Case: Ram Chandra Mawa Lal and Others Etc Vs. State of Uttar Pradesh and Others Etc

The Constitution which promises a socialistic pattern of Society in the preamble and traces the contours of the socialistic philosophy which permeates the spirit of the Constitutional can neither command nor commend the exercise of the Constitutional Jurisdiction to issue HIGH PREROGATVE WRITS under Art. 32 226 or 227 in order not to remove injustice but to do injustice in order not to prevent exploitation of the poor by the rich, but to permit such exploitation. And yet the CONSTITUTIONAL JURISDICTION of the Court (as polarzed from its ERROR JURI SDICTION has been invoked in order to use the hand of the Court for transferring money from the pockets of poor cultivators (who feed the Nation) to the pockets of the dealers in fertilizers (who feed themselves) by Challenging a notification on technical grounds. Such jurisdiction is invoked to enable the dealers to reap a rich harvest of unjust enrichment through the instrumentality of the Court at the cost and expenses of the cultivators. We firmly believe that the Court exercising CONSTITUTIONAL JURISDICTION is not obliged to grant a writ in such circumstances. But we need not elaborate on the theme furthermore as the High Court has rejected the petition on merits and as we are of the sameleading to the institution of the Writ Petitions under Article 226 of the Constitution of India giving rise to this group of appeals (by certificate of fitness granted by the Allahabad High Court) have taken the followingOn October 11, 1973 the Central Government issued a notification fixing the maximum retail selling price of certain varieties of fertilizers to the consumers. It was issued in exercise of powers under clause (3) of the Fertilizer (Control) order of 1957 promulgated under Section 3 of the Essential Commodities Act of 1955. (referred to as ActSome time later, on June 1, 1974 the Central Government issued a Notification whereby the maximum retail selling price of different varieties of fertilizers was steeply revised upwards in order to compensate the manufacturers in the context of the spurt in the prices of various inputs. The extent of the rise may be illustrated by taking the instance of Urea 46% Nitrogen. Its price was revised upwards from Rs. 1090 per ton to Rs 2000 per fon.(iii) On June 14 1974 the State of Uttar Pradesh issued the Uttar Pradesh Fertilizer Prices (Supplementary) Order 1974 in exercise of the powers conferred by Rule 114 of the Defence of India Rules, 1971 adverted to as D.I.R. hereinafter. Under this notification the registered dealers were prohibited from charging to the cultivators price in excess of the maximum price prevailing immediately prior to the upward revision authorised by the Central Government on June 1, 1974 in respect of stocks acquired at pre-revision rates held by the dealers on the eve of the upward revision of prices.(iv) The net result of the two last mentioned notifications was as follows: The dealers could sell to the cultivators fertilizers at the higher rates authorised by the notification dated June 1 1974 from out of the stocks acquired thereafter under both the notifications. As regards the stocks acquired after June 1 1974 the registered dealers were not affected by the notification issued by the State Government under the DIR in as much as the notification issued by the Central Government authorising the upward revision remained unaffected by the notification issued by the State. The dealers however could not sell the fertilizers at the higher rates from out of the existing stock acquired by them at the lower rates immediately prior to the upward revision effected on June 1 1974 in view of the aforesaid notification issued by the State Government on June 14 1974. Taking the instance of Urea 46% Nitrogen the net impact of the impugned State notification was that the dealers were not permitted to charge to the cultivators Rs. 2000 per ton instead of Rs. 1090 per ton in respect of stocks acquired at the lowerIt was in this background that the dealers instituted the petitions giving rise to the present appeals by certificate, challenging the legality and validity of the impugned notification issued by the State Government on June 14the following facts are not inThe registered dealers were entitled to a fixed profit margin of Rs. 45 per ton (and no more) under the terms and conditions of the licence held by them.(ii) The stocks acquired prior to June 1 1974 were meant for sale to the cultivators at the pre- upward revision rates at which rates the dealers had acquired the stocks. This stock had remained unsold with the dealers till than because the cultivators had not been able to effect their purchases till that date.(iii) The price rise was authorised to compensate the manufacturers in the context of t he spurt in the price of various inputs and had no bearing on the selling price for the dealers who were not concerned with the cost of production.(iv) In case the State Government had not issued the impugned notification dated June 14 1974 the dealers would have been enabled to charge about twice the prices at which the stocks were made available to them for sale prior to the notification. For instance Urea 46%. Nitrogen made available to the dealers for effecting sales to the cultivators at Rs. 1090 per ton could have been sold to the cultivators at Rs. 2000 per ton. Thus they would have been enabled to make a wind fall bumper profit of Rs. 910 per ton (in respect of Urea 46% Nitrogen) as against permitted profit margin of Rs. 45 per ton (i.e. about 1000% in place of about 5%) and to secure unjust enrichment for themselves to such an unconscionable extent at the cost of the cultivators.It is in the backdrop of these undisputed facts that the question regarding the validity of the impugned notification dated June 14 1974 issued by the State of Uttar Pradesh came to be challenged before the High Court ofimpugned notification was issued in order to meet a problem which arose in the peculiar facts and circumstances of the situation. The problem arose apparently because the competent authority exercising the powers of the Central Government under the Essential Commodities Act overlooked that the dealers who were concerned with the distribution of the fertilizers to the cultivators on a fixed and assured profit margin of Rs 45 per ton would be having with them stock-in-trade obtained at the pre-enhancement prices. And that they might take under advantage of the situation by charging a higher rate to the consumers even in respect of the stocks acquired at the lower rates The dealers