not possible to accept the contention of learned counsel for the appellant that sugarcane supplied by the cane-growers or Canegrowers Cooperative Society could be regarded as bonded Sugar Cane only if offer of the Cane-grower or t he Cane-Growers Co operative Society emanates within the period prescribed by sub-cl.(2) and the same is accepted by the occupier within the period prescribed by sub-cl. (3). As stated earlier, the true effect of sub-cls. (2) and (3) read together is that the compulsion or obligation to accept the offer on the part of the occupier of the factory arises only when the offer is made by the cane-grower or Cane-growers Co-operative Society within the time prescribed by sub-cl.(2) or the ext ended time under sub-cl.(4) but if the offer is made after the expiry of that period it is optional for the factory occupier to accept it or not but in cases where he accepts such offer a binding agreement comes into existence, and the sugarcane supplied thereunder becomes "bonded sugarcane". In the instant case the offer of additional quantity of two lac maunds of sugarcane was undoubtedly made long after the expiry of the period of sub-cl.(2) but the same was accepted by the appellant-firm and a binding agreement came into existence and what is more that a binding agreement was executed by the parties in the prescribed Form C. Further the conduct on the part of the appellant-firm in referring the dispute to arbitration and filing an appeal against the arbitrators award under the relevant Rules clearly shows that the parties, particularly the appellant-firm, treated the agreement dated May 4, 1955 as one under the Act and the U.P. Sugarcane and purchase Order, 1954. 6.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]On a fair reading of the sub-cls.(2) &(3) of cl. 3 of the Order two or three things become at once clear. In the first place sub-cl.(2) uses the expression may and provides that a cane-grower or Canegrowers Co-operative Society may within 14 days of the issue of an order reserving an area for a factory make an offer to supply the cane grown in the reserved area to the factory. That the period of 14 days mentioned in this sub-clause is not imperative or mandatory is also clear from sub-cl.(4) which confers power upon the Cane Commissioner to extend the date for making offer in respect of any reserved area. Secondly, sub-cl.(3) uses the expression shall indicating that an imperative obligation is cast upon the factory to accept the offer within 14 days from the receipt of the offer. Reading the two sub-clauses together, it becomes clear that if a cane- grower or Canegrowers Cooperative Society makes an offer within 14 days mentioned in sub-cl.(2) it is obligatory upon the occupier of the factory to accept that offer within 14 days of the receipt of the offer, this only means that if the offer is made by the cane-grower or Cane-growers Cooperative Society beyond the period specified in sub-cl.(2) or the extended time under sub-cl.(4) it would not be obligatory but optional for the occupier of the factory to accept the said offer but if such offer made beyond the prescribed or extended period is accepted by the occupier of the factory a binding agreement comes into existence between the parties and sugarcane supplied thereunder would be bonded sugarcane, more so when the agreement is entered into in the prescribed form. Merely because the offer from the cane-grower or Cane-growers Co-operative Society emanates after the expiry of the period mentioned in sub-cl.(2) it does not mean that the parties are prevented from entering into an agreement in the prescribed form and if they do enter into an agreement in the prescribed form, as was the case here, the sugarcane supplied thereunder would be bonded sugarcane. It is not possible to accept the contention of learned counsel for the appellant that sugarcane supplied by the cane-growers or Canegrowers Cooperative Society could be regarded as bonded Sugar Cane only if offer of the Cane-grower or t he Cane-Growers Co operative Society emanates within the period prescribed by sub-cl.(2) and the same is accepted by the occupier within the period prescribed by sub-cl. (3). As stated earlier, the true effect of sub-cls. (2) and (3) read together is that the compulsion or obligation to accept the offer on the part of the occupier of the factory arises only when the offer is made by the cane-grower or Cane-growers Co-operative Society within the time prescribed by sub-cl.(2) or the ext ended time under sub-cl.(4) but if the offer is made after the expiry of that period it is optional for the factory occupier to accept it or not but in cases where he accepts such offer a binding agreement comes into existence, and the sugarcane supplied thereunder becomes "bonded sugarcane". In the instant case the offer of additional quantity of two lac maunds of sugarcane was undoubtedly made long after the expiry of the period of sub-cl.(2) but the same was accepted by the appellant-firm and a binding agreement came into existence and what is more that a binding agreement was executed by the parties in the prescribed Form C. Further the conduct on the part of the appellant-firm in referring the dispute to arbitration and filing an appeal against the arbitrators award under the relevant Rules clearly shows that the parties, particularly the appellant-firm, treated the agreement dated May 4, 1955 as one under the Act and the U.P. Sugarcane and purchase Order, 1954.