could and should have sold the stock in-trade acquired at the pre- enhancement price at the hiterto prevailing rates till t he old stocks were exhausted. That is what would have been expected of them having regard to the fact that they were getting a fixed and assured margin of profit of Rs. 45/- per ton and that the enhancement of the price was necessitated and made solely to neutralize the rise in the cost of the inputs which phenomenon affected only the manufacturers and not the dealers. There was therefore no occasion or justification on their part for charging a higher price to the consumers in regard to the sales effected from the existing stocks acquired at the lower rates. The notification issued by the Central Government on June 1 1974 was silent on the question of selling prices in respect of sales from out of stocks acquired earlier at the lower rate. Since the said notification issued by the Central Government was silent the State Government which appears to have been more vigilant stepped in and exercised powers which were conferred on it by the DIR.The challenge before the High Court was made on three main grounds,The Central Government having issued a notification in exercise of powers under the Essential Commodities Act 1955 the State Government could not have issued the impugned notification under the Uttar Pradesh Fertilizer Prices (Supplementary) order 1974 issued in exercise of the powers conferred under Rule 114 of the DIR. T he power to fix the maximum price in respect of fertilizers could be exercised only under the Essential. Commodities Act it being a special Act and could not have been exercised by the State Government by issuing an order under the D.I.R.(B) Even if the State Government had the power to issue the notification under the D.I.R. the notification was invalid by reason of its inconsistency with the notification issued by the Central Government on June 1 1974 under the Essential Commodities Act 1955.(C) The impugned notification was violative of Article 14 of the Constitution ofHigh Court of Allahabad negatived all the three contentions by an extremely well considered and well reasoned judgment. In the present group of appeals by certificate the original petitioners have reiterated the same contentions before thisWrit Petitions filed under Article 226 of the Constitution challenged the validity of a notification dated 14-6-1974 issued by the Government of Uttar Pradesh in exercise of the power conferred by Rule 114 of the Defence of India Rules, 1971, directing that no registered dealer of fertilizer shall charge or retain, enter into or enforce any contract for charging, in respect of any fertilizer sold to any person on or after 1.6.1974, from any stock held on 31.5.1974, a price exceeding the maximum price fixed by the Central Government for the sale of fertilizer under an earlier notification dated 11.10.1973 issued under Clause 3 of the Fertilizer (Control) Order, 1957 made in exercise of the power conferred by s. 3 of the Essential Commodities Act, 1955, as it prevailed on 31-5-1974. The Writ Petitions challenged also an order dated 18.6.1974 passed by the District Agricultural Officer s directing registered dealers of fertilizers to refund the excess price charged on the sale of fertilizer effected on or after 1.6.1974 from out of the stock which was in existence on 31.5.1974. The Writ Petitions sought the quashing of the said notification dated 14.6.1974 and also a direction to the District Agricultural Officers and other District Authorities not to ask the dealers to refund the excess in respect of sales completed prior to the date of that notification. The High Court has, while upholding the validity of the notification dated 14.6.1974 and dismissing the prayer for quashing the same, directed the District Agricultural Officers and other District Authorities not to enforce the order for refund of the excess price realized on the sale of fertilizer up to 14.6.1974 from the stocks which were in existence on 31.5.1974. This part of the High Courts order has become final and has not been challenged by the State Government. This Court has directed by orders dated 2.9.1974 and 30.10.1974 that the excess price charged on the sale of fertilizer which was in the possession of the appellants before 1.6.1974 should be deposited with the District Magistrate concerned within a fortnight of the sales to remain in a separate account.The fertilizer in question is admittedly a commodity controlled under the Fertilizer (Control) Order, 1957 issued by the Central Government in exercise of the power conferred by s.3 of the Essential Commodities Act, 19555. The maximum price for sale of fertilizers by registered dealers to consumers is fixed under Clause 3 of the Fertilizer (Control) Order, 1957 by notifications issued from time to time. The sale price of one of the varieties of fertilizers with which we are concerned in these appeals has been fixed at Rs. 1050 per ton by a notification dated 11.10.1973 which was in force on 31.5.1974. The price fixed in that notification for the sale of that variety of fertilizer to registered dealers was Rs. 1005 per ton leaving a margin of Rs. 45 per ton on sale to consumers at Rs. 1050 per ton. The Central Governments in supersession of the notification dated 11.10.1973 fixed the maximum sale price of that variety of fertilizer at Rs. 2000 per ton by a notification dated 1.6.1974, thus giving an increases of Rs. 950 per ton for that variety to the dealers. The dealers started selling at the new rates fixed in that notification for the several varieties of fertilizers. The Government of Uttar Pradesh being of the view that the Central Governments notification dated 1.6.1974 was not intended to apply to old stock procured by dealers at considerably lower prices from producers which w as in existence on 31.5.1974 issued the impugned notification dated 14.6.1974 directing that the old stock should be sold at the old rate of Rs. 1050 per ton with effect from 1.6.1974. The Writ Petitions were filed by the dealers, some of the m for quashing the State Governments notification dated 14.6.1974, some for quashing that notification as also for directing the District Agricultural Officers and other District Authorities not to enforce the order mentioned above and some for the latter direction alone.The question for consideration by the High Court was the validity of the State Governments notification dated 14.6.1974 as regards the stock of fertilizer available with the dealers at the end of 31.5.197 4, i.e., whether that notification will prevail over the Central Governments notification dated 1.6.1974.

Reasoning:
There is no question of placing the later law, Defence of India Act, 1971, for consideration by the President under Article 254(2) of the Constitution for both the laws, the Essential Commodities Act, 1955 and Defence of India Act, 1971 are laws passed by Parliament. There does not appear t o be any provision for placing any notification made by a State Government under the Defence of India Rules, 1971 for consideration by the President. As already stated, if the impugned State Governments notification is, however, considered to be in the nature of a State law there is nothing on the record, to show that it was placed before the President for consideration and had received his assent as alreadyupon the above decision in Zaverbhai Amaidas v. The St ate of Bombay (supra) Mr. Manchanda made a half- hearted plea that the impugned State Governments notification relates only to fertilizer which was carried over from the stock held at the close of 31.5.1974 and that it is intended to protect agricultural consumers from dealers making undue profit and should therefore, be held to be, valid in law. It is not possible to accept this submission of Mr. Manchanda. There is no basis, whatsoever, to presume, and it will, be totally uncharitable to the Central Government to presume, that the Central Government which had assumed powers under the Essential Commodities Act, 1955 to control the distribution of fertilizer and make it available at fair prices to consumers was ignorant of or had overlooked the fact while making the notification dated 1.6.1974 fixing a higher price for dealers to sell fertilizer to consumers with effect from that date that there may be some stock of fertilizer on 31.5.1974 pur chased by dealers at lower prices which may be carried over for sale subsequently. What has been done by the State Government under the impugned notification is utterly lacking in power and cannot be allowed to stand merely because it relates only to a comparatively small quantity of fertilizer carried over from the stock of 31.5.1974 and was intended to benefit and protect agricultural consumers and prevent dealers from making undue profits. For the reasons stated above the appeals are allowed and the impugned State Governments notification dated 14.6.1974 is quashed. There will be an order directing the District Agricultural officers and other District Authorities in the State of Uttar Pradesh not to ask the dealers to refund the excess in respect of the sales completed prior to the date of the impugned notification. The District Magistrates concerned shall return the monies deposited with them by the dealers pursuant to this Courts orders dated 2.9.1974 and 30.10.1974. The respondents shall pay the appellants costs. There will be one set of advocates fees in the batch of appeals in which the appellants are represented by Mr. Govindan Nair and another set of advocates fees in the other set of appeals in which Mr. Yogeshwar Prasad appears for the appellants.on the above decision in Zaverbhai Amaidas v. The St ate of Bombay (supra) Mr. Manchanda made a halfhearted plea that the impugned State Governments notification relates only to fertilizer which was carried over from the stock held at the close of 31.5.1974 and that it is intended to protect agricultural consumers from dealers making undue profit and should therefore, be held to be, valid in law. It is not possible to accept this submission of Mr. Manchanda. There is no basis, whatsoever, to presume, and it will, be totally uncharitable to the Central Government to presume, that the Central Government which had assumed powers under the Essential Commodities Act, 1955 to control the distribution of fertilizer and make it available at fair prices to consumers was ignorant of or had overlooked the fact while making the notification dated 1.6.1974 fixing a higher price for dealers to sell fertilizer to consumers with effect from that date that there may be some stock of fertilizer on 31.5.1974 pur chased by dealers at lower prices which may be carried over for sale subsequently. What has been done by the State Government under the impugned notification is utterly lacking in power and cannot be allowed to stand merely because it relates only to a comparatively small quantity of fertilizer carried over from the stock of 31.5.1974 and was intended to benefit and protect agricultural consumers and prevent dealers from making undue profits.